Tag: finance

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Understanding the 60% Tax Trap: Strategies to Mitigate Liability

bruceandholly
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It’s that time of year again. The P60s have arrived. So it’s time to get on with filing that self-assessment tax return. Why do so many people leave it to the last minute? I just don’t understand. I’ve already generated mine using the Government Gateway. It’s the second year I’ve used it to file my tax return. So much easier than going through an accountant as I had done in previous years. It means that I can rely on my own calculations instead of double-checking someone else’s arithmetic.

Of course not everyone has to file a self-assessment tax return. Only about one in three of us. But if filling out a tax return seems tiresome, at least it gives you an opportunity to review your tax affairs and make sure that you are only paying what you are required to pay. Nothing more. So remember to deduct those professional subscriptions. There are also some new kids on the block with which all of us need to be aware. One of them is not so new but it has just come to prominence because it is catching out so many people. About 2 million of us. I’m talking about the 60% tax trap.

The 60% tax trap was introduced in 2010 and applies if, taken together, your gross taxable income tops £100,000 but does not quite reach the 45% threshold which kicks in on anything above £125,000. Anything in between is doubly taxed because it is not only within the 40% higher rate tax band but you are also losing a deduction of £1 on your personal allowance for every £2 you earn above £100,000. Here are a few ways to mitigate that tax liability:

  • If you are below State pension age, increase your voluntary pension contributions sufficiently to bring your taxable pay below the £100,000 threshold.
  • Increase any Gift Aid charitable contributions you make, to reduce your taxable income. Giving to charity means that you CHOOSE who spends your hard earned money instead of having it taken out of your wage packet and wasted on something over which you have no control. Remember also that for every £40 you contribute in gift aid, your chosen charity gets £100
  • Think twice before working those extra hours. What is the point if you are going to lose 60% in tax?

There are other changes in the offing. Like a requirement for some self-employed business people and landlords to submit quarterly returns. Isn’t that another reason to get out of the residential lettings market? The government calls it ‘making tax digital’. I thought that my tax was already digital when I logged onto the Government Gateway

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UK Procurement: Supporting Local Businesses Through New Legislation

bruceandholly
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I’m always astonished that any industry still exists in the UK, with the highest energy costs in the world and successive governments which, for as long as I can remember, have been too quick to procure goods and services from abroad, even when it means the loss of UK jobs. Whatever happened to a level playing field? It’s also why I’m encouraged by the Local Government (Exclusion of Non-Commercial Considerations) (England) Order 2026, which allows local authorities to favour either UK companies or those which are locally based, when making procurement decisions. But the new legislation has its limitations:

  • The ability to favour local industry or that which is UK based only applies to the lowest tier of procurement which does not have to go out to formal tender. This means supplies or services contracts with a value under £207,720 and works contracts which are under £5,193,000
  • The legislation is permissive. which means that councils are under no obligation to favour local business or that which is UK based. Any council which wishes to use the legislation must update its contract standing orders to allow it to do so and also make clear in any advertisement that bidding is limited to UK companies or those which are locally based
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Share Tips from a Micro-Investor – November 2025

bruceandholly
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Ceres Power Holdings is my star performer for November 2025. A rise in the share price of more than 100% in just over 2 months. Even Rolls-Royce can’t beat that. Which gives me a dilemma. Do I cash in part of my shareholding to lock in the profit? Or do I hold my nerve? Just like playing Blackjack. Another card please! But I’ve got a hunch that it’s gone as high as it’s going to go. So I’d better cash in 50% and play the rest. It’s a mistake I made with Rolls-Royce when their shares hit 200%, and I cashed in 50% of my holding and played the rest. If I’d held my nerve, I might have got 100% of 650%. Because that’s how high Rolls Royce shares have flown. But I’m not complaining.

I’ve never understood why so many people get addicted to online gambling. Playing the stock market is so much more fun. Even when I’m gambling with small change. When Bloomsbury Publishing’s share price increased 100%, I cashed in 50% of my holding. I’m glad I did. After that the share price began to tumble and I sold the rest of my holding a couple of weeks later. I also had lucky escapes with Cineworld and Boohoo

Three months ago I’d never even heard of Ceres Power Holdings, until I was looking for some renewable energy companies in which to invest. I certainly haven’t seen it being tipped anywhere.

At a time when so many major UK pharmaceuticals are planning to upsticks and move their operations to the United States, it is also refreshing to see that some companies are still listing on the London Stock Market. The three new listings are Shawbrook Bank; Beauty Tech and Princes Group. What attracts me about Shawbrook is that it is a bank with a focus on small business finance. And what can I say about Princes Group? Except that I just love a tuna sandwich. So far I have been unsuccessful in my attempts to buy shares in these new listings through my share ISA. But that may only be because those shares are so new. I’ll keep trying.

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Share Tips from a Micro Investor (October 2025)

bruceandholly
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When a share has been tipped, it is already too late. Everybody is piling in. So the skill for anyone with a share ISA is to use their own gut feelings to try to identify those shares which may be tipped in the future. For me, it is not so much following recommendations but that crucial zigzag line. Is it creeping upwards? Or is it beginning to plateau? One of the things I’ve noticed is that the best time to buy a share is about 8.45am on a weekday, when adjustments have factored in and the share price is at its lowest. I also think that it’s important to have an awareness of world events and how these are likely to affect share prices over the medium term. That’s not to say that I’ve never followed up share-tips.

