Do you own one or more properties?

If you do, there is a chance that you will have to pay a large Capital Gains Tax bill when you come to sell your property.

If the property is your main residence, you won’t have to pay tax as long as:

• The property was your only home throughout the period you owned it (ignoring the last three years of ownership)
• You bought the property
• Expenditure incurred on the property was incurred primarily to use it as your home
• You did use the property as your home throughout the time that you owned it
• You didn’t use the property for any other purpose than as a home for you and your family (and no more than one lodger)
• The garden of the property do not exceed 5,000 square meters (approximately 1.25 acres)

You may still be entitled to tax relief even if you don’t meet every one of the conditions outlined above.

Please remember that if you are married or in a civil partnership, you and your spouse or civil partner can have only one such residence between you and

However, if the property is not your main residence and you sell the property for more than you paid for it worth there will normally be tax to pay on the profit your made. The first £10,100 (2010/2011) year allowance is tax free.

When working out whether any Capital Gains Tax is payable, you can:

• Deduct the costs of buying, selling and improving the property
• Offset any losses made on the property against other gains
Remember that you can also transfer the property to your spouse or civil partner (if you are living together) without paying CGT.


There are a number of documents that HMRC suggest that you retain when you buy or sell a property, these include:

• Copies of valuations which you are using to work out profits or losses
• Contracts for exchange or purchase of the property
• Evidence of payments for costs you are claiming for the purchase, improvement or sale of the property (solicitors invoices, bank statements showing fees etc


Henderson Morgan’s wealth management team can help you with all elements of tax due. The team can assist you to plan your tax effectively whilst protecting and growing your wealth.

Are you about to become a higher rate tax payer?

The coalition Government, in an attempt to trim the UK’s deficit have taken bold steps to increase the money coming into the Treasury. The tax thresholds are altered annually in line with inflation and generally announced in autumn’s Pre Budget Report. With the proposed changes, the number of people who pay higher rate tax is estimated to rise by nearly three quarters of a million, from 3 million to almost 3.7 million.

Recent changes in the structure of the tax system have been the reason for this huge increase in higher rate taxpayers. When the Government increased the tax free allowance to drag a million low paid workers out of paying any tax at all, they simultaneously reduced the threshold at which top rate tax became payable in order that the middle classes did not benefit. This tax year (2010/11) all earnings above £43,875 are taxed at 40 per cent. However, from April 2011 this threshold will be lowered to £42,475, the Treasury has confirmed.

There is a double whammy because, in addition to the lowering of the tax threshold, National Insurance (NI) rates for higher rate taxpayers will also rise in April 2011. The rate of NI will rise from 11 per cent to 12 per cent.The result people earning between £40,000 to £50,000 and upwards will be significantly worse off than before, anyone earning £50,000 will be £747 worse off next year.If you have children you will face another blow in April 2013 as higher-rate taxpayers with children will lose out on child benefit, costing a family with two children an additional £1,750 per year.

Now is a good time to think about both your immediate tax calculations and long term tax planning, Henderson Morgan’s wealth management team can review your current situation and help you and your family grow and protect your wealth for the future.

Should we move our business offshore

A hot topic around UK boardrooms right now is ‘Do we move offshore?’
Many high-profile UK Companies including HSBC’s CEO moving to Hong Kong, WPP’s board heading to Ireland, Ineos moving its HQ to Switzerland and Regus migrating to Luxembourg. And Wolseley has just announced plans to move to Switzerland, citing tax savings of around £27 million.
But this is not just restricted to the large multinationals; many smaller AIM-listed or privately held businesses are also relocating. In reality it is far easier for SMEs to move as they are more flexible and moving offshore can offer substantial commercial, administrative and tax advantages for a business.

• Better proximity to markets-with emerging markets still growing fast, prospects in Asia are particularly strong at the moment and Singapore and Hong Kong are favoured hubs for trading in the region.
• Accessing local talent pools- many offshore locations offer large pools of expertise, for example, Switzerland and Ireland for pharmaceutical companies.
• Reducing the burden of compliance-compared to company administration in the UK, countries such as Luxembourg or the Netherlands may offer greater simplicity, transparency and certainty.
• Improve cash flow-There are some very favourable tax incentives on offer, with effective tax rates potentially around or below 10%. into the commercial, tax and legal issues to consider in each jurisdiction.

