If you’re planning to put your home up for sale, there’s a lot to think about right now. As the first daffodils start to bloom across gardens and verges, the housing market usually blossoms too.

In 2023, with expectations of slowing demand and house price falls, it has never been more important to focus on the fundamentals of selling a house. Here are some things you should think about before the ‘For Sale’ sign goes up.

Buyers aplenty

The overall market might seem to indicate waning demand. However, to sell a house, you only need to find one keen buyer – and there are plenty still out there! The number of views of homes for sale on Rightmove soared by 20% between the week commencing 19 December and Boxing Day week (Rightmove, 2023). The “promising activity and familiar patterns over the festive period… are good signs for the year ahead,” commented Rightmove’s Tim Bannister.

Focus on what you can control

With house prices forecast to fall, some potential sellers are rushing to the market and others are holding off until conditions stabilise. It is important, though, not to become fixated on market movements. Instead, focus on the things you can control. Making your house as marketable as possible before listing will help you maximise your chances of achieving a good price. 

Some easy ways to add value and ensure a speedy sale include:

• Removing clutter before viewings. Your house shouldn’t look empty, but prospective buyers need to be able to picture themselves living there
• Making minor repairs can reassure buyers they won’t have too much work to do when they move in. Small details can make a big difference.
• Controlling the smells of your home can make a big difference to a viewing experience. A fresh spring scent might not seal the deal on its own, but it won’t put buyers off!

Ask the experts

Are you looking to move this year? Have you considered your mortgage options? Get in touch today to see how we can help get you moving this spring.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

Inflation rises unexpectedly

The Bank of England’s Monetary Policy Committee (MPC) has continued its efforts to contain price rises by sanctioning another interest rate hike but said it believes February’s surprise jump in inflation was due to “one off elements” which will probably fade quickly. 

Data released last month by ONS showed that the Consumer Prices Index (CPI) annual rate – which compares prices in the current month with the same period a year earlier – stood at 10.4% in February. This was a notable jump from January’s figure of 10.1% and significantly higher than the consensus forecast in a Reuters poll of economists which had predicted the headline inflation rate would actually fall to 9.9%. 

ONS said the cost of food and drinks had the largest upward impact on February’s figure. Food prices rose at the fastest rate in 45 years partly due to shortages of some salad and vegetable items, while higher food and drink prices in pubs and restaurants also pushed the CPI rate up. 

Prior to the unexpected inflation jump, analysts had been evenly divided over the outcome of March’s MPC deliberations. However, after release of the inflation data, a rate rise seemed

inevitable and the MPC duly obliged, increasing Bank Rate by 0.25 percentage points on 23 March, the eleventh rise in a row. 

Minutes to the MPC meeting played down the significance of February’s resurgence in inflation, reiterating the Committee’s belief that CPI is ‘likely to fall sharply’ across the rest of this year. Indeed, the minutes stated that inflation is expected  to decline to a lower rate than previously anticipated due to the Chancellor’s ‘Energy Price Guarantee’ Budget announcement and further falls in wholesale energy prices, prompting speculation that the MPC may now pause its run of rate hikes. The Committee’s next decision will be announced on 11 May.

Markets

UK markets responded positively at month end after the UK’s 2022 Q4 GDP data was revised upwards, indicating that a recession had been avoided in the second half of 2022. Slower-than-expected inflation data in the US added to hopes of a pause in interest rate hikes from the Federal Reserve.

In the UK, the FTSE 100 ended March on 7,631.74, a loss of 3.10% in the month. The domestically focused FTSE 250 closed the month down 4.90% on 18,928.30, while the FTSE AIM closed March on 809.27, a monthly loss of 5.83%. 

Across the pond, the Dow Jones index closed March up 1.89% on 33,274.15, while the NASDAQ closed the month up 6.69% on 12,221.91. On the continent, the Euro Stoxx 50 closed the month on 4,315.05, registering a gain of 1.81%. In Japan, the Nikkei 225 closed March up 2.17%, on 28,041.48. 

On the foreign exchanges, the euro closed the month at €1.13 against sterling. The US dollar closed at $1.23 against sterling and at $1.08 against the euro. 

