The Chancellor’s March 2013 Budget confirmed many of the details that were initially announced during the Autumn Statement in 2012. However, further detail and clarification was also provided on a number of key areas;
Personal Allowance – (basic) £9,440
Age Related Allowance – (born 5 April 1938 – 5 April 1948) £10,500
Age Related Allowance – (born before 5 April 1938) £10,660
Basic Rate Threshold for Income Tax – £32,010
The reduction in the basic rate threshold will create more higher rate taxpayers as higher rate tax will be payable on income above £41,450. The £100,000 personal allowance income limit and £150,000 additional rate tax thresholds remain unchanged. For individuals paying tax at a higher rate (40% or more) there are likely to be ways of mitigating, reducing and managing your income tax liability.
Nil Rate Band – £325,000
The nil rate band is to be frozen until 2015, with further legislation expected to extend this a further 3 years. The extension of the freeze on the nil rate band together with the recent rise in asset values is likely to lead to more estates being potentially liable to inheritance tax. If an individual’s estate is valued at more than £325,000 or a married couple have assets greater than £650,000 then there are several exemptions and allowances that can be used to reduce the potential inheritance tax liability. In addition, there are various arrangements, trusts, and investments that can be used for effective inheritance tax planning.
Capital Gains Tax
Capital Gains Tax Exemption – £10,900 (£5,450 for Trusts)
We believe the capital gains tax exemption is an often under utilised exemption. By investing for capital growth and/or making regular use of the capital gains tax exemption a structured portfolio can provide a tax efficient return for both individuals and trustees.
ISA Allowance – £11,520, of which up to half (£5,760) may be a Cash ISA.
Junior ISA – £3,720
ISAs continue to be a popular investment due to their tax efficiency. The Government’s proposal to consult on broadening the range of qualifying investments for Investment ISAs to possibly include shares traded on the Alternative Investment Market (AIM) and similar markets will make them even more attractive for investors.
For holistic financial advice speak to an experienced, qualified adviser at Springfield Financial Services.