IT may seem premature to be talking about end of tax year planning in but that is not necessarily the case.
From a practical point of view, most of the information that you need for your 2014 tax return will be based on values as of December 31. This is true for income, capital gains and wealth taxes, with additional reporting under M720 of capital values of overseas assets as of that date.
All very tiresome, but if you are ready in advance you can request information from the various providers and banks and won’t be scrabbling around at the last minute next March or June.
That having been said, there is an even greater opportunity to simplify many aspects of this burden on an on-going basis, particularly the M720 requirements. This is by undertaking a bit of financial housekeeping and re-engineering – and while you could argue that this would have been better done earlier in the year – it is not too late to make improvements now.
As regular readers will know, I have often advocated the merits of a structured financial planning review, which in itself would look at many aspects to be taken into account, including things like aims and long term objectives, sensitivities and concerns, income needs and succession planning. All that before we start to think about sensible investment returns and tax minimisation, themselves all part of the wider financial planning that should be considered.
So how does this link with preparing for the tax year end? As you think about the things you will need to report and consider the places you have your capital – or from where you are receiving income – it should raise one simple question: is there a better way?
Could you, for example, reduce the amount of tax you pay on the income you receive or avoid paying capital gains tax on disposal of some investments? Is it possible to reduce the amount you have to include on the M720 return and could you reduce the amount of inheritance tax that might be payable one day? The answer in each and every case is ‘Yes’, but there is no universal answer – individual circumstances will always differ.
My suggestion is therefore a simple one. As the nights draw in, why not put some time into looking at how your current finances are arranged and if they have not been reviewed for a year or more, take the opportunity to have a full financial review.
A word of caution as always – make sure your adviser is properly qualified, regulated and fully independent and that he is not working for an organisation that has a ‘one size fits all approach’ and that pays high commission on new business rather than sensible charges for advice provided.