How might taxes inhe UK be raised in the forth coming budget on 24th March 2010 and what can you do to stop their effect and that of the forthcoming tax increases that come into effect on 6th April or shall we say prepare or plan for them. Also income tax rates rise to 50% on 6th April 2010 as a result of a previous budget. Many leading firms such as Tesco, Sainsbury's and Marks & Spencer are bringing forward the payment dates of their bonuses, in diect response to the Labour Government's introduction of a new 50 per cent tax rate. In the case of Tesco this will apply to some 1,700 employees and this includes those who earn a personal income above and below £150,000. The reason for this is simply that on 6th April 2010 the personal tax rate for those with income higher than £150,000 increases from 40 per cent to 50 per cent. Dealing with the forthcoming budget one leading accountant thinks that there could be increases ahead for inheritance tax and I have no doubt that there will continue to be an increse in stealth taxes. Increases in Inheritance tax Inheritance tax could increase to 50% for estates in excess of say £1m. Also as life expectancy continues to increase year on year it has been suggested that the period of time required for life time gifts to be exempt from tax to be increased from the current seven to perhaps ten or even fourteen years. Husband and Wife Company's After the election the Labour Governement may continue its rather harsh campaign to prevent mum and dad businesses from paying dividends in order to be able to use any lower tax bands that one of the partners may have. Reduce Gift Aid Higher rate tax payers who generously donate some of their income to charities under the gift aid scheme receive tax relief at 40%. In December 2009 the Government published some research that was looking at reducing the higher rate relief. That is I think extremely mean as often the charity can use this to increase the amount they receive. Increases in VAT Across the European Union the average rate of VAT is in the order of 20% and an increase in VAT is a quick and easy way to raise revenue. It has been said that a 20% increase could bring in more than £10 billion to the treasury's coffers. Capital Gains Tax The current chancellor of the exchequer Alistair Darling has played down any potential increase in CGT (capital gains tax) but with the new higher rate of 50% income tax this will give rise to many tax planning ideas people that could be liable to the higher rate may try to reclassify income as capital gains Salary and Dividends It is believed rhat many small unquoted firms have paid directors and high earners their next year salary this year in advance so as to speak. More than 20 investment trusts have brought forward their payment dividend dates. The reason for this is that the top tax rate on dividend income will rise from 32.5% to 42.5% on 6th April 2010. ISAS The ISA allowance increased from £7,200 to £10,200 for people over the age of fifty in October and increase for all folks from 6th April 2010. This is quite a big tax break as couples could put £20,400 placed into an ISA before 5th April 2010 and a like amount a few days later. I have computed some estimated figures that show that if a 50 year old placed £10,200 into an equity ISA each tax year and taking a growth rate of 6% they could get a total return of £290,000 a gain of £127,000 as opposed to £63,000 if this was invested out side of an ISA. This assumes a dividend Isa and Tax on the Income at 42.5%. Capital growth with re-invested income could produce even more increase but these figures are perhaps slightly on the conservative side. Retirement It has been reported by some that people were taking early retirement to access tax free pension cash ahead of 6th April 2010 when the minimum age for taking a pension will rise from 50 to 55. There are also rumours that the government may try to interfere with the 25% tax free element. The thinking behind this is that this was renamed the "zero tax-rated pension commencement lump sum "now if that is not a mouthful to say I do not know what is. I think "tax free cash sum" is far more attractive and the only reason for changing it is that of an ulterior one to increase taxes. Perhaps this is a fore warning of yet another Stealth Tax.
Please Rate this Article 5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