Gold closed the month trading at around $1,979 a troy ounce, a monthly gain of around 8%. The gold price continues to rise as demand for the precious metal holds firm with expectations of the Fed easing interest rate hikes and a crisis of confidence in some major European lenders and US regional banks. Brent crude closed the month trading at around $80 a barrel, a monthly loss of around 4.5%.

It is important to take professional advice before making any decision relating to your personal finances. The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. 

Revised forecasts from the Office for Budget Responsibility (OBR) suggest the UK will not enter recession this year despite households facing a record drop in spending power. 

Chancellor Jeremy Hunt unveiled the independent fiscal watchdog’s latest projections during his Spring Budget statement delivered to the House of Commons on 15 March. Mr Hunt declared it was a “Budget for Growth” before announcing updated OBR figures which predict that, although the economy will contract this year, it will not now see two consecutive quarters of decline and thereby avoid the technical definition of a recession. 

The updated figures suggest the UK economy will shrink by 0.2% over the course of this year – which represents a significant upgrade from last autumn’s forecast of a 1.4% contraction – with growth then expected to hit 1.8% in 2024 and 2.5% in 2025. This improved outlook comes in spite of a sharp fall in real household incomes which the OBR said was “the largest two-year fall in living standards since records began in the 1950s.” 

Prior to the Chancellor’s statement, the latest monthly gross domestic product figures published by the Office for National Statistics (ONS) had confirmed that the UK economy is currently performing better than analysts had feared. ONS said the economy expanded by 0.3% in January; this represents a sharp rebound from December’s 0.5% decline and exceeded the consensus forecast in a Reuters poll of economists which had predicted a growth rate of 0.1%. 

Survey data released towards the end of last month also suggests the economy is likely to have expanded across the whole of the first quarter. The preliminary headline figure from the S&P Global/CIPS UK Purchasing Managers’ Index came in at 52.2 in March, a second successive monthly reading above the 50 threshold which indicates growth in private sector output.

*Content is for informational purposes only.

Inheritance Tax (IHT) is once again in the spotlight following the Chancellor’s decision to freeze IHT thresholds for a further two years until April 2028. Extending the frozen thresholds, together with rising house prices and soaring inflation mean that more estates are likely to be affected. 

IHT receipts on an upwards trend 

The latest IHT figures released in October make interesting reading. Total HM Revenue and Customs (HMRC) receipts for April 2022 to September 2022 were £3.5bn, £0.4bn higher than in the same period last year. 

Not just a tax on the very wealthy

IHT is a tax payable on all your assets when you die and potentially on some gifts you make during your lifetime. If the estate is liable for IHT, it is usually payable at 40%. These days, you don’t have to be hugely wealthy to be affected by IHT – the hated tax can cost your estate thousands of pounds when you die. 

A reminder of the thresholds 

An individual’s current threshold, or nil-rate band, is £325,000. A couple (married or civil partners) has £650,000. Any unused nil-rate band can be passed to the surviving spouse or civil partner on death.

 In 2017 the government introduced an additional nil-rate band when a residence is passed on death to a direct descendant. The main residence nil-rate band is £175,000 and when added to the existing threshold of £325,000 could potentially give an overall allowance for  individuals of £500,000. 

To reduce the amount of IHT payable, many families consider giving assets away during their lifetime. Some gifts will be automatically free from IHT; for example, £3,000 each financial year, certain wedding gifts and gifts to charities. 

Getting the right balance between gifting money during your lifetime and ensuring you have enough for your future years requires careful planning. Expert planning can legitimately mitigate IHT, meaning you can pass on assets to your family as you’d intended.

If you would like more information on how to plan for your family’s future, get in touch with our team today – https://audleywealth.com/contact-us/

* Content is for educational purposes only.  A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

Your investment focus for 2023

By any comparison, 2022 was tough for investors with a series of shocks impacting markets and, in 2023, uncertainties remain. One constant on the investment horizon, though, is the requirement to be strategic with your portfolio. A sound strategy based on careful planning; making purposeful decisions, based on thorough research and reliable processes, will stand you in good stead. 

Last year saw markets struggle with bouts of volatility as a combination of high inflation, rising interest rates and the war in Ukraine brought about challenging headwinds and markets sought a stable footing. As a result, fund inflows slowed while cash as a percentage of investors’ portfolios rose, prompting warnings that investors need to be aware of limitations to the Financial Services Compensation Scheme (FSCS) for cash balances.

