Earlier this summer Tax Tuesday used not one, but two, editions to warn of future tax increases. We make no apologies for returning, an unprecedented third time, to this subject following last weekend’s news that Mr Sunak has three big tax targets already in his parliamentary briefcase:
The three targets are apparently thus:
- An alignment of Capital Gains Tax (CGT) with Income Tax
- A restriction of tax relief on pension contributions
- An increase in Corporation Tax
Let’s be brief and straightforward, here:
- An alignment of CGT with Income Tax
For those who might be at, or near, the question of succession to their business, there is potentially no more time left to prevaricate.
Talk to us about the merits and implications of a succession plan for your business now, including an exit at maximum value. There is enough time for that well-designed, well-managed solution to be established and put in place. For more on the matter, please see our earlier blog ‘Succession: Do not let CGT disappear before realising your exit value.’
Design in September, get cleared by HMRC in October, and have implemented in November, prior to Budget Day.
When the nominal CGT rate of is aligned with Income Tax (at 40% or 45%….) by a Conservative Government, the current favourable CGT rates will not be coming back any time soon. Please talk to us urgently.
- A restriction of tax relief on pension contributions
For those who hope to be able to use their pension contribution capacities and to access higher rate tax relief which currently still applies, we equally recommend treating the November Budget with the greatest of respect.
There is enough time for us to establish your capacities (current and carry-forward relief), to discuss the merits and implications of early contributions, and for you to take all good advice on the appropriate investment strategies with your pension provider.
When the higher rate tax relief is gone, it will not be coming back any time soon.
- An increase in Corporation Tax
For those operating through a limited company (that’s over 90% of us these days), there might be a limit to what we can do to avoid the spectre of a hike in the Corporation Tax (CT) rate. This will be on the meeting agenda for Harold Sharp clients in the coming weeks.
Timing of profit, access to capital allowances, the potential for R&D tax relief etc. etc. are all capable of playing their part in a well-planned, well-managed approach to short term CT liability.
When the current CT rate is gone, it will not be coming back any time soon.
Contact us
You have three months to work in – a window of opportunity which might yield handsomely if you act now. Please speak to your usual relationship principal, email tax@haroldsharp.co.uk or call us on 0161 905 1616.