The annual limit for savings in an ISA increases by £240 to £15,240 for 2015/16, but remember that the 50% restriction on cash was removed with effect from 1 July 2014.  For Junior ISAs the limit will increase by £80 to £4,080, the same as the Child Trust Fund subscription limit.

There was an important announcement about the treatment of ISA savings on death in the Autumn Statement. It is proposed that the ISA savings will not lose their tax free status on death but, if transferred to the spouse, can be added to their tax free ISA savings.



Class 2 NICs are payable by the self-employed at the rate of £2.75 per week, although there is a small earnings exemption for those earning up to £5,885. It is understood that HMRC believe Class 2 NICs also apply to buy-to-let landlords. This is not correct and was tested in a case before the Tax Commissioners back in 2002 (Rashid v Garcia), when it was determined that property income was not applicable for Class 2 NIC purposes. Please get in touch with us if you receive a demand from HMRC for Class 2 NICs or a questionnaire requesting details of your property rental activities.


Many people die intestate because they think their estate will automatically pass to their spouse free of inheritance tax (IHT). This is not necessarily correct. Moreover, having a Will in place makes it easier to get a grant of probate and avoids the Statutory Intestacy Rules governing how the estate is distributed.

From 1 October 2014, if an individual is survived by a spouse or civil partner (but no children or remoter issue), the entire estate will go to the surviving spouse or civil partner. Previously, the spouse would only have received the first £450,000 (and half of the excess over £450,000); the other half of the excess would have passed to parents or siblings.

If the deceased individual is survived by a spouse/civil partner as well as children or remoter issue, the surviving spouse or civil partner will only receive the first £250,000 (and half of the excess over £250,000). The children will receive the other half of the excess equally between them. Having a Will is thus important for IHT planning, as only the first £325,000 is exempt unless the assets pass to the spouse. Making a Will is also important when couples divorce and there are former partners and children of previous marriages involved.


Unlike income tax under PAYE, Class 1 National Insurance Contributions (NICs) are not normally calculated on an employee’s cumulative earnings but on the earnings for that week or month in isolation. Employees pay Class 1 contributions at the rate of 12% on earnings between £663 a month and £3,488 a month. Above the upper earnings limit, a rate of 2% applies.

There have always been special rules for directors where an annual earnings period applies, but these do not generally apply to employees. HMRC are understood to be increasing the application of an annual earnings period for other employees in cases where they suspect Class 1 NIC is being avoided. Take for example a car salesman with a regular salary of £24,000 a year. His normal gross pay would be £2,000 a month, but he receives a commission twice a year based on car sales. If he receives £5,000 commission in October due to his car sales in the period to September, £3,512 of that that commission would only attract 2% Class I NICs (£70.24), as the £3,488 limit applies on a non-cumulative basis. Applying an annual basis would have resulted in afurther £351.20 being deducted (£421.44 less £70.24).  Note that employers NIC would be unaffected.


A condition of this campaign is that the individual is an employee with undeclared income from other work, so it is perhaps unlikely that practice clients will fall into this category.  But look out for:

  • Start-up clients
  • Employees who need help to make a disclosure

The point with start-up is that people frequently test the water before formally registering with HMRC, and may combine self-employed work with employment.  Now that HMRC has started the campaign, with its attendant videos and publicity, its attitude to non-disclosure in such circumstances is likely to be more severe.


In this context, it is worth a mention that the Property Income Task Force has recently moved the focus of its activities from London and the South East, to South West England, and Wales.  With the Task Force, we are looking at targeted rooting out of ‘evasion’, where ignorance of the rules is no excuse.

By contrast, in the Let Property Campaign (, we are looking at voluntary disclosure.  There are some straightforward technical scenarios that client may miss – such as renting out a property because of changes in relationships, or moving because of work.  Both of these can mean that a property is released for rent.  Taxpayers can then think that there is no taxable income because rental income just cover the mortgage payments – forgetting that it is only mortgage interest which is allowable, and that may be less than the total payment to the lender.

But there are more technical area such as:

  •  Rent-a-room
  • Non-resident landlord scheme
  • Property situated abroad
  • Property and relatives