Within the many announcements made in The Budget yesterday, there were a couple that potentially affect client’s financial planning:
Firstly, the Dividend Allowance reduction from £5,000 to £2,000 from April 2018. This not only affects the remuneration planning of Directors and the income strategy of investors, but it increases the value of the tax efficient allowances of both ISAs and Pensions.
Secondly, the transfers to an overseas pension (QROPS) will now be taxed at 25%, provided certain criteria are met.
There was good news for pensions as no changes were made to the current structure of Pension Tax Relief. This allows one to continue to benefit from 100% tax relief on pension contributions, while only being taxed on 75% of benefits.
With the Dividend Allowance now reducing next year, and pension’s Annual Allowance limits, it is important to take advantage of these each year while available.
If you have any questions regarding the budget please do not hesitate to get in touch.