Income Tax
Income tax is the tax payable on income earned in the tax year which runs from 6 April to 5 April. Income is broadly split into three categories; interest income, dividend income and all other income which is called non savings income.
Due to the different rates and allowances of income tax it can be difficult to calculate net figures for income purposes.
Personal tax advice: how we can help
You can instruct Sofia Thomas to calculate net income, projected income or to advise on the most tax efficient way to extract money out of a company.
Sofia Thomas also has extensive experience with HMRC investigations and HMRC administrations and can work with your clients to true up and rectify any outstanding tax issues ahead of proceedings.
Pensions
In recent years the annual allowance charge and lifetime allowance charge have added layers of complexity to an already complex area of income tax savings. The Office of Tax Simplification recently highlighted the tax risks associated with pension sharing reports where the sharing order results in a breach of the lifetime allowance. If instructing a pensions expert it’s advisable to seek tax advice to compliment the report.
Sole Traders
Sole traders can draw their accounts up to any period in the year and this is the income which is assessed on the tax return. If a sole trader is in their first 4 years of trading or the last 3 years of trading the rules for determining taxable income change. It will be important to understand the final net and accurate figure.
Dividends
Limited companies often take advantage of paying directors via dividends due to the lower rates of tax they attract. Whilst this tax planning is common place it is important to be aware of the potential pitfalls that may occur when going through divorce. These include the risks of attaching a maintenance order to dividends and any historical issues if dividends have been declared to the former spouse but not paid.