One thing is certain, there will need to be real business substance in the chosen location, both to obtain the commercial benefits and to ensure that the structure is tax-effective. Determining the right location is about piecing together your businesses needs like a complex jigsaw and there are many key factors that need to be taken into consideration,
• proximity to markets, suppliers and labour
• operational benefits
• compliance savings
• taxation
• impact on business culture
• costs of relocation
• willingness of relevant personnel to relocate
• short-term operational disruption.

The options are endless, from simple relocation of a single business unit to full migration of the group.
As a first step, it is important to map the components of the supply chain and identify the key value drivers in the business. Each component should then be considered in isolation to determine its optimal location before bringing the whole together. Some of the options to consider include:
• Centralised hubs-these can be set up for support services, such as a centralised buying hub to generate purchasing synergies. Transfers of this nature should be achievable with limited disruption to the wider business, and while savings are primarily operational, there may also be tax benefits. Centralised sales hubs (such as regional hubs in Dubai or Singapore) can offer more significant commercial and tax benefits, although the impact on the business is much greater.
• Intellectual property centres-for many businesses, much of the value lies with their intellectual property; from patents and trademarks to customer relationships and technical know-how. Some companies have transferred their research functions to locations to benefit from tax reliefs or incentives. Others are managing their intellectual property from a centralised global hub. Tax and legal benefits can be very significant. However, care is needed not to fall foul of tax anti-avoidance rules, especially when transferring intellectual property abroad.
• Full migration -various high-profile cases in the press have involved migration. This typically entails ‘inverting’ – setting up a new overall holding company in a favourable jurisdiction – and relocating the board and key decision-makers offshore. This offers maximum flexibility and potential benefits, but there needs to be a strong appetite for change at board level and a good commercial reason.

There is no magical juridcition where to locate depends on business requirements, locations include:
• Ireland
• Switzerland
• Luxembourg
• Netherlands
• Malta
• Cyprus
• United Arab Emirates
• Singapore
• Hong Kong
You next step to consult a specialist team who can guide you through the maze of offshore jurisdiction and work with you to find the solution right for your business. Contact the team at Henderson Morgan who can guide you through the maze advisor@henderson-morgan.com

2011-2012 HMRC Tax Rates

HM Revenue & Customs has published the Income Tax allowances, rates and thresholds, NIC rates, Tax Credit rates and thresholds, and the Individual Savings Account (ISA) subscription limit, to be used from 6 April 2011.

Details can be found at: HMRC Tables Confirming Tax and Tax Credit Rates and Thresholds for 2011-12

As expected, there's been a significant rise in the National Insurance Contributions threshold, (i.e., the earnings level at which NICs start to be due), broadly to match the rise in Income Tax Personal Allowance previously announced. However, the 1%rise in both Employees' and Employers' NICs will mean many will suffer from an overall reduction in net income, despite the increase in tax/NI-free thresholds.

If you need help with any aspect of UK Tax or tax planning to reduce your tax liability, please contact our wealth management team at advisor@henderson-morgan.com

VAT Advice from HMRC

Are you ready for the change in VAT? HM Revenue & Customs warns that the standard rate of VAT goes up to 20 per cent on 4 January 2011 – so it’s worth getting your business ready now.

Introduction
From Tuesday 4 January, you will need to charge the new 20 per cent VAT rate on all standard-rated sales you make from that day onwards.

If you’re in retail, you must use the new 20 per cent rate for all standard-rated takings you receive on or after 4 January. The new VAT fraction for the 20 per cent rate is 1/6 (used to calculate the VAT element of standard-rated gross takings).

If your business issues VAT invoices, you must use the new 20 per cent rate for all VAT invoices you issue on or after 4 January, which are issued within 14 days (or longer period that has been agreed with HMRC) of your providing the goods or services.

Supplies that Span the Rate Change
If you supply goods or services before 4 January 2011, but issue a VAT invoice on or after that date, you can choose to charge VAT at 17.5 per cent.

Continuous Supplies of Services
For a contract that started before 4 January you can choose to charge the old rate, 17.5 per cent, on services actually performed before 4 January, and the new rate of 20 per cent on the value of services actually performed after.

Reclaiming VAT
From 4 January 2011, you may receive VAT invoices with the new 20 per cent rate, as well as VAT invoices with the old 17.5 per cent rate for goods or services you bought before the rate changed. In such cases, you should claim back VAT at the rate shown on the invoice.

