You may have noticed over the past few weeks that there have been a number of personal tax related headlines, changes and announcements. Here’s a summary and my thoughts on a few…
Abolition of Inheritance Tax
This has been doing the rounds for the past few years and one begs the question, if it were to be abolished, where else would the tax take come from? Lifetime taxes, one would presume, so income tax and capital gains tax. Pre-Covid, the Office of Tax Simplification suggested some far-reaching changes to inheritance tax and capital gains tax but we’re yet to see any significant changes to either of them. Watch this space!
And here are some numbers for you… it was originally thought that freezing the level at which an individual starts paying inheritance tax at £325,000 until 2028 would bring an extra 13,400 families into the scope of inheritance tax. But it’s now thought to be nearer 49,400!
Self-assessment phone line
This is closed until 4 September. HMRC say that they have increased advisors on the web chat tool and have pushed other online forms of help. This summer shutdown may become the norm if HMRC think that this trial went well. Let’s hope not as there’s nothing better than speaking to a real human – and not everyone has access to, or can do, online communication.
Dividends received by Directors (and other extra reporting)
HMRC have announced that from April 2025 there will be new requirements for employers, owner-managed businesses and the self-employed.
Directors of companies where they also own shares will need to separately show dividends from those companies along with the percentage shareholding that they hold on the dividend pages of the tax return. Any other dividend income will be shown separately.
Employers will be required to provide detailed information about how many contracted hours are worked by employees using real-time information (RTI) reporting.
Those who are self-employed will need to include the start and end dates of their self-employment on their tax returns from the tax return ending 5 April 2026. If this information is omitted, there will be a penalty of £60!
Changes to pensions (again)!
The Government has set out its proposals to replace the lifetime limit from 6 April 2024. Two new lifetime limits would be created under the plans:
- A ‘Lump Sum Allowance’ set at £268,275 – a quarter of the current £1,073,100 lifetime allowance, and
- A ‘Lump Sum and Death Benefit Allowance’ set at £1,073,100 – incorporating both tax-free lump sums someone takes while alive and lump sums paid on death.
The Government is also considering adding further legislation to tax pensions inherited if someone dies before the age of 75 (which are currently tax free if taken as a lump sum).
Again, watch this space!
If you have any questions or require any assistance, please get in touch with our Private Client team who would love to help.
