Financial Planner

Samuel Back

large_Samuel Back 1.jpg

medium_Samuel Back 1.jpg

small_Samuel Back 1.jpg

thumbnail_Samuel Back 1.jpg

Samuel Back 1.jpg

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.

medium_Autumn Budget Key Points.jpg

small_Autumn Budget Key Points.jpg

thumbnail_Autumn Budget Key Points.jpg

Autumn Budget Key Points.jpg

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

Aventur Team

large_Aventur Profile.png

medium_Aventur Profile.png

small_Aventur Profile.png

thumbnail_Aventur Profile.png

Aventur Profile.png

Since taking charge in May 2024, the new Labour government have announced that there is a £22bn fiscal shortfall leftover from the previous government. Whilst there seem to be plans in place already to raise around £5.5bn in taxes this year, the new government has made it clear that there are further difficult decisions to be made at the upcoming Autumn budget.&nbsp; With the budget on 30th&nbsp;October 2024 being the first one delivered by a Labour government since 2010, there are rumours of some potentially controversial changes. Nobody knows for sure what will be included in the upcoming budget, but considering the rumours that are circulating we’ve explored below at what is possible: &nbsp;<h2>Changes to Capital gains tax (CGT)</h2> The current annual <a href="https://www.gov.uk/capital-gains-tax">CGT allowance</a> (2024/2025) is £3,000. Any gains realised above this allowance are charged 10% for basic rate taxpayers, and 20% for higher/additional rate taxpayers.&nbsp; Rates are charged slightly higher on residential property (except for your main residence) at 18% for basic rate taxpayer, and 24% for higher/additional. Changes to capital gains tax seem to be highly anticipated, with possible reforms including: &nbsp;<ul><li>A flat rate increase: Such as the flat rate of 30% that was in place from 1965 to 1988. &nbsp;</li><li>A harmonisation for CGT with income tax rates: which could include aligning CGT rates with income tax. &nbsp;</li><li>Tapering for longer term gains: similar to the US model for taxing gains, we could see heavier taxation on short term gains, with a reduced amount for assets held over the longer term. &nbsp;</li><li>Reduction or removal of the CGT allowance: potentially further reducing the CGT allowance of £3,000 maybe to complete removal or the allowance. &nbsp;</li><li>Removal of the CGT exemption on death: currently, CGT dies with you on death, so (assuming the asset is within your estate) you would only be subject to inheritance tax. &nbsp;&nbsp;</li></ul>If any changes to CGT were to be announced, it's possible for these to be implemented either immediately following the budget or at the beginning of the next tax year, around 6th April 2025. Both approaches have been utilised in previous budgets. Predicting which method the government will adopt is challenging, but the logical choice would be to provide a 5-month window for individuals to realise gains at the current and more favourable rates, potentially leading to significant short-term revenue.&nbsp; Without such a period, individuals may choose to hold onto their assets, which, while potentially generating high tax revenue in the long run, would not provide immediate revenue for the government. Many believe that aligning capital gains tax rates with income tax rates is the likely direction, however, simplifying the current system to a flat rate, would be a less complicated solution and maybe, more viable. &nbsp;<h2>Changes to Pensions Legislation</h2> Changes to current <a href="https://www.aventur.co.uk/blog/maximising-your-retirement-a-guide-to-pension-contributions-and-tax-benefits">pension legislation</a> is another area that is drawing significant attention, and rightly so, as any changes to pension legislation would likely affect a substantial portion of the UK population. &nbsp;The possibility of any changes to pensions has so far been a contentious issue, but if announced they could include: &nbsp;<ul><li>Cuts to income tax relief:&nbsp; There is a lot of speculation around capping the income tax relief available on pension contributions. For example, setting a cap of 30% or imposing perhaps an annual maximum relief in cash terms. &nbsp;</li><li>Reinstating the lifetime allowance:&nbsp; The return of lifetime allowance has been mentioned a few times and would expectedly cause complexities for those nearing retirement. &nbsp;</li><li>Reduction of tax-free cash: A reduction to £100,000 seems