An older couple sits across a table from a younger man.

You may already have your estate in order and have written your will accordingly, but have you overlooked the value of speaking to your beneficiaries?

A new report by PIMFA suggests that 58% of people in the UK have never discussed inheritance with their family members.

Not doing so could mean that your beneficiaries may be unprepared for receiving an inheritance, or they perhaps expect to inherit a substantially different amount than you intend. It may also mean that far more of your estate may be liable for Inheritance Tax (IHT).

The research also revealed differing generational attitudes towards talking about finances. 49% of Generation X and 63% of baby boomers said they never talk about their finances with friends. Conversely, more than 80% of millennials and Generation Z said they do so at least once a year.

So, what are the benefits of speaking to your beneficiaries?

Understanding your beneficiaries’ goals

Your beneficiaries may have goals and ambitions that they have not yet shared with you or other family members. Speaking with them about your estate plan could allow you to make adjustments that better suit their goals.

Perhaps one of your beneficiaries has dreams of starting their own business, in which case you could consider investing in their business now rather than leaving them a lump sum later? Or maybe a beneficiary wants to send their children to a particular school or university and would rather the money be kept in a fund for when the children are old enough?

Your beneficiaries may also want to use their inheritance to boost their own pension fund or buy a property.

In each case, you may find that there are better ways to use your wealth and align your beneficiaries’ goals with your estate, provided you are given ample time to plan for it.

Reducing potential Inheritance Tax liabilities

In the 2023/24 tax year, individuals can usually pass up to £325,000 on their death without IHT being due. The threshold can increase by £175,000 if a direct descendant inherits your main residence. With married couples or those in a civil partnership able to transfer any unused allowance, you could leave up to £1 million before IHT is due.

If your estate is valued above the nil-rate bands, your beneficiaries could be liable to pay IHT on everything they inherit above that figure.

If you make gifts to your beneficiaries at least seven years before your passing, they may not have to pay IHT on the value of these gifts. This is known as a “potentially exempt transfer”.

So, talking to your beneficiaries about transferring wealth intergenerationally may mean you can make gifts sooner. You’re much more likely to survive for seven years after making a gift at the age of 50 than at the age of 90.

Clarifying expectations

Speaking to your beneficiaries about their potential inheritance also gives you a chance to ensure they are clear about what to expect. It can remove any shock or surprise when your loved ones receive less or more than they anticipated.

For example, if you have chosen to leave some of your estate to charity or a friend, you may want to inform your family about it before they read your will. It might also smooth over any potential misunderstandings as you can explain the decisions you have made.

Ensuring your beneficiaries are prepared

Talking openly with your beneficiaries about your estate plans may provide them with peace of mind that they’ll be in a good position to manage an inheritance.

In preparation, they may want to open new accounts, begin exploring different investment options, or start looking for properties within their budget.

Encouraging them to seek sound financial advice

Speaking to your beneficiaries is a good opportunity to encourage them to seek ongoing financial advice that may improve their long-term security.

It might be useful to ask them to consider using financial advisers you have already spoken to and who you trust. It can even be useful for the whole family to work with the same firm or adviser so they can align their interests and ensure the tax-efficient transfer of wealth.

Speaking to your beneficiaries can be an important part of planning your estate, though many families overlook the benefits. Get in touch to find out how we can help you and your family.

Please note:

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

The Financial Conduct Authority does not regulate estate planning, Inheritance Tax planning, or will writing.

A couple taking in their living room.

More than 1 million investors will be hit with a Dividend Tax bill for the first time in the 2024/25 tax year, according to an AJ Bell report. Read on to find out if you could be affected and discover some of the steps you could take to mitigate a tax charge.

A dividend is a way of distributing a company’s earnings to shareholders. Usually, dividends are issued quarterly, but some businesses may pay dividends monthly or annually. So, if your money is invested in a dividend-paying company or fund, you could receive regular cash payments from them.

Dividends from investments are not guaranteed. Companies may reduce or cut dividends if profits fall or the business faces risks.

Some business owners also choose to use dividends as a tax-efficient way to extract money from the company. 

