Navigating the intricacies of Inheritance Tax (IHT) can be daunting, but understanding the available gift exemptions and strategic planning can significantly reduce potential liabilities. By effectively utilising annual allowances, small gift exemptions, and planning for special occasions, you can ensure more of your wealth is passed on to your loved ones tax-free.

There is an annual Inheritance Tax exemption of £3,000 for gifts, which can be carried forward to the following tax year if not fully utilised. This allows for a maximum gift of £6,000 within a qualifying two-year period. Additionally, you can give as many gifts of up to £250 per person as you wish throughout the tax year, provided you have not already used another exemption for the same individual. There are also special allowances for gifts made on the occasion of a wedding or civil ceremony. These gifts are excluded from the Inheritance Tax calculations in the event of the donor’s death within seven years of making the gift.

Wealthier individuals may also have the ability to make tax-exempt gifts and payments that are funded from their income. With proper planning, this can be an effective strategy, allowing grandparents, for example, to contribute towards their grandchildren’s school fees without incurring tax liabilities.

However, careful planning and consideration are essential to ensure that these payments are deemed to be part of the transferor’s normal expenditure and are made from income rather than from capital. It is also important to ensure that the transferor retains enough income to maintain their usual standard of living after making the gift, as the arrangement must not cause any financial hardship to the giver.

Even if you have never been employed, you might have been eligible for NI credits without realising it. For example, if you have been a carer for a sick or disabled person for more than 20 hours a week, you could have claimed Carer's Credit. Similarly, if you have been receiving certain benefits, such as Jobseeker's Allowance or Employment and Support Allowance, you might have automatically received NI credits.

It's a good idea to review your personal history to see if there are any periods where you might have been eligible for NI credits. If you identify such periods, you can contact the HM Revenue and Customs (HMRC) to see if your NI record can be updated accordingly.

Paying Voluntary Contributions

If you are below the State Pension age and have gaps in your NI record, you can choose to pay voluntary contributions to boost your State Pension entitlement. This can be particularly beneficial if you have some qualifying years but not enough to reach the 10-year minimum.

Before deciding to pay voluntary contributions, it's important to:

• Check Your National Insurance Record: This will show you any gaps in your contributions and how they affect your State Pension forecast.
• Evaluate the Cost: Voluntary contributions come at a cost, so you'll need to assess whether the potential increase in your State Pension is worth the expense.
• Consider Your Health and Life Expectancy: If you're in poor health, it might not be financially beneficial to make voluntary contributions.

You can find more information on paying voluntary NI contributions on the GOV.UK website.

Deciding whether to incorporate your business in the UK involves evaluating several key factors:

Limited Liability Protection

Incorporating as a limited company creates a separate legal entity, safeguarding your personal assets from business debts and liabilities. This means your personal finances remain protected if the business faces financial difficulties.

Tax Implications

Operating as a limited company can offer tax advantages. Companies pay Corporation Tax on all trading profits at a maximum rate of 25%; for smaller companies, this rate can be as low as 19%. Additionally, dividends distributed to shareholders are not subject to National Insurance, potentially providing a more tax-efficient method of remuneration.

Administrative Responsibilities

Incorporation brings increased administrative duties, including:

• Regulatory Compliance: Registering with Companies House, filing annual accounts, and submitting confirmation statements are mandatory.
• Record Keeping: Maintaining detailed financial records is essential to meet legal obligations.
• Costs: Expenses include registration fees and potential professional services for compliance.

Professional Image and Credibility

A limited company structure can enhance your business's credibility, potentially attracting more clients and investors. This formal structure often instils greater confidence among stakeholders.

Business Growth and Investment

Incorporation facilitates business expansion by allowing:

• Equity Sharing: Issuing shares to raise capital from investors.
• Succession Planning: Simplifying ownership transfer, ensuring business continuity.

Conclusion

Incorporating your business offers benefits like limited liability and potential tax efficiencies but comes with added administrative responsibilities. It's crucial to assess your specific circumstances, financial goals, and the current economic environment. Please call if you need help considering your options.

The Construction Industry Scheme (CIS) requires contractors to deduct tax from subcontractor payments and file monthly returns with HMRC. Even if no payments are made, nil returns must be submitted to avoid penalties.

The CIS is a specialised set of rules governing tax and national insurance for individuals working within the construction industry. This scheme specifically applies to businesses operating as 'contractors' and 'subcontractors' within the construction sector. Under the provisions of the scheme, contractors are required to deduct money from a subcontractor’s payments and pass it to HMRC. The deductions count as advance payments towards the subcontractor’s tax and National Insurance.

One of the primary responsibilities for contractors under the CIS is the submission of monthly returns, which must be completed and filed online. These returns correspond to each tax month, which runs from the 6th day of one month to the 5th day of the following month. The deadline for submitting these returns is 14 days after the conclusion of each tax month.

It is important to note that even if no subcontractors have been paid during a particular tax month, contractors are still required to file a 'nil return.' The necessity to submit returns must be met regardless of whether the contractor typically submits PAYE returns on a quarterly basis. Contractors can file their monthly returns using the HMRC CIS online service or through commercial CIS software. Failure to submit the required returns on time may result in penalties and interest charges.

In cases where a contractor has not made any payments to subcontractors during a given tax month, they are still obligated to submit a 'CIS nil return' or inform HMRC that no return is necessary. Should this 'nil return' situation become a long-term occurrence, contractors have the option to request a period of inactivity from HMRC. This request indicates that the contractor has temporarily ceased employing subcontractors and lasts for a period of six months. It is important to notify HMRC if subcontractor payments resume within this time frame, as this could affect the contractor’s obligations under the scheme.

Contractors are defined as those who make payments to subcontractors for construction work or who have spent more than £3 million on construction in the 12 months following their first payment under the scheme.

Health professionals providing medical services may be exempt from VAT if their work falls within their registered profession and primarily protects, maintains, or restores health. HMRC outlines specific exempt services, including diagnosis and treatment.

The VAT liability of goods and services provided by registered health, medical, and paramedical professionals, can be a complex area of tax law. HMRC’s guidance provides clarification on the definition of medical services and outlines the specific health services performed by registered professionals that are exempt from VAT.

If a health professional, as defined by HMRC, provides services, those services are generally exempt from VAT, provided that both of the following conditions are satisfied:

1. The services fall within the profession in which you are registered to practice.
2. The primary purpose of the services is the protection, maintenance, or restoration of the health of the individual concerned.

For VAT purposes, the definition of medical services (including medical care and treatment) is limited to those that meet the second condition outlined above. This includes services such as the diagnosis of illnesses, the provision of analyses of scans or samples, and assisting a health professional, hospital, or similar institution in making a diagnosis.

HMRC provides examples of services that are considered to meet the primary purpose of protecting, maintaining, or restoring a person’s health. These include:

• Health services provided under General Medical Services (GMS), Personal Medical Services, Alternative Provider Medical Services, General Dental Services, and Personal Dental Services contracts
• Sight testing and prescribing by opticians (limited to England, Wales, and Northern Ireland)
• Primary and secondary eye examinations (limited to Scotland)
• Enhanced eye health services
• Laser eye surgery
• Hearing tests
• Treatment provided by osteopaths and chiropractors
• Nursing care provided in a patient’s own home
• Pharmaceutical advice
• Services involving the diagnosis of an illness or the provision of analyses of samples that are a key part of a diagnosis

Additionally, certain insurance or education-related services may also be exempt from VAT, regardless of their primary purpose, as they could qualify under other independent exemptions.