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Sestini & Co | on Wed, 07/01/2015 - 12:29 | In
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Here at the Sestini & Co office we are enjoying the beautiful weather and speculating on what the Summer Budget next week may bring.
Capital Gains Tax
The Conservative manifesto promised to build a strong economy whilst committing to no increases in VAT, National Insurance contributions or Income Tax. The only mention of Capital Gains Tax, however, is in relation to the ability to transfer ISAs to your spouse tax-free. This makes me question whether there will be broader changes to Capital Gains Tax. The current rates of Capital Gains Tax are lower than Income Tax (currently 18% and 28% as opposed to 20%, 40% and 45%), I wonder if this will still be the case at the end of next week?
The Summer Budget in June 2010 included the announcement that Capital Gains Tax would increase from 18% to 28% for Higher Rate Taxpayers. This was effective from the day following the announcement giving people very little time to take advantage of the lower tax rate before the higher rate was implemented. Individuals who are considering selling assets in the near future may wish to consider whether they would prefer to do so before 8th July to pre-empt a possible increase in Capital Gains Tax.
Relief on Pension Contributions
The Conservative manifesto also promised to raise the effective threshold for Inheritance Tax for married couples and civil partners to £1 million. This serves as a good reminder that it is never too early to undertake Inheritance Tax planning to ensure your loved ones are provided for.
The bad news for higher earners is that the higher threshold for Inheritance Tax will be funded by reducing the tax relief on pension contributions for people earning more than £150,000.
To pre-empt changes to relief on pension contributions that may come into force next week, Additional Rate Taxpayers may wish to review whether they have fully utilised their annual pension allowance for 2015/16. Not doing so could mean missing out on a tax saving of £13,500.
If you would like advice in relation to Capital Gains or Inheritance Tax planning, please contact us on 01761 241861 or at info@sestiniandco.co.uk
Rachael Poole (Assistant Director – Sestini & Co)