Dividends may play an important role in your financial plan and could supplement income from other sources. However, changes to the Dividend Allowance could mean your tax bill is higher than expected.

The Dividend Allowance will fall to £500 on 6 April 2024

In the 2022/23 tax year, you could receive up to £2,000 in dividends before Dividend Tax was due.

The Dividend Allowance fell to £1,000 for the 2023/24 tax year. The AJ Bell report suggests this meant an extra 635,000 people paid Dividend Tax. The Dividend Allowance will halve again on 6 April 2024 to just £500 – a move that is forecast to drag a further 1.15 million investors into the tax net for the first time.

The amount of tax you pay on dividends that exceed the Dividend Allowance will depend on which Income Tax band(s) the dividend falls within once your other income is considered. For the 2023/24 tax year, the tax rates on dividends are:

  • Basic-rate: 8.75%
  • Higher-rate: 33.75%
  • Additional-rate: 39.35%.

So, even though the Dividend Allowance is less generous than it once was, the tax rate you pay could still be lower than Income Tax.

5 practical ways you could lower your Dividend Tax bill

1. Review your total income

Managing the income you receive from other sources could help you avoid a Dividend Tax bill or reduce the rate of tax you pay.

If dividends fall within your Personal Allowance, which is £12,570 in 2023/24 and 2024/25, they will not be liable for tax. Similarly, ensuring your total income doesn’t push you into the higher- or additional-rate tax bracket could mean you benefit from a lower tax rate.

2. Plan as a couple to use both of your Dividend Allowances

If you’re planning with your spouse or civil partner, it’s important to note that the Dividend Allowance is per individual.

As a result, passing on some dividend-paying assets to your partner could mean you’re able to utilise both of your Dividend Allowance and collectively receive £1,000 in 2024/25 before tax is due.

3. Hold dividend-paying assets in an ISA

An ISA is a tax-efficient wrapper for your savings and investments.

Dividends that you receive from investments that are in an ISA will not be liable for Dividend Tax and won’t impact your Dividend Allowance. In addition, the profits you make when selling investments in your ISA are free from Capital Gains Tax (CGT).

In the 2023/24 tax year, you can add up to £20,000 to ISAs.

4. Use your pension to invest for your retirement

If you’re investing for your retirement, pensions may provide you with a tax-efficient way to invest. Investments held in a pension are not liable for Dividend Tax or CGT. In addition, you’ll receive tax relief on your pension contributions.

Remember, you cannot usually access your pension before the age of 55, rising to 57 in 2028. As a result, it’s important to consider your investing goals and time frame, as a pension may not be appropriate for you. 

In 2023/24, you can usually add up to £60,000 to your pension (or 100% of your earnings, if lower) without incurring an additional tax charge. If you’ve already accessed your pension flexibly or are a high earner, your pension Annual Allowance may be lower.

5. Assess alternative ways to boost your income

Dividends are a popular way to boost your income, but there are other options you might want to explore too.

For example, payouts from bonds may be classed as interest and could supplement your income. Interest may be liable for Income Tax, but the Personal Savings Allowance (PSA), the amount of interest you can earn in a tax year before tax may be due, could mean it’s a useful option for you.

Your PSA depends on the rate of Income Tax you pay. In 2023/24, the PSA is:

  • £1,000 for basic-rate taxpayers
  • £500 for higher-rate taxpayers
  • £0 for additional-rate taxpayers.

Another option is to invest in non-dividend paying stocks or funds with the long-term goal of selling the assets for profit. The money you make selling investments held outside of a tax-efficient wrapper may be liable for CGT. However, the rate you pay could be lower than Dividend Tax and the Annual Exempt Amount could help you avoid a bill.

In 2023/24, the Annual Exempt Amount means you can make up to £6,000 profit before CGT is due. This allowance will halve to £3,000 in the 2024/25 tax year.

If CGT is due, the rate you pay will depend on which tax band(s) the taxable gains fall into when added to your other income. In 2023/24:

  • If you’re a higher- or additional-rate taxpayer your CGT rate would be 20% (28% on gains from residential property)
  • If you’re a basic-rate taxpayer, you may benefit from a lower CGT rate of 10% (18% on gains from residential property) if the taxable amount falls within the basic-rate Income Tax band.

