Latest news with #ClaireTrott
Yahoo
31-07-2025
- Business
- Yahoo
Inheritance tax nets record £6.7bn before Budget raid
The Exchequer raked in a record £6.7bn in inheritance tax between 2022 and 2023, as a longstanding freeze on the tax-free threshold and ballooning asset prices meant more estates were sucked in to paying the unpopular levy. The overall earnings from inheritance tax rose by over £700m in the tax year 2022/3, official data showed, a year on year jump of 12 per cent. HMRC attributed much of the added haul derived from more estates becoming liable to the duty thanks to thresholds remaining frozen at £325,000 since 2021. As many as 13 per cent more households were liable to the levy in the most recent official numbers from the UK's customs authority, taking the total number of estates that paid an IHT bill to 31,500. The figures, which come on the back of a similarly large jump in the 2021/22 year, are the latest evidence of the tax making up an increasingly large share of Treasury earnings. Receipts have more than doubled in the space of a decade, and are expected to rise even more sharply in the coming years, after the Chancellor removed several reliefs on the levy at her maiden Budget last October. Budget to drive higher inheritance tax bills The majority of additional revenues – due to kick in 2027 – will come from the government's telegraphed move to bring pension pots into the scope of inheritance. Until Rachel Reeves' maiden fiscal event last year, savers' nest eggs had escaped being subject to the levy. Claire Trott, head of advice at St James's Place, said that change alone was likely to mean an additional 10,500 estates will pay inheritance tax; a 55 per cent increase over just five years. The government also chose to end the decades-old Agricultural Property Relief and Business Property Relief carve-outs, that had previously allowed owners of farmland and family businesses to pass down their assets without paying the levy. They are expected to raise a further £500m annually for the Treasury. But the changes proved immensely unpopular and sparked a string of protests across the country. Farmers and Labour's political opponents branded the overhaul the 'family farm tax', and a cross-bench group of MPs recently called for the changes to be delayed by a year, while families adjusted their tax affairs. Pete Fairchild, head of private clients at professional services firm Crowe, said the swath of changes had resulted in abrupt behavioural responses from clients looking to adjust formerly tax-efficient plans. 'More individuals are reverting to seeing their pension pot as a vehicle to provide income in retirement, as opposed to an IHT planning opportunity,' he said. 'We are seeing more lifetime giving as people look to pass on their wealth and survive seven years to reduce their chargeable estate. 'Many clients have taken their 25 per cent tax-free lump sum from their pension and gifted that immediately to their children.' A spokesman for the Treasury said nine in 10 estates will continue to pay no inheritance tax by 2030. He added: 'The tough but necessary decisions we've taken on tax mean we could protect working people's payslips from higher taxes, invest record amounts into the NHS, defence and other public services while keeping bus fares at £3 and expanding free school meals.'
Daily Record
14-07-2025
- Business
- Daily Record
State Pension payments could be frozen due to soaring costs of annual uprating under Triple Lock
Financial expert Claire Trott suggests further increases to the age of retirement may help control soaring State Pension costs. Pension Credit – Could you or someone you know be eligible? Under the Triple Lock, the New and Basic State Pensions increase each year in-line with whichever is the highest between average annual earnings growth from May to July, Consumer Price Index (CPI) inflation in the year to September or 2.5 per cent. Over the 2025/26 financial year, the State Pension will cost the UK Government an estimated £145.6 billion. Last month, Pensions Minister Torsten Bell quashed growing speculation on social media that the State Pension would become means-tested under the Labour Government. However, Claire Trott, Head of Advice at