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Should you carry out some tax planning, like making a pension contribution before the General Election?

Next Thursday as we all know is Election Day. I cannot advise you on how to vote but I think that according to the various opinion polls we can expect a Hung Parliament. This makes advising on tax matters very difficult. Changes to Government will probably mean another budget and further  tax changes.

We do not know which parties will make up a new collation. We can assume that future tax policy will be a mixture of the various manifestos but this does come with a ‘health warning’.  No party in 2010 mentioned anything about VAT and the increase of the rate to 20% was implemented soon after the last election.

Should you carry out some tax planning before the 7 May?  This is a difficult question.  We may see a reintroduction of the 50% rate of tax if we have a Labour administration. We do not know if this will be retroactive to apply from 6 April 2015 or if it will apply from 6 April 2016.

My advice is that if you are intending to make a substantial pension contribution say £40,000, in the tax year to 5 April 2016 then you should consider making the contribution before next Thursday.

On taking of dividends from your personal company,  the advice is more complicated.  If you anticipate your total income for the year to 5 April 2016 to be more than £150,000 then it may be worth taking your dividends now. I think before taking action it would be worth talking through your personal circumstances with me. My mobile number is 07977 074493.

Andy Scott

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