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At Blue Wealth, we love what we do and work hard throughout the year to help you achieve your financial and life goals.

So, when December rolls around, we’re ready to let our hair down and celebrate our efforts at the team Christmas party.

Gatsby glad rags

Our end-of-year get-together took place on Friday 13 December, at the newly renovated Delta Hotels by Marriott in the heart of Bristol city centre.

The whole Blue Wealth team and partners turned up to enjoy some festive fun.

Our theme for the evening was The Great Gatsby. If you’ve read this classic novel by F. Scott Fitzgerald or seen one of the many screen and stage adaptations, you’ll know that this gripping story was set in the roaring 1920s.

We had great fun dressing up in suits, flapper-style dresses, sequins and glitz!

Delicious food and first-class entertainment

The party began with an excellent three-course meal, including turkey and all the Christmas trimmings.

We then moved on to a spot of gambling (with novelty money) at the casino tables, before singing and dancing the night away to music performed by an outstanding live band – there were some impressive moves on the dancefloor!

It was a brilliant evening and a great opportunity to get the team together to mark the end of another successful year.

Now that January is in full swing, we’re back hard at work and looking forward to developing Blue Wealth in 2025.

Keep your eyes on your email for news of our next social and charity events.

Get in touch

If you’d like to find out more about the Blue Wealth team and learn how we can help you with your financial planning needs, we’d love to hear from you.

Please email hello@bluewealth.co.uk or call us on 0117 332 0230.

Please note

The content of this newsletter is offered only for general informational and educational purposes. It is not offered as, and does not constitute, financial advice.

January is the perfect time to reflect, set new financial goals, and seek out ways to make positive changes.

While it might be easy to identify unhelpful habits you’d like to adjust, understanding the “hidden” emotions that drive these behaviours could be more of a challenge.

Yet, becoming aware of why you behave in certain ways could unlock your potential for positive change – until you know the problem, it may be hard to find a solution.

Indeed, when it comes to financial decision-making, your subconscious mind might play a significant role.

Read on to find out how overcoming these four common psychological biases – unconscious and systematic errors in thinking – could help you make better financial choices in 2025 and beyond.

1. Loss aversion

According to the Nobel prize-winning psychologist and economist Daniel Kahneman, “losses loom larger than gains”.

This “loss aversion” could skew your perception of risk and lead you to make financial decisions based on your emotions, rather than data and logic.

For example, if there is a downturn in the market and your investments fall in value, your knee-jerk reaction might be to sell your assets to avoid or minimise losses. Yet, this essentially turns a paper loss into an actual one, potentially jeopardising your progress towards your long-term goals.

On the other hand, staying calm and holding on to your investments could allow them to bounce back in value if the markets recover.

Loss aversion might also drive you to favour low-risk investments that limit your returns.

Overcoming loss aversion

• Focus on your long-term goals and avoid reacting to short-term fluctuations in the market.
• Make financial decisions based on data and logic rather than your emotions.
• Seek objective advice from a financial planner who can help you balance risk effectively.

2. The endowment effect

This psychological bias could lead you to place a higher value on assets you own, compared to those you don’t.

If you’re emotionally invested in this way, you might find it difficult to sell your assets, even if this might be the most logical financial decision.

The endowment effect often goes hand in hand with loss aversion – you’re less likely to sell something if you feel this would equate to making a loss.

Indeed, in a classic 1990 study by Kahneman and his colleagues, published by Science Direct, participants who were given a mug were reluctant to trade it for an item of similar value. What’s more, the amount they were willing to pay to purchase an item was typically much lower than the amount they were willing to sell it for.

This shows how the endowment effect can act as a powerful psychological bias that could lead you to make irrational valuations of the assets you own.

Overcoming the endowment effect

• Create a solid investment strategy that includes a clear plan of when to buy and sell assets.
• Regularly review and rebalance your investment portfolio with the help of a financial planner.

3. The sunk cost fallacy

You’ve probably heard of the saying, “throwing good money after bad”. This is the simplest way to understand the “sunk cost fallacy”.

If you’ve ever doggedly continued with a financial strategy that isn’t working, because you’ve invested “too much” time, money, and effort to change course, that’s the sunk cost fallacy at work.