Identifying opportunities

With large amounts of money on the sidelines, using our knowledge, we aim to identify opportunities and position portfolios to benefit from recession- resistant companies in which we have conviction. Those who still have the capacity to invest should consider adding back to their portfolios in order to take advantage of any potential low valuations.

Battling inflation

Investors also need to be aware of the erosive impact of inflation on cash-based savings. In the current economic climate, anyone holding a significant proportion of their assets in cash, even with savings rates improving, will inevitably see the value of their wealth decline in real terms. In essence, equities offer a better potential defence in the battle with inflation.

Trust in our process

Experienced investor or not, staying calm during periods of market turmoil is never easy but adapting your mindset and focusing on investment strategy rather than market sentiment is vital. Investing in the stock market does clearly involve a level of risk but the adoption of a carefully considered strategy based on sound financial planning principles undoubtedly offers investors the best chance of success.

If you would like help to refocus your investment portfolio after a turbulent 2022, get in touch with our team at https://audleywealth.com/contact-us/

*The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

Pensions – Getting to grips with the basics

Pensions are typically viewed as being complex and difficult to understand. As a result, people often delay starting one or ignore the issue altogether. In reality, though, the basics are relatively simple and taking time to understand them now could have a huge impact on your quality of retirement. Here, we’ll provide answers to questions our clients commonly ask and help guide you through the pensions maze.

WHAT IS A PENSION?

A pension is simply a type of long-term savings plan designed to help you save money for later life. In essence, it allows you to regularly save some of your earnings during your working life in order to provide an income when you decide to retire or work fewer hours. The money contributed to your pension is usually invested, along with other pension savers’ cash, in some form of investment product. Pension contributions also benefit from particularly favourable tax treatment, which makes them an extremely appealing investment proposition.

WHAT TYPES OF PENSIONS ARE THERE?

There are three major pension routes and most people fund their retirement through a combination of one, two or all three of these types.

Workplace pensions: These are arranged for you by your employer and are sometimes called ‘company pensions’ or ‘occupational pension schemes’. They work by you automatically paying a percentage of your salary into the scheme every payday. In most cases, the amount you pay is then topped up by a contribution from your employer, as well as tax relief from the government. The phased introduction of automatic enrolment since 2012 has now resulted in companies enrolling the vast majority of their staff into a workplace pension.

Personal pensions: You arrange these yourself and they are sometimes called ‘defined contribution’ or ‘money purchase’ pensions. Basically, you pay a portion of your earnings into your pension pot which, along with tax relief, is then placed by your pension provider into a range of investments, such as shares or bonds. The amount you ultimately receive in retirement will depend upon: how much you pay into your pot; the performance of your investment fund; the administration fees charged by your provider, and how you ultimately take your cash.

The State Pension: This is a weekly payment from government for people who reach State Pension age. Entitlement is built up by either paying or being credited with National Insurance contributions (NICs) during your working life. To qualify for the new full State Pension you need a 35-year NICs record.

WHAT TAX RELIEF DO I GET ON MY PENSION CONTRIBUTIONS?

Whatever type of pension plan you hold, you get tax relief at the highest rate of Income Tax you pay on all contributions you make, subject to annual and lifetime allowances. This effectively means that some of your earnings which would have gone to the government as tax are diverted to boost your pension pot instead. 

You receive ‘relief at source’ if you pay money into your personal pension yourself or if your workplace pension contributions are taken directly from your pay packet. In both circumstances, you automatically receive 20% tax back from government in the form of an additional deposit into your pension pot. So, for instance, if you’re a basic-rate taxpayer investing £800 of your take-home pay into your pension, the tax relief would amount to £200; effectively the taxman tops up your £800 contribution to £1,000. 

If you don’t earn enough to pay Income Tax at all, you still qualify for tax relief up to a certain amount. The maximum annual contribution you can currently make is £2,880 which, along with tax relief, would amount to £3,600 a year being paid into your pension scheme.

IS THERE A LIMIT ON HOW MUCH I CAN PAY INTO A PENSION SCHEME?

