Forward planning for the Budget
With the next Budget approaching, it may be worth reviewing your finances now.
More than the usual changes to tax rates are expected this time, after various consultations were started in the spring. Draft legislation was published in early July which contained no major surprises, but the consultations underway could result in some major announcements. For example, the Office of Tax Simplification has been examining the options for simplifying the administration of inheritance tax (IHT), with its report due in the autumn.
One possibility is that elements of IHT business relief will be ‘simplified’ by being abolished, which could restrict, or even end, the growing use of IHT-relieved AIM-based share portfolios in estate planning.
Potential tax increases
In June, the Prime Minister announced increased NHS funding of £20.5 billion by 2023, saying this will mean taxpayers will contribute a bit more in a fair and balanced way. According to the Institute for Fiscal Studies, adding one penny to all the main rates of income tax, or 1% to VAT, raises about £6 billion a year, so the ‘bit more’ could imply noticeable tax rises.
We will have to wait until the Budget to see how the Chancellor expects to raise the necessary revenue. In the meantime, in early July the Treasury was reportedly investigating a 25% flat rate of relief for pension contributions, which could net an extra £4 billion for the Exchequer.
Please get in touch if you would like to discuss your options before any announcements.
The Financial Conduct Authority does not regulate tax advice and some types of estate planning.
Levels and bases of taxation and tax reliefs are subject to change and their value depends on individual circumstances.
Tax laws can change.
The information in this article does not constitute advice and should be used for informational purposes only. This content has been provided to Helm Godfrey by Taxbriefs.