Tax Rises- Stability, Growth and Public Services

Tax Rises

• The 45p Additional Rate of Tax will start for incomes over £125,140 reducing from £150,000.
• Annual Dividend allowance of £2,000 will be halved in April 2023, and again in April 2024.
• Annual Capital Gains allowance of £12,300 will be reduced to £6,000 in April 2023, and then to £3,000 in April 2024.
• All other Tax allowances and National Insurance thresholds to remain frozen until 2028.

In real terms, this means that taxpayers will pay more, and continues to stress the importance of making use of other available allowances for Tax wrappers. This includes ISAs and Pensions to be Tax efficient where saving or investing for the future, as well as investments such as VCTs where other Tax allowances have been exhausted and investors are prepared to take higher levels of investment risk.

The Balancing Act

Chancellor Jeremy Hunt outlines a plan maintaining balance between Tax and spending cuts, with the hole in the budget being filled half from Tax rises such as those outlined above, as well as levies on energy generators and Business Rate increases. The other half comes from reducing Government spending in real terms (though still increasing some departmental budgets in monetary terms).
While many departments are seeing cuts to generate savings of £30 billion, the government remains committed to Triple-Lock on State Pensions and is also increasing the National Living Wage to £10.42 an hour in April 2023 and working age benefits by 10.1%.

MHA Caves Wealth is authorised and regulated by the Financial Conduct Authority (FCA), Financial Services Register number 143715. Tax and Estate Planning services are not regulated by the FCA.
Key Risks: Past performance is not a guide to future performance. The value of an investment and the income generated from it can go down as well as up, and is not guaranteed, therefore you may not get back the amount originally invested. Investment markets and conditions can change rapidly, along with tax legislation. Investments should always be considered long term.

This communication is for general information only and is not intended to be individual product/investment advice, tax or legal advice. The views expressed in this article are those of MHA Caves Wealth and should not be considered as advice or a recommendation to buy, sell or hold a particular investment or product. You are recommended to seek professional regulated advice before taking any action.

Dominic Thackray, BSc (Hons) / DipPFS- Financial Adviser