Only one in four respondents to an HMRC survey completely understood how the inheritance tax (IHT) system could work for them. How would you fare? A survey by HMRC of 947 people who had made gifts in the last two years was published in May and concluded that the public have a relatively poor knowledge of inheritance tax rules and lack of confidence in what they do know. To assess knowledge of the IHT system among these donors, they were asked eight questions, which are shown below…
Lump sum withdrawals under pension flexibility are resulting in over-paid tax due to emergency tax codes. Don’t be caught out. Recent HMRC statistics highlight the over-taxation of some pension benefits. More than one million people have received flexible pension payments thanks to the rules introduced just over four years ago. HMRC’s most recent statistics, to the end of March 2019, show that 1,113,000 people have withdrawn….
The tax year 2018/19 ends on Friday 5 April, which means it’s time to start planning for the new tax year and tie up the loose ends of the old one. Planning for the new tax year is now affected by the shift of the Budget schedule to autumn. The result is that changes announced in October, or in Scotland’s December Budget, have now passed into legislation in time for the new tax year. So, what does 2019/20 hold in store?
April is the one month in the year it pays to check your payslip with new tax and auto-enrolment rates coming into effect. Your April pay may look much the same as March’s, but it is worth giving your pay slip a close look. If you are an employee, your April pay slip is always worth checking, even if you pay little attention to the other eleven you receive over a year.
Future increases to the residence nil rate band might be in question, thanks to the OTS review of inheritance tax. Inheritance tax (IHT) will be slightly reduced for some from 6 April 2019, but greater reforms may well arrive soon. The reduction comes from the IHT residence nil rate band (RNRB) increasing by £25,000, bringing it to £150,000 for the 2019/20 tax year. In theory that means a married couple can pass on up to £950,000 (2 x nil rate band of £325,000 + 2 x RNRB of £150,000) to their heirs free of tax.
Changes to income tax, NICs and pension contributions are coming for 2019/20. One of the few certainties about 2019 is that the new tax rates and thresholds will take effect from the start of the 2019/20 tax year on 6 April and whilst the focus tends to be on year-end tax planning at this time of year, it is important to look forward to the new tax year and the changes that it will bring. From 2019/20 changes will come into effect for key income tax rates and thresholds, as well as pensions.
Two recent events have shone different lights on the government’s view of unmarried couples. As the graph shows, marriage has been drifting out of fashion for close to 50 years. There are now over 3.3 million unmarried couples in the UK, of which nearly half have children. In spite of this major social change, governments have largely maintained sharp legislative distinctions between the married and unmarried. When they have conflated the two, it is usually to swell the Exchequer’s coffers, for example when applying the high income child benefit charge to unmarried couples with children….
The long-term outlook for government finances suggests that tax increases are inevitable. The Office for Budget Responsibility (OBR) produces medium-term financial forecasts alongside the Budget and Spring Statement, but that is not its only task. It is also required to take a longer-term view of the public finances, producing a Fiscal Sustainability Report every two years. The latest version of the report was published in mid-July and did not make for comforting reading. This graph is a good summary
The start of the new tax year on 6 April marks several changes to tax and related matters that could make you richer… or perhaps poorer….
The 5th April is approaching fast so it’s important to take the time to give your finances a tax year-end check-up. Here are some of the key areas that could help you make the most of your money and ensure that you don’t miss the chance to make the most of valuable tax-efficiencies and allowances…