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Why 2012/13 is a year for urgent and inventive tax planning

Danby Bloch, 19 Apr 2012


 

There are at least four good reasons...

First it's the last year for which taxpayers can get the benefit of 50% tax relief on pensions and allowable expenditure. The good news for people with incomes of at least £150,000 is that they won't have to pay away half their income in income tax. The bad news is that next year the net cost of making a pension contribution will be more.

Second there is the proposed ceiling on certain tax reliefs that George Osborne also announced in the Budget – not on pension contributions, fortunately. These tax reliefs included those that apply most controversially on charitable gifts under gift aid. The aggregate limit will be the higher of £50,000 a year or a quarter of the taxpayer's income. So for that rare but important client who is a serious philanthropist, this is the year for that big donation – perhaps even to set up a charitable trust all of their own. This year such a gift will benefit from 50% tax relief with no upper limit – compared to next year when the relief will be a maximum of 45% and with the possibility of a stultifying ceiling. The backlash on this proposal has been huge so there may well be some rowing back; watch this space.

Third there is the introduction in January 2013 of the special new tax charge on child benefit – effectively gradually reducing it to nil on annual income of between £50,000 and £60,000 this year.

Finally there's the proposed new general anti abuse rule (GAAR) that the government aims to bring in, probably next year, which will further inhibit some current tax planning ploys.

And if you agree with this thesis, then you owe it to your business and your clients to come to the Taxbriefs High Net Worth Tax Planning Conference on 12 June. To find out more visit www.highnetworthconference.com

 


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Danby Bloch

Editorial Director, Taxbriefs

Danby Bloch is the editorial director of Taxbriefs, chairman of city-based IFAs, Helm Godfrey and director of Nucleus, an independent wrap provider.

Over a period of more than 40 years, Danby has established himself as one of the industry's leading thinkers and  is a respected author, lecturer and trainer on tax and financial planning.

 

 

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