Category: news

According to IFA Magazine, the Treasury raised £7.5 billion in Inheritance Tax (IHT) for the 2023/24 tax year. This record-breaking amount represents a 5.6% rise on the previous year.

What’s more, this figure is expected to increase further in the near future, as the IHT-free threshold, known as the “nil-rate band”, is currently frozen at £325,000 until 2028.

There is usually no tax to pay on any inherited wealth that falls below this. Additionally, if you leave your home to your children or grandchildren you could boost your tax-free threshold to £500,000 by using your residential nil-rate band, which is £175,000 (2024/25).

However, your beneficiaries may have to pay IHT – the standard rate is 40% – on any amount of your estate that exceeds these thresholds at the time of your death.

Fortunately, careful financial planning could help you to reduce a potential IHT bill. So, read on to discover three clever ways to avoid your wealth being eroded by IHT and leave your loved ones with as much of your estate as possible.

1. Gift assets to your family during your lifetime

Gifting money during your lifetime could be a helpful way to reduce the size of your estate for IHT purposes. What’s more, you can enjoy seeing your loved ones benefit from your gift.

So, it’s not surprising that this type of gifting has become a popular way for adults in the UK to pass on their wealth. According to the British Retirement Survey 2023, 1 in 10 British adults aged 40 or over have made a substantial gift of this kind during the last three years.

Here are three useful ways to gift money to your family during your lifetime:

• Annual exemption – You can give away gifts worth up to £3,000 each tax year (2024/25) without them being added to your estate. If you have unused annual exemption from the previous tax year, you can carry this forward for one year. You can also choose whether to use your exemption on one person or split it between several.
• Small gift allowance – You can give an unlimited number of gifts worth up to £250 each tax year. However, you can’t make a small gift to anyone who you have used another gifting allowance on.
• Gifts for weddings and civil partnerships – You can give a tax-free gift to someone who is getting married or starting a civil partnership. The amount you can give depends on your relationship to the recipient. For example, in 2024/25, you could gift up to £5,000 to your child without incurring tax, but only £2,500 to your grandchild or great-grandchild, and just £1,000 to any other person.

An underused yet potentially valuable option is to give “gifts out of surplus income”. According to the Telegraph, only 430 families used this IHT tax break in the 2021/22 tax year, and yet, it could allow you to provide potentially uncapped and ongoing financial support to your family.

To qualify for this exemption, your gifts must be regular payments from income (not capital), and you must be able to maintain a reasonable standard of living while you’re making the gifts.

Beyond the exemptions outlined above, your beneficiaries may have to pay IHT on any gifts you make within seven years of your death. So, if you’re considering using gifts to help reduce a potential IHT charge, it may be sensible to do this sooner rather than later.

2. Boost your pension and pass it on to your loved ones

Your pension may be one of your most valuable assets and it can be a tax-efficient way to pass on your wealth.

This is because money held in a pension is usually considered outside your estate for IHT purposes.

So, if you have other assets to draw on for a retirement income, it might be worth preserving your pension to pass on to loved ones.

You might even choose to increase your pension contributions to bolster the sum you can pass on.

It’s worth bearing in mind that your chosen beneficiary may need to pay Income Tax at their nominal rate when they access your pension. However, this could still be less than they might pay in IHT if you pass your wealth on to them outside your pension.

3. Consider donating some of your wealth to charity

Leaving a charitable donation in your will could not only allow you to support an important cause, but it could also offer IHT benefits for you and your loved ones.

Any money you leave to a UK-registered charity will be free from IHT. So, donating to a good cause could potentially reduce the total amount of your estate on which IHT is payable.

Additionally, if you pass on at least 10% of your taxable estate to charity, the IHT rate your beneficiaries will pay on anything above the threshold will reduce from 40% to 36%.

A financial planner can help you navigate these complex rules and create an estate plan that allows you to pass on your wealth as tax-efficiently as possible.

Get in touch

If you’d like to create an estate plan that allows you to reduce a potential Inheritance Tax bill and pass on more of your wealth to loved ones, 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 Financial Conduct Authority does not regulate estate planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Workplace pensions are regulated by The Pension Regulator.

In April, we held our annual golf day, which was a huge success and thoroughly enjoyed by all who attended.

Read on to find out more about the event and Rob’s Easter holiday in Cornwall.