to have been widely speculated and met with scepticism. &nbsp;</li><li>Inheritance tax exemption before and after age 75 rule: Another rumour is removing the inheritance exemption of pensions on death. Currently pensions sit outside of an estate for inheritance tax purposes meaning if you pass away before the age of 75, then whoever you decide to be the beneficiaries for your pension will pay no tax on drawing the funds. If you die after 75, then the funds drawn by your beneficiaries would be subject to income tax at their marginal rate. We could see the Labour government removing the ‘before 75’ tax free benefit to a pension, or even remove the inheritance tax exemption all together. &nbsp;</li><li>Restrictions to employer national insurance exemption: This limit could be at either an amount of money or a % of the employee’s salary that the employer is limited to. &nbsp;</li></ul>Given the demographic shifts and decline of final salary pension schemes supporting working people in their retirement, substantial cuts to tax relief on contributions for employee or employer seem obscure.&nbsp; &nbsp;Reducing the growth of people’s pensions which are built up to support retirement and considering the difficulty on the government to sustain a state pension on an aging population, it seems hard to validate the rationale, although not impossible. It may be more likely that the limits already in place for higher earner’s contributions to pensions could become stricter. &nbsp; &nbsp;Also, whilst putting a fixed rate of income tax relief seems simple at the surface, it would be difficult for HMRC to implement across the board and would be costly, meaning this is unlikely to raise money in the short term. &nbsp;In terms of cutting tax-free cash allowances or reinstating the lifetime allowance, if this were to occur, we usually see this done retrospectively, meaning some form of protection for the people that have built up their savings pot under the current regime. &nbsp;<h2>Changes to Inheritance Tax (IHT)</h2> There are currently two allowances available for&nbsp;<a href="https://www.aventur.co.uk/blog/inheritance-tax-what-you-need-to-know">inheritance tax;</a> the first being the nil rate band (NRB), providing an inheritance tax-free allowance of £325,000 that can be allocated to any beneficiary of your choosing. &nbsp;The second is the residence nil rate band (RNRB), offering an additional inheritance tax-free allowance of £175,000 for individuals who owned property at the time of their passing. This allowance is specifically reserved for direct descendants, such as children or stepchildren.&nbsp; &nbsp;Furthermore, assets can be transferred between spouses without incurring inheritance tax, and upon the death of one spouse, the nil rate bands may be inherited by the surviving spouse. &nbsp;There are currently ongoing discussions regarding potential changes to inheritance tax, which could have far-reaching effects. These include: &nbsp;<ul><li>Progressive tax bands: introducing progressive inheritance tax bands, starting at lower rates for smaller estates and higher rates for larger estates, potentially higher than the current rate of 40%. &nbsp;</li><li>Adjustment to business and agricultural relief: There are talks of a reduction or a cap on business relief or agricultural relief, and maybe a tightening to the qualification criteria such as removing the relief for AIM shares. &nbsp;</li><li>Reduction to other allowances: potential changes to current reliefs, such as the annual gifting allowance. &nbsp;</li><li>A wealth tax: The idea of a wealth tax, which could be a replacement for inheritance tax. For example, introducing an annual 1% wealth tax charge on estates exceeding £1,000,000. &nbsp;</li></ul>Despite the high combined cost of these allowances to the government, it seems unlikely that these important reliefs would be removed altogether due to the importance of allowing businesses and farms to continue operating.&nbsp; &nbsp;There could be an increase in time for the exemptions to count, as it currently takes two years for business relief or agricultural relief to qualify. Or potentially a tapering relief put in place where the % of inheritance tax is reduced over a number of years.&nbsp; &nbsp;Another possibility could be a limit on the amount of an estate that qualifies for business relief, such as the first 10 or 20 million of business assets. Again, it seems unlikely for the government to implement anything that will be too complicated and expensive to implement.