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Pre-Budget Report
The Chancellor's so-called Pre-Budget report is now an established procedure with one of its key objectives being to launch national debates on taxation and economic issues.
Highlights this year include:
- VAT registration threshold to increase in line with inflation.
- Increased state pensions and Minimum Income Guarantees for pensioners.
- ISA (Individual Savings Account) limit retained at £7,000 p.a. and to be available to 16-18 year olds from April 2001.
- Various measures on transport/fuel including excise duty abolished on tractors and reduced by £55 for cars smaller than 1500cc.
Information Technology (IT) Matters!
In a recent survey of software in use within Chartered Accountants practices, Digita - Taxability Pro performed the best of the top seven brands, scoring 22.3 points from a maximum of 25. We are proud to report that it is Digita software, which is used at Greenwood Barton & Co for clients tax affairs.
As regards accountancy software, the market is indeed dominated by Sage. We provide full supply, installation, training and ongoing support for leading products.
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Inheritance Tax
There is an old saying that "In life nothing is more certain than death and taxes" (Benjamin Franklin). The truth of the matter is that unfortunately the two things can actually arise at the same time!
Under IHT rules and subject to exemptions/reliefs the first £234,000 of an estate on death is not taxed, however, any excess is taxable at 40%. A person's estate will basically also include a cumulative total of any non-exempt gifts made within 7 years of death. With personal belongings and property to be included, the nil rate band can soon be exceeded so what can we all do to maximise the receipt by our intended beneficiaries and deny the taxman:
- The first consideration might be to make use of your PET's. In this context PET stands for Potentially Exempt Transfer. This is a transfer where no tax falls due at the time of the gift itself, however, it is only potentially exempt because if the donor dies within seven years then the value is added back to the estate for IHT purposes.
- Certain gifts from capital, including an amount of £3,000 per person, per annum are exempt.
- Dividing assets between yourself and your spouse and making appropriate Wills can ensure maximum advantage is taken of both nil rate bands.
- Ensuring pensions and life insurance arrangements are "written in trust" such that benefits fall outside the estate is generally also a sensible move.
- More complex tax planning including the use of trusts can also be considered.
IHT is often referred to as a voluntary tax because by planning ahead major savings of tax can be achieved.
If you would welcome a more detailed summary of the IHT regime please contact us for details.
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