As the UK government outlines its long-term vision for economic recovery and growth in the wake of the autumn budget, significant reforms and strategies are being introduced to stimulate local economies and empower entrepreneurs. We explore the initiatives and funding commitments that will shape the landscape for businesses and foster a thriving entrepreneurial ecosystem.
The government will set out its long-term vision for local growth funding in Phase 2 of the Spending Review. The government is continuing to invest in programmes which are important to growth and provide stability for local leaders and investors.
The government is setting out the next steps for delivering its strategy for regional growth, across investment, devolution and local growth funding reform – which will create good jobs and spread prosperity across the UK.
The government is confirming funding for Investment Zones and Freeports across the UK, announcing the approval of the East Midlands Investment Zone to support advanced manufacturing and green industries, and confirming that five new customs sites will be designated in existing Freeports shortly. The government will also work to ensure the Freeports policy model aligns with the national Industrial Strategy.
Supporting Scottish trade and investment by providing £0.75 million to establish Brand Scotland, a programme run by the Scotland Office to promote Scottish investment opportunities and exports across the globe.
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The government’s green paper launch on its modern Industrial Strategy sets out eight growth-driving sectors, announcing that government will produce sector plans for each as part of its promise to help these sectors thrive.
The Budget confirms long-term support for growth-driving sectors ahead of the full modern Industrial Strategy’s publication in the Spring, including:
UK Export Finance will support companies supplying critical minerals to UK exporters in growth-driving sectors such as EV battery production, clean energy, aerospace and defence. This new support targets projects that secure critical minerals from overseas and will boost supply chain resilience in key manufacturing sectors.
The government will bring forward a Small Business Strategy Command Paper in 2025.
This will set out the government’s vision for supporting small businesses, from boosting scale-ups to growing the co-operative economy, across key policy areas such as creating thriving high streets, making it easier to access finance, opening up overseas and domestic markets, building business capabilities and providing a strong business environment. The paper will complement the government’s forthcoming Industrial Strategy and Trade Strategy.
Funding for the Made Smarter Adoption programme will double to £16 million in 2025/26, supporting more small manufacturing businesses to adopt advanced digital technologies and enabling the programme to be expanded to all nine English regions.
East West Rail will connect Oxford, Milton Keynes and Cambridge and unlock land for housing and laboratories, supporting the wider Cambridge life sciences cluster The Budget will announce the East West Rail consultation, the next step in the project, which will be launched by the Secretary of State for Transport in November 2024.
The government is announcing that work will begin to develop a social impact investment vehicle, led by the Chief Secretary to the Treasury, working with DCMS, to support the government to deliver its missions. This will bring together socially motivated investors, the voluntary sector and government to tackle complex social problems. This will be designed and developed through engagement with the sector, with further details to be announced at Phase 2 of the Spending Review.
The government will transfer the Investment Reserve Fund in the Mineworkers’ Pension Scheme to the scheme’s Trustees. This will be paid out as an additional pension to members of the scheme.
The government will also take forward a review of the existing surplus sharing arrangements.
The government will deliver the Lifelong Learning Entitlement (LLE), but will postpone its launch by one year. The LLE will launch in September 2026 for learners studying courses starting on or after 1 January 2027.
With over 1,250 local advisers and staff, we’re here to help you address any financial needs arising from the Autumn Budget – from investment advice to retirement planning. Simply provide a few details through our quick and easy online tool, and we’ll match you with the ideal adviser.
Alternatively, click below to download our comprehensive guide to the Autumn Budget.
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THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.
A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.
YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.
The Autumn Budget 2024 introduces an extensive range of reforms designed to enhance tax efficiency and economic resilience. From the increase in employer National Insurance Contributions (NICs) to updated Capital Gains and Inheritance Tax policies, these measures have significant implications for both individuals and businesses.
Here’s a closer look at some of the key changes shaping the UK tax landscape.
Starting from 6 April 2025, the employer NICs rate will increase from 13.8% to 15%, with the Secondary Threshold—the point at which employers begin to pay NICs on employees’ earnings—reduced from £9,100 to £5,000. This change, applicable until 6 April 2028, aims to increase tax revenues, after which the threshold will adjust in line with the Consumer Price Index (CPI).