&nbsp; &nbsp;Whatever the changes, we would expect them to be preceded by a detailed consultation exercise. It is important to note that in order for the UK to continue with its economic growth, taxing businesses in the UK too heavily could create an issue for stimulating growth and job opportunities in the UK. &nbsp;<h2>Reduction to ISA allowances and capping Private Residence Relief</h2> The potential proposal for capping <a href="https://www.gov.uk/individual-savings-accounts">ISA</a> contributions and a cap on <a href="https://www.gov.uk/tax-sell-home">private residence relief</a> could include: &nbsp;<ul><li>Lifetime caps on ISAs: implementing a cap on the total value of funds held within an ISA or a limit on contributions. &nbsp;</li><li>Private residence relief limits: Introducing limits on private residence relief from capital gains, and a potential lifetime limit on the gains or a capital gain limit per home. &nbsp;</li></ul>Both suggestions would raise capital, and considering the majority of the country does not have £20,000 to save into an ISA each year, this could be less controversial than other proposals. &nbsp;A cap on private residence relief would be a new tax and therefore be another system for the new government to establish and is not likely to create any short-term benefit.&nbsp; &nbsp;Additionally, this would cause issues for individuals in the process of, or about to sell their homes for somewhere larger, as these changes would mean they would potentially not have enough capital to do so. However, it would be unlikely to affect current homes. &nbsp;It’s likely that this tax would cause some problems for the labour party if it was introduced. &nbsp;<h2>Fuel Duty increase</h2> Over 10 years ago the government pretty much scrapped the ‘fuel duty escalator’ that had been designed to encourage the use of more eco-friendly vehicles or zero CO2 vehicles.&nbsp; &nbsp;In 2022 Rishi Sunak reduced the duty on fuel by 5p, although the impact was small due to inflation at the time. In this budget we could see: &nbsp;<ul><li>Potential for increased fuel duty: As Labour government is recommitted to introducing the ban on the sale of new combustion engine cars by 2030, there are talks of reinstating the fuel duty escalator or a similar regime.&nbsp; There are also talks of benefits in kind taxes on company cars increasing significantly in the run up to 2030. &nbsp;</li></ul>With the inflationary pressures expected to tick up in autumn, an increase in fuel duty would likely have to be pushed back until 2025.&nbsp; If this was put into effect, with the impact of the cost-of-living crisis over the last couple of years, this could prove to be a rather unpopular move. &nbsp;<h2>Property Tax changes</h2> &nbsp;Discussions are currently underway regarding proposed changes to land tax and stamp duty.&nbsp;<ul><li>Changes to stamp duty for overseas buyers: Labour’s election manifesto committed to increasing stamp duty on property charged to overseas nationals buying UK residential property, to help prevent the sale of new builds to overseas buyers. &nbsp;</li><li>A new stamp duty bracket: There is also mention of a new stamp duty threshold for ultra-high valued properties, with higher rates of stamp duty. &nbsp;</li></ul>Raising stamp duty rates for overseas nationals and ultra-high-value property transactions could be viewed favourably by the public, addressing concerns about housing accessibility for UK residents, and could provide a political advantage, whilst generating revenue. &nbsp;<h2>What to expect from the upcoming budget?</h2> While these changes aim to address the fiscal shortfall, the government must balance revenue generation with continuing economic growth and public sentiment. Rachel Reeves faces a complex balancing act and given that this is the first Labour budget in 14 years, there will likely be heightened scrutiny and expectations. &nbsp;Whatever the new Chancellor has in store for her first budget, we’ll be ready to analyse and dissect what any changes may mean for you and your finances.&nbsp;If you have any queries relating to your finances before the budget, or if you’d like to be among the first to receive our analysis of the budget, you can&nbsp;<a href="https://www.aventur.co.uk/contact">get in touch with us</a>.<hr>*Information correct at the time of publishing. This article is provided for information purposes only and should not be taken as individual advice.