Our annual golf day was a roaring success

We held the Blue Wealth annual client golf day on Thursday 18 April at Bristol and Clifton Golf Club – an excellent venue with a beautiful, immaculately tended, mature parkland golf course.

Fortunately, the weather was good all day, as can be seen from the pictures – nothing but clear blue skies and sunshine.

We were delighted to welcome more than 30 guests to the event, which kicked off at 8 am with bacon rolls and coffee. Some eager participants even squeezed in a little extra practice before the first tee-off at 9 am.

It was an excellent day of play, with Nick Hendy winning on count back and Garth Bennet – last year’s winner – matching his record and winning closest to the pin. Patrick Jones, who travelled from Essex that morning, won longest drive!

We rounded off a full day of action with an excellent two-course dinner, good conversation, and plenty of laughter.

This annual event is a fabulous opportunity to connect with our clients, colleagues, and partners. We were especially pleased to have Laura from our chosen charity, Mothers for Mothers, in attendance.

This is an incredibly important organisation that offers maternal mental health and wellbeing support to women, birthing people, and their families in Bristol, North Somerset and South Gloucestershire.

We’re very proud to have raised more than £1,500 for charity and would like to thank all those who attended in support of this valuable cause.

We look forward to welcoming you back – and seeing some new faces – next year!

Rob enjoyed a family staycation in Cornwall

In April, it was Rob Bowers’ turn to take a break from the office.

As the founder and managing director of Blue Wealth, Rob is kept pretty busy at work. While he loves running the business, an Easter getaway to Cornwall provided some much-needed relaxation and precious family time.

Unfortunately, the weather wasn’t quite as kind to the Bowers family as it was to us on the annual golf day. But Rob, his wife, and their two young children braved the storms and had a blast on the beautiful yet breezy Cornish coast.

If your life is busy and you’re constantly juggling competing commitments, it might be easy to push matters such as retirement planning to the bottom of your to-do list.

And yet, the confidence you feel in your financial future could significantly affect your financial wellbeing and overall mental health.

Unfortunately, the current economic climate of “sticky” inflation and higher interest rates might contribute to feelings of uncertainty about your financial security.

Indeed, research published by This is Money has revealed that half of adults in the UK are worried that their pension savings won’t be enough to last them through retirement.

So, if you’ve been putting such concerns to the back of your mind, Mental Health Awareness Week in May and Wellness Day in June present a great opportunity to bump your financial and mental wellbeing to the top of your list of priorities.

Read on to discover five top tips for retirement planning that could help you feel more confident about your financial future.

1. Consider when you want to retire

Deciding when you want to stop working is an important first step towards ensuring that you have enough money to fund your retirement.

Your retirement age combined with your life expectancy will affect how long your retirement funds need to last.

According to the Office for National Statistics’ life expectancy calculator, a man aged 50 today has a life expectancy of 84 years, and a 50-year-old woman could expect to live to 87 years old. However, there’s a 1 in 4 chance of both living into their 90s.

So, imagine that you retire at 55 and live until you’re 95. Based on your current financial plan, are you likely to have enough income to fund the retirement lifestyle you expect for 40 years? If not, you may need to reconsider your retirement age or adjust your financial plan.

It might also be helpful to consider when you could access your pensions.

The State Pension Age – which is the earliest you can claim your State Pension – is currently 66 for men and women, but for those born after 5 April 1960, it is gradually increasing.

However, you can usually access any workplace or private pensions from the normal minimum pension age of 55 (rising to 57 from 6 April 2028). So, if you want to retire when you reach 50, you would need to draw on assets other than your pension for an income.

2. Calculate how much retirement income you might need

Once you’ve decided when you want to retire, it might be helpful to think about what you want to do in your retirement.

Have you been dreaming about extravagant holidays or buying a second home? Or are you impatient to buy a new car? Aligning your retirement wish list with your financial plan could help ensure you have the income you need.

It’s also worth considering how your spending may change during your retirement. The “retirement smile” suggests that your spending might be higher at the start of retirement as you rush to fulfil your dreams, before dropping as you settle down, then increasing again in later life as extra costs, such as healthcare, arise.

This might seem complicated. Fortunately, a financial planner can help by using cashflow planning to give you a clear understanding of your retirement income needs, factoring in changes in spending habits, inflation, and so on.

Read more: How a financial planner could help you enjoy a long and happy retirement

3. Take stock of your pension savings

Over the course of your working life, you might have accumulated significant pension savings that could be a valuable asset in your retirement.

