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Month: March 2024

Make sure your will is up-to-date and you have planned for IHT

Make sure your will is up-to-date and you have planned for IHT

Many of us will die without a will because it is something that we fail to get around to, often because we don’t want to think about our own demise. Around half of UK adults don’t have a will, with a third of those over 55 in this position, according to research from Canada Life. Anyone dying without a will is leaving the State to dictate how their assets are split when they die, and it could even mean the State taking your money. This would mean the people you want to receive the things you leave behind may not receive them.

Your ‘last will and testament’ is essentially your final wish for what happens with your worldly goods when you die. Without a will, there is a specific set of rules by which the State will divide up your estate, In England and Wales, these are:

  • Your married spouse or civil partner – even if you have separated and are yet to divorce – will inherit your whole estate and your personal possessions.
  • If there are any children, grandchildren or great grandchildren, then your spouse or civil partner will inherit:
  • The first £322,000 of the estate.
  • All the personal possessions of the deceased,
  • plus, half the remaining estate.

The rules vary in Scotland, and you can find more information here.

Writing a will is by far the best way to ensure your estate is divided in the way you want. You must keep it updated whenever you have any changes in your life, such as having a child, getting married, divorcing or a change in your net worth. If you are simply living together, your partner will have no legal access to any of your possessions without a will, and would potentially face a big IHT bill.

What do I need to think about when writing my will?

One of the reasons people might be reluctant to write a will is not knowing who they want to leave their possessions to. But the sooner you think about this and make those decisions, the sooner you will be sure that the State will have no look in when it comes to the division of your estate.

You can always update your will once it is created, so you don’t need to think of this as a one-time deal. Over time, you may find that you change your mind about who you want to receive what, and you also will have different assets over time too.

Choosing who gets what when you die isn’t easy. You may need to provide letters to explain your decisions if you think some of them may be contentious. Also, you may have a favourite charity you would like to leave a legacy to, and if this is the case, you should be aware that it will get its share before any of your loved ones, so think carefully about how you do this.

What is the most efficient way to separate my assets?

How you leave your assets and to whom is a very personal thing, and you can speak to your will writer or solicitor about this to make sure you are achieving what you want. There may be people, for example, that you want to ensure don’t receive anything when you die, and this may also need to be spelt out in your will.

You may find that leaving things in percentage terms, rather than monetary values, will also prevent you having to make changes on a more regular basis as your net wealth goes up and down throughout your life. In the case of a charity, this would mean it would only get the percentage you leave to it, and not the entire estate if your net worth had fallen significantly before you died.

For example, let’s say you are worth £650,000 including your property, you have children, and your spouse or civil partner has died previously without using any of their inheritance tax allowance. This would mean your entire estate could be passed without IHT as you can use your deceased spouse’s £325,000 allowance along with your own.

If you had previously been worth much more, say £2m, then you may have left £500,000 to a charity which would be 25% of your assets at that point. But if your estate had fallen to £650,000 when you die, then the charity would take the first £500,000, leaving just £150,000 for the remaining beneficiaries.

If instead you left 25% of your estate to the charity, then at £650,000 the amount it would be entitled to would be £162,500, leaving £487,500 to your other beneficiaries. This is an important consideration, and it might be worth using percentage values for all of your beneficiaries, so any significant change in your net worth will not mean one person or organisation getting much more than you had intended.

Is the Chancellor expected to change IHT in the upcoming Budget?

There have been rumours that the Chancellor will be making changes to IHT in the Budget, but this is something that has often been mooted before a Budget or an Autumn Statement. Yet there have been no significant changes to IHT in recent years. Even the threshold has been frozen at £325,000 bringing more people than ever into the IHT when they die thanks to rising property prices.

We won’t know for sure until Jeremy Hunt delivers the Budget on March 6, but if you don’t have a will, you should look to get one sorted as soon as you can anyway as no-one knows when the worst will happen. It can always be changed later and should be reviewed once a year at least to make sure it is still correct.

We can help you

If you are interested in estate planning to make your legacy as tax efficient as possible, then please get in touch with us and we will be happy to help you.