large_Autumn Budget 2024.jpg

medium_Autumn Budget 2024.jpg

small_Autumn Budget 2024.jpg

thumbnail_Autumn Budget 2024.jpg

Autumn Budget 2024.jpg

Autumn Budget 2024 Predictions

Navigating the world of pensions and retirement planning can be complex, but it's a crucial part of <a href="https://www.aventur.co.uk/blog/your-guide-to-estate-planning">securing your financial future</a>. &nbsp;Many of our clients ask us about the benefits of making regular pension contributions especially with saving rates being at their highest level for many years.&nbsp; &nbsp;For example, is it a good idea to pay into a Cash ISA offering a guaranteed return of 4% over a pension holding investment funds?&nbsp; &nbsp;While funds can be volatile and may indeed see a loss over the time period of the ISA interest rate offered, a secure 4% return is tempting to many (although it is worth noting of course that pensions can also be invested into cash deposits). &nbsp;And whilst a comprehensive financial plan will usually involve a range of savings, investments and other assets, pensions have some key benefits that are worth examining. &nbsp;Let’s look at examples for both a work-based scheme and your own private pension below, to give you an idea of how your contributions could enhance your pension.&nbsp; &nbsp;*Note that all examples relate to taxpayers in England, Wales or Northern Ireland and refer to defined contribution scheme investment, and figures and information are correct at time of publication. &nbsp;<h2>Private pension contributions and tax relief</h2> One key advantage is that if you make a personal pension contribution within your personal allowance, you’ll receive immediate tax relief at your marginal rate.&nbsp; &nbsp;An example of this would be: &nbsp;For an individual not earning an income, you’ll receive a 20% tax relief payment into your pension based on the first £2,880 you pay in.&nbsp; &nbsp;This means you’ll make a gross investment of £3,600. &nbsp;If you are a basic rate taxpayer, then you’ll receive a tax relief payment of £20 for every £80 you pay in. This would be the equivalent of investing £100 for every £80 from your bank account! &nbsp;An added bonus of this is that claiming the tax relief is normally done for you by your pension provider.&nbsp;If you pay Income Tax above 20%, you can claim even more tax relief using your self-assessment tax return. Here, an individual would be able to claim: &nbsp;<ul><li>20% up to the amount of any income you have paid 40% tax on &nbsp;</li><li>25% up to the amount of any income you have paid 45% tax on &nbsp;</li></ul>You can complete a self-assessment via the&nbsp;<a href="https://www.gov.uk/self-assessment-tax-returns">HMRC self-assessment website</a>, through an accountant or by writing to HMRC to claim if you pay income tax at 40%. &nbsp;Let’s look at the following example of how this would affect contributions: &nbsp;Let’s imagine that ‘Individual A’ earns £60,000 in the 24/25 tax year and pays 40% tax on £9,730 (where the annual allowance for a basic rate taxpayer is £50,270, so the £9,730 is the excess &nbsp;and therefore subject to the 40% tax).&nbsp;&nbsp;They could then put £15,000 into a private pension to automatically get tax relief at source on the full £15,000. &nbsp;‘Individual A’ could then also claim an extra 20% tax relief on the £9,730 (the same amount they paid higher rate tax on) through their Self-Assessment tax return. &nbsp;They would not however, get additional relief on the remaining £5,270 they put into their pension. &nbsp;Overall, this means ‘Individual A’ would have made a total investment of £18,750 at a net cost of £13,054! &nbsp;The tax relief on contributions (amongst others!) means that pensions can be a great way to invest for your future. &nbsp;<h2>Work-based scheme pension contributions&nbsp;</h2> Let’s now consider contributions into a workplace pension scheme. There are many different workplace pension providers including&nbsp;<a href="https://www.nestpensions.org.uk/schemeweb/nest/about-pensions/why-save-with-a-workplace-pension.html">Nest</a>,&nbsp;<a href="https://www.royallondon.com/pensions/workplace-pensions/">Royal London</a> and&nbsp;<a href="https://www.aviva.co.uk/business/workplace-pensions/">Aviva</a>. &nbsp;Auto-enrolment legislation introduced in 2012 means that workers need to manually opt out of their work pension scheme. Since introduction of this legislation,&nbsp;<a href="https://www.gov.uk/government/statistics/workplace-pension-participation-and-savings-trends-2009-to-2023/workplace-pension-participation-and-savings-trends-of-eligible-employees-2009-to-2023#:~:text=The%20workplace%20pension%20participation%20rate,pension%20(up%200.4%20million).">more UK employees than ever are paying into their workplace pension scheme</a>.