Bah Humbug …

Debbie Harris
Dec 2023  •  2 min read

Bah Humbug…

I was scrolling aimlessly through Facebook the other evening (is there any other way to do it?!) and happened upon an interesting post by a lady who had taken A LOT of flack for ‘only’ spending £100 each on her children’s Christmas gifts.

She had been accused of being ‘tight’ (amongst other far more unpleasant things).  She was very clear that this was their family’s decision in an attempt a) to budget for Christmas properly and carefully and b) to NOT spoil their children.

Some commenters were disgusted that in amongst the stocking fillers were things like socks and shower gel (which were considered to be ‘essentials’ rather than ‘luxuries’).

I was utterly incensed that the keyboard warriors and trolls came out to play as they inevitably do but this seemed beyond the pale to me.

Who are we to criticise someone else’s traditions, budgeting, parenting aspirations, whatever?

Anyway – it reminded me of a little rhyme someone told me donkeys years ago that Christmas gifts should include the following:

~  Something they want

~  Something they need

~  Something to wear

~  Something to read

I absolutely put ‘essentials’ in my kids’ stockings (*or rather Father Christmas does) – they get socks, bath bombs, lip balm – that kind of thing.  They also get puzzles, chocolates, bobble heads (google it – so daft!), satsumas, walnuts, party poppers.

I also always attempt to set a budget and stick to it – but invariably I go ‘over’ – well it’s a special occasion!  It doesn’t matter to the rest of the World what my budget is – the amount is NOT important, as long as it is proportionate to your available funds of course!  What is important is that you set a reasonable budget and do your best to avoid getting carried away – yes it IS a special occasion (for some), but it is actually after all only ONE DAY!

Here at Solomon’s, we always ask our clients to be ‘generous’ in their estimated figures for their expenses (and not just on gifting).  It helps build contingency and ‘wiggle room’ in the financial plan; and intrinsic to this is an understanding that life is rarely a straight line.  And it is never the same as anyone else’s – we are our own yardstick; always.

Bah Humbug …2023-12-19T17:05:41+00:00

TAX YEAR END PLANNING PART 3

TODAY’S BLOG

TAX YEAR END PLANNING PART 3 – IHT

Inheritance Tax is one of the most unpopular taxes, yet it is a tax that you will not pay – your estate might. There are various solutions to reducing or avoiding inheritance tax – talk to me if you want to know more about them. However, each tax year you get some basic allowances that you can use to pass on wealth without any inheritance tax.

  • ANNUAL EXEMPTION

Each tax year you can give away £3,000 free of IHT. If you do not use all of the exemption in one year, you can carry forward the unused element, but only to the following tax year, when it can only be used after that year’s exemption has been exhausted.

  • SMALL GIFTS EXEMPTION

You can give up to £250 outright per tax year free of IHT to as many people as you wish, so long as they do not receive any part of the £3,000 exemption.

  • NORMAL EXPENDITURE EXEMPTION

The normal expenditure exemption is potentially the most valuable of the yearly IHT exemptions and the one most likely to be reformed. Currently, any gift is exempt from IHT provided that:

    • you make it regularly;
    • it is made out of income (including ISA income); and
    • it does not reduce your standard of living.

One way to combine the use of your CGT annual exemption with IHT planning could be to make an outright lifetime gift of investments. Such gifts would count as a disposal for CGT purposes and a potentially exempt transfer for IHT. The recipients of the gifts would start with a base cost for the investment equal to the gift’s value and there would be no IHT to pay at any time, provided you survived for the following seven years (possibly reduced to five under OTS proposals).

ANNUAL GIVING

ISAs – INDIVIDUAL SAVINGS ACCOUNTS

There are five important tax benefits which are common across the different types of ISA:

·         Interest earned on cash or fixed interest securities is free of UK income tax.

·         Dividends are free of UK income tax.

·         Capital gains are free of UK CGT.

·         There is nothing to report on your tax return.

·         On death, the income tax and CGT benefits of your ISAs can effectively be transferred to a surviving spouse or civil partner.

The overall maximum that can be invested in all ISAs in 2019/20 is generally £20,000 (£4,368 for Junior ISAs). There are no carry forward provisions, so like the CGT annual exemption it is a case of use it or lose it.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

TAX YEAR END PLANNING PART 32023-12-01T12:13:23+00:00

IS INHERITANCE TAX AVOIDABLE?

TODAY’S BLOG

IS INHERITANCE TAX AVOIDABLE?

News this week that the taxman is set to take a record amount of inheritance tax for 2018/19 is perhaps not too much of a surprise. Most years the amount of inheritance tax paid rises. Arguably the least popular tax – sometimes called death duties, this is the tax that applies once you die to your worldly wealth.

It is generally the case that if you are married, it is only paid once the both husband and wife have died. This final day of reckoning, tax-wise generated £4.5billion in the first 10 months of 2018/19. A new record high.

It is surprising that despite complaining about the tax, most people do little about it. IHT is one of the few taxes that is avoidable by arranging your affairs sensibly in advance.

5 QUICK TIPS

1. Consider taking out an insurance policy to pay the bill. Admittedly this has a cost and does not remove the bill, but it does enable your real wealth to be passed on to those you want to receive it, rather than the Chancellor. A simple joint-life second death policy placed into Trust will suffice.

2. Have a Will and review it. This will ensure that your estate is passed to the right beneficiaries and you may also nominate charities. Gifts to charities are exempt from any inheritance tax.

3. Know your limit. Everyone has a limit known as the nil rate band. This is the first £325,000 of an estate – the net value (assets less liabilities). If you have a property this can be increased (complicated but it will increase). Couples double up on these. You can find more detail within out FREE app about this.

4. Consider using IHT exempt investments, this is really not for everyone, but is certainly a possibility. The most basic being business owners have certain exemptions – technically known as BPR, as does owning woodland or some aspects of farming. You can also hold some AIM listed shares which will be exempt – but be warned all these options have pro’s and con’s.

5. Spend money from the right places. Under pension reforms, it is possible to pass on the balance of a pension fund free of inheritance tax. So if you have the option, you may wish to use up other investments that will be subject to IHT first. Context is everything and thought needs to be given to this from an income tax angle and investment approach.

There are other options too, so if you would like to discuss how you can reduce inheritance tax please get in touch. However, if you are married and have a net estate worth less than about £1million you probably wont have any inheritance tax.

And finally a reminder about our app, which is loaded with all this information.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

IS INHERITANCE TAX AVOIDABLE?2023-12-01T12:17:33+00:00
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