Ensuring the people you love benefit fully.

Inheritance Tax

Inheritance Tax (IHT)

The government levies tax on the value of a person’s estate, if their estate is worth more than the Nil Rate Band. The IHT ‘Nil Rate Band’ (NRB) is currently £325,000 (2024/2025) and many people are still getting caught in the trap of property inheritance tax as the threshold has not kept pace with the inflation of property prices, and so is affecting more and more people.

There is also an additional ‘main residence’ allowance (‘Property Nil Rate Band’ (PNRB)) which applies if a person’s home is given to their children (including adopted, foster or stepchildren), surviving husband or wife, or grandchildren. This is set at £175,000 (2024/2025) and is added to the IHT threshold providing a total allowance of £500,000 (2024/2025).

When a relative dies and leaves an estate worth more than £325,000 (2024/2025) or £500,000 (2024/2025) if the ‘main residence’ allowance applies, families are required to pay tax on the amount in excess of the NRB (and PNRB if applicable) within six months. After that, they are charged interest at a rate of 7.75% (2024/2025).

However, there are ways to lessen the burden of property IHT.

When you die, it is likely that you would wish to leave as much as possible for your loved ones. Unfortunately, this is often not as simple as you might expect. HM Revenue and Customs (HMRC) will apply 40% tax to the value of your estate over and above that of the NRB (and PNRB) that applies at the time of death.

No IHT is applicable on ‘inter-spousal transfers’ (money/property/assets that is bequeathed by one spouse (or civil partner) to the other.

Your estate could include more than you originally realise. It is often easy to dismiss IHT as something that may not affect you as your property may not be over, or much over, the IHT threshold. However, with all your other assets, such as investments, life cover, bank accounts, as well as physical property such as cars, furniture and family heirlooms, many estates are considerably over the threshold without the individuals being aware of it.

For assets passed between spouses and civil partners, the nil rate band allowance will pass along with the assets. This gives a couple available allowances (nil rate bands) of up to £650,000 (2024/2025), which increases to £1,000,000 (2024/2025) with the addition of the ‘main residence’ allowance detailed above.

For further information about Inheritance Tax please click here.

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Your concise guide to key facts and figures.

Capital Gains Tax

Capital Gains Tax Allowances, Liabilities & Reliefs

In the tax year 2024/2025, an individual’s CGT allowance is £3000.

This means you do not have to pay tax on gains from buying and selling shares or other investments during the tax year up to that amount. You do not normally have to pay tax on any gain you make when you sell your main residence.

(1). These rates do not apply to transactions involving residential property (the sale of second homes) or carried interest (the share of profits or gains that is paid to asset managers). CGT rates for these transactions remain at 18% (standard rate taxpayers) and 28% (higher rate taxpayers).

If you have used your CGT allowance, don't forget your Individual Savings Account (ISA) allowance. Both a 'Cash ISA' and a 'Stocks and Shares ISA' can shelter capital gains on investments, for example unit trust holdings, worth up to £20,000 per year.

From 6th April 2008 Taper Relief was removed and a new relief called 'Entrepreneurs' relief' was introduced to reduce the Capital Gains Liabilities on the disposal of certain business assets.

CGT is a tax on capital 'gains'. If when you sell or give away an asset it has increased in value, you may be taxed on the 'gain' (profit). This doesn't apply when you sell personal belongings worth £3,000 or less or, in most cases, your main home.

When do I have to pay CGT?

You may have to pay CGT if, for example, you:

• sell, give away, exchange or otherwise dispose of (cease to own) an asset or part of an asset
• receive money from an asset - for example compensation for a damaged asset

You don't have to pay CGT on:

• your car
• your main home - provided certain conditions are met
• ISAs
• UK Government gilts (bonds)
• personal belongings individually worth £3,000 or less when you sell them
• betting, lottery or pools winnings
• money which forms part of your income for income tax purposes

Important Considerations:

• if you are married or in a civil partnership and living together you can transfer assets to your husband, wife or civil partner without having to pay CGT
• you may not give assets to your children or others or sell assets to them cheaply without having to consider CGT
• if you make a loss you may be able to make a claim for that loss and deduct it from other gains, but only if the asset normally attracts CGT
• if someone dies and leaves their belongings to their beneficiaries, there is no CGT to pay at that time - however if an asset is later disposed of by a beneficiary, any CGT they may have to pay will be based on the difference between the market value at the time of death and the value at the time of disposal

For further information about the 2024 Budget changes please click here.

