You may have noticed that a certain phrase came up more than once in the Chancellor’s Budget speech last week.<\/p>\n
The phrase went something like this:<\/p>\n
Allowances\/rates will be frozen at this level until April 2026.<\/em><\/p>\n That’s four years of flat-lining rates and allowances and it applies to income tax, capital gains tax, inheritance tax and pension tax relief.<\/p>\n At first glance this may seem like a good deal for taxpayers, no tax increases, but all is not what it seems.<\/p>\n Income tax<\/strong><\/p>\n Because wage rates tend to increase over time, and hopefully we should soon be moving out of recessionary times, then if your tax-free allowance is pegged to a fixed amount (£12,570 for income tax purposes), more and more of your extra earnings will be subject to tax.<\/p>\n The budget also pegged the basic rate threshold for income tax at £37,700 for the same period. This measure will likely mean that an increasing number of individuals will find themselves paying income tax at the 40% or higher rates for the first time.<\/p>\n Capital Gains Tax (CGT)<\/strong><\/p>\n As assets subject to CGT when sold, second homes for example, tend to increase in value over time, as the tax-exemption is being pegged – currently £12,300 a year – an increasing amount of any profit on disposal will be taxed.<\/p>\n Inheritance Tax (IHT)<\/strong><\/p>\n At present, lifetime gifts are potentially subject to this tax as well as your estate when you die. Currently, and until April 2026, £325,000 of your estate is exempt from this tax and your executors can also claim up to an additional £175,000 relief that relates to your family home.<\/p>\n As with CGT, as the value of your estate will likely rise in value between now and 2026, more of your assets will be subject to IHT.<\/p>\n Pensions<\/strong><\/p>\n In a similar vein, as the amounts of allowable pensions savings are being pegged at £1,071,100 and the annual contributions allowance at £40,000, it will not be possible to inflation proof your pension pots if you have already reached this savings limit (£1,071,100). In fact, you could top-up pensions savings above these limits, but punitive tax would be levied on any excess.<\/p>\n It will be interesting to see if the Chancellor can maintain this hiatus in tax allowances as the next general election looms, 2 May 2024.<\/p>\n","protected":false},"excerpt":{"rendered":" You may have noticed that a certain phrase came up more than once in the Chancellor’s Budget speech last week. The phrase went something like this: Allowances\/rates will be frozen at this level until April 2026. That’s four years of flat-lining rates and allowances and it applies to income tax, capital gains tax, inheritance tax […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[1],"tags":[],"class_list":["post-1288","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/1288","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=1288"}],"version-history":[{"count":0,"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/1288\/revisions"}],"wp:attachment":[{"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=1288"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=1288"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/slacc.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=1288"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}