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What’s Your Opinion About the Budget?

Dominic Thomas
Nov 2025  •  4 min read

What’s Your Opinion About the Budget?

There was a palpable sense of adolescent schoolchildren during the Budget. The team here couldn’t quite fathom the petulant behaviour of adults. It didn’t help women’s causes that the three main characters seemed like characters from St Trinian’s, Grange Hill and Mean Girls. You can decide who was who.

The short version – nothing much happened. The Budget is often an exercise in shuffling the deck attempting to please the public who want more for less, the media who want sensationalism and the markets which want certainty. If we are honest the “greater good” should prioritise the planet, society and the economy in that order, but little is achieved without money, so the reverse generally holds.

A main problem that any Government has is that roughly 10% of all taxes ends up going towards servicing interest on loans the UK has received, (it’s now almost as much as the entire spend on education). This includes paying you your interest on your UK Government Bonds and Gilts or National Savings. As it is just the interest (not actually repaying the debt) market responses to a Budget can increase this considerably.

I’m not sure that I can really comment on the Budget without getting ‘political’, but … I think it’s a pity that:

  • Young people attempting to buy a home were not given any good news
  • The Landlord tax will likely only increase rents, which seems entirely counter-productive
  • Tax relief on pensions could have been simplified to a single rate for all
  • Working taxes are punishing work and are overly complicated. If you want to get people spending, raise the personal allowance and give it to everyone irrespective of income. I’d be bold with this
  • NI needs to be sorted properly and with gumption, employers have seen enormous increases in staffing costs, which results in both inflation and reduced new hires as well as possibly redundancies. I don’t know what the solution is, but I think I would amalgamate it into income tax
  • Small farms haven’t had any relief of note, these people feed us and look after the countryside and are being squeezed on their own margins. I think the £5m exemption would seem fairer
  • There is about £11bn of uncollected corporation tax that is hidden offshore by multinationals. This can and should be collected
  • I’m curious to know how EV mileage will be monitored
  • We need to encourage entrepreneurs who take a risk to start a business and employ people in good jobs with good salaries which generate tax. So the cut in reliefs isn’t helpful
  • Clearly tax simplification isn’t that simple

To me, tax is a bit like someone who plants a tree for future generations to sit in its shade, whilst never doing so themselves. It’s a price paid to the future.

I don’t pretend to have the answers and it is very easy to criticise a Government. I rewatched the disastrous Kwasi Kwarteng Budget of September 2022. I would imagine that most people would actually agree with his policies to reduce income taxes and welcome many of his proposals at the time, but we are beholden to the servicing of debt on the Bond market. All Chancellors are subject to the wisdom of Proverbs 22:7 “The borrower is a slave to the lender”.  [For your interest – it is generally believed that King Solomon wrote the Book of Proverbs.]

Anyway, perhaps you have some thoughts of your own?

What’s Your Opinion About the Budget?2025-11-27T14:28:54+00:00

What happens if my bank goes bust?

Matt Loadwick
Nov 2025  •  3 min read

What happens if my bank goes bust?

It’s probably fair to say that consumer understanding of the banking system is varied. Many people (and I used to count myself as one of these) live their lives being under the impression that the money held in their personal bank accounts, the numbers they see on their bank statements or banking app at any one moment, represents their money alone, which is held in their separate bank account, for themselves, and themselves only.

In reality, this is not quite how it works. It is true to say that it is your money, in that it is money you are entitled to. However, what happens to your money when you deposit it with a bank is not quite the same as what some people may picture. Rather than it just sitting there waiting for you to use it, the bank keeps a small reserve and then lends out the rest to earn profit, charging interest on loans and mortgages etc. This means that there is some element of risk involved when depositing funds with a bank that probably isn’t at the forefront of our mind. This is probably because (living in the UK), we take the safety and robustness of the financial services industry as a given. All banks have safeguards in place to limit the risk of you not being able to access your money; holding reserves, managing cash flows, and borrowing if needed so that it can meet withdrawals on demand.

In the UK, authorised by the Bank of England’s regulatory arm, the Prudential Regulation Authority (PRA), there are further protections for consumers in place. For the last eight years, savers with a UK-authorised bank, building society or credit union have benefitted from a deposit protection limit of £85,000, backed by the Financial Services Compensation Scheme (FSCS). This means that if your bank went bust, the FSCS would compensate you up to the value of £85,000, typically within seven days of a bank going out of business. It should be noted that this limit is per person, so in a joint account with a married couple, for example, the protected limit would be £170,000.