Keep in mind that investment returns cannot be guaranteed. The value of investments can fall as well as rise.

Contact us to talk about your tax strategy for 2024/25

Using tax allowances and being aware of different options could reduce your overall tax liability. Please contact us to discuss your tax strategy for the 2024/25 tax year and beyond.

Please note:

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

The Financial Conduct Authority does not regulate tax planning.

A person holding up a phone showing stock market performance.

The Magnificent Seven might conjure up images of the 1960s Western film or its 2016 remake, but there’s a new group in town – seven technology companies that outgained the market in 2023. Read on to find out more about these companies and the effect they’re having.

The S&P 500 is an index that tracks the stock performance of 500 of the largest companies listed on stock exchanges in the US. It’s widely regarded as a gauge for measuring the performance of large-cap US equities as it covers around 80% of the total market capitalisation of US public companies.

In January, the S&P 500 reached a new high. However, far from indicating a strong performance across the index, just a handful of companies, dubbed the “Magnificent Seven”, were largely responsible.

The 7 technology companies that are boosting the S&P 500

The Magnificent Seven has a huge market value. In fact, the seven stocks are the same size as the entire stock markets in the UK, Canada, and Japan combined. Analysis from Deutsche Bank also found the combined profits of the companies exceeded almost every G20 country in 2023.

The Magnificent Seven are all technology stocks and include:

  • Alphabet, the parent company of Google
  • Amazon
  • Apple
  • Meta, the parent company of Facebook
  • Microsoft
  • Nvidia
  • Tesla

Individually, the stocks of these companies soared between 50% and 240% in 2023. As a leader in AI, Nvidia saw the biggest gains and it may continue. In less than a year, the chipmaker doubled its market cap to reach $2 trillion (£1.58 trillion) at the start of 2024.

The Magnificent Seven could mask wider market trends

An index rising is usually viewed positively and as a sign that the market is performing well. However, the size of the Magnificent Seven could mask wider trends.

The S&P 500 is weighted by market capitalisation, so the movements of the largest companies affect the overall performance of the index more than smaller businesses. As a result, the stellar performances of the Magnificent Seven had an even larger impact on the index than you might expect.

According to the New York Times, the gains of the Magnificent Seven in the 12 months to January 2024 account for more than 60% of the return in the S&P 500. Indeed, after Tesla’s value increased by more than 64%, it led to an almost 3% rise in the S&P 500.

The impact the Magnificent Seven have on the index might lead you to think they were the best-performing companies. Yet, this isn’t the case. For example, Royal Caribbean experienced a rise of 212% in the last year. However, as the cruise line is a smaller company, it holds less weight in the index.

The weighting could mean that even if most companies included in the index experience a fall, a strong performance from the Magnificent Seven could lead to the S&P 500 rising. As a result, if investors only viewed the headline data, they could form a very different picture of how the market is performing than it is in reality. 

The effect of the Magnificent Seven could work the other way too. If they suffered a fall in value, it would have a much larger impact on the S&P 500 than if a smaller business experienced a dip.

2 important takeaways investors may want to keep in mind

1. Look beyond the headline data

The overall performance of the S&P 500 would suggest the market is strong thanks to the Magnificent Seven. Yet, once you look at the performance of the remaining 493 companies, it’s still positive but more subdued.

Headline data without context can be misleading. So, if you’re making investment decisions, it’s often wise to dig a little deeper.

2. Don’t make investment decisions based on hype

With the Magnificent Seven featuring in headlines around the world, you might be tempted to invest in them. However, one year of strong growth doesn’t automatically mean an investment is right for you. It’s important to consider whether it suits your profile and goals, and how it might fit into your wider portfolio.

Contact us to talk about your investment portfolio

If you want to review your investment portfolio, please contact us. We could help you identify investment opportunities that are right for your goals and risk profile. Please get in touch to speak to one of our team.

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 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.

A woman holds her head with a phone in one hand and a bank card in the other.

A recent survey reported by Professional Adviser revealed that 2 in 5 wealthy individuals have been the victim of financial crime.