For example, you might continue to pour money into maintaining and marketing a rental property, even though you struggle to find regular tenants who can provide a worthwhile income.

While investing for the long term is often a valid strategy, if you’re continually investing in an asset that is underperforming, it’s important to objectively weigh up your options rather than holding tight for emotional reasons.

Overcoming the sunk cost fallacy

• Set clear goals and track the performance of your investments.
• Look forwards rather than backwards – acknowledge the “sunk cost” but base your decisions on your long-term plan rather than how much you’ve invested in the past.

4. Confirmation bias

Confirmation bias refers to the human tendency to seek out information that supports our pre-existing beliefs.

Perhaps you feel that investing is “too risky” or that financial protection is not for you because you think that insurers never pay out. Confirmation bias might draw your attention to news headlines and loved ones’ experiences that seem to validate these beliefs, such as stories about insurance companies that refused to pay out on a seemingly legitimate claim.

Unfortunately, this kind of irrational thinking could leave you stuck repeating the same financial mistakes over and over again.

For example, you might miss out on valuable investment opportunities that could help you progress towards your long-term goals, or fail to take out adequate financial protection, which could provide a valuable safety net.

Overcoming confirmation bias

• Conduct unbiased research from a variety of sources before making any financial decisions.
• Use your trusted financial planner as an objective sounding board.

Get in touch

Becoming more aware of any psychological biases you might have could be a crucial first step towards more informed financial decision-making.

You may not be able to stop yourself from feeling certain emotions. Yet, understanding the reasons behind your financial behaviours could help you put strategies in place to overcome your biases and make data-driven, logical decisions.

If you’d like an objective perspective on your finances and to learn how to make decisions based on data and logic rather than emotions, we can help.

Please email hello@bluewealth.co.uk or call us on 0117 332 0230.

Please note

The content of this newsletter is offered only for general informational and educational purposes. It is not offered as, and does not constitute, financial advice.

Blue Wealth Ltd is not responsible for the accuracy of the information contained within linked sites.

Blue Wealth Ltd is an appointed representative of Best Practice IFA Group Ltd, which is authorised and regulated by the Financial Conduct Authority.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

Approved by Best Practice IFA Group 20/01/25

A leak of offshore information on 3 October 2021 claimed to identify the secret deals and hidden assets of some of the world’s richest and most powerful people. My cynicism tells me that it won’t be the super wealthy that face the pain of tax authorities but instead the moderately wealthy businessman that thought they’d save some tax and lock away some family wealth.

While the Pandora Papers headlines 35 world leaders (including current and former presidents, prime ministers and heads of state), I struggle to see Tony Blair being caught for tax avoidance or evasion (after all the High Court did not favour prosecution for the war based on non-existent weapons of mass destruction).

The world economy is managed by unfairly exploiting the “average” person

The Pandora Papers’ 300 other public officials including ministers, judges, mayors and military generals may help prove my theory that the world economy is managed by unfairly exploiting the ‘average’ person in favour of personal financial benefit.

I do wonder whether the world’s politicians hold meetings to decide to have a pandemic or a war to make markets crash so they can invest at a low point and reap the upturn. Obviously acting in this manner would be to use the “average” citizen as a mere pawn in their pursuit of higher wealth, which would be well, unthinkable.

If I survive the potentially numerous assassination attacks (assuming my conspiracy theories are correct), this could be the start of my political career. I am mere tax adviser who has over two decades experience handling suspected serious fraud investigations for the benefit of those who are misfortunate not to be “powerful” enough to avoid the clutches of HMRC.

HMRC are blanket-targeting UK tax residents holding offshore assets

The Pandora Papers claim that some 11.9 million files from companies hired by wealthy clients to create offshore structures and trusts in tax havens have escaped to the hands of international journalists.

While those journalists will concentrate on donations to the conservative party and Mr Blair’s (Labour) offshore structure, HMRC in possession of information through exchange agreements are blanket-targeting UK tax residents holding offshore assets.

