Tight turnaround for year end tax planning before Spring Budget
20 January 2017
It may feel like Mr Hammond’s Autumn Statement was only a few days ago, but shortly before Christmas the Treasury announced that the Spring Budget will be on Wednesday
In theory, this will be the last Budget to take place in spring, as in November Mr Hammond announced he would be reverting to Autumn Budgets, last seen when Ken Clarke was Chancellor. That means 2017 will have two Budgets, but no Autumn Statement and 2018 will witness the first Spring Statement.
The tax year dates will not be changing, so the 2016/17 tax year will end on 5 April – exactly four weeks after the Budget. Your tax year end planning therefore needs to start as soon as possible. On this occasion, there are two areas which warrant especially prompt action:
Pensions This is the last chance to carry forward unused annual allowance of up to £50,000 from 2013/14. The calculations for maximising contributions and picking up unused allowances can be complex and have become more so with the introduction of a tapered annual allowance this year. Assembling all the necessary data can be a slow process, hence the need to start discussion early.
Venture Capital Trusts The changes introduced to venture capital trusts (VCTs) last year have slowed down the investment process according to many VCT managers. As a result, some managers have decided not to raise any fresh funds this year, while others are making limited new share issues, primarily to existing investors. The potential reduction in supply comes at a time when the 30% income tax relief offered by VCTs is attracting increased interest from those affected by the latest reductions in the pension annual and lifetime allowances. Good offers could sell out quickly, so do let us know if you wish to invest in VCTs this year and be prepared to act promptly.