A new deposit limit of £120,000 per person has just been announced, taking effect from the 1st of December. This is a 41% increase on the current limit, and was a larger increase than was expected within the industry. At the same time, the protection on ‘temporary high balances’ – which accounts for scenarios where a customer may temporarily have a large amount land in their account following a property sale, receiving an inheritance or an insurance policy payout – will be increased from £1m to £1.4m. Temporary high balances are protected for up to six months.

Without doubt, this is good news for consumers. The chief executive of the PRA, Sam Woods, said that the new maximum limit “will help maintain the public’s confidence in the safety of their money.”

There are concurrent concerns of course that the higher deposit protection limit could encourage more wealthy consumers to cache more money in savings accounts, which is contrary to the government’s objective of encouraging people to invest in the stock market, and in British companies in particular, with the aim of boosting the economy. There may be some validity to this, but purely from the perspective of individual consumers, this increased protection should absolutely be seen as a positive move.

There is no way of holding money that is truly free of risk. Holding too much money in cash means you subject yourself to inflation risk – ie the value of your money being eroded over time. Investing in the stock market means that you subject yourself to investment risk – ie the possibility that an investment’s return will differ from its expected return, including the potential loss of some or all of your initial investment. We’re here to help you decide which risks are best for you in a way that enables you to live the life you want to lead.

What happens if my bank goes bust?2025-11-21T16:20:23+00:00

Autumn Budget 2025 (Latest Announcement)

Matt Loadwick
Sept 2025  •  2 min read

Autumn Budget 2025 (Latest Announcement)

The Treasury has announced that this year’s Autumn Budget will be delivered on 26th November.

The chancellor makes a budget statement each year to MPs in the House of Commons, which presents the Government’s fiscal plans; stating which taxes will be raised (or lowered), and where public spending will be focused – on areas such as health, schools, transport and other public services.

Last year, this Labour Government’s first budget in office brought about some significant changes to taxation, including: announcing proposals to bring pensions into the estate for IHT purposes as of April 2027, increasing Capital Gains Tax rates to 18% & 24% (from 10% & 20%), increasing employer National Insurance Contributions, and lowering the threshold at which Stamp Duty Land Tax is paid for first time buyers from £425,000 to £300,000.

This year’s budget comes against the backdrop of a difficult economic landscape, with the cost of government borrowing reaching a 27-year high on the 2nd September. The interest rate paid on 30-year gilts (bonds), referred to as the gilt yield, reached 5.72%, increasing the costs of borrowing for the government. This has led to criticism being levelled at Chancellor Rachel Reeves for her management of the economy, however it should be recognised that the UK is not alone in seeing borrowing costs rise, with costs also rising to their highest levels since 2011 on 30-year bonds in France, Germany and the Netherlands. There are various factors affecting global borrowing costs, such as Trump’s trade policies, geopolitical uncertainty and conflict.

The options for this Government are made more difficult by their pre-election pledges not to increase taxes for working people, whilst attempts to balance the books through welfare spending cuts were shown to be incredibly difficult to get past Labour MPs. It is therefore expected that some tax rises will be announced in the upcoming budget, but the Chancellor is going to have to be creative if she is to stick to her ‘rules’.

We’ll be keeping an eye on further news as it emerges in the coming weeks, and, as we do every year, the team at Solomon’s will be watching the budget announcement live on 26th November. We’ll subsequently be keeping you fully informed on any announcements that affect your financial planning.

Autumn Budget 2025 (Latest Announcement)2025-09-22T13:41:44+01:00

Would you be hit by a Wealth Tax?

Dominic Thomas
July 2025  •  4 min read

Would you be hit by a Wealth Tax?

We live in a world that is lurching towards fascism, which is largely due to the failure of centrist Governments to address the inequalities in our society. Whilst evidently aware that the UK overspends and hasn’t enough income each year to continue to provide the services that we expect, sadly this Government, much like those before it, is adamantly refusing to tax the very wealthy (those with more than £10m of assets). Instead, they are taking a wrecking ball to the working and middle classes and small businesses with tax upon tax.

Plans to raise even more from inheritance tax (IHT)

We know that inheritance tax is unpopular and probably not because of the amount it raises (which is a fraction of taxes, accurately less than 1% of the total £857,821m) but rather more to do with the approach that Government simply taxes you again, taking bites out of the same money. Your savings have already suffered income tax, capital gains tax and possibly stamp duty and VAT, yet also finally succumb to inheritance tax.

The Fake Exodus

The failure of the current Chancellor, who in fairness is just as ineffective as all her predecessors over the last 40 years or so, is unable to appreciate the biases that she has – an inability to believe that taxing a few people more will not cause them to leave the UK with a proper wealth tax. Pandering to right wing reports of an “exodus” of millionaires from the UK, which is an utterly inflated and bogus interpretation of the available data, we, like the Chancellor and most politicians, are being fed the lie that we must allow the very rich to pay minimal taxes or risk their departure and then share the burden between those who remain here. In fact, our tax system is deliberately structured this way. The firm touting the narrative, seized upon by billionaire media moguls, is Henley and Partners – a company that basically specialises in servicing the ultra-rich. Its equivalent is a gun manufacturer distorting violent crime data resulting in fear and widespread gun ownership (ker-ching!) and … more violent crime.

