A trio of tax updates

Marriage Allowance

HMRC is reminding married couples and people in civil partnerships to sign up for Marriage Allowance for extra cash. This allowance allows couples to share their personal tax allowances.

Couples are eligible if one partner earns below the Personal Allowance threshold of £12,570 and the other is a basic rate taxpayer. If eligible, the couple can transfer 10% of their tax-free allowance to their partner, amounting to £1,260 currently. This means that couples can reduce the tax they pay by up to £252 a year.

Applications are free and can be made directly via HM Revenue and Custom’s (HMRC) online portal. Claims can also be backdated for up to four previous tax years to receive a payment of up to £1,242.

 

Capital Gains Tax

Latest data from HMRC has revealed that a record amount of Capital Gains Tax (CGT) was due in the 2020-2021 tax year. The total CGT liability was £14.3bn, realised on £80bn of gains for 323,000 taxpayers. The liability increased by 42% from the previous year, while the amount of gains and number of taxpayers increased by 19% and 20% respectively. In his March 2021 Budget, then-Chancellor Rishi Sunak froze the annual £12,300 CGT allowance until 5 April 2026, which is likely to see more people impacted by CGT over the coming years.

 

IHT receipts higher

Most recent figures from HMRC show that an extra £300m was collected in Inheritance Tax (IHT) between April and June 2022, compared to the same quarter last year. Rising house prices are being blamed for the rise, together with a freezing of the IHT thresholds until 2026. Receipts for the first quarter of the 2022-23 financial year hit £1.8bn – a new high for IHT receipts. When looking year-on-year, there was a 14% (£729m) increase in IHT receipts between the 2020-2021 financial year and the 2021-2022 financial year.

 

Remember

Sensible financial planning can help to reduce the amount of tax you pay and safeguard your wealth for the future. We can help – please get in touch.

 

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. The Financial Conduct Authority does not regulate tax planning.