There is something quite interesting searching the ICIJ offshore leaks database. For example, on the second page of the database for the Pandora Papers, I found a family settlement administered by a trust company in Jersey. The settlement carried a very “British” name. I then found a number of UK incorporated companies with the same registered office in Jersey. I found a PLC registered at the same address. I then realised I knew the principal of the trust company!

I found companies with unusually funny names and I found a daughter of a wealthy Brazilian family and her UK address in Kensington owned by an offshore company. It looked like the property has lending against it from another tax haven. Since 2016, the territorial scope of tax on UK property has been the UK. Having looked at the family, I doubt they needed to borrow to buy the property so why leverage unless to reduce taxable income?

The property would no doubt be within the annual tax on enveloped dwellings (Kensington houses are generally worth more than £0.5m). I am inquisitive. Understanding why people use offshore structures or hold offshore assets is important when applying the anti-avoidance legislation intended to deter their use.

It’s thought that more than 138,000 properties in the UK are held in offshore structures

HMRC already in possession of information, have continually for the past half a decade sent “nudge letters”. The letters inform the recipient merely that HMRC are aware they have “offshore assets, income and gains” and gently invite them to make sure their tax affairs are correct.

It is reported that 177,000 nudge letters have been sent. This may seem a lot but it is not.

The Guardian believes there are more than 138,000 properties in the UK held by offshore structures. HMRC estimate that 1 in 10 people have offshore interests (that’s over six million).

HMRC employs around 60,000 people. HMRC is currently recruiting for 64 positions. Herein lies an issue.

Even if every HMRC employee were full time and working cases, of which they work between 15 and 20 at any one time, HMRC do not have the resources to make enquiries into all UK residents with offshore income or assets. Fortunately, HMRC’s Connect database will risk profile those for enquiry and those for nudge letters.

Those receiving enquiry letters are likely to be higher risks than those simply sent a nudge letter.

Ahead of an enquiry being opened, the HMRC officer is likely to have done a lot of research. Those receiving nudge letters are likely to have simply been identified from an exchange of information with another tax authority.

Both need to be considered seriously.

If there is an omission from a tax return, the offshore criminal offence could kick in resulting in criminal prosecution. Aside of the risk of prosecution the penalties that can apply to tax arising from offshore income or gains can be as high as 200% (of the potential lost revenue).

It would be prudent for a person holding legal or beneficial ownership in offshore assets or a structure to seek independent professional advice. Even if a nudge letter hasn’t been received, it would be wise to have a second opinion.

Legislation and case law applying to the anti-avoidance legislation used to attack those with offshore income and gains is among the most complicated. It is not an area a normal accountant, solicitor or tax adviser is familiar with and the good news is that because it’s complicated, it is rarely black and white. There may be many options for mitigating potential tax liabilities.

This is a guest post from Edge Tax, originally posted on 15 June 2023.

Humans are hard-wired to make poor financial decisions. It’s just in our DNA.

Financial wellbeing is a broad topic, covering all aspects of the relationship between money and our long-term happiness. It covers a wide variety of subjects, including how to manage money better, and how to use money to generate wellbeing.

In some ways, financial wellbeing is about getting out of the bad habits we have acquired by linking money with success.

If you want to improve how you make financial decisions, this guide covers six steps to take:

1. Understanding why you are bad with money
2. Understand the sources of wellbeing
3. Identify your objectives
4. Don’t be a financial wellbeing junkie
5. Connect with your future self
6. How to give.

Download your copy of “Financial wellbeing: 6 ways to help you make better financial decisions” to learn more.

If you have any questions about your financial plan and how to improve your wellbeing, please contact us.

Investing for your children or grandchildren is one of the best gifts you can give to the young people in your life. Start saving early enough and you could help them on their way to a £1 million fortune.

Even if your children or grandchildren are already approaching adulthood, there’s still time for them to become a pension millionaire.

A recent report published in FT Adviser has revealed that with steady and consistent investment, thanks to compounding, an 18-year-old could save £1 million by age 68 (the likely State Retirement Age by the time a child today reaches the retirement milestone).

To achieve this goal, they would need to save £1.71 a day into their pension until they reach 68. This equates to 50 years of around:

• £12 a week
• £52 a month
• £624 a year

The calculations are based on an assumed high growth rate of 10%, the long-term average market return over the past 100 years.

