With great power comes great responsibility
11 March 2015
- Stan Lee, 1962
Stan Lee was referring to heroes such as Spiderman, Captain America and the Fantastic Four but, in a few weeks, the people of the UK will decide who will have the ‘power’ and the ‘responsibility’ to decide, perhaps not the future of mankind, but at least your tax future!
A new Government in May this year could bring with it changes to tax legislation that could reduce current tax planning opportunities, in a bid to drive up tax revenues.
At Springfords, we'd like to guide you through the existing tax planning rules, and the run up to the end of the tax year is an ideal time to ensure you take full advantage of what’s available now – some opportunities might not be around for long!
There may be a number of areas on your 'Tax Manifesto', but some of the more common themes you might want to think about could be:
- Personal Allowances – will you ‘use them or lose them’?
- Capital gains – have you utilised your annual exemption where practical to do so?
- Annual Investment Allowances – for those in business, should you take advantage of 100% tax relief?
- Charitable donations – can you reduce higher rate tax costs and possibly carry back tax relief?
- Tax efficient investments – have you used your ISA entitlement, and would you consider the Enterprise Investment Scheme or other similar tax efficient investments?
- Inheritance Tax – have you used your £3,000 annual exemption this year/last year?
- Married couples – could you transfer income generating assets to minimise tax costs or register to transfer allowances?
- Business structures – if you’re self-employed, have you considered becoming a partnership or incorporating?
- Profit extraction – are you minimising your exposure to higher rate tax, or is there a more economical way to extract income from your business?
- Furnished holiday lets - those affected by the 2012 change to the rules (see our September 2014 article here) may only have until 5 April 2015 to take advantage of a 10% rate of capital gains tax on a property sale.
There may be other annual tax planning topics that are of interest to you, (please feel free to give us a call if you’d like to discuss) but we’d also like to highlight some important tax changes which have effect from April 2015, and which could impact on you or your family:
- Pension Funds – major new pension flexibility and a much kinder Inheritance Tax regime for pensions will give more scope for the future (we've all probably read speculation in the press about post election changes, so it may be worth acting now).
- Non-Residence – the new capital gains tax rules for non-UK residents who own UK based property will apply, resulting in potential future gains being taxed in the UK.
- Incorporations – there will no longer be scope to obtain a 10% rate of tax on incorporation capital gains, but there may be alternative routes that can be used, and incorporation may still be beneficial regardless.
- Capital allowances – the level of Annual Investment Allowance for those in business will reduce later in the year (from 31 December 2015) from £500k to just £25k.
With the General Election around the corner, we can help give you the power to take control of your tax affairs in a responsible way NOW before the landscape has a chance to alter. Why not have a look at our ‘30 days of tax planning tips’ on our Facebook page, for more ideas?
Just get in touch with your usual Springfords contact if you'd like to speak to someone.
This is a general guide which is intended to give background information and is not a substitute for taking specific advice based on your particular circumstances.