There will be a second budget on 8 July in which it is to be expected that some at least of the Conservative party’s election commitments will be put into effect. The word on the street is that the Treasury are burning the midnight oil and that there may be some significant changes introduced.
In the run-up to the election, a promise was made that both the Personal Allowance and the threshold for the payment of higher rate Income Tax would be increased: but we do not expect those increases to happen in the near future. Increasing any of the rates of Income Tax, NIC or VAT has been ruled out for the duration of this Parliament. That does, conspicuously, leave CGT out in the cold. In the past (remember 23 June 2010? We do.) CGT rates have been increased mid-year: it could happen again, so if you are contemplating a disposal around now, it may perhaps make sense to make the disposal before 8 July.
There was a manifesto commitment to restrict tax relief for pension contributions for taxpayers earning more than £150,000 per year. The proposal outlined has been that for every £1 by which your income exceeds £150,000, you would lose 50p of your £40,000 pension annual allowance, down to a minimum of £10,000 for incomes exceeding £210,000. It has also been speculated that some tightening-up on the carry-forward rules might be contemplated. It would be messy to introduce either change mid-year, but not impossible: so readers may wish to take urgent advice as to the desirability of making pension contributions before 8th July – especially because the changes in pension rules already in force make pensions an attractive IHT planning device for many.