Even taking a more conservative 5% growth rate, an 18-year-old can still retire with a comfortable pension pot (£811,697) if they only save £10 a day, or £3,650 a year.

And even if those claiming the world is in a long “low growth phase” are right, the effects of compounding over time still mean you don’t need to save hundreds of pounds a week to achieve millionaire status.

We recently wrote about investing for your grandchildren and, while you won’t quite reach a million in 18 years, you can make significant progress by investing in a pension or Junior ISA (JISA) from when a child is born.

Investing through a JISA from birth

If you saved the maximum allowable amount (currently £9,000 a year) into a JISA for your child or grandchild from when they are born, the JISA could be worth £450,422 by the time they turn 18.

Again, this calculation is based on an assumed growth rate of 10%.

The money will be free of both Income Tax and Capital Gains Tax when they withdraw money from their JISA account, which they can do from age 18. Alternatively they can transfer the JISA to an adult ISA account and continue saving, and benefiting from more and more compound interest.

Paying into a child’s pension

Even if your child is a non-taxpayer, they benefit from tax relief on contributions. If you invested £2,880 (the current maximum contribution eligible for tax relief) into a child’s pension from when they are born, the pension fund could be worth £180,167 by the time they are 18.

Your annual contribution of £2,880 will be topped up automatically by the government, which adds 20% to make the total invested £3,600 each year.

The above calculation is based on the full invested amount of £3,600 every year, growing at an assumed rate of 10%.

This gives them a great head start on reaching pension millionaire status by the time they retire.

“Compound interest is the eighth wonder of the world.”

When asked what mankind’s greatest invention was, Albert Einstein replied: “Compound interest.”

He’s also quoted as saying, “Compound interest is the eighth wonder of the world. He who understands it earns it… he who doesn’t… pays it.”

Perhaps the most important principles behind wealth creation and long-term investing, for those who are on the right side of it, compound interest is responsible for much of the potential gains behind every long-term investment strategy.

Compound interest is relatively simple to understand

The simplest way to begin is to understand compound interest is that it is interest earning interest.

For example, say you saved £100 in the last year. During that time, you may have earned about £2 in interest. If you keep the money in the bank for another year, you’ll earn interest on £102. So, if you earn the same 2% interest the following year, your savings will be worth £104.04.

While the money isn’t much in this example, extrapolate the concept over a long period, and regular saving has the potential to become a sizeable amount of money.

3 ways you can benefit from compound interest

Once you understand the value of compound interest, you can appreciate the benefits it can bring:

1. Regardless of what you’re saving for, the amount that you save, or your financial knowledge, everyone can earn compound interest on any type of investment.
2. If you are saving money, compound interest is hugely beneficial. However, if you are borrowing, compound interest can wreak havoc on your finances, which is why managing debt is so important in financial planning.
3. Allow your money to compound over the long term, and it will eventually grow at a much faster rate.

Stay on the right side of compound interest and let it work for you

So long as you have compound interest working for you, and not against you as unmanaged debt, Einstein was almost certainly right when he declared it one of the world’s greatest inventions.

By saving for your children or grandchildren when they are young, you will see the benefits of compounding within a few years of consistent saving.

As with compound interest, the effect of each good financial planning decision builds over time. Every cost and tax saving that you make builds more benefit for you and your family in future years.

Investments left to grow will continue to benefit from further compounding for every year that the money remains invested.

If you want to find out more about how you can help the children in your life secure more financial freedom when they reach adulthood, we can help.

Please email us at hello@bluewealth.co.uk or call us on 0117 3320230 to discuss how you can best harness compound growth and save for yours, or your children’s futures.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

Levels and bases of, and relief from, taxation are subject to change.

Since Pension Freedoms were introduced in 2015, retirees have had more choice when they access their pension. However, it also means you have more responsibility for generating an income later in life and it’s important to understand what your options are.

Our latest guide explains the basics you need to know, including:

• Why it’s important to have a retirement plan in place
• Your different options, such as buying an annuity or taking a flexible income
• The pros and cons of the different options available to you.

Download “Your retirement choices: how to generate an income later in life” and start planning for your retirement.

