HLAS

The current State Pension is £11,502 and is expected to increase to around £12,000 per year for 2025/26. At current annuity rates, it would require over £300,000 to purchase an index-linked annuity starting at £12,000 annually, making it crucial to maximise your State Pension entitlement. To receive the full State Pension, 35 qualifying years are needed, but is it worthwhile to top up voluntary Class 3 National Insurance contributions for any missing years? This is ultimately a financial decision, but the break-even period is relatively short. For employees, it’s around 3 years, and for the self-employed, who can pay Class [...]

Under current pension regulations, many pension schemes allow members to withdraw up to 25% of their pension savings tax-free. However, the Finance Act 2023 capped this tax-free amount at £268,275, unless an individual had secured protection for a higher limit. There are rumours circulating that the tax-free allowance may be reduced further, with a figure of £100,000 being suggested, which has prompted a surge in pension fund withdrawals in recent weeks. It is important to note that anti-avoidance rules restrict how much can be reinvested into a pension fund within a 12-month period. Pension lump sum “recycling” is addressed by [...]

Changes to pension tax relief seems to be top of the list of possible changes in the Budget and could yield more tax revenues than changes to CGT and IHT combined. As recently as 6 April 2023, we saw the abolition of the lifetime allowance charge and a significant increase in the pension annual allowance to £60,000 a year, which Rachel Reeves commented were too generous, so we may see those changes reversed or curtailed. Possible changes to pensions to listen out for include: Limiting pension tax relief for individuals to basic rate or possibly a 30% flat rate; Further [...]

Many investors might be considering realising capital gains on their investments at current rates, in anticipation of a possible increase from 30 October 2024. They may then plan to repurchase those investments after any rate changes to maintain their portfolio balance. However, if the same shares or securities are repurchased within 30 days of the disposal, the shares bought back will be matched with those sold, potentially negating the intended capital gain and the increase in base cost. For instance, if 1,000 shares in A plc were purchased at £2 per share several years ago and sold on 29 October [...]

CGT changes typically come into effect from 6 April, although there have been instances of mid-year adjustments in the past. This potential has prompted many taxpayers to accelerate disposals in order to benefit from the existing rates. For CGT purposes, the disposal date is defined as the date of the unconditional exchange of contracts. It’s also expected that anti-forestalling measures will be introduced to prevent any artificial acceleration of disposal dates. While there is still time to sell listed investments before 30 October, selling other assets such as a business or property often requires more time, unless a buyer has [...]

Many commentators are speculating that the Capital Gains Tax (CGT) rate could be aligned with income tax rates, which would be a return to the system in place when Gordon Brown was Chancellor. Given Rachel Reeves’ admiration for Gordon Brown, it’s possible we could also see the reintroduction of taper relief. There is hope that Business Asset Disposal Relief (BADR), or a similar scheme, will continue to support entrepreneurship and economic growth. Rachel Reeves might even consider bringing back Business Asset Taper, another of Gordon Brown’s policies, which reduced the effective CGT rate to 10% after 10 years of ownership. [...]

The government has announced new measures designed to improve the warmth of homes for renters and lower heating costs. As things currently stand, a private rented home can be rented out if it meets Energy Performance Certificate (EPC) E. Social rented homes have no minimum standard at all. A consultation will shortly be launched on proposals for both private and social rented homes to have to meet EPC C or its equivalent by 2030. Also announced was a new Warm Homes: Local Grant that will help low-income homeowners and private tenants to be able to make necessary energy performance upgrades [...]

If you, or your child, was born between 1 September 2002 and 2 January 2011, there could be a savings account with your or their name on it – literally! More than 670,000 young people, aged 18-22, have yet to claim their Child Trust Fund, with HM Revenue & Customs calculating that the average fund is worth £2,212. That’s a decent chunk of money, so it’s worth checking to see if you’re one of those with unclaimed funds. Let’s look at how you can find out if you or someone in your family are owed this cash, and what steps [...]

The government has announced reforms to the apprenticeship system in England, presenting exciting opportunities for business owners. These changes, aimed at increasing young people's access to apprenticeships, include a new "growth and skills levy" that will replace the existing apprenticeship levy. Here’s what you need to know, and how it could benefit your business. Understanding the new growth and skills levy The new levy is designed to give businesses greater flexibility in hiring and training apprentices. Currently, apprenticeships must last at least 12 months, which may not always suit your business needs. Under the revised system, funding for shorter apprenticeships [...]

In line with the e-invoicing initiative we reported on elsewhere, the Chancellor also outlined broader reforms to modernise HMRC through a Digital Transformation Roadmap, which is expected in Spring 2025. This roadmap will aim to create a “digital-first” tax system, although it will include measures to ensure support for those unable to go fully digital. In addition, James Murray, who is Exchequer Secretary to the Treasury and is responsible for the UK’s tax system, has been appointed as the Chair of the HMRC Board. This in part is to help him oversee how HMRC can ‘close the tax gap’ – [...]