&nbsp; &nbsp;A workplace pension will certainly help with later life living, especially when the future of the state pension is subject to review. &nbsp;We have already seen the state pension age rise for both men and women, and this is due to rise again between 2026-2028 and further still between 2044-2046.&nbsp; &nbsp;It is also anticipated that retiring early (or at least comfortably!) is unlikely to be sustainable without a good level of personal pension wealth.&nbsp;&nbsp;The long-term thought is that the state pension will never be a means tested benefit but with the age rising to 68 by 2024, it is showing signs that sustainability is going to be difficult with the growing age of the population. &nbsp;When looking at your pension planning, a good place to start is with your workplace scheme.&nbsp; Not only do you receive the tax relief on your own contributions, but your employer will also be paying into the scheme.&nbsp;For someone ready to start their pension journey this is a great way to boost your retirement, as many employers match your contributions up to certain levels. &nbsp;It is true that your future pension income will be taxed at the marginal rate when you retire, and for many individuals this will likely be at the basic rate.&nbsp; &nbsp;But don’t forget that under current rules you are also able to take 25% of your pension tax free.&nbsp; &nbsp;This does still mean that a good portion of your pension will be taxable, but if you are able to save over many years, the tax relief you have received will also form part of your potential growth.&nbsp; &nbsp;Should someone start saving for their pension at their first opportunity, their savings are likely to see over 50 years of investment. And, whilst growth can never be guaranteed, this should, with careful advice, see a secure retirement.&nbsp; &nbsp;It may seem early, but a worthwhile exercise is to calculate what sort of income you need in retirement.&nbsp;&nbsp; &nbsp;<h2>How much will you need to save for retirement?</h2> Begin by assessing your total outgoing and allow for things like holidays, emergencies and your desired lifestyle, as this can help with seeing how much your private pension will need to be. &nbsp; &nbsp;The full state pension is currently £11,502 a year (the full basic state pension is £8,814 per annum), so additional retirement income from a private pension will likely be needed &nbsp;A married couple earning the full state pension with no other income sources would generate almost £2,000 per month.&nbsp; &nbsp;So, saving just £100 per month with even just annual growth of 2% for 50 years would be worth over £100,000 over the long-term, and having a pension fund paying an annuity (an income for life based on the size of your pension pot) or flexibly would mean a more secure retirement. &nbsp;<h2>Potential Pension changes in the 2024 Autumn Budget</h2> At the time of writing, there is a potential for tax relief to change on the pension contributions in the 2024 Autumn budget. Currently, a significant portion of tax relief (estimated at 56%) is at the higher rate. For more on this topic, why not read our <a href="https://www.aventur.co.uk/blog/autumn-budget-2024-predictions">Autumn Budget 2024 predictions</a>. &nbsp;Reducing the relief to a flat 20% would represent a considerable tax saving for the government but would be extremely unpopular amongst savers.&nbsp; &nbsp;It is possible that reduction from the 40% may be announced, so it may be worthwhile considering a lump sum payment before any new legislation is brought in. &nbsp;As discussed, when it comes to your retirement, having a range of investments, savings, property and additional assets is desirable, but it is also clear that contributing into a pension in any capacity should form an important part of your financial planning.&nbsp; &nbsp;If you’re ready to take the next step, why not schedule a consultation with our&nbsp;financial experts to discuss your unique retirement goals and explore the best pension options for you.&nbsp; <a href="https://www.aventur.co.uk/contact">Contact us today</a> so that our team can help you: &nbsp;<ul><li>Assess your current pension situation. &nbsp;</li><li>Identify potential gaps in your retirement plan. &nbsp;</li><li>Develop a personalized savings strategy. &nbsp;</li><li>Maximise tax benefits and optimize your contributions. &nbsp;</li></ul><hr>*Capital at Risk. The value of investments can go down as well as up and you may not get back the full amount you invested.

