HMRC staff scheduled strike action for today. Not the most auspicious backdrop to today’s Budget.
Jeremy Hunt has been Chancellor for five months now. It feels longer than five months, maybe because the UK has been getting through its Chancellors quicker than a disappointed customer at an evening’s speed dating.
Looming large for many of my clients is the impact of the recent cuts in funding to the arts. These have been badged as a levelling up, however together with the reduction of funding for arts subjects in Higher Education, they are devastating for many individuals, and a heavy blow for creative and performing arts in and around London in particular.
Key income tax rates and allowances can be seen here. Much was made of the welcome but limited measures to help lose on benefits and lower incomes, families with childcare costs, and of plans to curb inflation which potentially will help anyone struggling with increased costs of living. The lifting of certain limits on pension contributions is largely a response to senior health workers choosing to retire early rather than stay in work, after previous changes to the rules on taxation of pension contributions backfired. Preannounced but not mentioned are static or decreasing tax thresholds. On top of high inflation, this means that more people will pay more tax next year.
End of tax year planning and actions
Make sure you are signed up to HMRC online services with Gateway access and a ‘Tax Account’ here if you aren’t already. (Or retrieve your login details if you need to!) This is becoming essential as more and more tax information and organisation is done online.
For any clients whose 2023 payments on account we reduced, check whether the estimates we used still seem realistic, depending on how recent months have gone. If income has been better than expected, that’s great, but if the payments on account were reduced, it is worth checking whether in hindsight, these should be readjusted.
The capital gains tax tax-free allowance is reducing to £6,000 this April, then to £3,000 in April 2024. Anyone with sales at a gain coming up (such as investment properties, or valuable instruments which have gone up in value), to get the current, higher allowance, the sale needs to be done (or at least unconditional contracts exchanged) by 5 April this year.
Anyone unsure whether they have a complete record of national insurance payments since 2006, do check your NIC record online or by phoning 0300 200 3500. It is possible in some cases to make additional, voluntary contributions if you wish until July of this year. Details are here.
For clients with 31 March or 5 April accounting dates, consider spending on tax-deductible items you are planning to buy in the next few months during March, to get the benefit of these in the next tax return.
For taxpayers who pay tax at 40%, consider making an extra payment into your personal pension or your chosen charities to arrive by 5 April, to save tax in the 2023 tax return. For clients who are not usually higher-rate taxpayers but have had increased income recently, we can run a quick estimated calculation to help you think about making pension or charity payments (and for pension payments, to make sure you stay within the current limits for tax relief).