By Stephen Womack
David Williams IFA
THE FIRST Monday Budget in more than 50 years kept intact valuable opportunities for business owners and managers to build a secure future through saving and investing.
In the wake of the Budget announcements, Northampton-based David Williams IFA is working with business leaders to help ensure as much of their hard-earned wealth as possible goes to benefit themselves and their families, rather than the taxman.
While a boost to personal income tax allowance to £12,500 a year caught the headlines, the October Budget was as notable for what was not in it as it was for the measures the Chancellor actually announced.
Savers and companies were relieved that there was no further erosion of pension tax reliefs after years of frequent change. Pension contributions remain the most tax-efficient way for individuals to save and a highly effective way for business owners to extract value from their companies. Company contributions to a pension can be set against corporation tax and flow into an individual’s pension fund free from income tax and National Insurance deductions.
There is an expectation that these generous reliefs will eventually come under fire from a cash-strapped Chancellor, but in the meantime, those who have yet to pay anything into a pension this tax year could potentially save as much as £80,000 in the next few months – £40,000 before April 5 2019 and then a further £40,000 once the new tax year starts.
David Williams IFA, Northamptonshire’s biggest firm of Chartered Financial Planners, is also spotlighting the value of Individual Savings Accounts to clients. The annual allowance for next tax year remains at £20,000 – and double that for a couple.
Investors should also be cheered that the Chancellor only tinkered with capital gains tax (CGT) and left most of the key rates and reliefs untouched. The CGT allowance is often overlooked and savers will each be able to earn £12,000 per year of gains from next April without paying a penny in tax.
Higher earners who find themselves caught by the pensions annual allowance cap can instead look at other tax-efficient investments such as Venture Capital Trusts and Enterprise Investment Schemes. These can offer an up-front tax relief and tax-free returns in exchange for taking on more risk by investing in fledgling companies.
To speak with one of our advisers about investment opportunities in 2019 call 01604 621302 or visit www.dwifa.co.uk