Money Matters

with Roger Downes of Andorran

Chartered Certified Accountant Self- Assessment Returns

TAX YEAR ENDED 5th April 2022

FILE ONLINE BY 31st January 2023 Year-End Accounts Personal & Business Taxes VAT Returns & Bookkeeping Free Initial Consultation 01242 577570 07749 045261

Louise@Louise-Newman.co.uk

2 Bath Mews, Bath Parade, Cheltenham GL53 7HL

chartered accountants

We recognise that talking about money and finances can be tricky. It’s a personal topic. So it’s reassuring to know there’s someone on hand who can help you address your needs, understand your goals and realise your dreams. We provide a wide range of services, including: • Retirement & pension planning • Investment planning • Inheritance tax planning • Personal & Corporate protection

Get in touch for a friendly chat.

Diana Cooper BA (Hons) DipPFS Cert II (MP) T 01242 464998 M 07976 753747 E di.cooper@sjpp.co.uk W www.dianacooper.co.uk

Diana Cooper Financial Planning

Diana Cooper Financial Planning is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website www.sjp.co.uk/products. The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives. SJP Approved 09/11/2022

Ever since it was invented centuries ago, the idea of the tax system has been that those earning the most pay the highest contribution in taxes. It seems perfectly logical and fair. The system increases the rate as your income gets higher. Those earning the least pay 0%, increasing to 20%, through 40% to a maximum of 45%. Easy? Sadly no.

There are a number of intricacies that mean that many people pay more than 45%, even though they don’t earn anywhere near the threshold at which that rate kicks in.

Firstly there is student loan repayment. It works like a tax in everything but name for those who have university finance to repay. It starts every year when your income reaches what for graduates is a relatively modest £20,000 or £27,000 depending on when you were at university. Above that they pay an additional 9%, making their effective tax rate 29%, 49% or even 54%.

Next you hit the child benefit repayment challenge. This generally affects a different group to the student loan issue, but there will be taxpayers, probably a growing number of them, who are penalised by both ‘taxes’ . If either parent earns over £50,000, the child benefit they have received starts to be repaid. If that parent’s income goes over £60,000, all of the benefit is recalled.

This clawback increases the effective tax rate for those involved by anything from 6% upwards, depending on how many children they have. If you have as many as six children, your effective rate on this band of income goes over 90%!

Still further up the scale is the loss of personal allowance for those earning over £100,000 a year, who suffer a 60% tax on their next £25,000 of income. Sound complicated? It is and it keeps tax advisers in business! Happy NewYear. The Local Answer To advertise call 01242 510500 Page 25