The days are longer, there’s a sense of hope and optimism in the air, it’s time to embark on a good spring clean. A great opportunity to de-clutter, organise and refresh, to bring a sense of wellbeing and contentment. This concept to tidy and organise should also extend to your finances.
While there’s minimal change in the operation and structure of the taxation of UK individuals, the ‘no change’ element is significant Excluding the 1.25 percentage point increase to National Insurance and Dividend Tax rates from April 2022, and an increase in the National Insurance threshold to £12,570 from July, the big tax freeze is on.
Stemming from the Spring 2021 Budget when most major tax rates, bands and allowances were frozen until 2025/26, freezing is often regarded as a stealth tax. Estimates from the Institute for Fiscal Studies suggest by 2025 there could be five million higher rate taxpayers, a 900,000 increase7. They summarise, ‘Freezing things for a long period makes a big difference.’ By way of example, frozen allowances, growth in assets and accumulation of unspent income could see people falling into the Inheritance Tax (IHT) net.
Get your ducks in a row early in the new tax year
Effective tax planning strategies can help shield you from the chill this spring.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning.