ARE YOU A HIGH EARNER?
If you earn over £100,000 in a tax year, you’re considered a high earner and you will need to file a Self-Assessment tax return; this is also required if you are self-employed or are a partner in a business partnership. If you don’t usually send a tax return, you will need to register by 5th October, following the tax year you received the income.
As soon as you start earning over the £100,000 threshold, you gradually lose your £12,570 tax-free personal allowance. As a high earner, you will usually have more than one source of income which makes things more complex. This usually draws the attention of HMRC who will want to make sure that all income is reported, and all the tax deemed to be owed, is paid.
In addition, if you are self-employed, a company director, or have other sources of income such as rental income or foreign income, you may need to file a tax return even if your earnings are below £100,000.
It is important to remember that the deadline for filing your self-assessment tax return online is 31st January, following the end of the tax year the income is received. Late filing may result in penalties, so it is important you meet the deadline.
If you are unsure whether you need to file a tax return, please get in touch and we will be happy to discuss this with you and make recommendations where appropriate.
SIMPLER WILLS ARE THE FUTURE!
In August 2020, the Law Commission released a report proposing several changes to the law surrounding the making of Wills, including recommendations to simplify the process of creating a Will, make it more accessible to a wider range of people, and ensure that people’s wishes are more likely to be carried out accurately after their death.
Following its suspension in 2021, the Law Commission has now resumed its work on the project and is planning an additional consultation in September 2023.
Some of the key proposals put forward by the Law Commission were:
- Electronic Wills – Electronic Wills would allow people to make and sign their Wills online, using electronic signatures, without the need for physical witnesses
- Flexibility – The proposed changes would allow courts to take a more relaxed approach to these formalities in certain circumstances, such as when a Will is clearly intended to be a person’s final testament and there is clear evidence of their wishes.
- Revocation – The proposed changes would allow a Will to be revoked by a person simply making a new Will, or by carrying out some other clear act that shows their intention to revoke the original Will.
- Presuming capacity – A person would be presumed to have the capacity to make a Will unless proven otherwise.
- Electronic Will register – The introduction of a system of electronic Will registers and the simplification of the rules governing the interpretation of Wills.
At Penguin, we pride ourselves on offering a comprehensive service to our clients, and this includes keeping up to date with the latest changes to the law surrounding Wills. If you have any questions about the proposed changes or if you would like to discuss creating a new Will for you, or someone you know, please do not hesitate to contact us.
INVESTMENT BRAIN TRAINING
The past few years have been a bit of a rollercoaster in terms of market movements, and we can’t really be surprised with everything that’s been happening around the globe. But these types of events, understandably, don’t exactly make any of us jump for joy.
The way that the brain works means that positive events are only recorded by half of the brain, so we end up needing way more good things to happen to us than bad things, just for it to seem balanced!
In terms of investing, this means we are all much more affected by negative market movements than positive ones.
Look at the markets less. It is that simple. If you are checking your portfolio every day, then stop. On any given day, the market is as likely to be down as up, so all you’re doing is tossing a coin to determine how you will feel each day.
If you only check things on an annual basis, then markets will have been performing positively around 75% of the time on average.
If you’re investing with us, rest assured that our Investment team are checking things daily, so you don’t have to!
So, give your brain the day, week, month, and year off.
MAKE SURE YOUR CASH IS COVERED
Whilst the Bank of England is insistent that the UK banking system is secure and we tend to agree, we would always recommend that any deposits held in banks or building societies sit below the Financial Services Compensation Scheme (FSCS) limits. These limits are currently £85,000 per person per institution, and keeping savings under this amount makes sure that all funds are fully covered in case the worst should happen.
The FSCS does allow a temporary balance of up to £1m on deposits from such things as house sales to be held and fully covered for a period of 6 months. More information about this can be found on their website – Temporary high balances | Check your money is protected | FSCS.
As an alternative, NS&I does not have an upper limit for compensation and is 100% covered by the FSCS as it is a government-backed scheme.
If you need advice on your cash holdings, then get in touch and we can discuss and advise what is best for you.
PENSION LIFETIME ALLOWANCE CHANGES KEEP COMING
As more details become clear about the changes in the recent Budget, we thought we would update you on one detail that seemed to slip under the radar.
Lump sum payments from pensions on death that would have been subject to a Lifetime Allowance excess charge, will instead be liable for income tax at the recipient’s marginal rate from April 6, 2023.
The changes HMRC are making place the onus on the beneficiaries or solicitors to determine and relay the tax charge to the pension provider, and then the provider is required to deduct the tax from the excess above the Lifetime Allowance prior to making the payment.
This additional step, whilst it appears insignificant, is highly likely to cause delays in the time it takes for beneficiaries to receive lump sum payments from pensions. This is because the pension scheme will be required to wait for the legal personal representative to confirm the LTA position before it can release funds.
This just highlights the importance of having a trusted and capable solicitor in place to deal with probate and all of the related complications that come with it.
Top three cash ISAs
Please check the terms and conditions before opening any account. If in doubt, consult with your financial adviser directly, as the above is for your information only.
Source: Moneysavingexpert.com 25.04.2023.