In Focus: Tax  

Tax day: all the devilish details

  • To be able to explain the reasons for Tax Day.
  • To understand what changes might be made to processes around IHT and trusts.
  • To be able to explain what some of the other proposals mean for the tax system.
CPD
Approx.50min
Tax day: all the devilish details
 Photo by Nataliya Vaitkevich via Pexels

Introduction

TS Eliot may well have said 'April is the cruellest month' but this year many advisers will end March with the thought that they have got away lightly.

With the Budget on March 3 and Tax Day following on March 23, many would have been preparing for a series of proposed changes and updates to the UK's antiquated, largely paper-based, tax system.

There were several areas of potential change. For many years, financial planners have called for an overhaul of inheritance tax, citing the fact many of the allowances, reliefs and thresholds were set in the 1980s - before house prices increased exponentially and pushed many more Britons into the 'wealthy' bracket for IHT purposes.

Capital gains tax had also been earmarked for reform - not least bringing the rates more into line with income tax, or cutting the current relief - moves that had led some financial planners to call this a 'wealth tax by the back door'.

And there was the perennial question of pensions relief, which some commentators had once again warned was ripe for HM Revenue & Customs' plucking.

But Chancellor Rishi Sunak seems to have pulled his punches on Tuesday (March 23), with very limited real change to IHT other than an administrative clean up, no changes announced to CGT, and the only hint of pensions tax reform arriving in the shape of a review to come over anomalies that exist in scheme rules.

That said, there are some notable updates to the tax system that tax advisers and their clients might need to grapple with - not just this month, nor in April alone, but as part of long-term financial planning.

This mini-guide, which qualifies for an estimated 50 minutes' worth of structured CPD, will outline the reasons and the economic rationale for tax day, explain the changes to IHT and what might be in store for pensions as hinted at by the documents, and unpick some of the other proposals that could affect clients.

simoney.kyriakou@ft.com

Contributors include: Steven Cameron, pensions policy director at Aegon; Jesse Norman MP, financial secretary to the Treasury; Neil Jones, tax and wealth specialist at Canada Life; Rachael Griffin, tax and financial planning specialist at Quilter; George Bull, senior tax partner at RSM; Andrew Dixon, head of wealth planning at Kleinwort Hambros; Edward Grant, director responsible for professional development at St James's Place; HM Revenue & Customs; Jenny Cutts, partner at Wedlake Bell.

In this guide

CPD
Approx.50min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. The Budget was not the time for what, according to Griffin?

  2. True or false? Dixon says: Stealth taxes are easy to position to the public than an explicit tax rise as the impact isn’t immediate.

  3. What would Shah prefer to see when it comes to changing the UK tax system?

  4. What is IHT planning always about, according to Dixon?

  5. Which of the following are NOT one of the three things outlined by Cameron when he says the chancellor provided no new insights:

  6. The proposals around renting out holiday homes might mean what for clients who let these out?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • To be able to explain the reasons for Tax Day.
  • To understand what changes might be made to processes around IHT and trusts.
  • To be able to explain what some of the other proposals mean for the tax system.

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