Staying ahead of the pack10th February 2012
With the budget date set for 21st March, now is a good time to think about what it may contain and the implications on your business and your independent wealth. We often discuss the benefits of cashflow planning and thinking ahead about the financial strategy for your business.
Nobody can predict what will happen but with the Government’s austerity measures still high on the agenda, one area attracting media attention is ‘tax relief’ – particularly tax relief on pension contributions which do not stimulate the economy.
Our good friends at Richmond House Group provided us with some interesting facts and figures:
Tax relief on pension contributions currently stands at £36.4 billion!
What is more interesting is that Mr David Laws (former chief secretary to the Treasury) wrote a letter to the Chancellor in December 2011 asking what the cost savings of restricting tax relief on pension contributions to 20% on incomes over and above £100,000 p.a. would be? For 2012/2013 the saving would be £3.6bn.
Also on the agenda was how much tax relief allowance would be saved if the current £50,000 level was reduced to £30,000 or £40,000. This saving could equate to £600m to £1.8bn.
So is this a sign of things to come? We can’t be certain but, for those thinking of making lump sum payments to their pension, it might be a good time to consider accelerating these to 20th March rather than waiting until 5th April.
Remember forewarned is forearmed!