The South West tourism and leisure industry looks set for increased visitors throughout the 2017 holiday season, with more holidaymakers planning to stay in the UK rather than travel abroad. According to research carried out by Barclays Bank, over a third of British holidaymakers are planning to holiday at home this year, as the weakening pound and the risk of terror attacks deter foreign travel. In addition, the weather forecast for the summer is looking very promising.
The South West is the most popular destination, chosen by an estimated 25% of holidaymakers.
An increasing number of holidaymakers now take longer holiday breaks in the UK, many of which incorporate the long bank holiday weekends.
According to figures published by Visit England, just over 5 million Britons are planning long bank holiday staycations in the UK, 6% up on last year, with 63% of British adults planning on taking a holiday break in the UK in 2017, up from 57% in 2016.
Here in the South West we are ideally situated to benefit from this increase in staycations, as more holidaymakers than ever are choosing to stay closer to home.
All our clients engaged in the tourism and leisure industry, either directly or indirectly, should make every effort to promote and market themselves to take advantage of this opportunity, increasing public awareness of what they have to offer, especially using social media.
As clients can expect increased profits, this presents us with the opportunity to look at timely tax planning advice to mitigate their tax liabilities, including pension contributions.
However, if your client chooses this option, beware of the “nasty” tapered annual allowance, which Andrew Brown of TWFM has previously written about.
One of my clients in the industry was innocently contemplating using his annual allowance of £40,000 (he had previously used up all carry forward relief) at the same time that his company had declared increased (tax efficient) dividends as a reward for the sharp rise in profits.
As a result, his threshold income (total income before pension contributions) was £130,000.
His pension contribution of £40,000 would have taken his adjusted income to £170,000, £20,000 over the trigger of £150,000. As a result, his annual allowance would have reduced by £10,000, and there would have been an annual allowance charge of £4,500. Fortunately I was able to intervene and suggested that the pension contribution be reduced to £20,000.
If the client wishes to pay a larger pension contribution in the next tax year, he would have £60,000 available (Annual allowance of £40,000 plus £20,000 carry forward), but he will have to tailor his income so that it does not exceed £110,000.