Cathy Corns author on our sister blog SME Plus has highlighted some tax policies which have been announced following the formation of the Conservative-led coalition government - the key issues are highlighted below.
I will also be posting further blog posts as the detail becomes clearer. In the meantime, if you would like to discuss these and other tax planning opportunities available to you, please do not hesitate to contact me.
Tax planning opportunities in uncertain times
We are living in interesting and uncertain times. We do now know who is governing Britain and that we will have a Budget within the next 50 days. There is a lot of speculation, but tax is going to change.
Some measures announced in the 2009 Pre Budget and the (first) 2010 Budget have not yet hit the statute books, so there is uncertainty over which will be retained. The coalition agreement makes specific mention of some tax policies which may affect you.
Capital Gains Tax
This tax is about to change again with CGT rates being aligned with income tax rates on non-business assets. The end result could be significantly more tax for higher earners, but with, possibly, extended entrepreneurs’ relief. Where this relief is not available, now may be a good time to look at realising gains to take advantage of the current rate of 18%. It is important though to consider all angles balancing earlier tax payment with the benefit of a lower rate of tax. It is not clear whether the change will be introduced from the date of the emergency budget or next 6 April.
Pension contributions
There are already rules to restrict the amount of higher rate relief that anyone earning over £130,000 can claim on pension contributions. The Lib Dem manifesto proposed the removal of all higher rate relief on pension contributions. I do not know when or if this measure will be introduced, but if you planned on making contributions in the current tax year, now may be a good time to do this.
Other changes
The inheritance tax threshold is not now going to be increased significantly in the short term at least but there will be an increase in personal allowances. These points will have a bearing on how your family organises its financial affairs in the round.
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