It’s never too soon to start thinking about retirement. The decisions you make when accessing your pension for the first time can have an impact on the rest of your life. Setting out a plan now can make sure you stay on track, whether the milestone is just around the corner or decades away.

Talking about homes and property values is something of a pastime in the UK. Property is probably among one of the largest assets we own, so it’s not surprising that we want the value to go up.

While property prices have soared in recent years, investing in your home could push up its value even more. Whether you like to take on projects yourself or hire a professional, our latest guide explains ten things you could do to boost the value of your home, including:

• Creating extra living space by converting the loft
• Updating your bathroom
• Showing your garden some love
• Converting a room into a home office.

Download “10 things that could increase the value of your property” and discover how to boost the value of your home.

After a year of lockdown measures, our gardens and outdoor spaces have become far more important. In fact, more than half of people say they get a good deal of pleasure from their garden. With spring arriving, now is the perfect time to invest in yours.

Our latest guide aims to help you get the most out of your garden, whether you love entertaining outdoors, want a space to relax, or even grow your own vegetables. Did you know almost four in ten people already grow some of their own food?

Gardening doesn’t just provide you with a beautiful extension to your home, it can help you remain active and improve wellbeing too. Whether you’re a beginner, or a budding Alan Titchmarsh, you should find something in the guide to help get the most out of your garden this summer and beyond.

Download 10 ways to make the most of your garden in 2021 to read more.

We hope you find some useful tips and inspiration for your garden.

Late last year, the government announced that a range of documents and consultations on future tax policies would be released after the Budget.

Dubbed “tax day”, these announcements came later than usual this year to allow for greater scrutiny after the significant number of changes Rishi Sunak announced in his Budget.

Many experts speculated that savers would see changes to pensions, Capital Gains Tax, and Inheritance Tax relief, with reforms designed to help the government increase its tax take to pay for pandemic support.

However, there’s great news for savers as most of the anticipated reforms were ignored. Here’s what “tax day” means for you.

No change to pension tax relief

One of the most hotly anticipated reforms was to pension tax relief. Many had expected the government to cut higher- and additional-rate tax relief on pensions, perhaps to the basic rate of tax or to a fixed level of 25% or 30%.

However, pension tax relief has escaped reform – at least for the time being.

This means that, if you’re a higher- or additional-rate taxpayer, you can continue to claim additional tax relief on your pension contributions through your self-assessment tax return.

The “tax day” documents also seem to ignore the issue of low-paid workers missing out on pension tax relief because of the “net pay” system.

Former pensions minister, Steve Webb, says: “In a blizzard of Treasury documents on tax, it is pretty shocking that they have failed to address a longstanding tax injustice affecting around 1.5 million lower paid workers. The Conservative manifesto promised to tackle this issue, whereby large numbers of workers miss out on tax relief through no fault of their own.”

The various consultations published only touch on pensions in a technical capacity. Rather than reforming tax relief, the Treasury has instead focused on technical updates on “scheme pays” facilities for public service schemes and the tax treatment of defined benefit (DB) superfunds.

A reduction in paperwork if you’re dealing with Inheritance Tax

As part of the government’s aim to build “a trusted, modern tax administration system”, the Treasury has adopted a series of recommendations by the Office of Tax Simplification when it comes to the reporting of Inheritance Tax.

Reporting regulations will be simplified later this year so that, from 1 January 2022, more than 90% of non-taxpaying estates each year will no longer have to complete Inheritance Tax forms for deaths when probate or confirmation is required. You’ll also be able to provide an Inheritance Tax return without a physical signature.

Apart from these admin changes, there were no other reforms to Inheritance Tax. The seven-year gift rule remains, as do the nil-rate band at £325,000 and residence nil-rate band at £175,000. The chancellor recently froze these thresholds until 2026.

Capital Gains Tax rates and exemptions remain

Ahead of “tax day” there was also plenty of speculation that the government would seek to reform Capital Gains Tax (CGT). Many expected the annual exemption to be cut, or for the rates of CGT to be aligned with Income Tax rates.

