Taxpayers planning to move around their assets have been urged to act now to sign a key document ahead of expected Labour tax hikes in the Autumn Budget.
Mark Routen, head of Tax at Hoxton Wealth, has issued a warning that Chancellor Rachel Reeves is likely eyeing up hikes to capital gains tax, inheritance tax and on pensions.
Sharing his predictions, Mr Routen said: “It is speculated that the rate of capital gains tax will be aligned to income tax.
“This could mean an increase from 20 per cent to 45 per cent in some cases, or in respect of property 24 per cent to 45 per cent.
“If you are considering selling an asset, to put in simply, you need to take action now and look to do it before the budget.”
He said those looking to sell assets need to take action now to get a key document in place even ahead of the actual sale.
The tax expert explained: “You do not have to complete the sale but get to the binding contract stage and this is the date that triggers the tax.
“You could also look to rebase the cost of any asset by selling and having your spouse purchase back or moving it into an ISA or corporate structure such as a family investment company.
“This could trigger an immediate charge but offer a potential saving of up to 25 percent long term.”
Turning to inheritance tax, Mr Routen said there could be an end to the reliefs for farmers and unquoted businesses, meaning now is the time to act.
He said: “If you are considering a gift, you should do it now while the gifts are available. There could be changes to the rate and other reliefs as well.”
He also said there could be “big changes” to pensions policy such as to the tax-free lump sum and tax relief on contributions.
The analyst warned: “Pension tax relief is very costly to the government and could come under attack in the budget.
“Labour may reduce the existing annual allowance of £60,000, or introduce a new flat rate of tax relief on pension contributions. Either way, higher or additional rate taxpayers will be the biggest losers.
“The message at this time is if you are considering a contribution make it before the budget and if you are looking to take your tax-fee lump sum also do this before the budget.
“The rate of tax on dividends could well be increased so if you are thinking of making a dividend or have large retained profits now is the time to consider making a payment.”
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