The Nightmare Budget – A Little Overstated
So after months of speculation the much anticipated and dreaded first budget of the new Labour government has been delivered.
There is much to discuss, but our initial thoughts:
Below are the particular areas that directly affect where we advise. Changes to Income Tax, National Insurance & beer duty are sure to be covered elsewhere.
Pensions
After all the speculation the only announcement was that Inherited Pensions will come into the estate for Inheritance Tax purposes. This is from 2027 and the detail will be eagerly awaited by the industry. We will communicate further when this is known and agreed.
There is no change to Pension Commencement Lump Sum (Tax Free Cash).
Tax relief has not been changed.
Capital Gains Tax
Capital Gains Tax had been speculated to be going up significantly. However in the end the lower rate will be raised from 10% to 18%, and the higher rate from 20% to 24%. This will match the level on selling second properties.
The £3,000 annual exempt allowance remains the same.
Inheritance Tax
Apart from the pensions above, the main changes were around Business & Agricultural relief, this effects those of you owning business assets & holding AIM shares. The changes are from 2026 so we will pick this up at your reviews.
The standard allowances (£325,000 Nil Rate Band & £175,000 Residential Nil Rate Band) remain unchanged.
Stamp Duty on Second Properties
If you own a second property, whether as a holiday home, buy to let or a share in a family property, you already have to pay additional stamp duty when purchasing a new property. This will go up to 5% overnight.
We often get asked about adding children to the ownership of the parental home. It is important to understand that this will have a significant impact upon the child when they buy their own property as the part-ownership will expose them to the additional stamp duty.
As I have said above, we will cover any issues that impact you directly at your Annual Review, however if you have any questions please contact your adviser via the normal channels.
Kind Regards
Paul Richardson
Head of Financial Planning
Risk Warnings
So after months of speculation the much anticipated and dreaded first budget of the new Labour government has been delivered.
There is much to discuss, but our initial thoughts:
- The pain was overstated, it could have been much worse
- There is little that needs immediate urgent attention and therefore we will pick up these new rules at review.
- The devil is often in the detail, we will take our time to digest this information when available.
Below are the particular areas that directly affect where we advise. Changes to Income Tax, National Insurance & beer duty are sure to be covered elsewhere.
Pensions
After all the speculation the only announcement was that Inherited Pensions will come into the estate for Inheritance Tax purposes. This is from 2027 and the detail will be eagerly awaited by the industry. We will communicate further when this is known and agreed.
There is no change to Pension Commencement Lump Sum (Tax Free Cash).
Tax relief has not been changed.
Capital Gains Tax
Capital Gains Tax had been speculated to be going up significantly. However in the end the lower rate will be raised from 10% to 18%, and the higher rate from 20% to 24%. This will match the level on selling second properties.
The £3,000 annual exempt allowance remains the same.
Inheritance Tax
Apart from the pensions above, the main changes were around Business & Agricultural relief, this effects those of you owning business assets & holding AIM shares. The changes are from 2026 so we will pick this up at your reviews.
The standard allowances (£325,000 Nil Rate Band & £175,000 Residential Nil Rate Band) remain unchanged.
Stamp Duty on Second Properties
If you own a second property, whether as a holiday home, buy to let or a share in a family property, you already have to pay additional stamp duty when purchasing a new property. This will go up to 5% overnight.
We often get asked about adding children to the ownership of the parental home. It is important to understand that this will have a significant impact upon the child when they buy their own property as the part-ownership will expose them to the additional stamp duty.
As I have said above, we will cover any issues that impact you directly at your Annual Review, however if you have any questions please contact your adviser via the normal channels.
Kind Regards
Paul Richardson
Head of Financial Planning
Risk Warnings
- The value of an investment and the income from it could go down as well as up.
- All investing is subject to risk, including the possible loss of the money you invest.
- Past performance is not a reliable indicator of future results.
- Diversification does not ensure a profit or protect against a loss.
- Please remember that all investments involve some risk. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income
- This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice as at 16th September 2024. You are recommended to seek competent professional advice before taking any action.
