The Autumn Budget 2024 introduces significant reforms to business and international tax policies, targeting areas such as Capital Gains Tax, business rates, and environmental compliance for corporations. These changes are designed to support economic stability, increase tax transparency, and incentivise sustainable practices among UK businesses. Explore how these updates may impact businesses and international tax obligations.
The lower and higher main rates of Capital Gains Tax will increase to 18% and 24% respectively for disposals made on or after 30 October 2024. The rate for Business Asset Disposal Relief and Investors’ Relief will increase to 14% from 6 April 2025, and will increase again to match the lower main rate at 18% from 6 April 2026. The new rates will be legislated in Finance Bill 2024/25.
The lifetime limit for Investors’ Relief will be reduced to £1 million for all qualifying disposals made on or after 30 October 2024, matching the lifetime limit for Business Asset Disposal Relief. This will be legislated in Finance Bill 2024/25.
The government will reform the way carried interest is taxed, ensuring that this is in line with the economic characteristics of the reward. From April 2026, all carried interest will be taxed within the Income Tax framework, with a 72.5% multiplier applied to qualifying carried interest that is brought within charge. As an interim step, the two Capital Gains Tax rates for carried interest will both increase to 32% from 6 April 2025. The government will also consult on introducing further conditions of access into the regime.
From 1 January 2025, to secure additional funding to help deliver the government’s commitments relating to education and young people, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20%. This will also apply to boarding services provided by private schools.
The government has published a response to its technical consultation on this policy. To protect pupils with special educational needs that can only be met in a private school, local authorities and devolved governments that fund these places will be compensated for the VAT they are charged on those pupils’ fees.
The government greatly values the contribution of our diplomatic staff and serving military personnel. The Continuity of Education Allowance (CEA) provides clearly defined financial support to ensure that the need for frequent mobility, which often involves an overseas posting, does not interfere with the education of their children.
Ahead of the VAT changes on 1 January, the MOD and the FCDO will increase the funding allocated to the CEA to account for the impact of any private school fee increases on the proportion of fees covered by the CEA in line with how the allowance normally operates. The MOD and FCDO will set out further details shortly.
As announced on 29 July 2024, private schools in England will no longer be eligible for charitable rate relief. The Ministry of Housing, Communities and Local Government (MHCLG) will bring forward primary legislation to amend the Local Government Finance Act 1988 to end relief eligibility for private schools. This change is intended to take effect from April 2025, subject to Parliamentary process. Private schools which are ‘wholly or mainly’ concerned with providing full-time education to pupils with an Education, Health and Care Plan will remain eligible for relief.
For 2025/26, eligible Retail, Hospitality and Leisure (RHL) properties in England will receive 40% relief on their business rates liability. RHL properties will be eligible to receive support up to a cash cap of £110,000 per business.
For 2025/26, the small business multiplier in England will be frozen at 49.9p. The government will lay secondary legislation to freeze the small business multiplier. The standard multiplier will be uprated by the September 2024 CPI rate to 55.5p.
The government intends to introduce permanently lower multipliers for Retail, Hospitality and Leisure (RHL) properties from 2026/27, paid for by a higher multiplier for properties with rateable values above £500,000.
A discussion paper has been published setting the direction of travel for transforming the business rates system and inviting industry to a dialogue about future reforms.
The Valuation Office Agency (VOA) is publishing a response to the March 2023 Consultation on Disclosure, which sets out the next steps on increasing the transparency of business rates valuations by disclosing more information.
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From 31 October 2024, the Higher Rates for Additional Dwellings (HRAD) surcharge on Stamp Duty Land Tax (SDLT) will be increased by 2 percentage points from 3% to 5%. Increasing HRAD ensures that those looking to move home, or purchase their first property, have a comparative advantage over second home buyers, landlords and businesses purchasing residential property.
This is expected to result in 130,000 additional transactions over the next five years by first-time buyers and other people buying a primary residence. This surcharge is also paid by non-UK residents purchasing additional property.
The single rate of SDLT that is charged on the purchase of dwellings costing more than £500,000 by corporate bodies will also be increased by 2 percentage points from 15% to 17%.
From 1 November 2024, the Energy Profits Levy (EPL) rate will rise by 3 percentage points to 38%, the investment allowance will be abolished and the rate of the decarbonisation allowance will be set at 66% so its cash value is maintained. To provide certainty and to support a stable energy transition, the government will make no additional changes to tax relief available within EPL. The levy will end on 31 March 2030. The government will legislate for these measures in Finance Bill 2024/25. To support long-term stability and predictability in the oil and gas fiscal regime, the government will publish a consultation in early 2025 on how the taxation of oil and gas profits will respond to price shocks after the EPL ends. The government will also continue to have regular engagement with the sector to understand the evolving context of oil and gas investment, supported by bi-annual fiscal forums.
The government will legislate in Finance Bill 2024/25 to provide relief for payments oil and gas companies make into decommissioning funds in relation to assets sold for use in Carbon Capture Usage and Storage, maintaining the tax treatment had these assets instead been decommissioned. This legislation will also remove receipts from the sale of these assets from the scope of the EPL.
