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Telegraph
20-05-2025
- Business
- Telegraph
Average earners face £200k death tax bills under Labour
The Chancellor's inheritance tax raid will see even average earners hit with £200,000 bills, new calculations reveal. Inheritance tax used to be seen as a charge on the wealthy but families with modest estates are increasingly facing the 40pc levy thanks to soaring house prices and recent policy changes. In the October Budget, Rachel Reeves stripped pensions of inheritance tax relief which means unused retirement savings will now be considered part of the estate upon death. As a result, a middle-aged worker earning a typical income of £35,000 a year, owning a house valued at the national average and with £80,000 in their pension would store up a £194,529 bill by the time they turned 68, according to calculations by the stockbroker Interactive Investor. At the same time years of house price growth mean Britain is now paying more inheritance tax than ever before, with families forking out a record £8.2bn in 2024-25. More than 121,000 face higher inheritance tax bills by 2030 because of the Chancellor's pension proposals, data uncovered by the platform via a freedom of information request has shown. Meanwhile, more than 31,000 will pay inheritance tax who otherwise would have avoided the charge. Myron Jobson, of Interactive Investor, said: 'The stark reality is that the inheritance tax net is expanding, increasingly ensnaring people with modest assets.' A worker earning £50,000 would leave their family a £218,992 bill while someone on £80,000 would lose £267,914 of their estate to the taxman. The calculations assume the worker contributes 8pc of their salary to their pension and that their wages and the price of their property rise 2pc per annum. Inheritance tax is due on the portion of an estate worth more than the nil-rate band of £325,000, which has not been uprated with inflation since 2009. The figures assume the £325,000 nil-rate band remains unchanged and do not include the £175,000 residence nil-rate band which is available to homeowners leaving their main property to their children. There are growing concerns that the loss of tax relief on pensions, due to come into effect in 2027, has driven some taxpayers to take too much out of their retirement pots. Andy Butcher, of wealth manager Raymond James, said: 'In the past we would advise clients to spend their pension last because of the tax relief, but with the recent changes that's no longer the case.' Giving away money is one way to bring an estate below the tax-free allowances. However pensioners risk leaving themselves struggling later in life if they give away more than they can afford in order to avoid a tax bill. Mr Butcher continued: 'A lot of money is coming out of pensions and it does raise questions about people's later-life costs and their reliance on the state.' The Government was urged to rethink the proposals by stockbrokers and pension firms earlier this year following a technical consultation. The firms warned in response to the consultation that the tax raid could discourage workers from saving towards a pension while causing more delays and adding to the administration burden of bereaved families. HMRC has said it will publish a formal report and draft legislation later this year. The Treasury was contacted for comment.
New Indian Express
19-05-2025
- Business
- New Indian Express
Guinness maker Diageo cuts costs, eyes US tariff hit
LONDON: Diageo, the maker of Guinness stout and Smirnoff vodka, said Monday it would cut costs to reduce debt, as the British group anticipates a hit from US tariffs of $150 million. The announcements from Diageo, whose brands also include Johnnie Walker whisky and Baileys liqueur, were included in an earnings statement that showed total group sales rose nearly three percent to around $4.38 billion in its third quarter. "We view the near-term industry pressure as largely macro-economic driven, with continued uncertainty impacting both the timing and pace of recovery," Diageo chief executive Debra Crew said in the statement. The maker of Astral tequila and Captain Morgan rum said it plans cost savings of around $500 million over three years under the first phase of its Accelerate programme. It leaves the company "well-positioned to deliver sustainable, consistent performance while maximising shareholder returns; even if current trading conditions persist", Crew added. The CEO said Diageo would share further detail of Accelerate in its full-year results due in August. Diageo's share price was steady Monday on London's benchmark FTSE 100 index, which was down 0.6 percent overall in late morning deals following the updates. While "tariffs are likely to cause an annualised hit of some $150 million on profits... the group estimates that its mitigating actions, such as increasing prices, cost control and supply chain management will limit the damage", noted Richard Hunter, head of markets at Interactive Investor.
France 24
19-05-2025
- Business
- France 24
Guinness maker Diageo cuts costs, eyes US tariff hit
The announcements from Diageo, whose brands also include Johnnie Walker whisky and Baileys liqueur, were included in an earnings statement that showed total group sales rose nearly three percent to around $4.38 billion in its third quarter. "We view the near-term industry pressure as largely macro-economic driven, with continued uncertainty impacting both the timing and pace of recovery," Diageo chief executive Debra Crew said in the statement. The maker of Astral tequila and Captain Morgan rum said it plans cost savings of around $500 million over three years under the first phase of its Accelerate programme. It leaves the company "well-positioned to deliver sustainable, consistent performance while maximising shareholder returns; even if current trading conditions persist", Crew added. The CEO said Diageo would share further detail of Accelerate in its full-year results due in August. Diageo's share price was steady Monday on London's benchmark FTSE 100 index, which was down 0.6 percent overall in late morning deals following the updates. While "tariffs are likely to cause an annualised hit of some $150 million on profits... the group estimates that its mitigating actions, such as increasing prices, cost control and supply chain management will limit the damage", noted Richard Hunter, head of markets at Interactive Investor.