As a fledgling investor in the years before covid crashed the markets, it was an Investors Chronicle tip which prompted me to buy some shares in Rolls-Royce. The value of which has since increased six fold. My only regret is that after they had doubled, I sold about 40% of the stock in the expectation that the rise could not continue. But it did. And more. That was followed by another Investors Chronicle share tip, which prompted me to invest in BAC Industries.

Then came Russia’s invasion of Ukraine. And America’s shakiness over its continued Nato commitment, which Britain had foolishly taken for granted, when its own military capability was hollowed out in the Cameron years. Things like an aircraft carrier without any aircraft because what had remained of Britain’s harrier fleet had their wings cut off. What was the sense in that? It was in response to that dangerous madness that I invested a few hundred pounds in Scotland based Babcock International Group, which I had discovered from my own research and whose share price has also risen

I am an ethical investor. I try to invest in companies which either manufacture in the UK or which source UK manufactured products. It is those companies which create our jobs. Something I don’t understand is why Ed Milband’s green energy revolution is so dependent on Chinese manufactured hardware. It is why, a couple of months back, I looked around for companies which manufactured energy renewable hardware in the UK. I came up with three companies in which I invested. Of those, my most successful investment has been Ceres, which has seen a significant rise in its share price. One of the things I’ve never understood, is why European economies impose ever increasing regulation on their own domestic industries whilst at the same time allowing those same domestic industries to be undercut by countries whose workforce do not enjoy the same employment protections. In some cases even with a suspicion that slave labour has been used in the manufacture of those outsourced products. What is the excuse for anyone importing anything made by slave labour? I’m reminded of the 18th century sugar boycotts. Maybe we should learn something from that. My ethics will also not allow me to invest in banks, finance companies, investment trusts or online gambling. Forget it!

But investing in UK manufacturing or companies which source UK manufactured products, is becoming ever harder to do. I noticed that since Trump’s tariffs came into effect, many UK pharmaceuticals are planning to up-sticks and move their operations across to the United States. I can also see that happening in the future with the UK film industry, which is now facing 100% tariffs from the United States. Only a week back, I invested in Pensana, one of the few companies outside China which specialises in the extraction and refining of rare earths, of which China currently has a 90% monopoly. It is those rare earths which are critical to the UK’s development of it’s own high-tech. Then a couple of days ago, I read that Pensana had cancelled its project to build a UK rare earth refinery because it is getting a much better deal if it relocates to America. I’m not sure how this is going to affect its share price. I might just hang in there and see what happens. At the moment it’s all a bit volatile.

Faced with tariffs not only from America but also from Europe, particularly as regards UK steel production, it would seem to me that the only way our government can protect British manufacturing from annihilation is to use its own buying power to increase the domestic market. By insisting that government departments and others in the public sector, source manufactured products only from UK companies where it is possible to do so in preference over cheaper products from elsewhere. Why not? That is what Trump is doing. And we are seeing it work for the American economy. Our public sector is also in a unique position to do that. Wake up! Ed Miliband!

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Stamp Duty Land Tax – When it all goes wrong

bruceandholly
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Since it replaced the centuries old Stamp Duty in 2003, Stamp Duty Land Tax has become one of the UK’s most complex taxes.

Within 14 days of completion of any significant property transaction, it is the responsibility of the buyer or leaseholder to file a stamp stamp duty land tax return and pay any applicable duty on the transaction. This is usually uploaded electronically by the conveyancer who completed the purchase, save that legal responsibility for ensuring that everything contained within the return is correct and that the correct duty is paid, is placed firmly on the client-purchaser, not the conveyancer who acted on the purchase.

In terms of complexity, a stamp duty land tax return can be compared with any complex self-assessment tax return. And it is the responsibility of the taxpayer to get it right as in most cases, HMRC take the information provided on trust unless there is something specific which raises query.

Most purchaser – clients are not tax experts and will rely on the advice given by their conveyancer as to how much stamp duty land tax they will be required to pay. However they must still make sure that the information they provide to the lawyer is correct, particularly as regards any second homes. Once the client has seen and approved the draft stamp duty land tax tax return, the conveyancer will upload it on the HMRC portal. Almost instantaneously, that conveyancer will receive back an electronic certificate in form SDLT5, confirming that the stamp duy tax return has been uploaded and received, even if the duty itself has not yet been paid. It is that SDLT5 which will then enable the conveyancer to register the transaction and pay the stamp duty from money held on account from the particular client. There are also some cases involving trusts, where the issues are so complex, that the conveyancer should advise their client to seek specialist tax advice before approving the stamp land tax return for upload.

Because of the complexity of some conveyancing transactions, there is always a risk of miscalculating the amount of duty chargeable on a particular transaction. The risk applies both ways. There’s firstly the risk that you may overpay stamp duty on a transaction because your conveyancer has not identified a legitimate relief to which you are entitled. Or you may accidentally fail to declare something which would otherwise have had the effect of increasing the tax liability which would otherwise be payable. Either way, the mistake is expensive.