The government is publishing a consultation on new environmental guidance for assessing end-use emissions related to oil and gas projects. This consultation seeks to provide stability for the oil and gas industry, support investment, protect jobs and ensure a fair, orderly and prosperous transition in the North Sea in line with our climate and legal obligations.
The main rates of the Climate Change Levy (CCL) for gas, electricity and solid fuels will be uprated in line with Retail Price Index (RPI) in 2026/27. The main rate for liquefied petroleum gas will continue to be frozen. The reduced rates of CCL will remain at an unchanged fixed percentage of the main rates.
The government will maintain Carbon Price Support rates in Great Britain at a level equivalent to £18 per tonne of CO2 in 2026/27.
The government has published its response to the March 2024 consultation on the introduction of a UK carbon border adjustment mechanism (CBAM). The response confirms that the UK CBAM will be introduced on 1 January 2027, placing a carbon price on goods that are at risk of carbon leakage imported to the UK from the aluminium, cement, fertiliser, hydrogen and iron & steel sectors. Products from the glass and ceramics sectors will not be in scope of the UK CBAM from 2027 as previously proposed. The registration threshold will be set at £50,000, retaining over 99% of imported emissions within the scope of the CBAM, while removing over 80% of otherwise registrable businesses.
Over 70% of those removed from the CBAM altogether by this threshold are micro, small or medium-sized businesses.
For 2026/27, the government will increase rates of Air Passenger Duty (APD). This equates to £1 more for those taking domestic flights in economy class, £2 more for those flying to short-haul destinations in economy class, £12 for long-haul destinations, and relatively more for premium economy and business class passengers. The higher rate, which currently applies to larger private jets, will rise by a further 50% in 2026/27. From 2027/28 onwards, all rates will be uprated by forecast RPI and rounded to the nearest penny. The government is also consulting on extending the scope of the APD higher rate to capture all passengers travelling in private jets already within the APD regime.
The government will freeze fuel duty rates for 2025/26, a tax cut worth £3 billion over 2025/26 which represents a £59 saving for the average car driver. The temporary 5p cut in fuel duty rates will be extended by 12 months and will expire on 22 March 2026.
The planned inflation increase for 2025/26 will also not take place.
The government is setting rates for Company Car Tax (CCT) for 2028/2029 and 2029/30 to provide long-term certainty for taxpayers and industry. CCT rates will continue to strongly incentivise the take-up of electric vehicles, while rates for hybrid vehicles will be increased to align more closely with rates for internal combustion engine (ICE) vehicles, to focus support on electric vehicles.
The government will uprate standard Vehicle Excise Duty (VED) rates for cars, vans and motorcycles, excluding first-year rates for cars, in line with the RPI from 1 April 2025.
The government will change the VED First-Year Rates for new cars registered on or after 1 April 2025 to strengthen incentives to purchase zero emission and electric cars, by widening the differentials between zero emission, hybrid and internal combustion engine (ICE) cars.
These changes will apply from 1 April 2025.
The government recognises the disproportionate impact of the current VED Expensive Car Supplement threshold for those purchasing zero-emission cars and will consider raising the threshold for zero-emission cars only at a future fiscal event to make it easier to buy electric cars.
The government will uprate the Van Benefit Charge and Car and Van Fuel Benefit Charges by CPI from 6 April 2025.
The government will support pubs and the wider on-trade by cutting alcohol duty rates on draught products below 8.5% alcohol by volume (ABV) by 1.7%, so that an average ABV strength pint will pay 1p less in duty. The government will also increase the discount provided to small producers for non-draught products, and maintain the cash discount provided to small producers for draught products, increasing the relative value of Small Producer Relief. Alcohol duty rates on non-draught alcoholic products will increase in line with RPI inflation. These measures will take effect from 1 February 2025.
The current temporary wine easement will also end as planned on 1 February 2025.
The government will consult on ways to ensure that small brewers can retain and expand their access to UK pubs, and maximise drinkers’ choice, including through provisions to enable more ‘guest beers’.
The government will consult with industry to improve the Spirit Drinks Verification Scheme (SDVS) and make an investment of up to £5 million to support the SDVS.
The Alcohol Duty Stamps Scheme will end following a review by HMRC. The government will introduce legislation in Finance Bill 2024/25 to end the Scheme from 1 May 2025.
To protect its real terms value, the Soft Drinks Industry Levy (SDIL) will be increased, over the next five years, to reflect the 27% CPI inflation between 2018 and 2024. Annual rate increases will occur on 1 April, starting on 1 April 2025, and will also reflect future yearly CPI increases.
To ensure the SDIL continues to encourage reformulation to help tackle obesity, the government will review the current SDIL sugar content thresholds and the current exemptions for milk-based and milk substitute drinks. Contributions from all interested stakeholders are welcomed as part of this review.
