Finance

Free Guide: Spring Statement 2024

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On Wednesday, 6 March, Jeremy Hunt, the Chancellor of the Exchequer, addressed the Commons to deliver the Spring Budget 2024.

Following the Spring Statement, we have produced a guide breaking down these changes which you can download for free.

Fill out the form below to receive your free guide.

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Take your ISA to the max

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ISAs are one of the most straightforward ways to achieve tax-efficient gains. Remember you can currently invest up to £20,000 this tax year in an ISA, so a couple can put £40,000 out of the reach of the taxman. And don’t forget your children or grandchildren. Parents and guardians can invest up to £9,000 in a Junior ISA.

To find out more or discuss your requirements, please contact us.

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Individual Savings Accounts (ISAs)

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What is an ISA?

Individual Savings Accounts (ISAs) aim to encourage UK residents to plan for their financial future by saving and investing in a tax efficient way.

ISAs are a type of savings plan where you can pay in lump sums and/or regular contributions. There are both advantages and disadvantages to having an ISA.

If you want to discuss ISAs and the potential benefits to your financial future, please contact us:

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Make the most of your ISAs

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Don’t Miss the ISA Deadline 5th April 2024

Any unused ISA allowance will not be rolled over into the new tax year. On 6 April when the new tax year starts, if you haven’t used all of your or your children’s ISA allowances from the previous tax year, they will be lost forever.

Here are your ISA questions answered

Q: What is an individual savings accounts or ISA?

A: An ISA is a ‘tax-efficient wrapper’.

Types of ISA include a Cash ISA and Stocks & Shares ISA. A Cash ISA is similar to a normal deposit account, except that you pay no tax on the interest you earn. Stock & Shares ISAs allow you to invest in equities, bonds or commercial property without paying personal tax on your proceeds.

Q: Can I have more than one ISA?

A: You can have as many ISAs as you like, as long as you meet the eligibility criteria for each type. However, you can only pay into one of each type of ISA in a single tax year (e.g. one Cash, one Lifetime, one Stocks and Shares, one Innovative Finance) and you can’t pay in more than your annual ISA allowance overall which is £20,000 for the current tax year across all your ISAs this tax year. However, bear in mind that you have the flexibility to split your tax-efficient allowance across as many ISAs and ISA types as you wish. For example, you may invest £10,000 in a Stocks & Shares ISA and the remaining £10,000 in a Cash ISA. This is a useful option for those who want to use their investment for different purposes and over varying periods of time.

Q: When will I be able to access the money I save in an ISA?

A: Some ISAs may tie your money up for a period of time. However, others are flexible. If you’re after flexibility, variable rate Cash ISAs don’t tend to have a minimum commitment. This means you can keep your money in one of these ISAs for as long – or as short – a time as you like. This type of ISA also allows you to take some of the money out of the ISA and put it back in without affecting its tax-efficient status.

An ISA is a tax-efficient way to invest because your money is shielded from Income Tax, tax on dividends and Capital Gains Tax’ On the other hand, fixed-rate Cash ISAs will typically require you to tie your money up for a set amount of time. If you decide to cut the term short, you usually have to pay a penalty. But ISAs that tie your money up for longer do tend to have higher interest rates.

Stocks & Shares ISAs don’t usually have a minimum commitment, which means you can take your money out at any point. As with all investing, it’s recommended that you invest your money for at least five years or more. Staying invested for longer allows your investment to grow and to better weather any market volatility.

Q: Could I take advantage of Lifetime ISA?

A: You’re able to open a Lifetime ISA if you’re aged between 18 and 39. You can use a Lifetime ISA to buy your first home or save for later life. You can put in up to £4,000 each year until you’re 50. The Government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.

Q: What is an innovative ISA?

A: An Innovative Finance ISA allows individuals to use some or all of their annual ISA allowance to lend funds through the Peer to Peer lending market. Peer to Peer lending allows individuals and companies to borrow money directly from lenders. Your capital and interest may be at risk in an Innovative Finance ISA and your investment is not covered under the Financial Services Compensation Scheme.

Q: What is a junior ISA?