However, CGT remains untouched, and so the present annual exemption of £12,300 applies. This exemption allows you to make gains of up to £12,300 in a tax year before you pay any CGT – although do remember that the chancellor froze this exemption at the present level until 2026 in his recent Budget.

Despite a 2020 report from the Office for Tax Simplification (OTS) saying that CGT intake could be doubled to £14 billion if it was brought in line with Income Tax, CGT rates also remain unchanged:

• Basic-rate taxpayers – 10% on gains above the exemption (18% on residential property)
• Higher- and additional-rate taxpayers – 20% on gains above the exemption (28% on residential property).

Again, the absence of reform is good news if you’re thinking of disposing of an asset and making a gain as neither the exemption nor the rates of tax have changed.

Other minor reforms announced on “tax day”

Alongside a range of highly technical reforms and consultations concerning VAT and other taxes, other measures announced include:

• The government is publishing a consultation on raising standards in the tax advice market. This will seek views on the definition of tax advice and a requirement to make professional indemnity insurance compulsory for all tax advisers. The aim is to improve tax advice and providing taxpayers with better access to redress where they have received bad advice.
• The government intends to legislate later this year to extend “Making Tax Digital” (MTD) to Income Tax Self-Assessment from April 2023.
• There will be a consultation to consider how Air Passenger Duty (APD) could support regional connectivity, alongside the commitment to reach net-zero emissions by 2050. This consultation will seek views on the government’s initial position that the effective rate of APD on domestic flights should be reduced alongside a potential increase to the number of distance bands in order to align the tax more closely with the government’s environmental objectives.
• An announcement that the government will legislate to tighten tax rules for second property owners meaning they can only register for business rates if their properties are genuine holiday lets.

Get in touch

If you want to know more about what the “tax day” announcements mean for you, or want to chat to a professional about mitigating your tax liability, please get in touch.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation which is subject to change.

A year ago, Rishi Sunak delivered his first Budget just as the pandemic began to take hold. While his £30 billion package sounded significant, it’s a sum that has paled into insignificance over the last 12 months as the chancellor has spent £280 billion shoring up the UK economy.

As the chancellor acknowledged in his speech: “The damage coronavirus has done to our economy has been acute”.

So, who are the winners and losers of the 2021 Budget?

Winners

Retail, leisure, and hospitality businesses

It’s been a tough year for many sectors, and retail, leisure, and hospitality businesses have been particularly hard hit.

The chancellor announced £5 billion in government grants to businesses in these sectors. Non-essential retail businesses will receive grants of up to £6,000 per premises, while hospitality and leisure businesses will receive grants of up to £18,000.

Sunak also confirmed an extension to the temporary 100% business rates relief for hospitality, retail, and leisure until the end of June. He will then discount business rates by two-thirds, up to a value of £2 million for closed businesses, with a lower cap for those who have been able to stay open.

The chancellor also extended the temporary VAT reduction in these sectors from 20% to 5% until 30 September. There will then be an interim 12.5% VAT rate until April 2021.

Alcohol duties were frozen for the second year in a row.

Businesses with staff on furlough

In a pre-Budget statement, Sunak summed up his Budget: “We’re using the full measure of our fiscal firepower to protect the jobs and livelihoods of the British people.”

Sunak most clearly demonstrated this commitment by announcing the government will extend the furlough scheme until the end of September 2021 – longer than businesses expected.

The government will cover the wages for workers who have been put on leave due to the pandemic (up to a maximum of £2,500 a month) at the following rates:

• 80% until the end of June 2021
• 70% in July 2021
• 60% in August and September 2021

Employers will have to pay the difference to 80% – so 10% of wages in July and 20% in August and September.

This is a major commitment by the Treasury as the scheme costs around £5 billion each month.

Self-employed workers (including the recently self-employed)

The fourth Self-Employed Income Support Scheme (SEISS) grant for February, March, and April 2021 will cover 80% of monthly profits up to a maximum of £2,500 a month.

People who became self-employed in the 2019/20 tax year, and have filed a 2019/20 tax return, will also be eligible for the fourth and fifth grants, helping an additional 600,000 workers.

A fifth grant, covering May, June and July 2021 will also be available.

