Gift Aid Gift aid donations work in a similar way to pension contributions in that they extend your tax bands. So, a higher rate or additional rate taxpayer’s annual tax liability can be reduced by 20% or 25% of the grossed-up charitable donation. These payments can also help to reinstate your personal allowance alongside personal pension contributions. Gift Aid also allows the charity to claim an additional 25p from HM Revenue and Customs for every £1 you donate.
And with rumours circulating that the Labour Government are open to lowering or abolishing the annual ISA tax-free allowance, now’s the time to make sure you’ve considered whether utilising your ISA allowance is beneficial to your circumstances. Tax efficient investments Some qualifying investments benefit from income tax relief on the amount invested. And the below summarises the benefits of making such investments. But these won’t be suitable for everyone, so it’s important to seek out financial advice on what best suits your circumstances.
The HICBC still remains chargeable on the higher earning partner, irrespective of whether they are the Child Benefit recipient. So, where couples run their finances independently, and one party doesn’t know the other claims Child Benefit, this can cause particular problems. If you are in receipt of Child Benefit, you should ensure that you check the projected taxable income of you and your partner to avoid any unexpected tax charges in your Self-Assessment Tax Return. Pension contributions can be a useful way of lowering your adjusted net income to below the HICBC threshold. Capital Gains Tax The annual exemption available to most individuals in the 2024/25 tax year is £3,000 and should be utilised wherever possible before the 5 April. Given the annual exemption has been reduced by 50%, it’s likely more individuals will be due to pay Capital Gains Tax on disposals made within this current tax year. Therefore, if you’ve made total Capital Gains over the £3,000 annual exemption, you’ll be required to report and pay Capital Gains Tax through a Self-Assessment Tax Return by the 2024/25 self-assessment deadline of 31 January 2026. FIG Regime The FIG Regime comes into effect from 6 April 2025 to abolish the non-domiciled status from the UK Tax system. You can read more about the impact of these changes here:
Tax planning to consider ahead of 2025/26
Venture Capital Trusts (VCTs)
Remuneration planning Recent tax changes continue to make profit extraction strategies for shareholders in family companies a complex matter. There is an increased need for bespoke planning as there are numerous factors that can impact the best strategy. So, it’s important to review your remuneration planning before the end of the tax year to be sure you’ve maximised allowances. Jointly held assets If your marginal rate of income tax is different to your spouse’s, then it may be appropriate to consider whether any of your assets should be held jointly, or in your spouse’s sole name to reduce the overall tax liability. If an asset is jointly held between spouses, the income generated is then shared equally between each individual. A transfer of an asset can be made between spouses under the no gain/no loss rules which means such transfer can also be made without any Capital Gains Tax implications. High Income Child Benefit Charge From 6 April 2024, the income thresholds for the High Income Child Benefit Charge (HICBC) increased, opening the possibility of receiving Child Benefit payment in many more households. The HICBC now applies where the adjusted net income is over £60,000 (previously £50,000). Adjusted net income is broadly your taxable income after you have deducted personal pension contributions and Gift Aid payments. Child Benefit is clawed back at a rate of 1% for every £200 of income above £60,000. Therefore, if your income exceeds £80,000, the full amount is clawed back and all financial benefit of receiving payment is lost.
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Investments of up to £200,000 per year qualify for Income Tax Relief at 30%.
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There is no Capital Gains Tax payable on any profit made when selling the investment.
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Dividends from VCT investments are received tax-free.
Enterprise Investment Scheme (EIS)
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Annual investments of up to £1 million in qualifying companies attract Income Tax Relief at 30% (or up to £2 million if at least £1 million is invested in knowledge intensive companies). There is no Capital Gains Tax payable on any profit made when selling the investment if the investment is held for over three years.
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Seed Enterprise Investment Scheme (SEIS)
Non-Doms and Non-Residents: April 2025 Changes Explained
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Investments of up to £100,000 per tax year can be made in start-up companies that qualify for the SEIS.
But if these rules will impact your tax position and you have not yet reviewed your current arrangements, please reach out to our tax team to discuss your personal situation in more detail. Get in touch We can provide support with all of the above topics to help mitigate your tax position both for the short and long-term with specialised advice on your affairs. Contact Simon or one of the team by calling 0330 058 6559 or by emailing hello@scruttonbland.co.uk
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Income tax relief is available at 50% on SEIS investments.
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Any profit made on an SEIS investment is exempt from Capital Gains Tax if the investment is held for over three years.
PRIVATE CLIENT | SCRUTTON BLAND | 5
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