Three Tax planning Thoughts – before the Autumn Statement 2012

The Chancellor of the Exchequer George Osborne stands up next Wednesday 5 December to make his Autumn statement.

Here below are some quick simple ideas you may wish to consider acting on - one possibly before next week and the other two before the end of the current tax year on 5 April 2013

1. Contribute to your Pension pot whilst the current limits still last

It is rumoured that either the current annual limit or the rate at which contributions are relieved may well change next week. Currently the “annual allowance” is £50,000 for which relief is given at your top rate of tax. The calculations can quickly get complicated but it is possible to carry forward unused relief from the previous four years.

If you are in the happy position of having any spare cash you may wish to consider prepaying now some pension contributions you intend to make for the next five years. This will ensure the maximum possible contributions are relieved and at up to 50%.

2. For Additional Rate 50% Taxpayers Defer income beyond 5 April 2013

The additional top rate of tax reduces from 50 to 45% for income received on or after 6 April 2013. Maybe consider deferring the receipt of income until after that date? This would clearly save 5% of the income delayed.

Of course to effect this you have to either be in control of your own business or be sufficiently senior in an organisation to have control over the timing of bonuses and dividends.

3. Accelerate Reliefs while tax relief is available at 50%

Again a simple point but for those with the cash available consider taking reliefs in the current tax year to be relieved at rates up to 50% rather than only 45% from 6 April 2013. This might apply for example to pension contributions, charitable donations and losses.Eg

By way of example John a top rate 50% taxpayer pays £4,000 net to his personal pension plan each year. As he has the money available he decides to pay the next five years contributions now. This means that he writes a cheque for £20,000 and receives an extra £1,250 of tax relief than if he had instead made the contributions on an annual basis as he had planned.

There is more detailed prediction and commentary on the Autumn Statement from PWC here.

Please do contact me on or 079415 80062 if you want more detailed help on how to implement any of these ideas from a london tax adviser, london tax advisor, london tax consultant - covering West End, Ealing, Mayfair, Knightsbridge, Chiswick, Fulham, Chelsea, Notting Hill, Belgravia, Bayswater, Kensington, Ladbroke Grove, Kingston, Marylebone, Barnes, Putney, Richmond, Wandsworth, Kew, Putney..

For those who prefer (mainly Google!) there is a brief video here which covers the above matters but no more detail than already here. Please feel free to share.

Tax TipsKaty Carlisle