Latest news with #IHT
The Herald Scotland
24-05-2025
- Business
- The Herald Scotland
What is the best way to save for your grandchildren?
A junior ISA is one of the most popular ways of saving money for grandchildren. These accounts offer tax-free growth, meaning any interest or gains are not subject to capital gains tax (CGT). Contributions can be made up to a specific annual limit of £9,000 and the money is accessible by your grandchild when they turn 18. The benefit of a junior ISA is that the money doesn't form part of your estate, which means it won't be subject to inheritance tax (IHT). This assumes that any gifts made to the junior ISA fall under the IHT gifting allowances or otherwise you survive for seven years from the date of the gift. A junior SIPP (self-invested personal pension) is another a great way to invest for your grandchild's long-term financial future. Unlike junior ISAs, a junior SIPP is designed specifically for retirement savings. The key benefit of a junior SIPP is the tax relief on contributions. You can contribute up to £2,880 per tax year and the government adds 20% basic rate tax relief, boosting the total contribution to £3,600. However, the funds are locked in until your grandchild reaches at least 57 years old. While this may seem a long way off, the advantage of starting early is the significant compound growth over the years, which could potentially result in a substantial retirement fund. A junior SIPP can be a fantastic way to ensure your grandchild has a comfortable retirement, even if they don't have the means to contribute themselves. Once your grandchild turns 18, a lifetime ISA (LISA) can be a valuable tool to help them save for their first home or retirement. The government offers a 25% bonus annually on contributions, which can be a significant boost. Each year, until they turn 50, your grandchild can contribute up to £4,000 and they'll receive a bonus of up to £1,000, making it an attractive option for young adults just starting to save. All interest accumulated within a LISA is tax-free too. A LISA can act as a stepping stone toward helping your grandchild get on the property ladder or saving for their future retirement. While the funds can't be accessed until age 60 (unless used for a first home purchase), it's an investment that can grow significantly over time. When thinking 'what is the best way to leave money to my grandchildren' it's important to consider the potential IHT implications. The amount you 'gift' to your grandchildren could be subject to IHT, depending on how much you leave and when you leave it. However, there are several ways to reduce this potential liability, such as gifting money directly to grandchildren through ISAs or trusts. By making gifts to grandchildren within your annual capital gift allowance – up to £3,000 a year - or setting up a trust, you can reduce the value of your estate, ensuring that more of your wealth passes to the next generation without being impacted by IHT. It's also possible to use other exemptions such as regular gifts from surplus income. Any gifts made that fall outside of these allowances are subject to the 'seven-year rule,' meaning they will only fall outside of your estate once you have survived for seven years from the date of the gift. The best way to leave money to your children or grandchildren depends on your family's wealth, your goals and your wishes for how the money should be used. There is no one-size-fits-all approach, but with careful planning, you can create a strategy that helps you achieve both your own financial goals and those of your grandchildren. Paul Hancock is a senior wealth planner at Canaccord Wealth
Yahoo
22-05-2025
- Business
- Yahoo
HMRC collects £780m in just one month of inheritance tax
HMRC have collected almost £0.8bn in the space of a month through inheritance tax (IHT) receipts - and the expectation is of this continuing to rise, as more families are pulled into scope for paying the tax due to frozen thresholds and regulation changes. The £780m collected in the first month of the new financial year is the second-highest monthly total ever recorded, with OBR forecasts predicting IHT will raise more than £9bn for the Treasury across 2025/26. Industry experts are warning families to ensure they know the state of their estates ahead of time to allow for inheritance planning, with pensions also due to fall within these tax considerations from 2027 onwards - pulling more into this sphere of taxpayers at a moment which will already be difficult. 'IHT receipts are only going in one direction and that's up,' Andrew Zanelli, head of technical engagement at Aberdeen Adviser, said. 'The government's plans to bring pensions into the tax's scope from April 2027 is one of the reasons for the continued rise and we're still waiting for the details which is making many people understandably concerned. 'But there's also a large amount of people who still don't realise their estate will be taxed on death, and we see in the data that the number of estates where tax is due is concentrated in the smaller estates. 'Knowing exactly how much you're worth and good planning is key because it is possible to manage IHT risk. Careful and comprehensive planning, supported by expert advice, is critical for managing exposure in a way that still supports overall financial goals.' There could be additional changes on the way, too. Shares held in companies listed on the Alternative Investment Market (AIM) are currently exempt from inheritance tax, but proposals have suggested this could be slashed by 50 per cent - or removed altogether. 