Reality Check – Millionaires care about a thriving society too

The reality is that only 0.2% (zero point two percent) of millionaires migrate. This rate has barely altered. The Tax Justice Network and Patriotic Millionaires UK have both attempted to address this grossly deliberately misleading narrative, providing data and facts, but UK and global media outlets are rarely concerned with anything other than sensationalism and stoking division. It wouldn’t be a surprise if you had never heard of either organisation. It might surprise you to learn that 80% of UK millionaires support a 2% wealth tax. These are people who have at least £4m of net assets, which does include some of our clients.

Chancellor Rachel Reeves, like those before her, has fallen for it and is pressing ahead with frozen allowances, increases to NI and tax rises for inheritance taxes in particular, impacting anyone with an investment-based pension fund (you) or a farmer (we have a few farmer clients but not many). Whilst Henley and Partners have backtracked on their false and inflammatory statements about an “exodus”, the media has not caught up and neither has Reeves.

As a result, the gradual reduction of the welfare state, the sense of distaste that most of us have for our ever-rising bills and taxes, the billionaires and ultra rich continue to build wealth and remain largely outside of scope. The constant failure of the UK Government and in particular Kier Starmer, leaves the door open for an irate electorate to vote for change, sadly the party that garners attention (thanks to a more than willing media) is that of Reform and the duplicitous Nigel Farage, who is a Trump mimic and fans the flames of fascism. For some people he is a protest vote; but the evidence suggests that he is not merely a protest. His rhetoric (backed by very wealthy individuals like Elon Musk and businesses) calls for dismantling the welfare state (including the NHS) and taking an authoritarian approach – threatening our democracy. On the rare occasions that he and his supporters admit that Brexit has failed, he states this is due to Government not going far enough (by which he means far right enough). Whilst the focus may initially be on “illegal immigrants”  and abandoning plans to save our only planet, his “policies” or words will inevitably fail to address any real problems; his argument will always be that centrists (the vast majority of the electorate) didn’t allow him to go far enough, and so we are, in my view, at a crossroads. He also advocates “relaxing” gun laws and defended fascists (laughably calling them “concerned families”) attempting to burn down a hotel which may have housed asylum seekers. You know your history.

When new information comes to light, I am forced to rethink and change my mind – how about you? My role as your adviser is not to tell you how to vote, but to advise you about your wealth and how this aligns with your lifestyle and the general sense of wellbeing when contextualised within our society.  Successive Governments have all largely failed most of us except the very wealthy which doesn’t include you (or me) despite our combined efforts to save, invest, grow, innovate, employ, repay debt and minimise taxes.

Instead, an employed person earning say £120,000 will have tax rates of 62% whereas I can assure you that someone with sufficient capital will be able to generate the same level of income with tax rates no higher than 28%. Taxing income and taxing wealth are not even vaguely comparable. You will note that in the diagram about tax receipts, most of those taxes are paid by working people under State Pension age.

I’m actually of no particular political persuasion, I attempt to vote for who I believe will serve our country and planet best, not necessarily my own interests. The choices today are highly influenced by media bias and false representation. Somehow, we have to pick our way through the noise and vote for decent people who hold everyone’s interests; not simply those who have a particular distorted view of monoculture, a faux respect for the protection of women and children (look at what they vote to cut) and conveniently forget our history whilst at the same time portraying a distorted view of the past. It is time for hope, not hate.

Would you be hit by a Wealth Tax?2025-08-13T10:19:38+01:00

Coming to your inbox – the latest tax headlines

Dominic Thomas
April 2025  •  4 min read

Coming to your inbox – the latest tax headlines

This morning (Wednesday 23rd of April) HMRC provided a regular release of information concerning tax receipts. It makes interesting reading for those of us who work with tax for a living, but for most, well … not so much. In essence, it covers the tax collected up to the end of the 2024/25 tax year, though there is always some adjustment made. Let’s start with the headline figure.

HMRC collected £857billion in tax for 2024/25 up 3.4% on the previous year. The trend is ever upwards for the collection of tax, at least from those of us not evading it.