Of the 2,000 people with assets worth more than £250,000 who were surveyed, 41% of them reported they had been scammed, with more than a third saying they had fallen victim in the last six months. 20% of the victims lost money through investment scams, while 15% were defrauded by pension scams.

Pension and investment fraud are two common methods of scamming affluent people. Read on to find out how these scams work, some red flags to watch out for, and what you can do if you find yourself the victim of financial fraud.

Investment scams

Investment scams will attempt to make you part with your wealth, either into a fake scheme or one that is designed to make you pay more than the potential returns. They can be difficult to spot and may appear legitimate, with professional websites, client testimonials and other marketing material.

There are many different types of investment scam, and the rise of digital communication and the internet has made them increasingly complex and difficult to discern.

Indeed, according to UK Finance, in the first half of 2023, victims of investment scams collectively lost £57.2 million.

One of the most notorious forms of investment fraud is a “Ponzi” or “pyramid scheme”. In this scam, fraudsters collect money from new investors to pay earlier ones. The scheme continues until the amount owed is greater than the amount collected, and the scheme collapses leaving investors out of pocket.

How to spot an investment scam

When it comes to investment scams there are several red flags to be wary of, including:

  • Cold-calls – Cold-calls should always be treated with a degree of suspicion, especially if the caller attempts to contact you several times over a short period. If you answer a cold-call and find that you are unable to call them back or locate any further contact information, this may also be a sign that the caller was fraudulent.
  • High-pressure sales tactics – An investment scammer will often try and push you into making a quick decision. For example, they may tell you that their offer is available for a limited time only or for a certain number of people.
  • High-return, low-risk offers – If an investment offer seems too good to be true, it could be a scam. Fraudsters often offer high returns on investments or downplay the risks as a way of enticing victims into their schemes.

Pension scams

Pension scams also come in many guises, but they usually promise some form of early access to your fund that requires you to transfer your pension pot.

The fraudster might attempt to persuade you to cash in your pension or take a loan from it and then hand this money over for them to invest.

Alternatively, a criminal may try and convince you to move your pension savings from your current pot into a new one with supposed higher returns.

Since April 2015 it has become easier to self-manage your pension pot once you reach the age of 55 (rising to 57 in 2028). This also means that it has become easier for scammers to operate and commit fraud. It is important to remember that if you are aged under 55, you cannot withdraw cash from your pension without incurring significant charges, unless in exceptional circumstances.

Yet, according to an FTAdviser report, between 2020 and 2022 more than £26 million was reported lost through pension scams to the City of London Police’s National Fraud Intelligence Bureau. This figure could be the tip of the iceberg as some victims may not realise they’ve been scammed straightaway.

How to spot a pension scam

As with investment scams, there are a few tell-tale signs of pension scams you should be alert to, including:

  • Cold calls – Pension cold calling was outlawed in 2019, so any unsolicited calls should be ignored
  • High-pressure sales tactics
  • Offers that guarantee better returns than your current pension
  • Offers to help you “unlock” or “liberate” your pension pot, particularly before the age of 55
  • Unusual investments
  • Complicated structures which may involve several different groups, each of which will take a fee.

How to avoid scams

As the research from the survey indicates, financial scams are sadly all too common among affluent people. Thankfully, there are several things you can do to avoid them.

A good rule of thumb is to reject any unsolicited calls you receive. If you have already picked up the call and you feel suspicious, hang up. You can always return the call or proactively contact them if they are legitimate.

Remember that a trusted provider, such as a bank or insurance company, will never ask you for your password or other sensitive information.

If you do find yourself on the phone with someone who is proposing an investment or pension scheme to you, don’t give in to pushy sales tactics. If you are tempted by an offer, don’t commit to anything without seeking further advice.

You may want to research the firm that has contacted you. For example, you could find out if they are on the Financial Conduct Authority (FCA) register or on the FCA warning list, check their HMRC status, or research their reputation online.

If you have been offered an opportunity, you can also speak to us and we can help to determine whether it is genuine.

Finally, never share your passwords or bank details, or download software from a source you do not trust.

What to do if you think you’ve been scammed

If you think you have been the victim of financial fraud there are a few things you can do.

