Aventur Team

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The <a href="https://www.aventur.co.uk/blog/autumn-budget-key-points-how-will-your-finances-be-affected">2024 Autumn Budget </a>saw a range of changes to Inheritance Tax (IHT) announced, a move which has, and will surely continue to cause controversy until it’s implementation. &nbsp;The new guidelines may mean that some people will have to reconsider their existing Estate Planning as many carefully made plans under the old rules will be impacted. &nbsp;So, what are some of the things that can be done in the meantime to help individuals prepare for the upcoming changes? Let’s find out below. &nbsp;<h2>An introduction to Inhertiance Tax (IHT) &nbsp;</h2><h3>What is IHT?</h3> IHT is a tax that you might have to pay when you pass away. It can also apply to certain financial gifts you give while you're still alive. &nbsp;You’ll usually owe IHT if the value of everything you own when you die (your estate) is more than a certain amount called the <a href="https://www.gov.uk/government/publications/inheritance-tax-nil-rate-band-and-residence-nil-rate-bands-from-6-april-2028/inheritance-tax-nil-rate-band-residence-nil-rate-band-from-6-april-2028">'nil rate band</a>', which is currently £325,000, by default. &nbsp;However, the actual amount can vary based on your situation. If your estate is worth more than the nil rate band, the excess can be taxed at 40%. &nbsp;<h3>What's included in your estate? &nbsp;</h3>For most in the UK, your estate includes all the things you own worldwide like your home, any properties you rent out, cars, savings, investments, and personal belongings. &nbsp;It also considers financial gifts you gave within seven years before your death, and any debts you owe will reduce the value of your estate. &nbsp;<h3>What allowances does my estate have? &nbsp;</h3>Allowances that you will be entitled to include:&nbsp;<ul><li><a href="https://www.gov.uk/government/publications/inheritance-tax-nil-rate-band-and-residence-nil-rate-bands-from-6-april-2028/inheritance-tax-nil-rate-band-residence-nil-rate-band-from-6-april-2028">Your own nil rate band</a>: This is currently £325,000 and remains fixed until April 2028. Gifts made in the seven years before your death use this first. &nbsp;</li><li><a href="https://www.gov.uk/guidance/transferring-unused-basic-threshold-for-inheritance-tax">Transferable nil rate band</a>: If your spouse or civil partner died before you, you can use their unused nil rate band, potentially doubling it to £650,000. &nbsp;</li><li><a href="https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band">Residence nil rate band</a>: If your family home goes to direct descendants, you can claim an additional £175,000 nil rate band. This can also be transferred from a deceased spouse or civil partner. &nbsp;</li></ul><h3>What about if I give my money away when I’m alive? &nbsp;</h3>Making gifts during your lifetime can reduce your IHT bill. Generally, gifts made more than seven years before your death aren't included in your estate. &nbsp;<h3>How is IHT calculated? &nbsp;</h3>Upon death, your estate's value is determined by adding up all your assets and subtracting any debts. Certain gifts made within seven years before death are also considered. There's no IHT on money left to your spouse/civil partner or donated to charity.&nbsp; &nbsp;Business property relief and agricultural property relief can also reduce IHT for certain assets. If the total assets not covered by these exemptions exceed the nil rate bands, IHT is charged at 40%. The order in which gifts were made also affects the use of the nil rate band. &nbsp;<h2>What IHT changes were in the Budget? &nbsp;</h2><h3>Defined contribution pensions liable for IHT</h3>&nbsp;In the 2024 Autumn Budget, it was announced that from April 2027, defined contribution (DC) pensions (and potentially some defined benefit pensions as well) will no longer be exempt from IHT.&nbsp;&nbsp;This could add a significant amount of additional IHT liability to estates who fall under the new rules.&nbsp;For example, any estates over the IHT threshold with a Defined Contribution pension balance of £500,000, could be in line for an additional IHT bill of £200,000.&nbsp;&nbsp;Anything passing to spouses will remain exempt, but the option of passing these assets down the generations free of IHT, has been removed.&nbsp;These changes in the budget will undoubtedly have an impact on how people approach IHT planning. In future, pension funds won’t be as an attractive a vehicle for IHT planning as they have been. Instead, releasing pension funds to spend or gift is now a much more attractive option.&nbsp;&nbsp;<h3>New caps introduced for Business relief and Agricultural relief.</h3>&nbsp;Agricultural property and Business relief (BR) have previously benefitted from up to 100% relief from IHT.&nbsp;&nbsp;Assets that fall under these regimes include family farms and businesses, plus a range of investment products specifically created to take advantage of the exemption.&nbsp;&nbsp;This relief was introduced to ensure that, if a business owner dies, the business isn’t jeopardised by a large IHT bill.&nbsp;As of April 2026, IHT will be charged on combined business and agricultural property worth over £1 million at half of the normal 40% rate. This creates an effective IHT rate of 20% for any amount over £1 million.