Graph 1

The data in the chart above shows:

  • annual receipts over the last 20 years have grown from £402.9 billion in 2005 to 2006, to £857.0 billion in 2024 to 2025
  • receipts as a proportion of GDP over the last 20 years have grown from 28.4% in 2005 to 2006, to 29.8% in 2024 to 2025
  • the slight fall in 2008 to 2010 was due to a period of economic slowdown
  • receipts fell to £584.0 billion in 2020 to 2021, due to the economic impact of the COVID-19 pandemic and the subsequent government policies to support business and individuals

Even in my small world, the sector media focuses on what stories resonate. The item that grabbed the most attention recently was about inheritance tax “up to its highest level ever!” Whilst true that £8.2bn was paid in inheritance tax, this made up less than 1% of all tax receipts. This tells us a lot about the direction of politics – a focus on the 1% rather than the majority.

This is the chart that media focus on – the rising tide of inheritance tax.

Graph 2

Of course, this is a truth and clearly £8.2billion is a lot of money and we are all aware of the reality that more inheritance tax is going to be collected due to pensions falling within the scope of the tax from April 2027. It’s a tax we feel perhaps more directly as a large chunk of an estate heads off to HMRC for doing, well… very little.

However, in the context of all taxes paid, we can see where most (57%) of tax is generated – income tax, national insurance and capital gains tax. All of which will rise due to reduced or frozen allowances (capital gains and tax bands).

Here’s the political bit that you could sense was coming… income tax, national insurance and capital gains taxes are generally not paid by the very very ultra rich. Income taxes are reduced when derived as dividends and NI is only paid on earned income. Borrowed money (borrowing against your portfolio) is not taxed (though interest is charged, it is less than tax rates) and as shares are not sold unless valuations collapse, capital gains are not triggered. Add in some tax incentives for particular investments and you may not have any tax to pay at all…

Or to put it another way…

Ref*

Coming to your inbox – the latest tax headlines2025-04-27T19:26:18+01:00

PENSION DEADLINE – YOUR STATE PENSION

Dominic Thomas
March 2025  •  3 min read

PENSION DEADLINE – YOUR STATE PENSION

I’ve had a few enquiries from people who have seen something in the news but aren’t clear about what it is. There is a sense of urgency and the information seems to be coming from reliable sites, so what is it?

‘BOOST’ YOUR PENSION

The tax year ends on 5th April 2025 a few weeks away now. This is a deadline for people who wish to make up (backfill if you will) missing or incomplete years of national insurance contributions. The timeframe is closing, it’s a use it or lose it situation.

Why would you?

Firstly, this only applies to people under State Pension Age (SPA). To get a full State Pension, you need 35 years of National Insurance contributions, which for the record, technically can begin when you are 16 until you are 67 or older. So most people will have a ‘working career’ of 51 years to build 35.

If you have had breaks in your employment (maternity, child care, working abroad, redundancy, sickness) then you will likely find that you don’t have a full record. So on the assumption (red flag) that you work and pay NI until your State Pension Age, then you can estimate how many years you will have.

If you build more than 35 years, you do not get a bigger pension.

Time is Running Out

Until 5th April 2025 you can buy the missing years (for a price) all the way back to 2006. Once the new tax year starts, you will only be able to make up incomplete years in the last six tax years.

You are smart enough to know that ‘the system’ is under some strain, so getting the data and paying for the missed years is going to be arduous.

So the first thing to do is check your NI record. You get a list of every tax year since you were 16 (fairly enlightening as an experience). If you spot missing years, perhaps there has been an error? If not, then estimate how many more full tax years you are likely to work for yourself or someone else until State Pension age.

WARNING: Estimating Your Lifetime

You have to give this some thought, a State Pension pays out for your lifetime, so if you die before getting one, well, that’s lost. As a warning, from both experience and research, most people underestimate how long they will live, so beware of that. You may also have a condition that shortens your life expectancy. So to pretend that this is an easy calculation is misleading.

The State Pension is very good value, it provides a guaranteed income for life, it is taxable but for most will fall within the current personal allowance for 0% tax.

Check your NI record, get a State Pension forecast – but remember that they assume you work until your State Pension age. Whilst you are there check the date of when that is for you. You can find the links in our resources section or start by clicking here.

Link to your NI records: https://www.gov.uk/check-national-insurance-record

PENSION DEADLINE – YOUR STATE PENSION2025-03-07T16:05:43+00:00

Geopolitics and Market Volatility

Matt Loadwick
Feb 2025  •  3 min read

Geopolitics and Market Volatility

The stability, or otherwise, and volatility of global stock markets can be affected by a number of factors, which can be both economic and political in nature. In terms of economic factors, both UK and US economies are currently experiencing well-documented inflation, the result of rising costs of goods and services. This leads to increased borrowing costs, and to market uncertainty, as investors get spooked by high costs, and have a tendency to wait for prices to drop before investing.