Daily Mail
13-05-2025
- Business
- Daily Mail
Why investors are piling into short-term gilts for a tax-free profit on a safe haven
Short-term UK government debt is proving popular among investors, lured by potential tax-free gains in a relatively safe asset, data suggests. A growing number of DIY investors also appear to buying UK treasury bills, with durations of just three and six months, targeting higher yields than offered by most savings account and without long lock-up periods. The so-called T26, T26A and TN28 gilts, which mature in January 2026, October 2026 and January 2028, respectively, were among the top ten assets bought by Hargreaves Lansdown platform investors last week. The T26, which has a 0.125 per cent coupon and costs around £98 to buy, was in the 10 most popular assets among Interactive Investors in the 25 to 34, 35 to 44, and 45 to 54 age categories in the first quarter of the year. Investors are buying gilts with low interest rates that mature soon for less than face value, as they can pick up their full value when they are redeemed and bank capital gains tax-free. Interactive Investor said the T26, which has a yield-to-maturity of 3.15 per cent, has proved popular since T25 matured earlier the year after being heavily bought in the previous quarter. Sam Benstead, II's fixed income lead, added: 'Investors have rolled money into another low-coupon gilt, maturing soon, to take advantage of the tax break on offer and guaranteed return. 'Gilts are not subject to capital gains tax, so when bought at a discount and maturing at £100, the gain is tax free if held outside of an I sa or a S ipp. 'Coupons are taxed as income, however, but because T26 was issued in May 2020, when interest rates were close to zero, most of the return now comes from capital uplift not income.' Hal Cook, senior investment analyst at Hargreaves Lansdown, highlighted the 'safe haven' pull of gilts since Trump launched his 'liberation day' trade tariff bombshell at the end of March. He added: 'Gilts with shorter periods of time until they mature [are particularly popular] as the potential for losses is usually lower. 'For investors who have lots of money in the stock market and are worried about the implications of tariffs on company earnings over the short-term, parking money in short-dated government bonds can be an appealing option.' Longer term gilts have seen yields fall over the last month as bonds have proved an alternative to volatile equity markets and interest rate expectations have changed. Three different gilts were among the most purchased assets on Hargreaves Lansdown last week T26 gilts have been popular with ii investors over the last quarter But while two-, five- and 10-year gilt yields are down 6, 7 and 10 basis points, respectively, over the last month, analysts point to uncertainty in the UK's economic outlook. The BlackRock Investment Institute is neutral on UK gilts, but currently holds them alongside US government bonds in preference to peers. It said in a note: 'Gilt yields are off their highs, but the risk of higher US yields having a knock-on impact and reducing the UK's fiscal space has risen. We are monitoring the UK fiscal situation.' T-bills now a retail trade? Broker RetailBook, which claims to be the only platform offering retail access to Treasury bills, has seen £130million of T-bill buying activity over the last two months. T-bills, the market for which is traditionally dominated by very large investors, are not capital gains exempt but still provide investors tax efficiency as they can be held in a Sipp or Isa. RetailBook head of fixed income Stacey Parsons said T-bills can be more appealing to everyday investors as the capital gains benefits of gilts are more applicable to high-net-worth individuals. She said of the roughly 10,000 individual buyers on the RetailBook platform over the last two months, who face a minimum purchase of £1,000 but bought around £18,000 on average, 75 per cent have cited tax efficiency. Perhaps more appealing though are yields of around 4 per cent, compared to a cash and savings market currently offering closer to 2 per cent, as well as a short-term, liquid and relatively low risk destination for capital during market volatility. Parsons said: 'T-bills can offer retail investors institutional returns without having to lock up their money for long periods.' Nick Smith, managing director for capital markets, added: 'With UK interest rates back up to normal long-term levels, there's a huge need for retail investors to access institutional rates of returns for their savings - something that RetailBook has enabled via our unique UK Treasury Bill offering. 'Over the last two months alone we have seen £130million of investor demand, often using tax-efficient ISA's and SIPPs, demonstrating the natural demand that exists from retail investors for democratided access across all primary markets.'
Yahoo
07-05-2025
- Business
- Yahoo
The most bought stocks and funds for investors in April
April was a particularly volatile month for markets, amid different developments around US president Donald Trump's tariff agenda. Trump kicked off the month by announcing sweeping tariffs on 2 April, which he dubbed "Liberation Day". A week later, Trump then announced a 90-day pause on tariffs for many US trading partners. However, tensions escalated between the US and China, with back-and-forth moves on trade between the two countries keeping concerns around the economic impact of tariffs in focus. Towards the end of the month both Washington and Beijing appeared to soften their stance on trade negotiations, which provided a boost to markets, though uncertainty around if and when a deal will be reached is still a concern. Read more: The most bought US stocks in Trump's first 100 days The end of April also marked the end of the first hundred days of Trump's second term. According to Capital Economics, the US stock market and dollar fared worse in this period than in the first 100 days of any other presidential term since 1980. While a rebound in stocks towards the end of April, the S&P 500 (^GSPC) is still down 4.7% year-to-date. 'April was a tough month for investors given Donald Trump's proposed trade tariffs," said Keith Bowman, equity analyst at Interactive Investor, adding that investors' "desire for safe havens helped gold rise by close to 5% during the month." Here's more detail on which investments proved most popular last months across UK platforms Interactive Investor, Hargreaves Lansdown, Robinhood (HOOD) and Bestinvest. Most popular stocks in April BP's profits nearly halved in the first quarter, according to results released last week. · NurPhoto via Getty Images Oil prices have fallen over concerns that trade war will lead to a recession and weigh on global demand for fuel. "That impacted heavily on oil major BP (BP.L), bringing its shares back into the sharp investor focus," said Bowman. "BP shares fell by almost 20% over the month, further hindered by concerns for group strategic direction going forward." Stocks: Create your watchlist and portfolio BP's profits nearly halved in the first quarter, according to results released last week. The company reported an underlying replacement cost profit — a key metric used as a proxy for net profit — of $1.38bn (£1bn), falling short of the $1.53bn forecast by analysts polled by LSEG. The figure also marks a 49% decline from the $2.7bn posted in the same period last year. Despite the earnings miss, BP went ahead with a $750m share buyback in the first quarter and announced plans to repurchase a further $750m worth of shares in the second quarter.