March 25, 2024

Exporters must make declarations on a new system from March 30

Exporters must make declarations on a new system from March 30

Any trader making export declarations needs to move to a new HMRC system from March 30 this year. The CHIEF system is being fully replaced by the Customs Declaration System, and anyone who has been using the old system will now have to move across.

There has been a transition period from the old to the new system, but it ends on this date. You will need your Government Gateway ID to subscribe to the system, plus:

  • Your EORI number that starts with GB or XI — if you do not have one you can apply for an EORI number when you subscribe — you’ll need to meet the eligibility criteria to register for an XI number.
  • Your Unique Taxpayer Reference (UTR) — find your UTR if you do not know it.
  • The address for your business that we hold on our customs records.
  • Your National Insurance number (if you’re an individual or sole trader).
  • The date you started your business.
  • Your EORI number and Customs Declaration Service accounts will be linked to your Government Gateway user ID. You cannot apply for more than one EORI number using your Government Gateway user ID.

Source: Gov.uk.

What happens once I’ve subscribed to the new system?

Once you have subscribed to the new system, you will either gain access within two hours, if HMRC doesn’t need to make any additional checks, or five days if it does. It is best to give yourself plenty of time in case your access is delayed, so you don’t find yourself needing to move goods but not having access to the right paperwork.

If you have already subscribed to the new system for either imports or exports, you don’t need to sign up again.

Will I always be able to access it?

There might be times when the system isn’t available, either because of maintenance or some other problem. This could create problems if you leave too little time before you need to export or import goods from or to the UK and there is an issue.

To help prevent any problems like this, you can keep an eye on the Customs Declaration Service: service and availability issues page. It will help you avoid any planned maintenance on the site and tell you if there any problems with access. To make life even easier, you can also sign up to receive email notifications about the service availability, enabling you to plan more effectively.

Just sign in with your Gov.uk One login if you have it or sign up for this if you haven’t yet.

We can help you meet your obligations

If you need to get onto the new system for customs declarations and you’re not sure what to do, then please get in touch with us and we can explain what you need to know.

March 18, 2024

UK Export Finance doubles limit to £10m for traders

UK Export Finance doubles limit to £10m for traders

Small businesses looking to access funding to expand their exporting opportunities can now fast-track their applications with UK Export Finance, the Government’s export credit agency, and apply for twice the previous amount. The limit available now is £10m.

The move makes it “easier than ever” to sell into international markets, according to the Government, as the UKEF has now expanded its ‘auto-inclusion’ scheme which offers fast-track access to products such as the General Export Facility.

The payment terms have also increased from two to five years under the scheme, which increases the repayment flexibility available to small businesses too.

How does a business access this funding?

To access this funding, a business would need to speak to a participating bank, but the auto-inclusion removes the need for a manual intervention by UKEF, so the funding should be accessible quickly.

Charles Platts, Chair of ICAEW’s Global Trade Community Advisory Group, says: “The speed at which finance can be accessed is critical to small businesses everywhere that are considering export opportunities. By expanding this facility, UKEF is giving small businesses throughout the UK a major source of quickly accessible finance that will enable them to chase opportunities that they may have otherwise not pursued.”

Tim Reid, CEO at UK Export Finance, said: “We’re proud to celebrate another successful year of supporting UK businesses. In speaking with our customers – and especially with small businesses – it’s clear that ease of accessing finance and flexibility in repayment terms make a big difference for firms wanting to export.”

Let us help you

If you need any help with accessing financing through the UKEF scheme or in any other way, please get in touch and we will be happy to offer you the help and guidance you need.

March 11, 2024

Budget 2024 – Introduction

Budget 2024 – Introduction

Budget 2024

Chancellor Jeremy Hunt delivered his ‘Budget for Long Term Growth’ on Wednesday 6 March 2024. His speech promised ‘more investment, more jobs, better public services and lower taxes’.

Lowering taxes

The Chancellor made further changes to National Insurance contributions (NICs), following the cuts made in the Autumn Statement 2023. The rates for NICs will be cut further for both employees and the self-employed from 6 April 2024.  