The government will renew the tobacco duty escalator at RPI+2% on all tobacco products until the end of this Parliament
To reduce the gap with cigarette duty, the rate on hand-rolling tobacco will increase by a further 10% this year. These changes will take effect from 6pm on 30 October 2024 and will be included in Finance Bill 2024/25.
A flat-rate excise duty on all vaping liquid will be introduced from 1 October 2026 at £2.20 per 10ml vaping liquid, accompanied by an equivalent one-off increase of £2.20 per 100 cigarettes / 50g of tobacco in tobacco duty to maintain the financial incentive to switch from tobacco to vaping.
The Gross Gaming Yield bandings for gaming duty will be frozen from 1 April 2025 until 31 March 2026.
From 1 April 2025, UK films with budgets under £15 million and a UK lead writer or director will be able to claim an enhanced 53% rate of Audio-Visual Expenditure Credit, known as the Independent Film Tax Credit. Expenditure incurred from after 1 April 2024 on films that began principal photography on or after 1 April 2024 is eligible. This measure was announced at Spring Budget 2024 and has been legislated.
From 1 April 2025, the rates of Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibitions Tax Relief will be set at 40% for non-touring productions and 45% for touring productions and all orchestra productions. These rates apply UK-wide. This measure was announced at Spring Budget 2024 and has been legislated.
The government will discuss widening the use of advance clearances in Research & Development reliefs with stakeholders, with the intention to consult on lead options in spring 2025. The government has also published a document setting out further information on the scale and characteristics of error and fraud up to 2023/24, the policy and operational changes that have been made to address this, and further data on customer experience.
The government will launch a consultation in spring 2025 to develop a new process that will give investors in major projects increased tax certainty in advance.
The government will extend for a further year the 100% First Year Allowances (FYA) for qualifying expenditure on zero-emission cars and the 100% FYA for qualifying expenditure on plant or machinery for electric vehicle chargepoints, to 31 March 2026 for Corporation Tax purposes and to 5 April 2026 for Income Tax purposes.
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 Chancellor, Rachel Reeves, announced the government is to increase the rate of employer National Insurance Contributions (NICs) by 1.2 percentage points to 15% from 6 April 2025, which will raise £25bn in tax. This will mean employers will have to pay 15p in NIC for every £1 paid to an employee. In addition, the NIC per-employee secondary threshold at which employers start to pay NI will be reduced from £9,100 per year to £5,000 per year.
The Chancellor said she was ‘taking the difficult decision to increase the rate to repair the public finances and help raise the revenue required to increase funding for public services.’
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While she recognised this was an additional cost to businesses, the Chancellor also said, ‘Successful businesses depend on successful schools, and healthy businesses depend on a healthy NHS.’ However, the Chancellor announced that the Employment Allowance would be raised, which she said would mean more small employers pay no NI, and around one million would pay the same or less. The allowance will increase from £5,000 to £10,500.
The government will also expand the Employment Allowance by removing the £100,000 eligibility threshold, to simplify and reform employer NICs so that all eligible employers will benefit.
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.
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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.
Tim Ross, IFA discusses how those within the so-called Sandwich Generation can plan ahead and save for the future.
Life expectancy is continuing to rise. Couple this with individuals starting families later in life, means that more people are taking on responsibilities for both younger and older dependents at the same time. Otherwise known as ‘The Sandwich Generation.’
It’s thought that up to 6 million people in Britain are within this demographic [1]. Typically, between 45-55, the sandwich generation often provide physical and financial care for their children and their parents.
With an additional layer of responsibility, saving and forward planning can become more difficult. So, what should individuals within this generation be considering to help boost their financial resilience?
If you are within the sandwich generation and are caring for others, forward planning on how to best support your loved ones can be invaluable. Whether it’s university fees, housing costs or care plans, consider noting all the factors you may need to save and prepare for at a later date.
For some individuals within the sandwich generation, this might involve delaying imminent retirement plans, allowing them to save with access to their income for a longer period of time.
Having additional outgoing means that prioritising is key when it comes to saving. Setting smaller, realistic saving targets, within a set period of time can really help the sandwich generation in the long term.
Creating allocated savings pots for specific people, or purposes, such as retirement, university, care, or weddings, could also be very helpful when it comes to planning saving. If possible, this should also include an emergency fund in case any surprises crop up.
Make sure you take the time to research any discounts or benefits that you may be eligible for. If you have children, free childcare hours and/or Child Benefit may be available to you. Or if you are caring for relatives, you could qualify for Carer’s Allowance. You can find information on all these support measures on the Government’s website.
As a carer, you are entitled to a week of unpaid carer’s leave every 12 months, but it is also worth checking your contract of employment. Your workplace may offer additional benefits or carers leave on top of this.
If your parents still look after your children, you may be able to pass over National Insurance credits too. This can help to bolster their State Pension and in turn maximise the financial support which is on offer for your family as a whole.
Caring for loved ones is undoubtedly rewarding. But that’s not to dismiss how overwhelming it can be, especially when it comes to your finances.
