Date posted: 3rd Feb 2021
There has been a mountain of speculation on what will be in Rishi Sunak’s second Budget and we have held discussions internally, regarding tax planning opportunities to be taken before the Budget. Some of the options to consider including:
- Advancing dividend income or bonuses.
- Maximising the current capital gains tax allowances/rates by selling assets (shares, businesses, property etc) before the Budget.
- Making pension contributions.
- Utilising inheritance tax allowances and exemptions.
It is clear that the government will need to reduce the £2 trillion of borrowings at some stage. However, simply increasing tax rates would potentially send the wrong message when the government is trying to stimulate economic recovery. It is more likely that the Chancellor will abolish or restrict some of the tax reliefs in the current system. That would have the effect of raising tax revenue without increasing headline rates.
Rumours of cuts to pension tax relief are heard before every Budget but again, with the tax relief associated with pensions being higher than the defence budget, it is something that will be under serious consideration.
A recent report by the OTS suggests that the government could be looking at changes to capital gains tax and inheritance tax. This could again involve the reduction of allowances and reliefs.
Finally, those buying property might also want to speed up those transactions, if they can, as the beneficial stamp duty land tax rates are scheduled to increase from 1 April 2021.
As ever, we are here to help with your individual tax planning. Please contact the team here.
Read more articles from our February 2021 tax news below:
- Land Remediation Relief – are you overlooking this valuable corporate tax relief?
- The Budget day is approaching
- Scam alert – “HMRC” phone calls and texts
- Higher taxes for EU property owners
- IR35 – back on the agenda
- Paying your personal tax bill
- Foreign income – have you declared it to HMRC?
- Hybrid cars – 100% allowance coming to an end
Read more below: