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Should you save more into a pension? What the changes to IHT mean for you

Historically, saving into a pension has been seen as a smart investment strategy to reduce your tax liabilities.

Due to pensions being exempt from Inheritance Tax (IHT), they were seen as a viable way of ensuring that you or your family could benefit from them with little risk of being taxed.

In many instances, people would forgo pay rises and instead opt for bigger pension contributions that they could make use of later in life.

However, IHT is changing, and from April 2027, unspent pension pots will be considered part of your estate for IHT.

As this may confuse your tax planning, we are going to examine the impact of these changes and consider what you can do about it.

Why am I now at risk of Inheritance Tax?

The IHT threshold (known as the nil-rate band) is £325,000 per individual, but the threshold increases to £500,000 if you leave your home to a direct descendant, thanks to the additional £175,000 residence nil-rate band.

This allowance can be passed on to your spouse to create a potential £1,000,000 threshold before IHT is paid at a rate of 40 per cent on the estate.

Given that your property is likely to make up a sizeable portion of your wealth, and your assets may also be substantial, the addition of an unspent pension pot could tip your estate over the edge.

This will be especially true if you have been using your pension pot to reap greater financial reward from working while keeping your tax bill low, thanks to the tax benefits of saving into a pension fund from your regular income.

Does this mean I shouldn’t save for a pension?

A pension is still likely to serve as a decent wrapper for paying reduced tax on your earnings compared to receiving funds as a salary.

However, it impacts the considerations you must make regarding your estate as you approach the end of your life.

While your pension might be challenging to move, other assets could be offset as gifts, provided these are given seven years prior to your death.

Any gifts given seven years prior to your death are not considered for IHT, whereas those given closer to your death will be.

Valuing your assets and prioritising gifting the ones with higher value could be a smart way to reduce your overall estate and thus reduce your risk of IHT.

What is the best strategy going forward?

It is worth remembering that these changes do not come into force until April 2027.

Even then, there is little guarantee of what the future might hold and how rules and regulations might change going forward.

Successive Governments may redefine an estate in terms of IHT, so nothing is ever truly set in stone.

What is important is that you get ahead of the changes by considering smart tax planning as soon as possible.

Seeking advice from a trusted professional is the best way to stay ahead of the changes and ensure that your retirement strategy is kept up to date with evolving tax rules.

If you are concerned about how this change to the IHT rules may affect your retirement planning and estate, speak to our team today.

Tax-efficient investing – Are you making the most of the £41.2 billion on offer?

The beginning of the new tax year is a great opportunity to ensure that you are making the most of tax-efficient investments.

In the 2024 to 2025 tax year, it was estimated that £41.2 billion of tax breaks existed for smart investors to utilise.

As this figure was seven per cent higher than the previous year, it is worth unpacking how it came about and considering what benefits may exist in this new tax year.

Individual Saving Accounts

Individual Savings Accounts (ISAs) were a large part of the tax relief that exists for those who are smart with their money.

Knowing how to effectively utilise ISAs means that you can get the most out of your money.

You can invest £20,000 a year in an ISA without it falling into consideration of tax.

If you were to utilise this and invest before 5 April, you can enjoy the benefit of a full tax year with your tax-free growth that can then be utilised either later in the year or in the future as you require it.

Do not forget to invest more at the start of the next year to further optimise the utility of your ISA.

Pension contributions

While pensions may soon become more challenging given the changes to Inheritance Tax, smartly investing in pensions is still an effective way to offset Income Tax and prepare for the future.

Whether by using a salary sacrifice pension scheme or saving into a self-invested personal pension (SIPP), you can prevent yourself from entering higher Income Tax brackets and move the finances into your pension pot instead.

As the access to your pension is still not as culpable for tax as a salary, this remains a smart investment strategy.

Be mindful that your unspent pension pot will be considered part of your estate for Inheritance Tax purposes as of April 2027, exposing your entire inheritance to taxation.

Changes to Capital Gains Tax

Capital Gains Tax (CGT) underwent notable changes to reduce its tax efficiency.

Where once the tax-free threshold was £6,000, it was reduced to £3,000.

While disappointing for those seeking it as a viable way to offset tax payments, the fact remains that some relief is better than none.

Combining CGT relief with other forms of smart investment can be a vital part of a tax-efficient investment strategy.

Venture capital schemes

If you have the capacity, Venture Capital Schemes (VCTs) can be an extremely tax-efficient way to invest.

VCTs offer 30 per cent Income Tax relief on invested amounts up to £200,000, and these can also yield tax-free dividends with the added benefit of there being no CGT on gains.

If your investment budget stretches to it, an Enterprise Investment Scheme (EIS) offers 30 per cent relief on investments up to £1 million.

These can be combined with other forms of relief to provide a network of tax-efficient investment options.

Ultimately, knowing what options are available to you can ensure that your investments remain as tax efficient as possible.

Seeking professional advice is always wise, given the ever-changing economic landscape.

If you want to maximise your money, speak to our team today.

Making the most of work benefits to minimise your tax bill with salary sacrifice

Your hard work deserves to pay off, but after a while, the harder you work and the more you earn, the more you end up paying in tax.

In those situations, it could be worth considering some salary sacrifice options to ensure that you reap the full benefit of the work you do and minimise tax liabilities.

Alongside offsetting Income Tax, salary sacrifice sees you making smaller National Insurance contributions and thus, potentially, having a greater ability to use the money you have earned for your benefit.

What salary sacrifice options are there?

By far the most common form of salary sacrifice comes in the form of pension savings.

Rather than see your wage steadily increase, and thus your Income Tax and National Insurance payments increase too, there is an option to cap your salary and put the extra value into your pension plan.

This money will not be subject to National Insurance considerations and therefore will be of more value than if it were paid to you directly.

The drawbacks of this method are the length of time you must wait before you can access these funds.

If you are planning to retire early or have exciting plans for your twilight years, then this could be a viable investment in the long run.

Professional development

Although this is not universally applicable, some employer-funded training courses can qualify as a salary sacrifice.

These courses would serve to reduce your taxable income while also equipping you with the skills needed to keep growing professionally.

If retirement seems too far off to invest more income into a pension pot, then utilising professional development could be the route to take.

The course will need to be approved by HM Revenue and Customs for this purpose, so be mindful of this caveat before signing up for training courses.

Workplace benefits

Although it is not currently open to new applicants, a childcare voucher scheme did once exist and may return at some point in the future.

Until then, there are schemes to provide employees with bikes or electric vehicles that can qualify as a form of salary sacrifice.

Given that these tend to be valuable commodities, they are certainly avenues to explore, particularly if you are environmentally conscious.

There are always options available to those who want to be smart with their money, and seeking professional advice can aid in this endeavour.

Want to learn how you can make more from your work with the right salary sacrifice scheme? Speak to our team today.

Important tax reporting changes for 2025/26

As is customary for a new tax year, there have been sweeping changes to how the Government handles the reporting and recording of financial information.

This has involved the change to some proposals that have been set for implementation, as well as the introduction of some other measures.

We are examining two of the most notable changes that are likely to impact you in this coming tax year.

Employee hours reporting scrapped

The Government has abandoned its proposal to require the reporting of actual hours worked by employees through payroll.

Originally delayed to April 2026, the plan has now been dropped entirely due to concerns over the implementation cost, which was estimated at nearly £60 million.

This will come as a relief to those who were concerned about the increase in admin time that such a proposition would bring with it.

Monitoring and implementing compliant payroll techniques is already a challenge for many businesses, so it is good that the extra information is no longer being forced upon hard-working business owners.

Business owners are instead being left to manage their payroll information in much the same way as before, but payroll compliance checks are subject to change and seeking professional advice and support is a valuable way to stay ahead of any changes.

Compulsory questions are coming

The question about whether a taxpayer is a director of a close company will also become mandatory on the Self-Assessment return from 2025/26.

As a director, you will need to be prepared with accurate figures, particularly where shareholdings change during the year or where different share classes are involved.

These changes are an indication of a move towards increased transparency and more detailed individual reporting.

This is part of a wider movement by the Government to clamp down on noncompliance and fraud by ensuring that all financial information is consistent and accurate.

To stay ahead of these changes, keeping up-to-date records will be essential, as you do not wish to risk noncompliance.

What does this mean for the future?

Here we have examined a failed proposal and an implemented one to gauge where the Government’s priorities are.

With the global economy struggling, the Government need to ensure that they remain capable of meeting the needs of the country, and they have elected to clamp down on bad actors to facilitate this.

What it is likely to mean for honest businesses is more admin work and a greater need to stay abreast of changes as and when they happen.

Contact our team today to ensure that you remain compliant with the latest tax reporting requirements.

Change to dividend reporting to affect thousands of owner-managed businesses

From 6 April 2025, many directors will need to report dividend income in much more detail in their Self-Assessment tax return.

This change will affect an estimated 900,000 directors across the UK.

HM Revenue & Customs (HMRC) will now require directors to disclose the name and registration number of the company, the highest percentage shareholding held during the tax year, and the amount of dividend income received from that company.

These figures must be listed separately from dividends received from other sources.

At present, directors simply report total dividend income.

HMRC has no visibility of how much comes from their own business versus other investments.

This change will allow HMRC to build a clearer picture of remuneration and target compliance activity more effectively.

How will these changes affect me?

As with many of the changes that are currently being introduced, the goal is to ensure that businesses remain compliant.

You may find yourself at risk of noncompliance if you fail to update how you process information considering these changes.

The most effective way to stay ahead of the new dividend reporting is by updating any payroll or accounting software you currently employ.

If you have not yet taken the leap to utilise technology to get greater control of your finances, now might be the time to do so.

If you use in-house finance teams, make sure they are equipped and ready to implement the changes and that they are educated in ways to advise you of how to proceed with Self-Assessment returns.

For those seeking professional advice, it is wise to do this sooner rather than later.

As the tax year progresses, advisors are likely to become overrun with concerned directors seeking advice at the last minute.

You did not build your business by leaving everything to the last minute, and your tax considerations are no different.

Seek professional advice early to ensure that you can effectively plan for the changes and preserve the operationality of your business.

HMRC are attempting to make the system more transparent and gain greater protection against those with bad intentions.

Need help preparing your self-assessment tax return to account for these changes? Speak to our team today.

Spring Statement 2025

Chancellor Rachel Reeves today delivered her Spring Statement, outlining the Labour Government’s economic priorities and reaffirming a commitment to fiscal discipline and long-term investment.

Billed as the start of a “decade of national renewal,” the Statement acknowledged global uncertainty but marked a clear shift towards stability and responsibility at home.

While less headline-grabbing than last year’s Autumn Budget, the absence of major announcements is telling.

“No further tax changes” may sound reassuring, but it also signals no new relief in sight for businesses and their owners.

Beneath the surface, the Statement includes several important developments worth noting:

“No further tax increases” – and no support for businesses!

Despite stating that “this Labour Government was elected to bring change to our country”, the Chancellor has declined this opportunity to alter tax policy.

When Reeves confirmed there would be “no further tax increases” beyond those introduced in the Autumn Budget, it was met with jeers in the Commons.

While a freeze on tax rises might sound like welcome news for individuals concerned about their personal liabilities, the reality for business owners is more disappointing.

In practice, no tax changes means no new support for businesses already feeling the pressure.

There are no fresh reliefs, no easing of existing burdens, and no incentives to spur investment, innovation, or growth.

Businesses that had hoped for reform to Corporation Tax, cuts to National Insurance, or enhanced allowances for capital expenditure and R&D will find no comfort in this Statement.

At a time when many enterprises are still recovering from rising employment costs, interest rates, and ongoing uncertainty, the absence of tax-based support could dampen confidence.

Stability is welcome – but stagnation is not. For businesses looking for signals of a pro-growth agenda, this silence may speak volumes.

The UK’s economic outlook in “a changing world”

The Chancellor repeatedly referred to “a changing world” in her speech, citing the war in Ukraine as a driving factor (though avoiding comment on President Trump’s tariff-heavy policy).

Due to economic uncertainty, the Labour Party’s priority will be on stability, national investment and defence spending (more on this below).

Despite this, Reeves announced that the OBR has upgraded its GDP growth forecasts for each year from 2026 to 2029, with the economy now expected to be larger by the end of the forecast period than previously predicted in the Autumn Budget.

The specific figures she outlined include GDP growth of:

  • 1.9 per cent in 2026
  • 1.8 per cent in 2027
  • 1.7 per cent in 2028
  • 1.8 per cent in 2029

The hope for many businesses upon hearing this news must be that of optimism.

Economic development could support stronger investment, hiring and growth before the end of the decade.

Therefore, regardless of Reeves’ consistent referrals to economic uncertainty, GDP is expected to outperform previous Budget predictions – a positive takeaway for all.

Labour’s tax evasion crackdown

The Chancellor announced a further crackdown on tax evasion, aiming to increase prosecutions of tax fraud by 20 per cent and take total revenue raised from reducing tax evasion to £7.5 billion.

She emphasised fairness, stating that it is wrong for some to avoid taxes while working people pay their share.

For businesses, stronger enforcement helps level the playing field, ensuring competitors are not gaining an unfair advantage by dodging their obligations.

For individuals, it reinforces trust in the tax system and ensures public services are funded without raising taxes.

The extra revenue could also reduce pressure for future tax increases, supporting broader economic stability.

Changes to MTD for ITSA: Quietly announced, massively important

One of the most significant updates in the wider Spring Statement document (but, interestingly, not included in Reeves’ speech), was the confirmation of the phased rollout of Making Tax Digital for Income Tax Self-Assessment (ITSA).

From April 2026, the scheme will apply to sole traders and landlords earning over £50,000 and for those earning over £30,000 in 2027. Now, this is expanding to those with income above £20,000 by 2028.

This gradual lowering of the threshold means around 900,000 sole traders will be brought into the MTD regime by 2028.

As part of this scheme, HMRC will be cracking down on late payments of both VAT and Self-Assessments.

Previously taxpayers would incur a penalty of two per cent of the tax owed if the outstanding tax was not paid within 15 days and four per cent if the tax was not repaid within 30 days.

Now, taxpayers within the MTD scheme will face a 3 per cent charge on any outstanding tax if it remains unpaid after 15 days, with a further 3 per cent added if the amount is still overdue at 30 days.

In addition, the annualised interest rate applied to late payments will more than double – rising from the current 4 per cent to 10 per cent.

Those who are yet to react to MTD for ITSA due to the small scale of their business operation will now need to act quickly to avoid being caught outside of the scheme in the years to come.

Reeves reminds us of changes made last year

One of the key aspects to note was the reminder of previous tax changes made by the Government in the Autumn Budget.

Whilst Reeves noted the fact that these changes provided a foundation of a stronger economy, it’s worth remembering exactly where this “strength” comes from.

  • An increase in the lower and higher rates of Capital Gains Tax to 18 per cent and 24 per cent respectively.
  • An increased Employers National Insurance rate to 15 per cent from 13.8 per cent and a reduction of the threshold from £9,100 to £5,000.
  • Abolishing the UK’s non-domicile regime and introducing policies to tax non-doms on their worldwide income.
  • An increase in Stamp Duty Land Tax from three per cent to five per cent and a reduction in thresholds for first-time buyers.
  • The introduction of VAT charges to private school fees.
  • Changes to Business Asset Disposal Relief (BADR) that will take effect in the coming years. The current 10 per cent rate will remain until 6 April 2025, after which it will increase to 14 per cent, and then to 18 per cent from 6 April 2026.

Reeves made no attempt to roll back the previous changes – confirming that these increases are still going ahead.

Her Statement should serve as a timely reminder for business owners and individuals to revisit their tax planning strategies.

Just because today’s announcements lacked major surprises does not mean it is time to be complacent.

Minor issues – still noteworthy!

Whilst seemingly unrelated to the broader impact on businesses that this Spring Statement holds, there were minor points raised in Reeves’ announcement that deserve your attention.

For example:

  • Individual households £500 better off: Reeves told the Commons that the OBR now expects real household disposable income to grow at nearly twice the rate forecast last autumn, with households set to be £500 better off on average under this Government. This could lead to increased consumer spending and boost demand for goods and services – which is good for businesses.
  • Labour sticks to housebuilding promise: The Chancellor stated that Labour policies would “lead to housebuilding reaching a 40-year high” which is good news for a construction sector already crumbling under pressure.
  • Taking aim at defence spending: Reeves confirmed a £2.2 billion boost in defence spending, with at least 10 per cent of the equipment budget going towards advanced technologies like drones and AI. The investment will support manufacturing hubs in areas such as Glasgow, Derby, Newport, and Barrow, creating thousands of skilled jobs and new business opportunities.
  • Chancellor insists that inflation targets are achievable: Reeves said inflation, which peaked at 11 per cent under the previous Government, is on track to reach the 2 per cent target by 2027. This should offer greater price stability, helping businesses plan, invest, and manage costs with more confidence.
  • Unexpected freeze to benefit claimants: Reeves confirmed a £4.8 billion cut to welfare, including a 50 per cent reduction and freeze of the Universal Credit health element for new claimants – an unexpected move not signalled last week.
  • ISA reform on the horizon: Though not mentioned in the Chancellor’s speech, the larger document released at the same time hints at potential reforms to Individual Savings Accounts (ISAs) to “get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission.” This could mean a decrease in the tax-free allowance currently offered by these savings vehicles.