To alleviate the impact on smaller employers, the Employment Allowance will rise from £5,000 to £10,500, with the government removing the £100,000 eligibility threshold, broadening the allowance to include all eligible employers starting in April 2025. Additionally, NICs relief for hiring veterans has been extended for an additional year, providing employer NICs exemptions up to £50,270 for veterans’ first year of civilian employment.
The remittance basis of taxation for non-UK domiciled individuals will be replaced by a residence-based regime from 6 April 2025, allowing foreign income and gains (FIG) to be excluded from UK taxation for the initial four years of residence. For Inheritance Tax (IHT) purposes, the use of offshore trusts to avoid IHT will be phased out, and the rules for Capital Gains Tax (CGT) will allow current and past remittance basis users to rebase foreign assets to their 2017 values upon disposal, under certain conditions.
Autumn Budget 2024Download our full guide to the Autumn Budget 2024 as we explore the spending plans set by the Chancellor, Rachel Reeves. |
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The government is also reforming inheritance tax rules:
The IHT nil rate bands will remain frozen at £325,000 and £175,000 (for the residence nil rate band) until 2030, allowing estates to pass on up to £500,000 tax-free, or up to £1 million for estates of surviving spouses or civil partners.
Through these comprehensive reforms, the government aims to create a fairer, more efficient tax system that supports economic stability and enhances public funding.
With over 1,250 local advisers and staff, we’re here to help you address any financial needs arising from the Autumn Budget – from investment advice to retirement planning. Simply provide a few details through our quick and easy online tool, and we’ll match you with the ideal adviser.
Alternatively, click below to download our comprehensive guide to the Autumn Budget.
| Match me to an adviser | Download full guide to the Autumn Budget |
THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.
A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.
YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.
The Autumn Budget 2024 introduces a comprehensive suite of measures aimed at enhancing tax compliance, closing loopholes, and modernising HMRC’s operations. From bolstering HMRC staff and updating IT systems to reforming tax rules on pensions, capital gains, and offshore interests, these initiatives reflect a strategic push towards a fairer, more transparent tax system.
Here’s an overview of the key changes and their implications for taxpayers.
As announced in July, £1.4 billion will be invested over the next five years to recruit an additional 5,000 HMRC compliance staff, aiming to raise £2.7 billion annually by 2029/30. An additional £262 million will fund 1,800 HMRC debt management staff, projected to generate £2 billion per year in revenue by 2029/30.
Significant investment is also planned for modernising HMRC’s debt management case system (£154 million) and acquiring additional credit reference agency data (£12 million) to better target debt collection activities. Furthermore, £16 million will enhance HMRC’s app, allowing Income Tax Self Assessment taxpayers to make voluntary advance payments in installments.
To make Inheritance Tax easier and quicker, £52 million will fund digitisation of the service from 2027/28. Additionally, digital reporting for Individual Savings Account (ISA) managers will become mandatory from 6 April 2027, with draft legislation available for consultation in 2025.
Self-Assessment tax returns will soon be pre-populated with Child Benefit data to ensure accuracy in the High-Income Child Benefit Charge (HIBC). Plans to require payroll software for reporting benefits in kind by 2026 will improve efficiency in tax collection on income tax and Class 1A National Insurance contributions (NICs).
The Making Tax Digital (MTD) initiative will continue to expand, initially targeting individuals with incomes over £20,000 by the end of this Parliament, with additional timelines to be confirmed at future fiscal events.
Autumn Budget 2024Download our full guide to the Autumn Budget 2024 as we explore the spending plans set by the Chancellor, Rachel Reeves. |
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To tackle tax avoidance and fraud within umbrella companies, recruitment agencies will be responsible for accounting for PAYE on payments to workers supplied via these companies starting in April 2026. This reform aims to protect workers from large tax bills caused by non-compliant umbrella companies.
The late payment interest rate on unpaid tax liabilities will increase by 1.5 percentage points from 6 April 2025. Additionally, new legislation will address tax avoidance in contrived car ownership schemes, levelling the playing field for all employees.
Charity tax rules will be tightened to prevent abuse, effective from April 2026, while reforms to capital gains tax on liquidated Limited Liability Partnerships (LLPs) will close a tax avoidance route, effective 30 October 2024.
Efforts to reduce offshore tax non-compliance will be strengthened, with additional resources dedicated to high-value offshore fraud investigations. A consultation on offshore interest reporting aims to simplify rules for easier compliance with UK tax requirements.
