There has been great speculation regarding how Rishi Sunak, the Chancellor of the Exchequer, is going to begin the mammoth task of finding the hundreds of billions of pounds which have been lost to the Coronavirus pandemic. Many are hedging their bets that there will be a significant Tax reform budget come in the Spring. So what would this mean for you?
Firstly, Capital Gains Tax (CGT) may be harmonised to fall parallel to the income tax bands. CGT rates have never been as low as they are today, so this seems a logical place for the Chancellor to begin to repatriate funds.
Secondly, the Chancellor may abolish tax relief on pension contributions. This is something that has been discussed on several occasions, but now seems as good time as any for the Chancellor to make some provision for this. Already those earning more than £240,000 per annum have their tax relief reduced.
Thirdly, possible inheritance Tax (IHT) reforms could be on the horizon. Although there is only speculation, but changes to your Nil Rate Band and Residence Nil Rate Band allowances could be changed.
To combat this in an active fashion, we urge you to consider a couple of key things:
- Start by maximising your pensions contributions for this year.
- Begin to think about the legacy of your second homes and buy-to-let properties – with the possibility of taking advantage of Stamp-Duty relief up to £500,000 until March.
Now is the time to have a good think about your assets and what implications you may have in the future by not assessing the situation now. If you wish to discuss this in more detail, please contact get in touch.