What to do before Budget 2021
Unless you've been living in a cockerel's boot, you'll be aware that there is a Budget coming on 3rd March. There is ample speculation about what may be in it but we aren't going to consider that here in any detail.
However, in summary, these are some of the possible delights we can look forward to:
- A raise in capital gains tax rates to bring them in line with income tax rates,
- An increase in income tax – either rate increases or allowance changes/freezes,
- VAT increase,
- Fuel duty increase,
- Inheritance tax changes
Essentially, if it's a tax or duty it could change. We won't know for sure until a couple of days before the Budget when all the leaks appear in the press. There was even talk of a wealth tax at one point but it seems unlikely a Conservative government would bring one in.
So, what can one do before 3rd March? Several things, as it happens. To keep this article short, they are summarised as follows:
- ISA – you can put what you can into an ISA, up to the annual allowance of £20k. Growth and income is tax free in an ISA and they can hold shares too. If you aren't sure what to invest in, it's always advisable to speak to an expert first.
- Pensions – consider whether you can put additional funds into a pension plan. There is tax relief on the way in as the government will add an amount equal to the basic rate tax rate and higher/additional rate taxpayers can receive further tax relief via their tax return. Watch the annual allowance and lifetime allowances though as exceeding them can be costly. Check with a qualified financial adviser before doing anything.
- Consider utilising a spouse or civil partner's lower tax rates by moving income producing assets between you. A rental property, for example, can be held unequally to ensure a larger percentage of income passes to the spouse/partner with the lower tax rate. Take advice before making changes though as there could be other tax charges, particularly SDLT if there is a mortgage.
- If you have a family company, can you rearrange the shareholdings to include family members with lower tax rates for dividend payments? This can be used to take advantage of the £2k dividend allowance (0% tax rate effectively) and currently lower income tax rates.
Any of the above may work for you. But always take advice from a specialist as what's good for one person may be terrible for another. For investment advice, speak to a qualified financial adviser. For tax and legal advice, come and speak to Gepp Solicitors. Our Private Client department has many years' experience of assisting clients and we would be happy to speak to you.
To arrange an appointment, or to receive a fee estimate, please contact us on 01245 228125 or PrivateClientEnq@gepp.co.uk.
This is not legal advice; it is intended to provide information of general interest about current legal issues.