St. James's Place, warns that the long-term sustainability of the State Pension Triple Lock is a topic that won't go away, despite political parties' reluctance to address it. She suggests one way around the ever-increasing costs of the Triple Lock could be to freeze the State Pension and increase access to Pension Credit, the most under-claimed means-tested benefit delivered by the Department for Work and Pensions (DWP). Another option could be to increase the State Pension age, which she said is the 'most viable and publicly palatable option'. The State Pension age is set to start rising from 66 to 67 next year, with the increase due to be completed for all men and women across the UK by 2028. The planned change to the official age of retirement has been in legislation since 2014 with a further State Pension age rise from 67 to 68 set to be implemented between 2044 and 2046. People born on April 6, 1960 will reach State Pension age of 66 on May 6, 2026 while those born on March 5, 1961 will reach State Pension age of 67 on February 5, 2028. You can check your own State Pension age online here. Ms Trott explained: 'The long-term affordability of the Triple Lock has been questioned for some time and understandably so. With people living longer and the Triple Lock delivering higher increases more frequently than originally anticipated, the cost has exceeded expectations and is only set to rise further. 'Yet despite the fiscal pressure, it remains a politically sensitive promise. With many pensioners still living in poverty, and also being a reliable voting demographic, few politicians are willing to risk tampering with it. 'If reform were to be considered, any proposal would need to ensure adequate support for those on the lowest incomes. Means-testing is often raised as a solution, but in practice it's unlikely to be pursued, given the cost and complexity of implementation outweighs the savings.' The financial expert continued: 'There are other options such as freezing the State Pension and increasing access to Pension Credit which might be a more pragmatic route - it's already in place and better targeted to those who need help most. 'Raising the State Pension age has been controversial in the past, but it's arguably the most viable and publicly palatable option in the longer term, as people continue to live and work for longer.' State Pension Triple Lock Nearly 13 million State Pensioners across Great Britain, including over one million living in Scotland, should start to keep an eye on the Consumer Price Index (CPI) inflation rate as it forms part of the Triple Lock measure which determines the annual uprating for the contributory benefit. The latest figures from the Office for National Statistics (ONS) show UK inflation decreased to 3.4 per cent in May, down from 3.5 per cent in April. Annual growth in employees' average wages for regular earnings (excluding bonuses) was 5.6 per cent and total earnings (including bonuses) was 5.5 per cent. The New and Basic State Pension increased by 4.7 per cent in April, which means someone on the full New State Pension currently receives £230.25 per week, or £921 every four-week pay period. Those on the full Basic State Pension receive £176.45 each week, or £705.80 every four-week pay period. State Pension uprating predictions for 2026/27 The Triple Lock is currently on track to be determined by the earnings growth element which is currently at 5.5 per cent. However, this figure may go up or down and isn't the final metric that will determine the level of uprating. The next CPI figure will be published by the ONS on July 17. That being said, a 5.5 per cent increase on the current State Pension would see people receive the following amounts. Full New State Pension Weekly: £242.90 Four-weekly pay period: £971.60 Annual amount: £12,630.80 Full Basic State Pension Weekly: £186.25 Four-weekly pay period: £744.60 Annual amount: £9,679.80 The annual uprating won't be confirmed until the Autumn Budget, but pensioners - and those due to retire next year - can start to plan their finances by following the Triple Lock measurements. The September CPI figure will be published in mid-October, but the wages growth figure is usually published in August.
