On 27 October 2021, Chancellor of the Exchequer Rishi Sunak announced a number of key spending pledges and tax changes. We have set out some of the highlights below: Businesses From April 2023, the qualifying expenditure definition for R&D tax relief will be expanded to include data and cloud costs. It was stressed that R&D will be refocused to ensure that the relief benefits the UK, hinting towards relief being restricted for R&D activities performed overseas. Further details regarding the government's plans for R&D, including tackling abuse of the relief and improving compliance, will be set out later in the autumn. The increase in the main rate of corporation tax from 19% to 25% was confirmed, and will apply fr...

Every tax year, a taxpayer is entitled to accrue pension contributions in accordance with their annual allowance (AA). The standard AA currently stands at £40,000 per year, however if you are a “high-income taxpayer” (i.e. adjusted income of £240,000 or more p/a, and threshold income exceeding £200,000 p/a), this AA will be restricted by £1 for every £2 in excess of the £240,000 limit, to a minimum AA of £4,000 (2020/21). These allowances apply across all schemes a taxpayer belongs to and includes all contributions i.e. those made by the taxpayer, their employer and any third party who pays on the taxpayer’s behalf. Where a taxpayer’s contributions exceed the aforementioned AA (whether standard or tapered) they will no lon...

The government has published the second Finance Bill of 2017, which contains a number of policies that were dropped from the first Finance Act 2017. The original Finance Bill 2017 was streamlined in order to pass the Bill into Law as a result of the decision to call a snap election in June 2017. The following legislative changes are included in the latest Finance Bill: a reduction of the dividend allowance from £5,000 to £2,000 from April 2018; measures to tighten and clarify the income tax treatment on termination payments (see our blog for more information); regarding pensions, a reduction in the money purchase annual allowance from £10,000 to £4,000 from April 2017; significant changes to the rules on non-...

Following the substantial reduction of the Finance (No. 2) Bill 2017 ahead of the June election, the Government has now published a new Finance Bill 2017 and has said that it intends to introduce it "as soon as possible after the summer recess". The effect of the new Bill will be to implement policies that were previously dropped from the Finance (No. 2) Bill 2017, including: The extension of inheritance tax to UK residential property held through offshore structures by non-UK domiciled taxpayers and trusts. The abolition of permanent non-dom status for individuals who have lived in Britain for at least 15 out of the preceding 20 years. A reduction in the money purchase annual allowance from £10,000 to £4,000 for individua...

Click here to download Issue 3, 2017 of the Personal Tax Newsletter. This issue contains details of the Summer Finance Bill 2017,  provides some insightful statistics on Income Tax, and reviews a recent case concerning maintenance payments from a Will.

Update -  the proposed changes to class 4 National Insurance for self-employed individuals have now been dropped. See here for further details.  A summary of some of the changes anounced by the Chancellor of the Exchequer in the 2017 Spring Budget, published on 8 March 2017. Income and Personal Tax Personal Allowance and Higher Rate Threshold The personal allowance is increasing from £11,000 in 2016/17 to £11,500 in 2017/18. The basic rate band will increase from £32,000 for 2016/17 to £33,500 in 2017/18. Individuals will therefore be able to earn up to £43,000 before paying higher rate tax. Dividend Allowance Reduction The current tax free allowance of £5,000 for dividend income is to be reduced to £2,000 fr...

Pension contributions can be a tax efficient way of accruing wealth for the future.  However, consideration should be made as to the potential tax consequences that could arise as part of pension planning. Benefits on Retirement Most schemes will allow an individual to take 25% of their pension pot tax-free upon retirement, subject to the lifetime allowance (£1m for 2016/17).  Therefore, a taxpayer could receive up to £250,000 (25% of £1m) of their pension pot tax-free upon retirement, with the remaining funds being liable to income tax.  Taxpayers should discuss the most effective options for drawing these funds with a qualified independent specialist. The government’s Pensions Advisory Service (TPAS) is available to taxpay...

The Finance Bill 2016 provides that undrawn funds will not become liable to inheritance tax for all deaths on or after 6 April 2011. In light of the new rules, there may be scope for tax planning as provided that certain conditions are met, the new rules may enable individuals to pass on undrawn monies from a pension fund to a beneficiary free from inheritance tax. In the event of the death of the individual before the age of 75, the pension fund can be passed to beneficiaries as a lump sum free from inheritance tax or income tax, regardless of whether benefits have been taken from the fund or not. Alternatively, the nominated beneficiary can continue to receive the pension fund as draw-down tax free. In the event of death after the ...

The Autumn Statement ’15 was accompanied this year by the Spending Review, which took primary focus. Please see below for details on what tax changes were included with the headlines and some that were sneaked into the underlying paperwork: - A 3% SDLT surcharge for second homes or buy to let residential properties. This was the main topic of debate at our recent seminar and will come into force from 1 April 2016 and applies to properties valued at £40,000 or above The challenges here will be around declaration of a house as investment/second home rather than the main home and policing this The surcharge will apply to companies in general, but necessarily corporate developers of property - Capital gains tax will be payable on disposa...

Here is a summary of some of the changes announced by the Chancellor of the Exchequer in the Summer Budget, published on 8 July 2015. Income Tax It is the government's objective to raise the personal allowance to £12,500 and the point at which high rate tax applies to £50,000 by the end of Parliament. Therefore, someone working 30 hours a week on the minimum wage (aged 21 or over) will not pay tax. The government will achieve this by: Increasing the person allowance from £10,600 for 2015/16 to £11,000 for 2016/17, and £11,200 for 2017/18 Increasing the basic rate band from £31785 in 2015/16 to £32,000 for 2016/17, and £32,400 for 2017/18. There has been an increase in the tax-free "rent-a-room" income from £4,250 to £7,500 ...