Please get in touch for full details of how the Budget may impact you, in the meantime please read our quick guide to the key points:
1. Higher rate tax relief on pensions
Whilst much has already been written on this topic, it will not impact upon the vast majority of individuals.
Does your total income exceed £150,000 pa? If not, there is no change for you.

If your total income does exceed £150,000 pa but your pension contributions amount to less than £20,000 pa, there is still no impact on you.

Only if your total income exceeds £150,000 pa and your pension contributions amount to more than £20,000 pa will new restrictions apply (see below).

The Government has announced its intention to restrict the availability of higher rate tax relief on contributions to registered pension schemes for people with taxable income of £150,000 p.a. or more. Relief will be tapered so that for those earning £180,000 p.a. or more, relief will be worth 20%. How this will actually work is yet to be revealed. Current understanding is that salary sacrifice arrangements entered into prior to 22nd April 2009 are unaffected. New arrangements entered into on or after this date will be added back into ‘relevant income’ to establish whether it is above £150,000. Increased benefit accrual under a defined benefit or ‘final salary’ arrangement will also be treated as a benefit in kind within these restrictions for those earning £180,000 or more. Further details will be published here as & when they become available.

2. Salary sacrifice becomes more advantageous
It had already been announced that the employer NIC rate will rise to 13.3% for 2011/12, the Budget also announced significant increases to the earnings on which NI would be charged for 2009/2010. In the previous tax year NICs were payable at 1% on earnings in the band £40,040 to £43,875, that figure increases to 11% for the entire band £5,715 to £43,875 for 2009/2010. Using a salary sacrifice arrangement could boost pension contributions by as much as 30.8% for a basic rate tax payer or as much as 14.7% for a higher rate tax payer. Feel free to get in touch for an analysis of your own situation.

3. Increased ISA limits
From 6th October 2009, individuals aged 50 and over will be able to contribute up to £10,200 to an ISA, of which up to £5,100 can be held in a Cash ISA with one provider. Any residual allowance can be invested in a stocks & shares ISA with the same or another provider. If you currently have a fixed or special rate Cash ISA please note that your increased contribution may not necessarily secure the same terms – always check first. Those under age 50 will be able to invest at the higher levels from 6th April 2010.
4. Taxation of collective investment schemes & Discretionary Trusts
The increased income tax rate of 50% for individuals earning £150,000 or more and the maintenance of the Capital Gains Tax rate at 18% mean that it is even more important to ensure that your investments are held in the most tax-efficient manner, though this is not the sole consideration. Please contact us if you would like a review of your portfolio.
The 50% income tax rate also applies to income from assets held within a Discretionary Trust. The Trustee Investment Act 2000 stipulates that trustees should seek professional advice on significant events such as changes to taxation, EBS can provide a full review upon request.

5. and finally…
There were no changes announced to the current Inheritance Tax regime, though in the current climate most of us are possibly viewing this area as less of a problem right now!

For our detailed Budget Newletter visit our Downloads area or click here:

http://www.ebsfs.co.uk/wordpress/wp-content/uploads/2009/04/budget-client-newsletter-2009.pdf

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