Tax for senior and/or vulnerable individuals - making your life a little bit easier…

The world of tax can be an incredibly complex and daunting subject.  Many individuals are faced with confusing issues when trying to comply with their tax obligations, and these are not always confined to the wealthy but also to those with modest and low incomes.

Recent studies have highlighted the numerous obstacles that hinder tax compliance for senior and vulnerable individuals. These studies examined case files of the tax charity, "Tax Volunteers", which runs a project called 'Tax Help for Older People', established in 2004 to provide accessible tax help and advice for individuals with low and moderate incomes. These studies have revealed that the most common issues were problems with self-assessment, tax codes, determining the correct tax rates (especially on savings and investment income), eligibility for allowances (the marriage allowance), and taxation benefits (particularly the state pension).

Many individuals seeking assistance from the charity were considered vulnerable due to their age (many were in their 80s), illness and/or physical or mental impairment. During the year to March 2016, the charity received approximately 67,000 requests for help which demonstrates how many individuals are experiencing these issues.

Individuals would usually need to have an annual income of less than £20,000 and be 55 years old or over in order to qualify for the help of the charity. Further information regarding the charity can be found at www.taxvol.org.uk.

There are many individuals who will not be eligible to receive help from this type of charity as a result of higher levels of income or age. These individuals will be experiencing the same issues but will instead need to enlist the help and advice of family, friends or tax professionals.

In our experience, many elderly people are within the self-assessment system and are therefore required to complete annual tax returns when they simply do not meet the filing requirements. Unfortunately, once someone is within the self-assessment system, HM Revenue & Customs ('HMRC') will continue to issue notices to complete tax returns on an annual basis and related penalties for non-compliance, unless they are alerted to the fact that the individual does not meet the filing criteria and should be removed from the system. A review of their tax position by a tax professional can help address this problem and save future costs of unnecessary compliance.

There will also be many individuals who do meet the requirements to file self-assessment tax returns (e.g. they might receive income from savings or investments of £10,000 or more before tax or receive income from a let property), and perhaps are not aware they should be completing returns or do not understand how to complete a tax return.  Again, anyone who is unsure of their reporting obligations should contact a tax professional for help and guidance as substantial penalties and interest can arise from non-compliance, even where this was unintentional.

In addition, we work with many clients who have been paying unnecessary tax, either deducted at source or through the self-assessment system.  We work with these clients to make a claim for the repayment of tax or to ensure that their tax returns are completed after claiming all the necessary reliefs to minimise their tax liability.

Some individuals might benefit from an annual review of their tax position to put their minds at ease that none of the scenarios above apply and a tax professional can also assist with providing this service. 

How can we help?

Now that people in the UK are living for longer (almost 10 years longer since the 1960s), more people are likely to experience problems keeping up to date with their tax compliance obligations. 

At Michelmores we have a dedicated in-house tax team who can provide a bespoke service tailored to the individual's needs. We can advise on how best to structure and deal with assets, to ensure that individuals and their families do not suffer unnecessary taxation.

We can offer a wide range of services, from a simple annual compliance check of an individual's tax position, completion of formal tax returns or income tax repayment claims through to giving more complex tax and estate planning advice. We typically deal with all correspondence with HMRC on behalf of our client's which can be very reassuring, particularly for our senior and/or vulnerable clients.

We believe that everybody can play an active role in assisting their senior/vulnerable relatives, friends or neighbours by checking there aren't any tax issues worrying them or that they should be addressing. If they do have concerns knowing where to signpost them, either to a charity or a tax professional, can ensure any potential issues are dealt with swiftly, with minimal hassle and tax cost.

To discuss any tax questions, please do not hesitate to contact Jessica Sanders or one of the Tax team who will be more than happy to assist.