Managing your corporation’s tax efficiently is more than just crunching numbers — it’s about making smart, proactive decisions. It’s an opportunity to optimise your finances by utilising all available allowances before 5 April 2025 tax year end.
The corporation tax landscape for 2024/25 hasn’t changed significantly, but staying informed is critical. Here’s the breakdown:
If your business is part of a group or has associated companies, you’ll need to share the profit thresholds, which can affect your effective tax rate. We recommend keeping a close eye on profit forecasts and reviewing them regularly is a must.
Extracting profits effectively is one of the simplest ways to reduce your corporation’s tax liability. Here are some tax-efficient options:
Dividends remain a popular and tax-efficient way to extract profits, but changes to the Dividend Allowance mean careful planning is vital. The Dividend Allowance has been reduced, so you’ll want to ensure your strategy aligns with your overall financial goals.
Paying yourself (or key team members) a salary or bonus isn’t just good for cash flow—it’s also deductible from your company’s taxable profits. By doing so, you may lower your overall corporation tax liability.
Did you know that pension contributions made by your business are deductible and free of National Insurance contributions? They’re a fantastic way to build long-term savings while keeping your tax bill in check.
A quick tax-efficient review of your current profit extraction methods could reveal opportunities to save more.
Timing is key. Adjusting the timing of your expenses can help you optimise your tax position.
If your business is planning to invest in equipment or machinery, consider making those purchases before your year-end. Why? The Annual Investment Allowance (AIA) allows a 100% deduction on qualifying capital expenditures, giving your business an instant tax break.
Aligning bonuses and other employee-related expenses with your financial year is another savvy move. This strategy can increase your allowable deductions and lower your taxable profits.
So, review your planned expenses for the year and see if shifting them forward or back could save you money.
If your family plays a role in your business, it’s time to explore how their involvement can benefit your bottom line.
Paying a fair, commercially justified salary to family members can be an effective way to reduce your taxable profits while spreading income across lower tax bands.
Allocating shares to family members can help you take advantage of lower personal income tax rates on dividend income. Just ensure compliance with tax laws to avoid issues down the road.
Tax planning doesn’t have to be overwhelming. Use this handy checklist to guide your tax-efficient review and planning efforts:
Make sure you know whether your company falls into the small profits rate, main rate, or marginal relief bracket. Adjust your strategy accordingly.
Evaluate the best ways to extract profits—whether through dividends, salaries, or pensions. Balance your current needs with long-term planning.
Are you taking full advantage of the AIA for capital investments? A strategic review of planned expenses could save you thousands.
If your business engages in innovative activities, don’t leave money on the table. Research and Development (R&D) tax credits could significantly reduce your tax bill.
Look at how family involvement in the business could optimise income distribution and reduce overall tax liability.
Take Action: Work with a tax adviser or schedule a tax-efficient review to ensure you’re maximising every available opportunity.
Whether it’s managing corporation tax rates, extracting profits wisely, or exploring family tax efficiency, the key is to stay proactive. Tax rules may seem complex, but with the right planning, you can transform them into opportunities for savings.
Not sure where to start? Conduct a thorough tax-efficient review to identify the strategies that best suit your business. From profit extraction to capital investments, a few small changes can lead to significant benefits.
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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 end of the tax year is fast approaching, ending on 5 April 2025. This is your opportunity to review your annual allowances and assess how best to make the most of them. With some significant changes to tax allowances in the 2024/25 tax year and further reductions expected in the future, planning ahead is key. Using your allowances now could maximise your wealth by leveraging tax-efficient strategies and minimising liabilities.
The end of the tax year is more than a deadline, it’s an opportunity to make your money go further. This is the time to use up allowances that reset in April, reduce your tax liabilities, and fine-tune your financial strategy. For higher rate taxpayers, this could mean significant savings with the right moves in place.
There have been many tax changes in the last 12 months but here are the ones you really need to be aware of.
Understanding these updates ensures you’re prepared to navigate them and take full advantage of what’s available.