&nbsp;&nbsp;This could have very damaging consequences for businesses and farms, particularly where the business or farm has a high value but there aren’t sufficient non-business assets to cover the IHT bill.&nbsp;&nbsp;Executors will have to find the funds to pay the tax from somewhere which could result in businesses being sold off to fund the IHT.&nbsp;<h3>AIM shares also lose 100% exemption</h3>&nbsp;This effective tax rate of 20% will also extend to Alternative Investment Market (AIM), which were previously exempt from IHT if held for at least two years at the time of death.&nbsp;These have been a popular investment option, which can be held inside an ISA, for those who wish to reduce their exposure to IHT, as their investments receive full IHT relief after two years (which is much quicker than the seven years required for gifts), and the investor still owns the assets (unlike with a gift). From April 2026 these investments will be subject to 20% IHT.&nbsp;&nbsp;The notable difference between AIM shares and BR and Agricultural relief is that AIM shares will not be eligible for the £1 million tax free threshold.&nbsp;<h3>IHT threshold freeze extended to 2030</h3>&nbsp;Finally, a great example of Fiscal drag!&nbsp;The current nil rate band of £325,000 and residence nil rate band of £175,000 will be frozen until 2030, and has been stuck at £325,000 since 2009, which in real terms, means it will have been reducing with inflation for 21 years by 2030.&nbsp;<h2>What can I do about IHT?</h2>&nbsp;There are a number of options individuals have in light of the announced changes to IHT. These include:&nbsp;<ul><li>Do Nothing -&nbsp;You may choose not to take any specific action. While this approach is straightforward, it often results in a substantial IHT liability, potentially reducing the amount passed to beneficiaries.&nbsp; It depends if choosing to pay money to HMRC is acceptable to you! &nbsp;</li><li>Spend Your Money -&nbsp;Spending can be the most enjoyable way to reduce your IHT liability and for most clients, happens naturally throughout retirement.&nbsp; However, for clients who want to leave legacy for their family or have a sizable estate, this option alone may not be a solution. &nbsp;</li><li>Lifetime Gifting -&nbsp;Gifting assets during your lifetime can significantly reduce IHT liability, especially if done with clear planning and an understanding of future financial needs.&nbsp; By working with your financial planner to determine the necessary capital for your own retirement, you can make gifts confidently, allowing you to see your family to enjoy some of the money you have worked hard to accumulate. &nbsp;</li><li>Will Planning -&nbsp;Ensuring that Wills are updated and correctly structured is essential. This allows for certain allowances and reliefs to be utilised, ensuring that assets are passed on as tax-efficiently as possible.&nbsp; &nbsp;</li><li>Insuring the IHT Liability -&nbsp;Insurance can sometimes be used to cover IHT liabilities, especially for clients with valuable assets that are not easily liquidated (such as property or business assets).&nbsp; However, it’s not for everyone - insurance premiums can be costly. This strategy &nbsp;can be more suited as either a temporary solution or for clients with less liquid estates. &nbsp;</li><li>Using Trusts -&nbsp;Trusts offer a flexible approach to estate planning and can help preserve wealth across generations.&nbsp; Various trust structures can be integrated into a gifting strategy to provide a lasting legacy while potentially reducing IHT liability. It’s important to take expert advice on trusts given the complexities. &nbsp;</li><li>Tax-Efficient Investing - Whilst facing some restrictions following the budget, certain investments may qualify for Business Property Relief (BPR), exempting them from some (or all!) of the IHT liability if held at the time of passing.&nbsp; For example, investments in qualifying trading companies can allow clients to maintain access to their capital while benefiting from IHT relief.&nbsp;</li></ul>&nbsp;<h2>Conclusion</h2>&nbsp;The 2024 Autumn Budget introduced significant changes to inheritance tax that will fundamentally reshape estate planning strategies.&nbsp;&nbsp;With the removal of IHT exemptions for defined contribution pensions, the introduction of new caps on business and agricultural relief, and the continued freeze of the nil rate band, individuals looking at an IHT liability must now take a proactive approach to managing their estate.&nbsp;It’s well worth considering your approach to estate planning, including:&nbsp;<ul><li>Revisiting your strategy with your financial planner &nbsp;</li><li>Strategic lifetime gifting &nbsp;</li><li>Updating wills &nbsp;</li><li>Exploring trust structures &nbsp;</li><li>Considering tax-efficient investment options</li></ul>&nbsp;The complexity of these changes underscores the importance of personalised, forward-looking estate planning. For help in planning your estate to account for these changes, <a href="https://www.aventur.co.uk/contact">get in touch with our team</a> today. &nbsp;<hr>*The Financial Conduct Authority does not regulate Inheritance Tax Planning or Estate Planning. Information correct at time of publishing.