Seeking professional advice before making any alterations to your working patterns could make a huge difference. An adviser will look at the bigger picture and potentially offer strategies and support to help you save for the future, whilst managing your current responsibilities.
Please feel free to get in touch if you are looking for any information or support when it comes to managing your finances and balancing your responsibilities.
Source data:
[1] 6 million sandwich generation in UK. Data source, Office for National Statistics, March 2022, Accessed October 2024
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 it comes to building your wealth, investing can be invaluable.
A comprehensive investment strategy can see your wealth grow far beyond the potential of a standard savings account. Over time, your wealth will accumulate through interest, dividends and capital appreciation. This can act as an income stream to see you through some of life’s biggest milestones.
However, risk is an inevitability that comes with any investment. With that in mind, Investment Director, Oliver Stone explains the importance balancing your risk profile with your investment strategy.
As an investor, there will be a threshold of risk you’re willing to take. Risk tolerance is the benchmark of how comfortable you are with the potential of making a loss, as well as your tolerance of market volatility.
There is a whole array of different factors which can influence your risk tolerance. Your past investment experience, your financial ambitions and even your personality will all impact your risk tolerance.
Having a clear understanding of your level of risk tolerance is vital before you invest. A good starting point is to ask yourself the following questions:
Risk capacity takes your emotions out of the equation. Instead, it is an indicator of you much of a risk you can viably afford to take.
Risk capacity is focused on practicalities, rather than your emotions, taking your stage of life, financial situation and investment timeframe into account. Your savings, income and liabilities will all be considered.
If you’re a high earner, with a steady income and still have decades before retirement, you’re likely to have a higher risk capacity than someone who is nearing retirement and can’t afford substantial losses.
If you are looking to start investing, aligning your risk tolerance and capacity is absolutely critical.
It ensures that you aren’t taking on too much unviable risk which could impact your finances or create worry. Equally, it can also ensure that you aren’t being too conversative in your investments, which would impede the growth of your wealth.
Here are some practical tips to use when assessing your attitude toward risk:
Once you have a clear understanding of your risk tolerance and capacity, it is important to speak to an independent financial adviser. They will be able to offer you whole of market advice on investment options.
The options you could be looking at, depending on your risk tolerance and capacity, could include:
Our team of IFAs are here to help curate an investment strategy which is tailored to you. They will be able to delve into your risk tolerance with a specific questionnaire. Providing you with insights into comfort levels when it comes to risk.
From here, they will listen to your goals and your plans, and create a bespoke investment strategy which is aligned to your profile. If you would like to discuss your investment plans in more detail, please feel free to get in touch.
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 VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED.
Receiving a lump sum of money, whether from an inheritance, windfall, lottery win, or the proceeds from a business or property sale, can be both exhilarating and daunting. The decision on where to invest this money is crucial to securing the financial well-being of you and your loved ones.
With multiple options available, it can be challenging to determine the best course of action. Knowing where to place your windfall can be difficult, especially in times of market and economic uncertainty.
In this guide, we explore various strategies for investing your lump sum, helping you make informed decisions to maximise your financial growth and security.
The right decision for you will largely depend on what you want to do with your money and your specific needs and goals. It’s important to thoroughly assess these objectives, and we can assist you in this process. Dependent on the
Meanwhile, here are some of the main options to consider.
As a general rule, it’s usually better to consider paying off your debts before you start investing, especially if they’re high-interest debts. Not all debts are equal, though. Typically, the cost-effective option is to repay any debt with the highest interest rate first, as it’s charging you the most to borrow the money. Prioritise paying off any high-interest credit cards and loans because the interest rate you pay is likely to be higher than the rate of return on any investment you make.
A cash savings account is a good choice if you want to use your lump sum to fund short-term goals, or if you’re not quite sure what to do with it yet. By holding your lump sum in a cash savings account instead of investing it in the stock market, you won’t risk your money falling in value just before you need to access it.
If you don’t need your money for several months, you may wish to consider a notice or fixed-term savings account, as these may offer higher rates than easy-access savings accounts. It’s always worth shopping around to find the best rate on your savings, as even a small difference in the interest rate could significantly impact large sums of money.
Always be on the lookout for the best interest rates for lump sum deposits. Consider locking into a fixed rate if interest rates are expected to decline. Sometimes, longer-term commitments can lead to better returns, but this isn’t a universal rule. Stay vigilant for interest rate changes, especially after introductory periods, and be ready to transfer your funds if a better opportunity arises.
For larger sums exceeding £85,000, it’s wise to diversify your savings across different financial institutions to benefit from the Financial Services Compensation Scheme protection.
If you haven’t utilised your ISA allowance this year (2024/25), investing your lump sum in an Investment ISA can potentially allow it to grow over the long term while also shielding it from Capital Gains Tax (CGT) and Income Tax. If you sell investments outside of an ISA, you could be taxed on your profits above your annual CGT exemption. Additionally, if your investments pay dividends or interest, this could be included when calculating your overall Income Tax bill, potentially pushing you into a higher Income Tax bracket. The ISA allowance currently stands at £20,000. It is a ‘use it or lose it’ allowance, meaning you cannot carry it forward from one tax year to the next.
