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The New Tax Year 2012/2013
For those who want a handy pocket size guide to the 2012/13 tax and tax allowances, just email us at info@sovereignfinance.org. The main immediate changes are as follows:
The Personal Tax Allowance goes up from £7,475 to £8,105. The Government keeps its pound of flesh by reducing the point at which higher rate tax becomes payable to £34,370 – a reduction of £630 – exactly the amount of the increase in the Personal Tax Allowance! Those quick with their arithmetic will work out that you would need to earn in excess of £42,475 before you would start paying 40% tax (Personal Tax Allowance of £8,105 on which you pay no tax plus the Basic Rate Band of £34,370 on which you pay 20% tax). This is the same starting point as last year. Good news for those over 65 is that the higher Personal Allowances are still in place for 2012/13 and in fact are increased to £10,500 for those over 65 and £10,660 for those over 75. (Note: to qualify for the full higher personal allowances, your total income must be less than £25,400 per annum). But enjoy them while you can. They will be frozen from April next year.
Some of the items in the Budget came into effect on the 6th of April 2012 but others do not start until the 6th of April 2013. Probably the most important of these is the reduction of the highest rate income tax from 50% to 45%. This does give those on high incomes a chance to plan ahead.
The Capital Gains Tax allowance remains the same as last year - £10,600. The Inheritance Tax Threshold also remains the same - £325,000 (note: married couples are eligible for £325,000 each). The annual pension contribution maximum remains at £50,000.
Besides the ongoing reductions in Corporation Tax, probably the only really useful increase for most of us was the Cash ISA allowance. From the 6th of April you can put in £5,640 in cash into an ISA, instead of £5,340, as it was last Tax Year. The overall limit of contribution to an ISA, including the Stocks and Shares part, has gone up from £10,680 to £11,280.
The real sting in the tail was delivered to those buying properties worth over £2,000,000. They will pay 7% stamp duty. On a purchase price of £2,000,001, that works out at a chunky £140,000!
KEEPING ON TOP OF YOUR FINANCIAL AFFAIRS!
The coming end of the Tax Year is a good time to review your financial arrangements. In this way you can take advantage of some of the usual money deadlines. Even if none of the "Buy Now" items affect you, an annual review is worth doing in any case. With our cars an MoT is enforced on us, but unfortunately no one requires us to do the same with our finances. Over the thirty years we have been helping advise people, we have found that those who do regularly review their finances are the ones who have the most success with their money.
THE SOVEREIGN NEWSLETTER
KEEPING ON TOP OF YOUR FINANCIAL AFFAIRS!
The coming end of the Tax Year is a good time to review your financial arrangements. In this way you can take advantage of some of the usual money deadlines. Even if none of the "Buy Now" items affect you, an annual review is worth doing in any case. With our cars an MoT is enforced on us, but unfortunately no one requires us to do the same with our finances. Over the thirty years we have been helping advise people, we have found that those who do regularly review their finances are the ones who have the most success with their money.
THE SOVEREIGN NEWSLETTER
We are starting 2012 much as we started 2011 – with bad news about the world economies. While there are obviously very real problems to be sorted out, our worrying and being glum is not going to help change them. What each of us can do is to focus on prospering and enjoying life in our own sphere of activity. The country’s prosperity, and even the world’s, is the sum of the prosperity of all its people and their businesses – large or small. In that way we each can strive to make a difference.
BATTLING FUTURE ECONOMIC UNCERTAINTY
We cannot individually do a great deal towards sorting out the problems of Government debts that are causing major problems worldwide, but we can operate our own finances sensibly.
A TIME TO CHANGE?
Mortgage lenders have been reducing rates generally and fixed rates for 3 and 4 years are now under 3.0% and 5-year rates at 3.5%. While the economy is probably going to mean that the Bank of England interest rate will remain low for some time still to come, those who want some future security should consider moving to one of the new fixed rates for 3 years or more.
WALKING A TIGHTROPE
A NEW TAX YEAR FULL OF CHANGES
The Tax Year 2010/2011 is bringing many more changes to our finances than is immediately obvious. The changes, and promised changes, leave one feeling like the Matrix has shifted or that one has walked through Alice’s Looking Glass (depending on your preference of books and films). There are substantial changes in pension legislation yet again and talk of major changes to the State Pension. There are some boosts in personal tax allowances, but higher VAT and rising costs of petrol and basics leave many living a bit on the knife edge and dreading the moment when the Bank of England finally increases the Bank Base Rate.
So what has changed and how do we need to respond? Pensions deserve the closest look because they are likely to impinge on our lives most in the long term. In the previous decades those working many years for major companies could rely on a worthwhile pension when they reached State Retirement Age - which for many, many years had been age 65 for men and age 60 for women. The quality pension schemes have been subjected to harsher and harsher regulations over recent years, and the great majority of companies can no longer afford to keep them going. Even the Blue Ribbon public service schemes, such as the Civil Servant Pension Scheme, can no longer be afforded by the Government and will have to change. The Government’s talk of a higher State Pension to help handle this problem is so far in the future that it really is little more than an effort to raise hopes and avoid a backlash from the other changes. The Government cannot even afford the current level of State Pension, which is why they are having to extend the State Retirement Age.
You only receive one ISA allowance every tax year. Since you cannot carry your allowance over to next year, if you do not use it, come the end of the tax year, you will lose it.
OPPORTUNITIES!
With the end of the Tax Year approaching, it is a good time to see if you are taking advantage of all of your opportunities. It is true that there are more opportunities for those who are higher rate tax-payers, but everyone should go through the following checklist to see if there are points that they can take advantage of.
MEETING THE CHALLENGES OF THE NEW YEAR
2010 saw Sovereign passing its 29th anniversary and we look forward to celebrating our 30th in early 2011! 2010 was certainly a year of change as we saw the General Election bring in a coalition Government for the first time in many many years. The theme of spending cuts has been the main economic focus for 2010 and will certainly continue through 2011. What is this likely to mean for the average person? Inevitably there will be job losses in the public sector as the cuts work their way through the system.
November 2010
Welcome to the latest edition of E-Newsletter, our update on developments in the world of financial services. We hope you find the contents of interest. If you have any questions, or would like to discuss any of the points raised, please give us a call.
Pensions Alert!
While the focus is on the Spending Review, there are major changes being brought forward regarding pension contributions and the Lifetime Allowance. While these moves are not yet law, if you are considering largish pension contributions, it is worth looking into these new proposals carefully.
We are facing a time of changes with the Spending Review and its effects. While allowing for what might happen, it is equally important to focus on the financial fundamentals, which remain fundamentals regardless of which party is in Government.
The news is full of the various Government moves to cut back expenditure. Such moves are likely to affect us all in one way or another. So it is a good idea to keep close watch on your finances. For example, mortgage rates have become very competitive again. So, unless you are already on an excellent deal, it is worth finding out what is available for you. We can make those enquiries quickly for you.
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