Nobody wants to pay more tax than they have to. Tax rules and legislation are constantly changing, which can make it difficult to keep up. With the changes made to the way dividends are taxed, which came into action in the 2016/17 tax year, it has become clear that even HMRC haven’t been able to keep up with their own rules.
An implication of the changes to dividend tax is there are more effective ways to allocate personal allowances. Previously, personal allowances were generally set against a taxpayers “non-savings income” which is employment income, self-employment income, income from rental property etc. because it was most beneficial, but that is no longer always the case.
How we saved our client £600
As the new tax year has begun, here at Rosslyn Associates, we have started preparing 2016/17 tax returns. While preparing a return we noticed a significant difference in tax due depending on whether we set a client’s personal allowance against their employment income or their dividend income. – a difference of around £600! Thankfully we checked this out and the software we use enables us to complete tax returns in the most tax efficient way for our clients.
HMRC software making you pay more!
We filled out the same return on HMRC’s online tax return software to see if it gave the same figure. Had the client used HMRC’s website to complete their return, the client would be paying £600 extra tax which they did not owe. Increasing the clients tax bill from around £1,100 to £1,700!
We can help you save tax
This got us thinking – how many other similar situations like this are there? Many people may be paying too much tax without even realising it, due to the changes to legislation and HMRC’s software not keeping up!
If you feel that you may be in a similar situation, are confused by all the new changes or simply want to be confident that you are not paying too much tax, get in touch! At Rosslyn Associates, we take care exploring all the options to ensure that you pay no more tax than you have to. Giving you peace of mind.
Get in touch for more information and to find out if we can help you save tax. Give us a call on 0131 445 1825 or email firstname.lastname@example.org