Tax Planning Archives - Financial Planning in Surrey

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?

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What’s Your Opinion About the Budget?Jemima Thomas2025-11-27T14:28:54+00:00

The Times They Are A Taxing?

Dominic Thomas
Oct 2025 • 3 min read

The Times They Are A Taxing?

Tax is one of those hot topics that can be fairly divisive along political lines. Few of us relish the idea of paying tax, but nearly everyone loathes the idea of our taxes being wasted on vanity projects or things that seem out of line with our values or needs.

I recently had the pleasure of seeing Nye, a production at the National Theatre about the Welsh Labour MP who was responsible for creating the NHS. Given how many doctors I have met and advised over the years and how committed they are to their work, I was surprised to learn how few doctors in the late 1940s were initially supportive of his plans. I am, probably like you, extremely grateful for the NHS and the treatment and care that I have had over the years. Of course it has many faults and flaws, but like all great things it is a work in progress.

Whilst the play, starring Michael Sheen, has now concluded its sell-out run, it is still available to watch on the excellent streaming service from the National Theatre (very good value at £100 a year).

You may remember the fabulous opening ceremony of the 2012 Olympic Games in London, created by Danny Boyle, a time when being English made me rather proud and flags were welcoming. There was a great segment honouring the NHS with giant beds and dancing doctors and nurses, a real celebration of one of our best institutions.

It took courage, passion and compromise to create the NHS – agreeing to make doctors the highest paid professionals, whilst retaining their independence and ability to work outside the NHS. It also took tax – at a time when Britain and the world was being rebuilt brick by brick, street by street. Rationing hadn’t even ended – not officially ending for another six years after the NHS was born (4 July 1954).

Today the NHS has approaching 1.4m members of staff with a budget approaching £200bn and serving 66 million of us. Most Americans (the sensible ones) recognise just how lucky we are to have our NHS, a medical problem in the US may well see your family bankrupted without sufficient private insurance.

Tax can be used extremely well and it’s clear that different nations have alternative views and approaches. It would seem that the majority of politicians have given up on trying to do difficult things, instead opting for pat answers and deferring decisions (or indecision). The NHS is regularly a political football and the media coverage that it often receives can only leave a discerning mind questioning the motives of billionaire media owners who live abroad (well maybe simply drawing obvious conclusions). In the pandemic we saw the incredible bravery of medics as they tackled an unknown virus without the right equipment, we clapped and thanked and then many forgot.

So I am hereby giving my heartfelt thanks to those of you who work within the NHS, as GPs, Junior Doctors, Consultants, nurses, psychologists, psychotherapists, OTs and managers (I hope I haven’t missed any of you out). Whether you are retired or still fighting the good fight, THANK YOU! My family, friends and I have all benefitted from your collective wisdom, care and the pursuit of good medicine and good science.

So let us remember that our taxes, as painful as they may sometimes be (and I would be the first to suggest that the tax system is desperately broken) are doing tremendous good, every minute of every day. The NHS should not be for sale.

References:

2012 Olympic Ceremony video: https://www.youtube.com/live/4As0e4de-rI?si=VwY32f_03psef0F0

Nye: National Theatre Trailer: https://nye.ntlive.com/trailer/

National Theatre at Home: https://www.ntathome.com/

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The Times They Are A Taxing?Jemima Thomas2025-10-10T15:53:03+01:00

How much tax will I pay on my savings interest?

Sam Harris
July 2025 • 2 min read

How much tax will I pay on my savings interest?

Working out how much interest you’ve earned across all your accounts and what allowances are available to you can be a challenge. The aim of this blog post is to help you understand the basics.

Interest is earned on the cash you deposit in a variety of financial products, such as savings accounts, bonds and cash ISAs. As you are probably aware, interest earned within ISAs is not taxable.

For everything else, these are the main allowances that can be used to mitigate your tax liability on your savings income:

Personal Savings Allowance (PSA) – your personal savings allowance is based on your marginal rate. The allowance is £1,000 for basic rate and non-taxpayers, £500 for higher rate taxpayers, while additional rate taxpayers have no personal savings allowance at all
Personal Allowance – the current personal allowance is £12,570. If your personal allowance has not been entirely used up by income from other sources, you may use it to offset your savings income
After that, we have the Starting Rate Band (SRB) – the SRB applies to individuals with earned income below £17,570. The full SRB is £5,000 but only applies to non-taxpayers (ie if your earned income is below £12,570) and is then reduced by £1 for every £1 of earned income above the personal allowance, which is why you lose entitlement to the SRB once your earned income reaches £17,570

Of course, the amount of tax you’ll end up paying on savings income depends on a variety of factors and your personal circumstances. Working it out can be a complex and stressful task. That’s where we come in.

