NEW Articles27 Aug 2024
The Advantages of the UK as a Location for a Holding Company
The UK is still an attractive location to site an international holding company
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The Bank of England base rate increase is impacting on the government’s tax takes, with more taxpayers paying tax on savings income due to higher interest rates. Increased mortgage rates are contributing to rocketing capital gains tax (CGT) takings too
The impact of savings on tax
National Savings & Investment is offering a 5% return on its one-year bonds, and some financial institutions are offering 6% for a similar investment. So, a higher rate taxpayer with £10,000 or more invested will easily exceed their £500 savings allowance. In fact, it is estimated that the number of taxpayers paying tax on their savings income for 2023/24 will be a million more than the previous year.
There are two options to minimise tax liabilities:
It’s advisable to keep careful track of your savings income for tax purposes. If tax is owed, it will be paid through self-assessment or via a PAYE coding adjustment.
Why is capital gains tax revenue increasing now?
The substantial increase in CGT receipts reported recently is partly explained by the number of buy-to-let landlords who are selling up. A buy-to-let was a good investment choice when mortgage costs were low, property prices were increasing, and cash savings accounts offered a very poor return in comparison. But all three of these factors are now in reverse, and landlords will often be able to get a better return investing their funds elsewhere.
Uncertainty around possible future increases to CGT is also pushing landlords to sell sooner rather than later.
If selling up, landlords can keep CGT bills as low as possible by:
These measures can help alleviate some of the seemingly punitive rates of CGT.
HMRC information on the taxation of savings income on can be found here [savings interest] and we are always happy to advise you on your options.
THE AUTHOR
Manager, Mixed Tax
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