YET ANOTHER CHANCELLOR – BIG CHANGES IN THE BUDGET?Mar 05 2020
It is almost 18 months since the last budget, and we will have had three different chancellors in this time following the unexpected resignation of Sajid Javid. The early years of a new Parliament are a good time to make radical changes and many are predicting significant tax announcements on March 11th.
Rather than increasing headline tax rates it is understood that the government are considering the abolition or restriction of many tax reliefs that we have got used to relying on. This would also have the effect of increasing tax revenue, but it is likely that the changes will impact on those who are better off.
WILL PENSION TAX RELIEF CHANGE IN THE BUDGET?
There are frequent rumours that pension tax relief will change in the Budget. This is even more likely this year as the new government looks for additional tax revenue to fund its ambitious spending pledges such as the HS2 rail link.
There is speculation that the restriction for those with income over £150,000 may be removed but at the same time higher rate tax relief may be removed. One suggestion is that tax relief may be “simplified” by limiting relief to say 25% or 30% so that the government would increase a £750 pension saving to £1,000 but with no further tax relief.
If you have surplus cash you might wish to consider maximising your pension relief before budget day.
FURTHER CHANGES TO ENTREPRENEURS’ RELIEF?
Another tax relief that could be restricted or even abolished is CGT entrepreneurs’ relief. This relief allows business owners to pay just 10% CGT on the first £10 million of capital gains when they dispose of their business. When first introduced, the relief only applied to the first £2 million of gains. The limit has increased twice since 2008 to the current lifetime limit so look out for the relief to be limited again in the March budget.