03 June 2020
The cost of the unprecedented package of support measures which the Government have introduced in the face of the COVID-19 pandemic has been huge and it is clear that there will need to be a significant re-balancing of the national books in order to accommodate that unanticipated spend.
Few can doubt that tax measures will be amongst the tools used by the Chancellor to pay for this financial support.
Delivering his first Budget on 11 March 2020, a speech that seems as distant a memory as going to the pub or visiting friends and relatives, Rishi Sunak alluded to a second budget later in 2020, probably in the Autumn. No-one appreciated at that time how dramatic an effect COVID-19 would have on the country and speculation is now growing that there will be a much earlier emergency budget announced, fuelled by a comment Boris Johnson made in front of the liaison committee on 26 May that an economic recovery package would be brought forward in late June or early July.
The adage ‘make hay while the sun shines’ is one way of looking at this speculation. There are a number of allowances, reliefs and exemptions given with reference to tax years and whilst it is unusual for tax rates or allowances to change mid year, it is not unheard of (George Osborne saw to a mid year change in capital gains tax rate in 2010, in times much more normal than these).
We urge readers to consider the following.
Have you used your:
- ISA contribution allowance
- Pension contribution allowance
- Capital gains tax annual exemption
- Dividend allowance
- Inheritance tax annual exemption
- Are you likely to realise taxable capital gains this year? Could the sale be sped up to lock in current rates of tax?
- Are you planning gifts as part of succession or inheritance tax planning? Could these be finalised ahead of any budget announcement?
- Are you buying a house or other land/buildings? Is it attractive to speed up the purchase to lock in the current stamp duty land tax regime?
- Are you considering accessing a pension tax free lump sum in the near future? Does accelerating this ahead of the budget seem sensible?
In short, if you’re considering anything that only occurs annually, transactionally or once in a lifetime, think about the current tax regime and what the effect of changes to that tax regime might mean to you.