You can contribute as much as you like into your pension, but there is a limit on the amount of tax relief you will receive each year. The Annual Allowance is currently £40,000, or 100% of your earnings, whichever is lower. You can, however, carry forward unused allowances from the past three years, provided you were a pension scheme member during those years.

For the 2022-23 tax year the ThresholdbAdjusted Income limit is £200,000 and the Adjusted Income Limit is £240,000. If your income plus pension contributions exceeds the Adjusted Income Limit, your Annual Allowance is reduced by £1 of every £2 you are over the Adjusted Income Limit.

A Lifetime Allowance also places a limit on the amount you can hold across all your pension funds without having to pay extra tax when you withdraw money. This limit is currently £1,073,100.

WHEN CAN I ACCESS MY PENSION?

The pension freedoms introduced in 2015 allow you to access your pension once you turn 55 (57 from 2028); from that point you’re free to take as much or as little as you like from your pension pot, whenever you like. While this has certainly introduced greater flexibility, it has also heightened the necessity to carefully consider your options. It’s therefore imperative to seek professional financial advice before accessing your pension to minimise potential tax implications and maximise the benefit you ultimately receive from your pension funds.

Pensions Top Tips

IT’S NEVER TOO EARLY TO START SAVING INTO A PENSION…

You should start saving for retirement as soon as possible as the sooner you begin

the longer your savings have to grow. While other financial challenges can make this difficult, investing regular amounts in a pension throughout your working life gives you the best chance of enjoying a prosperous retirement.

…BUT BETTER LATE THAN NEVER

Never think it’s too late to start saving for your retirement. The favourable tax treatment pensions enjoy and their potential for investment growth means

any contributions you make later in life can still make a huge difference to your standard of living in retirement.

RETIREMENT PLANNING IS VITAL FOR THE SELF-EMPLOYED

As the self-employed are inevitably responsible for their own pension

provision, it’s particularly important that this section of society takes full control of their retirement planning. So if you belong to the growing band of self-employed workers make sure you don’t delay saving for your retirement.

KEEP TRACK OF HOW YOUR PENSIONS ARE DOING

It’s good to regularly review your pension arrangements to ensure they continue

to meet your retirement objectives. Your pension provider(s) will send out annual benefit statements detailing your entitlements and you can also request a State Pension forecast. This information will allow you to assess your provision and decide whether you need to take further action, for instance, increasing contributions or setting up an additional pension. Many people only review their pensions when they’re about to retire, by which time it’s too late – don’t fall into this trap.

PLAN YOUR INHERITANCE

It’s important to plan what will happen to your pension benefits if you die. Passing on your pension wealth is now relatively easy and some pensions can be inherited tax-free. It’s therefore essential that you keep your beneficiary nomination forms up to date as your providers will use this information when deciding who will inherit your pension savings.

TAKE CONTROL OF YOUR RETIREMENT

When you reach 55 (57 in 2028), it’s important to carefully consider what you can do with your pension pot. For instance, you could: keep your savings invested; take a cash lump sum; draw a flexible income (drawdown); buy a fixed income (an annuity), or do a combination of these things. While this flexibility may enable you to retire earlier or semi- retire, it’s vital you take full control of your retirement options at this stage. This should include seeking advice and discussing the pros and cons of the different avenues available to you.

GET GOOD ADVICE

Retirement planning is never a case of ‘one size fits all’; so it’s vital you obtain sound financial advice tailored to your individual needs. We offer advice and help with all aspects of pensions and retirement planning, whether you’re just starting out and want help choosing the most appropriate pension products, or you’re approaching the stage of life when you need to utilise your pension pot and want to know the most efficient way to access your funds. Remember: we’re here to help.

* It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

An Introduction to ISAs – Getting to grips with the basics

If you’re thinking about saving or investing, it can be difficult to decide on the best place to put your money. There are hundreds of different accounts on offer from banks, building societies and investment companies. So how do you make your choice? For many people, taking out an ISA (Individual Savings Account) can be a good place to begin.

WHAT ARE ISAS?

An ISA is a simple, tax-efficient way to save or invest. The advantage of these types of account is that you don’t pay tax on the interest you earn, or the increase in value of your investments (no Capital Gains Tax to pay) and some deliver a government bonus. There are now several different types of ISA available, designed by the government to encourage people over 16 to save or invest for their or their children’s future.