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How will New Inheritance Tax Rules Affect your Estate Planning?

Financial Planner

Samuel Back

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In a landmark moment for the UK's economic landscape, Chancellor Rachel Reeves has delivered her inaugural budget, bringing significant changes that could impact your financial planning and long-term goals.&nbsp; &nbsp;Some changes were expected, as we explored in our <a href="https://www.aventur.co.uk/blog/autumn-budget-2024-predictions">Autumn Budget predictions</a>, and some were more of a surprise. &nbsp;While the full details and impact of the budget are still unfolding, we've analysed and compiled the key policy announcements to explain their potential implications. &nbsp;<h2>Tax for Employees</h2> It was confirmed that in line with the manifesto promise, Labour will not raise any income tax or national insurance for employees. It was also confirmed that fuel duty was frozen, and the temporary 5p fuel duty was retained. &nbsp;Under the Tory government, personal tax thresholds were frozen until 2028 and it was confirmed that from 2028-29 personal tax thresholds will be uprated in line with inflation once again. &nbsp;<h2>Capital Gains Tax (CGT)</h2> It has long been suspected, and hinted at through the wording from the election onwards, that one of the taxes that would see a substantial rise was <a href="https://www.gov.uk/government/publications/changes-to-the-rates-of-capital-gains-tax/1cf25453-5b0c-4e7b-9165-65cf117e0af0">CGT</a>. &nbsp;The chancellor confirmed an increase in the rate paid by basic-rate taxpayers from 10% to 18% and from 20% to 24% for a higher/additional rate payer from 30th October. &nbsp;Example: If you held an investment that you had purchased for £100,000 that increased in value to £150,000, you would have a £50,000 gain. &nbsp;Individuals benefit from a capital gains allowance of £3,000, and therefore £47,000 of the gain would be subject to CGT. &nbsp;Under the previous rules, the tax on this would be £4,700 for a basic rate taxpayer or £9,400 for a higher/additional rate taxpayer. &nbsp;Following this rule change, the CGT liability would increase to £8,460 for a basic rate taxpayer or £11,280 for a higher/additional rate taxpayer. &nbsp;<h3>Potential financial planning solutions</h3> There are a number of potential planning ideas that could be utilised to mitigate CGT hikes: &nbsp;<ul><li>Timing of asset sales in line with wider plans &nbsp;</li><li>Making use of spousal allowances &nbsp;</li><li>Utilising tax-advantaged investment schemes &nbsp;</li></ul><h2>Pensions</h2><h3> Pension Tax Advantages</h3> It was pleasing to see that the tax-free cash entitlement of up to 25% was maintained and the speculation around the removal of higher rate tax relief on contributions turned out to be untrue. &nbsp;<h3>New Changes to State Pensions</h3> Basic and new state pension payments will go up by 4.1% next year as Labour have stuck to their commitment to maintain the "triple lock". This will see a full state pension entitlement increase to £11,975.60 annually, an increase of £473.<h3> Pensions and Inheritance Tax (IHT) Changes</h3> It was confirmed that pensions passed on will be subject to IHT from 2027. &nbsp;Most pensions are currently exempt from IHT and not classed as part of your estate when you die. This makes them under the previous rules, a particularly effective IHT planning vehicle. &nbsp;This is also coupled with an IHT threshold freeze until the next election. &nbsp;Example: &nbsp;This is potentially going substantially impact a lot of individuals across the UK. &nbsp;An example of a household impacted by this may be as follows: &nbsp;<ul><li>Home - £500,000 &nbsp;</li><li>Cash - £50,000 &nbsp;</li><li>Chattels - £25,000 &nbsp;</li><li>ISAs - £100,000 &nbsp;</li><li>Pensions - £500,000</li></ul> With pensions outside of the estate, there would be no IHT liability for this household assuming the family home is left to direct family members. &nbsp;As a result of the changes to the budget, the estimated impact would be an IHT bill of £70,000. &nbsp;<h3>Potential financial planning solutions</h3> There are a number of potential planning ideas that could be used in the above circumstance: &nbsp;<ul><li>Using comprehensive cashflow modelling to understand how much is ‘required capital’ and looking at how gifts can be made directly to family members &nbsp;</li><li>Looking at trust planning to reduce IHT &nbsp;</li><li>Considering Expression of Wishes and the planning opportunities for Pension &nbsp;</li><li>Death Benefit Trusts &nbsp;</li><li>Drawing monies from the pension and mitigating the resulting liability / continued IHT liability through tax-efficient investment structures &nbsp;</li><li>Taking monies from the pension scheme to fund insurance policies paid into trust &nbsp;</li></ul>The movement of pensions into the scope of IHT will undoubtedly impact the financial planning of many and will require changes to long-term financial plans. However, as shown above, there are a number of wealth management strategies that we will be able to utilise to mitigate this. &nbsp;<h2>Alternative Investment Market (AIM) shares</h2> For individuals wanting to mitigate IHT whilst retaining access to capital, especially for ISA funds, a common strategy was to invest the funds into AIM market shares, which often held a 100% exemption from IHT. As a result of the rule changes, these will now benefit from a reduced 50% discount. Whilst this remains worthwhile considering given that it takes the effective IHT rate from 40% to 20%, it certainly becomes less appealing. &nbsp;<h2>Business Asset Disposal Relief</h2> <a href="https://www.gov.uk/business-asset-disposal-relief">BADR</a> would be kept at £1m, and would remain at 10% this year, rising to 14% in April 2025 and 18% in 2026-27. For those selling businesses or liquidating their company, this could mean a potential increase in the tax liability of the business sale of £80,000.&nbsp;<h2>Continuation of VCT/EIS legislation</h2> Aventur's holistic financial planning service provides the opportunity to optimise tax advantages investments as Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS). &nbsp;These offer 30% tax relief on investments made and a whole host of other advantages from It was confirmed that these will remain in place until 2035. &nbsp;<h2>Private School Fees and VAT</h2>Somewhat controversially VAT is set to be introduced to private school fees from January 2025, meaning tuition and boarding fees at independent schools will be subject to a 20% VAT charge.&nbsp; For those affected, this additional expense will likely require adjustment to long-term financial plans. &nbsp;Further information about the VAT charge for Private School fees can be found <a href="https://educationhub.blog.gov.uk/2024/11/01/vat-private-schools-everything-you-need-to-know/">here</a>, with additional information likely to be released closer to the January deadline. &nbsp;<h2>Stamp Duty Increase</h2> Stamp Duty was announced to increase for second homes, from 2% to 5% from 31st October. Homes in the purchase process that are set to complete after this date will likely be subject to the new rates. Information around the new rates and who is likely to be affected can be accessed <a href="https://www.gov.uk/government/publications/stamp-duty-land-tax-increase-to-the-higher-rates-of-stamp-duty-land-tax-and-to-the-single-rate-payable-by-non-natural-persons/380cf2b3-cc05-4457-9624-224485c29fb5">here</a>. These budget announcements present both challenges and opportunities for more strategic wealth management. And while the impact of these announced changes may seem unsettling, informed planning could be the best defense for many.&nbsp; One thing is clear though, and that is that the budget's complexities will require truly personalised advice. Our team of financial experts are ready to:<ul><li>Analyse your specific financial situation</li><li>Develop tailored strategies</li><li>Mitigate potential tax impacts</li></ul> <a href="https://www.aventur.co.uk/contact">Get in touch today</a> to discuss your current financial plans or for more information about how the budget could affect your plans. &nbsp;<hr>*Information correct at the time of publishing. This article is provided for information purposes only and should not be taken as individual advice. Aventur is not responsible for the content of 3rd party websites.

