INHERITANCE TAX

Inheritance tax may seem daunting, but it presents an opportunity to take proactive steps to safeguard your wealth and provide for future generations.

How does it work?

Most commonly, it is a 40% tax upon death on the value of someone’s estate (i.e. assets in their ownership) which exceeds a ‘nil rate band’ of £325,000 plus potentially a ‘residence nil-rate band’ of £175,000 if the residence (or the equivalent proceeds if already sold) are left to children or grandchildren. Because these allowances can be passed on to a spouse (or civil partner) if unused, surviving spouses can potentially have up to £1 million of nil-rate band on their eventual deaths (two nil-rate bands plus two residence nil-rate bands).  Various reliefs are available, the most common of which are transfers between spouses, gifting, gifts to charities and taking advantage of tax allowances and reliefs.

What to do about it

Careful IHT planning is all about passing as much of your estate as possible to whomever you want to receive it, rather than to HMRC!   It’s also about maintaining flexibility and control over any arrangements that are made.  We recommend regularly reviewing the value of the assets in your ownership and considering the following:

• Does the value of your assets exceed £500,000?

• Are the assets owned by you individually or jointly owned (and is this the most tax efficient way to own the asset)?

• Could you afford to gift any assets now (and would gifting now trigger a Capital Gains Tax Charge)?

• Are you using all the IHT allowances and exemptions available?

James and Dawn are here to help if you would like advice or assistance with your IHT planning.

SELF ASSESSMENT REPAYMENTS

HMRC have paused the issuing of Self Assessment repayments for new claims over the telephone and through webchat until further notice.  Instead, individuals are being advised to claim any refunds due through their online tax account or via their authorised agent so please get in touch if you need our assistance.

CHANGES COMING FROM COMPANIES HOUSE

A raft of changes is being phased in by Companies House to crack down on the misuse of the UK companies register.   Currently scheduled for Autumn 2025, identity verification will become a compulsory part of new incorporations and director/PSC appointments.  Existing directors and PSCs will also need to verify their identity as part of the annual Confirmation Statement filing so this will be phased over a 12-month period until Autumn 2026.  To assist our clients with these changes and new requirements Clarksons have registered as an Authorised Corporate Service Provider (ACSP) with Companies House and will keep you informed as these changes are implemented. 

SMALL PENSION POTS

Forming part of the Government’s Pension Schemes Bill which is due to be put before Parliament by July this year, small pension pots may be automatically combined in the future.  Following the introduction of auto-enrolment, the number of pension pots holding less than £1,000 has grown rapidly as employees leave one job and pension scheme for another.  By consolidating these into one larger pot the government estimates that this will boost pensions by reducing the admin fees which can eat away at the total value over time if you are no longer contributing.  However, these proposals are at an early stage and experts are asking for clarification on whether individuals will be able to opt-out and how the government will ensure that pots are only moved in the best interests of the saver.