Last month we knew that there would be changes, but now the new government have announced that their first Budget will be broadcast on 30th October.
Given that they’ve already been making a lot of noise about ‘financial black holes’, it’s likely that we’ll be getting some unwelcome news about tax increases and many of them will have a direct impact on businesses.
We don’t have a crystal ball and the rumour mill is in overdrive, but the signs are that this is likely to be the biggest changes in taxation that we’ve had for many years. We can expect increases in Capital Gains Tax (CGT) and probably a reduction in the pension annual allowance – and that’s just for starters.
If you’re in the process of selling an asset, it would be wise to make sure the sale goes through before 30th October, as it’s probable that increases in CGT will apply pretty much immediately.
If you’re selling a rental property, for instance, it’s time to light a fire under the solicitors to get things moving, so you only pay the current CGT rate of 24%. Keep in mind that it could go up to as much as 45%.
If you have not yet started the process of sale, it’s unlikely you’ll be able to get the sale to completion before 30th October. It’s probably sensible to hold fire and, once you know what CGT will be, make an informed decision about whether it’s better to sell or to keep your property and rent it out.
The other area where you can take action now is your pension. There’s an annual allowance of £60K that you can add each year tax free, but that allowance is almost certainly going to reduce dramatically. If you have the money, try to use your allowance now. The change in allowance may not take effect until April 2025, but it’s better to take action sooner rather than later.
If there are things you want to do that are currently possible, don’t wait until the changes have been made and it’s too late. There’s no guarantee what will actually happen, but worth hedging your bets.