Daily Mail
23-06-2025
- Business
- Daily Mail
Worried about inheritance tax on your pension? Don't let a scammer take advantage
People anxious about a future inheritance tax hit on pensions should stay on guard against scammers offering easy and appealing fixes, a finance expert has warned. Money remaining in pension pots is going to become liable for death duties like other assets, such as property, savings and investments starting in spring 2027. The announcement in last autumn's Budget has prompted a stream of questions from This is Money readers asking how best to avoid the raid on their retirement savings - scroll down to find some legitimate options. The legislation and communication around how the changes will work in practice is still vague, and savers may feel unsettled and unsure about whether to continue putting money into their pensions, according to St. James's Place head of advice Claire Trott. 'Some people may even be tempted to withdraw large sums from their pension out of fear their families will be hit with an inheritance tax bill in future,' she says. 'This is particularly worrying as it can increase vulnerability to potential scams.' Will your family have to pay inheritance tax? Check the rules on who pays below Trott says pension firms offer protection against scams, but after people take savings out their funds become more susceptible to fraud. 'Those who withdraw funds with no real plan for what they are going to do with the money can find themselves at a higher risk too. 'They may be approached by someone offering to take care of their cash, inheritance tax free, and while this may sound appealing, it could be a scam.' She says that before making decisions about avoiding an inheritance tax bill, you should get guidance from a trusted source - such as the free Government-backed Money Helper or Pension Wise services - or consider getting a regulated financial adviser to guide you through the upcoming changes and how to manage your estate. Trott adds that people younger than 55 should be particularly careful about pension scams. 'If you do get approached by a company claiming to help you withdraw your pension early, chances are it will be a scam,' she warns. You can lose your entire fund in a so-called 'pension liberation' scam, and face a hefty tax charge on top for taking money from your pension before you are 55. HMRC will pursue you for this even if all your pension money has vanished already. 'It isn't illegal to access your pension before the age of 55, but it's not recommended,' says Trott. 'Not only does it significantly increase your risk of running out of money in retirement, but those who choose to withdraw early are also subject to a tax charge. 'Early pension withdrawals are only permitted without an additional charge in two scenarios – those in ill health and those with a protected retirement age in careers such as sports or the military – and a reputable pension provider is unlikely to recommend withdrawing from your pension in any other circumstances.' How to guard against pension fraud Claire Trott offers the following tips to protect yourself from pension scammers. Be wary of unsolicited calls: It's important to remember that pension cold calling is illegal in the UK. If you receive a call from an unknown caller about your pension, it's likely to be a scam, so do not share any personal information or move money out of your pension at their instruction. Hang up or if you can get some information on them, for example their phone number and company name, report it to the Information Commissioner's Office so they can take the necessary action. Be cautious of emails, texts, or messages on social media offering 'free pension reviews' or 'guaranteed returns' too. Don't be rushed to take action: A tactic scammers often use is to pressure you to act quickly. Take your time to make decisions and consult with trusted advisers or family members before moving money from your pension. Remember, a genuine adviser will give you time to consider and won't rush you into a decision. Stay alert for red flags: The following tactics are used often used by pension scammers, so if you see any of them, be aware as it could be a scam. - Promises of 'high or guaranteed returns' or 'overseas investments'. - Schemes that seem too good to be true, which probably are. - Requests to transfer your pension into a single investment, especially if you're offered cashback or an upfront bonus. Only use trusted sources: As a rule of thumb, government-backed services like Money Helper or Pension Wise are safe sources to use for pensions advice. It may also be worth speaking to a regulated financial adviser who can guide you through the upcoming pension changes and how to manage your estate. How do you avoid the looming inheritance tax raid on pensions? Many savers with larger pensions are keen to avoid the new inheritance tax levy, and there are ways to do this legitimately - though some are more sensible than others, depending on your wealth and personal circumstances. First off, consider consider if you really are likely to have a big enough estate to pay inheritance tax, especially after you have spent down your pensions and other assets during retirement. Check the rules in the box further below, before you start worrying about your beneficiaries paying inheritance tax after you are gone. If you have cause for concern, consider the following options. 1. If you can afford it, you can spend or gift as much of your pensions as possible, while avoiding a big income tax bill. Recent research showed many savers with larger pensions intend to spend them by splashing out on more holidays. Bear in mind it is better to avoid crystallising losses by making bigger pension withdrawals in market downturns. 2. Consider gifting out of surplus income, which remains inheritance tax-free providing you can afford it. We explain how to do this and prove to the taxman you are doing it from actual surplus income. A This is Money reader explains how he is doing this to pass his wealth to his two daughters. 3. Look into buying life insurance and putting it in trust. This can mean your loved ones get a payout straight after your death and free of inheritance tax - but you have to set it up correctly. Here's how to put life insurance into trust, but be aware that premiums can be high especially as you get older, and if you cancel a policy you immediately lose all the benefits of taking it out in the first place. 4. Leave more or all of your estate to your spouse, who can still benefit from estates free of inheritance tax, instead of your children to delay and minimise the eventual bill. Wealth manager Evelyn Partners has suggested there could be a marriage boom or rise in civil partnerships among older couples as a result of the inheritance tax changes - read its six options to cut inheritance tax on pensions. 5. Buying an annuity is another option which Evelyn Partners explores. Meanwhile, beware- although some people have raised the idea of siphoning pension funds into stocks and shares Isas, these are also liable for inheritance tax, and there are other pitfalls. A financial planner from Quilter Cheviot explains how switching pensions into Isas can backfire. How much is inheritance tax and who pays? Inheritance tax is levied at 40 per cent on estates above a certain size. You need to be worth £325,000 if you are single, or £650,000 jointly if you are married or in a civil partnership, for your loved ones to have to stump up inheritance tax. A further allowance, the residence nil rate band, increases the threshold by £175,000 each - so £350,000 for a married couple - for those who leave their home to direct descendants. This creates a potential maximum joint inheritance tax-free total of £1million. This own home allowance starts being removed once an estate reaches £2million, at a rate of £1 for every £2 above the threshold. It vanishes completely by £2.3million. Chancellor Rachel Reeves said in the Budget these thresholds will be frozen until 2030.
