Finance

Discussing Inheritance Tax

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You may well want to pass your estate onto your children when you die, but unless you make suitable plans your children will pay 40% inheritance tax (IHT) in the UK on all your estate above £325,000 which in today’s property market is most people’s property value alone.

You worked hard to earn your wealth, so let us work hard preserving it and help you and your family maintain its financial strength from one generation to the next.

If you are worried about Inheritance Tax and want to plan for the future, get in touch with us today.

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Autumn Budget 2024: Key Points

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The Chancellor of the Exchequer, Rachel Reeves, delivered her maiden Autumn Budget Statement 2024 on Wednesday 30 October, alongside an updated economic forecast from the Office for Budget Responsibility. Three months after coming to power, she set out the government’s taxing, borrowing and spending plans.

Main announcements from Chancellor Rachel Reeves at a glance

Key measures on tax, investments, pensions and property

What does the Autumn Budget Statement 2024 mean for your money? Chancellor Rachel Reeves delivered Labour’s first Budget since 2010 on 30 October, after the party’s return to power in July’s general election.

She announced tax rises worth £40bn, commenting that these would rebuild public services and stabilise the public finances.

ECONOMY

  • Office for Budget Responsibility predicts the UK economy will grow by 1.1% this year, 2% next year and 1.8% in 2026
  • Inflation is predicted to average 2.5% this year and 2.6% next year before falling to 2.3% in 2026
  • The official definition of UK government debt loosened by including a wider range of financial assets, such as future student loan repayment

PERSONAL TAXATION

  • Rates of Income Tax and National Insurance (NI) paid by employees, and of VAT, to remain unchanged
  • Income Tax band thresholds to rise in line with inflation after 2028, preventing more people being dragged into higher bands as wages rise
  • Basic rate Capital Gains Tax on profits from selling shares to increase from 10% to 18%, with the higher rate rising from 20% to 24%
  • Rates on profits from selling additional property unchanged
  • Inheritance Tax threshold freeze extended by further two years to 2030, with inherited pension pots also subject to the tax from 2027

WAGES, BENEFITS AND PENSIONS

  • Legal minimum wage for over-21s to rise from £11.44 to £12.21 per hour from April
  • Rate for 18 to 20-year-olds to go up from £8.60 to £10, as part of a long-term plan to move towards a ‘single adult rate’
  • Basic and new State Pension payments to go up by 4.1% next year due to the ‘triple lock’, more than working age benefits
  • Eligibility widened for the allowance paid to full-time carers, by increasing the maximum earnings threshold from £151 to £195 a week

HOUSING

  • Social housing providers to be allowed to increase rents above inflation under multiyear settlement, external
  • Stamp duty surcharge, paid on second home purchases in England and Northern Ireland, to go up from 3% to 5%
  • Current affordable homes budget, which runs until 2026, boosted by £500m

TRANSPORT

  • 5p cut in fuel duty on petrol and diesel brought in by the Conservatives, due to end in April 2025, kept for another year
  • £2 cap on single bus fares in England to rise to £3 from January
  • Commitment to fund tunnelling work to take HS2 high-speed rail line to Euston station in central London
  • Commitment to deliver upgrade to trans-Pennine rail line between York and Manchester, running via Leeds and
    Huddersfield
  • Air Passenger Duty on flights by private jet to go up by 50%
  • Extra £500m next year to repair potholes in England
  • Vehicle Excise Duty paid by owners of all but the most efficient new petrol cars to double in their first year, to encourage shift to electric vehicles

BUSINESS TAXES

  • Companies to pay NI at 15% on salaries above £5,000 from April, up from 13.8% on salaries above £9,100, raising an additional £25bn a year
  • Employment Allowance – which allows smaller companies to reduce their NI liability – to increase from £5,000 to £10,500
  • Tax paid by private equity managers on share of profits from successful deals to rise from up to 28% to up to 32% from April
  • Main rate of Corporation Tax, paid by businesses on taxable profits over £250,000, to stay at 25% until next election

GOVERNMENT SPENDING AND PUBLIC SERVICES

  • Extra £22.6bn for day-to-day spending on the NHS in England, and a £3.1bn boost to budget for investment
  • £6.7bn allocated for education investment next year, with £1.4bn earmarked for rebuilding over 500 schools
  • Defence spending to rise by £2.9bn next year

OTHER MEASURES

  • £11.8bn allocated to compensate victims of the infected blood scandal, with £1.8bn set aside for wrongly prosecuted Post Office sub-postmasters
  • Government to stop receiving surplus cash from pension scheme for mineworkers
  • Extra spending in England will lead to £3.4bn more for Scotland, £1.7bn more for Wales and £1.5bn more for Northern Ireland in devolution payments

Do you need a Post Budget Financial Health check?

