With the next Budget approaching at the end of October, 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 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 around £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 content of this publication is for information purposes and should not be treated as a forecast, research or advice to buy or sell any particular investment or to adopt any investment strategy. It does not provide personal advice based on an assessment of your own circumstances. Any views expressed are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness. Any expressions of opinion are subject to change without notice.