And yet, according to research by Standard Life, 75% of UK adults don’t know how much is in their pension pot.

A financial planner can help you take stock of your pension savings, understand how much State Pension you might be entitled to. They may also be able to help you locate any pensions you might have lost track of as you moved between employers.

They can also offer guidance on how to make the most tax-efficient use of your pension benefits, whether you intend to draw a retirement income from them or pass them on to loved ones after you’ve gone.

4. Review other potential sources of income

Once you’re on top of understanding your pension assets, it’s time to consider any other potential sources of income you might want to draw on in retirement.

These might include:

• Cash savings
• Tax-efficient savings held in an ISA wrapper
• An investment portfolio
• Income from property
• Part-time, freelance, or consultancy work.

If you plan to continue working after you retire, you might want to give careful thought to when you start drawing flexibly from your pension, as this could trigger the Money Purchase Annual Allowance (MPAA).

The MPAA reduces your future tax-efficient pension contributions to £10,000 each tax year. This is significantly less than the £60,000 Annual Allowance that most people enjoy – your Annual Allowance may be lower if your income exceeds certain thresholds.

Indeed, there’s a lot to consider when planning for your retirement, so you may benefit from seeking professional financial advice.

5. Speak to a financial planner

If you’re feeling anxious about planning your finances to support the retirement you want, a financial planner can help restore your confidence by providing objective guidance based on data and experience.

They can work with you to create a bespoke financial plan that fits your unique circumstances and retirement goals.

Get in touch

If you’d like to create a long-term plan that helps you feel more in control of your finances, 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.

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.

The Financial Conduct Authority does not regulate estate planning, cashflow planning, or tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Workplace pensions are regulated by The Pension Regulator.

How do you grow your wealth when you’re investing? Choosing the “right” investments is just one of the ingredients needed for success. Indeed, your mindset and behaviours could have a much larger effect on the outcomes of your investments than you might think.

Your approach to investing could influence the decisions you make when you start building your portfolio, such as how much risk you take. It could also play a role in how you respond to market movements, which may have a knock-on effect on the long-term returns of your portfolio.

So, as well as considering which investments could help you reach your goals, you might also want to review your behaviours and the impact they could have.

This useful guide explains how some behaviours, such as being patient or staying calm during market volatility, could have a positive effect on your wealth.

Download ‘7 valuable behaviours for successful investing’ now to read more about the behaviours that might lead to improved investment outcomes.

If you have any questions about your investment portfolio or how investing could fit into your wider financial plan, please contact us to arrange a meeting.

Towards the end of last month, Rob and Dan were excited to represent Blue Wealth at the Professional Adviser awards in London.

Meanwhile, our Technical and Financial Planning Support Manager, Nathan Jones, celebrated his birthday.

Read on to hear more from Rob, Dan, and Nathan …

Rob and Dan got suited and booted for the annual Professional Adviser Awards

In our February team update we shared the fantastic news that Blue Wealth had been shortlisted for Adviser Firm of the Year (South West and Wales) in the prestigious Professional Adviser annual awards.

These awards recognise the best financial firms and product providers in the UK, based on their performance over the last 12 months. They are invaluable to the financial services profession and Blue Wealth as they provide continued recognition of high-quality work.

On Wednesday 20 March, the evening Rob and Dan had been waiting for arrived – the awards ceremony in London.

The evening was held at the impressive Grade-II listed corporate events venue, The Brewery, in East London. It was attended by a wide range of sector professionals including advisers, providers, and fund managers.

Although they didn’t return home with an award this time, the highlight of the evening for Rob and Dan was seeing the Blue Wealth name up in lights. They also loved sharing a table with their peers – seeing some familiar faces and making new contacts.

The duo have their sights set on returning to the event in 2025 and hope to win an award in recognition of the Blue Wealth team’s exceptional work.

Nathan celebrates his birthday with a weekend away at the races

Nathan turned 45 on 21 March and he celebrated in style by taking a group of friends to Newbury races.

After a successful day watching the horses – Nathan had a big birthday win! – the group enjoyed an evening out and an overnight stay.

We asked Nathan what his favourite birthday memory is. He had plenty to choose from, including his most recent celebration. But top of the list was an overnight stay in Marlow with his wife, Vic, where they enjoyed a fantastic dinner at Tom Kerridge’s eatery, the Hand and Flowers, which was the first pub to receive two Michelin stars.

Nathan is now looking forward to a clothes shopping trip with his birthday money, which has become something of an annual tradition.