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Autumn Budget Key Points: How Will your Finances be Affected?

Caroline Wishart-Young

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So, you’ve spent all those years contributing into your pension and now it is time to retire and take an income, but what is the best way to do this? &nbsp;We’ve compared the pros and cons of the two most common options – Drawdown and Annuity – to help you make an informed choice about your financial future and funding your retirement. &nbsp;<h2>What are the key differences of Drawdown vs. Annuity?</h2> Before we dive into the pros and cons of drawdown vs annuity, it's crucial to understand the fundamental difference between them. &nbsp;The key difference lies in flexibility versus certainty. <a href="https://www.investopedia.com/terms/d/drawdown.asp#:~:text=A%20drawdown%20refers%20to%20how,a%20measure%20of%20downside%20volatility.">Drawdown</a> typically offers more control over your money, but it comes with ongoing responsibility and risk. Where <a href="https://www.investopedia.com/terms/a/annuity.asp#:~:text=Annuities%20are%20financial%20products%20that,sum%20payment%20or%20periodic%20payments.">an annuity</a> provides guaranteed income but lacks flexibility once set up. &nbsp;Let’s take a look at the pros and cons of each in more detail below. &nbsp;<h2>Pension Drawdown: Flexibility in Retirement Income</h2> Think of drawdown as keeping your pension pot invested while taking income from it. It's like having a savings account that you can dip into as needed. Your money remains invested in the market, potentially growing over time, but also subject to market fluctuations. &nbsp;<h3>The Pros of Choosing Pension Drawdown &nbsp;</h3><ol><li>Flexibility: As mentioned, drawdown gives you the option to increase or decrease your level of withdrawals depending on your income requirements at the time and change how often you receive the payments.&nbsp; You also have the option to take additional lump sums from your pension if they are needed. However, this can reduce how long your pension will last for and will also be subject to tax. &nbsp;</li><li>Inheritance: In the event of your death, any pension funds left over can be passed to your chosen beneficiaries , which can help loved ones financially in the future, and by completing an Expression of Wish, you’ll have peace of mind knowing that the funds have been left to those who you have chosen. &nbsp;</li><li>Growth: As your pension funds remain invested whilst you are withdrawing the money, growth can still be achieved to help prolong the length of time the income can be paid. However your investment views, circumstances, objectives and markets themselves on could change, so an ongoing assessment of your current investment strategy is essential.</li></ol><h3> The Cons of Pension Drawdown &nbsp;</h3><ol><li>Investment Risk:&nbsp;Your pension funds remain invested, this means that the value of the funds can go down, so you could end up losing some of your money.&nbsp; This approach is why it is good to have a Financial Adviser looking after your investments so you can have peace of mind that an expert is looking after this for you. &nbsp;</li><li>Longevity Risk: when in drawdown, there is a chance that you could outlive your pension money, meaning you will have a shortfall in the income you need during retirement. This can happen if you are drawing too much money out for the size of the pension pot you have. With a financial adviser they can help reduce the chances of this occurring, by working with you to plan your cash flows and spending needs to help you understand how sustainable and secure your retirement is. &nbsp;</li></ol><h2>Annuities Explained: Guaranteed Income for Life</h2> An annuity, on the other hand, is more like trading your pension pot for a regular pay-check. You give your pension savings to an insurance company, and in return, they promise to pay you a fixed income for the rest of your life, regardless of how long you live. &nbsp;<h3>The Advantages of Pension Annuities &nbsp;</h3><ol><li>Security:&nbsp;With an annuity you get a guaranteed income for life, meaning that you have a reliable income source for your lifetime; so you know exactly what is going to be received each month, no matter what.&nbsp; &nbsp;</li><li>Simplicity: No matter what is happening in the market, your income from the annuity will not change as it is a fixed amount and is not linked to any investments. &nbsp;</li><li>Increased Income Option:&nbsp;When applying for an annuity, make sure to disclose any health conditions as you may be eligible for an enhanced annuity if you have a condition which affects your life expectancy. &nbsp;</li></ol><h3>The Disadvantages of Annuities &nbsp;</h3><ol><li>Lack of Flexibility:&nbsp;When you purchase an annuity, the income is for your lifetime so there is no way to make any changes to it once it is in force.&nbsp; This means that future income needs will have to be sourced from elsewhere. &nbsp;</li><li>Inflation Risk:&nbsp;Inflation can mean that your fixed income amount could struggle to keep up with the increasing cost of day-to-day expenses.&nbsp; You can choose an annuity option which helps protect against this, but it may mean the annual amount you can get is less. &nbsp;</li><li>Limited Inheritance: In the event of your death the income payments do not pass onto any beneficiaries, they just stop.&nbsp; You can choose an option with a spousal or dependents benefit, but again this may mean the annual amount that you can get is less. &nbsp;</li></ol><h2>Key Factors to Consider when choosing Drawdown or Annuity</h2> It’s clear that there is many factors to consider when it comes to taking your pension income, speaking with a Financial Adviser can help you understand which option is the right one for you, and what you can do to achieve your desired income in retirement. &nbsp;Choosing between drawdown and annuity isn't just about the numbers – it's about your lifestyle, risk tolerance, and legacy goals.&nbsp;&nbsp;Drawdown offers flexibility and growth potential but requires ongoing management, whilst annuities provide certainty but at the cost of flexibility.&nbsp; &nbsp;<h2>Choosing the best option for Retirement &nbsp;</h2>You don't have to navigate this crucial decision alone. Our experienced financial advisers are here to help you create a personalised retirement strategy that aligns with your unique needs and goals.&nbsp;For more help planning your retirement, visit our <a href="https://www.aventur.co.uk/service/retirement">planning your retirement page</a>. &nbsp;<a href="https://www.aventur.co.uk/contact">Contact us today</a> to schedule a pension review and take the first step towards a secure and fulfilling retirement. The first meeting is always at our expense!

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Pension Drawdown vs Annuity: Which is Best?

