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Posts tagged “financial advice

Child Benefit – will you be liable for extra tax?

Welcome to the Hill Lillis & Company Monthly Tax Tips.

You may not be totally aware of a tax change which comes into force from January 2013. The new rules, which are expected to affect approximately 1.2 million families, will apply to those in receipt of child benefit where the income of one or both partners exceeds £50,000 per annum.  In these circumstances, the partner with the highest income will be liable for ‘The Higher Income Child Benefit Charge’.  This is a tax charge which is computed on a gradual scale, whereby when the higher-paid partner’s income is above £60,000 the child benefit received by the family will be fully re-charged.

We foresee that difficulties are going to arise when there are changes in the family circumstances during a tax year (e.g. separation or divorce) or where there is uncertainty over who is the highest earner (perhaps because one partner receives occasional bonuses). It is worth stressing that the person who is expected to pay the charge is not necessarily the same person who receives the child benefit.

HM Revenue & Customs are investing a great deal of money and staff resources in pursuing this new ‘Tax’ and families could be liable to penalties and surcharges if they do not take the appropriate action to ensure their circumstances are notified when applicable.  This does mean having to register for Self-Assessment and file annual Tax Returns.

If your income is very close to the thresholds, you may wish to consider how you can reduce it for these purposes, perhaps by making additional pension contributions or Gift Aid donations.

Alternatively you may decide it is simpler to elect not to receive child benefit; however if one partner is a non-working carer, what will be the impact on their National Insurance record for future state benefits?

We offer a free 30 minute consultation, so if you would like any additional information regarding the above or any other tax issues concerning you, then please contact us 0121 351 6777 or visit us in our offices in Walmley Village, Walmley, Sutton Coldfield.

This article appears in Walmley Pages Magazine, delivered to over 8,000 homes and businesses, in Walmley and surrounding areas of Sutton Coldfield


PAYE Code numbers and PAYE Reconciliations – Tax Tips

Welcome to the Hill Lillis & Company Tax Tips.

Tax and National Insurance deductions are made at source from most taxpayers in the UK through the PAYE scheme.  Each employee (or pensioner) is allocated a tax code which the employer uses to calculate the deductions to be made. If your affairs are straight forward then your code is likely to be 810L which indicates you are entitled to the basic personal allowances of £ 8,105.

However if your tax affairs are more complex, you code may be very different as HMRC seek to collect the tax due on sources of untaxed income or make other adjustments. Some of the most common adjustments are for the benefits you receive from your employment (such as a company car or private medical insurance), whereas pensioners may see a restriction in respect of the State Retirement pension they receive which is never taxed at source.

Often these adjustments are estimated, based on information supplied in previous tax years, and problems can arise where someone has multiple employments or pensions, so it is understandable that on occasions the tax collected is not always correct. Therefore after each tax year HMRC issue many PAYE reconciliations (on form P800) showing how they have computed the under or over deduction of tax.

Our experience shows that there has been a great deal of distress caused by HMRC unexpectedly issuing  PAYE reconciliations covering  several years’  tax arrears, and we note that often there are errors on these calculations. We recommend you check them carefully, and seek advice if you think there is a problem.

We offer a free 30 minute consultation, so if you would like any additional information regarding the above or any other tax issues concerning you, then please contact us 0121 351 6777 or visit us in our offices in Walmley Village, Sutton Coldfield.

This article features in Walmley Pages Magazine, delivered to residents in

Walmey and surrounding areas of Sutton Coldfield.


Personal Allowances – Tax Tips for Sutton Coldfield Residents

Welcome to the Hill Lillis & Company Tax Tips. As a local accountancy and tax practice we will be providing a short, monthly article outlining tax problem areas and our suggestions on what you can do to resolve the issues.

Everyone with income below £100,000 is entitled to a full personal income tax allowance of £8,105 for the current tax year. However if you are over the age of 65 and your income from all sources is less than £25,400  you can claim an increased allowance of £10,500, and if you are over 75 years old the allowance is increased to £10,660. Any income above these levels is taxable, and at present the tax rates are 20% up to £34,370; 40% up to £150,000 and 50% above that level.

Each person within a family is individually entitled to personal allowances, so it is worthwhile regularly reviewing your situation, so that you  make best use of everyone’s allowances.

If family assets are owned jointly, then the default position is that the income should be declared by the owners equally. However in some circumstances you can make an election to confirm that both the underlying capital and income is shared in different proportions.

So, where there is an inequality between the level of income and tax rates being paid by spouses, you may wish to consider how you allocate assets, perhaps by transferring the assets generating the highest levels of income to the partner who pays the lowest levels of tax.

We offer a free 30 minute consultation, so if you would like any additional information regarding the above or any other tax issues concerning you, then please contact us 0121 351 6777 or visit us in our offices in Walmley Village, Sutton Coldfield.

This article appeared in Walmley Pages Magazine, delivered each month to over 4000 homes in

Walmley and surrounding areas of Sutton Coldfield.