Here are some things to think about following yesterday's Budget
The ISA limit is being raised from £7,200 to £10,200 for 2010/11 and will increase each year after that in line with inflation.
Is now the time to look at moving ‘traditional’ savings to an ISA? Don’t forget to compare rates!
Offshore Tax Evasion
Following a series of ‘disclosure windows’ for offshore tax evaders, these have now slammed shut. The Chancellor has announced three new tax disclosure arrangements between HM Revenue and Customs (HMRC) and tax haven countries and tax penalties for offshore tax evasion are effectively being increased by 50 per cent.
Take advice if you have undisclosed offshore income.
Use of Tax Losses
The temporary extension of trading loss carry-back from one to three years for losses up to £50,000 continues for the 2008/09 and 2009/10 tax years for unincorporated businesses.
Before making a loss claim, consider carefully what the best claim to make will be.
You are reminded that restriction of higher-rate tax relief comes in fully next tax year for high earners.
A review of your pension arrangements may be in order.
Losses on Investments
Losses Due to Financial Services Act Regulated Products
Anomalies in tax treatment can arise where compensation is paid to policy holders etc. as a result of the operation of the Financial Services Compensation Scheme. Tax law is being altered to ensure that compensation scheme payments are treated as if they were the ‘normal return’ of the investment concerned.
Capital Losses on Insurance etc. Policies Held as Investments
The Government is to legislate to improve the availability of ‘life assurance deficiency relief’, the practical effect of which is that people who have lost money on policies held as investments will benefit from reduced tax at the higher and dividend rate.
If you have lost money through an FSA regulated investment, take advice.
Inheritance Tax (IHT) Threshold Frozen
The IHT threshold, which was planned to be increased to £350,000, has been frozen – for four years – at £325,000. This is a rate which traps those with relatively modest estates.
If you haven’t done an IHT planning exercise, now is the time to start.
Working Tax Credits for the Over 60s
From 6 April 2011, people aged 60 and over will qualify for Working Tax Credits if they work at least 16 hours a week. Currently, those aged 60 and over qualify for Working Tax Credits if:
•they work 30 hours or more a week;
•they work 16 hours or more a week and they have dependent children or qualify for the disability element; or
•they work 16 hours or more and they are returning to work after being on certain benefits for six months or more (only available to the over 50s).
The Chancellor announced that he is to double the stamp duty threshold to £250,000 for first time buyers with immediate effect (from midnight tonight). In addition, the rate of stamp duty on homes over £1 million will increase from 4 to 5 per cent.
Housing benefit is to be cut for those in expensive properties.
If any of the items in this bulletin apply to you, please get in touch. The end of the tax year is 5 April for individuals.