Estate planning involves deciding how to distribute assets after your death. It can be complex, but it's important to have one in place to ensure that your wishes are respected, and your loved ones are taken care of. &nbsp;You can use this article as your guide to estate planning, as it provides an overview of the process. &nbsp;<h2>Why is estate planning important? &nbsp;</h2>There are several reasons why estate planning is important: &nbsp;<ul><li>To ensure that you split your assets according to your wishes. If you die without a will, your assets will be distributed according to government guidelines. These guidelines may not be in line with your wishes. &nbsp;</li><li>To minimise inheritance tax (IHT). Individuals pay IHT on the value of an estate above a certain threshold. Estate planning can help to reduce the amount of inheritance tax that your loved ones have to pay. &nbsp;</li><li>To protect your loved ones from financial hardship. Estate planning can secure the financial future of your young children or dependent relatives after you pass away. &nbsp;</li><li>To choose someone to make decisions on your behalf if you become unable to. If you are unable to make decisions, estate planning ensures that you choose someone you trust to make decisions for you. &nbsp;</li></ul><h2>What does an estate plan include? &nbsp;</h2>Estate planning can involve a variety of different elements, including: &nbsp;<ul><li>Making a will.&nbsp;A will is a legal document that sets out your wishes for the distribution of your assets after your death. &nbsp;</li><li>Setting up a trust.&nbsp;A trust is a legal arrangement that means you can transfer ownership of your assets to a trustee. They will then manage your assets for the benefit of your beneficiaries. &nbsp;</li><li>Appointing a power of attorney.&nbsp;A power of attorney is a legal paper that lets someone make choices for you if you can't. &nbsp;</li><li>Appointing a healthcare proxy.&nbsp;A healthcare proxy lets someone make medical decisions for you if you can't make them yourself. &nbsp;</li><li>Purchasing life insurance.&nbsp;Life insurance can provide your loved ones with a financial payout after your death. &nbsp;</li></ul><h2>How to create an estate plan &nbsp;</h2>To create an estate plan, you should first take the time to consider your wishes. Ask yourself: What do you want to happen to your assets after your death? Who do you want to benefit from your estate? Once you have thought about this, you can start to put together your plan. &nbsp;It is important to seek professional advice when creating an estate plan. A solicitor or professional planner can help you to understanding your options and creating a personalised plan that meets your needs. &nbsp;<h2>Estate planning tips &nbsp;</h2>Here are some more estate planning tips if you're a UK resident: &nbsp;<ul><li>Make a will.&nbsp;Doing this is the most important thing you can do to ensure that you distribute your assets the way you want. &nbsp;</li><li>Consider setting up a trust.&nbsp;A trust can be a useful tool for protecting your assets and minimizing inheritance tax. &nbsp;</li><li>Appoint a power of attorney and a healthcare proxy.&nbsp;This will ensure that someone you trust is able to make decisions on your behalf if you become unable. &nbsp;</li><li>Purchase life insurance.&nbsp;This can provide your loved ones with a financial pay-out after your death. &nbsp;</li><li>Keep your estate plan up to date.&nbsp;You should regularly review your plan to ensure it reflects your current wishes and circumstances. &nbsp;</li></ul><h2>Inheritance tax &nbsp;</h2>The current inheritance tax threshold is £325,000. If your estate is worth more than this, your beneficiaries must pay inheritance tax on the excess amount. &nbsp;There are a number of ways to reduce inheritance tax liability, such as setting up a trust or making charitable gifts. If you are concerned about inheritance tax, read our <a href="https://www.aventur.co.uk/blog/inheritance-tax-what-you-need-to-know">Guide to Inheritance Tax</a>. &nbsp;<h2>Conclusion &nbsp;</h2>Proper estate planning ensures the distribution of your assets according to your wishes. If you don't have a plan, you can make one yourself or get help from a professional to create one.&nbsp; Our team are experienced in creating estate plans for all eventualities, if you'd like some help in creating yours, <a href="https://www.aventur.co.uk/contact">get in touch</a>. &nbsp;<hr>* Some forms of Estate Planning are not regulated by the FCA. Information correct at the time of publishing.

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Your Essential Guide to Estate Planning