There was also a cut in the higher rate of Capital Gains Tax on residential property disposals and the creation of a new ISA allowance to encourage investment in promising UK businesses.

The Chancellor has responded to pressure from business groups by raising the threshold for VAT registration to £90,000 and announcing his intention to extend Full Expensing to leased assets.

Making it possible

The Chancellor made his cuts possible with a series of tax-raising measures. These included a new regime for non-doms, the abolition of the Furnished Holiday Lettings tax regime and Multiple Dwellings Relief, alongside a new duty on vaping and an increase in tobacco duty.

March 7, 2024

Budget 2024 – Personal Tax

Budget 2024 – Personal Tax

Personal Tax

Tax bands and rates

The basic rate of tax is 20%. For 2024/25 the band of income taxable at this rate is £37,700 so that the threshold at which the 40% band applies is £50,270 for those who are entitled to the full personal allowance.

The basic rate band is frozen at £37,700 until April 2028. The National Insurance contributions upper earnings limit and upper profits limit will remain aligned to the higher rate threshold at £50,270 for these tax years as well.

For 2024/25, the point at which individuals pay the additional rate of 45% is £125,140.

The additional rate for non-savings and non-dividend income will apply to taxpayers in England, Wales, and Northern Ireland. The additional rate for savings and dividend income will apply to the whole of the UK.

Scottish residents

The tax on income (other than savings and dividend income) is different for taxpayers who are resident in Scotland from that paid by taxpayers resident elsewhere in the UK. The Scottish income tax rates and bands apply to income such as employment income, self-employed trade profits and property income.

In 2024/25 a new 45% rate will be introduced, making six income tax rates which range between 19% and 48%. Scottish taxpayers are entitled to the same personal allowance as individuals in the rest of the UK.

Welsh residents

Since April 2019, the Welsh Government has had the right to vary the rates of income tax payable by Welsh taxpayers (other than tax on savings and dividend income). The UK government has reduced each of the three rates of income tax paid by Welsh taxpayers by 10 pence. For 2024/25 the Welsh Government has set the Welsh rate of income tax at 10 pence which has been added to the reduced rates. This means the tax payable by Welsh taxpayers is the same as that payable by English and Northern Irish taxpayers.

The personal allowance

The income tax personal allowance is fixed at the current level until April 2028 at £12,570.

There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000. The reduction is £1 for every £2 of income above £100,000. This means that there is no personal allowance where adjusted net income exceeds £125,140.

The government will uprate the married couple’s allowance and blind person’s allowance for 2024/25.

The marriage allowance

The marriage allowance permits certain couples to transfer £1,260 of their personal allowance to their spouse or civil partner.

Comment
The marriage allowance reduces the recipient’s tax bill by up to approximately £250 a year. To benefit from the marriage allowance one spouse or civil partner must normally have no income or income below the personal allowance for the year. Since the marriage allowance was first introduced there are couples who are entitled to claim but have not yet done so. It is possible to claim for all years back to 2019/20 where the entitlement conditions are met. The total tax saving for all years up until 2022/23 could be over £1,000. A claim for 2019/20 will need to be made by 5 April 2024.

Tax on savings income

Savings income is income such as bank and building society interest.

The Savings Allowance applies to savings income and the available allowance in a tax year depends on the individual’s marginal rate of income tax. Broadly, individuals taxed at up to the basic rate of tax have an allowance of £1,000. For higher rate taxpayers the allowance is £500. No allowance is due to additional rate taxpayers.

Savings income within the allowance still counts towards an individual’s basic or higher rate band and so may affect the rate of tax paid on savings above the Savings Allowance.

Some individuals qualify for a 0% starting rate of tax on savings income up to £5,000. However, the rate is not available if taxable non-savings income (broadly earnings, pensions, trading profits and property income, less allocated allowances and reliefs) exceeds £5,000.

Tax on dividends

Currently, the first £1,000 of dividends is chargeable to tax at 0% (the Dividend Allowance). This will be reduced to £500 for 2024/25.

These changes will apply to the whole of the UK.

