Ahead of the Budget, tomorrow, clients are rushing to avoid potential tax grabs in areas such as Entrepreneurs Relief, pensions and Business Property Relief says Moore, the accountants and business advisors.
Lucienne Parry comments: “This budget has been advertised as being a radical one.” “This has made many taxpayers understandably nervous that some very important tax breaks may be removed in order to pay for a cut in income tax or an increase in spending.”
Business owners are selling their businesses
There are concerns that Entrepreneurs’ Relief could be cut. This has led to business owners accelerating plans to sell or dispose of their businesses in order to utilise this relief and help to reduce their CGT bills.
Lucienne Parry explains: “Clients that were already in negotiations to sell their businesses have accelerated that process.”
“For some entrepreneurs the tax savings at stake are very significant, making it well worth pushing for an early completion of a deal. For many, the gains from their business sales will form a large part of their retirement income – an increase in tax here is going to impact their quality of life in retirement, as the amount that they will ‘take home’ could be much smaller.”
Entrepreneurs’ Relief currently reduces Capital Gains Tax payable on the sale or disposal of a business from 20% to 10% and is capped at £10m.
Individuals are adding to their pension pots
Individuals have been adding more to their pension pots in recent days, despite the correction in the stock market, due to fears that tax relief on pension contributions will be cut for higher earners.
High-earners, which includes those earning £150,000 and above, benefit from tax relief of 45% on their pension contributions compared to 20% for a basic rate taxpayer. Under the mooted reforms, the 20% rate would apply to all taxpayers.
Taxpayers are accelerating plans to pass on business assets
Rumoured cuts to Business Property Relief has resulted in individuals looking to pass on their assets to their dependents, including unlisted shares, property and other business assets, ahead of the Budget.
Lucienne Parry adds: “There has been very few changes to Business Property Relief over the years and few complaints over how it operates. However, rumours have circulated that we could see cuts take place in this area.”
“For a taxpayer that was intending to transfer some of their assets to their dependents, then it does make to do that ahead of the Budget to avoid the impact of any bombshells.”