Our Spring Budget 2024 predictions were all about how the government would navigate the competing challenges of inflation, cost-of-living pressures, and a sluggish economy. &nbsp;So, let's see how those predictions stacked up against the actual announcements: &nbsp;<h2>Income Tax &nbsp;</h2>No changes to personal tax rates or allowances, as Income tax cuts were off the table this year. &nbsp;This means Main personal allowance and 40% thresholds will remain at same levels and will do so until 2027/28. &nbsp;<h2>National Insurance &nbsp;</h2>Further cuts to NICs beyond those announced in the Autumn Statement were expected – and they were confirmed. &nbsp;Employees class 1 NIC reduced from 10% to 8% with effect from 6th April 2024, and there was a cut in NIC class 4 for self employed to 6% with effect from 6th April 2024. &nbsp;The self-employed have had to pay flat rate Class 2 NIC for many years, which have conferred entitlement to State pension, as well as profit-related Class 4 NIC. &nbsp;As announced in the Autumn Statement, from 6 April 2024, Class 2 NIC will not be required to secure benefits for anyone earning above £6,725, saving £179.40 a year for those earning over £12,570. &nbsp;Anyone earning less than that can still pay Class 2 voluntarily in order to maintain a full contribution record; the Spring Budget included an announcement that the Government will consult later this year on how to achieve abolition of Class 2 for those affected. &nbsp;<h2>VAT Changes &nbsp;</h2>An increase in the VAT registration threshold to benefit small businesses was rumoured to be a possibility. &nbsp;The good news for small businesses arrived! The VAT registration threshold was indeed raised to £90,000 and £88,000 – the first threshold increase since 2017, and both will come into effect on 1st April 2024. &nbsp;It was announced during the Budget that these thresholds would be frozen, but there was no indication as to how long that might be for. &nbsp;<h2>Investment into UK Enterprise &nbsp;</h2>It was rumoured in the Autumn Statement that ISA investors could be encouraged to invest in UK listed shares. &nbsp;In the Spring Budget, the Chancellor announced a consultation on a new ‘British ISA’, which would give an additional annual allowance of £5,000 to be invested in British companies. &nbsp;However, no date has yet been set for the introduction of this product. &nbsp;<h2>Inheritance Tax (IHT) &nbsp;</h2>The rates for IHT nil rate band remains unchanged at £325,000 until the end of 2027/28, meaning the threshold has been the same since April 2009. &nbsp;Even though more people may be subject to the tax, the £175,000 ‘residential nil rate band enhancement’ on death transfers may reduce impact where it applies. &nbsp;Married couples may now be able to leave up to £1 million free of IHT to their direct descendants (£325,000 plus £175,000 from each parent), but the rules are complicated.&nbsp; Read our <a href="https://www.aventur.co.uk/blog/inheritance-tax-what-you-need-to-know">IHT Guide</a> to see how current guidelines may affect you, or get in touch with our team for a more in-depth exploration of your situation. &nbsp;<h2>Child Benefit Reform &nbsp;</h2>The government seemed to heed the words of Martin Lewis and delivered a change in Child Benefit thresholds, which will be a welcome change for many. &nbsp;The threshold for the High-Income Child Benefit Charge was confirmed to be increased from £50,000 to £60,000 for 2024/25. &nbsp;A joint income review expected in the predictions wasn’t announced, however this is now expected to be reviewed in 2026. &nbsp;<h2>Cigarette and Alcohol Duty &nbsp;</h2>As expected, the 5p cut in fuel duty was indeed held steady. &nbsp;<h2>National living wage &nbsp;</h2>It was announced that from 1st April 2024, the National Living Wage will apply to those aged 21 and over rather than 23, and will rise to £11.44 per hour. &nbsp;<h2>Capital Gains Tax (CGT) &nbsp;</h2>The maximum rate of CGT on residential property was cut to 24%, exceeding predictions of it remaining unchanged. &nbsp;For this budget, the Chancellor seemed to prioritise tax breaks through reduced NICs and a higher VAT registration threshold, but held off on income tax cuts. &nbsp;This could suggest a plan to focus on stimulating business activity and immediate cost relief for workers, rather than long-term changes to income tax brackets. However, the announcement of a reduction in the CGT rate for higher-rate taxpayers on residential property was a surprising twist. &nbsp;This budget walked a tightrope between providing tax relief and managing a challenging economic climate. With the next election looming, it will be interesting to see how these measures play out in the coming months.&nbsp; If you have any queries relating to your finances, you can <a href="https://www.aventur.co.uk/contact">get in touch with us</a>.

