What to Expect From This Weeks Budget
Stamp Duty Reforms
There is speculation that, in order to unclog the slowing property market, the chancellor might announce stamp duty reforms. Perhaps targeted to assist first time buyers and those over normal retirement age.
The ongoing threat of an overhaul in pension tax relief has not abated. A reduction in the annual allowance could be on the cards, with the aim of restricting tax relief for higher earners. If the Chancellor is willing to take a more revolutionary approach, we could see a move towards a flat rate of tax relief, at say 30%.
A number of changes are already planned for April 2018 which include:
The planned cut in the annual tax free dividend allowance from £5,000 to £2,000 will affect directors of small companies who pay themselves by dividends to save on tax and national insurance. There is speculation that this could be coupled with an increase in the rate of dividend tax.
Buy to Let Tax Relief
The amount of tax relief buy to let landlords are able to reclaim on mortgage interest payments began to be reduced in April and a further reduction will come in to place from the 2018/19 tax year. Ultimately tax relief will be limited to the basic rate.
Inheritance Tax (IHT)
The Transferable Main Residence Allowance (TMRA), which is added to an individual’s IHT nil rate band when their home is passed on to descendants, will rise from £100,000 to £125,000 from April. This will allow an individual to pass on up to £425,000 with no tax payable, or a couple £850,000.