While not the headline announcements, these points could still have meaningful implications for both individuals and businesses.

One might see these as hints at broader economic shifts – and opportunities – that are worth keeping an eye on.

The real impact of the Spring Statement

While this Spring Statement may have lacked headline-grabbing reforms, its message was clear: stability first, change later.

For individuals, there are small signs of progress – rising household incomes, a firmer grip on inflation, and continued investment in defence and infrastructure.

For businesses, however, the Statement brings more caution than comfort.

There is no rollback of last year’s tax rises, no fresh reliefs, and no new incentives to drive growth or innovation.

Yet amidst the silence, there are signals – economic forecasts are improving, consumer spending may rise, and targeted investment could support job creation and local economies.

If the Autumn Budget was about making bold moves, the Spring Statement is about holding the line.

Now is the time for business owners and individuals to assess their position and review their tax planning strategies with their accountant.

To read the full Spring Statement released by the Government, please click here.

Preparing for the tax year-end – Five key considerations

As the end of the tax year on 5 April 2025 approaches, now is the perfect time to review your financial position, maximise tax efficiency, and ensure you’re fully prepared for the changes ahead.

Whether you’re a business owner, landlord or managing personal finances, proactive planning can help you reduce tax liabilities and avoid last-minute stress.

Here are five key considerations to help you get ready for the new financial year:

Business Asset Disposal Relief (BADR) – act now to secure a lower tax rate

If you’re planning to sell your business, timing is crucial. While BADR remains in place, tax rates on qualifying gains are increasing:

  • Currently, the tax rate is 10 per cent on the first £1 million of gains.
  • From 6 April 2025, this rises to 14 per cent.
  • By April 2026, it will increase again to 18 per cent.

For business owners selling assets worth £1 million or more, this could mean paying up to £40,000 more in tax after April 2025.

What to do now:

  • If you’re considering selling your business, accelerating the transaction before the tax year-end could save you money.
  • Explore options such as restructuring ownership, transferring shares to a spouse, or selling to an Employee Ownership Trust (EOT) to minimise tax exposure.
  • Speak to an expert to understand how anti-forestalling rules could impact the tax treatment of your sale.

Maximise tax reliefs on Agricultural Property Relief (APR) and Business Property Relief (BPR)

Changes to APR and BPR take effect from April 2026, placing a £1 million cap per individual on 100 per cent tax relief, with 50 per cent relief available on anything above this threshold.

For business owners and farming families, these changes could significantly affect estate planning and inheritance tax (IHT) liabilities.

What to do now:

  • Review how your assets are structured to minimise the potential tax impact.
  • Consider moving assets to family members or restructuring ownership ahead of the changes.
  • Check whether your estate is sufficiently liquid to cover any potential IHT bills and explore gradual asset disposal if necessary.

Get ready for Making Tax Digital (MTD) for Income Tax

By April 2026, sole trader businesses and landlords with qualifying income over £50,000 will need to comply with MTD for Income Tax Self-Assessment (ITSA), and by April 2027, this will extend to those with qualifying income over £30,000.

This means taxpayers must keep digital records and submit tax updates quarterly rather than annually.

What to do now:

  • Ensure your accounting software is MTD-compliant and start keeping digital records now to avoid a rushed transition.
  • Speak to an accountant about what quarterly reporting will mean for your tax payments.
  • If you’re close to the £50,000 threshold, review how your income is structured to determine whether you’ll need to comply.

Prepare for higher tax bills when buying your next home

From 31 March 2025, Stamp Duty Land Tax (SDLT) thresholds will revert to pre-September 2022 levels, increasing tax liabilities for many buyers.

The nil-rate threshold will halve from £250,000 to £125,000, and first-time buyers will see their relief cap drop from £425,000 to £300,000, with the maximum purchase price for relief falling from £625,000 to £500,000.