Completing a VAT Return
The deadlines for submitting VAT returns remain the same, so you should continue to submit VAT returns in the usual way – whether you send them monthly, quarterly or annually. For returns that span the change in rate, you will need to add together both the VAT on sales charged at 17.5 per cent and those charged at 20 per cent. You then put this total in box 1 of your VAT return.

Countering Arrangements Designed to Take Advantage of the VAT Rate Change
In order to counter businesses taking advantage of the VAT rate change by making arrangements that aim to apply the 17.5 per cent VAT rate to goods or services to be delivered or performed on or after 4 January 2011, anti-forestalling legislation has been introduced. Further details of this can be found in the web link VAT - Change of the Standard Rate to 20 per cent: Anti-Forestalling Legislation

Further Information
HMRC has published detailed guidance on the rate change, which can be found at Increase in the Standard Rate of VAT to 20 per cent.

For further information on other VAT and Excise matters, you can also contact the National Advice Service on 0845 010 9000.

Henderson Morgans wealth management team can help you plan your tax contact us for a a free discussion of your requirements advisor@henderson-morgan

Tax Advice for Small Businesses

For many small business owners, one of the largest overheads is their tax bill; however, many small businesses are paying more than they need too.
How often have you argued over whose shout it is at the bar; or that the check out person at your supermarket has short-changed you? Yet staggeringly, countless small business owners aren’t willing to set aside any time to understand how to slash their tax bill.
Time and time again, we see many people pay too much tax because of little information and fear of HMRC.
Tax laws changes regularly and all business owners should engage an accountant/tax specialist. Many small business owners try to organise their own tax returns and believe that they could save expert accounting & tax advisors fees, a good tax accountant/tax specialist will save you money.
Remember that you may be paying more tax than you need to!
For a free initial discussion contact the team at Henderson Morgan who can guide you through the complex web of tax regulations advisor@henderson-morgan.com.

What is an offshore Trust

An offshore trust is created when assets are transferred to a trustee. The trustee becomes the legal owner and is responsible for managing the assets and distributing them to the beneficiaries of the trust, which could include the person or corporation which transferred the assets to the trustees, in accordance with the terms of the trust deed.

The following assets can be held by an offshore trust
Shares and stocks in both quoted and unquoted companies.
Investment portfolios.
Real and intellectual property.
Bank deposits.
Life assurance policies issued on the life of the Settlor.
Most other types of asset
There are many advantages to offshore trusts,
Privacy many trust deeds are not publicly registered.
Wealth protection.
Tailored to specific family requirements.
Recognised in all common law jurisdictions.
Increasing recognition in important civil law jurisdictions.
An important tool in international income, capital gains and estate tax planning.
Used by corporations for employee benefit plans, retirement and stock option schemes, insurance plans and special financing arrangements.

Talk to our team at Henderson Morgan, advisor@henderson-morgan.com for a free consultation to see if an offshore trust is right for you, your family and business.

A Brief Guide to Asset Protection

1. Do Something Now. It is harder to protect yourself after a liability has been incurred, long term planning is the key to asset protection.
2. Liability Insurance is your first line of defense, buy every £ you can afford whilst assuming that it won’t work so you have a back up plan;
3. Use Incorporation as a liability firewalls. Always divide and segregate your personal & business assets (and liabilities) as much as possible. “
4. Don’t assume that incorporation will afford you complete protection. If you own it, run it, control it, it can be argued that it is still YOU;
5. Get professional legal & accounting help to organise your assets and make sure you maintain the legal formalities of these entities like tax returns, meeting minutes and separate bank accounts or they won’t help at all;
6. Get your vehicles out of the name of your business. Many people do this for the deduction. If you or your spouse injures someone with your car you have created a “bridge” to your business and all it owns. Take a vehicle allowance instead;
7. If you have employees get professional employment manuals, policies and dispute resolution agreements in place. A small investment will cover your business and family for years. You are five times likely to be sued by an employee than anyone else;
8. Be nice to everyone as a rule. During difficult economic times people are much more likely to take legal action, whether justified or not. Your bedside manner will play a role in their emotional decision to sue you;
9. Don’t keep too many eggs in one basket. Don’t use a single limited company, for instance, to own separate assets like 3 different rental income properties with high equity. An injury or exposure at one property or business places the owner, the company and its assets potentially at risk;
10. Own Nothing, Control Everything. You don’t need to keep assets in your own name to use, control and enjoy them. Make use of trusts, corporate shells and the law to transfer title to assets away from you.
Henderson Morgan’s Wealth Management team has over 20 years of experience of working with clients to protect their assets and grow their wealth please contact us at advisor@henderson-morgan.com for a free initial consultation.

