Summary of the 2024 Budget

Pensions

• To be brought into your estate from April 2027. Depending on your personal circumstances this could mean a tax bill of 40% on your pension.

Inheritance tax

• Nil rate band frozen until 2030 – currently £325,000 plus £175,000 if you own a property and are leaving it to direct descendants.

Business property relief (BPR)

• From April 2026 Agricultural relief and BPR are limited to £1m. Thereafter, 50% relief, therefore the rate will be 20% instead of 40%

AIM investments

• From April 2026 get 50% relief for inheritance tax so a 20% rate instead of 40%.

Business asset disposal relief

• Still limited to £1m
• Now 10% rising to 14% in April 2025 and then 18% in April 2026.

Capital gains tax

• Rate increased from 10% to 18% for basic rate taxpayers
• The rate increased from 20% to 24% for high and higher-rate taxpayers
• Residential properties at 18% and 24%
• Allowance remains at £3,000 per annum

Stamp duty

• Additional homes – Increased to 5% (from 3%) on top of the normal rate

Employers NI

• Raised to 15% from 13.8%
• The lower earnings limit for paying employer NI reduced from £9,100 to £5,000
• To help protect smaller employers from the increase in NIC, the amount of the employment allowance will be increased from £5,000 to £10,500 per year from 6 April 2025. Eligible employers can offset the employment allowance against their NIC liability, potentially reducing it to £nil.

VCT and EIS investment

• Reliefs to remain the same.

ISA allowances

• Remain the same until 2030

Finally, the information contained in this article is for information purposes only and does not constitute financial advice. No action should be taken based on this information alone. Anstee & Co is authorised and regulated by the Financial Conduct Authority (FCA).

By Rachel Efetha, Chartered Financial Planner.

What are Enterprise Investment Schemes?

The Enterprise Investment Scheme (EIS) is a UK government initiative designed to encourage investment in small, early-stage companies by offering tax benefits to investors. Here’s a simple explanation of its key benefits:

1. Income Tax Relief: If you invest in an EIS-qualifying company, you can claim 30% income tax relief on your investment. For example, if you invest £10,000, you can get up to £3,000 back as a reduction on your income tax bill. The maximum investment you can claim relief on each tax year is £1 million, or up to £2 million if at least £1 million is invested in knowledge-intensive companies (companies focused on innovation, research, or technology).
2. Capital Gains Tax (CGT) Exemption: If you hold the EIS shares for at least three years and then sell them at a profit, you won’t have to pay any capital gains tax on the profit. This can be a big saving if the company does well and your shares significantly increase in value.
3. Loss Relief: If the company doesn’t do well and you lose money, you can offset your loss against either your income tax or capital gains tax bill, reducing the financial impact of a failed investment. This loss relief helps lower the risk of investing in early-stage companies.
4. Capital Gains Tax Deferral: If you sell an asset (like a property or shares) and make a capital gain, you can defer paying capital gains tax on that profit by investing it in an EIS-qualifying company. You’ll only have to pay the CGT when you sell the EIS shares, and if you still hold them at the time of your death, the CGT can be written off entirely.
5. Inheritance Tax Relief: EIS shares are usually eligible for Business Relief, meaning if you hold them for at least two years, they may be exempt from inheritance tax when passed on to beneficiaries.

Should I invest in an Enterprise Investment Scheme?

These benefits make the EIS a highly attractive option for investors willing to take a risk on smaller, potentially high-growth businesses. It offers a combination of tax reliefs that help both reduce risk and increase returns.

How Anstee & Co. can help you with  Enterprise Investment Schemes.

We are a firm of Independent Financial Advisers (IFAs). This means that the financial advice we provide to you is unbiased. Why not arrange a meeting to see how we can help you? The initial meeting is at our cost and is without obligation. Meetings can be arranged at a time and location that is convenient for you.

Our Head Office is located at:

• Kettering, Northamptonshire

Additionally, our financial advisers live and make use of meeting rooms in:

• Bedford, Bedfordshire
• Market Harborough, Leicestershire
• Northampton, Wellingborough and Thrapston in Northamptonshire.

Our expertise covers all aspects of financial planning including pensions, investments, and mortgages.

If you have any thoughts or comments on this article, “Enterprise Investment Schemes. Should I have one?”, then it would be great to hear your views.

Finally, the information contained in this article is for information purposes only and does not constitute financial advice. No action should be taken based on this information alone. Anstee & Co is authorised and regulated by the Financial Conduct Authority (FCA).”

By Caroline Anstee, Managing Director of Anstee & Co.

The new Labour Government announced the autumn budget on Wednesday the 30th of October 2024.  Since then there has been much speculation and we have seen the cut in the winter fuel payment, now means tested, which was a bit of a shock. The recent vote at the labour conference showed how unpopular this was.