The Crypto asset Reporting Framework (CARF) will be extended to UK users, and the government will implement reforms to Employee Ownership and Benefit Trust taxation to prevent abuse, ensuring these structures reward employees fairly.
To increase reporting of high-value tax fraud, HMRC will strengthen its rewards scheme for informants. New consultations on tackling marketed tax avoidance and improving HMRC’s correction powers will support efforts to reduce tax fraud.
The government will engage with stakeholders to develop measures for a more user-friendly tax administration system, which will be detailed in the spring.
New rules will bring European Economic Area (EEA) Overseas Pension Schemes (OPS) and Recognized Overseas Pension Schemes (ROPS) in line with those established elsewhere from 6 April 2025.
With over 1,250 local advisers and staff, we’re here to help you address any financial needs arising from the Autumn Budget – from investment advice to retirement planning. Simply provide a few details through our quick and easy online tool, and we’ll match you with the ideal adviser.
Alternatively, click below to download our comprehensive guide to the Autumn Budget.
| Match me to an adviser | Download full guide to the Autumn Budget |
THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.
A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.
YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.
As part of a broader tax-raising initiative, the Chancellor, Rachel Reeves, confirmed that the lower Capital Gains Tax (CGT) rate will rise from 10% to 18%, while the higher rate will increase from 20% to 24%. This change means you might face higher taxes on profits from selling assets like shares. Previously, those with gains above the threshold had to pay 20% on profits from assets such as shares, or 24% from selling additional property. Rates on residential property will remain at 18% and 24%, respectively.
‘We need to drive growth, promote entrepreneurship and support wealth creation, while raising the revenue required to fund our public services and restore our public finances,’ Reeves said.
‘This means the UK will still have the lowest capital gains tax rate of any European G7 economy.’
CGT is paid on profits of more than £3,000 (2024/25) made when an asset is sold, and rates depend on how much you usually pay in Income Tax, and how large the gain is.
Autumn Budget 2024Download our full guide to the Autumn Budget 2024 as we explore the spending plans set by the Chancellor, Rachel Reeves. |
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The Chancellor also announced that the CGT charged on carried interest would rise to 32% from 28%, saying that the fund management industry provided ‘a vital contribution to our economy but… there needs to be a fairer approach to the way carried interest is taxed.’ She said that in order to encourage entrepreneurs to invest in their businesses, the lifetime limit for Business Asset Disposal Relief would be kept at £1 million and would remain at 10% this year, rising to 14% in April 2025 and 18% in 2026/27.
‘The OBR say these measures will raise 2.5 billion pounds by the end of the forecast,’ the Chancellor said. CGT raised 15 billion pounds in the last financial year, and is currently worth around 4% of receipts from all taxes on income. CGT is not normally payable when a person sells their primary residence, but is payable if on the sale of second properties.
With over 1,250 local advisers and staff, we’re here to help you address any financial needs arising from the Autumn Budget – from investment advice to retirement planning. Simply provide a few details through our quick and easy online tool, and we’ll match you with the ideal adviser.
Alternatively, click below to download our comprehensive guide to the Autumn Budget.
| Match me to an adviser | Download full guide to the Autumn Budget |
THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.
A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.
YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.
IFA, Harry Sims discusses the importance of estate planning when it comes to securing your legacy.
Estate planning looks different on a person-by-person basis. For some, ensuring their loved ones are financially secure will be the priority, for others it could be safeguarding their possessions.
No matter what your objectives are, taking a comprehensive approach which takes your will and your tax and financial position account, is crucial.
So, what do you need to consider to create a truly robust estate plan?
Creating a will is central to estate planning. As a legal document which clearly states how you intend to distribute your property, finances and possessions after you pass away, it’s vitally important that your will is up to date.
If you don’t have a will, intestacy laws will be implemented to determine how your estate is distributed upon death. Location, relationship status and family structure are all factors which can impact the rules of intestacy. And the complexities can lead to unintentional consequences, like loved ones being left without support.
By creating a valid will and ensuring that it is up to date, you’re in complete control over your wishes and know that any chances of potential disputes will be lessened.
Lasting Power of Attorney (LPA) is another crucial component of estate planning. It is a legal document which allows you to appoint one or more individuals to make legal decisions on your behalf, or help you in making decisions. These individuals are known as attorneys.
There are two main types of Lasting Power of Attorney: those for making financial decisions and those for making care and health decisions.
