mikes1531
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Post by mikes1531 on Apr 13, 2017 12:00:26 GMT
The net effect of the HMRC guidelines as FS have applied them is to defer income to be reported -- and the tax due on it -- from earlier years into later years. ISTM that generally would be considered to be a good thing by most investors. The main group who might not like it would be those who expect their marginal tax rate to be higher in the future than it is now. Deffered income is quite saught after! Gives you another chance to use tax allowances, rearrange your affairs in anticipation (eg VCTs etc if missed out previously). : Yes, but doesn't the opposite apply as well? Examples... - You think you've managed to keep your income in the current year down to the point where most is covered by your allowances so there's going to be very little tax to pay. Then FS come along and declare that some of your loans have been classified as losses, so your income is much reduced and you find yourself with unused allowances -- and you can't carry those forward to the next year when the FS loans are 'recovered' and become income, which causes you to pay more tax.
- You expect to incur tax this year, so you make a VCT investment so that you can reduce the amount of tax actually payable. After you've done that, the FS losses arrive and it turns out you owe no tax, so the tax relief you expected to get for your VCT investment evaporates.
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ablender
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Post by ablender on Apr 16, 2017 19:24:53 GMT
Deffered income is quite saught after! Gives you another chance to use tax allowances, rearrange your affairs in anticipation (eg VCTs etc if missed out previously). : Yes, but doesn't the opposite apply as well? Examples... - You think you've managed to keep your income in the current year down to the point where most is covered by your allowances so there's going to be very little tax to pay. Then FS come along and declare that some of your loans have been classified as losses, so your income is much reduced and you find yourself with unused allowances -- and you can't carry those forward to the next year when the FS loans are 'recovered' and become income, which causes you to pay more tax.
- You expect to incur tax this year, so you make a VCT investment so that you can reduce the amount of tax actually payable. After you've done that, the FS losses arrive and it turns out you owe no tax, so the tax relief you expected to get for your VCT investment evaporates.
It sounds like you are trying to play the system.  
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mikes1531
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Post by mikes1531 on Apr 16, 2017 22:05:26 GMT
It sounds like you are trying to play the system. Isn't that what investors pay large fees to accountants and tax advisors to do?
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