New tax changes will affect all
Published May 2010
Whether you are rich or poor, working or unemployed, you will be affected by personal tax changes announced by the new Conservative/Liberal Democrat coalition Government.
While the new system will be fairer in terms of the benefits it offers to low earners, it could also mean the rich lose a favourite tax shelter.
The changes include the coalition Government ‘working towards’ increasing the tax-free personal allowance to £10,000 – roughly the earnings of a full-time worker on the National Minimum Wage. The tax-free allowance currently stands at £6,475, so an increase would mean people get to keep more of their income, reducing the need for Government top-ups.
The changes could also see Capital Gains Tax (CGT) – paid when you sell assets such as shares, businesses or second homes – increased to 40% or even 50%. However, this is would only affect the wealthy.
The new coalition has also scrapped the previous Labour Government’s plans to increase National Insurance (NI) contributions for both employers and employees, as both the Conservatives and Liberal Democrats had strongly opposed the rise.
Instead, the coalition plans to raise the starting point for employers’ contributions, reducing the cost to employers, but leave in place higher levies on employees.
Tory plans to increase the tax-free inheritance tax threshold from £325,000 to £1m per person have now been abandoned by the coalition.
Chancellor George Osborne has already announced an emergency Budget on June 22, when it is likely these changes will be confirmed.
For further information on how the changes could affect you, please contact Steve Holden, Tax and Trust Manager at mfg, on 0845 55 55 321 or email steven.holden@mfgsolicitors.com.
