THE AUTUMN BUDGET 2021

TODAY’S BLOG

THE AUTUMN BUDGET 2021

In terms of your personal finance, not a lot has changed. Indeed, most of the announcements merely confirmed previous announcements, such is the way of our politicians. As a reminder, the next tax year begins on 6th April 2022. The main changes for most are really for those that receive dividends or pay National Insurance

iNCOME TAX RATE ON DIVIDENDS 2022/23 2021/22 (NOW)
Basic rate taxpayer 8.75% 7.50%
Higher rate taxpayer 33.75% 32.50%
Additional rate taxpayer 39.45% 38.10%
Rate for Trusts 39.35% 38.10%

National Insurance for employers increases from 13.8% to 15.05% which basically makes it more expensive to employ people. Employees will also pay rather more at the main rate, rising from 12% to 13.25% and then at the upper or higher rate increased from 2% to 3.25%. Remember the thing about National Insurance is that there is a threshold for the main rate after which you simply pay a flat, reduced rate (currently 2% but increasing to 3.25%). The self-employed main rate increases from 9% to 10.25%. Self-employed people do not fully enjoy the same benefits for their NI payments.

MAIN ALLOWANCES

For those of you using your pensions, the annual allowance remains at £40,000 but if you have begun drawing income from investment-based pensions it is restricted to £4,000 the delightfully named “Money Purchase Annual Allowance” or MPAA. The Lifetime Allowance (the total value of your pensions permitted before excess charges) remains frozen as previously indicated at £1,073,100. This is equivalent to a pension income of £53,655.

ISA and JISA limits remain as they were (£20,000 and £9,000) which are fairly substantial allowances but indicate a “kick the can down the road” policy of Government worrying about tax in the future. Capital Gains Tax (CGT) allowances and rates remain as they are (which is daft).

If you own a second property or inherit one, the capital gains rate and requirement for payment are important to understand. However, one small improvement is that you now have 60 days to pay the liability rather than 30 (with immediate effect). I imagine one of Rishi’s friends was offloading and was worried about an extra charge (surely not!).

As for inheritance, the nil rate remains at £325,000 per person and those with children inheriting the family home the residential nil rate band adds a further £175,000. However, this is tapered when an estate is worth more than £2m.

In short, for all the bluff and thunder and 200 pages, not much is in it for you and I. Remember – death and taxes.

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

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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Are we a good fit for you?

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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Are we a good fit for you?

THE AUTUMN BUDGET 20212023-12-01T12:13:01+00:00

RISING COST OF A SECOND HOME

TODAY’S BLOG

RISING COST OF A SECOND HOME

Second home owners face a clampdown over a tax loophole that can save them money by claiming the properties are available for holiday lets. Currently around 60,000 properties classed as holiday lets are liable for business tax rather than council tax, which in the vast majority of cases currently means paying nothing at all. The Treasury said it would “ensure that owners of properties that are not genuine businesses are not able to reduce their tax liability by declaring that a property is available for let but make little or no realistic effort to actually let it out”. It was announced as part of a raft of consultation documents on tax published by the Treasury which also included plans to shake up air passenger duty (APD).

SOLOMONS IFA RISING COSTS OF A Holiday Home

THE TAXMAN COMETH

The holiday lets move relates to properties in England which the owner declares are intended to be made available to let 140 days in the coming year, making them liable for business rates rather than council tax. In about 96% of cases, they have such a low rateable value that they qualify for small business rates relief which means they pay nothing at all.

There is currently no requirement for checks to verify that the properties are actually commercially rented out.

Following a consultation launched in 2018, the government said it would now legislate to tighten the rules. Also included in the series of consultations were proposals to cut down on inheritance tax red tape, reducing the paperwork families need to fill out. The government also published an interim report on its review of the business rates system – long the subject of calls for change from the retail sector – detailing responses from some firms. But a final report will not be published until the autumn.

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

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

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

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

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

RISING COST OF A SECOND HOME2023-12-01T12:13:08+00:00

As safe as houses… more IHT

As safe as houses…. more IHT

You have probably heard that the nil rate band or inheritance tax allowance is increasing on a main residence, provided that it is inherited by your family and provided that it isn’t worth too much. As probably intended, many are under the impression that this new “£500,000” allowance has started… it hasn’t and many will not see the benefit.

For starters, the new “Main Residence Nil Rate Band” … MRNRB is being gradually introduced from April 2017 starting with an extra £100,000 rising each tax year by £25,000 until the full extra £175,000 becomes applied from April 2020. However if the net value of the estate is worth more than £2m, then this extra allowance is gradually lost. I think that’s called giving with one hand and taking with the other and of course is ignored by those who think that this is a tax break for the super rich…. reality is quite different.

IH405

IHT405 is the form you use to tell HMRC about all of your properties upon death. Have a look at the form, the valuation of a property (or plural) can and will make a considerable difference to the value of an estate. If you have a second (or further) property, then please keep really good records about it. This includes dates and purchase prices, valuations, work done, insurance costs and so on. You need to be fastidious in your record keeping… not least because these records may also be pretty vital whilst you are alive.

Getting your house/s in order

If you have acquired property over the years, perhaps just for your own family use or perhaps as a commercial concern to generate rental income, this all needs accounting…(sorry for stating the obvious). The value of property obviously changes and there is some degree of flexibility in how this is valued for probate… on the basis that what someone will actually pay for a property is more fluid than a simple figure.

As an aside, landlords that are off-setting interest against rental income, thereby reducing profit and tax, are having the amount permitted altered (another feature of the last Budget). So beware! Also as an aside, those with second properties that have soared in value are loaded with capital gains and thus subject to capital gains tax. There are ways to manage this… which I shall outline at another time – but be advised that there are solutions that may appeal.

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

As safe as houses… more IHT2023-12-01T12:19:53+00:00
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