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Webinar: Planning opportunities in a general election year Our webinar will highlight the importance of getting your tax and financial affairs in order. Our speakers will discuss the tax efficient actions you should be taking including using your savings and ISA allowances, making the most of your annual pension allowance, sharing income amongst the family, considering family investment companies and the use of Trusts. Available on demand webinar |
Gift Aid payments – ticking a box and making a difference
The key point here is that the charity receives your payment and they are able to claim back basic rate relief on the payment from HMRC. When making Gift Aid payments, ticking the box informs the charity that you are UK resident and have sufficient taxable income to cover the payment.
Gift Aid payments are relevant for sponsoring, donating and some entrance and membership subscriptions.
Who should make Gift Aid payments?
Ideally, the person in the family with the highest marginal tax rate should be making the Gift Aid payment and recording the payment on their UK tax return. Those paying higher rate of tax will generate additional tax relief via a reduction to their tax liability.
See our insight Making Gift Aid donations | Crowe UK for more information.
Making the most of Individual Savings Accounts (ISAs)
ISAs are not just for you but for other members of your family. They can be used by parents or grandparents to transfer funds to future generations and assist children to save for their future.
The income and capital gains generated is tax-free and not taxed when withdrawn.
The government will add a 25% bonus on some ISAs.
The facts:
ISA
Junior ISA
Lifetime ISA (LISA)
Utilising allowances and reliefs
Being aware of the allowances and reliefs available and making the relevant changes to take advantage of them will benefit you and your wider family.
Savings and dividend allowances
These provide an opportunity for families to structure their savings and dividend income to benefit from these allowances.
| Taxpayer | Savings allowance | Dividend Allowance | |
| Allowance | Tax Saving | ||
| Basic rate | £1,000 | £200 | £500 |
| Higher rate | £500 | £200 | £500 |
| Additional rate | £0 | £0 | £500 |
Trading and property allowances
These allowances are designed to exempt modest amounts of income for example from sales on eBay and Amazon and rentals from Airbnb.
Each allowance is £1,000 tax-free.
In addition, rent-a-room relief can be claimed if part of your home is let out. Up to £7,500 can be received tax free.
Marriage allowance
Up to £1,260, 10% of the personal allowance, can be transferred to the spouse/civil partner where one party to the marriage/civil partnership is a basic rate taxpayer, and the other has income below the personal allowance. The reduction in the tax liability for the basic rate taxpayer is up to £252 in the current year.
Reliefs available for employees
As an employee there are a few reliefs that can be claimed in respect of your employment. These include:
These allowances are designed to exempt modest amounts of income for example from sales on eBay and Amazon and rentals from Airbnb.
Each allowance is £1,000 tax-free.
In addition, rent-a-room relief can be claimed if part of your home is let out. Up to £7,500 can be received tax free.
Marriage allowance
Up to £1,260, 10% of the personal allowance, can be transferred to the spouse/civil partner where one party to the marriage/civil partnership is a basic rate taxpayer, and the other has income below the personal allowance. The reduction in the tax liability for the basic rate taxpayer is up to £252 in the current year.
Reliefs available for employees
As an employee there are a few reliefs that can be claimed in respect of your employment. These include:
Actively utilising the Capital Gains Tax annual exemption
You can crystallise capital gains and make use of the annual Capital Gains Tax exemption of £3,000* before 6 April 2025.
One way of crystallising capital gains is to sell and then buyback stocks and shares.
This also provides an opportunity to increase the base cost for future sales. However, the repurchase will need to be delayed for more than 30 days or made by your spouse, civil partner, or ISA to benefit from this.
*Not available to those taxed on the remittance basis with income and capital gains above £2,000.
Taking advantage of lower CGT rates
The Autumn budget saw an immediate increase to the main rates of CGT to 18% and 24%, to align with the residential CGT rates. The CGT rate applying to assets qualifying for Business Asset Disposal Relief (BADR) has been staggered. The 10% rate continues to apply until 5 April 2025, before increasing to 14% until 5 April 2026 and then aligning with the 18% lower main rate thereafter.
With the above in mind, business owners looking to withdraw from the business in the near future may wish to to take advantage of the lower BADR rates (see also Furnished Holiday Lets below) and dispose of their interests before 6 April 2026.
Restrictions to IHT Reliefs
The Autumn budget announced significant restrictions to two key IHT reliefs – Business Property Relief (BPR) and Agricultural Property Relief (APR).
These reliefs are a crucial element of tax planning strategies for business owners, allowing the business to be passed to the next generation on death free of tax. For many, the new restrictions will mean new approaches will need to be considered to efficiently transfer the business, which may include making use of lifetime gifts and setting up family trusts. There is also the possibility of the rules around lifetime gifts changing and hence proactive action and professional advice should be taken now.
For more information on the changes see our insight Capital Taxes changes.
Easy IHT reliefs
You and your family can take advantage of a number of IHT free reliefs.
Great care needs to be taken to ensure that the gifts are habitual in nature and are out of income which is in excess of regular expenditure.
These gifts could include making the following for children/grandchildren:
Saving for retirement, making the most of pension contributions
Are you and your family benefiting from making pension contributions? Pension contributions can be made for your minor and adult children and for grandchildren.
The benefits of making contributions are:
How much can you contribute?
Do you have scope to make additional contributions that can utilise unused capacity brought forward from the three previous years?
Reviewing your pension position and that of your family is important.
Pension contributions: act now to maximise tax efficiency and Pension contribution opportunities for Partners.
Pensions and Inheritance Tax planning
The Autumn budget saw the removal of the IHT exemption covering pensions, effective from April 2027. It is common practice for individuals with various sources of wealth to retain their pension pot and to pass it to family members IHT free.
With the potential removal of the IHT exemption on pension pots, many will need to revisit their strategy regarding IHT generally and this may lead to changes to their Wills. The inclusion of pension pots within IHT will impact the availability of the residence nil rate band.
There are three key generic tax efficient investments that individuals are able to invest in where income tax relief is available which will reduce your tax liability.
Venture Capital Trusts (VCTs)
Enterprise Investment Scheme (EIS)
Seed Enterprise Investment Scheme (SEIS)
From 6 April 2025, the tax benefits available for qualifying Furnished Holiday Lets (FHL) will be abolished. These benefits included full relief for finance costs against income received, in addition to CGT and IHT reliefs.
With reference to the CGT section above on Business Asset Disposal Relief (BADR), the opportunity to sell the property before 6 April 2025, to achieve the 10% CGT rate, may have passed. However, if the property letting ceases before 6 April, BADR could still be available if the property is sold within three years.
For jointly owned property, FHL status allowed discretion as to how profits were split between owners each year. From 6 April 2025, the income will be split based on the beneficial ownership. However, for jointly owned property held between spouses and civil partners HMRC will assume an equal split. To change the split a declaration of trust will need to be in place and submitted to HMRC with a completed Form 17. This is a complex area and can have unintended tax consequences and professional advice should be sought.
It is important to consider your short, medium and long-term strategies and to consider some of the following:
Taking advantage of year-end tax planning should only be part of your overall tax planning strategy. Tax planning is all about putting into place a strategy that provides the right structure and security for your financial affairs. Your strategy should evolve and develop with time to enable you to plan for the future.
Finally, with the new tax year approaching, there is still time to take action and put in place tax planning opportunities to help you and your family, partner, children, parents, and those closest to you.
For more information on how you can make the most of your tax planning opportunities, get in touch with Nicky Owen or your usual Crowe contact.
Providing individuals and families the right financial planning advice ensuring you meet your goals and aspirations at every stage of your life.