Book a chat with one of our expert financial advisers to see how they can help and support your financial planning through the new legislation

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Financial advice during Divorce

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Divorce can be bewildering, especially when managing your finances. However, understanding your options can make the process more manageable. Financial concerns may not be your first thought during a marital breakdown. Still, given the significant impact divorce can have on your financial future, it’s crucial to take proactive steps to safeguard your financial security.

Download our guide to Financial advice during Divorce to find out how you can secure your future.

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Is it time to give your pensions a health check?

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Entering your 50s is not just another chapter in your life; it’s a profound and exciting phase in your financial journey. By this time, life may have settled into a more predictable rhythm. Perhaps your children are financially independent, and your career is at a peak, providing a stable income.

Pension review

In your 50s, a pension review is pivotal in preparing for a secure retirement. This review thoroughly evaluates your current pension plans to understand their performance and projected future income.

Conducting this review ensures that you know how on track you are to achieving a comfortable retirement, providing you with confidence and clarity as you approach this life stage.

Obtain a State Pension forecast: If you haven’t already done so you can obtain a State Pension forecast from the Gov.uk website.

Review pension statements: Gather and review your latest pension statements to understand your current savings and projected retirement income.

Evaluate progress: Check if you are on track to meet your retirement goals. Consider factors like your desired retirement age and lifestyle.

Consolidate your pension pots: If you have had more than one employer in your lifetime, you’ll probably have more than one pension pot, too. If appropriate, consider transferring your old pensions and combining them under one roof, giving you more control of your money and where you’re invested in the run-up to and in retirement.

Envision your future: Start imagining what retirement might look like for you. Consider travel, hobbies, part-time work or any other aspirations.

Have a retirement plan: A general idea of your retirement goals can help shape your financial planning and savings strategy.

Amplified retirement savings: If appropriate, you can boost your pension contributions to increase the overall amount saved, creating a larger pool of funds to support your retirement lifestyle. Even small increases can lead to substantial growth, ensuring you have more resources to draw upon in your golden years.

Power of compounding: One of the most important aspects of saving for retirement is the effects of compounding, which allows your money to grow exponentially. The earlier and
more you contribute, the more time your savings have to benefit from compounding. This means your contributions not only earn interest, but that interest also earns interest, leading to significant growth over the years.

Tax relief advantages: Pension contributions are highly tax-efficient. Depending on your tax bracket, you receive tax relief on the money you contribute, effectively reducing the net cost of your contributions. For example, if you’re a basic rate taxpayer, a £1,000 contribution might only cost you £800 after tax relief. This government top-up adds an extra layer of growth to your pension fund, enhancing its value.

Increase financial security: By ensuring you have sufficient savings for retirement, you reduce the risk of financial insecurity later in life. This financial cushion can help maintain your standard of living and provide peace of mind that you won’t outlive your savings.

Flexibility and options in retirement: A larger pension pot provides more choices when it comes to retirement planning. Whether you want to travel, pursue hobbies or ensure you can cover healthcare costs, having additional funds gives you the freedom to make these decisions without financial constraints.

Protection against inflation: Increasing contributions helps counteract the eroding effect of inflation on your savings. As the cost of living rises, having a robust pension fund means you’re better positioned to keep up with expenses, maintaining your purchasing power well into retirement.

Discuss retirement plans: Share your retirement goals and plans with your family to ensure everyone is on the same page.

Involve your partner: If applicable, coordinate financial planning efforts with your partner to optimise joint retirement outcomes.

Track investment performance: Regularly check how your pension investments perform against projections.

Adjust investment strategy: Be open to adjusting your investment strategy if your pension isn’t growing as expected.

Understand your Pension Annual Allowance: Check your Pension Annual Allowance, typically £60,000 or 100% of your UK relevant earnings, whichever is lower. If you have no relevant earnings, up to £3,600 could qualify for tax relief. Note any reductions if you have a high income or have triggered the Money Purchase Annual Allowance (MPAA).

Explore carry-forward options: Investigate the possibility of carrying forward unused allowances from the previous three tax years. !is can be complex, so ensure you meet the eligibility criteria.

Optimise Individual Savings Account (ISA) contributions: Consider contributing up to the £20,000 limit in the 2024/25 tax year. ISAs offer tax-efficient growth and withdrawals, making
them an effective savings tool.

Choose the suitable ISA: Examine your balance between cash and investments. Decide between Cash ISAs or Stocks & Shares ISAs based on your risk tolerance, capacity for loss and financial goals.

