As the new year begins planning is essential especially with the current tax year ending on 5 April 2025. The effects of announcements made last October are still to be seen. Although Rachel Reeve’s Spring Forecast on 26 March 2025 isn’t a fiscal event, it might still offer important insights.
In the meantime, as the end of the tax year approaches, have you thought about
- The importance of maximising your Capital Gains Tax (CGT) allowances and the timing of asset sales to minimise CGT liabilities – especially after the rates of CGT increased to a maximum of 24% last October.
- The proposed changes to pensions from April 2027 – although the current annual £60k allowance for pensions and £20k for ISAs remain unchanged, maximising your contributions to these tax-efficient vehicles will help mitigate the increased CGT rates and save Income Tax.
- With another 3 more years of frozen allowances and thresholds, can your assets be held differently to reduce your tax bill?
- With the tax treatment of Furnished Holiday Lettings (FHL) businesses ceasing, can you accelerate your capital expenses before 6 April 2025 to claim capital allowances? If you are married (or in a civil partnership) and share the income in unequal shares, will the default 50:50 allocation of income from 6 April 2025 work for you? Learn more about the changes to the FHL tax regime here.
- If you are an employer, have you considered introducing salary sacrifice arrangements for pensions, childcare, cars and bikes to soften the impact of the proposed National Insurance hike from April 2025?
- Have you revisited your business succession plans bearing in mind the proposed cap to Inheritance Tax (IHT) reliefs of £1m (whilst being mindful of passing on CGT liabilities during your lifetime) from April 2026?
The above is only a smattering of our thoughts, read our 2024/25 Year End Tax guide for more helpful insights here.
Be mindful that October’s announcements are still passing through parliament – will Rachel go into reverse and the government concede on some of the above? Nevertheless, several changes do require careful consideration and proactive planning, especially as we edge closer to the end of the tax year. Consulting with a tax professional can provide valuable guidance and help you navigate these changes to optimise your tax position. If you’d like to talk to a CKLG expert, give us a call on 01223 810100.