A:This is a savings and investment vehicle for children up to the age of 18. It is a tax-efficient way to save or invest as it is free from any Income Tax, tax on dividends and Capital Gains Tax on the proceeds. The Junior ISA subscription limit is currently £9,000 for the tax year 2023/24.

Q: Is tax payable on ISA dividend income?

A: No tax is payable on dividend income. You don’t pay tax on any dividends paid inside your ISA.

Q: Is Capital Gains Tax payable on my ISA investment gains?

A:You don’t have to pay any CGT on profits.

Q: I already have ISAs with several different providers. Can I consolidate them?

A: Yes you can, and you won’t lose the tax-efficient ‘wrapper’ status. Many previously attractive savings accounts may cease to have a good rate of interest, and naturally some Stocks & Shares ISAs don’t perform as well as investors would have hoped. Consolidating your ISAs may also substantially reduce your paperwork. We’ll be happy to talk you through your options.

Q: Can I transfer my existing ISA?

A:Yes, you can transfer an existing ISA from one provider to another at any time as long as the product terms and conditions allow it. If you want to transfer money you’ve invested in an ISA during the current tax year, you must transfer all of it. For money you invested in previous years, you can choose to transfer all or part of your savings.

Q: What happens to my ISA if I die prematurely?

A: The rules on ISA death benefits allow for an extra ISA allowance to the deceased’s spouse or registered civil partner.

Time to take your ISA to the max?

ISAs are one of the most straightforward ways to achieve tax-efficient gains. Remember you can currently invest up to £20,000 this tax year in an ISA, so a couple can put £40,000 out of the reach of the taxman. And don’t forget your children or grandchildren. Parents and guardians can invest up to £9,000 in a Junior ISA.

To find out more or discuss your requirements, please contact us.

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Tax Year End Checklist

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Personal tax planning should be at the top of your agenda as the end of the current tax year is not too far away. Taking action now may give you the opportunity to take advantage of any remaining reliefs, allowances and exemptions.

At the same time, you should be considering whether there are any planning opportunities that you need to consider either for this tax year or for your long-term future.

Feel you need to talk about a tax year end tax health check?

We hope you find this checklist useful, but please bear in mind that this only provides a summary of the options available and not all options will be suitable for everyone. Please do contact us if you would like more information on any of the areas outlined above.

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What are the tax implications when I receive my pension pot?

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As expert Financial Advisors we are here to make the complex straight forward. We work with you to ensure you maximise all tax relief available and to look at all your current and future finances to mitigate a whole range of liabilities including inheritance tax, income tax and capital gains tax.

Ensure your investments are tax efficient

The UK tax system is notoriously complex, but the benefits of structuring your finances tax efficiently can be significant. It is important to keep up with any changes that could affect your tax position now and in the future.

If you’d like to speak to us about tax implications surrounding your pension, please get in touch

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Tax Year End: Time for a Tax Health Check?

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As the financial year draws to a close the clock is ticking and it is important to utilise all the tax reliefs and allowances available to you before 5 April 2024 in order to minimise any potential liabilities.

Personal tax planning should be at the top of your agenda as the end of the current tax year is not too far away. Taking action now may give you the opportunity to take advantage of any remaining reliefs, allowances and exemptions.

At the same time, you should be considering whether there are any planning opportunities that you need to consider either for this tax year or for your long-term future.

We’ve listed a few reminders of the issues you may want to consider as worthy of including in your 2023/24 tax health check to-do list.

Some key things you might need to action before the tax year end

Personal reliefs: Married couples should consider utilising each person’s personal reliefs, as well as their Pension drawdown: If you are 55 or over you could access 25% tax-free cash from your Defined Contribution (also known as Money Purchase) pension pots and invest the rest.

However, drawing large amounts in one tax year can lead to a larger tax bill than if spread over a longer period. Do you know the implications of taking money out of your pension pots?

Passing on your pension: Usually called a ‘spousal by-pass trust’, although the recipient may not always be a spouse, this is a discretionary trust set up by the pension scheme member or pension holder to receive pension death benefits. Are your pension death benefits written in trust?

Pension Annual Allowance: Maximising pension contributions up to the current £60,000 in 2023/24 offers maximum tax efficiency. The annual allowance is tapered (reduced) for higher earners. It is reduced by £1 for every £2 someone earns over £260,000 (including pension contributions). Tapering stops when the annual allowance reaches £10,000.