• For self-employed workers whose turnover has fallen by 30% or more, the grant will continue to pay 80% of monthly profits up to £2,500 a month.
• For self-employed workers whose turnover has fallen by less than 30%, the grant will pay 30% of monthly profits up to £2,500 a month.

Homebuyers

As expected, the chancellor announced a three-month extension to the Stamp Duty holiday. This tax break will now finish at the end of June, at a cost of about £1 billion to the Exchequer.

The Stamp Duty nil-rate band will then be increased from £125,000 to £250,000 until the end of September 2021.

Sunak also relaunched the Help-to-Buy scheme to bring back 95% mortgages, which are mainly used by first-time buyers and have been in short supply due to the pandemic.

Here, the Treasury will offer lenders a guarantee covering 95% of property value, up to £600,000. This will encourage banks and building societies to lend to first-time buyers and current homeowners.

Sunak said: “By giving lenders the option of a government guarantee on 95% mortgages, many more products will become available, helping people to achieve their dream and get on the housing ladder.”

Lenders including HSBC, Lloyds, and Halifax will offer these deals from April 2021 onwards.

People claiming Universal Credit

The government have extended the temporary £20 per week uplift in Universal Credit benefits until the end of September 2021. This will be a one-off payment of £500.

The National Living Wage will rise to £8.91 from April 2021.

Businesses looking to invest

After announcing a hike in business tax rates (see below), the chancellor announced what he called the “biggest business tax cut in modern British history”.

A new “Super Deduction” will come into force for two years. This means that, when companies invest, they can reduce their tax bill by 130% of the cost of the investment.

Sunak gave the example of a firm currently spending £10 million on equipment. At present they benefit from a £2.6 million tax reduction but, under the Super Deduction they would get a tax break worth £13 million.

The Office for Budget Responsibility say it will boost business investment by 10%.

Drivers

The chancellor cancelled the planned increase in fuel duty.

People living in the East Midlands, Liverpool, Plymouth, and other freeport locations

Goods that arrive at freeports from abroad aren’t subject to the tax charges that are normally paid to the government. The tariffs are only payable when the goods leave the freeport and are moved somewhere else in the UK.

To help regenerate deprived areas, Sunak announced the creation of eight new freeports: East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames, and Teesside.

Losers

Medium-sized and large businesses

The first step to repairing the public finances came in the form of a Corporation Tax rise which will come into force in April 2023.

From April 2023, the Corporation Tax rate will rise to 25%. Despite a significant six-point increase in the rate, the chancellor argued that the UK will still boast lower Corporation Tax rates than the likes of Germany, Japan, the US, and France.

Small businesses – those with profits less than £50,000 – will benefit from a “small profits rate” of 19%. This means 1.4 million businesses will be unaffected and pay the same rate.

There will be a taper for profits above £50,000, so the 25% Corporation Tax rate will only apply to businesses who make profits of £250,000 or more. Sunak says that just 1 in 10 companies will pay the full higher rate.

Income Tax payers

While the chancellor announced no Income Tax, VAT or National Insurance rises, the decision to freeze the Personal Allowance at £12,570 and the higher-rate tax threshold at £50,270 from 2021/22 to 2026 equates to, essentially, stealth taxes.

A freeze drags more people into paying Income Tax and will also push 1.6 million people into the higher tax bracket by 2024, raising around £6 billion for the Exchequer.

Pension savers

In an expected move the chancellor announced he was freezing the Lifetime Allowance – the amount an individual can save into a pension before incurring tax charges. The allowance will remain at £1,073,100 until 2026.

This is another stealth tax, as it means that anyone whose pension savings are above this amount could face a levy of up to 55% on any additional lump sums or income taken from their pension pot.

Wealthier individuals and families

Just as the chancellor froze the pension Lifetime Allowance, he also announced a freeze in the Inheritance Tax (IHT) threshold and the Capital Gains Tax (CGT) annual exemption until April 2026.

The IHT threshold will remain at £325,000 with the “residence nil-rate band” at £175,000.

The annual Capital Gains Tax exemption will remain at £12,300 for five years.

As the value of assets such as house prices and investments rises over the next five years, this freeze will see more people face a CGT or IHT liability, raising additional revenue for the Exchequer.

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