There are many ways to ensure you are being as tax efficient as possible, from maximising pension contributions to managing capital gains tax. Below are the key actions to consider ahead of 5 April 2025.
Tax relief on pensions offers one of the most generous savings opportunities. Higher rate taxpayers can claim up to 40% relief on contributions, whilst additional rate taxpayers can claim up to 45% relief. Make sure to use your £60,000 annual allowance and consider contributing to pensions for non-earning family members to secure their futures while staying tax-efficient.
Planning withdrawals is just as important—access up to 25% of your pension tax-free, and time it with other income to reduce overall liabilities.
If you’re earning above £100,000, making pension contributions is a powerful way to reduce taxable income. Not only could this help you retain your full £12,570 personal allowance, but it also delivers up to 45% tax relief.
We’d recommend you take action by contributing before 5 April and, if possible, carry forward unused allowances from the past three years to increase your savings potential.
The £20,000 ISA allowance is a simple yet effective way to shield your savings and investments from tax. Consider using a mix of Cash ISAs for easy-access funds and Stocks & Shares ISAs for long-term growth. Don’t forget Junior ISAs for your children, which allow contributions of up to £9,000 annually. If you’re under 40, then consider opening a Lifetime ISA, into which you can save £4,000 per year and receive an immediate 25% bonus (This £4,000 forms part of your overall £20,000 ISA allowance).
With the dividend allowance now just £500, it’s time to rethink your dividend income strategy. If you’re a higher rate taxpayer, dividends above this threshold are taxed at 33.75% (39.35% for additional rate taxpayers).
Consider spreading dividend income across family members or paying dividends before 5 April to take advantage of current rates. A little planning here could save you significantly.
The reduced CGT exemption means gains above £3,000 are taxable at 20% for higher and additional rate taxpayers, but gains realised from 30th October 2024, are charged at 24%.
Strategies like “Bed and ISA” (selling assets and repurchasing within an ISA) or transferring assets to your spouse to utilise their CGT allowance can help you stay efficient and minimise tax.
Higher rate taxpayers should also focus on inheritance tax efficiency. Use the £325,000 Nil-Rate Band and £175,000 Residence Nil-Rate Band to minimise IHT exposure. Lifetime gifts—like the £3,000 annual exemption and £250 small gifts—can also reduce your estate while helping loved ones.
For more complex estates, trusts and other specialist investments offer a strategic way to manage assets and shield them from unnecessary tax.
The personal allowance for the current tax year is £12,570. To retain the full allowance:
The annual ISA allowance of £20,000 allows you to shelter savings and investments from tax. You can:
Contribute up to £4,000 into a Lifetime ISA if you opened one before the age of 40.
Pension contributions attract tax relief at your highest marginal rate (20%, 40%, or 45%). By contributing before 5 April, you can:
Yes, charitable donations through Gift Aid allow you to claim additional relief if you’re a higher or additional rate taxpayer.
The annual CGT exemption is £3,000 for the current tax year. To reduce CGT:
With the dividend allowance reduced to £500, dividends above this threshold are taxed at:
Consider spreading dividend income across family members or adjusting your dividend strategy before 5 April.
Use the £325,000 Nil-Rate Band and the £175,000 Residence Nil-Rate Band efficiently. You can also:
If you or your spouse earn below the personal allowance, you can transfer up to 10% (£1,260) of your allowance to the higher-earning partner, potentially saving up to £252 in tax.
Yes, options like:
Offer tax relief and can complement your broader investment strategy. It’s vital you seek professional financial advice as these investments are highly complex.
The deadline for Self-Assessment tax returns is:
Keep detailed records of:
The 5 April deadline is fast approaching, so don’t wait to take action. Whether it’s pension contributions, ISA investments, or estate planning, each step you take today can make a meaningful difference. By getting your finances tax-efficient now, you’ll set yourself up for a stronger, more secure financial future.
Take control, optimise your savings, and make every pound work harder for you.
For further information on tax year-end planning opportunities get in touch today.
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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.
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.
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’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.
| 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 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.
