In the News
New Government, old tax regime?
Since the creation of our new coalition government and the subsequent worrying reports of tax hikes, you could be forgiven for having forgotten the tax regime that commenced on 6 April 2010.
The changes implemented by the previous government included a 50% income tax rate for individuals with taxable income over £150,000 and more worryingly a rate of 60% tax for individuals with income between £100,000 and £112,950 due to the removal of the personal allowance.
Also, changes to the taxation of pension contributions mean that individuals could be the subject of additional tax charges, known as ‘Special Annual Allowance excess charges’. This applies if pension contributions have increased after 22 April 2009 and total income for the current or preceding two years is £130,000 or above.
So what, if anything, can you do in order to protect yourself if you fall within these boundaries?
In certain circumstances the following might be possible:
· ‘Switching’ income between spouses in order to utilise personal
allowances and lower rate tax bands;
· If self-employed or in partnership, consider becoming a director/shareholder of a limited company in order to benefit from the greater flexibility in the way profits can be extracted;
· Carefully consider the levels of any pension contributions in order to avoid ‘Special Annual Allowance excess charges’.
If you believe that you are affected by any of the issues raised above and would like to discuss them further please do not hesitate to contact Richard Massey on 01204 534031 or email richardmassey@warings.co.uk
29th June 2010