With much political turmoil, it is expected that there will be some changes to taxation.
The Office of Tax Simplification issued a report on the opportunities to simplify IHT earlier in the year, but due to the pre-occupation of Brexit, there has been no legislation passed through parliament.
With a general election a strong possibility, both the Labour and Liberal Democratic Parties have suggested some alignment between income and capital taxes, whilst the Conservatives are promising lower taxes for all.
So, what can you do from a Personal Financial Planning point of view given all the uncertainty?
Our advice as Chartered Financial Planners is to carry out a “Tax Health-check”; make sure you are using all your available exemptions, and if not, use them while you can.
Some of the allowances and exemptions to be used are:
- Income tax personal allowance and tax bands
- IHT exempt gift allowances; annual £3,000 exemption plus £250 small gifts allowance as well as gifts out of surplus income
- Annual Exempt Amount for Capital Gains purposes; currently £12,000
- ISA/JISA savings allowances (£20,000/£4,368)
- Pension contributions for non-earners (£3,600)
We are not being scaremongers, but if you are planning to use exemptions, now is not “get round to it” time; do it now! There will be changes.