HMRC rule change: Thousands of UK households urged to gift money to children in advance
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UK households earning £100,000 are forecast to "bear the brunt of tax rises" in the Autumn Budget. It is feared that Chancellor Rachel Reeves will initiate HMRC tax raids on UK households in her Autumn Statement.
Sarah Coles, head of personal finance at Hargreaves Lansdown, has warned that "so-called Henrys (High Earners Not Rich Yet) could bear the brunt of tax rises".
Ms Coles also cautioned that they "already face significant income tax burdens, and those earning more than £100,000 fall off the cliff edge of government support for childcare too."
If the Government extends the income tax freeze beyond 2028, "it would mean more people pass over the threshold to pay 60 per cent, and more pass into the realms of 45 per cent tax too," Ms Coles stated.
Warnings have also been issued about increases in council tax and a tax on inheritance and pensions under new HMRC rules and shake-up previously confirmed by the Labour government, reports Birmingham Live.
A way to navigate the rule shake-up has also emerged, though. IHT changes might prompt those planning to leave money to Henrys to "do so sooner rather than later, to take advantage of gifting allowances or get the clock ticking on the seven years it takes for a larger gift to leave their estate," Ms Coles said.
The term 'Henrys' was coined way back in a 2003 article in Fortune, an American magazine. Emma Sterland, chief financial planning director of wealth managers Evelyn Partners, spoke out last year to highlight the other clouds on the Henrys' horizon.
"The pension tax reliefs may be under threat in the Budget, with higher-rate relief abolished and replaced by a lower flat rate," says Sterland. Join the North Wales Live WhatsApp community group where you can get the latest stories delivered straight to your phone
She continued: "Thousands of people are coming off heavily discounted fixed-rate mortgages at rates of 2 per cent or lower. Mortgage rates may be moving downwards but these borrowers will still be paying substantially more each month."
Giving them some good news, Andrew Montlake of mortgage brokers Coreco said: "There are specialist lenders who are prepared to advance 5.5 times income for "high net worth" customers who are earning above, say, £100,000. Some lenders will do special deals for accountants, doctors and lawyers."
He continued: "If you're on £300,000 a year or more, a private bank, like Investec, will start with a blank sheet of paper when it assesses how much it may be happy to lend you. But it may require that future bonuses be used to pay down the loan."
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