Get in touch

If you want further advice on how to avoid financial scams and what to do if you are the victim of one, please contact us.

Please note:

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

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 results.

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. 

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

The exterior of Carisbrooke Castle.

If you’re looking for a fun way to spend time with your loved ones over Easter, why not explore one of Britain’s many impressive country houses? Discover the beautiful landscapes and incredible stories while enjoying brilliant Easter activities at these seven historical homes.

1. Dunham Massey, Cheshire

Step into the 17th century in this gorgeous Georgian home and investigate their extensive collection of fascinating antiques, which reveal the history of the house. Then, explore the stunning gardens, 400-year-old mill, and ancient parklands populated with adorable fallow deer.

Dunham Massey is also hosting an Easter trail throughout March and April. Pick up your Easter Adventure pack from the welcome desk to enjoy 10 activity stations dotted throughout the 300 acre grounds to learn about the history of the house and celebrate the start of spring.

2. Longleat House, Wiltshire

If you’re interested in breathtaking Elizabethan architecture or experiencing one of the most significant private antique collections in Britain, Longleat House is the destination for you. Learn more about the history through one of their intimate guided tours or relax in their 900 acres of stunning landscaped grounds.

They also run brilliant activities all year round for your children and grandchildren to enjoy. Walk, drive, or sail through their famous safari to meet animals ranging from tiny meerkats to gigantic Asian elephants. Or if you’d prefer to avoid the mischievous monkeys, you can lose yourself in one of the world’s biggest hedge mazes or take a trip on their quaint railway.

3. Audley End House and Gardens, Essex

Turn back the clock to the Victorian era at one of England’s grandest mansions. Whether you want to experience the servant’s wing and kitchen garden or the state rooms and beautiful grounds, you can discover what life was like for both the rich and poor at this amazing country house.

This Easter, English Heritage is teaming up with Lego to transform Audley End’s historic stables into brick art. Help them bring history to life through your Lego creations, which will be transformed into mini versions by their master builders and displayed for all visitors to see.

4. Moseley Old Hall, Wolverhampton

Discover the secrets of the Elizabethan farmhouse whose priest hole and chapel attic tell the story of King Charles II’s escape. Stroll through a 17th century-style knot garden and heritage orchard while your children and grandchildren climb their three-storey tree house, and then peruse their lovely second-hand bookshop.

Moseley Old Hall is peppering their grounds with Easter-themed activities this year. Follow their trail from 22 March to 7 April for only £3, which includes bunny ears and a chocolate egg to get you in the Easter spirit.

5. Blenheim Palace, Oxfordshire

Blenheim Palace is the only non-royal, non-episcopal house in the country to hold the title of “palace”. As one of England’s largest country houses, it was designated a UNESCO World Heritage Site in 1987 and remains one of the most stunning buildings and gardens in Britain.

This bank holiday weekend, visit for their Easter Eggstravaganza. With exciting activities such as circus skills, balloon modelling, and a travelling vintage variety show, there’s plenty of fun for the whole family. You can keep your children and grandchildren busy with their egg hunt around the huge grounds while you refuel on delicious homemade food at their Walled Garden Pizzeria.

6. The Children’s Country House, Sudbury

Sitting proudly in their marvellous gardens, the incredible Sudbury Hall was the historic country home of the Vernon family. Explore their childhood museum, where you can take part in interactive activities, meet a Dalek, and be transported back in time in a Victorian classroom.

Once you’ve finished exploring the amazing building, you can enjoy a cup of tea in the Fairy Tale Forest Café and browse the Jungle Bookshop. Or if you’re looking for an adventure to keep your children and grandchildren entertained, why not book the second world war-themed Mystery Rooms Experience or get stuck into seasonal crafts at the Activity Hub?

7. Carisbrooke Castle, Isle of Wight

Nestled at the heart of the Isle of Wight, Carisbrooke Castle has been many things: an artillery fortress, a king’s prison, and a royal summer residence. Today, you can experience the spectacular panoramic views from the high castle walls, relax in the tranquil Princess Beatrice Garden, and meet the delightful Carisbrooke donkeys.