large_Pension Contribution Guide.jpg

medium_Pension Contribution Guide.jpg

small_Pension Contribution Guide.jpg

thumbnail_Pension Contribution Guide.jpg

Pension Contribution Guide.jpg

Maximising Your Retirement: A Guide to Pension Contributions and Tax Benefits

Caroline Wishart-Young

medium_Wishart-Young, Caroline - Square1.jpg

small_Wishart-Young, Caroline - Square1.jpg

thumbnail_Wishart-Young, Caroline - Square1.jpg

Wishart-Young, Caroline - Square1.jpg

Are you self-employed or a business owner and not sure if your end of year tax planning strategy is any good? &nbsp;We have compiled a list of the main tax planning opportunities for both, which may prove helpful when preparing for the end of the tax year. &nbsp;<h2 style="margin-left:0;">For the Self Employed &nbsp;</h2>As an individual, whether you submit your own tax return or have an accountant who does it for you, planning for the end of tax year is all about making the most of what is available to you. &nbsp;<h2 style="margin-left:0;">Pensions &nbsp;</h2><a href="https://www.ftadviser.com/pensions/2023/10/10/worry-self-employed-are-being-left-behind-as-third-have-no-pension/#:~:text=A%20third%20of%20self%2Demployed,have%20no%20pension%20at%20all">The Financial Times</a> reported last October that ‘a third of self-employed people have no retirement nest egg and are being left behind’. Unlike employed individuals whose employers legally must enrol them in a pension scheme if eligible, self-employed workers do not – which means a missed opportunity when it comes to saving for retirement and tax planning. You can contribute into a pension up to either 100% of your earned income or up to the annual allowance of £60,000, whichever is less. When contributing to a pension personally, you receive ‘relief at source’. This means the pension provider can claim tax relief from the Government at the basic rate of 20% and add it to your pension pot. This may not necessarily reduce your income tax bill at the end of the year, but when you are given what is essentially a ‘bonus’ from HMRC for saving for your retirement, it seems silly not to take it into consideration. If you’re a higher rate or additional rate taxpayer, the additional tax relief can be claimed through your Self-Assessment Tax Return or by contacting HMRC directly. This can also be back dated over four tax years. The up-side to claiming the additional relief? It doesn’t need to go back into the pension! It will either be paid out as a tax rebate, be a reduction in your tax liability, or you’ll see a change in your tax code.<h2 style="margin-left:0;"> Individual Savings Account (ISA)</h2> Whether your preference is a cash ISA, or you’re happy to take a little more risk with a Stocks and Shares ISA, utilising this tax wrapper up to its annual allowance of £20,000 a year is a good way to help save for your impending tax bill in January. With both interest from a cash ISA and income or capital gains from a Stocks and Shares ISA growing free of tax, it is a useful product to consider when tax planning. Contributions can be made in regular monthly amounts or lump sums in both ISA types and there are no withdrawal charges or exit fees either, which means accessing the funds when you need them is straight forward. The only time restraint would be for a Stocks and Shares ISA, is when the provider would need to sell down the funds to make the cash available to withdraw. To top it off you do not need to declare any interest, income or capital gains from an ISA on your tax return! Applying for an ISA is simple, and the majority of providers allow you to do it online, if your preference is a Cash ISA make sure to do your research on the best interest rate available. If you like the sound of a Stocks and Shares ISA it may be worth speaking to a financial adviser if you are not sure about managing the investments yourself.<h2 style="margin-left:0;"> Marriage Allowance</h2> Each person has an annual Personal Allowance, which is currently fixed at £12,570 along with the tax rates until the 5th of April 2028. <a href="https://www.gov.uk/marriage-allowance">The Marriage Allowance</a> lets a person transfer £1,260 of their Personal allowance to a spouse or civil partner, which can reduce their tax by up to £252 in a tax year. For this to be worth doing, the lower earner would normally have to have an income below the Personal Allowance, and it may mean by transferring part of their personal allowance to their spouse/civil partner, that they would now be subject to tax but as a couple you could pay less. This would benefit you if: &nbsp;<ul><li>You’re married or in a civil partnership &nbsp;</li><li>You do not pay income tax or your income is below the Personal Allowance of £12,570. &nbsp;</li><li>Your spouse/partner pays Income Tax at the basic rate.