Facebook - Birmingham Business Twitter - Birmingham Business Instagram - Birmingham Business
http://www.edgbaston.com http://www.pure-telecom.co.uk

The Spring Budget - a wish list

Julia Rosenbloom, partner and head of Birmingham private client tax services at financial and professional services firm Smith & Williamson, is calling on the government to bring about changes in the upcoming Budget that would see greater wealth transfer to younger generations, and greater tax equality for unmarried couples. 

 

1. A much needed boost for the housing market

 The Chancellor should abolish higher rates of Stamp Duty Land Tax, including the 3% surcharge, to encourage more activity and make buying a home a more achievable dream for those who live in areas that have seen house prices soar.

A range of measures is also needed to support people who run residential property portfolios, of all sizes, as a substantial business. Tax changes in recent years have made these businesses less sustainable. The Chancellor should consider: 

Aligning the Capital Gains Tax rates - residential property is subject to 18% and 28% tax rates for individuals, compared to other asset classes which are subject to much lower rates of 10% and 20%.

Removal of the 3% Stamp Duty Land Tax surcharge, which greatly increases the stamp duty payable by those who own multiple properties.

Applying Inheritance Tax Business Property Relief where the property investments are made as part of a substantial business.

Abolition of the restriction on interest deductions so that interest on borrowings is fully relievable as a cost of the business. 

 

2. Boosting lifetime gifting to support the next generation

As younger generations are increasingly squeezed by higher rents, unachievable house buying dreams and stagnant wages, the ‘bank of mum and dad’ has become more important than ever. The current tax system puts people off gifting during their lifetime, which is often when the next generation most needs financial help. There are several measures the Chancellor could implement that would make an immediate difference:

It should be easier to make gifts without crystallising Capital Gains Tax by extending deferral reliefs so that they apply to more types of assets. Doing this would allow people to defer Capital Gains Tax to a later date when they are more able to pay it.  

Stopping lifetime inheritance tax charges on large transfers into trusts, which are yet another blocker to passing wealth to the next generation during lifetime.

Making the rules simpler to understand and it easier for people to transfer wealth to the next generation. The Residence Nil Rate Band, introduced in 2017, should be scrapped. Instead, the Chancellor should increase the main nil rate band (NRB), as this would prove universally beneficial and easier to understand. If each individual were to be given an additional £175,000 of NRB, this would take the total to £500,000 per person (or £1 million per married couple/civil partners).

 

3. Simplifying pension allowances to encourage increased saving

It’s no secret that people are not saving enough for retirement. The Chancellor should take this opportunity to simplify the pensions rules. In particular, the method of calculating the capped pension allowance is far too complex, leaving people baffled by the best way to save for their future. It should be sufficient just to have the lifetime cap and allow people to make annual contributions more flexibly and without reference to annual limits.

 

4. Greater tax equality for unmarried couples

We live in a time of much greater equality, but many unmarried couples and those who are “romantically unattached” are still unfairly paying higher taxes. Where an individual is unmarried or not in a civil partnership, the rules should be changed to allow them to elect for one individual to effectively qualify for ‘spouse exemptions’, meaning the nominated individual could qualify for inheritance tax ‘spouse exemption’ and would enjoy “no gain/no loss transfer’ status to that individual such that the transfer would not result in a liability to Capital Gains Tax. This would ensure greater equality for all families and individuals across the UK.

For more information about how the Budget may impact you or your business please check for updates on www.smithandwilliamson.com or email tax specialist Julia Rosenbloom at julia.rosenbloom@smithandwilliamson.com.

http://www.science2industry.co.uk

Reaction to Chancellor's spending review

'Stark realities' are laid bare

25th November 2020

Tax partner reveals Budget wish list

Calls to bring in tax reliefs to boost struggling economy

24th February 2021

Calls for Chancellor to target major corporations

Business man says corporates who sidestep moral obligations must contribute

10th March 2021

Cautious welcome to Chancellor's mini-budget

Businesses respond to wide-ranging financial update

8th July 2020

Chamber says more support needed

Business leaders warn hardest hit need more help

24th September 2020

Safeguarding your cashflow in troubled times

It's time for a sound rationale, and reasoned approach

26th March 2020

Budget 2020 - warm response from city businesses

Upbeat reaction to Chancellor's plans

11th March 2020

Extended furlough scheme is welcomed

Business leaders say it's a lifeline for firms across the UK

12th May 2020

Financial firm launches interactive guide

Smith & Williamson helps negotiate coronavirus crisis

7th May 2020

Tax experts welcome new partner

Financial and professional services firm sees Birmingham team grow

6th March 2020

Andy McGill

Restructuring partner at Smith and Williamson

31st July 2020

Krista joins Birmingham team

Financial and professional services firm expands

9th January 2020

Warning over flat pack homes

Lawyer says buyers run the risk of unidentified defects

3rd December 2019

Birmingham businesses outline Budget wish-list

Business rates, late payments and 5G on the menu

10th March 2020

Four new recruits join thriving team

Design practice welcomes new faces after business grows

29th April 2021