New plans for a new tax year?
The clocks have gone forward, Spring is certainly upon us and the economic climate, while still unsettled, is expected to end the year on a firmer footing.
The major news from the Spring Budget was that the lifetime allowance for pensions has been effectively abolished, intended to encourage some higher earners in the workforce to stay employe, or return to work The annual allowance has also increased to £60,000, giving more freedom and flexibility to pension investments. Where the Chancellor was a giving mood in March, however, he had already used the Autumn Statement to lower the additional tax rate threshold, potentially bringing around 250,000 people into the higher bracket. With most thresholds frozen and reductions to the dividend and capital gains allowances, focusing on your tax planning early in 2023/24 is likely to be a priority.
Those expecting to be brought into the Making Tax Digital reporting framework have been granted a reprieve. The original earnings threshold for inclusion of £10,000 for self-employed workers and landlords has been increased to a more reasonable £50,000, and put back until 2026/27, with those on £30,000 or more due to start digital reporting the following year. The original timetable for the rollout of this project was due to complete in 2020, but it has been subject to numerous delays. So far only the MTD strand for VAT is up and running, and perhaps 2030 has become a more realistic completion date.
It seems we in the UK have a collective blind spot when it comes to ‘common law’ marriages. More couples are choosing to cohabit rather than form a civil partnership or get married, and many assume that this arrangement will still afford them rights over assets, and any children, in case the worst happens. While the law has recently changed to grant bereavement benefits to cohabiting partners, when it comes to inheritance or separation, these relationships are not automatically recognised. If you are part of this growing cohort of couples, you should take steps to make your own arrangements for any property, insurance or caring responsibilities you share.
For updates on these issues, as well as market activity that could affect your financial planning, please see our spring newsletter. We will continue to monitor the effects of inflation, and other outcomes from the new financial year, so our next newsletter will bring you the latest on managing your financial future.