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CLIENT PRIVATE
Welcome to the latest edition of our private client newsletter As we approach the end of another year and look forward to the festivities of Christmas, we take the opportunity to look back at 2024 and the financial issues that so many of you will have faced. We review the impact of the many political and financial changes we’ve seen in the last twelve months. Along with detailing the practical advice you can take in advance of April’s Inheritance Tax changes. You’ll also find a reminder of the expertise within our private client team who are here to support you as we head into the new year. We hope you’ll enjoy this festive edition. And from all of us here at Scrutton Bland we wish you a very Merry Christmas and warm wishes for 2025.
2024 in review
With significant changes in the political landscape and the Labour Party returning to Government after 14 years, it’s no surprise that we’ve seen a raft of changes that will impact individuals and their tax planning. Simon Hurren, one of Scrutton Bland’s Private Client Tax Partners discusses the most pressing issues.
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Spring Budget We started the year with Jeremy Hunt looking to pull a rabbit out of the hat in the Spring Budget before an anticipated general election. Whilst most allowances and thresholds were frozen, we did see a further 2% cut to employee’s NIC announced. With a pledge for it to support working people by suggesting when paired with the previous cut, it could save a working person up to £1,500. State pensions increased by 8.5% in April 2024 under the triple lock, but with the freezing of personal allowance and basic rate bands it pushed many pensioners into paying tax or in many cases into a higher tax band.
Autumn Budget Finally, on 30 October 2024, we had some more certainty with the Autumn Budget. Capital Gains Tax rates were increased from 20% to 24% for higher rate taxpayers, so not as bad as initially feared. But significant Inheritance Tax changes were announced to Agricultural Property Relief and Business Property Relief, changing the tax landscape for those owning farms and businesses. And with pensions now brought into the scope of Inheritance Tax, this adds further potential changes to the outlooks of those with significant pension pots. Whilst the changes have been highly reported, our advice continues to centre on the actions you should be taking now the dust has settled slightly.
The dreaded 60% effective tax rates remained at £100,000 and we continue to advise clients on ways to help reduce the impact of this.
Likewise, we’ve seen the impact of the reduced annual exemption from £6,000 to £3,000, and the reduction in the dividend allowance - once up at £2,000 now reduced to £500 - impact individuals and restrict the tax planning available, as well as bringing more people into self-assessment. The big surprise from the Conservatives was to change the tax rules for non-domiciled individuals. This had been a key point for the Labour party and with the Conservatives announcement in March many people felt it was a reversal of the previous Conservative stance, with Jeremy Hunt previously quoted as saying “Scrapping the non-dom status would be a terrible thing to do, we would wave goodbye to £8billion of capital investment in the UK. We will never do that”
Finally, as we approach the Tax Return filing deadline of 31 January HMRC have recently released an article with some of the excuses they have received from taxpayers as to why they did not complete their return on time last year.
So, for a little light relief at this time of year… some of my personal favourites…
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My pet goldfish died
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I had a run-in with a cow
• After seeing a volcanic eruption on the news, I couldn’t concentrate on anything else
You’ll find a more detailed analysis of these changes in our Non-Dom and Non-residents article included in this issue.
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My wife won’t give me my mail
Following the election of the Labour Party in July, speculation was rife about the potential tax changes that could impact individuals. Whilst in their manifesto they had clearly stated they would not touch income tax or employee’s NIC, they were clear that those with the broadest shoulders should bear the heaviest burden.
• My husband told me the deadline was 31 March, and I believed him
• I’ve been far too busy touring the country with my one-man play
This led to a very busy period through the summer and early autumn as clients considered what sensible steps they could be taking.
• My bad back means I can’t go upstairs. That’s where my tax return is
With rumours swirling that increases in CGT to 40% and major changes to IHT were coming, it was no surprise that many looked to take action.
• I’ve been cruising round the world in my yacht, and only picking up post when I’m on dry land
Although in many cases, the advice remained to make decisions based on good long term commercial planning rather than being driven by the concern around tax rises. And on this basis, many of our clients looked to accelerate something they were already planning to do, whilst they had the certainty of the current tax rates.
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Our business doesn’t really do anything
• I’ve been too busy submitting my clients’ tax returns (from a London accountant!)
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Is this the end for IHT reliefs? The Inheritance Tax changes announced
in the Autumn Budget have certainly caused a stir. Particularly in the farming world, with the recent protests being heavily publicised in the media.