WHAT TYPES ARE THERE?

The basic types of ISA are:

• Cash ISAs
• Junior ISAs
• Help-to-Buy ISAs (closed to new accounts from 30 November 2019)

• Stocks and Shares ISAs
• Lifetime ISAs

With a Cash ISA you never need to pay tax  on the interest you earn on your cash. 

Junior ISAs are a tax-efficient way to build up savings for a child and can be opened for any child under 18 living in the UK. The money can be held in cash and/or invested in stocks and shares. 

Help-to-Buy ISAs are designed for first-time house buyers as a type of Cash ISA. When the money saved is used to complete a house purchase, the government adds a 25% bonus (up to a maximum bonus of £3,000). The Help to Buy ISA closed to new accounts on 30 November 2019. If you opened a Help to Buy ISA before 30 November 2019, you

will be able to continue saving into your account until November 2029. 

With a Lifetime ISA (LISA) you are able to hold your money in cash or invest in stocks and shares. LISAs are designed for those aged 18 to 40 wanting to save for their first home or retirement, with the added attraction that they can save until they are 60 if they wish to. People under the age of 40 are able to contribute up to £4,000 in each tax year. Government bonuses apply up to age 50.

If you choose a Stocks and Shares ISA, there is no Capital Gains Tax and no tax on dividend income. ISA dividends have no impact on the dividend allowance.

HOW MUCH CAN I SAVE IN AN ISA?

The ISA allowance is a generous £ 20,000 for the 2022-23 tax year. You can put all the £20,000 into a Cash ISA, or invest the whole amount into a Stocks and Shares ISA or Innovative Finance ISA. You can also mix and match, putting some

into cash, some into stocks and shares and the rest into innovative finance if you wish. However, the combined amount can’t exceed your annual ISA savings allowance (£20,000). 

In the 2022-23 tax year, £9,000 can be saved in a Junior ISA. 

With a Lifetime ISA, if you are aged between 18 and 40, you can save up to £4,000 each year. The government then provides a 25% bonus on these contributions at the end of the tax year. This means that people who save the maximum each year will receive a £1,000 bonus each year from the government. Savers are able to make Lifetime ISA contributions and receive a bonus from the age of 18 up to the age of 50. Savers need to be aware of the risks associated with a LISA, early withdrawal charges,nrestrictions and accessibility.

We can help you make the right choice of ISA based on your age, the length of time you want to save for and your plans for the future. We can save you time and make recommendations that are right for your personal financial circumstances.

SHOULD I OPT FOR CASH OR SHARES?

Cash is solid and reliable, and with a Cash ISA you are guaranteed to get back all the money you have put in – but with interest rates continuing to remain low, there is a risk that inflation will erode the value of the money saved over time.

If you are able to lock your money away for a reasonable amount of time – a minimum of five years for example – it is often better to invest in stocks and shares which historically have offered a better return. Unlike cash savings, money invested in stocks and shares rises and falls in line with what is happening in financial markets. So the value of your investment can go up and down.

Given that you can put your money into both Cash, and Stocks and Shares within an ISA, people often find this a tricky decision to make. This is where we can offer practical help and guidance based on your attitude to risk, and the length of time you have to

save or invest.

CAN I HAVE MORE THAN ONE ISA?

You can have multiple ISAs, but you can only open and subscribe to one Cash ISA and one Stocks and Shares ISA per tax year. However, you can’t exceed the combined allowance, which for tax year 2022-23 is £20,000. You can continue to hold ISAs set up in previous years.

DO I LOSE THE TAX BENEFITS IF I TAKE MONEY OUT?

ISAs can be flexible, which means that if the account terms allow, you can take cash out and put it back during the same tax year without reducing your current year’s allowance and without losing the tax benefits.

DO I INCLUDE MY ISA ON MY TAX RETURN?

No, there is no requirement to do this under current tax rules. You don’t need to declare income and capital gains from ISA savings or investments on your tax return.

ISA Top Tips

REMEMBER, CASH IS NOT RISK FREE

With interest rates currently low, there is a risk that over time inflation will erode the buying-power of your savings. You can hold a wide variety of assets in an ISA. We’ll explain these options to you.

