Start your tax year-end planning early this year
The General Election on 12th December is a great opportunity to bring forward your tax year end planning.
Some individuals view the first quarter of the calendar year as the time to implement their annual tax planning, benefitting from reliefs, allowances, and exemptions that are available to them throughout the year. The twist this year is that with the December General Election, there will likely be a Budget in early 2020, almost certainly before 5th April, and dependent on the outcome of the Election, the tax landscape could be very different before the 2019/20 tax year is out.
The General Election campaign is well under way, and while we are still awaiting full manifestos from the main parties, they are beginning to announce some of their key policies ahead of polling day. Even without said manifestos we can be fairly certain that tax under a Labour Government or Labour-led coalition, would be very different to that we are currently living with, most likely on all fronts – income tax, capital gains tax, inheritance tax and corporation tax. Similarly, from the papers released at their conference, the Liberal Democrats also have some fairly radical ideas on income tax, CGT, and IHT, which could see a significant shake-up to the current system. Rumoured policies from the Conservatives also suggest some tax changes, which although not so radical, could impact significantly on higher rate pension tax reliefs.
Clearly, without full manifestos having been published we do not know the exact changes. However, what we do know from what’s been said so far in the respective Tory and Labour campaigns is that both parties have ambitious spending plans, which will need to be financed in some way. The salient point from a personal tax and financial planning point of view is that whoever gets into power – especially if we have a Labour Government – the reliefs and exemptions currently available are unlikely to get materially better than they are currently.
We would therefore encourage all individuals to carry out a Tax Health Check prior to the Election and consider the opportunities available to them under the current system or there may be a risk of losing them before the tax year concludes.
Know your reliefs, allowances, and exemptions:
Pension Annual Allowance – contribute up to £40,000 to pension for 19/20
Pension carry forward – maximise unused relief from previous three tax years – 16/17 being the last year you may have had the full £40,000 allowance before tapering was introduced
ISA allowance – invest up to £20,000 for tax-free growth and income
Capital Gains exemption – realise gains of up to £12,000 per individual (NB. Children have CGT exemptions)
Dividend allowance – receive dividends of up to £2,000 tax-free
Gifting allowance – gift up to £3,000 to benefit from immediate IHT exemption
The information on this website is based on our interpretation of the current law and HMRC practice.
Taxation legislation and HMRC practice may be subject to unforeseen changes in the future.
The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.