Written by Merlin Lewis.
The recent budget has brought about significant changes to taxation and other financial rules, and clients need to take note of how these changes affect them. At Humphries Kirk, our clients can trust that we provide up-to-date advice on these matters. Following major announcements like the recent budget, we understand that our clients require timely advice on how any changes will impact them.
- A “return to work” budget. A major feature of the budget is to bring in and retain more members of the workforce and to reduce the number of inactive potential workers. To do this the Chancellor introduced a number of measures:
- Individuals with children of 1 and over will have subsidised childcare.
- Those in the age range 50 to 64 will be encouraged to stay in work or return to it.
- The government will be offering a “midlife MOT” via their digital MOT Jobcentre Plus scheme “to help individuals take stock of their finances and wellbeing to prepare for a more secure retirement”.
- Increased pensions allowances and IHT planning. The government will be increasing the Annual Allowance for pensions from £40K to £60K and will be removing the Lifetime Allowance charge for pensions.
- While the abolition of the lifetime allowance will mean that pensions can provide an unlimited IHT shelter, where someone with a pension dies after the age of 75 their beneficiaries will face Income Tax charges on money they receive at their marginal rates, of up to 45%. In that case, careful consideration will need to be given as to the trade-off between IHT and Income Tax.
- Clients and their advisers should also consider the potential that, should Labour win the next election, they have said that they would re-impose the allowance.
- Longer Working Careers. The changes are likely to create a larger age range of those in work.
- For clients and their advisers, this creates planning opportunities around differing financial profiles for individuals. It may well be that advisers launch their own equivalent to the mid-life MOT offer being promoted by the Government.
- Potential expansion of Agricultural Property Relief. Within the finer print of the budget announcement, the Government stated it will be looking into potential expansion of IHT Agricultural Property Relief (APR)to cover certain types of land managed for environmental benefit.
- This would be in line with the post-Brexit move to adopt environmentally based subsidies to replace the EU Basic Payment scheme. Currently, many farmers will be put off changing agricultural land use for fear of losing APR.
- Change to Charitable tax reliefs. Going forward these (potentially for all the taxes) will be restricted to UK charities.
- Frozen ISA Allowances. Annual ISA and Junior ISA subscriptions will be frozen at the current rates.
- Changes to the tax regime for Trusts. There will be formalisation and extension of the existing Income Tax concession for low-income trusts and estates.
- There will be further changes to make calculations and reporting more straightforward.
- HMRC also intend to make changes to IHT regulations to remove non-tax-paying trusts from reporting requirements.
How we can help
Modern life is complex, and everyone’s situation is different, particularly when it comes to financial arrangements.
Our expert lawyers take the time to understand your circumstances, guide you through what the recent budget changes mean for you and then empower you to make appropriate and legally valid provisions.