2020 has been a year of unprecedented world events. We have all had to adapt and live in a different way to ensure that we minimise the risk to ourselves and others to coronavirus.
In addition to mitigating the risk to health we can also mitigate our financial risk by keeping a close eye on our financial wellbeing in difficult times
To help, we have set out four simple measures that you should be taking now to help you get your tax position right in what is a very unsettling time.
Here are a couple of things you can address now to help yourself keep financially fit.
Complete your tax return
If you are working from home and saving time on a commute, why not take the time to get together all your tax return information? Do it now and don't put it off until later in the year!
- If you have a liability for the 2019/20 tax year and / or a payment on account due for 2020/21 it will give you time to manage your cashflow more effectively; or
- If you are in a repayment position, then claiming the refund now, could aid your cashflow.
Make all claims for tax relief
It is important that all allowable reliefs are claimed. This could include claiming relief for losses on your business, accelerating gift aid relief or perhaps looking to maximise pension contributions.
Check you have claimed any extra help
- Did you claim the self employed grant and the follow up? Might you be eligible for the next round of help for the self employed?
- If your income has dropped maybe you will now qualify for child benefit? A claim for this can only be backdated 3 months.
- Perhaps your income has dropped to the point where tax credits could be claimed? A protective claim may be worthwhile in case things do not improve next year.
Review the losses on your investments
Due to the current economic climate you may have incurred losses on some of your investments or they may be showing as having no value. Lovetts can help review these for you to make sure that all available losses are claimed and in the most beneficial manner. Some examples are:
- Capital loss against income: You may have disposed of shares in a business at a loss. This will normally be a capital loss with relief being given against any other capital gains that you have made (relief at up to 20%). However, in certain circumstances the loss could be relieved against your income rather than capital gains. For a higher rate or additional rate taxpayer, this could more than double the amount of relief received (up to 45%).
- Shares are worthless:Where shares are worthless, but are still held, it may be possible to make a claim to crystallise the loss. This could allow the loss to be made in an earlier tax year than would otherwise be the case.
- Loans to traders:Where certain loans have been made to a business and that loan becomes irrecoverable (possibly because the business has failed) a capital loss can be claimed to offset your other chargeable gains. If you have made loans that will not be repaid Lovetts can review these for you to determine what tax relief may be available.
Please contact us if you have any concerns or questions about your personal tax affairs and we will be happy to help you.