Mini-Budget: Reviewing your financial affairs

As of 17/10/22, Chancellor Jeremy Hunt has announced new budget plans.  To view our latest budget information, click here.

With the changes to tax rates confirm in the Chancellor’s Mini-Budget on 23 September, below are some things that you should consider when reviewing your financial affairs.

Individuals

Tax for individuals will be lower after 6 April 2023 due to the reversal of the increases to Health and Social Care Levy, NI and dividend tax rates; and bringing forward the reduction to the basic rate band.

Basic rate taxpayers may wish to consider:
• Postponing pension draw down until after 6 April 2023 – to reduce the tax rate by 1%;
• Postponing the disposal of investments which are subject to income tax on the gain, eg offshore single premium bonds or non-reporting offshore funds – to reduce the tax rate by 1%.

Higher rate and additional rate taxpayers in 2022/23 may wish to consider:
• Bringing forward the disposal of single premium bonds with a UK tax credit – to increase the tax credit by 1%.
• Refraining from bringing donations between 6 April 2023 to 31 January into 2022/23 – doing so would reduce the relief on grossed up donations by 1%.

Individuals may also wish to consider:
• Postponing dividends until after 6 April 2023 – to pay 1.25% less tax;
• Recalculating their payments on account for 2023/24 based on the lower tax rates (though any timing changes must also be reflected);
• Where capital losses can be claimed against income, claiming or carrying back losses against income for 2022/23 or earlier years;
• Where gift aid donations will exceed the tax paid in the year, delaying paying these donations until after 6 April 2023.

Individual landlords who are basic rate taxpayers should consider:
• Postponing income until after 6 April 2023;
• Bringing forward revenue expenditure to before 5 April 2023.
These steps are particularly relevant where the cash basis is used, though may also be achievable for clients using the accruals basis.

People buying a new dwelling:
The reduced SDLT rates for the tranche of consideration between £125,000 and £250,000 took immediate effect, so there are no planning opportunities.

Purchasers where the purchase has recently completed, or where completion is imminent, should consider:
• Whether the correct rates have been used on the SDLT return;
• Whether the transaction was substantially performed before 23 September, even if completion took place afterwards. If so, the old SDLT rates will apply.

First time buyers should consider:
• Making offers of up to £625,000, without giving up the SDLT relief for first time buyers which is worth up to £8,750.

If you would like to discuss reviewing your financial affairs, get in touch.