April is Stress Awareness Month, which aims to raise awareness of the causes and potential coping strategies for feelings of stress. So, it’s an ideal time to get to grips with your anxieties about money.

Feeling overwhelmed by financial concerns and constantly worrying about money can be exhausting and it may affect your ability to enjoy life.

Whether you’re anxious about funding your retirement, or confused about how best to protect your wealth, taking practical steps to tackle your financial stress could boost your physical and mental health.

Read on to learn five simple ways to reduce your financial stress and start feeling happier.

1. Understand the causes of your financial stress

Identifying the triggers of your financial stress could be an important first step towards feeling calmer and more in control.

There might be many potential causes, such as worries about paying for later-life care or concerns about the performance of your investments if the market is volatile.

A lack of confidence and financial literacy could also be a factor. Indeed, the Financial Capability Survey has revealed that 39% of adults in the UK don’t feel confident managing their money.

To gain a clear picture of what’s causing your financial stress, you might find it helpful to write down your main concerns.

Talking to someone you trust, be that a family member, a friend, or a financial planner, could allow you to explore these concerns in more depth and prioritise which issues to tackle first.

One significant benefit of speaking to an impartial financial professional is that you won’t need to worry about the potential impact of your concerns on their wellbeing, as may be the case if you choose to speak to a family member.

A financial planner can provide a logical perspective based on their knowledge, experience, and the data you share with them.

For example, if you’re anxious about a short-term dip in the value of your investments, a financial planner could help you adopt a long-term view. They might also suggest opportunities for diversifying your portfolio to balance the level of risk you’re exposed to.

Once you have a clear understanding of what’s causing your financial stress, you can start taking action to reduce it.

2. Review your budget and create a financial plan

Understanding your financial situation by reviewing your budget and creating a plan for managing your money in the short-, medium-, and long-term, might help you feel more in control and reduce feelings of overwhelm.

You could start by looking at your income, expenditures, and debt. Are there any areas where you may be able to cut back on spending? Are you saving regularly? Reviewing your budget in this way might ensure that it aligns with your current circumstances and financial goals.

Additionally, creating a long-term financial plan could provide valuable guidance and reassurance. This in turn may reduce stress and allow you to focus on enjoying other areas of your life.

3. Build your emergency fund

Having to find money for an unexpected problem could be stressful. Conversely, building a contingency fund that you can fall back on may provide invaluable peace of mind.

Additionally, having an emergency fund might allow you to avoid or minimise expensive borrowing, such as using credit cards.

Experts suggest saving somewhere between three- and six-months’ expenses, although you may need more if you’re self-employed or your circumstances demand it.

Automating your savings can be a clever way to develop a regular and effortless saving habit. By setting up a recurring monthly transfer from your salary to your emergency fund, you could accumulate a nest egg to cover any unexpected costs that may arise.

4. Make sure you’re well protected

Putting sufficient protection in place to ensure that you and your family are taken care of if the worst happens could help to reduce your financial stress, both now and in the future.

Your emergency fund may cover short-term unexpected costs, but it might not be enough to provide a sustainable income if, for example, you become ill and unable to work.

On the other hand, financial protection tailored to your specific needs could help to pay for ongoing costs such as mortgage repayments, school fees, and other essential living costs.

The type and level of cover you need will depend on your unique circumstances. Life insurance, income protection, and critical illness cover could all provide valuable financial support during times of crisis.

Your insurance needs may also change over time, for example, if you move house or get married. So, it’s worth regularly reviewing your financial protection.

You might benefit from speaking to a financial planner about the options available and how to factor protection into your budget.

Read more: 3 important reasons to properly protect your financial plan

5. Seek professional financial advice

Whether you’re reviewing your budget or seeking out the best type of protection for your family, the choices available could be overwhelming – which may compound your financial stress.

Working with a financial planner can provide you with access to invaluable advice, information, and guidance.

What’s more, research by Royal London has shown that consulting a financial professional regularly might boost mental wellbeing and reduce stress.

Those surveyed said that working with a financial planner helped them feel more in control of their finances, less anxious about money, and more financially secure and stable.

Get in touch

If you’d like to create a long-term plan that helps you feel more in control of your finances, 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.

Note that life insurance 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.

In March, several of the Blue Wealth team are heading off for family holidays. Here, they share their plans, tell us about their dream holidays and more…

Nathan is jetting off to sunny Rhodes in May

Nathan is looking forward to spending a week with his family on the beautiful Greek island of Rhodes in May.

