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Are you Eligible for the Marriage Allowance?

The Marriage Allowance lets you transfer up to 10% of your Personal Allowance to your husband, wife or civil partner. For the 2015-16 tax year, the maximum amount is £1,060.00 that would reduce their tax by £212.00.

The Personal Allowance is the amount of income that you can earn in a tax year on which there is no Income Tax to pay. For most people, the Personal Allowance is £10,600.00 this year.

However, despite HMRC remaining coy on the uptake, it is clear that only a fraction of the four million couples who could benefit have applied.

In a parliamentary written reply on 3rd March 2016 to this question, Mr David Gauke, the Financial Secretary to the Treasury, stated “400,000 couples have successfully claimed Marriage Allowance” and went on to say that “Eligible couples who haven’t already claimed for the tax year 2015/16 will not lose out as they have until 5th April 2020 to do so”.

You are eligible to claim the Marriage Allowance if all four of the following conditions apply:

Even if you live abroad, you are entitled so long as you receive a Personal Allowance.

If these conditions are met, then you can now apply online at https://www.gov.uk/marriage-allowance.

For the application, you will need your and your partner’s National Insurance numbers.

In addition, you will need a proof of identity that can be:

The £1,060 limit will increase automatically in line with any increase in the Personal Allowance in future tax years.

The Marriage Allowance will continue to transfer automatically until either you or your partner cancels it due to a change in circumstances. Depending on the reason, it will either run to the end of that tax year or can be backdated to the start of the year

If you would like to discuss the Marriage Allowance in particular or your tax affairs in general, please email us at welcome@cooperfaure.co.uk for an initial consultation that is free and without obligation.

Budget 2016 – The Lifetime ISA Explained

There were three standout announcements in the 2016 Budget:

This article looks at the Lifetime ISA, how it will work and whether it could be start of the road to pension reform.

Lifetime ISA accounts will be available from April 2017 for individuals aged between 18 and 40 who will be able to invest up to £4,000 each year up to the age of 50. The government will contribute an annual bonus of 25% of the amount invested.

An eighteen year-old would be able to have contributions of £128,000 matched by the government maximum bonus of £32,000.

However, the Lifetime ISA is for two specific purposes:

Whilst the funds can be accessed for other purposes before the individual’s 60th birthday, the government bonus on this amount together with any interest or growth on this will be lost. In addition, a 5% surcharge would be payable.

For example, if £20,000 of contributions had been made topped up by £5,000 from the government and the ISA had grown in value to £30,000 and the money needed to be retrieved for an unforeseen circumstance, the individual would actually receive £23,750.

On the other hand, the Lifetime ISA offers a tax-efficient method for parents or other relatives to help their heirs. Under current Inheritance Tax rules, the Annual Exemption is £3,000 per donor per year. Therefore, relatives could join together to fund the contributions without these incurring Inheritance Tax.

For those looking to save to save to buy their first home, the Lifetime ISA is extremely attractive. The Lifetime ISA per person not per home, so a couple would each receive a bonus when buying together assuming that it is the first home for them both.

Help to Buy ISAs will be either transferable into the Lifetime ISA or can to be invested in alongside but bear in mind that the bonus from only one scheme can be used in the purchase of the property.

The only concern is there is no indexation of the £450,000 ceiling on the property price and, with annual average property inflation running at 4.8% overall and more than 12.0% in London and part of the South East, this could need to be addressed.

For those looking to save for retirement, the situation is more complex.

Certainly, for the self-employed who are excluded from workplace pension schemes, the Lifetime ISA is a sensible route especially for the high proportion without a private pension.

However, those making contributions to a workplace pension are receiving an equivalent tax relief from the government plus the employer contribution.

On the current minimum contribution ratios, every £8 that the employee pays is topped up by £2 tax relief from the government and £10 from the employer. Ultimately in 2018, employer contribution will reduce to £6 but there will still be overall matched funding to the contribution.

Similarly, standard rate tax payers paying into a private pension scheme are receiving an equivalent tax relief to the Lifetime ISA government contribution. Indeed, higher rate tax payers are receiving substantially more – £2 for every £3 contributed.

This has led many in the pension industry to view the Lifetime ISA as a Trojan Horse on the road to the reform of pension tax relief.

