HOW TO PROTECT YOUR TAX ALLOWANCES

TODAY’S BLOG

HOW TO PROTECT YOUR TAX ALLOWANCES

The government has committed to an awful lot of new spending. But the money has to come from somewhere. The unwritten rule of electioneering is to announce the spending increases during campaigning, and wait for the first post-election Budget to reveal the bad news about tax. Over the past few weeks we’ve seen suggestions of everything from some form of ‘mansion tax’ on more expensive homes, to changes in capital gains tax and tweaks in pension tax relief.

Sajid Javid’s resignation as chancellor – the person in charge of the Budget – might have derailed some of the plans in progress, but commentators are divided on what’s likely to happen next. Some think fiscal (tax) rules will be relaxed, so there’s less pressure to balance the books and spending can rise alongside tax cuts.

Let us not forget the small matter of an election manifesto pledge to get rid of ‘arbitrary tax advantages’ for the wealthy. Unfortunately we don’t have a working crystal ball to know what tax changes if any will come to fruition. We think the best way to shelter yourself from any potential tax changes is to take as much advantage as you can with the appropriate current breaks, while they still last:

Take advantage of ISAs (£20,000)
Consider a Lifetime ISA (£4,000)
Don’t forget Junior ISAs (£4,368)
Top up your pension (£40,000 and the abilty to use up unused allowances from the 3 previous tax years)
Consider salary sacrifice (employer pays your reduced NI and tax into your pension)
Take advantage of your spousal exemptions (share capital gains etc)
Claim the marriage allowance (transfer £1,250 to your spouse)
Consider your annual gifting allowance of £3,000
Use your 2019/20 Capital Gains Tax Allowance of £12,000
VCT, EIS, SEIS investment options for those that are more adventurous

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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HOW TO PROTECT YOUR TAX ALLOWANCESDominic2023-12-01T12:13:23+00:00

TAX YEAR END PLANNING PART 1

TODAY’S BLOG

TAX YEAR END PLANNING PART 1

As you will have gathered, the Chancellor Sajid Javid resigned on 13 February just a month before his first Budget. There will be many that offer reasons for this, perhaps some of them will be something resembling the truth, but as they say “a week in politics is a long time”. We have a new Chancellor – Rishi Sunak (who?) … who sent most of us into a google spin. He’s the 39 year-old who worked for Goldman Sachs immediately following graduating from Oxford in 2001, who he left in 2004 to become a Hedge Fund 2006-2010. He became an MP in 2015 taking over William Hague’s seat in Richmond, Yorkshire.

As a result of the rather sudden changes in arguably the most important job in UK politics, there was concern that the Budget may have to be resceduled. However we have been reassured that 11 March remains the date for the 2020 Budget date. We also have an effective deadline for tax-year-end planning. There could be a range of measures announced on 11 March (normally operative from the beginning of Budget day) which could impact on such planning. The Government has loosened the purse strings on capital investment, but in terms of day-to-day spending it has little room for manoeuvre. The Treasury may thus be tempted to make some subtle tax changes to boost its coffers.

PENSIONS

More than in most years, 2020 is the year to ensure you make your pension contributions before the Chancellor delivers his speech. As explained earlier, the risk of a major pension tax reform, potentially reducing higher rate tax relief, is greater now than for some while.

One important point to check is whether you have any unused annual allowance from 2016/17, when the maximum annual allowance (before tapering) was £40,000. You have until the end of 2019/20 to use up this past allowance, or it is lost forever. However, it can only be utilised once your full annual allowance for the current tax year is exhausted. So, for example, if you are not affected by the taper rules and you have £10,000 annual allowance unused from 2016/17, to mop it up completely would require a total contribution of £50,000 in 2019/20 – £40,000 for the current tax year and £10,000 carried back three years.

Unused relief can also be used from later years, but once you have paid the current year ‘entrance fee’, the excess contribution is offset in chronological order, starting with 2016/17. Under current rules unused relief can be carried forward for three tax years (hence the 2016/17 deadline), but that principle – and the rate of tax relief – could change.

Dominic Thomas
Solomons IFA

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TAX YEAR END PLANNING PART 1Dominic2023-12-01T12:13:24+00:00

ONE MONTH UNTIL BUDGET DAY

TODAY’S BLOG

ONE MONTH UNTIL BUDGET DAY

The chancellor Sajid Javid announced the date of next UK budget, with a pledge to tackle the cost of living and tear up strict budget rules to hike borrowing for infrastructure spending. The 2020 budget will take place in a month’s time on 11 March 2020 after a planned budget last November was cancelled in the run-up to the election.

Business leaders have said it was the new administration’s “first opportunity” to show it understood firms’ concerns amid continued political uncertainty over Brexit. Javid said the British public had “told us they want change,” in a signal of the government’s changing priorities since the Conservatives’ landslide election victory in December. Officials said Javid would use the budget to:

Fulfil government pledges on tax to “help tackle the cost of living for hard-working people.”
“Level up” across the country through “billions” in investment, rewriting previous administration’s spending rules and taking advantage of low interest rates to increase borrowing.
“Build on” recent announcements to boost spending on public services and tackle the cost of living, including hospital investment, vocational training and a significant hike in the minimum wage

So…. we shall have to wait 4 weeks to see what happens and whether mistakes of the past will be repeated. I have every confidence that they will be.

Dominic Thomas
Solomons IFA

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Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

Email – info@solomonsifa.co.uk
Call – 020 8542 8084

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

Email – info@solomonsifa.co.uk Call – 020 8542 8084

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PRIVACY POLICY | DATA PROTECTION

ONE MONTH UNTIL BUDGET DAYDominic2023-12-01T12:13:24+00:00