Following the controversial scrapping of winter fuel payments for most pensioners, attention now turns to what might be next on the Chancellor’s hit list. There is no doubt that the ground is being laid for some major changes which are expected to be announced in the Budget on 30th October.
In the run up to the Election, the Labour party ruled out increases to Income Tax, National Insurance Contributions and VAT but will these promises be safe following their claimed discovery of a “£22 billion black hole” in the government’s finances?
Assuming they are safe, there are other key taxes that could be on the hit list:
Capital Gains Tax
One of these is CGT where a major restructure is possible. Instead of the current rates which range from 10% to 28% depending on the type of gain, gains could be taxed at a much higher rate, with the government reportedly having modelled rates of between 33% and 39%.
Changes here would affect private investors with substantial gains in their non-ISA portfolio following growth in world markets over the last few years. Crypto gains also fall into the net with HMRC now taking a closer interest in these.
Whilst removing the relief on the increase in value of the family home may be a step too far, those with holiday homes or buy-to-let properties may be in the firing line with many reported to be selling up to crystallise gains at the current tax rates or using concessions where available.
Inheritance Tax
Another likely target is inheritance tax. Current allowances which allow up to £500,000 per taxpayer to pass free of inheritance tax may be adjusted. Instead of a single rate of 40%, tiers could be introduced with lower rates for smaller estates and higher rates for larger ones. Other allowances for making gifts in one’s lifetime and relating to passing one’s business or agricultural assets could be reviewed.
Those with potential tax bills may consider gifting within the current rules or consider setting up trusts to protect their assets. It is also an opportune time to review Wills and Lasting Powers of Attorney to ensure they are up to date and reflect current wishes.
How Moore Barlow can help
Our private wealth lawyers offer a comprehensive range of services to help you protect and grow your assets, plan for the future, and ensure that your loved ones are taken care of.
Contact us for further information. Any changes announced in the Autumn Budget could apply immediately or from the next tax year so advance planning is vital.