Daily Record
10-06-2025
- Business
- Daily Record
Self-employed people urged to file tax returns early for faster refunds
Submitting an early Self Assessment return could result in a faster refund from HMRC. HM Revenue and Customs (HMRC has announced that a record breaking 299,419 Self Assessment tax returns were filed in the first week of the new financial year. People filling out Self Assessment forms can submit their tax return for the 2024/25 tax year between April 6 2025, which was the first day of the new tax year, and the deadline for online returns on January 31 2026. HMRC said there were 57,815 'early filers' on the first day of the new tax year, which was a Sunday, compared with 67,870 people who filed on April 6 2024. It's important for those submitting a paper tax return to be aware that these must be submitted by October 31 2025. The revenue body is encouraging people to file early so they know what tax they owe sooner and can plan for any payments in advance. People can set up a budget payment plan to make either weekly or monthly direct debit payments towards their Self Assessment tax bill. HMRC said that in cases where tax has been overpaid, refunds can be claimed as soon as the return has been processed and people can check if they are due a refund in the official app. HMRC recently introduced a new £10 per day late filing fee for people who have still not submitted their Self Assessment tax return for 2024/25. Personal finance experts warn that even though the deadline was January 31, the penalty will apply to 'hundreds of thousands of people'. Alastair Douglas, CEO at TotallyMoney, said: 'While the initial £100 fine might not have been enough to encourage some to get going, from today, HMRC will start charging late filers an extra £10 per day. This is on top of the eyewatering 8.5 per cent late payment interest rate on outstanding balances. "If in three months' time you still haven't filed your return, the taxman will hit you with a penalty of 5 per cent of the tax due or £300, whichever is greater. Any penalties need to be paid within 30 days, and can be done in several ways, including Direct Debit, bank transfer, or by cheque.' He added: 'If you have a 'reasonable excuse' you can challenge your penalty, and reasons include the death of a close relative, serious illness and issues with HMRC's online services. If you're struggling to pay your bill in full, then head over to the HMRC website, where you might be able to set up a payment plan, under a 'Time to Pay' arrangement.' Claire Trott, Head of Advice at St. James's Place, said 'pressure is rising' for those who still haven't submitted their tax return. She continued: 'While completing a tax return is often a dreaded task, and one may choose to put it off, getting it sorted now could save you from significant financial penalties down the line. 'Up until now, late filers have faced a one-off fine of £100, but from today the consequences will become even greater. The £10 a day penalty will continue for 90 days, potentially adding up to £900 if the return is not submitted during this period. 'Further penalties of 5% of the tax due or £300 (whichever is greater) will apply at both the six month and 12 month mark for those who still haven't filed.' It's important to be aware that anyone who is currently registered for Self Assessment is required to submit a return, whether they owe tax or not, so if you're in this position, it's crucial you don't ignore reminders or warnings from HMRC. Ms Trott also said that while submitting your tax return today won't erase the financial penalties you have accrued up to this date, it's well worth it to prevent further fines adding up. She explained: 'The quickest and simplest way to do this is to complete HMRC's online form. While the process may seem daunting, there are plenty of tips and guidance available on the HMRC website, and if your finances are particularly complex, speaking to a financial adviser is always a good option for those who are able. 'With today's penalties likely to cause alarm for those who are unaware, the most important thing is not to rush the return process as this could cause you to leave out vital information that could result in paying more tax than necessary. 'There are a number of details - such as gift aid payments, and necessary work expenses - that can be easy to forget about when filing a return but can amount to significant tax relief. It's important to take time to include all relevant information to ensure you receive the full tax relief you're entitled to."
