By Neil Armstrong, Tax Director
They have been the subject of great controversy and protest since their announcement in October 2024, but various changes to taxes – be that inheritance tax, stamp duty, capital gains tax, or Employer National Insurance contributions – are coming into effect in April and tax planning that allows both individuals and businesses to maximise their tax-free reliefs and allowances has taken on an even greater importance than usual.
On the individual front, there is an annual allowance of up to £60,000 gross, dependent upon circumstances, that can be paid into a pension. Pensions offer tax free growth and contributions can be made on a personal basis, attracting Income Tax relief at your highest marginal rate. If an employer makes contributions for an employee, these contributions can be offset as an expense against Corporation Tax.
Individuals looking to maximise their savings allowance should be aware that they have either £500 or £1,000 dependant on their personal circumstances. Of course, ISAs also allow for substantial tax-free savings, with the allowance currently standing at £20,000 per annum.
Capital gains tax was one of the headline changes announced in last October’s budget, with the rate increasing from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher rate taxpayers. Anyone considering selling an asset soon may want to consider utilising this year’s CGT allowance of £3,000 before the tax year end as any unused allowance cannot be carried forward. Further changes will affect the disposal of business assets with the first £1 million of eligible gains increasing from 10% this year to 14% on 6 April 2025, and then increasing to a further 18% in April 2026. Anyone planning such a sale should consider how they time these disposals as it will cost them more the longer they hold off.
In relation to Stamp duty, from 6 April 2025 the threshold at which individuals need to pay stamp duty will be halved from £250,000 to £125,000, again meaning that buyers should take timing into account.
The above points in relation to utilising allowances and tax-free reliefs is advice that can be applied to anyone with regard to the tax year’s end and timing is key to maximise them all.
To discuss any aspect, please get in touch with Neil Armstrong, Tax Director T: 028 9032 3466 E: neilarmstrong@bakertillymm.co.uk
This article first appeared in The Irish News on 18th March.