In an attempt to ensure that higher rate taxpayers make a reasonable contribution to UK tax revenues new legislation is to be introduced from 6 April 2013 that limits access to certain tax reliefs. Taxpayers will be denied relief(s) if the claim exceeds 25% of their income or £50,000, whichever is the greater.
This will not affect tax reliefs which are already capped such as Enterprise Investment Scheme and pension reliefs, but may affect “open-ended” reliefs such as interest relief on qualifying loans and Gift Aid relief. The Chancellor has said that he will consult to make sure that charities are not negatively affected by such a move.
Ironically, this may mean that tax planning opportunities available to 50% rate taxpayers in 2012-13, may produce more tax savings than if applied, and capped, in 2013-14 when the top rate of tax is reduced to 45%.
50% tax rate payers therefore have one more fiscal year, 2012-13, to take advantage of certain, unlimited reliefs…
Is your birthday after 5 April 1948?
If the answer is yes you will not qualify for the higher value personal allowances presently available to the over 65s and over 75s.
From 6 April 2013 age related personal allowances are being phased out. Here’s how the changes will work in practice:
If your birthday is after 5 April 1948 you will not qualify for age related allowances.
If your birthday is after 5 April 1938 but before 6 April 1948 you will continue to qualify for the age related personal allowance (65 to 74 age group) of £10,500 until this allowance equals, or is exceeded by, the personal allowance. For 2013-14 the basic personal allowance is due to rise to £9,205.
If your birthday is before 6 April 1938 you will continue to qualify for the age related personal allowance (75 and over) of £10,660 until this allowance equals, or is exceeded by, the personal allowance. As mentioned in 2 above for 2013-14 the basic personal allowance is due to rise to £9,205.
There is no doubt that eventually all taxpayers over the age of 65 will be disadvantaged by these changes.