Pension Lifetime Allowance: In 2023/24, the standard lifetime allowance for most people is £1,073,100. At the Spring Budget 2023, the Government announced that it would abolish the lifetime allowance. It started this process by removing the tax charge for exceeding the lifetime allowance from 6 April 2023 encouraging greater (and tax efficient) pension contributions by all. Could you take greater advantage of these pension related tax efficiencies?

Individual Savings Accounts (ISAs): An ISA allows you to save and invest tax-efficiently into a cash savings or investment account. The proceeds are shielded from Income Tax, tax on dividends and Capital Gains Tax. The Government puts a cap on how much you can put into your ISA or ISAs in any tax year (from 6 April to 5 April). The ISA allowance for 2023/24 is set at £20,000. Have you fully utilised the maximum annual allowance?

Junior ISAs: This is a long-term tax-efficient savings account set up by a parent or guardian, specifically for the child’s future. Only the child can access the money, and only once they turn 18. Have you invested the maximum £9,000 allowance for your child or children?

Lifetime ISAs (LISAs): The Lifetime ISA (LISA) is a tax-efficient savings or investments account designed to help those aged 18 to 39 at the time of opening to buy their first home or save for retirement. The government will provide a 25% bonus on the money invested, up to a maximum of £1,000 per year. You can save up to £4,000 a year, and can continue to pay into it until you reach age 50. Could you be taking advantage of this very tax-efficient option?

Capital Gains Tax (CGT): There are two different rates of CGT – one for property and one for other assets. If your assets are owned jointly with another person, you could use both of your allowances, which can effectively double the amount you can make before CGT is payable. If you are married or in a registered civil partnership, you are free to transfer assets to each other without any CGT being charged. It is currently £6,000 from 6 April 2023 and £3,000 from 6 April 2024. Have you fully used your annual exemption?

Inheritance Tax (IHT) relief: IHT must be paid on the value of any estate above £325,000, or up to £1 million for married couples including the residence nil-rate band). However, certain business assets, including some types of shares and farmland, in private trading companies can qualify for 100% relief from IHT. The Government has frozen the IHT thresholds for two more years to April 2028. Are you taking advantage of the reliefs available to you?

Residence nil-rate band (RNRB): This allowance was introduced during the 2017/18 tax year and is available when a main residence is passed on death to a direct descendant. The allowance is currently £175,000. When combined with the nil-rate band of £325,000, this provides a total IHT exemption of £500,000 per person, or £1 million per married couple. If you are planning to give away your home to your children or grandchildren (including adopted, foster and stepchildren) the RNRB must be claimed.

There is a form for this purpose – IHT435. The form is available on the Gov.uk website. If applicable, have you applied for the RNRB?

Charitable and personal gifts: If you leave at least 10% of your net estate to charity a reduced inheritance rate of 36% applies rather than the usual 40%. Other exemptions apply for inter-spousal transfers, transfers of unused annual income, business and agricultural assets, and for various other fixed, small amounts. Are you intending to make gifts before the end of the current tax year?

Trust funds: These help protect your assets and guarantee that your loved ones have financial stability for their future. Crucially, a trust can help to avoid IHT and ensure that the majority of your money, shares and equity are passed on in the most efficient way. Should you consider setting up a trust? Future legislation could potentially result in changes to tax law, which could in turn require adjustments to your plans.

Feel you need to talk about a tax year end tax health check?

We hope you find this checklist useful, but please bear in mind that this only provides a summary of the options available and not all options will be suitable for everyone. Please do contact us if you would like more information on any of the areas outlined above.

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Estate Planning for Business Owners

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Not having an estate plan in place for your business risks undermining a lifetime of work

Proper estate planning helps to provide for your loved ones, business partners and employees who rely on your business; minimise tax exposure; and provide clear instructions on how the business should proceed. These plans are also critical in case you’re incapacitated.

Not having an estate plan in place risks undermining a lifetime of work, jeopardising the livelihood of your family and your business partners. Owning a business is time-consuming. Your focus is on managing the day-today tasks while growing the business.

There’s little time left over to think about anything else, especially what would happen if something were to happen to you. Not having an estate plan in place risks undermining a lifetime of work, jeopardising the livelihood of your family and your business partners.

