Now the Summer Holidays are behind us we need to consider the well trailed Budget on the 30th October.
A couple of initial points:
- I have no inside track on any proposed changes that have not already been announced eg. VAT on school fees, change to Non Dom planning etc.
- Clearly the new Government believe they have a mandate to increase taxes.
- Whilst certain taxes are supposedly protected, I wouldn’t rely on that as you can pull various levers to increase the tax take on all taxes without altering the actual tax rate of a particular tax.
FINALLY IN THE WORDS OF LANCE CORPORAL JONES…………“DON’T PANIC” – I have been through over 50 Budgets/Autumn Statements in my career and regardless of the various changes there are always options before and after these events.
If you wanted my predictions, then “If I was in charge and had to raise money quickly I would….”:
Pensions
• Reduce the annual Pension Contribution limit to£20k immediately.
• Reimpose the lifetime cap at the previous limit with “protection” for anyone over that limit.
• Reduce the tax-free cash to 10%.
Income Tax
• Abolish the dividend tax rates completely so dividends are taxed like any other income – technically I’m not changing the“Income Tax Rates”
Capital Gains Tax
• Increase the CGT rate to 30% for most gains and35% for residential profits and “Carried Interest”.
Inheritance Tax
• Remove the 7-year rule and tax all gifts at a lifetime rate of 40% on every gift.
ACTIONS
So, what do I suggest you consider doing?
- Making Pension Contributions before 30 October and using up as much of your brought forward allowance as is sensible/cash allows.
- Subject, to investment advice, realise inherent gains in investment portfolios.
- Engineer CGT disposals on imminent retirements. Word of warning --- HMRC clearance process is already overloaded so if you are going to consider this you will have to be quick
- Ensure property and share transactions in progress are completed well before Budget Day.
- Revisit making gifts before Budget day.
As always drop me a line if you want to discuss specific matters further.
The forgoing is based purely on an opinion and no action should be taken without consulting a suitably qualified adviser