Keir Starmer’s announcement and recent speech warning of a budget we may not be happy with, protecting the workers and not increasing NI or taxes for the workers, has now been confirmed by Rachel Reeves at the labour conference when she said:

‘We will protect workers and not increase income tax, for the basic, high or higher taxpayers or raise NI,  VAT  or Corporation Tax’.

The question is then where will the axe fall?

As advisers, we can only advise on current legislation and it is our job to keep up with any changes and advise accordingly. However, nobody knows the outcome, every budget or new tax year brings changes, keeping us on our toes, however, this feels different.

I thought I would summarise some of the things they could do, I attended a recent conference where Paul Johnson, director of the Institute of Fiscal Studies spoke, he doesn’t know any more than we do, although he has a lot more information to hand so interesting to hear his thoughts.

Capital Gains Tax (CGT)

Capital Gains Tax (CGT) the annual allowance (£3,000) is the lowest it has been for years so there is not much they can do except abolish it altogether. The rate at which capital gains tax is charged could be increased, it is currently 10% for basic rate taxpayers, 20% for high rate taxpayers and 28% on residential additional homes.  They may add the gain to your income, then taxed at your highest rate, although if they did that there should be some sort of indexation (as there was previously).

Inheritance Tax (IHT)

Inheritance Tax (IHT) the allowances haven’t changed for a long time, currently they are £325,000 per person and an additional £175,000 per person if you own your own home and are passing it to children.

They could increase the rate at which IHT is taxed, it is presently 40%.

Placing funds into a trust is one way to protect your assets, although the tax regime is already tough they may make it even worse.  Trusts presently only get half the tax allowances an individual gets.

Pensions could be brought back into a person’s estate (currently outside of your estate).

Pensions

Pensions are one of the most tax-efficient vehicles. No income tax, no CGT and tax relief on contributions. Your pension is also not included in your estate for IHT.

They could change the contribution annual allowance – currently, it is £60,000 per annum per person.

They could change the tax relief on contributions, currently given at your highest level of tax i.e. 20% for basic rate taxpayers and 40% for high-rate taxpayers.

When you die before the age of 75 your pension goes to your beneficiaries (that you have nominated) tax-free, they could tax this?

They may stop carry forward – this is where you can go back to the previous 3 years and use unused allowances.

They could increase the NI paid on pensions by the employer.

At the conference yesterday (25/9) Steve Webb, former pensions minister spoke and said that changing tax relief and tax-free cash is highly unlikely as it will affect the majority of the public sector pensions and therefore politically damaging. He demonstrated how we have a massive pension crisis looming as there is a generation who just don’t have enough in their pension pots. Any major changes will make this worse.

Individual Savings Accounts (ISAs)

Individual Savings Accounts (ISAs) are a tax-efficient savings vehicle, currently limited to £20,000 per year per person. They could change this allowance or cap the amount you can have in total.

All the areas of financial planning above won’t raise funds immediately and in the scheme of things do not raise much of the billions needed, certainly they won’t fill the black hole. There are of course other taxes, such as stamp duty, for example, however, the above are the areas most affecting your long-term financial plans.

Listening to Rachel Reeves at the Labour conference she said:

‘We are going to close loopholes in tax avoidance, tax evasion and non-dom loopholes, recruiting 5000 new HMRC officers. The budget will be for economic growth and ‘tough decisions’ have to be made’

Some tax reform will be inevitable, however, it all lacks clarity and is pure speculation at this point.

What should I be doing now?

Some of the above are unlikely just because of the practicality of it all, however, there are a few things that could be done before the budget or the new tax year, such as :

• Make sure your ISA allowance is used if you have savings.
• consider realising capital gains whilst the rates are the lowest, they have been for some time.
• Talking about options with your pensions, taking the tax-free cash from a vehicle that is very tax efficient may not be the right course of action, but for those nearing the age of 75, it is worth reviewing regardless of the potential changes.
• Make sure your pension contributions are maximised (using carry forward where possible)

It will be a busy time before and after the budget and if you want to discuss any of the above and how it may affect you please speak to your adviser. Just don’t call or expect answers on the 30^th of October!

I stress currently we can only advise on current legislation and like you we have no idea what they are likely to do.

Finally, the information contained in this article is for information purposes only and does not constitute financial advice. No action should be taken based on this information alone. Anstee & Co is authorised and regulated by the Financial Conduct Authority (FCA).”

By Rachel Efetha, Chartered Financial Planner.

The Alternative Investment Market (AIM) is a part of the London Stock Exchange that helps smaller or growing companies raise money by selling shares to investors. It’s designed to be more flexible and less strict than the main stock market, so businesses that might not yet be big enough or established enough for the main exchange can still attract investment.

AIM offers investors a chance to invest in companies with lots of potential, but it can also be riskier because these companies might be less stable or more unpredictable. Many well-known companies started on AIM before growing and moving to the main market.  Some examples are:

• Domino’s Pizza UK: Domino’s started on the AIM in 1999 and grew significantly as it expanded its franchise model. By 2008, it had become large enough to move to the main market of the London Stock Exchange.
• ASOS: The popular online fashion retailer joined the AIM in 2001 when it was still a small company. After experiencing rapid growth, ASOS transitioned to the LSE’s main market in 2018, becoming a major player in online retail.

