Tag: personal-finance

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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.

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Navigating Share ISA: Tips for Tiny Investors

bruceandholly
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I hesitate to use the phrase ‘small investor’. ‘Tiny’ would be better. Even miniscule. I trade out of my share ISA. So what am I telling you?

Always rely on your own research and professional judgement. Don’t be led by what someone else is telling you. Magazines like ‘Investors Chronicle’, are great for generating ideas for someone coming to it new. But remember that as soon as IC recommends a share, its price will shoot up. So take a step back and wait a few weeks before making that decision. Some of the online recommendations always seem to me to be over optimistic, as if they want to pull you in.

I opened up my share Isa about a year before covid. When that struck, my account dipped £5,000 overnight. So did everybody else’s. I wondered whether it might be a great time to buy. But every time I bought a share, thinking that it was already at rock bottom, it would go down a little further. But eventually things picked up, as it did for all of us.

I also try to be an ethical investor. I always try to invest in companies which manufacture in the UK. I also look for geopolitical changes to guide me towards companies in which to invest. Following the recent America and India trade deals, I looked at the whiskey Industries, whom I think are likely to most benefit. Even though I’m not a whiskey drinker. At the moment there’s a lot of news about weight loss drugs and how demand is outstripping supply. So far the only talk is about demands on the NHS. But I guess that it won’t be long before some of the pharmaceutical companies will be launching their own over-the-counter equivalents. So I want to get in there. I wanted to invest in the American company, Eli Lilly, which is a leader in the field, but my Isa platform wouldn’t let me. So I guess that I’m going to have to settle for AstraZeneca.

I’ve also started to look at companies who manufacture renewable energy euipment in the UK. I found a few and have invested.

For me, the most important indicator of a share’s performance is the official graph. As long as the line keeps going up, I will hang in there. But as soon as it begins to plateau, I will think about what I need to do. Maybe it’s time to cash in part of that shareholding and keep running the rest of the shares in that company. When I’m investing in a new share, I try to start with a few hundred pounds to see how it works out. Then, if the value increases, this gambler will shove some more money on the table. Hope this is helpful.

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Top Tips for Filing Your Self-Assessment Tax Return

bruceandholly

I never understand why some people wait until almost the January 31st deadline to submit their self-assessment tax return. Or forget to do it altogether and cop a £100 penalty. I uploaded mine yesterday. And it was easier than I had expected. It’s actually a long time since I last filed my own tax return. I had been using a payroll company to do this. But they stopped providing this service. So I had a choice of either finding another accountant or dealing with it myself. I did the latter.

I always used to fill out my own tax returns using the paper forms which HMRC posted out to me. One day my completed form got lost in the system and I began to worry as I got closer to the submission deadline. Online submission was at that time very new and difficult to navigate. Which was why I gave £150 to the payroll company to file it on my behalf.

Even if you are not required to submit a self-assessment tax return, there may be reasons why it is advantageous to do so, particularly if there are things which you can legitimately deduct from your tax liability, like professional subscriptions. So here are a several tips for anyone who has to fill out a self-assessment tax questionnaire:

  1. Pull together the information and get it in as soon as possible, so that you don’t have to worry about it later. Best time to get it in is as soon as you get your P60 (perhaps more than one if you have a portfolio of jobs). It’s better to know now if something is missing, than later.

2. Keep accurate records so that you have all the information to hand when you fill out the online form, particularly about those legitimate deductibles, like professional subscriptions and training courses. I included in my own tax return a deduction of £177 for sundries. But that deduction could have been much bigger if I had kept better records of business purchases. Like the letter-scale which I purchased several months back from Amazon so that I didn’t have to traipse along to the post office and wait in line every time needed to post a larger item. I’ll make sure that I don’t forget when I fill out next year’s return.

3. Don’t forget those charitable donations which you made through the tax year. Legitimate charities can claim back basic rate tax relief directly on any donations you make. But this doesn’t mean that you can’t set it against higher rate tax by including it as a deductible on your tax return. The effect of a gift aid charitable donation is boost your basic rate threshold to reduce the amount of higher rate tax which you would otherwise pay