Pre-Budget Planning

With just two weeks to go before the emergency Budget we are talking to many of our clients who have asked us about action they might take now, before potential tax changes are announced (22 June).

The sheer uncertainty of when any Budget changes might take effect makes definitive planning a difficult exercise. However, amongst the matters discussed have been:

• bringing forward planned disposals of assets hopefully to minimise capital gains and restrict the tax to 18% (10% with entrepreneurs’ relief) before a possible increase to 30%, 40% or perhaps even a top rate of 50%
• arranging for an offshore trust to make planned capital distributions now, while the CGT rate remains hopefully at 18% (28.8% maximum for gains distributed more than 6 years post-realisation) before a potential increase to perhaps as much as 50% (80% for older gains). Care is needed here because a back-dated CGT rate could give a worse position
• incorporation, to enable profit extraction by dividends, saving NICs
• planning for a clean move from the UK, to establish immediate residence, for income tax purposes, outside the UK
• paying pension premiums

In most years we have been able to advise clients in the run-up to a Budget on the basis of “act now before the Budget and …”. The particular circumstances of this emergency Budget mean we cannot be certain the changes announced on 22 June will not be back-dated to 6 April 2010 – though they may apply “immediately” or with effect from 6 April 2011.  

If you think you will be affected by possible changes, and want to discuss your position, please get in touch with your usual Buzzacott contact as soon as possible.

We covered some of the main areas which might be affected in our earlier eshot available here on our website­.