</li></ul> Claims can be made online, and they can be backdated to include any tax year since the 5th of April 2019 that you could have been eligible for Marriage Allowance. Tax bills will be reduced depending on the Personal Allowance rate for the years you would like to be backdated. &nbsp;<h2 style="margin-left:0;">If you're a Business Owner</h2> There are many benefits to being a director of a limited company and being more tax efficient is certainly one of them.<h2 style="margin-left:0;"> Employer Contributions</h2> As a limited company your profits are subject to <a href="https://www.gov.uk/government/publications/rates-and-allowances-corporation-tax/rates-and-allowances-corporation-tax">Corporation Tax</a>, depending on the level of your profits you could be paying 19% for profits less than £50,000 and up to 25% for profits greater than £250,000. There are ways to get relief from Corporation Tax, one of these ways is by <a href="https://www.unbiased.co.uk/discover/tax-business/running-a-business/contributing-to-your-pension-via-a-limited-company-explained">contributing into a pension scheme as an Employer</a>. Not only does it help save for retirement, but it is also a tax efficient way of using the profits from your business since employer contributions are classed as an ‘allowable expense’. Where an individual can contribute either 100% of their earned income or up to the annual allowance of £60,000, whichever is less, as an employer they can contribute the maximum allowance of £60,000 in a tax year even if the directors earned income is less than this. They could also potentially contribute more than this using ‘carry forward’. <a href="https://www.hl.co.uk/pensions/contributions/carry-forward-rule">Carry Forward</a> allows you to fulfil unused pension allowances which have not been used in the last 3 previous tax years including the current tax year, giving a potential pension contribution of £180,000 including tax relief.<h2 style="margin-left:0;"> Managing Income</h2> Another benefit to being a business owner is being able to minimise your tax liability by paying yourself in <a href="https://www.gov.uk/tax-on-dividends">Salary and Dividends</a>. A common strategy among company directors is to pay themselves salary up to their Personal Allowance of £12,570 and then take the rest of their desired income in dividends. There are benefits related to taking a salary which include entitlement to state pension and pension contributions, dividends are not classed as earned income so taking them on their own would not be beneficial to you. Compared to income tax, dividend tax is considerably less, and you also have an annual dividend allowance of £1,000 for the 2023/24 tax year, this reduces to £500 for the 2024/25 tax year.&nbsp;<h3>Income Tax Vs Dividend Tax Rates</h3><figure class="table"><table><tbody><tr><td style="border:1.0pt solid windowtext;padding:0cm 5.4pt;vertical-align:top;width:150.25pt;">&nbsp;</td><td style="border-bottom-style:solid;border-color:windowtext;border-left-style:none;border-right-style:solid;border-top-style:solid;border-width:1.0pt;padding:0cm 5.4pt;vertical-align:top;width:150.25pt;">Income Tax</td><td style="border-bottom-style:solid;border-color:windowtext;border-left-style:none;border-right-style:solid;border-top-style:solid;border-width:1.0pt;padding:0cm 5.4pt;vertical-align:top;width:150.3pt;">Dividend Tax</td></tr><tr><td style="border-bottom-style:solid;border-color:windowtext;border-left-style:solid;border-right-style:solid;border-top-style:none;border-width:1.0pt;padding:0cm 5.4pt;vertical-align:top;width:150.25pt;">Basic Rate</td><td style="border-bottom:1.0pt solid windowtext;border-left-style:none;border-right:1.0pt solid windowtext;border-top-style:none;padding:0cm 5.4pt;vertical-align:top;width:150.25pt;">20%</td><td style="border-bottom:1.0pt solid windowtext;border-left-style:none;border-right:1.0pt solid windowtext;border-top-style:none;padding:0cm 5.4pt;vertical-align:top;width:150.3pt;">8.75%</td></tr><tr><td style="border-bottom-style:solid;border-color:windowtext;border-left-style:solid;border-right-style:solid;border-top-style:none;border-width:1.0pt;padding:0cm 5.4pt;vertical-align:top;width:150.25pt;">Higher Rate</td><td style="border-bottom:1.0pt solid windowtext;border-left-style:none;border-right:1.0pt solid windowtext;border-top-style:none;padding:0cm 5.4pt;vertical-align:top;width:150.25pt;">40%</td><td style="border-bottom:1.0pt solid windowtext;border-left-style:none;border-right:1.0pt