Personal Tax Newsletter | December 2020

In our final newsletter of 2020, we want to look forward to 2021. We expect it to be an interesting year bringing many tax changes to deal with the fallout of 2020 which include Brexit and the deficit from Covid. As we progress into 2021, our focus will be on proactive tax planning and preparing for these changes. Here we have some suggested planning you could consider and our initial thoughts on the possible changes coming.

Capital gains tax – will the rates be increased? 

Speculation is that CGT rates will be increased in the Budget expected in the early part of 2021. The OTS report on CGT was released earlier this year and the recommendations suggest that an increase to CGT is likely. An increase could even see the current rates double if they are to be brought in line with income tax, which is one of the proposals in the report. 

If you have assets with significant gains, now is the time to consider these and look at your tax planning options. Do you have a business you are considering selling? Are you thinking about passing assets to the next generation?

Are you thinking about passing assets to the next generation? If these are questions you are thinking about, now is the time to take some advice. 

Christmas gifting and tax ????

Christmas is a time for giving and for some might be the perfect time to combine this with a little annual IHT planning.

There is an annual tax-exempt allowance of £3,000. This means that you can gift up to £3,000 per year and it will immediately be out of your estate for IHT. If you would prefer not to do this for Christmas, you have up to 5 April 2021 to use the allowance in the 2020/21 tax year. Any unused allowance in a tax year can be carried forward one year so if you did not make any gifts last year, you could gift up to £6,000.

Tax return reminder

We couldn’t resist taking this opportunity to add a quick reminder about the tax return deadline! As the self-assessment deadline is fast approaching (31 January 2021), please send us your tax return information as soon as possible if you haven’t already done so.

The right tax planning ideas can produce significant savings to you and your family. Connect with Lucy Crow & Louise Mackie on LinkedIn, who will be taking you through a series of tax planning suggestions over the coming months to help you consider some planning ideas. We will also be keeping an eye out for possible changes coming in the Budget and will be ready to discuss these with you. 

Merry Christmas from our tax team! ????