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Spring Budget 2024 Key Points

With the 2024 Spring Budget being the last one before a general election, it will be interesting to see how the government balances ongoing inflation battles with a cost-of-living crisis, and a relatively sluggish economy.&nbsp;The cost-of-living crisis has put people’s finances in the public eye and is sure to be front and centre of the headlines at this election.&nbsp;Looking at the polls, we can see Labour are well out in front and the Tories will need to weigh up the amount of fiscal headroom they have (and cynically how much fiscal headroom they may want to leave behind!).&nbsp;Although faced with a sluggish economy and still not completely out of hot water with inflation, there are some positives for Chancellor Jeremy Hunt.&nbsp;For example, public sector net borrowing fell to £7.8 billion in December 2023 which is certainly a large number. However, it is still around half of the previous year and is the lowest since 2019.&nbsp;With the above in mind, what can we expect to see in the 2024 Spring Budget? Here are our predictions and what we’d like to see happen in March:<h2>&nbsp;</h2><h2>Possible Income Tax Cuts &nbsp;</h2>There has been speculation that any headroom at all would be used on a Basic Rate tax cut. Hinting that the rate of income tax at the marginal rate could be reduced to 18%.&nbsp;With the NIC cut in January, could we see even a 1% or 2% cut to the Basic Rate? It would certainly prove to be a popular decision.&nbsp;&nbsp;Perhaps now would be a good time to reverse some of the ‘silent tax hikes’ that we have seen with the frozen thresholds. It’s important to remember though that tax rates are different in Scotland.<h2>&nbsp;</h2><h2>VAT Changes &nbsp;</h2>If the government does opt for expansionary fiscal policy, another rumoured change could be to raise the VAT registration threshold.&nbsp;Whilst this could be good news for small businesses, it is important to consider how it would affect prices for everyday shoppers.<h2>&nbsp;</h2><h2>Investment into UK Enterprise &nbsp;</h2>Brexit unlocked new possibilities for encouraging investment in UK companies. And there is now greater flexibility regarding how incentives are applied to UK companies compared to foreign shares.&nbsp;It was rumoured in the Autumn Statement that ISA investors could be encouraged to invest in UK listed shares. So, it will be interesting to see if there are any further details released in next month’s budget.<h2>&nbsp;</h2><h2>Inheritance Tax (IHT) &nbsp;</h2>A potential end to inheritance tax is a possibility, although it has been downplayed by the Government.&nbsp;&nbsp;Only 4% of estates have been subject to the tax but it has proven to be unpopular. A change to IHT could prove to be a welcome tax break, costing the Government relatively little in lost revenue.&nbsp;Read our&nbsp;<a href="https://www.aventur.co.uk/blog/inheritance-tax-what-you-need-to-know">IHT Guide</a> to see how current guidelines may affect you.<h2>&nbsp;</h2><h2>Child Benefit Payment Reform &nbsp;</h2>After a lot of recent media attention, the current threshold for child benefit being based on a single person earning over £50k is likely to be reviewed.&nbsp;&nbsp;Currently, a couple with a combined income of £49k each is eligible for child benefit. However, if one partner earns £70k and the other earns £28k, they will not receive support. Therefore, we could see some changes and equalisation.&nbsp;&nbsp;Martin Lewis in particular has been campaigning for this change, so it is possible we will see some sort of movement on this issue.<h2>&nbsp;</h2><h2>Cigarette and Alcohol Duty &nbsp;</h2>Cigarettes and alcohol are always easy wins for tax from the government. However, it has previously been hinted that alcohol duty may not increase in this budget. &nbsp;This may be different in Scotland.&nbsp;<h2>What to expect from the upcoming budget?</h2>&nbsp;Ultimately, we all want tax cuts that put more money in our pockets. This could boost spending, savings, and potentially even influence interest rates. And a strong economy benefits everyone, so we hope the Chancellor considers this.&nbsp;Whatever the Chancellor has in store for the budget, we’ll be ready to review and dissect what any changes may mean for you and your finances. If you have any queries relating to your finances, you can&nbsp;<a href="https://www.aventur.co.uk/contact">get in touch with us</a>.