For buyers of average-priced homes, these changes could mean paying up to £2,500 more in Stamp Duty. Given that property transactions can take 12 to 16 weeks or longer, buyers looking to avoid higher tax bills should act well in advance of the deadline.

The impact will be most significant for first-time buyers, who may find it harder to get onto the property ladder. If you’re considering buying, now may be the time to bring your plans forward to maximise savings before the new rates take effect.

Use up your personal tax allowances before 5 April

The tax year-end is your last chance to maximise allowances and reliefs before they reset.

What to do now:

  • Maximise pension contributions – Contributions up to £60,000 per year qualify for tax relief (subject to earnings and prior years’ allowances).
  • Use your Capital Gains Tax (CGT) exemption – The annual exemption is just £3,000 in 2024/25, so consider selling assets before the tax year-end to make use of it.
  • Claim tax-deductible expenses – Ensure all eligible business expenses are recorded and claimed to reduce taxable profits.
  • Make tax-efficient gifts – Transfers within Inheritance Tax (IHT) allowances (e.g., gifting up to £3,000 per year) can reduce your taxable estate.

Plan now to save later

With significant tax changes on the horizon, now is the time to take action. Planning will help you stay compliant, optimise your tax position, and avoid unexpected costs.

If you’d like tailored advice on any of the above areas, our expert team is here to help. Get in touch today to make the most of the 2024/25 tax year.

Inheritance Tax Planning – Protecting Your Estate

Inheritance Tax (IHT) is a growing concern for families, homeowners, and business owners looking to pass on their wealth efficiently.

With new changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) taking effect in April 2026, and further changes to IHT and unspent pensions in 2027, estate planning is becoming more important. 

However, IHT planning is about more than just APR and BPR – understanding nil-rate bands, gifting rules, and trust structures can help you reduce or even eliminate unnecessary tax liabilities.

How does inheritance tax work?

Currently, IHT is charged at 40 per cent on estates valued above £325,000 (the standard nil-rate band).

However, there are various reliefs and exemptions available to help minimise the tax burden. These include:

Nil-rate bands – Everyone has a £325,000 tax-free allowance, with an additional £175,000 residence nil-rate band (RNRB) if passing on their main home to direct descendants. This means that each individual can pass on up to £500,000 or pass their threshold to their spouse so that couples can leave an inheritance of up to £1 million tax-free. These rates are currently frozen until 2030, so planning is essential as the costs of assets rise.
Gifting rules – Gifts made more than seven years before death are generally exempt from IHT. Gifts out of regular income, such as paying for the cost of private schooling for a grandchild are also exempt. 
Trusts – Trusts can help to control how assets are distributed while potentially reducing IHT liability.
Business and Agricultural Property Reliefs – From April 2026, full relief will be capped at £1 million per individual, with only 50 per cent relief available on excess value.

How to reduce your IHT liability

If your estate could exceed the tax-free thresholds, there are several strategies to mitigate the impact of IHT.

1. Make use of nil-rate bands

  • Married couples and civil partners can pass assets tax-free to each other and transfer any unused nil-rate band to their spouse, potentially shielding up to £1 million from IHT.
  • Ensure your residence nil-rate band is maximised by passing your home to children or grandchildren.

2. Use gifting allowances

  • You can gift £3,000 tax-free each year (£6,000 if no gift was made in the previous tax year).
  • Wedding gifts, small gifts, and regular gifts from excess income can also be exempt.
  • Larger gifts may also be free from IHT if you survive for seven years, as they fall outside your estate for IHT purposes.

3. Consider trusts for wealth protection

  • Trusts allow you to pass assets down generations while keeping control over how they are used.
  • Certain trusts may reduce IHT liability if structured correctly.
  • Trusts can be useful for protecting assets for children or vulnerable beneficiaries as well.

4. Review your estate’s liquidity

  • From April 2026, IHT on assets not covered by APR or BPR will need to be paid in 10 equal instalments.
  • Ensure that your estate has sufficient cash or liquid assets to cover potential tax bills.
  • If necessary, gradual asset disposal may be an option to ease the financial burden on beneficiaries.

5. Update your will and succession plans

  • Having an up-to-date will ensures your assets are distributed as intended while taking advantage of tax-efficient planning.
  • If you own a family business or farm, a structured succession plan can help reduce tax exposure and ensure a smooth transition.

Take action now to protect your estate

With significant changes to IHT on the horizon, now is the ideal time to review your IHT planning strategy.

