If you are self-employed (as a sole trader or in partnership) you will normally make two payments on account of your self assessment tax liability at the end of January and July each year.

Normally, these payments on account are based on your total self assessment dues for the previous tax year. So, for 2015-16, you will be making payments on account at the end of January and July 2016, based on your total liabilities for 2014-15.

As long as your taxable income does not change significantly, year on year, this system will ensure that your tax liabilities are settled by the on account payments you make (plus or minus small differences if your income varies slightly).

But what happens if you know that your income for 2015-16 is going to be much lower than 2014-15? In this case any payments on account based on the previous tax year’s income will likely result in an overpayment of tax.

If your income is likely to be lower in 2015-16 you should elect to reduce the payments on accounts that you make January and July next year. Your advisor should be able to estimate the amount due, and the necessary reduction in your payments next year. In this way you can avoid overpayments of tax and minimise the cash flow impact on your business cash flow or savings.

If the opposite applies, your taxable income is likely to be more in 2015-16, there is no obligation to offer a higher payment on account. However, you will need to reserve funds to cover any underpayment for this year which will be payable 31 January 2017. 

 1 September 2015 – Due date for Corporation Tax due for the year ended 30 November 2014.

 19 September 2015 – PAYE and NIC deductions due for month ended 5 September 2015. (If you pay your tax electronically the due date is 22 September 2015.)

 19 September 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2015.

 19 September 2015 – CIS tax deducted for the month ended 5 September 2015 is payable by today.

 1 October 2015 – Due date for Corporation Tax due for the year ended 31 December 2014.

 19 October 2015 – PAYE and NIC deductions due for month ended 5 October 2015. (If you pay your tax electronically the due date is 22 October 2015.)

 19 October 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2015.

 19 October 2015 – CIS tax deducted for the month ended 5 October 2015 is payable by today.

  31 October 2015 – Latest date you can file a paper version of your 2015 Self Assessment tax return.

If you own property in the EU you may be advised to revisit your Wills and make sure that you are not affected by the automatic succession rules that apply in many countries. For example, in France it is the usual practice to ensure that property is left to children rather than the surviving spouse.

Recent changes in EU law and practice mean that you can now nominate the jurisdiction that you wish your EU property to be ruled by. This may mean a change to your current Will in the UK, or by creating a second Will to cover your EU property.

 In effect, citizens are able to choose whether the law applicable to their succession should be that of their last habitual residence or that of their nationality.

If you are concerned about the annual cost of a VED license you may want to consider your car replacement options before the new VED regime starts April 2017. It will apply to all cars first registered after 1 April 2017.

From this date, VED will still be based on CO2 emissions, but the present generous rates for low CO2 vehicles will largely disappear. The only exception is zero emission vehicles which will continue to have a £0 charge.

VED will be split into two bands: a starter band, which will apply for the first year, and a standard rate, which will apply to subsequent years of ownership.

The rates gradually increase for the initial starter band. For emissions between 1 to 50g/km the starter rate is just £10. At the other extreme, cars with a CO2 rating in excess of 255g/km, the starter rate is a significant £2,000.

Owners of all vehicles with a CO2 emission rate in excess of 0g/km will then pay an annual, standard rate of £140 for the second and subsequent years of ownership.

Finally, cars with a list price above £40,000 will pay a supplement of £310 a year for the first 5 years at which the standard rate is applied. i.e. the annual standard rate for these vehicles will be £450 not £140.

The Government is undertaking a review of the Sunday Trading legislation. The review aims to deal with the concerns of larger high street retailers, who are concerned that they cannot compete effectively with online retailers unless they are open seven days a week at normal opening hours.

The Government is consulting on plans to give local areas the power to allow large shops to open for longer on Sundays.

The reforms would give metro mayors and local authorities the power to determine Sunday trading rules that reflect the needs of local people and allow shops and high streets to stay open longer and compete with online retailers.

Local authorities would have the discretion to zone which part of their local authority area would benefit from the longer hours, allowing them to boost town centres and high streets.

The existing Sunday trading laws were introduced more than 20 years ago before high-street shops faced competition from online retailers. The law currently prevents large stores from opening for more than 6 hours. Small shops covering less than 3,000 sq ft can open all day.

The Government is committed to giving the UK’s major cities the power to compete for international tourism while increasing consumer choice. Paris has recently extended Sunday trading opening hours in areas of international tourism, and Dubai and New York shops open into the evening 7 days a week.

As we mentioned in last month’s newsletter, from April 2016, the present dividend tax credit of 10% is being abolished and is being replaced with an annual dividend allowance of £5,000.

To recap, dividends received in excess of the £5,000 allowance will be taxed at increasing rates according to your highest rate of Income Tax:

• 7.5% if you are a basic rate taxpayer
• 32.5% if you are a higher rate tax payer, and
• 38.1% if you are an additional rate tax payer.

These changes will make a difference to all limited company shareholder/directors who presently receive a small salary and large dividends. Many will be paying more tax as a result.

We recommend that all affected readers undertake a review of their tax position from April 2016 so that they are aware of the financial impact on their personal disposable income.

But what about tax payers who receive significant dividend income from diverse investments and do not, necessarily, run their own company?

If your dividend income is likely to exceed the £5,000 limit you could consider the following actions to minimise any additional dividend tax:

1. Make sure you use the ISA limit to transfer high dividend yield shares into this tax free environment.
2. Each person will be entitled to the £5,000 relief so spouses could consider equalising their share holdings in an attempt to make the most of their individual £5,000 allowance.
3. As the additional tax, on dividends received in excess of the £5,000 limit, is at higher rates for higher rate and additional rate income tax payers, consider transferring shares to a lower taxed spouse to restrict tax to the lower 7.5% rate.
4. If you are a higher or additional rate tax payer and you have significant dividend income, you could look for ways to reduce your overall taxable income and therefore reduce an additional dividend tax charge. For example, by deferring withdrawals from a drawdown pension.

If it is likely that you will be crossing the £5,000 Rubicon next year, now is the time to plan an effective tax mitigation strategy. Please call if you would like our assistance.