If you appoint an LPA for financial decisions, the attorney has authority to make decisions over everything from your bank accounts to selling your home. Whereas a health and welfare LPA enables your attorney to make decisions with regards to your care and treatments, if you are incapacitated.
In the absence of appointing an LPA your loved ones may have to apply to the Court of Protection to act on your behalf. This can be an added financial strain in what is already a tumultuous time.
You can create a lasting power of attorney via the Government’s website here. Once you have drafted your lasting power of attorney documentation, it will need to be registered with the Office of the Public Guardian (OPG).
Ensuring your LPA is registered is crucial. Only then will the LPA become legally effective and allow your attorneys to make decisions on your behalf.
Inheritance Tax (IHT) can have a huge impact on your estate. If your estate exceeds the £325,000 threshold, it could be liable to the tax which is currently set at a rate of 40%.
Gifting your assets, donating to charity and specific tax reliefs can significantly lower your IHT bill, or result in your estate no longer being liable. This requires careful forward planning, and we would always recommend consulting a tax adviser before making any decisions regarding IHT.
Our team of advisers can help to identify gaps in your estate planning, ensuring you have a robust strategy in place to protect your legacy.
We work closely with expert will writers, solicitors and tax advisors. Together we can assist you in planning for the future, every step of the way. Please get in touch with us for further information on estate planning.
THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL, OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.
THE FINANCIAL CONDUCT AUTHORITY DOESN’T REGULATE TRUST PLANNING AND MOST FORMS OF INHERITANCE TAX (IHT) PLANNING. SOME IHT PLANNING SOLUTIONS PUT YOUR MONEY AT RISK, AND YOU MAY GET BACK LESS THAN YOU INVESTED. IHT THRESHOLDS DEPEND ON INDIVIDUAL CIRCUMSTANCES AND THE LAW. TAX AND IHT RULES MAY CHANGE IN THE FUTURE.
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As the newly elected government seeks to boost the nation’s economic stability and financial health, all eyes are turning to the upcoming Autumn Budget. Speculation has been growing in intensity over the last few weeks, as the Prime Minister warned of a ‘painful’ budget ahead.
Whilst none of us can see into the future, planning ahead will always remain crucial. With that in mind, we’re delving into what the budget could mean for your finances, before Rachel Reeves sheds light on the government’s economic strategy.
Whilst the new Labour government explicitly ruled out any increases to VAT, income tax and national insurance, it’s likely that we will see tax increases elsewhere in the upcoming Autumn Budget.
Against the backdrop of the current economic climate, this budget has the potential to shape everything from public services and business investment, to tax rates in the coming months and years. But what does it all mean for your finances?
The Labour government refused to rule out an increase to the current Capital Gains Tax (CGT) rates, which are currently lower than income tax rates.
Given that it is primarily high net worth individuals who profit from investments and properties, the tax rates could in all likelihood be hiked, or thresholds could be changed. Currently, CGT rates depend on which tax bracket you fall into and on the asset you are looking to sell. If you make a gain exceeding the £3,000 annual tax-free allowance, you will be liable to the tax.
Basic rate taxpayers will pay 10% CGT, whilst additional tax ratepayers will pay 20%. If you’re selling a property which isn’t your main residence, you will be liable to CGT tax at higher rates still, being 18% and 24% for basic and additional rate payers respectively.
When it comes to CGT, it’s always best to speak to your financial adviser. They will be able to work alongside you to ensure that you are planning accordingly, to both minimise your liability whilst staying compliant.
While only 5% of all estates in the UK pay IHT, the tax generated 9% more revenue in the first quarter of 2024/25 than it did in the same period in the year prior – a trend which has been on the rise for several years.
This ongoing increase combined with the number of available exemptions and gifting regimes, makes the tax a clear target for potential changes.
If your estate is liable to IHT, you should carefully consider the current options you have at your disposal. If you were planning on making charitable donations, or gifts you had planned to make, now may be the time to consider making them. any changes to IHT rules going forward could have a significant impact on the amount of tax your estate is liable to.
There has been a lot of speculation over whether the Chancellor could be making changes to pension tax relief in the Autumn Budget. In fact, pensions have specifically been pinpointed for change within Labour’s manifesto. One option being to cut the relief to 20%.
Whilst this wouldn’t be a change for basic rate taxpayers, it would have a considerable impact for higher and additional rate taxpayers. Currently they receive 45% relief on their pensions contributions, so the change could have a huge impact on them. Basic rate taxpayers on the other hand, receive relief at a rate of 40%.