'Over the last 20 years the inheritance tax tab has increased from £3.3bn to £8.2bn. With such a strong start to the 2025/26 tax year this is only going one way - and that is up,' said Nicholas Hyett, investment manager at Wealth Club. 'This is no accident – leaked government documents made it clear this week that inheritance tax is still seen as a cash cow by some members of the cabinet.' In addition to the inheritance tax windfall, changes to employers National Insurance contributions helped to boost the Treasury by £1.7bn in April. Meanwhile, while borrowing came in at £20.2bn - £1bn more than last April - debt interest was £0.5bn lower than April 2024 as a result of lowered interest rates. Sign in to access your portfolio
The Independent
22-05-2025
- Business
- The Independent
HMRC collects £780m in just one month of inheritance tax
HMRC have collected almost £0.8bn in the space of a month through inheritance tax (IHT) receipts - and the expectation is of this continuing to rise, as more families are pulled into scope for paying the tax due to frozen thresholds and regulation changes. The £780m collected in the first month of the new financial year is the second-highest monthly total ever recorded, with OBR forecasts predicting IHT will raise more than £9bn for the Treasury across 2025/26. Industry experts are warning families to ensure they know the state of their estates ahead of time to allow for inheritance planning, with pensions also due to fall within these tax considerations from 2027 onwards - pulling more into this sphere of taxpayers at a moment which will already be difficult. ' IHT receipts are only going in one direction and that's up,' Andrew Zanelli, head of technical engagement at Aberdeen Adviser, said. 'The government's plans to bring pensions into the tax's scope from April 2027 is one of the reasons for the continued rise and we're still waiting for the details which is making many people understandably concerned. 'But there's also a large amount of people who still don't realise their estate will be taxed on death, and we see in the data that the number of estates where tax is due is concentrated in the smaller estates. 'Knowing exactly how much you're worth and good planning is key because it is possible to manage IHT risk. Careful and comprehensive planning, supported by expert advice, is critical for managing exposure in a way that still supports overall financial goals.' There could be additional changes on the way, too. Shares held in companies listed on the Alternative Investment Market (AIM) are currently exempt from inheritance tax, but proposals have suggested this could be slashed by 50 per cent - or removed altogether. 'Over the last 20 years the inheritance tax tab has increased from £3.3bn to £8.2bn. With such a strong start to the 2025/26 tax year this is only going one way - and that is up,' said Nicholas Hyett, investment manager at Wealth Club. 'This is no accident – leaked government documents made it clear this week that inheritance tax is still seen as a cash cow by some members of the cabinet.' In addition to the inheritance tax windfall, changes to employers National Insurance contributions helped to boost the Treasury by £1.7bn in April. Meanwhile, while borrowing came in at £20.2bn - £1bn more than last April - debt interest was £0.5bn lower than April 2024 as a result of lowered interest rates.
Business News Wales
16-05-2025
- Business
- Business News Wales
UK Farmers 'Have Two-Thirds of their Wealth Tied up in their Farm'
On average UK farmers have two-thirds (66%) of their total wealth tied up in their land, equipment and livestock, new analysis from Rathbones, one of the UK's leading wealth management firms, reveals. For almost a third of farmers (30%) interviewed this rises to over three-quarters of their wealth. The vast majority of farmers see their farm not only as their livelihood, but as their future pension which will provide the bulk of their income when they retire, meaning many will face a significant financial shock in a year's time, when new inheritance tax rules come into effect in April 2026, Rathbones said. Rathbones study reveals nearly all of the farmers interviewed (96%) see their farm as their future pension and over half (52%) believe that they will rely on their farm to finance up to half of their cost-of-living expenditure once they retire. Around a third (32%) say it will provide between half and three-quarters of their retirement income and 16% believe they will be almost wholly reliant on their farm which will fund 75% or more of their living costs once retired. At the moment farmers are almost entirely exempt from inheritance tax, as they can use a combination of Agricultural Property Relief and Business Property Relief to pass on their farmland and other business assets to children or grandchildren tax free. But this is set to change in April 2026, with single farm owners only able to pass on up to £1.5 million of farmland and assets tax free, and those who jointly own a farm only able to pass on up to £3 million tax free. This increase in inheritance tax