31st January Tax Return Deadline is Looming

The tax year runs from 6th April to 5th April the next year, and under self-assessment it is up to the individual taxpayer to calculate their own tax liability and pay the tax due by the due date. Most UK residents are taxed under PAYE and do not have to complete a Self Assessment tax return.
However, the following people usually have to complete one…
• Anyone who is self-employed;
• A company director;
• A trustee;
• Pensioners with an annual income of £100,000 or more;
• Employees or pensioners with an annual income from savings or investments of £10,000 or more;
• An employee or pensioner with untaxed annual income of £2,500 or more;
• A landlord who rents out property or land.
If you are unsure whether you need to complete one, please advisor@henderson-morgan.com for advice as it is your responsibility to notify chargeability to tax to HMRC
If you are required to complete a return, they are normally issued to you at the beginning of April each year. The basic return is 10 pages, but many sources of income require supplementary pages to be completed as well. Some people receive a short tax return of only 4 pages.As well as your income it deals with the allowances and reliefs that you can claim.
Paper returns have to be filed by 31 October following the end of the tax year and HMRC will calculate your liability for you. For online returns you have until 31 January following the end of the tax year to file the return. If you file the tax return online through the HMRC website the software will calculate your tax liability for you.
If the return isn’t filed by the due date, there is an automatic fine of £100, which is reduced to the level of tax due if that is less. There is a further £100 fine if your return is still outstanding six months later.
The method of payment usually involves two payments on account of your tax liability as follows…
• one on 31 January during the tax year and
• another on 31 July following the tax year.
These are based on the net income tax and Class 4 NIC liability of the previous tax year .
A final payment (or repayment) is due on 31 January following the tax year.
Thereafter, there is a 5% surcharge on any taxes that remain unpaid after 28 February, and a further 5% on taxes not paid after 31 July.
The payments on account are not required if…
• income tax and NIC liability for the previous year (net of tax deducted at source) is below £500 (doubled to £1000 from 2009/10 with first payment affected being 31 January 2010) or
• more than 80% of the income tax and NIC liability for the previous year was tax deducted at source.
You can also apply to have the payments on account reduced if you expect your liability for a tax year to be less than the previous year.
HMRC can correct a self assessment return within nine months of the return being filed in order to correct any obvious errors or mistakes in the return and an individual can amend their self assessment at any time within 12 months of the filing date.
By law you must keep all records in support of the tax return for at least 22 months after the end of the tax year, but if you are self-employed or have rented property the records must be kept for five years and ten months after the end of the tax year.
You can be fined up to £3,000 if you fail to maintain or retain adequate records to back the return.
Henderson Morgan can assist you with the completion of your self-assessment return, advise on payment of liabilities and deal with any enquiries into your return, and assist you to plan for tax more efficiently in the future. Please contact us at advisor@henderson-morgan.com for a free initial consultation.

Structured Tax Advice

Henderson Morgan offers guidance and advice in international tax structuring, tax management and offshore tax planning.

We can efficiently and precisely set out a strategy to mitigate your ongoing liability both locally and internationally, taking into account the bigger picture.

Our team solve your problems and using the complex international tax rules and regulations to your advantage
Please contact us at advisor@henderson-morgan.com for a free confidential discussion

Are you Resident or Non Resident?

If you are minded to leave the UK you do actually have to go!
Merely cutting the time you spend here is not enough. There is a very big difference between establishing that you have left the UK rather than simply maintaining an existing state of non residence.
In the recent case of Gaines-Cooper v Revenue and Customs Commissioners the Special Commissioners ruled that a different method of counting had to be used in order to give a more accurate picture. Rather than ignoring days of arrival and departure, nights spent in the UK should be the deciding factor in determining the amount of time spent in the UK.
Resident/Non resident status is a very complex matter and if you think you could be affected by the Gaines-Cooper ruling or need advice on non residency please contact our team at advisor@henderson-morgan.com

Things you should know about giving your home to your children

You are permitted to give your home to your children (or another beneficiary) at any time – even if you live in it.