Dividends received above the allowance are taxed at the following rates for 2024/25:

  • 8.75% for basic rate taxpayers
  • 33.75% for higher rate taxpayers
  • 39.35% for additional rate taxpayers.

The Corporation Tax due on directors’ overdrawn loan accounts is paid at 33.75% and remains unchanged.

Dividends within the allowance still count towards an individual’s basic or higher rate band and so may affect the rate of tax paid on dividends above the Dividend Allowance.

To determine which tax band dividends fall into, dividends are treated as the last type of income to be taxed.

Pension tax limits

A number of changes were made to the tax regime for pensions for 2023/24:

  • The Annual Allowance (AA) is £60,000.
  • Individuals who have ‘threshold income’ for a tax year of greater than £200,000 have their AA for that tax year restricted. It is reduced by £1 for every £2 of ‘adjusted income’ over £260,000, to a minimum AA of £10,000.
  • No Lifetime Allowance (LA) charge.

The AA and threshold and adjusted income levels will remain the same for 2024/25.

As previously announced the LA of £1,073,100 will be abolished from 2024/25. Changes have been made to clarify the taxation of lump sums and lump sum death benefits, and the application of protections, as well as the tax treatment for overseas pensions, transitional arrangements, and reporting requirements.

Individual Savings Accounts

The government is freezing the limits on Individual Savings Accounts (ISAs) (£20,000), Junior Individual Savings Accounts (£9,000), Lifetime Individual Savings Accounts (£4,000 excluding government bonus) and Child Trust Funds (£9,000) for 2024/25.

The government announced that it is looking to introduce the UK ISA.  This will have a new ISA allowance of £5,000 in addition to the existing ISA allowance, and will provide a new tax-free savings opportunity for people to invest in the UK.

High Income Child Benefit Charge

The High Income Child Benefit Charge (HICBC) is a tax charge that applies to higher earners who receive Child Benefit, or whose partner receives it.

The government is increasing the income threshold at which HICBC starts to be charged from £50,000 to £60,000 from April 2024. The rate at which HICBC is charged will be halved from 1% of the Child Benefit payment for every additional £100 above the threshold to 1% for every £200. This means that Child Benefit will not be withdrawn in full until individuals have ‘adjusted net income’ of £80,000 or more.

Comment
The government estimates 485,000 families will gain an average of £1,260 towards the cost of raising their children in 2024/25. 170,000 families will be taken out of paying the tax charge.

In addition, the government plans to administer the HICBC on a household rather than individual basis by April 2026, with a consultation in due course.

Non-UK domiciled individuals

From 6 April 2025, the current remittance basis of taxation for non-UK domiciled individuals will be abolished and replaced with a residence-based regime. Individuals who opt into the new regime will not pay UK tax on any foreign income and gains arising in their first four years of tax residence, provided they have been non-tax resident for the last ten years. Anyone who has been tax resident in the UK for more than four years will pay UK tax on their foreign income and gains.

The government will also introduce the following transitional arrangements for existing non-UK domiciled individuals claiming the remittance basis:

  • an option to rebase the value of capital assets to 5 April 2019
  • a temporary 50% exemption for the taxation of foreign income for the first year of the new regime (2025/26)
  • a two year Temporary Repatriation Facility to bring previously accrued foreign income and gains into the UK at a tax rate of 12%.

The government will also reform Overseas Workday Relief for employment duties carried out overseas.

Inheritance Tax (IHT) is currently a domicile-based system. The government announced the intention to move to a residence-based system, subject to consultation, but no changes to IHT will take effect before 6 April 2025.

March 7, 2024

Budget 2024 – Employment

Budget 2024 – Employment

Employment

National Insurance contributions

The Chancellor has previously announced major changes to the National Insurance contributions (NICs) system.

Employees and NICs

Following the Autumn Statement in 2023 the government cut the main rate of Class 1 employee NICs from 12% to 10% from 6 January 2024. The government has further cut the main rate of Class 1 employee NICs from 10% to 8% from 6 April 2024.

Comment
According to the government, building on changes made at the Autumn Statement the government has cut taxes again for 29 million people with the average worker on £35,400 receiving a cut in 2024/25 of over £900.