For those with sufficient disposable income, the Lifetime ISA is an option to build a bigger retirement fund in conjunction with their existing pension arrangements.

If you would like to discuss efficient tax planning, the Lifetime ISA or any other aspect of Budget 2016, please email us at welcome@cooperfaure.co.uk.

Budget 2016 and the Business Owner

The Chancellor of the Exchequer used the Budget in the UK to unveil some significant tax changes. Albeit, most of these are pledges for the future.

From April 2017:

Looking further ahead:

There are some measures that have come into immediate effect such as the move to a graduated rate of Stamp Duty on freehold commercial property and leasehold premium transactions.

Finally, a number of measures come into effect from April 2016, the most noteworthy being:

If you would like to discuss how the Budget 2016 or the new measures that come into effect from April 2016 affect you, please email us at welcome@cooperfaure.co.uk for an initial consultation that is free and without obligation.


Tax on Private Pension Contributions

One of the questions that we are often asked is how much can I invest tax-free in a pension scheme each year?

As a result, we thought that it would be useful to give an overview.

Private pension contributions are tax-free up to certain limits which for the current tax year are:

It is important to recognise in this context that earnings are the total taxable income of an individual including dividends, property and investment income.

The contributions can be made into most private pension schemes such as:

The annual allowance applies across all of the schemes into which contributions are made rather than being a per scheme limit. In addition, this figure is for all the contributions made by the individual, their employer or any third party.

However, it is possible to carry back any unused annual allowance from the previous three tax years provided that the individual was a member of a registered pension scheme in those years.

The annual allowance for the 2014-15 tax year was £40,000, for the 2013-14 tax year was £50,000 and for the 2012-13 tax year was £50,000.

There is nothing to prevent contributions above the limits but any additional sums will be taxed as part of the Self-Assessment tax return.

On the other hand, as it stands, tax relief is available on private pension contributions up to 100% of your annual earnings and, therefore, on contributions above the annual allowance. The amount of tax relief is based on the tax band of the individual.

There has been much speculation that this tax relief could be reduced as part of the upcoming Budget and we will include the details of any such change in our Budget Briefing.

If the tax due is more than £2,000, which equates to an additional payment of £5,000 by a tax payer in the Higher Rate tax band, this tax can be paid directly by the pension provider to HMRC from the pension pot.

Similarly, with the lifetime allowance, tax becomes payable once the threshold of £1.25 million is exceeded.  For this, it is important to understand the difference between pension schemes.

Personal, stakeholder and most workplace schemes are designated as ‘Defined Contribution’ where the total monies paid in equate to the lifetime allowance.

However, there are still some workplace schemes that operate on a ‘Defined Benefit’ basis. Here, the initial lump sum plus twenty times the first year pension equates to the lifetime allowance.

If you have any questions or would like any further information, please email us at welcome@cooperfaure.co.uk.

Job Vacancy – Accounts Administration Assistant

CooperFaure Accountants is looking for a full-time Accounts Administration Assistant to join our friendly team in our London office based in Teddington.

The role will suit a confident, friendly and bright individual, with an excellent telephone manner and presentation looking for their first full-time placement in the sector.

We are looking for someone who is reliable and conscientious, with the ability to tackle all aspects of the role with enthusiasm and professionalism. A real eye for detail, a desire to achieve the highest standards and an ability to manage conflicting priorities are highly desirable qualities.

A knowledge of Microsoft Office and an ability to work under your own initiative together with an interest in the field of accountancy are necessary.  Experience using accounting software is desirable, though not a requirement, as full training will be given.

The successful candidate must be able to work in the UK and there will be a three-month probationary period. The role reports to the Accountancy Manager.

Job Description:

Administration Tasks, including but not limited to:

Accounting Tasks, including but not limited to:

We are a growing, independent firm of chartered accountants, based in Teddington, South-West London. The Company was established in 2006 by the two founder Directors to provide a fully comprehensive accounting services platform for any business big or small. From our formation, our key principle is to work with the best. This has involved investing in market-leading technology, suitable premises and information resources. Our team share an enthusiasm to support our clients and bring a range of diverse skills not confined to accountancy.

If this role is of interest, please email your CV to meg.macgill@cooperfaure.co.uk in the first instance.

If you would like to know more about us, please visit our website www.cooperfaure.co.uk