At Solomon’s, we’re not accountants but we can do these calculations for you (your Accountant should also be able to assist, if you have one).

Anybody with more than one source of income (where one of those sources is ‘savings interest’), needs to be aware of these bands, thresholds and allowances to ensure that you can double-check that you are paying the correct amount of tax over to HMRC when your circumstances are considered as a whole.

If you think you might be affected by these issues (and we aren’t already aware of them), please drop us a line and we will be happy to assist.

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How much tax will I pay on my savings interest?Jemima Thomas2025-11-18T10:34:04+00:00

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.

Ref: HMRC latest tax receipts: https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk/hmrc-tax-receipts-and-national-insurance-contributions-for-the-uk-new-monthly-bulletin#headlines
Henley and Partners: https://www.henleyglobal.com/services
Tax Justice Network: https://taxjustice.net/press/millionaire-exodus-claim-backtracked-but-media-re-run-story-anyway/
Patriotic Millionaires UK: https://patrioticmillionaires.uk/
Who Owns the UK Media 2023 Report: https://www.mediareform.org.uk/blog/new-report-who-owns-the-uk-media
Farage defending Epping fascists: https://www.independent.co.uk/news/uk/politics/nigel-farage-epping-asylum-hotel-protests-b2793289.html
Hope not Hate: https://hopenothate.org.uk/

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Would you be hit by a Wealth Tax?Jemima Thomas2025-08-13T10:19:38+01:00

Is your pension being taxed too much?

Dominic Thomas
July 2025 • 2 min read

Income from your pension and a little less conversation

For those of you who have been using the 2015 pension freedoms to access lumps of money from your pensions, there is some good news (I hope).

As of 6^th April 2025, if you are taking lump sum income (or indeed regular income) from your pension there ought to be less hassle from HMRC. If you have already done this with your pension, you will know that the pension company have to adhere to HMRC tax rules and invariably have to ‘over-tax’ your pension income, meaning that you have to reclaim it via a P55, P53Z or P50z form from HMRC. In fairness, this process has been improved a lot and cases tend to be resolved within 6-8 weeks. However, only if you reclaim it!

HMRC have confirmed that this system (which has resulted in pensioners being over-taxed to the tune of £1.3bn since 2015) is finally set to be overhauled following years of campaigning.

Since the system was put in place, over 470,000 claims totalling £1.37bn have been made for refunds. In Q4 of 2024 £49.5m was repaid to the 14,612 people who submitted forms.

From April, HMRC has announced that it will move much more quickly to replace these ‘emergency’ tax codes with regular tax codes, which will make sure that the correct amount of tax is deducted in real time. Hopefully this will reduce the need for form-filling to claim back over-paid tax, particularly where people make multiple withdrawals in a single tax year.

HMRC Announcement

HMRC made the announcement in its latest ‘Pension Schemes Newsletter’ (January 2025 Number 166) in an article entitled ‘helping customers get on the right pension pay faster’.

“From April 2025 we are improving how tax code information is used for those people who are new to receiving a private pension, so they pay the right amount of tax from the outset. We will automatically update the tax code for customers who are on a temporary tax code and would benefit from being on a cumulative code — this means they’ll avoid an overpayment or underpayment at the end of the year. There is no need to contact HMRC and once a tax code has been changed we’ll inform customers by letter or digitally if they’ve signed up for paperless in the HMRC app or online.

You do not need to make any changes to your tax coding process as we will automatically change these codes. However, as we’re systematically changing the tax codes for these customers you will receive notices for tax codes that have been automatically adjusted as they happen. As well as benefiting customers who will receive the right pension pay quicker, you may also see a reduction in queries you receive on tax code errors.

This small change is part of our wider commitment towards improving our customer service experience.”

So, hopefully a little less paperwork, but expect ever more access and accountability through the new HMRC app (which I have not yet tried myself). You may not be dancing in the aisles, but I’m reminded of Elvis…

A little less conversation, a little more action, please

All this aggravation ain’t satisfactioning me

A little more bite and a little less bark

A little less fight and a little more spark

Close your mouth and open up your heart and, baby, satisfy me …

So … why not … well done HMRC!