In the UK, a glimmer of light appeared when the rate of inflation dropped by 0.1% in December compared to November, easing the pressure on Chancellor Rachel Reeves, and going some way to improve market confidence as the odds increase of the Bank of England reducing interest rates early this year. That said, it does feel like the current news cycle in the UK will provide reasons to be cheerful one day, followed by reasons to despair on the following, fuelling further volatility as markets react.

Global stock markets are also influenced by geopolitical events, where often the unpredictability surrounding such events can lead to increased volatility. As an example, the Russian invasion of Ukraine resulted in firms that had strong ties to Russia experiencing a significant fall in share prices.

It is also worth pointing out that politics and economics clearly do not exist in a vacuum, with both influencing each other symbiotically – as politicians drive their economic agenda, markets respond accordingly depending on the success (or otherwise) of their policies …

As the 47th President of the United States was sworn in for the second time earlier in January, the world is braced for increasing geopolitical uncertainty with a Trump administration once again at the helm. Indeed, they have taken little time to give us a taste of what is to come over the next four years, creating headlines through divisive policies, such as the proposed mass deportations of illegal immigrants, withdrawal from the Paris climate agreement (compounded by plans to increase drilling for oil to promote as a key US export), pardoning the circa 1,500 Trump supporters who were charged over the 2021 US Capitol riots, and far-fetched rumours (we hope) of an interest in invading Greenland.

Such examples certainly give the impression that this administration may cause something of ‘a bumpy ride’ for markets in the coming years, particularly in the context of ongoing conflicts in the Middle-East and Ukraine. This is reflected in research undertaken by Scottish Widows, which suggests that geopolitics and volatility are likely to be among the top concerns for advisers in 2025.

If at some point you were to watch the value of your investments take a temporary drop, it is only human nature to feel a sense of nervousness. In the face of this expected volatility, we at Solomon’s are here as ever to encourage calm, and to ensure that our clients do not lose sight of the importance of planning for the long term.

Geopolitics and Market Volatility2025-02-10T10:02:08+00:00

Autumn 2024 Budget

Dominic Thomas
Oct 2024  •  5 min read

The Autumn 2024 Budget

I expect further analysis to be necessary, here are some of the initial Autumn Budget highlights. I think firstly there is some good news. The tax-free cash from pensions has not been abolished (I didn’t think it would be).

The Taxman on Steroids

Whatever your political persuasion, the Government is raising an extra £40bn and raising an estimated £1,229bn in 2025-26. One might conclude that all the fuss amounts to a total increase of 3.3% which isn’t that far off the rate of inflation. This merely fuels my general, (admittedly cynical) belief that a Budget is a bit like rearranging the deckchairs on the Titanic. Is ‘the system’ fixed? and will it benefit the nation? are always the questions without answer.

What we do know is that Labour are going to ramp up tax collecting, which in truth is probably a continuance of previous Conservative policy. By the end of November 2024 there will be 200 new HMRC compliance staff, with the intention of creating 5,000 new compliance jobs at HMRC. This is part of the strategy to collect more of the unpaid tax (tax gap) that is owed. HMRC are also launching an app for your phone. HMRC do have powers that enable them to take money from your account and I would expect to see more of this sort of thing occur for frequent late payers.

Similarly, Labour will be aggressively going after those who cheat the welfare state, with fairly tough consequences for those who are caught.

Inheritance Tax

Agricultural property relief and business property relief will alter from April 2026. These will retain 100% relief from inheritance tax up to £1m but thereafter be subject to a 20% inheritance tax rate (half the actual rate). So this is probably a better result than many feared, but there cannot be many agricultural properties worth much below £1m. The reduced IHT exemption will also apply to AIM shares (a commonly used but very high risk tool used by some within the sector) which will inevitably now be less appealing.

Surprisingly, there has been some certainty provided in that the Nil Rate Band of £325,000 is now secured until 2030 as is the Main Residence Relief Rate of £175,000 for estates up to £2m. There is no inheritance tax between spouses.

Farmers will certainly be caught by the changes and I wonder if there may be an amendment for smaller farms (sub £5m in value). It isn’t a good idea to upset those who provide our food and rural management, but it is evident to many that some are considerably more prosperous than others and shouldn’t be totally exempt from IHT.

Pensions

Sadly but not unexpectedly, your unused pension pots will begin to be part of IHT assessment for anyone who dies after 5th April 2027. Currently, unused pension pots are exempt from IHT, but this will end in two and bit years time. This may change some strategies for leaving your pension pot as long as you can, but we have time to make adjustments if necessary. This slight change in policy was always expected and remains one of the many reasons for keeping your retirement provision under review.

