Posted: 16 / 03 / 2023
Article by: David Evans, Head of Private Clients
Image: Posted by: HM Treasury and The Rt Hon Jeremy Hunt MP. Photographer: Andrew Parsons, OGL 3, via Wikimedia Commons
From a Private Client perspective, this was a Budget of few surprises given the leaks in the run up.
There were no changes to the previously announced reductions to the thresholds at which taxpayers pay the highest rates of income tax, and at which the tax-free personal allowance begins to taper away. Remuneration planning for Private Clients is now more important than ever in order to maintain tax efficiency and avoid paying more tax than is necessary.
There were also no changes to the previously announced reduction to the capital gains tax annual exemption which comes into effect from 6 April 2023. Private Clients should therefore consider the timing of capital disposals to mitigate the capital gains tax arising. Please speak to us if you are considering disposing of an asset as it may be possible to minimise the capital gains tax.
The increased pension annual allowance combined with the abolition of the lifetime allowance will allow Private Clients some welcome tax relief, and for some, pensions are now back on the table as a tax planning tool. Interestingly the Labour Party has already announced that it will seek to reverse the policy should it win the next general election.
Following these changes, all Private Clients should review their pension positions to maximise the use of the allowances and we will of course be carrying out this exercise with our clients. Abolishing the lifetime allowance could also create some inheritance tax planning opportunities as funds held within a pension can be outside the inheritance tax net.
Sticking with the pensions theme, the deadline for making voluntary National Insurance Contributions going back to 2006 has been extended to 31 July 2023. Anyone with gaps in their National Insurance record from April 2006 onwards now has more time to decide whether to fill the gaps to boost their new State Pension. All Private Clients should review their position before the deadline.
SPRING BUDGET 2023
How does the Spring Budget 2023 affect you, your business and your team?
Download the full guide at sedulo.co.uk/budget.