It is our civic duty to pay tax, in my experience as a Chartered Accountant over the last 30 years, people don’t like paying tax. There I said it, I hope you’re not shocked; that’s why we have a compulsory tax system. I have never advocated aggressive tax planning because most people cannot deal with the inherent uncertainty. But we can all do the basics, and given that getting the basics right is most of the battle I have prepared a quick checklist. Obviously I can’t advise you without knowing your hopes dreams and finances so these are just a few pointers.
- Tax relief on pensions is amazing especially if you are a higher rate tax payer and as you get toward the age when you can take your pensions, currently 55.
- ISA and LISAs are ways of saving tax on your savings – useful way to invest your lock down loot.
- EIS and SEIS can reduce your tax bills if you want to invest in risky small and medium sized businesses you don’t control.
- Inheritance tax is full of loop holes if you have a bit of money and you want to leave it to your kids not the taxman you need to make plans.
- Take advantage of your annual capital gains tax allowance.
- If you have a company, put your life cover through the business with a relevant life policy.
- In a company you have flexibility over how you pay yourself which can reduce your national insurance and higher rate tax liabilities.
- If you are self-employed please keep your receipts to claim your expenses.
- Plug in electric cars (and pickup trucks) have very favourable tax treatment.
There will be a budget in November, I have no crystal ball, but there are rumours about what he might do. You might want to perform transactions before the budget rather than after it:
- He might increase capital gains tax, if you have taxable gains maybe crystallise them before the budget.
- He might reduce the limits on inheritance tax, consider making gifts to your family before the budget.
- He might reduce the cash free lump sum from pensions so if you are thinking of making a withdrawal maybe make it before the budget.
- Will he stop higher rate tax relief on pensions? I doubt it, because it’s a benefit MPs get (!), but it might be best to make any contributions you are thinking of doing beforehand.
- He is likely to increase corporation tax, dividend tax and self-employed national insurance a little but I’m not sure there is much we can do to protect ourselves.