The truth is that this will create more administration for Probate which will likely increase the time that the process takes. It is also yet another opportunity for HMRC to learn the value of your pension assets.

Tax-free cash on pensions remains as it was, as does the tax relief on contributions (the latter being a surprise to me). As ever, it rather suggests that you really shouldn’t listen to ‘news’ reports, which are sadly driven by ideology rather than actual facts.

I cannot find anything about changes to Lifetime Allowance, Annual Allowance or Small Pensions rules in the 164 pages of the report. Indeed, it is confirmed that there are no other changes to existing pension rules and allowances, except for offshore pensions, which you do not have anyway! This impacts QROPS (if you know, you know, but you don’t need to if you don’t!).

ISAs

There were no changes to the ISA, LISA or JISA rules and allowances, despite what media pundits suggested. Clearly use of these allowances is sensible, don’t waste yours. The one thing they have scrapped is the British ISA which was announced but never implemented. I think it best assumed that this was a flag-waving attempt for the election.

Non-Dom

Nothing to do with me, but non-domiciled. The rules are changing with the intention being to ensure that people who live in the UK pay their taxes in the UK, both whilst alive and deceased. So this impacts people born outside of the UK. Ultimately, if you have made the UK your home then your worldwide assets will be liable to UK inheritance taxes. Reading between the lines, this is really aimed at very wealthy people with jets and large yachts.

Capital Gains Tax

Capital Gains tax will rise for any disposals from Budget Day (deeply embedded on page 129) this will make our calculations particularly onerous for 2024/25. However, the increase is much as expected, though frankly still lower than I thought might be the case. CGT will increase to 18% (for basic rate taxpayers) and 24% (for higher and additional rate taxpayers). This is still less than income tax. This makes an even stronger case to ensure you use your ISA allowances (£20,000) where CGT does not apply.

There was no change to the CGT allowance of £3,000 – the gain you can make before paying the tax; also no changes to your ability to use realised losses as well

Allowances and rates

There was no change to the annual giving allowance, inheritance tax rates or allowances (other than the above exemptions). The tax bands remain frozen (as previously planned and expected). This means that more people will end up paying tax as they drift into higher tiers.

Business Owners

Arguably business owners (like me) were the ‘hardest hit’ in the Budget. Whilst employees may not pay more National Insurance, employers will collectively pay rather more, some £24bn more from the next tax year and beyond. The employer rate will rise from 13.8% to 15% and be paid from a lower starting level of £5,000 rather than £9,100 (this alone is an extra £615 a year). However small businesses do get Employment Allowance, so the calculated NI they pay only applies after £5,000, this is extended to £10,500 from the new tax year and will apply to all businesses.

This is going to make salary sacrifice schemes more appealing for employers, but I wonder if they might otherwise be even more circumspect about new appointments. This also prompts thoughts about bonuses and pay rises being paid into pensions rather than as salary.

If you do own your own business, then the first £1m you get from selling it has a reduced capital gains tax rate (10%); gains above this are at normal CGT rates. This is known as Business Asset Disposal Relief (BADR) and Investors Relief. The £1m allowance will persist but the rates will increase to 14% for 25/26 and 18% for 26/27. So if you were planning to sell or close your business you probably don’t have enough time to take advantage of the lower rate. In practice the extra tax is no more than £40,000 in 25/26 then £80,000 from 26/27.

Business rates (the council tax businesses pay for having an office, shop or factory without any right to local vote or waste disposal) are going to rise. The temporary discount of 75% on rates expires in April and will become a 40% discount.

Corporation tax will remain at the same rate (25%) – that’s business profit taxed at 25% before the balance is distributed as dividends (which are also taxed). The small business rate (profits under £250,000) is retained at 19%, but is of course reduced in real terms (which is what politicians mean by retained or frozen).

Families With Young Children

For those of you with children and are paying for private education or plan to do so, VAT will now be added to your invoice (20%). You may also find that the fees increase as Public Schools will not be able to claim rates relief.

Child benefit rules are remaining as they were. Long gone are the days when families collected child benefit for each child, irrespective of income or need. Today the benefit is withdrawn (or more accurately must be repaid) if the higher earner’s income tops £80,000 (High Income Child Benefit Charge). The one change is that this can now be resolved through the PAYE system rather than dealing with self-assessment returns which invariably are forgotten by employees – leading to fines.

Helping First Time Buyers

There is little attempt to help any first time buyers in the south of the country. The Stamp Duty Land Tax (Stamp Duty), currently has a threshold of £425,000 before SDLT is paid. This is going to be reduced to £300,000. So First Time Buyers and indeed anyone, will now pay more tax when purchasing a home, so make sure it’s the right location, location, location. Those buying a second property (not their main residence) will see SDLT increase further.

