The New Tax Year: What The Government Has In Store For Us

The new tax year has started..so what lies ahead?April Blog Tax Picture

Let’s start with the good news.The private sector continues to create over 590,000 extra jobs over the last year and growth in the normal economy (excluding Oil, London Bankers, and the public sector) is relatively healthy. However.. those three sectors are rather large!

The Oil industry and City of London pay a high percentage of our taxes, so the government is still borrowing more money than is prudent; it’s trying to stimulate growth with novel and unconventional policies, nervous times!

Limited Liability Partnerships

Limited liability partnerships are very fashionable in accountancy circles. They are really good because they give loads of flexibility in allocating profits between partners, for commercial reasons….and on occasion for tax planning reasons. The Revenue have noticed that they’re increasingly being used to help people avoid national insurance through what they describe as ‘disguised remuneration’. They announced in the budget that they will review this. So what do we do? We’ll keep ourselves, and our clients, up to date on the latest, but I’d have thought that as long as there are good commercial reasons behind your arrangements you’re unlikely to be disadvantaged.

The Taxman

We need to be careful. In recent years the tax man seems to have been replacing heavy handed investigations with public relations activity. Not without success, I’m quite sure celebrities think of Jimmy Carr’s embarrassment before signing up to high risk tax avoidance schemes! Our understanding is that routine VAT investigations remain common, as do investigations on tax rebates on business losses. For a time the Revenue did limited checks on business records; but it is a struggle to understand how they were cost effective. These have been abandoned, replaced by a form i.e. you’ll be sent a thick questionnaire which you (or more likely we) will fill in.

The answers will determine if you get a formal visit. We have taken out insurance to ensure you don’t suffer extra cost as a result of this work.

An Uncertain Time

Choosing investments remains tricky, the money the government is printing is distorting asset valuations – don’t forget the government has bought (printed) about 1/3 of its own debt over the last few years in particular: Because the government has been buying so much of its own debt there is something of a false market so interest rate are unrealistically low as are annuity rates. Some of the money has spilled into the Stock Market which is doing rather well, the London property market has also boomed (a bubble?).There is some evidence that the property market outside London is showing some signs of life. Beware of inflation, it could pick up quickly. I think the government (of whatever flavour) will use ever more unconventional methods to kick start the economy until they get their fingers burned.

Our advice remains consistent, keep your investments balanced and keep an eye on rising inflation.

jamescolourWith best wishes from James Sheard and all at The Accountancy People.

If you have found this post useful and would like to know more about the advice The Accountancy People have to offer, why not book in for a free consultation in which you can review your finances for the year ahead. Link in with James Sheard, email info@theaccountancypeople.co.uk or phone 0161 947 9207

 

 

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