There’s been a lot of noise recently around possible tax changes in the upcoming Budget, with the government trying to fill a £22 billion “black hole” in public finances.
Although pre-election promises were made not to increase income tax, national insurance or VAT rates, the new Chancellor hasn’t ruled out changes to capital gains, inheritance, or pension taxes. Until Budget Day on the 30th October, it’s all speculation so what, if anything, can you do now to prepare for potential tax increases?
Capital Gains Tax (CGT)
If CGT rates are going up, it’s likely to affect any disposals made after Budget Day. If you have assets like shares that have gained value but haven’t been sold yet, you might want to consider selling them before the Budget is announced. Do bear in mind though that there are anti-avoidance rules in place, for instance, you can’t buy the same shares back within 30 days. That said, if you’re looking to “re-base” your holding, you might be able to buy them back in an ISA (if you stay within investment limits), a SIPP (depending on available relief, or get your spouse to re-purchase them if you are married. As always, you should talk to an investment advisor before making any decisions.
If you’re already in the process of selling a property or other assets subject to CGT, it might be worth speeding things up to finalise the sale before Budget Day. Remember, for tax purposes, the disposal date for property is usually the exchange date, not the completion date.
Inheritance Tax (IHT)
IHT could also be on the government’s radar, but since IHT planning is a long-term process, it’s probably not wise to make any quick decisions that could have far reaching implications. However, if you’ve already been thinking of making gifts to your family, you might want to act before the Budget is announced, just make sure to get professional advice first, as there could be other tax implications to consider.
Pension Taxation
There’s also talk about possibly restricting tax relief on pensions. If you have the resources and were already planning to make contributions this year, you could potentially bring them forward to avoid any changes. But again, it’s essential to seek advice to ensure you don’t exceed your annual allowances.
If you want to discuss any of your options before the Budget take place, do contact us -we’d of course be happy to discuss your options in more detail.