is a significant worry for farmers, as the Rathbones study reveals that 92% of those interviewed expect the next generation in their family to take over the farm and run it, once the current generation is ready to retire. More than nine in ten (93%) of those interviewed said that they think the next generation will be capable of successfully running the farm – but profit margins for many farms are already very tight and 30% of farms are already loss making. Profit margins are likely to be further affected if the next generation of farmers are saddled with additional taxes to pay. Adam Brewer, Investment Director with Rathbones Group, said: 'Even prior to the IHT change, many families have been forced to utilise their land differently by moving into higher margin sectors like caravan parks to subsidise their traditional farming operations. 'The latest tax change is likely to accelerate this struggle, threatening the continuing viability of smaller farms in the area.' Rathbones highlights some key changes to Agricultural Property Relief and Business Property Relief potentially impacting farmers from April 2026: Rates of Relief: The full 100% relief continues for the first £1 million of qualifying property, after which only 50% is allowed for the excess value. This means estates may incur significant IHT liabilities compared to the current situation where larger estates could claim full relief. The full 100% relief continues for the first £1 million of qualifying property, after which only 50% is allowed for the excess value. This means estates may incur significant IHT liabilities compared to the current situation where larger estates could claim full relief. Trusts: Both individuals and trusts will each have a separate £1 million allowance for qualifying assets. Trusts created before 30 October 2024 will retain their own allowances, while post-Budget trusts will share a single £1 million allowance. Both individuals and trusts will each have a separate £1 million allowance for qualifying assets. Trusts created before 30 October 2024 will retain their own allowances, while post-Budget trusts will share a single £1 million allowance. Lifetime Transfers: For gifts made after 30 October 2024, the new rules will apply if the donor dies after 6 April 2026. Gifts could potentially reduce IHT liability if the donor survives for seven years, allowing family members to pass on substantial assets tax-free. For gifts made after 30 October 2024, the new rules will apply if the donor dies after 6 April 2026. Gifts could potentially reduce IHT liability if the donor survives for seven years, allowing family members to pass on substantial assets tax-free. Instalment Payments: Estates can opt to pay IHT liabilities in equal annual instalments over 10 years interest-free, which provides some flexibility for affected families.
Yahoo
15-05-2025
- Business
- Yahoo
Tenant farmers call on Labour to reconsider ‘ill-thought' farm tax raid
LABOUR must reconsider the 'ill-thought' farm tax raid after the May 7 local election setback, says tenant farmers in Cumbria. The Tenant Farmers Association said the May 2025 local election results should serve as a warning to Labour that the party could lose rural seats at the next General Election if they do not change tack on changes to the farm tax raid. TFA Chief Executive and Farmer columnist, George Dunn, said: 'The TFA is apolitical - we lobby all parties equally. However, inevitably, there is a focus on the Party in power which, at the current time, happens to be Labour. 'To that end, we understand the dual objectives of Government to bring the public finances into balance and to go after wealthy individuals who are seeking to hide that wealth from the tax system. However, we cannot stand idly by whilst the agricultural sector becomes the collateral damage for those policies.' Mr Dunn's comments come after the author of the Rock Review, Baroness Kate Rock, into the tenanted agricultural sector told Parliament that she had received 'many heartbreaking messages' from tenant farmers who told her they could not go on and feared eviction in light of the Chancellor's Budget. She said: 'A Farmers Guardian and Tenant Farmers Association joint survey reports that 55% of tenant farmers will invest less in their farms and 25 per cent of tenant farmers expect their landlords to take back land for non-farming purposes and reduce their investment. Furthermore, over half say their mental health is suffering. They fear eviction. I have had many heartbreaking messages from farmers who fear they just cannot go on.' As a solution, Ms Rock proposed that landlords who let land for 'eight years or more' should be allowed to include the value of that land as 'part of the zero-rate threshold' for IHT. In response, the Financial Secretary to the Treasury, Lord Livermore said while he understood the 'strength of feeling', he did 'not accept' the premise of her question. 'I fully respect the commitment that has gone into the survey that she spoke of but do not necessarily accept its conclusions,' he said, adding the Government's commitment to tenant farmers 'remained steadfast' and it was investing '£5 billion into farming over two years'. He added the Government took the issue of mental health 'extremely seriously' and was working hard to recruit an 'additional 8, 500 mental health workers'.
