Personal Finance: Ways to beat the Budget
Sunday 14 November 1993
Finding ways to dodge some of the more punitive aspects of the Budget has become almost a national sport.
Filling up the car with petrol and stocking up on alcohol and cigarettes are basic tax dodger's tactics.
The more sophisticated graduate from taking advantage of the sure-fire financial manoeuvres, to predicting what is likely to come up and acting accordingly.
The most notable Budget tax coup for the nifty was the leak over the ending of life assurance premium relief in the 1984 Budget. Those who rushed out ahead of the Budget to buy 10-year endowment policies to take advantage of the tax relief have not had a sparkling return for their trouble.
Those policies will start maturing in February and March. Saving small sums may not have been too painful, so any lump sum that lands in your lap seems like a real gain. But colder analysis may put a different complexion on things.
The old adage about never investing just for the tax relief seems hard to follow when there is a gift horse baring its teeth.
So what about this year's Budget ?
Firstly, there are quite a few hangovers from Norman Lamont's last Budget. Tax relief on mortgage interest is to be cut from 25 to 20 per cent, and the tax relief on married couples and the additional personal allowance for single parents will also be restricted to the basic 20 per cent tax band.
This has raised speculation that tax relief for pensions, which is still available at 25 and 40 per cent, looks suspiciously out of line.
But there is a problem here, as restricting the relief would cut across the grain of persuading people to stop thinking they can rely on the state and encouraging them to save as much as possible for themselves.
It is a matter of where the line is drawn. There is already a ceiling of pounds 75,000 on earnings eligible for company pension tax relief. Beyond that, people are deemed well-off enough to save up for a luxury old age out of taxed income rather than relying on state subsidy on their savings - which is what tax relief on pensions amounts to. In fact, there is a double subsidy - tax relief and the tax privileges of the pension funds.
Whether there is action on the basic pension payment or AVCs (additional voluntary contributions) - extra payments made to boost basic pensions entitlement - will make little difference.
What it comes down to is that pensions are worth doing under current rules, because the boost from the state more than makes up for the lack of flexibility. So why not put as much as you can afford into pensions ahead of this Budget, rather than waiting for the end of the tax year - and you probably won't regret it in the long run whatever the contents of the Budget.
The other pre-Budget action that seems worthwhile is paying some extra cash into your gas and electricity bills. Pre-payment of bills before April will escape VAT as long as you are careful to specify that it is a pre-payment.
A TWO-TIER property market seems to have developed in the South-east.
Looking at it from a buyer's point of view, at first sight there appears to be a desert. On closer inspection the thin, estate agents' lists are littered with overpriced and not terribly attractive properties that have often been languishing on the lists for months and months.
Meanwhile, there is a feverish market in attractive reasonably priced properties that may not even make it to the printed lists as buyers rev up for contract races.
Buyers who bought at the height of the market either cannot stomach making a loss or cannot contemplate selling because they are trapped by negative equity and have no cash to dig themselves out of the hole.
- 1 JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
- 2 The West has it totally wrong on Lee Kuan Yew
- 3 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 4 Video shows what happens when lava is poured onto ice
- 5 Cate Blanchett loses temper during interview: 'That's your f**king question?'
Andreas Lubitz: Who is Germanwings co-pilot who 'locked out captain and crashed flight 9525'?
Germanwings crash: The poignant final photograph taken by Iranian journalist on doomed flight after watching Barcelona play Real Madrid
#FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Cate Blanchett loses temper during interview: 'That's your f**king question?'
Jeremy Clarkson calls on trolls to leave producer Oisin Tymon alone: 'None of this is his fault'
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Vote Ukip, says far-right group Britain First
iJobs Money & Business
£16000 - £18000 per annum: Recruitment Genius: A position has arisen within th...
£50000 - £63000 per annum + excellent benefits : Ashdown Group: IT Manager / D...
£16500 per annum: Recruitment Genius: Applicants must hold a valid SIA Door Su...
£50000 per annum: Ashdown Group: Business Analyst - Financial Services - The C...