THINK ABOUT YOUR TIME HORIZONS

If you intend to save or invest into an ISAnover the longer term, say five to ten years, then you may want to consider investing rather than saving in cash, giving your money more time and scope for growth.

CONSIDER INVESTING MONTHLY

If you’re thinking of putting your ISA subscription into the stock market, but are worried about the volatility that stocks and shares can sometimes experience, then you can always choose to make regular contributions. By making regular contributions, returns are smoothed over the longer term, with the objective of hedging the risk of a falling market over time. This simple concept is known as ‘pound-cost-averaging’ and is based on the principle that when markets are low, your set amount buys more shares or units, and when markets are high it buys fewer.This investment philosophy offers the opportunity to make inevitable market fluctuations work in your favour; by gradually drip feeding money into the market over a longer term, you can reduce the impact of market timing and volatility on purchase prices.

DON’T FORGET YOUR PENSION

Both ISAs and pensions are forms of tax wrapper that offer valuable tax concessions. One of the key differences between ISAs and pensions is that contributions to ISAs are made from taxed income, while those made to pensions are not. Savers contributing to a pension within HMRC annual and lifetime allowances receive tax relief at the same rate they pay income tax. With a pension, you can’t generally access your money before you are 55. For many people, contributing to an ISA and a pension makes good financial sense.

GET GOOD ADVICE

ISAs have an important part to play in organising your money in a tax-efficient

way and making provision for the future. We can offer advice about the type of ISA that would work best for you, whether you’re investing for a child through a Junior ISA, or accumulating funds for future goals such as a comfortable retirement.

WE’RE HERE TO HELP

We’re only a phone call away, so if you have queries or would like to discuss the different

types of ISAs and consider what would work best for you or your family, please do get in touch.

* It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

Following his controversial ‘stealth tax’ Statement in November, the Chancellor made a raft of key personal taxation and pension announcements. 

The government pledged its commitment to the pensions Triple Lock, which will increase the State Pension in line with September’s Consumer Prices Index (CPI) rate of 10.1%. This means that the value of the basic State Pension will increase in April 2023 from £141.85 per week to £156.20 per week, while the full new State Pension will rise from £185.15 to £203.85 per week.

In addition to the Dividend Allowance and CGT allowance reductions (as per ‘Tax year end reminder’ article), other key personal tax announcements included:

• The Income Tax additional rate threshold (ART) at which 45p becomes payable will be lowered from £150,000 to £125,140 from 6 April 2023. The ART for non-savings and non-dividend income will apply to taxpayers in England, Wales and Northern Ireland. The ART for savings and dividend income will apply UK-wide. This move is set to push 250,000 more people into this band

• The Income Tax Personal Allowance and higher rate threshold are to remain at current levels – £12,570 and £50,270 respectively – until April 2028 (rates and thresholds may differ for taxpayers in parts of the UK where Income Tax is devolved)

• Inheritance Tax nil-rate bands remain at £325,000 nil-rate band, £175,000 residence 

nil-rate band, with taper starting at £2m – fixed at these levels for a further two years until April 2028.

With an increasing number of people likely to be impacted by these changes, we can’t stress enough the importance of tax year end planning. Although some of these changes don’t come in with immediate effect, it is vital to ensure you are in the best place possible to take advantage of any allowances, exemptions and reliefs available this year and to prepare for the changes that come in over the next few years. With plenty to consider and factor into your financial plan, valuable financial advice remains central to achieving your goals and aspirations.

If you would like to know more about how he changes may affect you, please don’t hesitate to get in touch with our team – www.audleywealth.com/contact-us

* The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

Tax on residential property purchase 

Stamp Duty Land Tax (SDLT) in England and Northern Ireland; Land and Buildings Transaction Tax (LBTT) in Scotland; Land Transaction Tax (LTT) in Wales Residential property (first property only):

• The SDLT cut announced on 23 September 2022 is a temporary measure which will remain in place until 31 March 2025
• First time buyers are exempt from SDLT for purchases up to £425,000 and for the first £425,000 of purchases up to £625,000
• A 2% supplement applies where a property is purchased by a non-resident
• A 15% flat rate SDLT applies to ‘non-natural persons’ purchasing residential properties (enveloped properties) valued above £500,000 unless relief is available
• Higher rates for additional properties – a 3% supplement is payable on top of the SDLT rates if buying a new residential property means you’ll own more than one.

