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March 28th 2014 / BY: Wisteria

Chartered Accountants in London explain UK tax law changes

The latest budget from the coalition government announced many changes for both individuals and companies alike in the UK. With many rules and regulations set to change, many Chartered Accountants in London will have to assess the changes to better advise their clients. This article outlines some of the proposed changes to UK tax law and what the next steps could be to take advantage of this.

For companies, one change to take effect from 1 April 2014 is the increase of the Annual Investment Allowance (AIA) for all UK companies. AIA is a 100% tax relief on the expenditure incurred on items such as plant and machinery for the purpose of trade. The limit has been doubled from £250k to the new limit of £500k. By increasing the limit, this will encourage businesses of all sizes to invest more in plant and machinery for their business to hopefully boost growth. Additionally, this incentive from the government may make it more favourable to register a company (which can be completed by many online company formation agents). As the AIA and what qualifies for this relief can be a highly complicated area it is advisable to seek the advice of chartered accountants in London to assist you with this to calculate what allowances are available to you.

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Another change announced in the budget was the introduction of a new combined Isa (Individual Savings Account) which comes into effect as of April 2015. Unlike the current system where there is a Stock and Cash ISA which provides tax free interest and dividends, the new ISA would be a combined £15,000 yearly limit. Finer details are yet to be released, but speaking to a financial advisor or your tax advisor may be beneficial to plan your tax affairs most efficiently.

The other main talking point during this year’s budget was the vast changes to the pension schemes. In particular, what happens on retirement and how individuals take the money from their pension. Under the current law, individuals can take pensions in a variety of ways, one of which is as an annuity. However under the revised rules there will no longer be a limit to how much of the pension can be withdrawn at any one time. This will allow individuals more freedom to draw down on their pensions. A financial advisor or pensions specialist would be best placed to provide further advice and planning opportunities.

There are a number of changes to UK taxation which will affect both companies and individuals to varying extents. To find out more about how these changes could affect you and how best to plan your tax affairs around these changes, feel free to call Wisteria on 020 8952 0140 or email info@wisteria.co.uk where a tax expert will be more than happy to assist.