Issue 6

Issue 6

Another Square Circular so soon after the last one! And you thought accountants were too busy in January to think about their clients.

Well, we’re trying you out with a quiz and some of the questions need answers before the end of the tax year, 5 April 2002. In fact one of the questions needs an answer before the end of this month. If we ask the questions now it gives you time to find the answers.

Please don’t think that our quiz is just a light-hearted start to 2002. Each question raises financial and tax planning issues. Some of these matters may be relevant to you.

After you’ve answered all ten questions you can attempt the Back Page Bonus Question. Unless you’re the kind of person who always reads the back page first.

ANY ANSWERS? ANY QUESTIONS?

You are reminded in a Square Circular that if you have a personal pension plan, premiums paid before 31 January 2002 can be related back (by election) to the 2000/01 year of assessment and can pick up unused relief at that time.

Do you:

a. Ignore it. You don’t have a personal plan.
b. Make a carry forward note in your diary for 1st February 2002 so you can consider it then.
c. Call Alexander & Co. on 0161 832 4841 and ask what to do.

You read in a Square Circular that if you make or regularly update a tax efficient Will, you can literally save £thousands of inheritance tax whilst at the same time also ensuring financial security for a surviving spouse. That’s quite apart from making lifetime gifts to utilise inheritance tax exemptions.

Do you:

a. Faint from shock.
b. Ignore it because you think you’re immortal.
c. Call Alexander & Co. on 0161 832 4841 and ask for further details.

You read in a Square Circular that it is good tax planning sense to ensure that either you or your spouse do not waste your personal allowances or your lower rate or basic rate band of tax if the other one of you is a higher rate taxpayer and you should take steps to equalise your income. What’s more, inter-spouse asset transfers before the sale of an asset (quoted company shares for example) can help use two rather than one annual Capital Gains Tax exemption or can ensure that tax on a gain could be paid at a lower rate.

Do you:

a. Get married.
b. Commit bigamy. You’re already married.
c. Contact us (you know the name and telephone number by now) and ask what to do.

You realise that since 5 April 2000 you have been getting absolutely no tax relief at all in respect of interest on mortgage payments on your home.

Do you:

a. Pay off some or all of your mortgage out of spare capital.
b. Leave your capital exactly where it is. Otherwise the mattress would be lumpy on one side.
c. Consider whether it is possible to re-finance and take out a loan for a qualifying purpose.
d. Contact us to discuss these options.

You have a portfolio of equities and read in a Square Circular that whilst you haven’t been able to bed and breakfast on your own for some years you can still bed and breakfast with your spouse or with an ISA.

Do you:

a. Phone the Ramada and book a double room.
b. Instruct your broker to sell.
c. Instruct your broker to buy.
d. Contact us to find out what you should do.

You own a business or shares in a family company and a would-be purchaser of the business/company makes you an offer you can’t refuse but you’re concerned about Capital Gains Tax.

Do you:

a. Try and delay the sale until after 6 April 2002 to save tax.
b. Try and effect the sale before 5 April 2002 to save tax.
c. Contact us to find out which suits you best.

A number of years ago you subscribed for shares in a private company and it now transpires that the shares are worthless. You read in a Square Circular that you can establish a loss which can be used for Capital Gains Tax or income tax purposes.

Do you:

a. Keep quiet about it. You can’t believe you’ve made such a poor investment.
b. Go out to celebrate your losses.
c. Contact us with the details so we can consider the appropriate claim to be made.

You read an article in a Sunday paper about tax efficient investments. It mentions mini and maxi ISAs with CATs, growth unit trusts, “zero’s”, single premium life assurance bonds, EISs and VCTs.

Do you:

a. Consult a dictionary.
b. Give all your possessions away to charity so you won’t have to worry any more. (Good tax planning, as well).
c. Contact us for advice.

You are reminded in a Square Circular that the company car rules are changing from 6 April 2002 and will generally be less favourable to larger cars irrespective of business mileage covered.

Does your company:

a. Buy walking boots for all employees and pushbikes for senior directors.
b. Buy pushbikes for all employees and vans for senior directors. Generous to a fault!
c. Contact the AA to see if it’s really true.
d. Contact us to ascertain the most tax efficient solution.

You and your spouse are over 65 years old and you are caught in the “age allowance trap” whereby your higher personal allowance for income tax is reduced because of the level of your income.

Do you:

a. Pretend you’re not really that old!
b. Pretend you haven’t really got that much income!
c. Contact us to see if the financial affairs of you and your spouse could be arranged in a more tax efficient manner.

BACK PAGE BONUS QUESTION

You are told in a Square Circular that we would like to know whether you are happy with the way we bring ideas and information to your attention and are asked whether you know of anyone who would benefit by receiving a copy of the Square Circular by post or e-mail.

Do you:

a. Ask us for a spare copy of a Square Circular for your friend. Your own copy is too valuable to give away!
b. Give us their contact details.
c. Give them our contact details (phone/fax/post/e-mail).
d. Give us and them one another’s contact details.