Whilst we await further clarity on any changes to come, making the most of all you pension allowances can help to build your financial resilience in retirement.
To discuss the potential impacts of the upcoming Autumn Budget on your finances, get in touch. We can provide tailored advice to help you navigate any changes which may affect your tax liabilities, pension contributions or investment strategies.
THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.
WHEN INVESTING YOUR CAPITAL AT RISK.
A PENSION IS A LONG TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVIALBLE. PENSION INCOME COULD ALSO BE IMPACTED BY INTEREST RATES AT THE TIME BENEFITS ARE TAKEN. PENSION SAVINGS ARE AT RISK OF BEING ERODED BY INFLATION.
PLEASE NOTE THAT THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE TAXATION AND TRUST ADVICE.
TAX TREATMENT OF PENSIONS IN GENERAL AND TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASSED ON INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION ARE SUBJECT TO CHANGE IN THE FUTURE. ALL RATES AND INFORMATION ARE CORRECT UP TO THE DATE OF PUBLICATION.
According to research, almost a third of UK adults who have checked their tax code (31%) have found that they have been on the wrong one at some point. Additionally, one in six (15%) UK adults do not know if they are on the right tax code and 6% of UK adults have realised they were on the incorrect tax code within the last year.
You can find your tax code printed on your payslip, P60, or annual notification letter from HMRC. Common reasons for having the wrong tax code include job changes, adjustments in state benefits, or changes in company benefits.
A tax code may seem like an accidental assortment of letters and numbers, but it holds the key to how much tax you pay. If you’re allocated the wrong tax code, you could end up paying hundreds or even thousands of pounds extra.
In this article, I’ll cover what you need to know about tax codes, how to check if yours is correct, and the steps to take if it’s not. Let’s dive in to ensure you’re not giving the tax man more than necessary.
Three-quarters (75%) of those who found they were on the wrong tax code have overpaid HMRC by an average of £689, amounting to a staggering £5.8 billion as a nation. Nearly one in five UK adults (18%) have never checked their tax code, and those who do typically only check once every 16 months.
There are several situations which could result in you being assigned the wrong tax code. Common reasons include:
If any of these circumstances apply, you should check your tax code as soon as possible. However, even if they do not, it still makes financial sense to confirm your tax code is correct.
Britons most commonly check their tax code for no specific reason (19%) or out of habit (17%). Others check due to a job change (12%) or because they have previously been on the wrong tax code (8%). Among all UK adults, less than half (42%) are confident that their current tax code is correct.
Moreover, almost four in ten (39%) do not understand their tax code, putting them at a disadvantage from the start. Over two-thirds (69%) admit they do not know the rules around claiming back overpaid tax. Less than one-fifth have employed professional services to manage their personal taxes (18%), down from three in ten in 2023’s study (29%).
Your tax code is composed of a series of numbers and letters, which HMRC uses to determine how much Income Tax you owe. For example, 1257L is commonly used when you have a single source of income through a job or pension and allows you to earn £12,570 a year (your Personal Allowance for 2024/25) before paying Income Tax.
Most tax codes consist of letters and numbers:
Here are some of the most common tax codes and what they mean:
L: The most common tax code for people who are working and entitled to the basic tax-free Personal Allowance.
M: Used for an employee whose spouse or civil partner has transferred some of their Personal Allowance.
N: Used for an employee who has transferred some of their Personal Allowance to their spouse or civil partner.
T: Used when HMRC needs to review some items with the employee.
K: This code indicates that the tax-free benefits you receive are greater than your annual Personal Allowance. As a result, you will pay the extra tax due from your benefits through your income.
0T: Used when an employee hasn’t given you a P45 or enough details to work out their tax code, or when their Personal Allowance has been used up.
There are even different tax codes that apply in Scotland, England, Northern Ireland, and Wales. If you’re on the wrong code, you might need to update your employment details or whether you’ve had a recent change in income.
If you think your tax code is wrong, you need to contact HMRC directly. Your employer (if relevant) won’t be able to do this for you. You can check if HMRC has your correct, up-to-date information online. https://www.gov.uk/check-income-tax-current-year
If you find you have been on the wrong tax code, you may be owed a rebate, or you may owe money to HMRC. HMRC may already know this, so you should be sent a tax calculation letter (a P800 form) or a Simple Assessment letter by the end of the tax year (5 April). These letters will tell you how to pay HMRC or reclaim overpaid tax.