UK government bonds, known as ‘gilts’, could be an attractive choice if you want to use your windfall to fund a medium-term goal. Gilts are secure savings vehicles guaranteed by the government and listed on the London Stock Exchange. If gilts are held inside an Individual Savings Account (ISA) or other tax-free wrapper, there is no Capital Gains or Income Tax to pay. If held outside of an ISA or similar, gilts are free from Capital Gains Tax when you profit from a trade, but any income you get is subject to Income Tax.
Fixed-rate bonds, savings accounts, and cash ISAs can be a secure and stable place to store your lump sum. However, they may not yield as notable returns as some other investment products. Lump sums up to £85,000 that are stored in savings accounts, bonds, and cash ISAs are protected by the Financial Services Compensation Scheme.
For longer-term goals, such as retirement or leaving a legacy for the next generation, you may wish to invest a portion of your lump sum in the stock market. Although the stock market is volatile, history shows that it tends to outperform cash and bonds over extended periods. You should be comfortable committing your money for at least five years, ideally longer, to give your investments time to recover from any market downturns.
Stocks and shares ISAs or other investments are riskier but may suit you best if you’re pursuing a long-term strategy. One way to reduce risk is to spread your money across different asset classes, such as equities, bonds, and cash, as well as across sectors and regions. This diversification is because different assets, sectors, and regions tend to perform differently under various market conditions. We can assist you in building a diversified portfolio that suits your needs and attitude towards risk.
Another option is to maximise your annual pension allowance. You can invest up to £60,000 or 100% of your UK relevant earnings, or £3,600 if you have no relevant earnings (whichever is lower) into pensions yearly and benefit from Income Tax relief up until age 75. Income Tax relief provides an immediate boost to your personal pension contributions, helping to increase how much money you have at retirement.
In some circumstances, you might be able to ‘carry forward’ unused annual allowances from the previous three tax years. Remember that your pension annual allowance might be lower than £60,000 if you earn a high income or have already flexibly accessed your defined contribution pensions. We can help you determine how much your annual allowance is and whether making a pension contribution is the right choice for you.
The tax treatment of a lump sum can vary depending on its origin:
Pensions: Typically, up to 25% can be taken tax-free. However, you should expect to pay tax on the rest, in line with UK income tax bands.
Gifts: Inheritance tax may be a concern if the giver passes away within seven years.
Redundancy: In the UK, up to £30,000 of redundancy pay is tax-free, though non-cash benefits are also valued for tax purposes.
Lottery winnings: These are tax-free in the UK, as they’re considered ‘gambling’.
If you come into a lump sum of money, you’ll need to decide how best to use it. Please contact us for further information and personalised advice. We are here to help you make the most informed and beneficial decisions for your financial future. If it is a substantial sum, employing the expertise of a nearby certified financial advisor or wealth advisor with investment and estate planning experience would be a prudent choice.
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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.
Individual Savings Accounts (ISAs) offer a versatile and tax-efficient way to save for the future, whether for yourself, your children or grandchildren. Now that we have entered the new financial year, on 6 April 2024, significant changes to ISAs have been introduced.
Since 6 April, savers and investors have had a more flexible approach to using their ISA allowance. For the first time, individuals can open multiple accounts of the same type of ISA within a single tax year, from 6 April one year to 5 April the next, provided they do not exceed the annual ISA limit. This marks a departure from previous rules, which annually restricted savers to one account per ISA type.
In addition to this newfound flexibility, the rules now permit partial transfers of funds from current tax year ISAs into different types of ISAs, enhancing the ability to tailor savings strategies to personal needs. Furthermore, the government has proposed a new ‘British ISA’ featuring a separate £5,000 allowance aimed at investments in UK-based companies on the UK stock market.
The Chancellor’s announcement of the British ISA during this year’s Spring Budget seeks to complement the existing £20,000 annual ISA allowance. This initiative is still under consultation, with a deadline set for 6 June, signalling a potential boost for domestic investment.
The ISA regime offers a variety of options to cater to different financial goals and risk appetites. Whether prioritising safety, growth or a mix of both, there’s an ISA type to match most requirements. From Cash ISAs, known for their simplicity and tax efficiency, to Stocks & Shares ISAs, which offer the potential for higher returns albeit with increased risk, choosing the right ISA depends heavily on individual circumstances.
Cash ISAs serve as a cornerstone for risk-averse savers, providing a straightforward, tax-efficient haven for cash savings. Cash ISA products can be easy access accounts that allow immediate withdrawals or fixed rate accounts that reward savers for committing their funds for a predefined period. Although these accounts can offer both higher and lower interest rates typically offer lower interest rates than standard savings accounts, they present a valuable tax shield, especially for those who have maximised their savings allowance or anticipate doing so.