While he loves his role as Technical and Financial Planning Support Manager at Blue Wealth, Nathan is excited to spend some quality time with his wife and children away from the distractions of their busy day-to-day lives.

Now that his children have reached their teenage years, Nathan anticipates a peaceful flight reading a good thriller novel while his 18-year-old son and 13-year-old daughter keep themselves entertained with their phones and iPads.

However, Nathan’s family are rarely alone when they jet off abroad. They love large family holidays with parents, siblings, cousins, nieces and nephews. So, they’re usually a group of around 13, and Nathan wouldn’t have it any other way!

Every holiday Nathan’s family takes is different. They love all types of getaways, from relaxing beach trips to action-packed adventures. As long as they’re spending time together and creating memories, the Jones family is happy.

That’s not to say they don’t have a favourite holiday memory. All four 100% agree that their 2022 trip to Orlando, Florida was their best family holiday to date.

Visiting Disney World and Universal Studios was an incredible experience. And the trip was extra special as it was the first time the family ventured abroad after the Covid restrictions were lifted.

If Nathan won the lottery, he’d like to take his family somewhere they haven’t explored yet, and Asia is top of the list. In particular, Thailand, Cambodia, and Vietnam.

Happy holidays Nathan!

Sarah and Dan are taking their young family to picturesque Majorca

Sarah and Dan can’t wait to hit the beach and enjoy the sunshine in beautiful Portocolom in Majorca. They went as a family two years ago and have been itching to revisit.

While flying with an eight-year-old and a five-year-old isn’t always easy, luckily, Sarah and Dan’s children are happy to trade snacks and time watching their favourite programmes on their tablets for a little peace.

As soon as the family steps off the plane, relaxation is the order of the day.

From getting out and about to see the sights and experiencing the local restaurants, Sarah and her family enjoy taking a leisurely pace while they’re on holiday. If she gets the chance, Sarah enjoys losing herself in a crime novel while she soaks up the sun.

Sarah and Dan’s favourite family holiday was to Marbella in 2023. They rented a villa with friends – who have children of a similar age – just two doors down from some other friends lucky enough to live there.

This was a perfect arrangement as all the kids could play together, and all three families could easily meet up as a group as and when they wanted to.

If Sarah won the lottery, she’d take her family to a five-star hotel – which could be anywhere in the world – that offers plenty of activities to keep the children entertained.

But for now, Sarah and Dan are very excited to return to Portocolom with their family.

Join us for lunch and a round of golf on our annual golf day

Finally, we’d like to remind you about our annual golf day on Thursday 18 April at Bristol and Clifton Golf Club. A light buffet lunch will be served before play in the afternoon and it’s always a fantastic day out.

Please email hello@bluewealth.co.uk to register your interest.

In April 1974, a Swedish foursome took to the stage at the Eurovision Song Contest. Performing eighth on the night, ABBA introduced themselves to a global audience, romping to victory with their hit ‘Waterloo’.

In the intervening five decades ABBA – made up of Agnetha Fältskog, Anni-Frid Lyngstad, Björn Ulvaeus, and Benny Andersson – has become one of the world’s best-selling and most enduring artists.

To celebrate five decades of fantastic Swedish pop, this guide looks at what you can learn about managing your money from 10 iconic ABBA songs. From focusing on your long-term goals so you can have the “time of your life” to the importance of balancing risk when you “take a chance” on investing, you might be surprised at the lessons you could learn.

Download ‘10 things you can learn about your financial plan from these ABBA hits’ now to find out more about ABBA and what their catchy lyrics could teach you about managing your finances.

If you’d like to arrange a meeting with us to talk about your financial plan, please get in touch.

With one eye on a forthcoming general election, the chancellor has announced a Budget aimed at generating long-term growth, with “more investment, more jobs, better public services and lower taxes”.

While the headlines will inevitably focus on Jeremy Hunt’s cut in National Insurance contributions (NICs), many less headline-grabbing messages will affect millions of families and businesses.

Read on to find out who were the winners and losers from the 2024 Spring Budget.

Winners

Working people

The chancellor said that his Budget gave “much-needed help in challenging times”, adding “if we want to encourage hard work, we should let people keep as much of their own money as possible”.