Remember, there are time limits to reclaim overpaid Income Tax, which is four years from the end of the tax year in which you are trying to claim. If you are in doubt, the earlier you contact HMRC, the better.
Understanding and managing your tax code is essential. Ensure that all your details are current, and promptly inform HMRC of any changes in your circumstances. This will avoid discrepancies and potential financial strain.
If you need professional expert guidance on planning for your future, please do not hesitate to contact us. We’re dedicated to helping you navigate every aspect of your financial journey. Whether you want to create a comprehensive retirement plan, invest wisely or manage your wealth, we offer personalised strategies tailored to your unique needs and goals.
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Starting conversations about money with children from an early age can build their financial confidence and instill essential principles they will carry with them for the rest of their lives. Despite being a crucial topic, financial education often remains neglected both at home and in schools. Shockingly, nearly half of UK adults (45%) lack confidence in managing their daily finances, according to research from the Money and Pensions Service.
This lack of confidence can make parents hesitant to discuss money with their children, as they struggle with their own financial literacy. Many parents or guardians lack a proactive plan to teach their children about managing money, yet equipping them with these skills early on is invaluable.
People who excel in managing money and building wealth typically have parents, carers, or mentors who discuss finances openly and allow them to handle spending and saving from a young age.
If you’re considering teaching children about money, reflect on your own money habits and who influenced your financial behaviours. Ask yourself:
Who did you adopt your financial behaviours from?
Before diving into age-specific advice, let’s focus on some foundational steps.
Start by considering the values you want your child to understand about money. In the initial stages would not focus on specifics of your financial situation but rather help the child understand the principles of effective resource management. Open conversations from an early age allow you to impart your values and help children form their own. Identify the pitfalls you want them to avoid, such as entitlement or lack of confidence, and carefully consider the values and principles you want to convey.
Reinforce financial concepts through practical activities. Simple budgeting exercises, setting savings goals, or discussing basic investing in a child-friendly manner can make abstract concepts more tangible. These hands-on experiences help children feel comfortable and knowledgeable about financial matters. Use stories instead of lectures and foster an open dialogue to create a strong foundation for their future financial well-being. An environment where money is openly discussed encourages children to seek advice and make informed financial decisions.
Why not introduce your little ones to money management with a simple and engaging activity? Label three jam jars: ‘Spend’, ‘Save’, and ‘Give’. Provide a regular amount of pocket money and divide it among the jars. As they grow, let them decide how to allocate their funds. Encouraging them to make spending decisions from the ‘Spend’ jar can teach them the value of money early on. Resist the urge to top it up until it’s replenished to instill a sense of responsibility.
Consider using the ‘Save’ jar for tooth fairy money or small gifts. Occasionally adding extra to their savings and matching their contributions can teach them about the benefits of saving and interest.
For the ‘Give’ jar, involve them in choosing a charity. Participating in the donation process, such as volunteering or visiting the charity, can make the experience memorable and impactful, fostering a sense of generosity.
Try involving children in shopping decisions early on. Compare branded and white-label products, show price differences, and let them choose. As they get older, give them money to allocate to specific categories, like fruit, to foster a sense of responsibility and pride in their contributions.
Help children distinguish between ‘needs’ and ‘wants’. Create a back-to-school shopping list together and discuss how to allocate the budget. This can be a powerful way to help them understand prioritisation and decision-making.
Encourage them to work for their ‘wants’ by setting goals. Have them draw or write down their ‘want’ and assign tasks to earn money towards it. Celebrate their success when they reach their goal, teaching them the value of hard work and goal-setting.
Why not give them a budget for a family event, like a birthday dinner? Allowing them to design the menu, buy ingredients, and decide on decorations and cake can be a fun way to teach budgeting and decision-making for the family.
Consider introducing your children to the banking world by visiting a bank and opening a minor or joint account. Choose a bank with an intuitive app to explore together. Helping them deposit gifts and pocket money, watching their balance grow, and reviewing monthly statements can make financial management tangible and engaging.
Organise a family stock-picking competition. Each member selects a company they know and tracks its performance. Use a stocks app to teach them how to look up share prices. Offering dividends or prizes based on performance can introduce investment concepts in a fun, accessible manner.