There was noise about building homes and allowing councils to keep funds from sale of council houses under the Right to Buy scheme, which it is hoped will aid the housing market crisis of overpriced and not enough. Perhaps the extra tax on pensions may result in more beneficiaries selling inherited homes as well.

Specifics and Personal  – Get In Touch

Of course, more detail may be needed for your specific personal situation, but these are the main headlines. I think most of us know that Government like to tax fuel, alcohol and cigarettes. Your green holiday flight tax will also rise by £2 for economy.  If you go by private jet, the levy will increase by 50%. Reeves rather pointedly glared at Sunak as she gave an example of a flight to California.

Autumn 2024 Budget2025-01-23T10:49:36+00:00

Contract for difference?

Dominic Thomas
Oct 2024  •  3 min read

Contract for difference?

I’m going to be blunt. If you come across a Contract for Difference (CFD) or more accurately someone trying to sell you one, run.

A CFD is a highly complex financial instrument. I’m not going to bore you with the detail. You can see it here if you wish: https://www.investopedia.com/terms/c/contractfordifferences.asp. Anyway, as is often the case, a man in a smart suit or sounding like he probably owns several of them from Savile Row (showing my age) is to be avoided. For good measure, I’d suggest that Forex (foreign exchange trading) when combined with ‘investment advice’ would also be best left well alone. Unless of course you quite like losing your life savings – which I know you don’t.

So, with the regularity of a tax year, news of yet another FCA fine to such a shark graces my inbox. This time the fine was slashed by over 75% from £1,215,000 to just £276,100 (well it is ‘just’ for a firm like that). The firm being Forex TB Limited (FXTB). This is for giving investment advice when they have no permission or right to do so. The fine was slashed as it would mean FXTB would face financial hardship. I would have thought the sector would be better off without an unauthorised firm quite obviously not giving a fig about the rules. I certainly don’t wonder why my regulatory fees rise each year when the fines for the culprits are soft. Still, at least they don’t have a license and have held no FCA permissions since last October. What a relief.

FXTB appear to have been fairly standard financial crooks, at least that is my reading of the FCA statement, which I quote:

“FXTB pressured customers to put their money at risk through CFD trading, even encouraging them to borrow money from friends or family in some cases.

Compounding these failings, FXTB frequently provided its customers with investment advice, despite not being authorised to do so.

FXTB’s customers were inexperienced in trading and did not always understand the risks associated with CFDs, which were also not fully explained to them. FXTB also enabled customers to become ‘Professional Clients’ by encouraging them to provide false information. This meant these consumers lost the protections that as ‘retail clients’ they would have had.”

In short, there is enough risk and return available in normal mainstream investment funds without going off-piste into really nuanced trading techniques, and yes before you ask, I would include cryptocurrency in the same category until further notice.

You can read the full FCA statement here: https://www.fca.org.uk/news/press-releases/fca-fines-fxtb-unfair-customer-treatment-practices

OK, so you wouldn’t fall for this, after all you pay us to advise you – but what about your friends, family and peers; you know the ones you worry about that might very well get sucked into this sort of stuff. Introduce us.

Contract for difference?2024-10-21T10:44:08+01:00

Budget or canary? A Whimsical Reduction

Dominic Thomas
March 2024  •  5 min read

Budget or canary? A Whimsical Reduction

There was another Budget today, my inbox and the media interest will likely pass over the next 48 hours until a ‘howler’ is found in the sums. Unlike politicians, let me extend my neck … this was possibly the last Conservative budget for a while and an attempt to rescue votes that would otherwise slip away. It contained the traditional narrative of putting money back in your own pocket (having taken it) rather than asking you to reach a little deeper for more. Anyway the 98 pages of light reading provide a distraction …

Owners of commercial property will pay less capital gains tax, 4% less or a reduction of 14%, or 28% reducing to 24% for higher and additional rate taxpayers, depending on how you like your spin. Over the last decade we have all witnessed the decline of retailers and shopping centres, the pandemic added to their misery and extended it to the office sector which has gradually spun the dial on remote working whilst watching energy bills soar and staffing levels make the place feel like an episode from The Last of Us.

Employees and the self employed have had national insurance cut by 2%, the tax that doesn’t really build up for your pension, other than in a pay to play sense. This is not applied to employers who do the employing and of course pensioners at State Pension age or above do not pay national insurance but actually receive the State Pension.

Some sense is being finally applied to the Child Benefit system for ‘High Earning Families’ where previously only one person had to earn above £50,000 for the tapering of financial help to begin.  This has been raised to £60,000 and will eventually be applied to household income rather than individuals (it was previously possible for a couple to earn £49,000 each and avoid any reductions). Sadly for most people the reality of juggling childcare and credits, whilst manipulating income is really a gigantic hassle merely  to demonstrate that they qualify to not have to refund money that has already been spent.

