Editorial team AccountingWEB.co.uk
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Any Answers Answered: Tapered annual allowance and a new sole trader

This month, TaxTv's Giles Mooney and Tim Good answer the AccountingWEB community's questions on tapered annual allowance calculation​ and the opening year calculations for a new sole trader. 

16th Oct 2020
Editorial team AccountingWEB.co.uk
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To view the full questions and AccountingWEB reader answers click on the links below:

New sole trader - 19 month AP - tax basis periods?

The first question covers a business starting up and how we decide what goes into those opening year calculations. "We have a brand new sole trader which has an accounting period 1/9/18 to 31/3/20 (a 19 month period)," writes AccountingWEB member MC1. 

The question is, should the profits be apportioned as 2018/19 from 1/9/18 to 5/4/19 and then in the second year, 2019/20, 1/4/19 to 31/3/20 - thus a 12 month period?

Tapered annual allowance calculation

The second question is from AccountingWEB reader Constantly Confused who asked a question on tapered annual allowance calculation.

"A client has a salary of £200,000 from an employment that started in 18/19. They pay £15,000 of pension contributions through their salary and their employer pays £5,000. Their taxable income that will appear on their employment pages is therefore £185,000. They make further private contributions outside their salary of £8,000 net (£10,000 gross). They also have dividends of £5,000..."

So, how much pension can this person pay and get relief on?

For the latest episode of TAXtv visit PTP Interactive.​ TAXtv is a monthly tax update programme available as an annual subscription, (11 issues plus budget editions) to view online, download from the internet or watch on DVD.

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By Matrix
17th Oct 2020 13:18

Thanks this was useful especially regarding the taper. I have at least 3 clients where I will have to calculate the taper but still waiting for all the info.

Apart from recommending pencon you didn’t really say what accountants should be doing to work out any adjustment to the tax return.

I just think it is added work for the accountant and wonder how others are dealing with this please?

I will look at pencon if I have difficulty calculating the threshold and adjusted income.

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