Assist your older child in building a budget for school or university. Teach them to anticipate income, plan for spending needs, and distinguish between fixed and discretionary costs. Transitioning to a less frequent allowance can help them practise independent budgeting. Encourage them to set aside funds for an emergency fund, building a foundation for financial independence.
Involve them in the family’s charitable giving decisions, providing insight into investments and family values without revealing the full financial picture. Including them in decisions about donations can foster a sense of responsibility and generosity.
Invite them to investment meetings or review reports to understand asset management. Encourage them to build their investment portfolio by managing a Junior ISA (JISA) at age 16 if applicable. Establish ground rules for accessing capital and income to equip them with skills for managing personal investments and fostering long-term financial competence.
Start talking about money early on and be open to your children’s questions. Honesty is key. Focus on sharing your values around money, and if you’re unsure about something, learn together. Appreciate that, like a good return, financial knowledge compounds over time. It might be tough at first, but it will get easier for everyone as you go along.
If you require further information or need assistance in initiating these important conversations, please do not hesitate to contact us. We are here to support you in fostering a financially literate and confident next generation. To discuss how we can help you, please contact us.
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THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.
THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED.
THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE.
Inheritance Tax (IHT) represents a significant consideration for anyone looking to pass on assets to the next generation. As of the 2024/25 tax year, IHT incurs a 40% charge on the portion of an estate exceeding the nil rate band of £325,000, excluding transfers to a spouse or registered civil partner.
Additionally, the introduction of the main residence allowance in 2017, offering an extra £175,000 relief when a primary residence is bequeathed to direct descendants or where an individual has moved into a care home, enables individual allowances to reach £500,000 before IHT applies cumulatively.
However, this allowance diminishes for estates valued above £2 million and comes with specific conditions, highlighting the importance of proactive IHT planning. With the IHT threshold frozen until at least April 2028, understanding how to manage your estate’s potential IHT liability is more crucial than ever.
A cornerstone of estate management and IHT management involves maximising the use of gift allowances. The law permits unlimited transfers between UK-domiciled spouses or registered civil partners without incurring IHT. For gifts to others, the annual exemption allows you to give away up to £3,000 per tax year, potentially carrying forward any unused allowance to the next year, enabling a £6,000 gift.
Further opportunities for IHT-free gifting include small gifts of up to £250 per person annually, donations to qualified charities and institutions, and wedding gifts within certain monetary limits, depending on your relationship with the couple. These strategies reduce your taxable estate and allow you to see your beneficiaries enjoy their inheritance during your lifetime.
Another straightforward method to minimise your estate’s IHT exposure is to gift excess income. This approach requires that gifts do not affect your standard of living, originate from surplus income rather than capital and be made regularly.
You can significantly lessen the future IHT burden by redistributing income that would otherwise increase your estate’s value. Moreover, such surplus income could be channelled into funding a life assurance policy within a trust, providing further financial efficiency and peace of mind.
Gifting assets such as cash, art and property presents a viable strategy for reducing your future taxable estate’s value. It’s imperative, however, that once gifted, you derive no benefit from these assets to avoid them being classified as ‘gifts with reservation’, which could negate any IHT benefits.
Furthermore, to qualify as ‘potentially exempt transfers’, the ‘7-year rule’ means you must survive for seven years following the gift. Failure to do so may result in the gifts being subject to IHT. Given the complexity of trusts, professional advice is prudent when considering gifts into trust, typically treated as chargeable lifetime transfers.
| Years between gift and death | Rate of tax on the gift |
| 3 to 4 years | 32% |
| 4 to 5 years | 24% |
| 5 to 6 years | 16% |
| 6 to 7 years | 8% |
| 7 or more | 0% |
However, any gift made in the seven years before you died uses up the Nil Rate Band allowance first, which is the IHT allowance each individual has on their death of £325,000. So, if you make gifts totalling less than the Nil Rate Band in the seven years before you died then the tapper will not apply. These rules are very complex and advice should be taken.
Securing against potential IHT liabilities can be achieved effectively through insurance, especially for assets that are not easily transferred into trusts or gifted, such as real estate. Opting for a ‘whole of life’ assurance policy can serve as a strategic approach, ensuring a predetermined sum is available to settle any IHT due upon death.