The introduction of a cap for only the first £1 million of BPR or APR assets to qualify for relief has potentially exposed many farmers and business owners to significantly higher IHT liabilities.
Cash flow Once you understand the impact of the changes, it’s wise to consider the executor’s cash flow and their ability to be able to pay the IHT liability. Clearly if a large proportion of wealth is held in share or land then it may not be easy to realise cash flow, but the following options can be considered:
We take a look at what you can do if you’re affected by these changes.
Understanding the impact to you Before making any rash decisions, you should take advice to understand what your potential IHT position looks like following the changes. Quantifying the impact should help to give context to your decisions.
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Borrowing funds to settle the liability. Is this manageable?
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Life insurance – depending on your age and health this might not be an option.
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Selling part of the business or farmland. This is less practical for a business as it could incur additional taxes. Likewise, the sale of any land can take time to sell and there would be further tax consideration on the sale.
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Make Gifts Historically, in many cases it has been
Pensions Prior to the Budget speculation was rife around possible changes being made to pension contributions. Ranging from changes to the income tax relief on pensions to the removal of the Pension Commencement Lump Sum (often referred to as the tax-free lump sum). The only change the Labour government decided to introduce was to bring pensions into the scope of Inheritance Tax. For many years, pensions have been used as a tool for Inheritance tax planning. In certain circumstances they could be left to beneficiaries free of IHT. This has led to many people deciding to use other assets to cover living expenses in preference to the pension pots.
As always, the decisions and actions that are right for you will depend on your individual circumstances. But you can start by thinking about the following:
beneficial to retain ownership of assets which qualify for relief, but the changes may warrant an acceleration of passing on assets. However, it’s unfortunately not so straight forward:
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What level of income do you need for your living costs, and can the pension replace other sources of income? How much of your pension income can be drawn in a tax efficient manner to utilise your tax bands? Where drawing additional income from your pension could push you into a higher tax band, could tax efficient investments such as EIS and VCT be considered to help mitigate the tax impact? Can gifts be made to utilise the IHT gift exemptions, such as normal expenditure out of income, and to help pass assets to the next generations to reduce your overall IHT liability?
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Any gift will only be outside of your Estate after 7 years.
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Will the gift trigger a capital gains tax liability, or will holdover relief apply?
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Do you still need any income from the asset. Many farms run as a partnership with each partner sharing the profits and dependant on the partnership for an income. Once any assets have been gifted it’s important to demonstrate that you have not retained any benefit, such as an income, from the assets as this could be caught by anti-avoidance legislation, gift with reservation of benefit, which would result in the asset still forming part of your estate.
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So, with the changes announced, does this flip that plan on its head?
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Well, it’s important to remember that the changes only come into play from April 2027, and HMRC are currently consulting on the specifics of the changes announced. As a result, we don’t yet have the legislation that will provide some of the necessary detail. The inclusion of the pension pot into the IHT calculations could also impact the availability of the residential nil rate band, which starts to get tapered once gross assets exceed £2 million. So careful planning will be needed to ensure the residential nil rate band is preserved. Therefore, it would be sensible to wait until the further details are announced, and for those minded to start planning, to now take account of some important factors to consider.
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Will the assets be exposed to marital breakdowns of the future generations?
Overall, these changes are likely to have a significant impact on many individuals’ IHT liability. And it’s vital to take advice to fully understand the impact of the changes before considering the available options and next steps and how these will apply to your own personal situation. In many cases, the changes will form part of a wider succession plan and so consideration of the bigger position is always a priority. To discuss how these issues may affect you, get in contact with Simon or one of the Private Client team by calling 0330 058 6659 or by emailing hello@scruttonbland.co.uk
Whilst on the face of it gifting assets seems a sensible step to mitigate the impact of the changes, seeking advice about how the intricacies of the rules will apply to you and your family’s circumstances is important. It’s also worth mentioning that whilst the focus has been on farms and business owners the changes will also impact those who have invested in IHT efficient schemes like the EIS investments and shares in unquoted stock markets such as the AIM stock market. Review your Wills Currently the nil rate band and residential nil rate bands not used on the first death will transfer to the surviving spouse for them to utilise. This has led to many Wills allowing all assets to the surviving spouse on the first death. However, in the details of the announcement it was clear that the £1 million allowance for BPR and APR is not transferrable to a spouse. Therefore, consideration will need to be given as to whether BPR or APR assets should not be left to a spouse to utilise the allowance and potentially save up to £200,000 of Inheritance Tax. Thought will also need to be given to the bigger picture, including protection and control over assets and whether a surviving spouse may need an income from the assets.