Capital Gains Tax exemption: Be aware of the annual Capital Gains Tax exemption, which allows you to realise gains up to a certain amount without paying tax (£3,000 in 2024/25). Plan
asset sales accordingly.

Dividend and Personal Savings Allowance: Utilise the Dividend and Personal Savings Allowance to minimise taxes on investment income and savings income.

Review annually: Make it a habit to review your tax strategy annually, ensuring it aligns with your goals  and takes full advantage of available allowances.

Discuss financial strategies: Share your tax planning strategies with your family to ensure they understand and can support your financial decisions.

If you would like to give your pensions a health check, get in touch today:

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Financial planning for a secure future

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Professional financial review

 

Receiving regular professional financial reviews in your 50s is an essential step towards securing your financial future. Professional financial advice offers a comprehensive assessment of your current financial health, providing expert insights into retirement planning, investment and protection strategies. This proactive approach will enhance your financial stability and provide peace of mind during this pivotal life stage.

Recognise the need for professional guidance: Professional advice will clarify and simplify decision-making as your financial situation becomes more complex.

Identify goals: Clearly define your financial goals, such as retirement planning, investment growth or securing your family’s future.

Discuss your needs: Discuss your financial goals and challenges to set the groundwork for a tailored financial plan.

Investments: Evaluate if your investment portfolio is aligned with your risk tolerance and financial goals.

Retirement planning: Assess whether you are on track to meet your retirement savings goals and explore options to enhance your pension or retirement accounts.

Tax-efficiency: Review strategies to ensure your investments and savings are as tax- efficient as possible.

Customised strategies: Benefit from personalised advice considering your unique financial situation and goals.

Peace of mind: Gain confidence knowing that your financial decisions are informed by expert analysis and recommendations.

Action plan: Implement a strategy that addresses your immediate and long-term financial needs. Monitor progress: Regularly review your financial plan with your adviser to ensure it remains relevant and practical.

Discuss plans with your family: Share your financial strategy with your family to ensure everyone is informed and supportive of the decisions being made.

Plan for emergencies: Collaborate with your adviser to develop a financial contingency plan for unforeseen events.

As you reach this critical milestone in your 50s, it’s time to focus on securing your legacy and ensuring financial peace of mind for the years to come. We’ll guide you through the complexities and create a personalised strategy that aligns with your goals and protects what matters most.

Start building a future that reflects your aspirations and safeguards your wealth. Find your local adviser today:

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Autumn Statement 2024: What it could mean for your finances

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On 30 October, Chancellor of the Exchequer Rachel Reeves will deliver the Autumn Budget Statement 2024. It will be a critical indicator of the Government’s approach to managing the economy, aiming to foster an environment conducive to sustainable growth. The outcomes of this Autumn Budget will have far-reaching implications, potentially influencing everything from tax rates and public services to business investment and consumer confidence. As such, it is a pivotal moment that will shape the economic landscape in the months and years ahead.

If you want to know more about what the Autumn Statement could mean for your finances, please head to our downloads page to download your free guide:

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How do we achieve client-centric outcomes?

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If you would like to speak to us about your financial future, please click below to find your local adviser:
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Autumn budget statement 2024

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On 30 October, Chancellor of the Exchequer Rachel Reeves will deliver the Autumn Budget Statement 2024 accompanied by a comprehensive fiscal statement from the Office for Budget Responsibility (OBR). This significant event comes as the new government, elected to boost economic stability and growth, takes its first important step in addressing the nation’s financial health.

The Autumn Budget will outline the government’s economic strategy, providing insights into their taxation, public spending and fiscal policy plans. It will be a critical indicator of the government’s approach to managing the economy, aiming to foster an environment conducive to sustainable growth.

BALANCING THE NATION’S BOOKS

The new government has faced the challenge of assessing the state of public spending and has identified a significant spending gap in the nation’s finances. This gap underscores the complexities of balancing the nation’s books while striving to implement growth-oriented policies. The Autumn Budget will likely address these challenges head-on, proposing measures to stimulate economic activity while ensuring fiscal responsibility.

The outcomes of this Autumn Budget will have far-reaching implications, potentially influencing everything from tax rates and public services to business investment and consumer confidence. As such, it is a pivotal moment that will shape the economic landscape in the months and years ahead.

ECONOMIC STABILITY AND GROWTH

Following an ambitious King’s Speech, the new government’s first budget will seek to announce initiatives for growth alongside the activation of plans to balance the books across the spectrum
of personal and business taxes and employment policy. But what could the new Labour government mean for your finances?