Notably, if these premiums are financed using surplus income or within the £3,000 annual gift exemption, they evade classification as chargeable lifetime transfers. The policy must be placed in an appropriate trust to ensure the proceeds do not augment the value of the estate and thus remain outside the scope of IHT.
In addition to insurance, investing in assets eligible for Business Relief (BR) presents a viable method for reducing IHT liability. Such assets once held within an IHT portfolio for a minimum of two years—and assuming ownership at the time of death—are subject to 0% tax. This encompasses a range of unlisted companies and certain AIM-listed stocks.
While this strategy introduces a greater degree of investment risk compared to other avenues, it offers the distinct advantage of retaining access to your capital without the necessity to survive an additional seven years, as is typically required. However, it is essential to acknowledge that this form of investment, predominantly in small capitalisation equities, is considered high risk due to the inherent volatility and uncertainty of growth, making it a long-term commitment.
Given the speculative nature of investments focused on small capitalisation and AIM-listed stocks, potential investors should proceed with caution. The possibility of substantial fluctuations underscores the need for such investments to be viewed with a long-term perspective. Furthermore, the regulatory landscape governing IHT and the tax treatment of specific investment vehicles, like AIM shares, could evolve, potentially affecting their suitability as part of an IHT mitigation strategy.
Therefore, obtaining professional financial advice is indispensable. Tailoring financial strategies to individual circumstances and maximising the efficacy of available tax reliefs demands a comprehensive understanding of current regulations and personal financial objectives. Efficiently managing your estate to mitigate IHT liabilities requires careful planning and a thorough knowledge of the available allowances and exemptions.
If you require further information or wish to discuss tailored estate planning solutions, we are ready to provide you with the guidance and support needed to navigate the complexities of Inheritance Tax planning. Contact us today to secure your legacy for tomorrow.
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THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.
THE FINANCIAL CONDUCT AUTHORITY DOESN’T REGULATE TRUST PLANNING AND MOST FORMS OF INHERITANCE TAX (IHT) PLANNING. SOME IHT PLANNING SOLUTIONS PUT YOUR MONEY AT RISK, AND YOU MAY GET BACK LESS THAN YOU INVESTED. IHT THRESHOLDS DEPEND ON INDIVIDUAL CIRCUMSTANCES AND THE LAW. TAX AND IHT RULES MAY CHANGE IN THE FUTURE.
THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU COULD GET BACK LESS THAN YOU INVESTED.
Significant life changes, such as getting married, having a baby and buying a property, are key times to consider protecting your family’s future. Life insurance assures that your loved ones won’t face financial stress in your absence and this peace of mind is not confined to those earning an income.
Even if you’re not currently working, for instance, if you’ve taken a career break to raise children, your demise could impose unexpected costs such as childcare on the surviving partner. A life insurance payout could alleviate these expenses.
The government does provide some benefits like Bereavement Support when a family member passes away. However, these benefits typically fall short of covering living costs. Moreover, even if you have a Will to financially support your family posthumously, the estate distribution process can be time-consuming. A life insurance payout can cover interim expenses or contribute towards funeral costs, easing the strain during an emotionally challenging time.
There are scenarios where life insurance may not be necessary. For instance, if you’re single with no financial dependents or your partner earns enough to support your family without your income. However, remember that a life insurance payout could still be beneficial by allowing your partner to take time off work to grieve. Additionally, you can purchase life insurance more cheaply the younger you are and while you are in good health.
Choosing the right life insurance policy necessitates understanding the types available and how they align with your circumstances. Often paired with a mortgage, term life insurance is a popular choice. It provides coverage for a specific term and only pays out if you die within the agreed period. There’s no lump sum or refund if you outlive the term.
On the other hand, whole life insurance covers you for your entire life, provided you keep up with the monthly premiums. The guarantee of a payout makes these premiums higher. Life insurance typically only pays out in the event of death, but some policies offer a terminal benefit, paying out early if you’re diagnosed with a terminal illness. Some insurers also provide integrated critical illness cover for slightly higher premiums.
It’s important to note that most life insurance policies exclude certain causes of death, such as those resulting from drug or alcohol abuse. If you’ve been diagnosed with a severe illness, a basic life insurance policy may also exclude causes of death related to this illness. Therefore, we can advise and help you scrutinise your contract terms carefully to understand what is and isn’t covered.
Please contact us to learn more about life insurance and find the right policy for your needs. We are here to assist you in making an informed decision that best suits your individual circumstances.
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THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH.
TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.
