Time to Review your Tax Planning?
The Chancellor of the Exchequer has announced that there will not be a Budget this Autumn. There had been a lot of speculation about what may, or may not, have been included, particularly in relation to Inheritance Tax. Whilst everybody appreciates the need for the government to raise funds to cover the expenditure that has been incurred during 2020, this was not the only driver.
The Office of Tax Simplification has published various reports looking into Inheritance Tax and Capital Gains Tax. In addition, the All Party Parliamentary Group, produced a report earlier this year with various proposals about how Inheritance Tax might be reformed.
Unfortunately, nobody has a crystal ball to be able to predict exactly what changes will be made in the future. Accordingly, we can only plan on what we do know, and give advice on that basis.
There does, however, appear to be some consensus by those providing advice on the subject of Inheritance Tax planning, that the favourable reliefs offered to Agricultural Property and Business Property could be amended. For this reason, many people are looking at lifetime gifting to crystallise the reliefs as they currently stand. It is certainly worth spending some time reviewing arrangements, thinking about strategy and the desire of passing wealth on to the next generations.
Of course, Inheritance Tax should not be looked at in isolation, and potential Capital Gains Tax liabilities, Income Tax liabilities and resources available, all need to be born in mind.
In addition to the reforms relating to Inheritance Tax, there has been recent speculation about changes to the rate of Capital Gains Tax. Might the rate be increased from 20% back to 28%, or could it be aligned with an individual’s marginal rate of income tax?
It may well be that such increases are delayed and would not come into effect until the next tax year. The advantage of this would be the likely increase in disposals that people would make before the end of the current tax year, wanting to benefit from the lower rates and thus generating a surge in tax receipts. Clearly this would be welcomed by the government!
As always, these are just my musings and we will have to wait and see what happens. However, in the meantime, if you would like to review your own affairs and tax planning strategy, taking account of what we do know, please do get in touch.
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Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.