Calling NICs a “penalty on work”, Hunt announced a cut in Class 1 NICs, from 10% to 8% from 6 April 2024. These cuts follow a similar reduction in the rate of NICs announced in the 2023 Autumn Statement.

The chancellor says that these cuts, in conjunction with the reductions announced in the 2023 Autumn Statement, would mean the average worker on £35,400 would benefit from a tax cut of more than £900 a year.

He also announced that, instead of falling from 9% to 8% as previously announced, Class 4 self-employed NICs would fall from 9% to 6% from 6 April 2024. This is in addition to the removal of the requirement to pay Class 2 NICs from the same date.

He added that 2 million self-employed people would benefit, with the average self-employed person earning £28,000 seeing a tax cut of around £650 a year.

The Treasury say that this means UK taxpayers face the lowest combined basic rate of Income Tax and NICs since the introduction of the modern structure of National Insurance in 1975.

Parents earning Child Benefit

The chancellor highlighted the “unfairness” in the current Child Benefit system that means a household with two parents each earning £49,000 a year will receive Child Benefit in full, while a household earning less overall but with one parent earning more than £50,000 will see some or all of the benefit withdrawn.

Consequently, he announced a plan to move the High Income Child Benefit Charge to a “household” system from April 2026.

In the interim, from April 2024, the High Income Child Benefit Charge threshold will rise from £50,000 to £60,000 while the top of the taper will rise to £80,000. This means that the full amount of Child Benefit will not be withdrawn until individuals earn £80,000 or more.

The government estimates that nearly 500,000 families will gain an average of £1,260 in 2024/25 as a result.

The hospitality industry and their customers

In a move designed for “backing the Great British pub”, the chancellor has extended the freeze on alcohol duty. The freeze was due to end in August 2024 but has been extended to February 2025, benefiting 38,000 pubs across the UK.

The Treasury says that this results in 2p less duty on an average pint of beer than if the planned increase had gone ahead.

This measure will cut costs for breweries, distilleries, restaurants, nightclubs, pubs, and bars.

Motorists

The chancellor argued that lots of families and sole traders depend on their cars and so wanted to continue supporting motorists.

Consequently, he maintained the temporary 5p cut in fuel duty and froze the duty for another 12 months.

Hunt said that this would save the average car driver £50 in 2024/25.

Small businesses

In a boost to small businesses, Hunt announced that, from 1 April 2024, the VAT threshold would increase from £85,000 to £90,000 – the first increase in seven years.

ISA and National Savings and Investments savers

To encourage investment in small British businesses, the chancellor announced his intention to launch a new “UK ISA”.

This will enable savers to invest an additional £5,000 in a tax-efficient wrapper, increasing the total ISA subscription limit to £25,000 – assuming these additional monies are invested exclusively in UK firms.

The government will consult on the details.

The chancellor also announced that National Savings & Investments (NS&I) will launch a British Savings Bonds product that will offer consumers a guaranteed interest rate, fixed for three years.

This new NS&I product will be brought on sale in early April 2024.

Creative industries

From film to theatre and music to art, UK creative excellence is unmatched.

To support the UK’s creative industries, the chancellor announced a further £1 billion package of additional tax relief over the next five years, to boost inward investment and attract production companies from around the world.

Hunt also confirmed £26.4 million of support for the globally renowned National Theatre.

Pensioners

The Spring Budget also committed to supporting pensioner incomes by maintaining the State Pension “triple lock”.

In 2024/25, the Treasury say that the full yearly amount of the basic State Pension will be £3,700 higher, in cash terms, than in 2010.

Sellers of second homes

Capital Gains Tax (CGT) is often due when an individual sells a second home – such as a buy-to-let property or holiday home.

In a move designed to increase the number of transactions, and consequently increase the revenue from the tax, the chancellor announced he would reduce the higher rate of property CGT from 28% to 24%.

The lower rate will remain at 18% for any gains that fall within an individual’s basic-rate band.

Losers

Vapers and smokers

In an attempt to discourage non-smokers from taking up vaping, and to increase revenue for the NHS, the chancellor announced a new duty on vaping.

The Treasury says this will raise £445 million in 2028/29.

There will also be a one-off tobacco duty increase of £2 per 100 cigarettes or 50 grams of tobacco from 1 October 2026 to maintain the current financial incentive to choose vaping over smoking. The government say this will raise a further £170 million in 2028/29.

Non-economy airline passengers

The chancellor announced that rates for individuals flying premium economy, business, and first class and for private jet passengers will increase by forecast Retail Prices Index (RPI) and will be further adjusted for recent high inflation to help maintain their real-terms value.