The allure of Cash ISAs lies in their tax advantages. Interest earned within these accounts does not contribute to the saver’s personal savings allowance, thereby offering a tax-efficient growth environment for savings. This feature is particularly beneficial for higher rate taxpayers and those with substantial savings, making Cash ISAs an option despite potentially lower interest rates compared to non-ISA savings accounts.
Stocks & Shares ISAs, sometimes referred to as ‘investment ISAs’, present an opportunity for individuals to diversify their investment portfolio across a broad spectrum, including collective investment funds, Exchange Traded Funds (ETFs), investment trusts, gilts, bonds, and stocks and shares. This form of investment carries an inherent risk since the value can fluctuate significantly; however, historically, the stock market has offered returns that surpass those of traditional savings accounts over extended periods.
Investors can choose investment funds within a Stocks & Shares ISA, where funds are amalgamated with those of other investors and managed by a professional fund manager, diluting the risk associated with individual investments failing.
Proceeds from Stocks & Shares ISAs are tax efficient. This encompasses both capital gains and dividends derived from the investments within the ISA. The convenience of not having to report these investments on a tax return simplifies the investment process, making Stocks & Shares ISAs an appealing starting point for newcomers to the investment world.
The Lifetime Individual Savings Account (ISA) presents a unique opportunity for individuals aged between 18 and 40, potentially benefiting your children or grandchildren. For each pound deposited into the account, the government offers an additional 25p, tax-free. With an annual contribution limit of £4,000, savers can receive a maximum bonus of £1,000 per year.
This fund can be used to purchase a first home worth up to £450,000 or for retirement savings, functioning similarly to a pension scheme. It is important to note that funds can be freely accessed after the age of 60 to supplement retirement income. However, early withdrawals for other purposes incur a 25% penalty.
The Lifetime ISA is available in two forms: Cash ISA and Stocks & Shares ISA. The market for Cash ISAs within this category is limited, with only a handful of providers. The £4,000 contribution towards a Lifetime ISA is counted within the broader £20,000 annual ISA allowance.
Turning our attention to Junior ISAs (JISA), these are designed for individuals under the age of 18. This financial year allows for an investment of up to £9,000 in either cash or stocks and shares. Access to the funds is restricted until the beneficiary turns 18, at which point full control over the account is granted. From the age of 16, they can manage the account, making it an ideal option for those looking to foster financial independence in their youth. From the start of the 2024/25 tax year, the minimum age to open a Cash ISA increased to 18.
The flexibility to transfer across different ISA providers and types (from cash to stocks and shares or vice versa) enhances the appeal of ISAs. However, verifying transfer policies with your chosen providers is critical, as not all permit transfers. Direct withdrawals and transfers should be avoided to maintain the funds’ tax-efficient status. Instead, the recommended approach involves initiating the transfer through the receiving provider, who will manage the process on your behalf through a straightforward form.
When it comes to managing the financial aftermath of a loved one’s passing, understanding the nuances of how Individual Savings Accounts (ISAs) can be inherited is key. An ISA can be transferred to a surviving spouse while retaining its coveted tax-free status, offering a silver lining during such difficult times.
However, it’s important to note that no further contributions can be made to the ISA once the original owner has passed away. Nevertheless, any increase in account value during the probate period remains exempt from tax. For the surviving spouse, this transfer includes an additional ISA allowance, which is calculated based on the higher of two values: the cash or investments inherited or the market value of the ISA at the time of the original holder’s death.
The situation becomes markedly different when ISAs are bequeathed to beneficiaries other than the spouse. In these instances, the value of the ISA may fall within the scope of Inheritance Tax (IHT), which is levied at a rate of 40% on portions of the estate exceeding the current £325,000 (2024/25) IHT threshold. This significant tax implication underscores the importance of proactive estate planning to effectively navigate the potential fiscal impact.
From the growth-focused Lifetime ISA to the foundational Junior ISA, understanding the nuances and options available is crucial for maximising benefits. Please get in touch with us if you’re contemplating opening an ISA or transferring between accounts and require further guidance. We can assist you in navigating these options to secure your financial future.
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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 (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.
THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE. THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE TAX PLANNING.
For investors, the perennial question of whether to ‘stick or twist’ with their current investments or pivot towards the perceived safety of cash is fundamental. Numerous factors influence this decision, which plays a pivotal role in the journey towards financial prosperity.
The appeal of cash, particularly in uncertain times, is clear; however, a judicious choice to remain invested frequently emerges as the more astute strategy.
The argument for maintaining an investment stance centres on the potential for long-term growth. Historically, investment options such as stocks have consistently outperformed inflation and delivered significant returns over prolonged periods.
The magic of compound interest, where your investments earn returns that, in turn, generate their own earnings, can dramatically increase the value of your initial stake, potentially leading to exponential growth over time.
The endeavour to time the market, shifting to cash in downturns and returning in upswings, is beset with difficulty. Even the most experienced professionals often fail to make consistently accurate timing decisions – a fact highlighted by Warren Buffett, who attributes his success to a mere dozen ‘truly good’ investment choices.
