The new financial year: what you need to know
Peter Fry, Senior Tax Consultant at Professional Fee Protection (PFP), part of the Geo family, shares his tops tips on what to look out for as the financial year comes to a close.
The new financial year: what you need to know
As we come to the end of the current financial year, there are several upcoming changes that brokers should be aware of. I’ve highlighted some of the pivotal changes below so you can remind clients of them in good time.
● It is rumoured that Cash ISAs will cease or be greatly reduced in the new tax year. If this is the way your clients save tax free or are thinking about it, they will need to get cash in by 5th April.
● Capital Gains rates will change from 6th April. If your clients have assets that would have obtained the Business Asset Disposal Relief, they will be paying an extra 4% tax from 6th April on disposals. Can they trigger any sale before that date?
● There is an annual exemption for Capital Gains. It is greatly reduced to only £3,000, but your clients could look at bed and breakfast shares to ensure they have used the full allowance. This is best done by using your spouse in what is called ‘bed and spouse’. To do this, you and your spouse exchange shareholdings by way of sale into the market. While this is called ‘bed and spouse’, it can in fact be done with friends too – so it is not restricted to married people.
● If your client has a Double Cab Pickup as a company vehicle, the rules regarding how they are taxed is changing. They were originally treated as vans with a relatively low benefit charge, but from April they will be treated as cars for tax purposes, greatly increasing the benefit and thus tax charge.
● The rules regarding the taxation of Furnished Holiday Lettings (FHL) change drastically from April. They will be treated as any other letting and will have the reliefs restricted. These were previously deemed as a trade but will no longer be so. It will increase the tax due and will stop reliefs such as the Business Asset Disposal Relief meaning that sales of properties will attract 28% rather than 10% as they currently do.
The end of the financial year is prime time for clients to review their insurance to ensure they align with their current needs and future budgets. Some premiums may be tax deductible so it is worth reviewing before the end of the financial year in order to maximise tax benefits. If your client has had a change in circumstances, their policy needs to reflect this.
Reviewing now gives businesses time to compare policies, negotiate better terms or switch providers before any automatic renewals are triggered. The end of the financial year is also a great time to assess risk – is there a way to mitigate risks in certain areas to reduce insurance premiums?
Geo and PFP are here to help
At Geo and PFP, we can support your accountancy clients with our fee protection product – get in touch with us today to discuss your options.
Our Tax Insurance product covers the accountancy fees incurred when tackling a HMRC Tax Investigation. A tax investigation can be both stressful and expensive, with professional fees often escalating into thousands of pounds. This product provides the reassurance that accountants can support their clients through this difficult time without the client having to worry about unexpected and unbudgeted costs.
PFP has delivered market leading tax advice and fee protection for 40 years, working with 10 of the UK’s top 20 accountancy firms as well as thousands of small and medium sized practices.