Those working in the Public Sector are under constant scrutiny for their productivity by (forgive the Thomas the Tank Engine sounding terms) the National Statistician and Comptroller and Auditor General who assert that “tens of billions” can be saved through higher production and less fraud, better project management and better Government technology. How many tens is unclear, one might say there is a touch of Yes Minister as any tech project the Government designs and procures usually fails to work. The fraud checking might do well to exercise a little more vigor in relation to Pandemic VIP lanes and contracts.

There will be more nurses (well nursing and midwifery places) by 2031. So we should expect delays and pressure on our NHS for another seven years. Similarly, medical schools will be aiming to achieve 15,000 places in the same timeframe.  Student digs around St George’s look set to thrive. Assuming entry to medical school is at 18 at the earliest, this is likely aimed at your bright 11-year-old who has not yet started secondary school. A hard sell to most 11-year-olds from generation alpha. There were about 778,803 live births in the UK in 2013, almost 2% of them are going to be doctors then, a fair chance they will be called Oliver or Amelia.

Now you see why we need the National Statistician who is also suggesting that doctors waste around 13million hours on poor IT.  A BMA study found that only 4% of doctors believe that the IT they use is “completely adequate”.  The Government of efficiency has been in power since 2010 … around the time of the iPhone 4, the pre-fibre days with speeds of up to 100Mbit/s. I imagine the plan to test AI to automate GP letters and discharge summaries will provide ample resource for comedians and there are assurances that it will not be called horayitzgon..

The need for yet another version of an ISA isn’t welcomed by me. It’s a little hallucinogenic, a nod to nostalgia, Blighty and Brexit whilst having its trace in the origins of the PEP (remember them – the Personal Equity Plan) which was originally restricted to UK shares. The new £5,000 UK ISA (in addition to your £20,000 ISA) must be held in UK equities. One for the purists, but also the mathematicians who will be able to encompass allocation to the UK of £5,000 within a portfolio, but making ‘models’ a challenge. Expect another acronym perhaps £UKISA?.

There will also be a British Bond (I’m not sure how that differs from any other one created by the UK Government) but anyhow a 3-year Bond will soon be making its way over the horizon, available from April at a Post Office near you, just don’t mention the subpostmasters.

Your petrol, beer and wine aren’t changing, though your consumption may.  Actually, strictly speaking the tax rate isn’t changing, I suspect the price already has since this morning. The Chancellor believes that inflation will reduce, so expect interest rates to do the same.

The threshold for small businesses registering and collecting VAT for HMRC will increase from £85,000 of revenue to £90,000. One for the builders who have a different company name for every room of your house-build to navigate with a little more ease.

In the 98 pages I can find no change to the annual allowance for pensions or the main ISA, LISA, JISA. Let’s hope this is not an error, if it is we now know that Fujitsu can ‘remote in’ to make some changes. There is no change to the capital gains tax allowance which reduces to £3,000 on 06/04/24. There is no change to the personal allowance, income tax thresholds or tax rates … which is as expected, but of course means a reduction in tax allowances when measured against inflation or a tax increase depending on your flavour of politics. There is a change for inheritance tax, but only if you have married someone from outside the UK and it doesn’t apply until 2025.

There is a continued attempt to entice businesses to money launder – I mean list in London – with not a hint of tropical offshore waters with a scheme called PISCES (that’s Private Intermittent Securities and Capital Exchange System to you and I). Having also witnessed the decline in pension funds owning UK shares (some vote a while back about cheese and wine) by 6%, the Government continue to attempt to ‘buck the market’ (something no Thatcherite would ever do) by forcing pensions to hold an allocation in UK companies. Discussions with the FCA and Pensions Regulator are due to begin in the Spring (note the daffodils are already out). This is possibly to be combined with a ‘Value For Money’ pensions framework … something that all three bodies have, in theory, been overseeing already.  Anyway … it would be remiss of me to fail to point out that it has been Government policy to reduce the Annual Allowance, introduce the tapered annual allowance, reduce the Lifetime Allowance, introduce the Money Purchase Annual Allowance  and imposed HMRC calculations for all – aimed in fact to deliberately reduce the value of pensions since 2010 (at the time, the Lifetime Allowance was £1.8m, the annual allowance was capped at £255,000).

Above all, the Chancellor reaffirmed belief in owning property, particularly in Surrey, which is to become a fiefdom under the level 2 devolution agreement. This despite local councils being unable to balance their own books, or perhaps because of it?

Carry on.

References:

Budget or canary? A Whimsical Reduction2025-01-27T17:01:00+00:00

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