Predicting market movements can be challenging, especially in bull markets – when the prices of stocks or other assets generally rise over a sustained period of time, usually accompanied by optimism and confidence among investors. It’s like a market on the rise, where people expect good things to continue happening. Investors may sell at low points and miss subsequent recoveries or remain in cash during bull markets, thereby forfeiting potential gains. This underscores the principle that ‘time in the market, not timing the market’ is a more reliable pathway to capturing long-term growth.
Diversification is a key tenet of sound investing. By allocating resources across a variety of asset classes, sectors and themes, investors can mitigate the risks associated with specific market segments.
Staying invested allows for the upkeep of a diversified portfolio, which serves as a buffer against market volatility. Such portfolios often experience smoother performance trajectories, as positive returns from certain assets can help offset losses in others. This proves particularly beneficial during economic slumps when specific sectors might lag.
Holding cash may seem like a prudent financial safety net, offering immediate liquidity and a sense of security. However, this approach has drawbacks, as it effectively sidelines the potential for higher returns from other investment avenues.
Embracing a long-term investment strategy is key to preserving and enhancing the real value of your wealth over time, navigating past the limitations imposed by cash holdings.
The investing journey can be fraught with emotional upheaval, particularly during market volatility. By committing to a long-term investment stance, investors are better equipped to sidestep the behavioural pitfalls of fear and greed, which often precipitate rash decisions.
A robust investment strategy, centred around long-term objectives, can help instil confidence that enables investors to endure the tempests of market fluctuations with composure.
The influence of taxation on investment outcomes cannot be overstated. Liquidating assets could trigger a Capital Gains Tax payment, potentially carving a significant slice from your profits. A commitment to remain invested, deferring the realisation of these gains, offers an avenue to mitigate tax liabilities, thereby bolstering the efficiency of your investment portfolio.
The annals of financial history are replete with instances of market resilience and the inevitable cycles of downturn and recovery. Although economic setbacks, such as recessions and market crashes, are inescapable, they can potentially set the stage for subsequent periods of growth. Staying the course allows investors to partake in the recovery, harvesting the rewards of economic upturns.
In light of the compelling arguments for long-term growth prospects, the psychological steadiness afforded by a consistent investment approach, tax advantages and the historical patterns of economic recovery, the logic for remaining invested becomes incontrovertible.
While maintaining a reserve of cash for emergencies or imminent expenditures is wise, the strategy of continued investment is eminently sensible if it matches your risk profile, needs and circumstances.
We’re here to assist if you are seeking more detailed guidance or looking to deepen your investment knowledge. We’ll provide tailored advice, equipping you with the tools and insights necessary to navigate the complexities of the investment landscape. Contact us to discover how we can help you achieve your financial goals and maximise your investment potential.
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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.
A recent study has spotlighted women and investing, offering critical insights that aim to empower women to take the reins of their financial destinies and forge paths toward a prosperous future. Notably, an impressive majority of women (68%) engage in investment activities at least once a month, with over two-fifths (42%) diligently monitoring their savings and investments via online platforms or apps at least once weekly[1].
This proactive stance leads to nearly one in five (19%) women having a precise understanding of the value of their investments at any given time. However, the distribution of investment vehicles among women reveals a tendency towards traditional savings accounts (61%) and Cash ISAs (35%), with a notably smaller segment (17%) opting for Stocks & Shares ISAs, in stark contrast to 30% of men.
When it comes to selecting a savings or investment product, an equal number of women (37%) value ‘easy access to funds’ and the protection offered by the Financial Services Compensation Scheme (FSCS) above other factors. Additionally, ‘low or reasonable fees’ are paramount for nearly one in four (23%), while digital accessibility is deemed essential by almost one in five (19%).
Alarmingly, a substantial proportion of women (37%) report not investing at all, a figure that exceeds that of men (24%). The reasons cited for this abstention are diverse, with the most common being a lack of disposable income for investment purposes (45%), followed by concerns over high risk (18%), complexity (10%) and liquidity (9%). These findings underscore an urgent need for bespoke financial education and empowerment initiatives for women.
The study further reveals a commendable balanced approach to investment risk among women, with a significant majority (85%) describing their investment strategy as either medium (35%) or low (50%) risk. This cautious yet strategic approach is laudable, especially in light of evidence suggesting that female investors often outperform their male counterparts over the long term, thanks to a patient and disciplined investment style.
In an age where financial independence is a coveted goal for many, it becomes crucial to address and surmount the unique obstacles that women may encounter in the investment landscape.
The journey towards becoming an adept investor commences with the acquisition of a solid grounding in financial literacy. This foundational step involves understanding diverse investment concepts, terminologies and strategies, thereby enabling one to make well-informed decisions.
Articulating your immediate and long-term financial aspirations is paramount. These objectives not only direct your investment strategy but also keep you concentrated on your ultimate financial targets. The decision to save or invest is pivotal; while savings offer security, their value may diminish due to inflation. On the other hand, investments seek to grow your wealth, though they come with the risk of potential loss.
