In this article, Dispute Resolution Associate, Olivia Parkinson covers everything you need to know about contesting an ex-spouses will.
The Chancellor’s 2009 Budget was intended to be a series of measures aimed at dealing with what is now universally regarded as the worst recession since the Second World War. Because it may take the best part of ten years to get the economy back in balance, it is therefore not surprising that the attack on high earners has already started.
Income tax
From April 2010 there will be a 50% income tax band for individuals with annual income in excess of £150,000. To compound this agony, individuals with income over £100,000 will receive a restricted personal allowance, reduced to zero once income exceeds approximately £112,300. How successful this will be in raising revenue is doubtful because there is time for individuals to plan their affairs around these income tax rules.
Pension savings
From April 2011 high earning individuals will only qualify for restricted higher rate tax relief on pension contributions, the relief pegged back to the basic rate if earnings exceed £180,000.
This, combined with the lifetime allowance freezes, will mean that it is very important to seek advice from a financial adviser to ensure no options are missed. You should consider writing a ‘death benefit in trust’ to save inheritance tax on your pension funds if you were to die before the pension was drawn.
Capital gains tax
Following last year’s changes there is very little to report this year. A modest increase in the annual allowance up to £10,100 is the only highlight. Entrepreneurs’ relief and the 18% rate remain unchanged.
With the current furore over MPs expenses, the ability to choose which property may benefit from the capital gains tax main residence relief (also known as "flipping"), may well be short lived. Those with more than one available residence should seek advice now to ensure that this very generous tax relief is not lost.
Inheritance tax
The IHT nil rate band rose to £325,000 from 6 April 2009, rising further to £350,000 from 6 April 2010.
Married couples continue to benefit from the double nil rate band on the death of the survivor of them. This is a generous relief and therefore it is imperative to consult us to ensure that you are maximizing your allowances.
