It was difficult to find any changes proposed in the budget last week that gave rise to great optimism or that swept away the nagging feeling that we are not out of the woods just yet.
We have summarised below some of the issues that will affect actions that we should perhaps consider between now and the end of the present tax year.
When reading these suggestions please bear in mind that you should take advice before acting on any of the ideas shared. Every business and individual has, to some degree, unique circumstances, and these must be carefully considered before making any changes to your tax planning options.
We have restricted our comments to ideas that it may be wise to consider before the end of the 2021-22 tax year (before April 2022).
- To counter the freezing of the income tax personal allowance and higher rate threshold, it may be beneficial to consider any planning options that would reduce your taxable income for the current year and next year. These could include deferring bonuses, increasing pension contributions, considering charitable donations, and reducing taxable benefits.
- As NIC contributions and tax on dividends are increasing next year (by 1.25% to meet health and social costs) now may be an opportune time to consider reworking how you extract funds from an owner/managed company.
- Benefits in kind will also increase from April 2022. This may be due to increases in taxable benefit rates and increased employer Class 1A NIC charges. Time to reconsider any benefits you take or provide? A change to electric cars for example.
- If you were born after 6 April 1973, you may have spotted that the minimum age that you can access your pension savings without incurring unauthorised tax charges, is changing. Presently, it is age 55, but from April 2028 it is increasing to age 57. If this affects you, and you are in business, you may need to rethink your business exit options. Effectively, you may need to work for a further two years.
These are just a few of the issues that you may be wise to consider before April 2022. To ensure all your bases are covered, please call when you have read this post and we will look at all your planning options.