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Non-Doms and Non-Residents: What will the April 2025 changes bring?
David Collins explores the practical considerations of Non-Dom tax changes following the announcements in the Autumn 2024 Budget, and what this means for you:
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Y ou’ll recall it was the Conservatives who, somewhat surprisingly at the time, decided in the Spring 2024 Budget that they wanted to bring in rules to abolish the Non-Domiciled (“Non-Doms”) status with effect from 6 April 2025. Labour’s first Budget in October 2024 stuck with this plan and confirmed the finer details (you can see more information on this in the detailed post-Budget Report on our website Autumn Budget Report 2024 - Scrutton Bland). While the headlines have been widely discussed, it’s worth taking a step back to consider the practical steps you might need to take to safeguard your financial position. And how you can take advantage of any planning opportunities that are available to you.
What action can you take now?
Plan Temporary Repatriations Carefully: The new rules on temporary repatriation of funds provide a useful planning tool but require adherence to the conditions. This includes ensuring funds are returned from overseas within the specified timeframe and, crucially, not before the rules are introduced in April 2025! Update Workday Relief Documentation: With the tightened rules for Overseas Workday Relief, maintaining detailed and accurate records of workdays spent in and out of the UK is crucial. Employers and individuals should review payroll and expense records to ensure compliance. It’s also wise to segregate overseas bank accounts to ensure that eligible funds can be remitted without being tainted by other funds that can’t benefit from these particular rules. Review Offshore Structures: If you’ve set up trusts, companies, or other vehicles to hold assets, these may need revisiting to ensure what your exposure to taxes may now be.
Key updates from the Budget to consider:
Temporary Repatriation of Funds: The new regime allows temporary repatriation of overseas funds to the UK under specified conditions with a low and fixed-rate tax charge. This presents a valuable opportunity for Non-Doms, but requires careful planning to meet the conditions and avoid unanticipated liabilities. The Foreign Income and Gains (FIG) Regime: The introduction of the FIG regime provides a welcome relief from UK taxes for some. But those unable to benefit from it will now face having to disclose all offshore income and gains, even if not remitted to the UK. Reforms to Overseas Workday Relief (OWR): The eligibility criteria for claiming OWR have been tightened, with a cap on the amount of earnings that qualify. Non-Doms working overseas should ensure that their documentation clearly supports the split between UK and overseas duties to aid in calculating the relief available. Inheritance Tax (IHT) Regime now based on residency rather than Domicile: The new rules further reduce UK resident Non-Doms’ ability to avoid UK IHT in their worldwide assets, with those resident in the UK for 10 of the last 20 years now being brought into charge. Furthermore, those leaving the UK may be liable to UK IHT for a longer period than was the case previously and assets held in offshore Trusts have lost their protections from UK IHT.
The Bottom Line
The changes coming into effect on 6th April 2025 reflect the Government’s ongoing focus to ensure fairness in the tax system, while encouraging compliance and urging investment in the UK. For many Non-Doms and Non- residents, the immediate task will be reviewing their current arrangements and seeking professional advice to mitigate risks and identify opportunities. For any questions on this topic or to discuss your personal situation in more detail, please contact David or one of the tax team on 0330 058 6559 or by emailing hello@scruttonbland.co.uk
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Meet the Private Client team From creating tax-efficient solutions to protecting your assets, growing your wealth and preparing your finances for later in life - our Private Client Team have the combined expertise to take care of the financial decisions that matter to you.
Simon Hurren Private Client Tax Partner Specialising in advising High-Net-Worth Individuals with their personal tax affairs, Simon has had significant experience advising a wide range of individuals including entrepreneurs, professional footballers and more recently
Graham Doubtfire Private Client Tax Partner
Proudly offering “a joined-up approach to tax planning for private clients” Graham works closely with High-Net-Worth Individuals and business owners, using his in-depth knowledge of all aspects of personal tax matters to provide specialist assistance. And helping to mitigate exposure to income tax, capital gains tax and inheritance tax, amongst other issues.
multiple generations of families. He works closely with all clients to offer personalised financial advice to ensure both practical and tax efficient solutions are found.
Speak to Graham about Personal Tax, Inheritance Tax & Protecting Estates, Making Gifts, Trusts, Capital Gains Tax and Income Tax.