The self-employed and NICs

The self-employed generally have to pay two forms of NICs: Class 2 and Class 4.

Firstly, the government will amend Class 2 self-employed NICs from 6 April 2024. This means that, from 6 April 2024:

  • Self-employed people with profits above £6,725 will continue to get access to contributory benefits, including the State Pension, through a National Insurance credit, without paying NICs.
  • Those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension will continue to be able to do so.

Comment
This will mean that a self-employed person who currently pays Class 2 NICs will save at least £192 per year.

Secondly, the government will cut the main rate of Class 4 self-employed NICs from 9% to 6% from 6 April 2024.

Comment
This will benefit around two million individuals, recognising the contribution of the self-employed to the economy and ensuring that work pays for all.According to the government, combined with the removal of the requirement to pay Class 2 NICs, this will save an average self-employed person on £28,000 £650 a year.

Extension of NICs relief for hiring veterans

The government is extending the employer NICs relief for businesses hiring qualifying veterans for a further year from April 2024 until April 2025. This means that employers will continue to pay no employer NICs up to annual earnings of £50,270 for the first year of a qualifying veteran’s employment in a civilian role.

National Living Wage and National Minimum Wage

The government has accepted in full the recommendations of the Low Pay Commission and announced increased rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from 1 April 2024. In addition, from 1 April 2024 the NLW will be extended to 21 and 22 year olds. The rates which will apply from 1 April 2024 are as follows:

NLW18-2016-17Apprentices
From 1 April 2024£11.44£8.60£6.40£6.40

The apprenticeship rate applies to apprentices under 19 or 19 and over in the first year of apprenticeship. The NLW applies to those aged 21 and over.

Comment
The Department for Business and Trade estimates 2.7 million workers will directly benefit from the 2024 National Living Wage increase.

Taxable benefits for company cars

The rates of tax for company cars remain frozen for 2024/25. Future car benefit rates have been announced for 2025/26 to 2027/28:

  • For 2025/26, the rates for emissions under 75gm/km increase by 1%.
  • For 2026/27, the rates for emissions under 75gm/km increase by a further 1%.
  • For 2027/28, the rates for emissions under 75gm/km increase by a further 1%.

The charge for electric cars will rise from 2% to 5% over that period.

For cars with emissions of 75gm/km and above, there will be a 1% rise in 2025/26 only, subject to a maximum of 37%.

From 6 April 2024 the figure used as the basis for calculating the benefit for employees who receive free private fuel from their employers for company cars remains £27,800.

Company vans

For 2024/25 the benefit remains £3,960 per van and the van fuel benefit charge where fuel is provided for private use remains £757. If a van cannot in any circumstances emit CO2 by being driven, the cash equivalent is nil.

March 7, 2024

Budget 2024 – Business

Budget 2024 – Business

Business

Corporation Tax rates

The government has confirmed that the rates of Corporation Tax will remain unchanged, which means that, from April 2024, the rate will stay at 25% for companies with profits over £250,000. The 19% small profits rate will be payable by companies with profits of £50,000 or less. Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective Corporation Tax rate.

Capital allowances

The Full Expensing rules for companies allow a 100% write-off on qualifying expenditure on most plant and machinery (excluding cars) as long as it is unused and not second-hand. The rules were originally designed to be effective for expenditure incurred on or after 1 April 2023 but before 1 April 2026. Similar rules apply to integral features and long life assets at a rate of 50%. The government announced in the Autumn Statement 2023 that both allowances will be made permanent.

The government is to publish draft legislation for consultation to help consider any potential extension to include plant and machinery for leasing.

The Annual Investment Allowance (AIA) is available to both incorporated and unincorporated businesses. It gives a 100% write-off on certain types of plant and machinery up to certain financial limits per 12-month period. The limit remains at £1 million.

Transfer of assets abroad – anti-avoidance legislation

The Transfer of Assets Abroad (ToAA) provisions will be amended so that UK resident individuals cannot bypass the legislation, by using a company to transfer assets offshore in order to avoid tax. Transfers of assets by certain companies will be considered a relevant transfer for the purposes of the legislation. The new measure will apply to income arising to persons abroad on or after 6 April 2024.