Prime Minister Starmer’s Labour manifesto emphasised wealth creation. The manifesto aimed to grow the economy and ‘keep taxes, inflation and mortgages as low as possible’. To fulfil those plans, Labour may have to make changes that could affect taxes, allowances, and various investment schemes and rules. Given the pledges made in the manifesto, doing so may prove challenging.

PLEDGES AND CHALLENGES
Although the manifesto is not legally binding, it best indicates Labour’s government plans. Here, we highlight what the pledges could mean for your finances.

PENSIONS
Ahead of launching its manifesto, Labour announced that it would drop plans to reintroduce the lifetime allowance, a cap on how much people can save into their pensions before paying tax. Importantly, Labour committed to upholding the pensions ‘triple lock’, which ensures that the State Pension will continue to increase yearly in line with the highest of three factors: wage growth, inflation or a minimum of 2.5%. This policy is designed to protect the purchasing power of retirees and ensure they can maintain a stable standard of living in retirement.

In the Autumn Budget, there are rumours the Chancellor could look to change pension tax relief, with speculation that this might be one of her targets. One option for Reeves is to cut pension tax relief to 20%. This would be no change for basic rate taxpayers. But it would be a considerable reduction for higher and additional rate taxpayers, who receive 40% and 45% relief on some or all of their pension contributions.

However, further clarity on the scope of this and the challenges they are looking to address has yet to be made available. In the meantime, making the most of all your pension allowances is essential to build your financial resilience in retirement.

INHERITANCE TAX
Although Inheritance Tax has been widely discussed recently, it was a noticeable absence from the Labour manifesto. It contained no comments on future Inheritance Tax rates or reliefs (such as Business and Agricultural Relief).

VAT
The Labour manifesto confirmed that it intended to introduce VAT on private school fees and will end business rates relief for the schools, with such measures estimated to raise around £1.5bn for the government.

The delay until 2025 gives families additional time to consider their options and improve their planning. Families typically have a finite number of financial planning options that can be used to meet additional expenditures, namely reducing other expenditures, increasing earnings, targeting higher returns (with the additional risk that comes with this), looking to borrow and gifting from relatives.

INCOME TAX
Whilst Labour had pledged not to increase taxes on working people (including Income Tax at the basic, higher and additional rates), this does not preclude utilising fiscal drag to increase Income Tax revenues. Fiscal drag occurs when inflation and income growth push taxpayers into higher tax brackets, which will remain frozen until at least 2028. This policy results in higher taxes for affected individuals, even though the tax rates themselves have not changed.

One area to watch could be taxes on dividend income. These have not been mentioned and may be outside the scope of the pledge as a non-working source of income with its own Income Tax rates. Moreover, Labour has pledged to reform the taxation of carried interest, which is a share of profits from a private equity, venture capital or hedge fund. The manifesto did not specify exactly how Labour would close the carried interest ‘loophole’, but the intent is clear: private equity is the only industry where performance-related pay is treated as capital gains. Labour will look to close this loophole.

CAPITAL GAINS TAX (CGT)
The Labour manifesto did not specifically mention CGT rates, and the party’s senior figures have said that they have no plans to reform these rates – with the exception of their proposed policy on carried interest. That said, future increases have not been ruled out entirely.

NATIONAL INSURANCE CONTRIBUTIONS
Labour supported the Conservatives’ cuts to National Insurance in the 2024 Spring Budget, and its manifesto outlined a commitment not to raise current rates. However, Labour may utilise fiscal drag with frozen tax rates until 2028.

As the 30 October Autumn Budget approaches, individuals and families should take proactive steps to manage their personal finances. Anticipating potential changes and being prepared can significantly affect one’s financial wellbeing.

Remember, proactive planning is key to financial stability and peace of mind. Don’t wait until the last minute – take action now to secure your financial future.

To discuss the potential impacts of the upcoming Autumn Budget on your finances, we can provide tailored advice and help you navigate any changes that might affect your tax liabilities, pension contributions or investment strategies. If you need further guidance or personalised advice, please don’t hesitate to contact us.

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Your Financial Adviser – Your Trusted Confidante

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‘Building up a relationship is really, really important over the years’, Nigel Swan Regional Director and Financial Planner.

Your financial adviser is here to understand and look after you, your family and your finances, to be there for you through the bad times and the good. 

‘We are there to take the burden away’. 

 If you would like to discuss your financial future, get in touch with us today

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8 Principles of Growing your Money

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Investing your money could be an effective way to reach your long-term goals and aspirations. By investing your money, you could potentially earn a higher return than if you were to simply save it in a low-interest savings account. This means that over time, your money could grow substantially, giving you a better chance of achieving your financial goals. For more information please download our free guide:

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