Create succession and exit plans

Consider these two different scenarios. In a succession, you’re turning the reins of the business over to the next leader. In an exit, you are selling or shutting down the business. When deciding whether to sell, close or pass along the company you’ve built, you need to consider a number of factors.

On a personal level, are you ready to retire or find you’re working too many hours? Are you simply no longer passionate about the business and ready to try something new? Answering these questions should provide clarity into your next steps.

Exit plan

If you wish to sell your business, you need an idea of the value. In fact, even if you aren’t looking to sell, it’s smart to always have a ballpark idea of the business’s market value.

Establishing an exit plan early on in the life of your business is crucial if you’re to extract the highest value from your investment of time and money. Exit plans are not static documents, however – they’re fluid, and should be reviewed as the company evolves. This ensures that plans remain achievable and provides the best chance of securing the highest return on sale, whether the business is intended to provide an income until retirement, or you intend to sell your company sooner rather than later.

Succession plan

Succession planning is becoming increasing critical for all businesses. It is the process of identifying and developing potential future leaders or senior managers, as well as individuals who could fill other business-critical positions, either in the short or the long term. The aim is for organisations to have greater visibility of individuals who are interested in filling key and/or new roles effectively. A well-thought-out succession plan reduces the risk of significant disruption when you lose senior personnel. The process of succession planning is critical to ensuring your business can continue to thrive when key people leave.

A well-thought-out succession plan reduces the risk of significant disruption when you lose senior personnel. Without a succession plan, businesses can find themselves without adequate management and leadership where it is needed most.

Ellis Bates are here to help you through this essential business planning.

Get in touch today

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Supporting your Business with Financial Advice

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We are here to provide expert financial advice for business owners.

Our business protection services include:

  • Group protection
  • Shareholder and co-shareholder insurance and protection
  • Partnership protection
  • Relevant life protection
  • Key person insurance
  • Director’s life insurance
  • Critical illness insurance
  • Health care insurance

For more information on any of these services, please download our free guides:

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Succession Planning: Preparing your Business for the Future

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Preparing yourself, your family and your business for the future 

The operational demands of running a family business or other closely held enterprise can be all-consuming, but it’s vital that business  leaders take the time needed to assess their organisation’s business succession planning. 

After pouring years of your life into building a profitable business, it’s natural that you’ll want to pass it on to someone who will take equal care of it, whether that’s a member of your family or a buyer. That’s why succession planning is so important. In the context of your business, succession planning is the process that ensures a smooth transition of ownership from you to someone else, so that a new owner can continue to pursue your company’s goals. 

Why is succession planning important? 

A succession plan can help to leave the business without negative repercussions, secure your legacy at the company, ensure a seamless transition to new management and reassure employees and stakeholders. 

What are your succession planning options? 

The three most common options are: 

  1. Keeping the business in your family

You might want to pass on your business to a family member, such as an adult child. 

While this option has many benefits, the relationships and emotions involved can make objectivity difficult, so it can help to involve an external adviser who can remain impartial. 

  1. Selling the business

It can be difficult to find a buyer with the skill and expertise to run your business, and the inclination to do so. But once you find them, this option can be profitable and strategically successful. 

  1. Management buyout (MBO)

Another option is for your company’s managers to become owners by raising the finances together. This can be the best way to ensure continuity of your business’s progress towards its goals, as the same team continue to operate it and service customers. 

How can you ensure successful succession planning? A successful succession plan takes time and dedication. It will be unique to your business. But all good plans involve the following steps: 

Goal setting 

Consider your personal goals and the goals of the business. You may have shareholders or other stakeholders whose goals you must consider. 

Timeline planning 

You need to establish the date you’re working towards, which may be definite, for example, your retirement at a specific age or indefinite, your eventual death. 

Communication 

Keep your employees, customers and clients informed. When people feel ‘out of the loop’, they get uneasy and you may lose them. Seeking professional advice You’ll likely only create a succession plan once. So, to maximise your chances of success, speak to a professional adviser who’s helped other businesses create theirs. An expert’s perspective provides insights you may not be aware of and keeps your plans on track.

If you’d like to find out more about Financial Advice for Business, please download our free guide:

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