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Spring Budget 2024 Predictions

Inheritance tax (IHT) is a complex topic, but it's important to understand the basics so that you can plan for your estate and reduce the amount of IHT you have to pay. &nbsp;This article gives an overview of IHT, and provides examples of what you, or your loved ones may be required to pay. &nbsp;<h2>What is inheritance tax? &nbsp;</h2>IHT is a tax on the estate of someone who has died, including all property, possessions, and money. The current <a href="https://www.gov.uk/inheritance-tax#:~:text=The%20standard%20Inheritance%20Tax%20rate,estate%20that's%20above%20the%20threshold.">standard IHT rate</a> is 40%. You only pay IHT on the part of your estate that's above the tax-free threshold, which is currently £325,000. &nbsp;You can read our <a href="https://www.aventur.co.uk/blog/your-guide-to-estate-planning">Guide to Estate Planning</a> to find out more about IHT and how you can prepare your estate. &nbsp;<h2>Who has to pay inheritance tax? &nbsp;</h2>Not everyone has to pay inheritance tax. If the value of your estate is below the £325,000 threshold, then you won't have to pay any IHT. &nbsp;However, if the value of your estate is above the threshold, then you may have to pay IHT on the part of your estate that's above the threshold. &nbsp;<h2>Who is exempt from inheritance tax? &nbsp;</h2>There are a number of people who are exempt from inheritance tax, including: &nbsp;<ul><li>Your spouse or civil partner &nbsp;</li><li>Charities &nbsp;</li><li>Community amateur sports clubs &nbsp;</li><li>Certain trusts</li></ul><h2>What are the IHT allowances?</h2> In addition to the £325,000 nil-rate band, there are a number of other allowances that can reduce the amount you have to pay. These include: &nbsp;<ul><li>The residence nil-rate band: This is an additional £125,000 allowance that can be used against the value of your main residence. &nbsp;</li><li>The agricultural property relief: This is a relief that can be claimed on the value of agricultural property. &nbsp;</li><li>The business property relief: This is a relief that can be claimed on the value of business property. &nbsp;</li><li>The rules around inheritance tax are complex and can change, so it is essential to stay up to date. &nbsp;</li></ul><h2>How is inheritance tax calculated? &nbsp;</h2><a href="https://www.aventur.co.uk/blog/inheritance-tax-what-you-need-to-know">Inheritance tax</a> is calculated by multiplying the value of the estate above the nil-rate band by the IHT rate. For example, if the value of your estate is £700,000 and you are not married or in a civil partnership, then you will have to pay IHT on £200,000 (£700,000 - £325,000 – £175,000).&nbsp; &nbsp;The current IHT rate is 40%, so you will have to pay £80,000 in IHT. This calculation includes the residential nil-rate band allowance. &nbsp;<h2>Ways to reduce inheritance tax</h2> There are a number of ways to reduce the amount of inheritance tax you have to pay. These include: &nbsp;<ul><li>Making gifts to your family and friends before you die. &nbsp;</li><li>Making a will and leaving your estate to your spouse or civil partner. &nbsp;</li><li>Using the residence nil-rate band and the agricultural property relief. &nbsp;</li><li>Setting up a trust. &nbsp;</li></ul><h2>Conclusion</h2>&nbsp;Your estate is a reflection of your life and your values, so it is important to plan for inheritance tax early. Through careful planning you can be prepared and reduce your IHT liability and ensure that your loved ones inherit your assets as intended. &nbsp;If you’re not sure where to start and want to understand your options, <a href="https://www.aventur.co.uk/contact">get in touch with our team</a> who can help you understand and make the right decisions for your estate. &nbsp;<hr>*The Financial Conduct Authority does not regulate Inheritance Tax Planning or Estate Planning. Information correct at time of publishing.

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Inheritance Tax: What You Need to Know

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