Daily Record
08-05-2025
- Business
- Daily Record
HMRC urges self-employed to file tax returns early this year
Submitting an early Self Assessment return could result in a faster refund, if one is due. Income tax rises for Scots in April - how the changes affect you HM Revenue and Customs (HMRC has announced that a record breaking 299,419 Self Assessment tax returns were filed in the first week of the new financial year. People filling out Self Assessment forms can submit their tax return for the 2024/25 tax year between April 6 2025, which was the first day of the new tax year, and the deadline for online returns on January 31 2026. HMRC said there were 57,815 'early filers' on the first day of the new tax year, which was a Sunday, compared with 67,870 people who filed on April 6 2024. It's important for those submitting a paper tax return to be aware that these must be submitted by October 31 2025. The revenue body is encouraging people to file early so they know what tax they owe sooner and can plan for any payments in advance. People can set up a budget payment plan to make either weekly or monthly direct debit payments towards their Self Assessment tax bill. HMRC said that in cases where tax has been overpaid, refunds can be claimed as soon as the return has been processed and people can check if they are due a refund in the official app. HMRC recently introduced a new £10 per day late filing fee for people who have still not submitted their Self Assessment tax return for 2024/25. Personal finance experts warn that even though the deadline was January 31, the penalty will apply to 'hundreds of thousands of people'. Alastair Douglas, CEO at TotallyMoney, said: 'While the initial £100 fine might not have been enough to encourage some to get going, from today, HMRC will start charging late filers an extra £10 per day. This is on top of the eyewatering 8.5 per cent late payment interest rate on outstanding balances. "If in three months' time you still haven't filed your return, the taxman will hit you with a penalty of 5 per cent of the tax due or £300, whichever is greater. Any penalties need to be paid within 30 days, and can be done in several ways, including Direct Debit, bank transfer, or by cheque.' He added: 'If you have a 'reasonable excuse' you can challenge your penalty, and reasons include the death of a close relative, serious illness and issues with HMRC's online services. If you're struggling to pay your bill in full, then head over to the HMRC website, where you might be able to set up a payment plan, under a 'Time to Pay' arrangement.' Claire Trott, Head of Advice at St. James's Place, said 'pressure is rising' for those who still haven't submitted their tax return. She continued: 'While completing a tax return is often a dreaded task, and one may choose to put it off, getting it sorted now could save you from significant financial penalties down the line. 'Up until now, late filers have faced a one-off fine of £100, but from today the consequences will become even greater. The £10 a day penalty will continue for 90 days, potentially adding up to £900 if the return is not submitted during this period. 'Further penalties of 5% of the tax due or £300 (whichever is greater) will apply at both the six month and 12 month mark for those who still haven't filed.' It's important to be aware that anyone who is currently registered for Self Assessment is required to submit a return, whether they owe tax or not, so if you're in this position, it's crucial you don't ignore reminders or warnings from HMRC. Ms Trott also said that while submitting your tax return today won't erase the financial penalties you have accrued up to this date, it's well worth it to prevent further fines adding up. She explained: 'The quickest and simplest way to do this is to complete HMRC's online form. While the process may seem daunting, there are plenty of tips and guidance available on the HMRC website, and if your finances are particularly complex, speaking to a financial adviser is always a good option for those who are able. 'With today's penalties likely to cause alarm for those who are unaware, the most important thing is not to rush the return process as this could cause you to leave out vital information that could result in paying more tax than necessary. 'There are a number of details - such as gift aid payments, and necessary work expenses - that can be easy to forget about when filing a return but can amount to significant tax relief. It's important to take time to include all relevant information to ensure you receive the full tax relief you're entitled to."
