Richard Coombs, Tax Partner at Bates Weston, suggests we use the time at home to clear our financial “to do” lists. 

If you believe all of the people currently posting on social media about their plans for this period of lockdown, it seems that the majority of the population will soon be speaking another language, will have mastered a new musical instrument and will have a bulging six pack.  If that happens then at least some good will have come from this torrid time.  Sadly, I suspect that, much like a New Year’s resolution, despite the best intentions life never really goes to plan and many of us won’t quite be as fluent or as chiselled as we had hoped.

I do confidently predict though that one of the main winners of this period of isolation will be the charity shops.  In our own house, phrases such as “I think I’m going to tackle the loft” are becoming more common and with little else to do it seems that people will indeed be finally getting round to clearing out long forgotten cupboards and attics, the beneficiaries of which will no doubt be the charity shops once they re-open.

Whilst people are quite understandably concentrating on getting their physical house in order, now is also an excellent time to get your financial house in order.  There are numerous tasks which tend to sit on “to do” lists for years as there is never a good time (or inclination) to focus on them.  However, in an unprecedented and unlikely to be repeated period of forced downtime, surely this is the time to deal with them?  It’s that or clean out the kitchen cupboards again.

As tax advisors, we come across numerous tasks which many clients never get around to until it is too late and so the following is a list of the some of the more common ones.  Therefore, if you have time between piano practice or your next abs workout then I would urge you to try to tick off as many as possible before life gets back to normal.

1. Use your ISA limit. It’s now only a week or so before the end of the tax year and if you have the money to save or invest then do not overlook doing so through an ISA.  I can’t overstate how useful ISAs are in long term tax planning but too many people seem to forget about them.  With all income and gains made within the ISA completely free of tax, over several years you can generate a sizeable, highly tax efficient portfolio.  For those that require income, generating it from an ISA means you get to keep everything you make, which can make a massive difference to disposable income.

You can invest £20,000 per annum into an ISA but it is a “use it or lose it” allowance.  We are not regulated to advise whether you should invest in a cash ISA or a stocks and shares ISA – that is something to ask your financial advisor – but the point is to make sure that if you are looking to invest soon then use your ISA allowance if you can.

2. Prepare a will. This is probably at the top of the “I’ll do it tomorrow” list of things to do.  Admittedly, no one likes to think of death or inheritance but it will happen to us all and to ignore it now just makes things much more difficult, and potentially costly, in the future.  For those people whose estates are less than £325,000, or £650,000 per married/civil partnership couple, then it is not so much tax you need to be concerned about but just to be sure that your assets end up where you want them to.  If you die intestate (i.e. without a will) then they are distributed by reference to a set of rigid rules and these may well not be what you wanted.  In some circumstances the estate can pass to the Crown.

Wills don’t need to be expensive and a relatively simple will can be arranged quite quickly. You may not have been aware that Bates Weston is licensed to write wills. Whilst in normal times a face to face meeting would always be our preferred method of discussing this with a client, if you are concerned either about your own or a family member’s legacy and wish to arrange something sooner rather than later then please call or email us and we will do our best to arrange this for you.

For those with estates above the nil rate band then tax planning becomes more important.  Most people’s wills are written in fairly standard terms – each spouse/partner leaves their entire estate to the surviving spouse/partner.  This is fine when the first spouse/partner dies, but what next?  It is the second death which often triggers a large tax charge and this can often be avoided, or at least mitigated, with some better planning when the will was drafted.

3. Check your Business Property Relief. For families who run their own business, Business Property Relief can be a very valuable relief.  In simple terms, it exempts from IHT the value of any qualifying trading business (or shares in a qualifying trading business).  So far, so good.  However, the rules on what qualifies as a qualifying business are complex and we often come across situations where the business does not actually qualify due to a technicality.  However, provided we spot it in time then with some reorganising we can often ensure that they become qualifying again so that when a death occurs the exemption will apply.  We offer a comprehensive BPR review for any family business to give you the peace of mind that you will be entitled to the relief when you need it.

4. Is your family business tax efficient? When companies are set up, tax efficiency is rarely a consideration as the business is in its infancy and it is all about making a success of it.  However, there comes a point in any business where it is sensible to stand back and look at it to see if its structure is as efficient as it could be.

So, for example:-

  • are you paying yourself the optimum mix of salary and dividends?
  • is your spouse or partner a shareholder?  If not should they be (e.g. if they are not working or are a lower rate taxpayer)
  • could your children/grandchildren become shareholders?  This could help with school or university fees planning by using their tax allowances
  • is the company claiming everything it is entitled to?  Things like R&D relief are incredibly valuable but often overlooked by companies who don’t feel they would qualify.

Often there is simply no time to take a step back and consider these things, but now could be that time.

5. And finally…..make a start on your tax return! Yes it’s early, but the current tax year ends on 5 April so why not spend some of the downtime getting the information collated whilst it is fresh in your mind?  There is no reason you can’t start collating receipts, calculating interest, dividend and rental income etc so that you pretty much have broken the back of it.  When things finally get back to normal then we expect people to be very busy, as the pent up demand over the fallow period is finally released when businesses re-open.  The last thing you will want to be doing then is dealing with your tax return.  Oh, and if you use an accountant to prepare your returns, you will forever be in their good books if you can let them have all of the information well before the 31 January deadline!

At Bates Weston we are still very much open for business and ready to assist you make the best use of any time “spare” time you might have.  Please feel free to contact Richard Coombs  or Craig Simpson ( if you would like to discuss any of the above or other aspects of tax planning.

Disclaimer: The information given in this article is generic in nature. You should take no action based upon it without consulting ourselves or an alternative professional advisor.