Don't overlook the tax year-end deadline

10 March 2016

A review could also establish which year – this one or the next one – is best for claiming deductions for expenditure.

Many individuals focus on 31 January as a key date for personal taxes – but that’s only the date by which tax returns need to be filed. The end of the tax year, 5 April, is another significant deadline for a number of reasons.

  • Many claims and elections need to be filed by that date.
  • The change from one tax year to the next often means a change in tax regime – that is certainly the case for this year.
  • Individuals may have a change in their tax status because of the length of time they have been resident in the UK.

Reliefs and allowances, claims and elections

Reliefs and allowances not fully used by the tax year end will generally be lost. This can include personal allowances, capital gains exemptions, pension reliefs brought forward, ISA allowances and tax efficient investments, to name just a few. However, there is still time to review and make use of these before 5 April.

The final deadline for making claims and elections claims and elections is four years after the end of a tax year. Although many deadlines arise earlier, a number of claims for tax reliefs may still be made for 2011/12, including claims to carry forward capital losses and for relief for overpaid tax resulting from certain errors or mistakes.

So 5 April 2016 is the last chance to look back to ensure everything for 2011/12 is in order. It is also the limit by which HMRC can assess certain income, provided they are aware of it and there has been no careless or deliberate attempt to evade tax.

Changes in tax regime

New rates of tax or new tax regimes often come into force from 6 April; in some cases it is beneficial to make use of the old regime. It will be especially important this year, ending on 5 April 2016, for:

  • high earners to consider making pension contributions;
  • business owners to review the possibility of taking a dividend; and
  • landlords to review the timing of expenditure.

Change in tax status

For non-UK domiciled individuals (non-doms), once they have been resident in the UK at least seven of the previous nine tax years, they need to pay a charge of £30,000 if they wish to use the remittance basis of taxation. This increases to £60,000 after 12 of the previous 14 tax years and to £90,000 after 17 of the previous 20 tax years. Whether it is worth claiming the remittance basis may need review, as there could be opportunities to reorganise overseas financial affairs to avoid this charge.

Those non-doms who will be in their 17th year of residence in the last 20 tax years on 6 April 2016will fall fully within the scope of UK inheritance tax, but it is possible to mitigate this with planning prior to the year end.

Significant changes for non-UK doms come into effect in April 2017 and those affected will need to pay close attention to their overseas financial affairs and the length of time they have been in the UK. There may be opportunities to mitigate some of the impending changes, provided there is time to plan.

The 5 April deadline should not be overlooked. There are key planning opportunities which could be available and a short review can establish whether anything is relevant to personal circumstances.

If you would like to discuss this, please contact Gary Heynes.