BUT,

if your home and your estate are worth more than the Inheritance Tax threshold (£325,000 in tax year 2010/11) there will be tax implications.

UNLESS

You live for seven years after you have given your home as an outright gift to your children, irrespective of its value it will be exempt from Inheritance Tax. This is known as a potentially exempt transfer.

BUT

If you give your home to your children with conditions attached to it, or if you continue to benefit from the home yourself, this is known as a ‘gift with reservation of benefit’. In this case, the gift won’t be exempt from Inheritance Tax, even if you live for seven years afterwards.


MAYBE

Instead of gifting the property to your children, you could sell your home and gift them the proceeds from the sale. In this case, the gift won’t be included in your estate for Inheritance Tax purposes, as long as you live for seven years after you make the gift.

BUT

If you sell your home, give the money to your children and then move into their home, there could be Income Tax implications. You may be classed as ‘living in a pre-owned asset’ if you do not pay the market rent.

HOW ABOUT

If you give your home to your children and they then move in with you, the gift will be treated as a ‘gift with reservation of benefit’ and the home will still be subject to Inheritance Tax.
However, if you give half of your home to your children, they move in with you and you share bills jointly, the half that you give them won’t be treated as part of your estate for Inheritance Tax purposes as long as you live for seven years after making the gift.

Inheritance Tax is complex and can benefit from effective tax planning. Henderson Morgan’s wealth management team with our 20 years of experience can work with you and your family to plan your inheritance, contact our team today for a free confidential chat advisor@henderson-morgan.com

Cross Border Transactions & Tax

Cross Border transactions use to be the realm of large multinational companies, now many SME under take cross border transaction daily. It is a rapidly changing field and all businesses need to keep up to date with changes
On 22 December 2010 the European Court of Justice case number C-277/09 RBS Deutschland Holdings held that a taxpayer is not prohibited from exploiting the differences in national tax systems in a cross border transaction leading to a more favorable tax result, provided that the transactions in which the taxpayer is engaged are not entirely artificial and are not entered into for the sole purpose of avoiding taxes.
The Court acknowledge that taxes are a factor that is taken into consideration to determine the final form of a transaction, but when they are not the only factor and the transaction otherwise serves a legitimate business purpose, the final tax result should be respected event when it is predicated on an inconsistent tax treatment of the transaction under two different legal systems.
Keep on top of all these legislative changes can be a nightmare for SMEs so talk to one of our experiences team at Henderson Morgan to discuss your business need and see how we can help your business grow and develop email :email :advisor@henderson-morgan.com

I am under investigation by HMRC- what should I do?

HMRC will normally send you a letter to let you know they have launched a tax investigation into your affairs, in this letter you will normally be asked to submit your personal and business records.

Do not do this until you have engaged a tax investigation specialist.

A tax investigation specialist will negotiation with HMRC on your behalf to ensure they have no further contact with you.

Don’t suffer countless sleepless nights and unnecessary stress contact Henderson Morgan’s multidisciplinary team of experts who can work on your case protecting your interest to the full extent of the law.


Contact the tax investigation team at Henderson Morgan on 24/7 0044 203 150 0923 or email investigation@henderson-morgan.com

Resolving Tax Problems

Tax investigations and conflicts with the HMRC can be a very difficult and stressful time for you and your family. Henderson Morgan works with you to resolve any tax investigation or disclosure in the most efficient, cost effective and timely manner possible to HMRC
Henderson Morgan is non judgemental and will take control of the investigation which allows you to carry on with your business and life. We pride ourselves on passionately supporting our clients.
Please contact our 24 hour phone line on 0044 203 150 0923 or contact investigation@henderson-morgan.com our initial consultation is free and confidential

Tax Evasion is a Criminal Offence

Tax evasion is a criminal offence punishable by serious fines and a prison term in the UK. Any hidden income or gains can be classified as tax evasion by HMRC.

Always consult a wealth management professional before planning an offshore business and/or investment, so you can make the most of low tax jurisdictions without taking the risk of being a tax evader.

Henderson Morgan's team have over 20 years of experience and are ready to help you build your wealth.