Rafter Associates Financial Management Ltd
Rafter Associates Financial Management Ltd is a family run business which has been trading since 1981.Tax planning to the fore
June’s Emergency Budget means that tax planning is more important than ever.
In the fortnight before the Emergency Budget, the Government issued many warnings of a period of austerity and the pain that was to come. In the event, the new Chancellor, George Osborne, did not disappoint on 22 June.
The headline Budget increase was to capital gains tax rates and, from 2011, VAT. However, hidden among the Budget announcements, there was a variety of other measures to help reduce the Government’s deficit. For example, the Chancellor followed his predecessor’s intention to raise all national insurance contribution rates by 1% from 2011/12. Next tax year will also see a cut of around £1,650 in the starting point for higher rate tax, compared with Mr Darling’s plans, and this threshold will not move in 2012/13. There was also a range of tax credit ‘reforms’, which could effectively amount to tax increases for you because they set a lower income ceiling for eligibility. From April 2011, many families (those with a household income in excess of £40,000 a year) will lose their child tax credit payments, worth up to £545 a year.
Realistically, there is virtually no chance of the tax environment improving for the duration of this Parliament. Government borrowing will still be higher in 2015/16 than it was last year, according to the newly created Office for Budget Responsibility. Indeed, taxes could increase further if the spending cuts to be detailed in October do not work as planned.
If you want to minimise the impact of the Emergency Budget changes, your first action should be to review your tax planning. The personal tax regime has been the subject of several major revisions over the past few years, such as the phasing out of personal allowances if your income exceeds £100,000. As a result, tax plans put in place two or three years ago may now be out of date. For example, the independent taxation of married couples and civil partners now offers more scope for planning than it did before 6 April 2010. As ever with tax planning, the DIY approach is not the one to choose: in this complex area you need expert advice to avoid the pitfalls.
The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Services Authority does not regulate tax advice.
In the fortnight before the Emergency Budget, the Government issued many warnings of a period of austerity and the pain that was to come. In the event, the new Chancellor, George Osborne, did not disappoint on 22 June.
The headline Budget increase was to capital gains tax rates and, from 2011, VAT. However, hidden among the Budget announcements, there was a variety of other measures to help reduce the Government’s deficit. For example, the Chancellor followed his predecessor’s intention to raise all national insurance contribution rates by 1% from 2011/12. Next tax year will also see a cut of around £1,650 in the starting point for higher rate tax, compared with Mr Darling’s plans, and this threshold will not move in 2012/13. There was also a range of tax credit ‘reforms’, which could effectively amount to tax increases for you because they set a lower income ceiling for eligibility. From April 2011, many families (those with a household income in excess of £40,000 a year) will lose their child tax credit payments, worth up to £545 a year.
Realistically, there is virtually no chance of the tax environment improving for the duration of this Parliament. Government borrowing will still be higher in 2015/16 than it was last year, according to the newly created Office for Budget Responsibility. Indeed, taxes could increase further if the spending cuts to be detailed in October do not work as planned.
If you want to minimise the impact of the Emergency Budget changes, your first action should be to review your tax planning. The personal tax regime has been the subject of several major revisions over the past few years, such as the phasing out of personal allowances if your income exceeds £100,000. As a result, tax plans put in place two or three years ago may now be out of date. For example, the independent taxation of married couples and civil partners now offers more scope for planning than it did before 6 April 2010. As ever with tax planning, the DIY approach is not the one to choose: in this complex area you need expert advice to avoid the pitfalls.
The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Services Authority does not regulate tax advice.