Here is the Official JXL Remix video of Elvis Presley – A Little Less Conversation

Come on – how many tax blog posts manage to link to Elvis?!

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Is your pension being taxed too much?Jemima Thomas2025-07-31T15:40:34+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.

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.

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*

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Coming to your inbox – the latest tax headlinesJemima Thomas2025-04-27T19:26:18+01:00

Pensions and Inheritance Tax

Dominic Thomas
Jan 2025 • 2 min read

Pensions and Inheritance Tax

In the first Labour Budget of the current Government, Rachel Reeves announced that from 6^th April 2027, pension funds (investment-based pension funds) would form part of an estate for inheritance tax assessment. This made a number of folk choke on their gin and tonic as they considered their estate in light of this pension reform.

Despite only being elected on 4^th July 2024; now barely six months on and only about three months since her Budget on 30^th October, the Government has been facing growing criticism for lack of economic growth since they took office. To be candid, I’m not sure who is so vexed about this; as any reasonable person would appreciate that the impact of a new Government and policy decisions generally take a while to have any impact on economic growth. So this has probably rather more to do with sentiment than fact (all political bias aside).

Anyway, some of the biggest companies have collaborated to tell the Chancellor that her plans to include pensions within inheritance tax assessments are “bonkers” (my word not theirs!). This includes AJ Bell, Quilter, Hargreaves Lansdown and Interactive Investor, who between them manage £430bn of pensions across around 3.4m people.

I’m not sure how much attention will be given to their pleading, however meritorious, as there is a rather obvious conflict of interest (if the funds are not taxed, then investment firms continue to manage the higher amount).

It would certainly seem that the UK needs some serious spending on its infrastructure, healthcare, education and welfare – so the money has to come from somewhere, but so far the billionaires seem to have been able to reside in their silos like Bond villains and declare that they will move outside the UK should they be required to pay any more tax – perhaps Mars.

There is obviously some unfairness about the Government proposals. It punishes those who saved and didn’t spend it all. There is ample opportunity for not simply one tax (IHT), but the likelihood of further double taxation. One might add that this doesn’t help the younger generations to finally buy a property either. Frankly the complexity of tax rules and pensions will make any adviser (let alone Executor of an estate) squirm with uncertainty when totting up all the assets and calculating the liability (failure for doing this accurately can result in a custodial sentence).

In short, a week is a long time in politics, the few months since the Budget already feel like a lifetime and there may well be a lot of changes before April 2027. So before you panic and blow your retirement planning into some irrevocable strategy, please do consider that change is possible and may be probable.

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Pensions and Inheritance TaxJemima Thomas2025-02-17T17:01:29+00:00

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:

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Budget or canary? A Whimsical ReductionJemima Thomas2025-01-27T17:01:00+00:00

Taxing times

Dominic Thomas
Jan 2024 • 5 min read

Taxing times

Tax is perhaps one of the most divisive issues. At the time of writing, just before the Christmas break 2023, the Scottish Government has announced that it is imposing the additional rate of income tax (45%) at a much lower level. Unlike England and Wales, the Additional Rate will start at £75,000.

Here in England and Wales, the 45% rate starts at that “only a quango could come up with it” number of £125,140 for tax year 2023/24. So someone earning more than £125,140 pays 45% income tax, but in Scotland the line is drawn much sooner.

By comparison, a Scottish resident earning £125,140 will pay an extra £2,507 on the same income. I doubt that the extra tax is enough to prompt thoughts about moving south, but it may well alter behaviour at the ballot box.

As a reminder, the tax rates for this tax year (2023/24) which comes to a close on 5^th April 2024 are as follows:

Band	Taxable Income	Tax Rate
Personal Allowance	Up to £12,570	0%
Basic rate	£12,571-£50,270	20%
Higher Rate	£50,271-£125,140	40%
Additional Rate	Over £125,140	45%

These are the income tax rates on earned income, not dividends (which have lower tax rates).

If you are breathing a sigh of relief because you live in England or Wales, remember that this tax year saw the Government reduce the higher rate band so that Additional Rate begins at £125,140 rather than £150,000.

