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Tax Threshold

Started by Denzy, April 28, 2023, 06:07:01 AM

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Denzy

Does anyone know how long these are frozen for? My rental income added to my personal income is now putting me around the 40% tax area. Anyone know when this is likely to be increased?

Simon Pambin

Quote from: Denzy on April 28, 2023, 06:07:01 AM
Anyone know when this is likely to be increased?

A cynic would say "Just before the next election".

Just before the next election.  :)

I've tweaked my pension contributions up a fair bit, which, amongst other things, is enough to keep me out of the 40% band for the most part.

Denzy

Quote from: Simon Pambin on April 28, 2023, 10:28:40 AM
Quote from: Denzy on April 28, 2023, 06:07:01 AM
Anyone know when this is likely to be increased?

A cynic would say "Just before the next election".

Just before the next election.  :)

I've tweaked my pension contributions up a fair bit, which, amongst other things, is enough to keep me out of the 40% band for the most part.

I'm about to to that and also putting some into shares. I just can't find anything online how long we are stuck with this threshold for.

CJ64

I believe when tax thresholds are set, they are not set for a fixed period of time. They are reviewed at each budget and only changed when the government feel it necessary to meet their financial objectives. They are not always revised upwards. I can remember not too long ago they were revised downwards and many average workers like teachers and nurses became higher rate tax payers for the first time.  As the previous person posted it will likely go up just before the next election lol.

Denzy

I found an article the other day that says Jeremy Hunt has frozen them until the tax year of 2027/28. I do hope it's not true.

Simon Pambin

Quote from: Denzy on May 05, 2023, 04:49:42 PM
I found an article the other day that says Jeremy Hunt has frozen them until the tax year of 2027/28. I do hope it's not true.

It's not true...

He can't set the rates for more than the coming year. Anything beyond that carries all the weight of a politician's promise.

Aside from anything else, if the local elections are any indication, Jeremy Hunt won't be chancellor by 2027/28.

lettki

#6
Any ideas how to avoid 40% tax other than pension contributions? Could I move my BTL income to my wife as she is well below the threshold.
We have joint mortgage.
Thank you.

jpkeates

You could definitely move some of the income to your wife, although there are legal costs. Have you worked out how much tax you'll actually pay, though. I run pretty at the limit most years, and, because it's only 40% on a very small amount of income it doesn't hurt as much as you might think.

lettki

Thank you for the answer. I worked out that it would be about £1700.
I have £50k as an employee, income from BTL goes to 40% bracket. I used tax scouts calculator.

What cost would I have if I move 95% of my BTL income to my wife allowance? Some accountants don't even know it is possible...

jpkeates

Find a decent accountant!

If you own the property jointly with you wife (which presumably you do if there's a joint mortgage) a solicitor can switch the ownership to tenants in common, if it's not already, create a deed of trust defining the proportions of ownership and submit a form 17 to notify HMRC. That's a routine, bread and butter process.

It's a real transfer, your wife will really own 95% of the property (you can change this later, but your wife will need to agree), and your mortgage lender will probably have to agree - and they should, but may not.
Note that if you do this, you should check your wills in case they also need to be updated.

lettki

Thanks again!

Any recommendations for a decent accountant or advice how to find one?

jpkeates

I always suggest a local firm, there's usually a firm that's big enough to have offices (high street above the shops often) has a small number of employees and does this stuff as bread and butter. They're not the cheapest, but you can deal with them. That sort of firm.

And not someone cheap online.

lettki