Category Archive: June 2016

  1. New Personal Savings Allowance

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    The new Personal Savings Allowance (PSA) was introduced on 6 April 2016. If you are a basic rate taxpayer, you can earn up to £1,000 of interest, tax free and a higher rate taxpayer can earn up to £500 of interest, tax free.

    Additional rate taxpayers are not entitled to any PSA. The PSA is completely separate from and in addition to the tax free savings that you can hold in an Individual Savings Account (ISA).  From April 2016, Banks and Building Societies are no longer deducting tax from the interest that they pay to us, and this applies to interest paying current accounts as well as savings accounts.

    The government have estimated that 95% of people will not pay any tax on their interest income as a result of the introduction of the PSA. If you do owe some tax on interest and do not already complete a self-assessment tax return, HMRC have said that they will collect this by adjusting your tax code.  If you don’t have any PAYE income, HMRC have said that they will write to you in the Autumn to explain how they can help you pay any tax due on interest income.

    The PSA does not work in the same way as the personal allowance. It does not reduce your taxable income, but simply taxes part of it at 0%. The different levels of PSA available to basic rate, higher rate and additional rate taxpayers can create some anomalies, where £1 of additional income can make you worse off!

    John has earnings of £42,000 and has interest income of £1,000.  Jonathan has earnings of £42,001 and interest income of £1,000. Earning just £1 more leaves him with £99.40 less money in his pocket.

    2016/17 John John’s Tax Jonathan Jonathan’s Tax
    Earnings 42,000 42,001
    Interest 1,000 1,000
    Total income 43,000 43,001
    Personal allowance (11,000) (11,000)
    Taxable earnings 31,000 32,001
    31,000 @ 20% 6,200
    31,001 @ 20% 6200.2
    PSA £1,000 @ nil 0 N/A
    PSA £500 @ nil 0
    £499 @ 20% 99.8
    £1 @ 40% 0.4
    Total tax bill 6,200 6,300.40
    Cash in pocket £36,800   £36,700.60  

    Hopefully the situation outlined above is going to be relatively rare.  However, if you are near the limit above which you move into either higher or additional rate tax,it might be worth considering the following to reduce your taxable income:

    • Moving an interest-bearing account into your spouse’s name
    • Making a charitable donation
    • Making a pension contribution
    • Reducing or delaying dividend payments from your personal company

    However, any planning must be done in the tax year in question as the personal savings allowance can only be used in the year. There is no facility to carry any unused amounts forward or back, and the allowance itself cannot be transferred to a spouse.

    If you require any help with this or any other aspect of tax planning, Julia Clarke, Director of Taxation at Wright Vigar, or one of our team of professionals in your local office would be pleased to help. Simply give us a call on 01522 531341 or email us at action@wrightvigar.co.uk.

  2. June 2016 Tax Tips & News

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    Welcome to June’s Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

    If you need further assistance just let us know.

    Change in Advisory Fuel Rates from 1 June 2016

    New PSC register requirements take effect

    OTS examines potential for new trading vehicles

    HMRC go live with Verify identity authentication

    Free pension advisory services to be merged

    June Questions and Answers
    Q1: I am thinking of purchasing a new house that I will use as my main residence, but I will still own other properties. Will I be liable to the new 3% stamp duty land tax (SDLT) change?
    Q2: I commenced trading as a service provider on 1 September 2015 and now wish to complete my 2015/16 tax return. I have not incurred any capital expenditure and my turnover is less than the current VAT threshold. Should I use 30 March (or 5 April) as my accounting year-end?
    Q3: How do I register as a self-employed subcontractor in the construction industry?

    June Key Tax Dates

  3. We welcome David Thompson to Wright Vigar

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    David in reception - small

    Wright Vigar is delighted to welcome the former Handelsbanken Manager, who has switched to the world of accountancy, joining us at the end of May as Chief Operating Officer.

    Originally from Cleethorpes, David joined Midland Bank (later HSBC) as a trainee in their Grimsby branch. He stayed with the bank for 24 years, going on to work in Sheffield, Nottingham, Lincoln, London and Jersey, spending three years looking after its international business.  David and his family originally moved to Lincoln in 1990 and he continued to further his career gaining experience in a range of management and leadership roles. His last two roles with HSBC were Branch Manager at the Lincoln Stonebow Branch and Area Director for the bank in North and North East Lincolnshire.

    In 2008, David moved to Handelsbanken, where he established the Lincoln branch, recruiting staff and building the customer base. The Lincoln branch now employs nine people involved in corporate and private client work.

    Eight years on, David is excited about his latest challenge and the chance to play a key role in the growth of our business which he has had close links with for about 16 years.

    “I have always liked Wright Vigar’s ethos. I understand the firm’s strategy. It’s my job to take an overview, help things to run smoothly and free up the Directors to focus on giving clients the tailored services they need,” said David.

    “The firm now employs more than 90 people and I will be taking on responsibility for the marketing team, human resources, IT, internal finance and the general management of the strategy of the practice. I look forward to working with the team and directors as we continue to grow and develop into the leading accountancy practice in the East Midlands.”

    David, who will be putting his experience and extensive list of East Midlands contacts to good use, is a well-known figure within the local business scene and is on the Institute of Directors’ Lincolnshire branch committee.

    In his spare time, he enjoys playing at Lincoln Golf Club (handicap 14) and cycling, to keep fit.

    David is married to Joanne and they have a daughter Abigail (19), who is studying business and finance at Sheffield Hallam University.

    Wright Vigar Managing Director Chris Shelbourne said: “We are delighted to welcome David to Wright Vigar, he is a great addition to the team and will bring with him extensive knowledge and experience to support our growth strategy.”