Preventive action ahead of the budget

masonic

hallmark said:

I've thought all along and still do that there is going to be a dramatic increase in council tax.  Unfortunately for most people there's no way to mitigate or minimise that (which is precisely why I think it'll happen).

Council tax could do with a complete overhaul. Could be replaced with a land tax so that homeowners and renters taking up a reasonable footprint aren't much worse off overall, but tax is broadened in scope to fall on other landowners. Then incentives could be created for development towards the govt's house-building targets. And landowners won't be able to hide it offshore.

jimjames

Albermarle said:

TheBanker said:

Albermarle said:

clive0510 said:

BCE1200 said:

One question that I see over 55s discussing is whether to grab the 25% tax free pension amount before October.

I don't think that hitting SalSac would raise as much tax as expected, owing to behavioural effects.  

with reference to the 25% question, if I was to draw that from my pension in the hope of avoiding the taxman, where would be the best place to put that money? all ready maxed out on isa allowance. 

The likelihood of the 25% tax free being removed must be extremely low.

So taking steps to avoid something that will most likely never happen woukd not be sensible.

Personally, I think they might decide the 25% is overly generous and want to make changes. But I think this will be a longer-term change. They will recognise that people will have built plans around the 25% (e.g. paying off mortgages), so they might need to introduce some form of protected rights or phasing in. This means it could raise more tax over the longer term, but won't help with the short term defecit.

I think the Annual Allowance is likely to be cut for 2025/6, and we might see a return of a modified Lifetime Allowance.

I also think ISA subscription limits are likely to see a reduction. I think we will get formal confirmation (if we haven't already?) that the Great British ISA is not going to go ahead, but I wonder if they will try to do something to incentivise S&S ISA holders and SIPP holders to invest more in British companies?

And there will be the usual increases to fuel/alcohol/tobacco duty, road tax, the cost of passports etc. 

I'd like to see them look at the £100k tax trap, having fallen for this myself once. I suspect it could be revenue neutral or even positive, given I do everything I can to keep my taxable income below £100k, including buying extra annual leave. If I didn't lose my personal allowance at £100k I would probably pay more tax overall as I'd be paying 40% tax + 2% NI on the income instead of finding ways to make it disappear. 

Without the 25% tax free, or a reduced amount, pension saving for a 20% taxpayer becomes more unattractive.
Capping the total amount of tax free cash possible at a lower figure than now, is possible though.

I think a lower cap is entirely possible. The amount that the average person has in pension is well below £400k so capping at £100k tax free will affect relatively few and probably be seen as a fairer option. Reducing annual allowance also seems fair, I couldn't see why it needed to increase from £40k when again very few are able to use that amount.

Edit - actually quite shocking how low the averages are. With a few very high pots that means there are some with virtually nothing saved for retirement

https://www.hl.co.uk/pensions/average-pension-pot-by-region

MarcoM

What do posters on here think about the inheritance tax changes?
If they remove gifting rules are they likely to apply to pre budget gifts?

Dazed_and_C0nfused

flaneurs_lobster said:

subjecttocontract said:

VXman said:

subjecttocontract said:

Well the fuel duty one is hardly worth worrying about, 5p or 10p a litre extra might save you £5 by topping up the day before but I'll probably be doing something far more important than that.

I've stocked up on alcoholic drinks so we can at least get drunk and make the pain go away for a few hours.

I've ordered 50 petrol cans - will fill those up gradually until October. 

Can't work out if this is genuine or a wind up.......😁😁 You have got to be joking.
50 X 5 litres = 250 
250 litres X £0.10p (potential saving) = £25 which is less than the cost of the petrol cans !

If it's not a wind-up  then it's illegal - 30 litres is the limit to store at home without a licence (and you're not allowed to keep it in the bath).

Tell me about it, evaporates far too quickly for my liking 😳

LHW99

I think this just about sums up all the speculation

https://www.express.co.uk/finance/personalfinance/1943501/Keir-Starmer-smoking-ban-NHS-waiting-lists-Labour-policies

(yes, I know, but it's a good laugh)

slinger2

MarcoM said:

What do posters on here think about the inheritance tax changes?
If they remove gifting rules are they likely to apply to pre budget gifts?

Given that the basic allowance has been unchanged at £325k since 6 April 2009, I'd have thought they'd simply leave the basis system alone. To raise more money they need to look at how the wealthy avoid paying it.

UncleK

masonic said:

hallmark said:

I've thought all along and still do that there is going to be a dramatic increase in council tax.  Unfortunately for most people there's no way to mitigate or minimise that (which is precisely why I think it'll happen).

Council tax could do with a complete overhaul. Could be replaced with a land tax so that homeowners and renters taking up a reasonable footprint aren't much worse off overall, but tax is broadened in scope to fall on other landowners. Then incentives could be created for development towards the govt's house-building targets. And landowners won't be able to hide it offshore.

There was session on this on the podcast "The rest is money" speculating on a 0.5% tax on the value of people's property. As mentioned, it would be difficult to avoid, and of course, people whose homes have massively increased in value since council tax was introduced might not be happy, but the argument used (should it happen - speculation, remember) - will no doubt be one of "fairness". But the amount it could bring in would be staggering, as would the administration in assessing value and exemptions! 

strawb_shortcake

See one newspaper is running with the single person council tax reduction may be scrapped. There were also comments about students not paying council tax, guess this may be misguided in some respect.

 I think there could be some reform though, when my OH went to uni as an adult his student loan increased our finances, but our council tax went down. Was nice for us but completely uneeded. Obviously others will have different views 

Sea_Shell

MarcoM said:

What do posters on here think about the inheritance tax changes?
If they remove gifting rules are they likely to apply to pre budget gifts?

I wonder if they'll remove the "loophole" of being able to do a Deed of Variation, to pass on an inheritance so avoiding your estate becoming (more) liable?

Albermarle

MarcoM said:

What do posters on here think about the inheritance tax changes?
If they remove gifting rules are they likely to apply to pre budget gifts?

I think that there have not been any changes for some years, and no recent announcements.
Of course there is a lot of second guessing and speculation, some of which is quite fevered.
Probably best to wait until the budget, where some changes may or may not be announced.