Most of us have been impacted by inflation, yet the personal allowance remained frozen as did the basic rate tax band. So more people pay more income tax. This is what the media and whoever is in opposition, like to call “stealth taxes” basically an increase in tax in real terms.

Additional Rate tax was introduced in the tax year 2010-11, and saw 236,000 people pay 45% raising £34.5billion. Ten years later, the HMRC 2020-21 data saw this number increase to 481,000. There is no doubt that whichever way one observes the data produced by HMRC, we all pay more tax.

There are of course some things that you can do about reducing tax or even obtaining tax reliefs, these are all part of a good financial plan. However what I often observe is how little attention is paid to good arrangement of financial ‘stuff’ so that you can minimise tax payments. How much and where from become really important when drawing money from your portfolio. It’s one thing to get tax relief or use an allowance, it’s another to draw money out so that you pay less than 20% tax.

I recently produced a White Paper that you may find of interest called ‘Understanding Adviser Fees’, which includes and explanation about the value that we bring. Whilst I firmly believe that every little helps, if you focus purely on costs and ignore taxes, you will quickly wonder why you bothered. You can find the paper (which is designed to be readable – feedback welcome) here.

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Taxing timesJemima Thomas2024-02-01T09:21:01+00:00

The Autumn Statement – the Ghost of Christmas Past

Dominic Thomas
Nov 2023 • 2 min read

The Autumn Statement – the Ghost of Christmas Past

We are in the closing weeks of the year. Our thoughts turn to Christmas celebrations and perhaps looking ahead to the New Year. The familiarity of our traditions poses a challenge to attempts to change them, yet even the harshest of men, Mr Scrooge, managed to pay attention to what is important and change his behaviour.

I don’t think it is contentious to say that the Conservatives are a party of tax cutting and yet we currently have one of the highest rates of personal taxes in the main economies. Few of us enjoy paying taxes, perhaps because often it seems that our hard-earned money is wasted on expensive ideas and ‘kit’ that doesn’t work very well at all … anyone tried the NHS IT system or indeed any ‘converting to digital’ Governmental system, let alone the military’s ability to spend a fortune on malfunctioning weaponry to cite just a couple of examples. We all have opinions. (As an aside the Power of Attorney system is going digital in 2024, so I urge you to sort yours before they muck it up and make the backlog even longer).

The Conservatives came to power in May 2010, admittedly with the assistance of the LibDems, but then we have had an entire mess of Government ever since.

According to Jeremy Paxton in 2018, David Cameron was the worst Prime Minister since Eden:

“[He] got to the top of a tree in order to set it on fire and cleared off, put the interests of his party before the country and decided to have this referendum, believed one thing was the only right outcome for the country, didn’t campaign for it, got the opposite outcome and XXX off. It doesn’t seem like leadership to me”.

Given the PMs we have had since 2018, Cameron might actually look a lot better, the bar seems woefully low, anyway, for now Cameron is back, this time as Foreign Secretary.

The backdrop of a Covid enquiry which merely proves what most of us thought, that Mr Johnson is an unreliable character (I am being polite), we have the prospect of an election looming by the end of January 2025. The Labour party seems set on sabotage and the plethora of political open goals being squandered is lamentable. The traditional approach of appealing to the notion “everyone has their price” is in the hands of the Chancellor, who is being tempted to cut taxes now that inflation appears to be returning to a more comfortable figure (4.7% October 2023 ONS).

Which of us doesn’t want to pay less tax? In an environment of rising prices, seeing your net pay remain pitifully stagnant is irksome. Yet we also know that tax pays to keep society running in some vaguely civil way. We can all find things to disagree with, it’s almost a rite of passage into a fifth decade. It’s clear that ‘the system’ doesn’t work for all, and indeed seems to generally work best for the few. The sadness is that there seems to be so few alternatives to the binary choices we have here in the UK; stuck in traditions that don’t work for the good of the country. Creativity and visionary leadership remain sadly elusive.

There was a time when the economy was thought about as a way of serving society, yet here in 2023 we are evidently a society that is serving the economy. There is no good reason why this cannot change, and despite experience, I remain an optimist in a sufficient number of decent people.

For the record, I have no intention of offending your political beliefs, but I do think we all deserve rather better than we have had. On 22 November 2023 we shall get further notice …

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The Autumn Statement – the Ghost of Christmas PastJemima Thomas2025-01-23T10:49:36+00:00

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