The Government brought in a Personal Allowance Income Limit of £100,000 in 2010. This means now that when annual income exceeds that amount, the personal allowance begins to shrink by £1 for each additional £2 earned. Thus far, the Personal Allowance Income Limit has not been adjusted in line with inflation, so for 2012-13 it is still £100,000.
It cannot be easy running the UK economy. Now we are in the doldrums, the Chancellor would like us to spend more to help the economy recover and generate more VAT and other tax. At times in the past, things have been different and George Osborne’s predecessors have wanted us to spend less, so they have encouraged us to invest and save more by inventing schemes that offer tax incentives. Putting money aside has generally been seen as virtuous and with its tax breaks on certain savings and investment accounts the Government made savings and investment even more worthwhile.
A little internet research suggests that death duties first came to the UK in 1796, some years after US founding father Benjamin Franklin first talked about death and taxes being the only two certainties we all face. Those death duties brought an even stronger link between the two dreads in Franklin’s words; and what we now call Inheritance Tax (IHT) still combines a loved-one’s departure with a potentially large tax bill payable from the deceased’s estate before probate can be granted and distributions made to beneficiaries.
2012 Autumn Statement to Parliament. – An overview of the main points.
Given current life expectancy, if everybody just handed down their family wealth to the next generation at death, hardly anyone would receive a financial boost until they were well into middle age.
Back in 2010, the Government introduced a Personal Allowance Income Limit, which was set at £100,000. Once someone’s annual income passed that figure, their personal allowance would start to reduce by £1 for every extra £2 of earnings. The Personal Allowance Income Limit has not so far been increased to reflect inflation, so remains at £100,000 for 2012-13.
We like to think that we know what we are talking about, so it is reassuring when others feel the same and ask for comment on topical issues.
Guest legal blogger Gareth from Silverman Sherliker LLP has kindly written this piece on why it pays to have a decent Will in place.
With only a few weeks left before the January 31 tax return submission deadline for 2010/2011 and Moira Stewart’s stern but friendly reminders still ringing in the ears, now is the time to tackle that tax return.
With low interest rates and relatively high inflation, the real value of savings and the purchasing power of a fixed income are steadily eroded. Over a period of years the cumulative impact can be dramatic and the effect on pension serious.