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Basic concepts and key facts.

Income Tax

Income Tax Allowances

PLEASE NOTE: the figures shown below apply to English taxpayers. Scottish taxpayers have different rates and bands. For more details, visit https://www.gov.scot/publications/scottish-income-tax-2024-2025-rates-and-bands/.

The income tax Personal Allowance for the year 2024/2025 is £12,570 (2023/2024 - £12,570). If your total income is less than this during the tax year, you have no tax to pay.

(1). This allowance is subject to the £100,000 income limit. The individual’s personal allowance is reduced where their income is above this limit. The allowance is reduced by £1 for every £2 above the limit.

(2).This age-related allowance is reduced by £1 for every £2 of income above this limit.

(3). This allowance is subject to the £37,000 income limit. The individual’s married couple’s allowance is reduced by £1 for every £2 above the limit. That reduction only applies after any reduction to their personal allowance (see note 1). The individual’s married couple’s allowance is never reduced below the minimum amount. Tax relief for the Married Couple's Allowance is given at the rate of 10%.

(4). This is also the maximum relief for maintenance payments where at least one of the parties is born before 6 April 1935.

(5). This transferable allowance is available to married couples and civil partners who are not in receipt of married couple’s allowance. A spouse or civil partner who is not liable to income tax; or not liable at the higher or additional rate, can transfer this amount of their personal allowance to their spouse or civil partner. The recipient must not be liable to income tax at the higher or additional rate. 

(6). Individuals will not have to pay tax on the first £500 of dividend income they receive.

(7). Basic rate taxpayers will not have to pay tax on the first £1,000 of savings income they receive and higher rate taxpayers will not have tax to pay on their first £500 of savings income.

(8). You may also get up to £5,000 of interest and not have to pay tax on it. This is your starting rate for savings.
The more you earn from other income (for example your wages or pension), the less your starting rate for savings will be.
If your other income is £17,570 or more you’re not eligible for the starting rate for savings if your other income is £17,570 or more.
If your other income is less than £17,570 your starting rate for savings is a maximum of £5,000. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1.

The rates available for dividends are the 8.75 per cent ordinary rate, the 33.75 per cent dividend upper rate and the dividend additional rate of 39.35 per cent.

The self-employed can claim business expenses against their income. So make sure you include all possible justifiable business expenses on your self-assessment form. This also applies to capital allowances for expenditure on plant and equipment, including computers and tools, for example, used for your business.

It is worth remembering you may be able to pay further contributions to your pension, which can utilise unused tax relief.

Since its introduction in 1990, Gift Aid allows taxpayers to receive tax relief on gifts made to qualifying charities.

One other point to remember is if one spouse is a tax payer and the other is not or pays tax at a lower rate it is worth considering switching certain investments to take advantage of their unused tax allowances.

For further information about the 2024 Budget changes please click here.

Useful insights into the basics of taxation.

Introduction to Taxation

Taxing Questions

Most of us face being taxed on our income, our capital gains, and in some circumstances the value of our estate when we die.

Taxation can be very complicated and the rules, reliefs and allowances often change, so it is worth obtaining a clear grasp of how these taxes work by discussing with a professional adviser the most efficient way to arrange your finances.

An expert will be able to help you plan your taxes in advance, and come up with effective strategies that will use the lawful reliefs and allowances to minimise the amount you have to pay.

By understanding how taxation works, you should be better prepared to manage your finances and you could save money in the long run.

One thing can be said for all forms of tax: if you do nothing, it is highly likely that you will end up paying more to the Government than you actually need to do.

For further information about the 2023 Budget changes please click here.

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