Before embarking on investment ventures, setting up an emergency fund is wise. This acts as a financial buffer for unexpected expenses, ensuring that you are not forced to liquidate investments during unforeseen circumstances. How much you put aside will depend on your circumstances. If you have three to six months’ worth of essential outgoings in your account to fall back on, this will give you a financial buffer if you need it.
A critical investment principle is diversification – the practice of spreading investments across various assets, funds and tax-efficient vehicles. This strategy aims to mitigate risk and foster long-term wealth growth. Interestingly, the research indicates that only 7% of women engage in diversified investing compared to 18% of men, highlighting the need for greater awareness and participation among female investors.
An informed investor keeps abreast of local and international market trends and emerging opportunities that could influence investment decisions. Regular portfolio reviews are crucial to ensure your portfolio remains aligned with your financial goals and risk tolerance. Adjustments may be necessary in response to personal financial changes or shifts in the market landscape.
Understanding your risk tolerance is essential for creating an investment portfolio that reflects your comfort level with risk, balancing it against the potential for returns. It’s important to remember that investments can fluctuate, resulting in both gains and losses.
We’re here to assist if you are seeking more detailed guidance or looking to deepen your investment knowledge. We’ll provide tailored advice, equipping you with the tools and insights necessary to navigate the complexities of the investment landscape. Contact us to discover how we can help you achieve your financial goals and maximise your investment potential.
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Source data:[1] Research conducted by Censuswide between 10–12 January 2024 of 2,003 general consumers, aged 16+, national representative sample. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.
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.
With the ever-evolving landscape of investment, it’s not hard to see why it might appear daunting. The investment world is equivalent to a living, breathing entity constantly evolving and changing. It’s a landscape that never remains static, mirroring the dynamic nature of global economies and financial markets.
Market conditions are like shifting sands, unpredictable and often beyond control. They can be impacted by many factors, such as political events, economic indicators, corporate earnings reports and even natural disasters.
In addition to the ever-changing market conditions, investors are inundated with a ceaseless news stream. Breaking news, financial analysis, expert opinions and economic forecasts are examples of the information barrage investors face.
While beneficial for making informed decisions, this constant flow of information can also lead to information overload. Sifting through the noise and identifying valuable insights that can genuinely impact one’s investment strategy can be challenging.
One of the most effective ways to accumulate wealth is to start investing early. It’s not about waiting until you’ve amassed a significant sum of cash or savings; it’s about leveraging the power of compounding.
Compounding is equivalent to a snowball effect, where the money you earn through investments generates more earnings. You’re growing your initial investment and any accumulated interest, dividends and capital gains. The longer you stay invested, the more time there is for your returns to compound.
Investing regularly is as important as starting early. Doing so ensures that investing remains a priority throughout the year rather than a task confined to specific deadlines like year-end tax planning. This disciplined approach can aid in wealth accumulation over time. Regular investments also allow you to easily navigate different market conditions (rising, falling, flat), eliminating the need to time your investments perfectly.
By consistently investing a fixed amount, you can buy more when prices are low and less when they’re high, potentially reducing your long-term investment cost. Moreover, investing small amounts continuously can help balance returns over time and decrease overall portfolio volatility.
Knowing how much to save today is key to achieving your long-term financial goals. Whether you’re saving for a property, education or retirement requires careful thought and decision-making. Your current income is a valuable benchmark for calculating long-term goals like retirement savings.
The more you earn today, the more savings you’ll likely need to maintain your lifestyle post-retirement. To determine how much you need to save, ask yourself: What is your goal (e.g., retirement, travel, starting a business)? How long will it take to reach your goal? How much money will you need? What savings do you currently have in place?
The investment world offers a simple yet powerful mantra to manage risk and enhance the likelihood of success – diversify your portfolio. This strategy involves spreading your investments across various asset classes, geographical markets and industries. But what makes this approach so crucial?
Financial markets are not uniform entities; they do not move in sync. Different types of investments or asset classes, such as cash, fixed income and equities, will lead or lag at different stages in the market cycle. They may also react differently to environmental factors such as inflation, corporate earnings forecasts and interest rate changes.
Diversifying your portfolio places you in an advantageous position to seize opportunities across various investments as they emerge. This strategy usually results in a smoother investment journey. But how? The answer lies in the balancing act that diversification encourages. Investments that appreciate in value can offset those that are underperforming.
Applying these principles of successful investing can help ensure that your portfolio is poised for long-term growth, equipped to navigate temporary market volatility and ready to capitalise on opportunities as market conditions evolve.
Despite these challenges, it’s crucial not to let this deter you from embarking on your investment journey. While investing may seem daunting at first glance, it’s a journey that can lead to substantial financial growth and security when undertaken with due diligence and strategic planning. If you require further information or want to discuss your investment journey, we’re here to help you navigate the complex investing world and achieve your financial and life goals.
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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 (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.