Capital Gains Tax (CGT)

• The annual CGT exemption for 2022–23 is £12,300
• The annual CGT exemption will fall from £12,300 to £6,000 in April2023 and then to £3,000 in April 2024
• For individuals the flat rate of CGT that applies to gains in excess ofthe annual exemption is 10% up to the higher rate tax threshold
• Surcharge for residential property and carried interest of 8%
• Chargeable gains in excess of the higher rate threshold:20% (2022–23)
• £6,150 CGT exemption for trusts, 20% rate applies thereafter
• Lifetime Allowance on gains eligible for Entrepreneurs’ Reliefis £1m.

Personal Allowances

• The Personal Allowance for those with adjusted net income over £100,000 reduces by £1 for every £2 of income
• Interest on savings is tax-free to a threshold of £1,000 for basic rate taxpayers and £500 for those who pay higher rate tax
• Married Couple’s Allowance is given at 10%, claimants must be born before 6 April 1935; the full allowance is £9,415
• Spouses or civil partners are able to transfer £1,260 of their unused Personal Allowance to their partner; this is available provided neither partner pays tax at the higher rate and is not available if the couple are in receipt of Married Couple’s Allowance.

Income Tax Rates

The following allowances and rates will apply in 2022–23 for the UK (excluding Scotland) Rate of tax 2022

• Income Tax is paid on the amount of taxable income remaining after allowances have been deducted
• From April 2023, the Dividend Allowance will be cut from £2,000 to £1,000 and then fall further to £500 from April 2024
• The Income Tax additional rate threshold (ART) at which 45p becomes payable will be lowered from £150,000 to £125,140 from 6 April 2023
• The ART for non-savings and non-dividend income will apply to taxpayers in England, Wales and Northern Ireland. The ART for savings and dividend income will apply UK-wide.

National Insurance 

• National Insurance contributions (NICs) Upper Earnings Limit (UEL) and Upper Profits Limit (UPL) frozen for a further two years until April 2028
• The National Insurance Secondary Threshold for employers is frozen at £9,100 until April 2028
• From July 2022 the NICs Primary Threshold (PT) and Lower Profit Limit (LPL) were increased to align with the Personal Allowance and will be maintained at this level from April 2023 until April 2028
• The Class 2 Lower Profits Threshold (LPT) will be fixed from April 2023 until April 2028 to align with the LPL
• The Lower Earnings Limit (LEL) will remain at £6,396 per annum (£123 per week) and the Small Profits Threshold (SPT) will remain at £6,725 per annum
• The Upper Secondary Threshold, Apprentices Upper Secondary Threshold, and Veteran Upper Secondary Threshold, will stay fixed at £50,270 per annum until April 2028, to remain aligned with the UEL and UPL.

Pension Allowances

• The Annual Allowance for 2022-23 is £40,000. Pension funding exceeding the allowance in a tax year can be offset against any unused Annual Allowance from the previous three tax years
• Individuals with threshold income in excess of £200,000 and adjusted income of more than £240,000 in a tax year will be subject to a tapered Annual Allowance in that tax year. £1 of Annual Allowance is lost for every £2 of adjusted income over £240,000. Individuals with total earnings over £300,000 could see their Annual Allowance fall to £4,000
• The standard Lifetime Allowance remains at £1,073,100 until April 2026.

Tax-free savings for individuals

• Overall ISA limit £20,000
• Junior ISA allowance £9,000
• Lifetime ISA £4,000.

Some tax relief options for individuals 

Venture Capital Trusts (VCTs) 

• Relief on investment in certain qualifying companies up to £200,000 per annum • Income Tax relief at 30%, provided shares held at least five years
• Capital gains exemption on disposal (only if Income Tax relief received)
• Dividends received from VCTs may be exempt from Income Tax 

Enterprise Investment Schemes (EIS)

• Relief on investments in certain unquoted trading companies up to £1m per annum (or £2m as long as at least £1m of this is invested in knowledge intensive companies)
• Income Tax relief at 30%
• Capital gains exemption on disposal
• Unlimited amounts of capital gains from the disposal of other assets may be able to be deferred by making an EIS investment.

