Page 10 - Budget Newsletter - March 2023

Pay later, not now?

For the growing number of higher and additional/top rate taxpayers, there can be a case for
considering the options for tax deferral, once the decision on which sector to invest in has been
made. The potential advantages and disadvantages of tax deferral include:

• What would be going to the Treasury instead remains invested, enhancing potential returns.

• There is the possibility that tax rates will be lower when the investment is realised. The
opposite risk is that the 50% top tax rate could reappear following a change of Government
– Scotland’s will already be 47% from 2023/24. However, your marginal tax rate could rise
anyway because of the impact of frozen (or falling, in the case of additional/top rate) tax
bands and allowances - being frozen until 5 April 2028.

• Some tax liabilities might disappear completely. Under current rules there is generally no
CGT on death, although several voices, have suggested this relief should be withdrawn.

• The investor may change their country of residence, giving rise to a lower tax rate or possible
tax savings during the period of transition between the old and new homes.

There is a variety of tax-deferral options available but, as ever, advice is needed in making the
‘customer’ a client of HMRC.

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