solid windowtext;border-top-style:none;padding:0cm 5.4pt;vertical-align:top;width:150.3pt;">33.75%</td></tr><tr><td style="border-bottom-style:solid;border-color:windowtext;border-left-style:solid;border-right-style:solid;border-top-style:none;border-width:1.0pt;padding:0cm 5.4pt;vertical-align:top;width:150.25pt;">Additional Rate</td><td style="border-bottom:1.0pt solid windowtext;border-left-style:none;border-right:1.0pt solid windowtext;border-top-style:none;padding:0cm 5.4pt;vertical-align:top;width:150.25pt;">45%</td><td style="border-bottom:1.0pt solid windowtext;border-left-style:none;border-right:1.0pt solid windowtext;border-top-style:none;padding:0cm 5.4pt;vertical-align:top;width:150.3pt;">39.35%</td></tr></tbody></table></figure>&nbsp; For example, if taking a £30,000 a year income (not taking into consideration National Insurance Contributions), was to be paid purely as salary, the income tax liability would be approximately £3,486. However, if you took £12,570 salary, where no income tax would be payable, and then took the remaining £17,430 as dividends, using your £1,000 dividend allowance would mean the tax liability would be roughly £1,437.63. So achieving a saving of just over £2,000.&nbsp;It is worth noting that there are a few disadvantages to taking part of your income as dividends instead of salary which includes the fact that dividends do not reduce Corporation Tax liability as they are paid out of post-tax profits and dividend income can fluctuate year on year as they are dependent on the company’s profits. It is always best to speak with an accountant or tax adviser to ensure that you are taking income as tax efficiently as possible.<h2> Research &amp; Development&nbsp;</h2> Your company may be eligible for <a href="file:///C:/Users/mcqui/Downloads/•%09https:/www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief">Research &amp; Development (R&amp;D) Tax Reliefs</a> which will help reduce your Corporation Tax liability. To be able to qualify for this relief your company needs to be part of a project where the work being carried out is aimed at making an advance in science or technology and relate to your company’s trade, either your current trade or one that you will be starting based on the results of the Research &amp; Development.&nbsp; It could be that you are developing a new process, product/service or you may be working to improve an existing one. There are two types of R&amp;D relief: &nbsp;<ol><li>Small and medium Sized enterprise (SME) R&amp;D tax relief – aimed at companies with less than 500 staff and a turnover of under €100m or a balance sheet under €86m. &nbsp;</li><li>R&amp;D expenditure credit (RDEC) – Large companies, over 500 staff can claim this relief for working on R&amp;D projects.</li></ol> You can claim either of the above reliefs in your Company Tax Return. However you may need to submit a claim notification form to HMRC in advance of making the claim in your Tax Return, and you must submit an additional information form to support your claim.&nbsp; Information can be found on the Government website about what information you need to submit as well as when, and how to submit. By taking the time to strategise and plan for the end of the tax year, you can reduce both your income and corporation tax bills, build retirement savings in an efficient way, and set money aside for the tax you do have to pay.&nbsp; &nbsp;For help planning your taxes, don't hesitate to<a href="https://www.aventur.co.uk/contact"> get in touch with our team</a>. &nbsp;<hr>*This article is for information only and should not be seen as advice or a recommendation to take action. Note that the value of investments can go down as well as up and you are not guaranteed to get all your capital back.** Aventur is authorised and regulated by the financial conduct authority. &nbsp;The financial conduct authority does not regulate tax planning and some forms of business financial planning.*** Aventur cannot be held responsible for content on 3rd party websites.

medium_End of Tax Yr.jpg

small_End of Tax Yr.jpg

thumbnail_End of Tax Yr.jpg

End of Tax Yr.jpg

How to Prepare for the End of the Tax Year

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>.

medium_Spring Budget 2.jpg

small_Spring Budget 2.jpg

thumbnail_Spring Budget 2.jpg

Spring Budget 2.jpg

Spring Budget 2024 Key Points

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.

Image of grandmother and granddaughter sitting and looking at a smartphone

thumbnail_Estate Planning.jpg

Estate Planning.jpg

Inheritance Tax: What You Need to Know

JOIN THE WAITLIST

Register Free

No commitment

Tax Planning