Some “non-doms”

In a move borrowed from Labour, the chancellor announced the abolition of the “remittance basis” of taxation for non-UK domiciled individuals (“non-doms”) and a replacement simpler 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 10 years.

This new regime will commence on 6 April 2025 and applies UK-wide – and transitional arrangements will apply.

The Treasury says that this measure will raise £2.7 billion in the year 2028/29.

Owners of holiday lets

The chancellor said that the current tax regime creates distortion, meaning there are not enough properties available for long-term rental.

Consequently, he intends to abolish the Furnished Holiday Lettings (FHL) tax regime from 6 April 2025, meaning short-term and long-term lets will be treated the same for tax purposes.

Anyone subject to fiscal drag

Freezing tax thresholds increases the amount of tax that individuals and businesses pay without nominal tax rates actually increasing. Called “fiscal drag”, this results in additional revenue to the government as more taxpayers are “dragged” into paying tax, or into paying tax at a higher rate.

Freezes in a range of thresholds mean that millions of individuals and businesses will face “fiscal drag” in the coming years.

For example, while the increase in the threshold at which small businesses and self-employed people have to register for VAT will be welcome to many businesses, the fact that the threshold had been frozen for seven years means that more businesses will likely have been forced to register for VAT than if the threshold had risen each year in line with the cost of living.

Similarly, freezes to the Income Tax Personal Allowance and thresholds mean more people will either start to pay tax, or pay more tax at a higher rate, than if these thresholds had risen in line with inflation.

Get in touch

If you have any questions about whether you are a winner or a loser from the Spring Budget, and how it will affect you and your finances, please get in touch.

All information is from the Spring Budget document published by HM Treasury.

The content of this Spring Budget summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

While we believe this interpretation to be correct, it cannot be guaranteed and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.

The 2024/25 tax year is just a month away, and chancellor Jeremy Hunt has delivered his 2024 Spring Budget, outlining the government’s plans for the next fiscal year and beyond.

With a general election looming – prime minister Rishi Sunak has said he will call it before the end of the year – the chancellor claimed that the government had met the prime minister’s three economic priorities laid out at the start of 2023, having:

• Halved inflation, down from highs of 11% last year to 4% in January 2024
• Kept debt falling in line with fiscal rules
• Grown the economy, fully 1.5 percentage points higher than expected.

Amid this backdrop, the chancellor called this a “Budget for long-term growth”, with goals to “deliver more jobs, better public services, and lower taxes”.

Read on for a summary of some of the key measures and announcements from this year’s Spring Budget, and what they might mean for you.

National Insurance will be reduced by another 2%

Arguably the biggest announcement from the chancellor’s Budget this year is that the main rate of Class 1 National Insurance contributions (NICs) will be reduced by a further 2%.

During the Autumn Statement in November 2023, the chancellor reduced the main National Insurance rate by two percentage points, falling from 12% to 10% from 6 January 2024.

Now, this main rate will fall a further two percentage points to 8%. Meanwhile, the main rate of Class 4 self-employed NICs will fall to 6%. Both changes will take place from 6 April 2024.

According to the OBR, an employed individual with average earnings of £35,400 will save £450 a year thanks to this cut, and £900 when including the previous cut in November 2023.

Furthermore, there will be no further requirement to pay Class 2 NICs from 6 April 2024, as outlined in the 2023 Autumn Statement.

However, offsetting these tax cuts is the news that the Income Tax Personal Allowance and tax bands will remain frozen until 2028.

As wage inflation increases, this could see many taxpayers pulled into a higher tax band over the next four years, an effect known as “fiscal drag”.

The High Income Child Benefit Charge will be reformed

Having been a contentious issue for some time, the chancellor confirmed reforms to the High Income Child Benefit Charge.

This tax taper effectively reduces the amount received from Child Benefit for those earning £50,000 or more. Those earning £60,000 or more must repay all Child Benefit or opt out from payments entirely.

Crucially, this rule only applies to one higher earner per household. So, a household with one person earning £55,000 and the other £10,000 would be affected by the charge, while two people each earning £49,000 would not be affected at all.

So, by April 2026, the government will introduce a household income charge, assessing both earners’ income against the threshold, rather than just an individual higher earner’s.

Furthermore, from 6 April 2024, the £50,000 threshold will be raised to £60,000, and the top taper to £80,000. According to the government, this will see half a million families gain an average of £1,260 in 2024/25.