From 23 March to 14 April, you can join their Easter Adventure Quest for just £2. Hunt for clues in the castle grounds to track down the Easter eggs for a tasty chocolate treat, learning about the history of the island at the same time.

A couple looking worried as they review paperwork.

Homeowners with fixed-rate mortgage deals that end in 2024 could face much higher repayments due to rising interest rates. If your mortgage deal expires this year, being proactive could help you manage your outgoings.

High inflation over the last couple of years has led to the Bank of England (BoE) increasing interest rates. In November 2021, the BoE base interest rate was just 0.1%. As of February 2024, the base rate is 5.25%.

When the BoE changes the base rate it affects the cost of borrowing, including the money you borrow through a mortgage.

Homeowners who have a fixed-rate mortgage deal may not have been affected by the BoE interest rate rises yet. So, when their deal comes to an end, their repayments may rise sharply.

Fixed-rate mortgage holders will see annual bills rise by £1,800 on average

According to a report from the Resolution Foundation, almost two-fifths of households that had a mortgage when the BoE started rising rates had not reached the end of their fixed-rate deal at the start of 2024.

It’s estimated that 1.5 million households could be affected by rising mortgage repayments this year. On average, these families will see their mortgage repayments rise by £1,800 a year.

Inflation is slowly falling, and it’s expected that the BoE will start to make cuts to its base rate. However, this is not guaranteed and the Bank may choose to wait until 2025 or later to ensure that inflation has stabilised.

As a result, mortgage holders searching for a new deal this year could face significantly higher repayments than expected.

As a mortgage is often one of the largest loans you’ll take out, even a seemingly small change in the interest rate you pay can have a large effect on your outgoings.

Let’s say you borrow £180,000 through a 20-year repayment mortgage, with a 2% interest rate, your monthly mortgage repayment would be £911. But if the interest rate increased to 4.5%, the repayment would rise to £1,138 a month.

3 useful steps that could reduce your mortgage repayments

If you’re worried about your mortgage repayments increasing when your existing fixed-rate deal comes to an end, here are three useful steps you may be able to take to reduce your bill.

1. Review your credit report

Lenders will use your credit report to assess how much of a risk you pose. Those deemed less risky will often benefit from a more competitive interest rate. So, taking a look at your credit report and seeing if there are steps you could take before you apply for a mortgage could be valuable.

You can review your credit report for free, and it won’t affect your credit score.

Red flags to lenders that could indicate you’re risky are missed payments, using a high proportion of your available credit, or opening lots of new accounts recently.

Keep in mind that changes to your credit report can take several months to show up.

2. Check your loan-to-value ratio

The loan-to-value (LTV) ratio is the value of your home compared to the amount you’ve borrowed to buy it. For example, if you took out a mortgage with a 10% deposit, your LTV would be 90%.

Usually, the lower your LTV, the more competitive the interest rate you’ll be offered. This is because there is less risk of a lender losing money if you default on your mortgage repayments when you have a low LTV.

Your LTV will gradually fall if you have a repayment mortgage and keep up with the repayments. The value of your home increasing could also help you move into a lower LTV band as the amount you owe relative to the value of your home will fall.

So, understanding how much your home is worth could help you secure a lower interest rate.

3. Extend your mortgage term

When you remortgage, you may review your mortgage term so that you pay the debt over a shorter or longer time frame.

If rising interest rates could mean you struggle to meet your mortgage repayments, extending the mortgage could be useful. As you’ll pay the debt over a longer period, the repayments will fall. However, you should note that by extending the mortgage term, you’ll usually pay more in interest overall.

There may be some restrictions when extending your mortgage term. For example, some lenders will want the term to end before you reach State Pension Age.

A mortgage broker could help you find a deal that’s right for you

There are lots of mortgage providers to choose from when your current deal ends, and they could offer you very different interest rates. We could help you secure a competitive deal that means you benefit from lower mortgage repayments.

We’ll work with you to understand your mortgage needs and which lenders are likely to accept your mortgage application. Please contact us to talk to one of our team about your mortgage options.

Please note:

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

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

one girl looking envious at the delighted girl next to her on the sofa

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.  

An external image of the Palace of Westminster in the evening

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.