What are the tax benefits?

Investing in AIM shares can offer several tax benefits for UK investors. Here’s a simple breakdown of the key ones:

1. Inheritance Tax Relief (IHT Relief): AIM shares are often eligible for Business Relief. If you hold AIM shares for at least two years and still own them at the time of death, they may be exempt from inheritance tax. This is a big benefit for those thinking about passing on wealth, as it can potentially save 40% of the value of the shares from inheritance tax.
2. Capital Gains Tax (CGT) Relief: When you sell shares, any profit you make is subject to capital gains tax. However, you can offset gains made on AIM shares with losses from other investments, potentially lowering your tax bill. In addition, AIM shares can qualify for the Annual Exempt Amount, which allows you to make a certain amount of profit each year before paying CGT.
3. No Stamp Duty: When you buy shares on the main market, you usually have to pay stamp duty reserve tax (SDRT) at 0.5%. However, AIM shares are exempt from stamp duty, so you avoid this cost when purchasing AIM shares.

These benefits can make AIM investments more attractive for people who are willing to take on higher risk with the potential for higher returns, while also enjoying significant tax savings.

How Anstee & Co can help you with the Alternative Investment Market.

We are a firm of Independent Financial Advisers (IFA’s). This means that the financial advice we provide to you is unbiased. Why not arrange a meeting to see how we can help you? The initial meeting is at our cost and is without obligation. Meetings can be arranged at a time and location that is convenient for you.

Our Head Office is located at:

• Kettering, Northamptonshire

Additionally, our financial advisers live and make use of meeting rooms in:

• Bedford, Bedfordshire
• Market Harborough, Leicestershire
• Northampton, Wellingborough and Thrapston in Northamptonshire.

Our expertise covers all aspects of financial planning including pensions, investments, and mortgages.

If you have any thoughts or comments on this article, “Is the Alternative Investment Market, for you?”, then it would be great to hear your views.

Finally, the information contained in this article is for information purposes only and does not constitute financial advice. No action should be taken based on this information alone. Anstee & Co is authorised and regulated by the Financial Conduct Authority (FCA).”

A recent survey undertaken by Wesleyan Financial Services highlighted that over three-quarters (78%) of UK adults are still unaware of the new Individual Saving Account (ISA) rule changes that are set to come into effect in April 2024.

The rule changes, announced by the Chancellor in his autumn statement, are designed to simplify the  ISA scheme and encourage more people to invest tax-free.

These changes allow investors to open multiple ISAs of the same type every tax year.

What are the key Isa changes?

Some of the changes the Chancellor made are as follows:

From 6th April 2024, it will be possible to make multiple subscriptions to the same type of ISA in one tax year. The current rule is one ISA of each type, each tax year.

Partial transfers of current tax year ISAs can be made. Currently, the entire subscription must be transferred.

If you hold an existing ISA that received no contribution in the previous tax year, a fresh ISA application is no longer required.

However, in a survey of 2,000 UK adults by Wesleyan, 78% said they did not know about this rule change.

Are people missing out?

The survey also uncovered some misunderstandings about ISAs that could mean that savers are missing out.

70% of those surveyed said they don’t know how different types of ISA work.

Of those who don’t hold ISAs, 45% believe that you need a large sum of money to open an ISA, while 22% said they did not want to lock their money away where they cannot access it. Both are untrue.

ISAs and tax year-end planning

ISAs have always been sought for those who can regularly invest the full annual allowance and so build up substantial tax-free savings. With the Capital Gains Tax annual exempt amount and the Dividend Allowance being reduced next tax year, they are becoming more attractive to those wishing to set aside smaller regular or one-off lump sums.

How Anstee & Co. can help you with your tax planning.

We are a firm of Independent Financial Advisers (IFAs). This means that the advice we offer is unbiased. Our team of financial advisers can help you with your tax planning.

The first “getting to know you” meeting, is at our expense and is without obligation. So, why not arrange a meeting today to see how we can design a financial solution for you?

Our head office is located at-

Kettering, Northamptonshire

Also, our financial advisers live and make use of meeting rooms located at-

• Bedford, Bedfordshire
• Market Harborough, Leicestershire
• Northampton, Wellingborough, Thrapston and Towcester in Northamptonshire.

Additionally, we can meet you at your home or through video conferencing. The choice is yours.

If you have any thoughts or comments on this article, “Are you aware of upcoming ISA changes?”, then it would be great to hear your views.

Finally, the information contained in this article is for information purposes only and does not constitute financial advice. No action should be taken based on this information alone. Anstee & Co is authorised and regulated by the Financial Conduct Authority (FCA).