Creative Industries

The government has announced additional support for UK independent films already eligible for the Audio-Visual Expenditure Credit (AVEC). The AVEC is currently set as a basic credit of 34% of qualifying expenditure. Companies with qualifying UK independent films with a budget of £15 million or less will be able to claim a new UK Independent Film Tax Credit (IFTC) of 53%. Qualifying expenditure will be capped at 80% of the film’s total core expenditure. Qualifying films will need to commence principal photography on or after 1 April 2024 and claims can be made from 1 April 2025.

Comment
The maximum IFTC claim will be £6,360,000.

Separately, from 1 April 2025, companies with qualifying visual effects costs will be able to claim an increased AVEC of 39%, a 5% increase on the basic credit. The 80% cap will also be removed for qualifying visual effects costs.

For Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Tax Relief, the temporary rates of 40%/45% for non-touring/touring and orchestral productions will be made permanent from 1 April 2025.

Furnished Holiday Lettings

The Furnished Holiday Lettings (FHL) tax regime will be abolished from April 2025. Draft legislation is to be published and will include anti-forestalling measures that will apply from 6 March 2024. The effect of abolishing the rules will be that short-term furnished holiday lets and longer-term residential lets are treated the same for tax purposes and individuals will no longer need to report the two income streams separately.

Research and Development relief

As announced in the Autumn Statement 2023, the existing Research and Development Expenditure Credit (RDEC) and SME schemes will be merged, with expenditure incurred in accounting periods beginning on or after 1 April 2024 being claimed in the merged scheme. The rate under the merged scheme will be set at the current RDEC rate of 20%.

The changes also provide additional relief for loss-making Research and Development (R&D) intensive SMEs through a higher rate of payable tax credit from April 2023, as a feature of the existing SME scheme. Those entitled to this higher rate would, from April 2024, continue to claim under rules similar to the current SME scheme rather than under the new RDEC scheme.

A number of other changes will apply to the new regime from April 2024, including that R&D claimants will no longer be able to nominate a third-party payee for R&D tax credit payments, subject to limited exceptions.

Comment
Further action may be needed to reduce the unacceptably high levels of non-compliance with the R&D rules and HMRC will be publishing a compliance action plan.

Making Tax Digital for income tax

The government has announced the outcome of the review into the impact of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) on small businesses and intends to proceed with implementation from April 2026. The government will also ensure taxpayers who join MTD from 6 April 2024 are subject to the government’s new penalty regime for the late filing of tax returns and late payment of tax.

Business Rates

The small business multiplier will be frozen for another year, while the 75% Retail, Hospitality and Leisure relief will be extended for 2024/25. The standard multiplier will be uprated in line with the Consumer Prices Index for September 2023. These changes will take effect from 1 April 2024 in England.

Freeports and Investment Zones

Both regimes allow businesses in specific locations to benefit from a number of reliefs including Stamp Duty Land Tax relief, enhanced capital allowances, structures and buildings allowances and secondary Class 1 NIC relief for eligible employers.

As announced in the Autumn Statement 2023, the government will extend the window to claim the tax reliefs available in Freeport special tax sites from five to ten years. The extension to the sunset dates will be enacted by secondary legislation and have been confirmed as:

  • 30 September 2031 for special tax sites in respect of English Freeports
  • 30 September 2034 for special tax sites in respect of Scottish Green Freeports and Welsh Freeports.

Other

Other announced changes include:

  • Making the cash basis of accounting the default position for the self-employed from 2024/25, with an alternative to opt for the accruals basis, together with technical changes to the regime.
  • A number of changes to strengthen the Construction Industry Scheme from April 2024.

March 7, 2024

Budget 2024 – Capital Taxes

Budget 2024 – Capital Taxes

Capital taxes

Capital Gains Tax rates

The Capital Gains Tax (CGT) rate remains at 10%, to the extent that any income tax basic rate band is available, and 20% thereafter.