Corporation Tax

• Corporation Tax for company profits up to £50,000 is 19%. An effective rate of 26.5% is applied to profits between £50,001 and £250,000.
• A planned increase in the Corporation Tax rate to 25% for companies with over £250,000 in profits will go ahead in April 2023.

Inheritance Tax (IHT)

• The nil-rate IHT band is £325,000, with 40% IHT payable above this threshold
• A lower rate of IHT (36%) applies if you leave 10% of your net assets to charity 
• Residence nil-rate band of £175,000 where a residence is passed on death to a direct descendant

The proportion of the threshold ‘unused’ on the first death of husband or wife (or civil partners) is effectively transferable to the surviving partner and serves to increase his or her threshold by a corresponding percentage. 

Chargeable lifetime transfers and potentially exempt transfers attract taper relief, if made up to seven years before death, on the amount of gift over the nil-rate band. 

Certain gifts are IHT-free however soon death occurs, including: 

• Gifts between UK domiciled husband and wife or between civil partners
• Total gifts up to £3,000 in a year (can be carried forward one year)
• Small gifts to other recipients (up to £250 each in year)
• Gifts in consideration of marriage or civil partnership ranging from £5,000 from each parent of the couple, to £1,000 from anyone else.

State Pension entitlement

• A flat rate, single tier State Pension of £185.15 per week is payable from 6 April 2022 (35 qualifying years of National Insurance contributions needed for full rate), available to those reaching State Pension age (SPA) on or after 6 April 2016. This increases to £203.85 per week in April 2023
• For those who reached SPA before 6 April 2016, the basic State Pension of £141.85 applies (30 qualifying years needed for full rate), plus any additional State Pension. This increases to £156.20 per week in April 2023.

Principal state benefits 

* or 90% of earnings, if lower

Self Assessment dates

• 31 Jan 2022 – Deadline for filing 2020-21 returns, balancing payment due for 2020-21, first payment due for 2021-22 
• 31 Jul 2022 – Second payment on account for 2021-22 due to HMRC 
• 05 Aug 2022 – Deadline to notify chargeability and advise HMRC of need to register for Self Assessment 
• 31 Oct 2022 – Deadline for submitting paper Self Assessment returns to HMRC 
• 30 Dec 2022 – Deadline for filing online return with HMRC if tax is to be collected through PAYE 
• 31 Jan 2023 – Deadline for filing 2021-22 returns, balancing payment due for 2021-22, first payment due for 2022-23

The information contained in this leaflet is based on our understanding of the Spring Forecast 2022, Growth Plan 2022 and Autumn Statement 2022, proposals, which are subject to change. No action should be taken without further advice being sought. We can accept no responsibility for any errors or omissions.

WE’RE HERE TO HELP 

With the tax year-end imminent, please get in touch with us as soon as possible if you have any questions or want to discuss any aspect of your end-of-year tax planning. We look forward to hearing from you.

*Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. 

As the end of the tax year approaches, a prime consideration should be how external factors

such as reduced or frozen allowances, together with high inflation, could impact your finances and what action you need to take before 5 April 2023.

If you are affected by the impending changes to Dividend Tax or Capital Gains Tax (CGT) announced in the Autumn Statement, have you considered investing up to £20,000 this tax year in a stocks and shares Individual Savings Account (ISA)?

From April 2023, the Dividend Allowance will be cut from £2,000 to £1,000 and then fall further to £500 from April 2024. In addition, the annual CGT exemption will fall from £12,300 to £6,000 next tax year and then to £3,000 the following tax year. Dividends received on shares within an ISA are tax free and won’t impact your Dividend Allowance. Also, any profit you make when selling investments in your stocks and shares ISA is free of CGT.

And don’t forget your pension

Both the Annual Allowance and Lifetime Allowance are frozen, at £40,000 and £1,073,100 respectively. As these allowances haven’t increased with inflation, it effectively means those saving to the maximum extent possible with tax concessions can save less in real terms each year.

If you would like to discuss this with our team, get in touch today- https://audleywealth.com/contact-us/

*The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.