By managing your estate, you can ensure that more of your wealth goes to your loved ones. If you would like assistance reviewing your estate in light of the changes to IHT, please get in touch.

Capital Gains Tax – What the New Higher Rates Mean for You

If you’re planning to sell investments, business assets, or property, recent changes to Capital Gains Tax (CGT) rates could significantly impact how much tax you owe.

With increases to the main CGT rates, as well as Business Asset Disposal Relief (BADR) and Investors’ Relief, understanding these changes is crucial to ensure you minimise tax liabilities and plan ahead effectively.

What’s changed

New CGT rates apply from 30 October 2024 for most disposals, with further changes from April 2025 and April 2026.

Increases from 30 October 2024:

  • Main CGT rates (for assets other than residential property and carried interest) increase from 10 per cent to 18 per cent (basic rate taxpayers) and from 20 per cent to 24 per cent (higher and additional rate taxpayers).
  • The CGT rate for trustees and personal representatives increases from 20 per cent to 24 per cent.
  • Rates on residential property sales remain unchanged at 18 per cent and 24 per cent.

Increases to Business Asset Disposal Relief (BADR) and Investors’ Relief.

From 6 April 2025, the CGT rate for BADR and Investors’ Relief increases from 10 per cent to 14 per cent. It will then increase further to 18 per cent in April 2026.

Special provisions apply for contracts entered into before 30 October 2024 but completed after that date, as well as for share reorganisations and exchanges where an election is made.

How to reduce your CGT liability

With CGT increasing, tax-efficient planning is more important than ever. Consider these strategies to reduce your liability:

Sell assets before the rate increases

  • If you’re planning to sell investments or business assets, consider doing so before 30 October 2024 to lock in the current lower rates.
  • Business owners may wish to accelerate plans to sell before 6 April 2025 or 6 April 2026.

Make use of tax allowances

  • The CGT annual exemption is just £3,000, so using this before making larger disposals can help reduce tax.
  • Transferring assets between spouses (which is tax-free) can double your allowance.

Consider spreading disposals

  • Selling assets over multiple tax years may help avoid higher tax brackets and maximise allowances.

Use tax-efficient investments

  • Gains made within ISAs and pensions are exempt from CGT, making them a useful shelter for investments.

How we can help manage your CGT liability

With higher CGT rates now in effect and further changes on the horizon, it’s essential to review your investment and business disposal plans.

Acting now could significantly reduce your tax bill, so speak to our team for advice.

Last-minute tax returns: The risks of fines and scams

With the Self Assessment deadline behind us, taxpayers should remain vigilant against late filing penalties and phishing scams.

HM Revenue & Customs (HMRC) has reported a record-breaking number of tax returns submitted before the 31 January deadline, with over 11.5 million people filing on time.

However, for many, this came as a last-minute rush, with nearly 780,000 submissions made on deadline day alone—including 33,000 taxpayers who filed in the final frantic hour between 11 pm and midnight.

The cost of missing the deadline

Despite the high number of timely submissions, 1.1 million taxpayers missed the cut-off and now face automatic fines.

Late filing penalties include:

  • £100 fine for missing the deadline
  • £10 per day after three months (up to £900)
  • 5 per cent of the tax due or £300 (whichever is greater) after six months
  • An additional 5 per cent of the tax due or £300 after 12 months

Separate late payment penalties and interest charges will also apply for unpaid tax bills. With HMRC expected to collect at least £110 million in fines, missing the deadline can quickly become costly.

Beware of tax scams

Every year, fraudsters target taxpayers following the 31 January deadline, exploiting those expecting tax refunds or worried about penalties.

Phishing scams have become increasingly sophisticated, making it crucial to spot the warning signs and protect yourself.

Scammers impersonate HMRC through emails, text messages, or phone calls, often:

  • Promising tax refunds and asking for personal or bank details
  • Demanding immediate payments for unpaid tax bills to avoid legal action
  • Asking for HMRC login credentials to “verify” your details
  • Providing fake links to HMRC websites designed to steal your information

HMRC will never ask for payment details or personal information via email or text.

If you receive a suspicious message, do not respond, click links, or share your details.

Stay safe and informed

Scammers are becoming more convincing, but by staying alert and following best practices, you can protect yourself from phishing scams.

If you’re ever unsure about a tax-related message, consult our team before taking any action.