Higher rates apply for certain gains, mainly chargeable gains on residential properties, with the exception of any element that qualifies for Private Residence Relief. These rates are changed from 18% and 28% in 2023/24 to 18% and 24% in 2024/25.

There is still potential to qualify for a 10% rate on gains up to £1 million under Business Asset Disposal Relief and £10 million under Investors’ Relief.

CGT annual exemption

The government has announced that the CGT annual exempt amount will be reduced from £6,000 to £3,000 from 6 April 2024.

Inheritance Tax nil rate bands

Despite much speculation before the Budget, Inheritance Tax (IHT) has not been abolished. The nil rate band has been frozen at £325,000 since 2009 and this will now continue up to 5 April 2028. An additional nil rate band, called the ‘residence nil rate band’ is also frozen at the current £175,000 level until 5 April 2028.

Changes to Agricultural Property Relief and Woodlands Relief

To ensure compatibility with EU law, action was taken many years ago to expand the scope of Agricultural Property Relief (APR) and Woodlands Relief to property located in the European Economic Area. Following Brexit, this measure reverses those changes and also removes APR from property in the Channel Islands and Isle of Man. Broadly, the changes take effect from 6 April 2024.

Environmental land management and ecosystem service markets

The government is undertaking significant reform of agricultural policy and spending in England.

At Budget 2023, the government published a consultation exploring elements of the tax treatment of environmental land management and ecosystem service markets. Following consideration of the responses, the government has decided:

  • to extend the existing scope of APR from 6 April 2025 to land managed under an environmental agreement with, or on behalf of, the UK government, Devolved Administrations, public bodies, local authorities, or approved responsible bodies and
  • not to restrict APR to tenancies of at least eight years.

March 7, 2024

Budget 2024 – Other matters

Budget 2024 – Other matters

other matters

The VAT registration threshold

After many years of having been frozen, the government will increase the VAT registration threshold from £85,000 to £90,000 and the deregistration threshold from £83,000 to £88,000 from 1 April 2024. The government has stated that these new thresholds will be frozen but has not stated for how long.

Stamp Duty Land Tax changes

A number of changes are made to the Stamp Duty Land Tax (SDLT) regime. These include the following:

  • The abolition of Multiple Dwellings Relief, broadly from 1 June 2024 but subject to transitional rules, for purchasers of residential property in England and Northern Ireland.
  • Changes to First-Time Buyer Relief to extend it to individuals buying a new residential lease via a nominee or bare trust for transactions with an effective date (usually the date of completion) on or after 6 March 2024, but subject to transitional rules.
  • Public bodies in England and Northern Ireland will be removed from the scope of the 15% SDLT higher rate charge where the effective date of transaction (usually the date of completion) is on or after 6 March 2024.

Simplification measures

The government has announced a package of measures that supports its ambition to simplify and modernise the tax system, which includes the following:

  • To simplify the process for employees claiming tax relief on their expenses, and for HMRC to automatically process claims, the government is designing a new, online service for employees to claim tax relief on all of their expenses in one place.
  • The government will mandate the reporting and paying of income tax and Class 1A NICs on benefits in kind via payroll software from April 2026.
  • The government will legislate to introduce a route for people to apply for National Insurance Credits for parents and carers for tax years where they have not claimed Child Benefit, to ensure that people do not miss out on their State Pension entitlement.

Other changes

  • The alcohol duty freeze will be extended until February 2025.
  • The temporary 5p cut in fuel duty rates will be extended until March 2025 and the planned inflation increase for 2024/25 will not take place.
  • A new duty on vaping products will be introduced from 1 October 2026. The government will also introduce a one-off tobacco duty increase from the same date.

March 7, 2024

End of tax year planning starts now – use up any allowances

End of tax year planning starts now – use up any allowances

Now is the time to start thinking about your end-of-year tax planning while there is still time to maximise the benefit of any allowances you haven’t used yet this tax year. The end of the current tax year is April 5, 2024, and there are various tax breaks you want to make the most of before that date.

