It’s not at all surprising that since I wrote my article COVID – who pays for the recovery, there continues to be further speculation about the tax measures we might expect from the Chancellor.
Last weekends’ newspapers included column inches dedicated to suggestions of a Corporation Tax rise from 19% to 24% and Income Tax increases, specifically in relation to company dividends. Potential increases to Capital Gains Tax are still a headline topic and there is also the suggestion of a restriction on pensions relief.
As I noted in my original article, we don’t have any inside track on this and it’s impossible to give specific answers about what you should do because it all depends on your individual circumstances. That and the fact that we don’t know what, if anything, the Chancellor will change until he makes his Budget announcements, rumoured to be in October.
Whether any of the predictions become reality remains to be seen, however, some things you could think about doing before the Budget to try and mitigate against the impact of any tax changes include:
- If you take dividends from your family company each year, perhaps consider voting all dividends for the current tax year prior to Budget day. Similarly, if you were thinking of taking a larger “one-off” dividend for any reason, it may be prudent to declare it beforehand.
- If your company is likely to realise any large gains, it would be good to do so ahead of the budget in case there is an immediate rise in corporation tax rates. Whether this sort of action would result in a significant tax saving may in part depend on the company year-end, as corporation tax is charged by reference to the company accounting period. You are well-advised to take specific advice if this is something you are contemplating.
- If you were thinking of taking advantage of your available pension contributions allowances this tax year, it may be prudent to do so before budget day.
These are just suggestions around the timing of actions you may already be considering and shouldn’t be taken as advice to initiate any decisions based solely on tax planning. Planning can be difficult at the best of times, but when trying to mitigate against potential tax hikes, it really is worth spending some time exploring your options and getting the right advice.
As I’ve said before, we’re not in the business of crystal ball gazing, but we can help you think through your options and take sensible action, so get in touch with me by calling 0113 297 6825 or email firstname.lastname@example.org