Personal Finance: Ways to beat the Budget

THERE are just 11 working days until the first Autumn Budget.

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.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
election 2015The 10 best quotes of the campaign
A caravan being used as a polling station in Ford near Salisbury, during the 2010 election
election 2015The Independent's guide to get you through polling day
David Blunkett joins the Labour candidate for Redcar Anna Turley on a campaigning visit last month
voicesWhat I learnt from my years in government, by the former Home Secretary David Blunkett
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

Pan Am Experience: A 'flight' back to the 70s

Tim Walker checks in and checks out a four-hour journey with a difference
Humans aren't alone in indulging in politics - it's everywhere in the animal world

Humans aren't alone in indulging in politics

Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

Crisp sales are in decline

As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

Barcelona vs Bayern Munich player ratings

Lionel Messi scores twice - but does he score highest in our ratings?
Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

Explosive batsman who sets the range for Kiwis' big guns

Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'