However, there is another date to bear in mind too – March 6, which is when Chancellor Jeremy Hunt will deliver his Budget to the House of Commons. There is some expectation that he will announce tax cuts on this date, which is customary in a General Election year. The question is whether it will be possible with an economy that is currently in recession.

Even so, there are plenty of things you can already do to help yourself legitimately save tax without waiting on a politician’s promise, so read on to find out more.

Maximise your pension contributions

Pensions is one of the most advantageous areas to maximise your tax relief. Most of us can put as much as £60,000 into a pension in the 2023/24 tax year and get tax relief on the contributions. But the actual amount you can put in and receive tax relief on is determined by how much tax you will pay in this tax year. You can’t receive more in tax relief than the tax you have paid in a single tax year.

Anyone who is a 40% or 45% taxpayer may need to reclaim their pension tax relief above 20% – which is the basic rate of income tax relief – directly from HMRC via their self-assessment return. If you have made all of the contributions you can for this tax year, then you can look to add some more to your pension by using up unused allowances from previous tax years.

This is something called Carry Forward. You can go back three years to mop up unused pension tax relief, and you must have also used up all of your allowance in the current tax year before you use Carry Forward. You must also have been a member of a UK pension scheme – not just the State Pension – for each of the previous three years you want to carry forwards.

If you earn more than £260,000, then your annual allowance which qualifies for tax relief will be reduced by £1 for every £2 above this amount you earn. The taper stops at £360,000, giving everyone a minimum of at least £10,000 annual allowance.

To make sure you don’t fall foul of any HMRC rules, you should speak to your accountant before you make your pension contributions to ensure you maximise the benefits and limit any issues.

Use up your Capital Gains Tax and ISA allowances

Each of us has a Capital Gains Tax (CGT) allowance each tax year, which for the 2023/24 tax year is just £6,000 – down from £12,300 in the 2022/23 tax year – and it is expected to fall to £3,000 for the 2024/25 tax year, unless there is a change announced in the March 6 Budget.

This amount can be used to reduce the amount of tax on any investment you may have crystallised a gain on in the relevant tax year. For example, if you invested, say, £100,000 in a fund and you made £6,000 on the investment in this tax year, you could crystallise that return between now and April 5, and you would not pay any CGT on it as it is under the CGT allowance. This is assuming you haven’t crystallised other gains elsewhere.

Remember though, CGT applies to many types of investments, including property investments that are not your own home. So, any buy-to-let property that you sell would also face CGT if you had made a gain above the £6,000 for this tax year.

Any amount of gain over this threshold in a residential property investment that isn’t your home, is taxed at 18% and 28% respectively for basic rate and higher rate taxpayers. For other investments, the rates are 8% and 20%.

To remove the threat of CGT, you can make your investments through an Individual Savings Account (ISA). For this tax year, you have a limit of £20,000 that you can invest through an ISA, and if you haven’t used your full allowance yet, you still have time to top it up before April 5. Using an ISA means your investment is excluded from CGT and Income Tax charges, so there is a real benefit to using as much of your ISA allowance as you can each tax year.

What else should I consider before the end of the tax year?

There are various other things to consider before the end of the tax year, and your accountant is best placed to advise you on your specific financial position. But other things to consider include reclaiming any tax you may have overpaid in this tax year if, for example, you were made redundant or left a job for another reason, such as moving overseas.

A Pay-As-You-Earn (PAYE) tax basis means the amount of tax you are due to pay in a whole year will be split into 12 even payments. If you are employed for the full 12 months, then you will have paid the correct amount of tax.

However, if you are made redundant or leave your job before the 12 months is up, then you will have overpaid tax as you will have not earnt the full amount expected. Any statutory redundancy pay, up to £30,000, will be tax free. But if you have other types of payments as part of your termination pay, such as unpaid wages, holiday pay and so on, then this part may be subject to tax and National Insurance. If you need to reclaim overpaid tax, or you need advice after getting a payout from the company you are made redundant from, your accountant can help.

Contact us

If you are unsure about how to maximise your tax relief or you have questions about a redundancy payment, then please get in touch with us and we would be delighted to help you understand your tax position.

March 4, 2024