Speak to Simon about Inheritance Tax, Trusts & Estates, Personal Taxes, Capital Gains Tax, and Income Tax.
graham.doubtfire@scruttonbland.co.uk
simon.hurren@scruttonbland.co.uk
01206 417267
01473 945822
Paul Harris Private Client Tax Partner Paul is a Private Client Tax Partner focused on serving clients across central East Anglia from our Bury St Edmunds office.
Samantha Mudd Senior Tax Adviser
Sam is a member of the tax advisory team and specialises in personal tax – in particular the taxation of trusts, estates and inheritance.
Specialising in providing advice on capital taxes and wealth preservation for High-Net-Worth Individuals and their families, alongside related entities such as businesses and trusts - his particular area of expertise is agriculture and landed estates. Speak to Paul about Taxes for Agricultural Businesses, Trusts and Estates, Inheritance Tax, Capital Gains Tax, Non Dom Status and Income Tax.
As a Senior Tax Adviser in the Private Client team Sam works from our Colchester office and focuses on assisting clients with tax planning to mitigate exposure to income tax, capital gains tax and inheritance tax.
Speak to Sam about Personal Tax, Inheritance Tax, Trusts & Estates and Personal Tax Returns.
samantha.mudd@scruttonbland.co.uk
paul.harris@scruttonbland.co.uk
01206 417269
01473 945824
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David Collins Senior Tax Adviser
Kate Cowell Associate Tax Adviser
A Senior Tax Adviser with expertise in both UK and non-UK tax residency rules, David works from our Colchester office providing personalised tax advice for clients.
Kate specialises in tax compliance and with a particular focus on individuals, the taxation of trusts and Estates
As an associate tax adviser in the Private Client team Kate works from our Colchester office and focuses on assisting clients with their tax compliance, helping guide them through the process to ensure their tax affairs are up to date.
Specialising in the tax rules for both UK residents and Non-Doms, David has built many long-standing close relationships with clients across the region based on his bespoke advice and recommendations.
Speak to David about Personal Tax, Tax Advice, UK and non-UK Tax Residency Rules and Personal Tax Returns.
Speak to Sam about Personal Tax, Trusts & Estates and Personal Tax Returns.
david.collins@scruttonbland.co.uk
kate.cowell@scruttonbland.co.uk
01206 417268
01206 417270
Sterling Mayes Tax Adviser
Chris Hall Associate Tax Adviser
Sterling is a tax adviser for a range of taxes but with particular specialism in capital gains tax planning and Inheritance tax planning.
Working within our Private Client Tax department Chris specialises in the tax affairs of High-Net-Worth Individuals and their families, including all aspects of trust compliance. As part of the team, he’s also heavily involved in
With a detailed technical knowledge Sterling can advise on complexities around capital gains tax as well as Inheritance tax and tax planning for Trusts.
the Trust Registration Service declarations required by HMRC, and takes a keen interest in Capital Gains Tax, meaning he’s well placed to provide detailed advice on planning to mitigate such liabilities and the subsequent reporting of them to HMRC.
Speak to Sterling about Capital Gains Tax, Trusts and Inheritance Tax
sterling.mayes@scruttonbland.co.uk
Speak to Chris about Personal Tax Advice, Capital Gains Tax, Trust Compliance and Tax Returns.
01206 417271
chris.hall@scruttonbland.co.uk
01473 945828
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Key financial dates for your 2025 diary
31 January Self-Assessment Tax Returns deadline 26 March Office for Budget Responsibility to produce its Economic and Fiscal Forecast 1 April Temporary increases to stamp duty land tax (SDLT) free thresholds come to an end 5 April New tax year begins
TBC Autumn Budget 5 October Deadline for self-assessment registration 31 October Midnight deadline for those who want to submit a paper self-assessment tax return 30 December Deadline for self-assessment taxpayers who wish for HMRC to collect any tax due via their PAYE tax code for 2024/25 Keep an eye on our website throughout 2025 for details of all Scrutton Bland events
In 2024, Scrutton Bland became part of Sumer – a collaboration of the best regional accountancy practices with a shared vision to champion local small to medium-sized enterprises. By bringing together the best in business services, Sumer retains the value that community-based practices offer and combines this with the scale, breadth of expertise and technologies that only a national organisation can muster.
To find out more about Sumer, visit our website: www.sumer.co.uk
0330 058 6559 scruttonbland.co.uk
@scruttonbland
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