The higher-rate Capital Gains Tax charge for residential property transactions will be reduced

To promote the housing market and encourage more property transactions, the chancellor announced a reduction in the higher rate of Capital Gains Tax (CGT) for gains on residential property, excluding main residences.

Under the current rules, the standard higher CGT rate is 20%, with an additional 8% charged on residential property transactions. This will be reduced from 28% to 24% from 6 April 2024, encouraging landlords and second-home owners to sell their properties, with the aim of increasing the housing supply for first-time buyers in particular.

The 18% charge for gains made in the lower rate band will remain unchanged.

On top of this, the chancellor also abolished the Furnished Holiday Lettings (FHL) tax regime, removing an incentive for landlords to offer short-term holiday lets rather than long-term residential lets, and Multiple Dwellings Relief, a bulk purchase relief in the Stamp Duty regime.

Changes to how and where pension funds are invested

As part of the chancellor’s goal to channel more capital into UK equity markets, the government is working alongside The Pensions Regulator (TPR) and Financial Conduct Authority (FCA) on the “Value for Money” pensions framework to “ensure better value from defined contribution (DC) pensions, by judging performance on overall returns, not cost”.

This looks to address where pension schemes prioritise short-term cost savings at the expense of long-term outcomes, as well as where savers may be prevented from receiving value because of a scheme’s current scale.

The FCA and TPR will have full regulatory powers to close schemes from new employer entrants or wind them up entirely if the schemes are “consistently offering poor outcomes for savers”.

The government will also seek to work with the FCA to increase UK equity allocations in DC pensions, asking pension funds to publicly disclose where this money is invested. These requirements will also extend to Local Government Pension Scheme funds.

Furthermore, the chancellor confirmed the government’s commitment to exploring a lifetime provider model for DC pensions, previously referred to as the “pot for life” in the 2023 Autumn Statement.

This would give pension savers the right to choose the pension scheme that their employer pays into, rather than being auto-enrolled into a scheme chosen by the employer.

Investments in UK-focused assets will be encouraged with the new “UK ISA”

As well as expanding pension investments into British businesses, the chancellor intends to create a new UK ISA, offering an additional tax-efficient allowance of £5,000 for investment in UK-focused assets. This is another move that aims to channel more investment into UK equities.

This will be on top of the existing ISA allowance, which remains at £20,000 for the 2024/25 tax year.

Other key changes

Fuel and alcohol duty remain frozen

Fuel duty will remain frozen for another 12 months instead of increasing in line with inflation, and the 5p cut to fuel duty, originally set to expire on 23 March, has been extended for a further 12 months. Government figures claim that this tax cut will save an average car driver £50 in 2024/25.

Meanwhile, the alcohol duty freeze will be extended until February 2025, benefiting 38,000 pubs across the UK.

Tax rises will bolster the government’s coffers

While this Budget has seen many tax cuts, the chancellor also announced measures that will see certain taxes increase.

Firstly, the government is abolishing the current tax system for UK non-doms, and replacing it with a “simpler and fairer” residence-based system.

From 6 April 2025, anyone who has been resident in the UK for more than four years will pay UK tax on any foreign income and gains, provided they have been non-tax resident for the last 10 years. In 2028/29, this will raise £2.7 billion. There will be transitional arrangements for those who have already benefited from the previous system.

There will also be a new levy on vaping products from October 2026, raising £445 million in 2028/29. Meanwhile, to encourage vaping over smoking, tobacco duty will also increase in October 2026, raising a further £170 million in 2028/29.

Household support fund extended

There will be an extra £500 million to extend the Household Support Fund in England from April to September 2024. This fund provides support with essentials such as food and utilities to vulnerable households.

Full business expensing extended, and increased to VAT thresholds

After initially making full business expensing permanent in November 2023, the chancellor announced plans to extend this to leased assets, when fiscal conditions allow for it. Draft legislation is to follow.

Furthermore, the chancellor increased the VAT registration threshold for small businesses from £85,000 to £90,000, and the deregistration threshold from £83,000 to £88,000 from 1 April. These thresholds are frozen at these levels.

Get in touch

If you have any questions about how the Spring Budget will affect you and your finances, please get in touch.

All information is from the Spring Budget documents on this page.

The content of this Spring Budget summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

While we believe this interpretation to be correct, it cannot be guaranteed and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.