Latest news with #InheritanceTax
Daily Mirror
2 days ago
- Business
- Daily Mirror
Millionaires may be eligible for Winter Fuel Payments in new rules
The Winter Fuel Payment U-turn could open up an unexpected loophole for wealthy retirees After facing severe backlash for cutting back Winter Fuel Payments shortly after winning the election last year, the Labour party has made a U-turn. Announcing new rules to means-test the seasonal benefit to assure vulnerable retirees are helped through the harshest months. To be eligible for the Winter Fuel Payment, which offers either £200 or £300 every winter to help cover heating costs, people over state pension age will need to have a taxable income of under £35,000 per year. Experts at Forbes Dawson warned: 'Although this may seem like a sensible approach, as many pensioners are asset-rich but have relatively low levels of income this could have unintended consequences and exclude many 'poor' people. 'Wealthy pensioners are generally in a unique position to control their level of taxable income on a year-to-year basis. Most pensioners will generally have some control over the amount of taxable income they extract from their pensions on an annual basis and many pensioners will have no 'income' and live off their built-up capital.' However, the experts added: 'We are not seriously suggesting that wealthy individuals will manipulate their income just to enjoy a £200 benefit, there will be cases where the very wealthy still qualify, while more deserving cases go without.' To break it down, the finance experts shared a fictional example of a retired NHS consultant called Dr Sam who has an estate worth £5million and makes specific moves with his money already in order to cut down a future Inheritance Tax bill. Including making loans to his Family Investment Company that sits outside his estate. As none of the shares are held by him directly, he doesn't pay tax on it and instead gets £200,000 annually as a repayment on his loan to the company. So while his general income is sitting at six-figures, his taxable income is zero so he will qualify under the new Winter Fuel Payment rules. In another fictional example, the money experts pointed out how people with less assets in retirement don't have as much control over their finances and might be excluded from the benefit. Retired teacher Doris uses a defined benefit public sector pension which is taxable income. She gets £40,000 a year from it, roughly £2,600 after tax, and with little money elsewhere she is reliant on nearly every penny so she can't cut it down. Because of her taxable income, she will not qualify for the benefit despite getting £160,000 less each year than Dr Sam. The new rules will make nine million more pensioners eligible for Winter Fuel Payments. And people can still opt out of receiving it but will need to do so before 15 September, 2025. Eligible people over state pension age will be receiving £200 between November and December 2025. Meanwhile those over the age of 80 who are eligible will receive £300.
Scotsman
6 days ago
- Business
- Scotsman
Get your house (and everything else) in order now
Richard Pike advises not to leave your estate in a mess when your time comes Sign up to our Scotsman Money newsletter, covering all you need to know to help manage your money. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... Litigation over inheritance is becoming increasingly common, both in Scotland and the rest of the UK. Figures from England and Wales showed a 34 per cent increase in court hearings about inheritance disputes between 2017 and 2022. The Guardian newspaper reported in 2024 that 10,000 families in England and Wales were estimated to be embroiled in such cases every year. Whilst equivalent statistics from the Scottish courts are not available, it is clear that the tide is rising north of the border too, given the number of executry disputes crossing my desk and those of my colleagues and peers. Advertisement Hide Ad Advertisement Hide Ad A perfect storm of factors is responsible, most attributable to the concentration of wealth in the 'baby boomer' generation. Members of that generation might have purchased a house in the 1980s when average house prices were 4x average earnings in the UK. Having paid off their mortgage well before retirement, often they will have saved and invested well in retirement thanks to generous indexed linked pensions. All of that adds up to a situation where even fairly modest earners are leaving behind estates worth in excess of £1 million. More and more executry disputes are landing on Richard Pike's desk By contrast, those due to inherit from the baby boomers suffered average house prices at 10x the average UK wage. Add the ongoing cost of living crisis, and worries over how to finance retirement, and that part of society is more likely to feel dependent on inheritance and hence be more willing to fight for it, if they do not receive what is coming their way. Other socio-economic factors are adding to the problem. Families are more complex than ever. As western society's approach to relationships has evolved, the number of 'blended' families is increasing, with children, step-children and step-parents regularly competing over the same estate. Inheritance laws have struggled to keep up with modern life, with disputes involving changing gender-norms, adoption, surrogacy and assisted dying all leading to reported court cases in recent years. The forthcoming major changes to Inheritance Tax announced by the government last year will make it more difficult to settle disputes, with more of the estate going to the taxman. Thanks to medical advances, another factor is rising life expectancy, bringing with it a significant increase in individuals who lack mental capacity to make a will, or who are vulnerable to financial abuse. These can be some of the most complex and emotionally charged disputes to deal with. Often the alleged 'abuser' will have had a power of attorney to manage the incapax individual's finances whilst alive, and will go on to be appointed as executor of their estate after death. This situation puts up legal and practical hurdles for the victim – how can they get hold of information to investigate the claim, and do they have any legal standing to go after the attorney executor if they are a beneficiary, or are cut out of the will altogether? Advertisement Hide Ad Advertisement Hide Ad Without a doubt, the best way to avoid putting your family through such a distressing and expensive situation is to put in place a well thought out estate plan with the help of specialist professionals, and to communicate your plan to your family so that there are no misunderstandings. If a dispute cannot be avoided, employing lawyers who specialise in inheritance disputes will improve your prospects of an early settlement with relationships intact, as opposed to your own version of Jarndyce v Jarndyce in Dickens's Bleak House.
The Herald Scotland
09-06-2025
- Business
- The Herald Scotland
Can I reduce Capital Gains Tax by splitting assets with other half?
Thinking of selling a second property? Cashing in a share portfolio? Or even selling some unwanted valuables you've inherited? When you sell an asset that's gone up in value since you acquired it, you may have to pay CGT on your profits. It can feel like a bitter pill for someone who made a wise investment some years back and has seen it grow in value – only to hand a sizable percent back to the government. However, you may have more options than you think to mitigate a high CGT bill. Splitting your assets can reduce your CGT bill One possible way of reducing CGT is by giving an asset away to your spouse or civil partner, or splitting it with them. By doing this, both of you are able to use your individual CGT allowance to bring down the amount of tax you'll pay. Read on to find out how splitting your assets can help you get on top of CGT. But first, since most of us are only likely to find ourselves liable for CGT a handful of times in our lives, we'll run over the basics of this tax. What is Capital Gains Tax? CGT is a tax payable on the profit or gain you make when you sell something that's increased in value since you acquired it. It's not a tax on the whole amount, just on the profit you make. If you sell or gift certain assets and your overall profit is above the annual CGT allowance (see below), you'll need to pay CGT. Read more: What is the seven year rule in Inheritance Tax? Assets that you might pay CGT on include shares that aren't part of an ISA or pension (both CGT exempt); business assets; personal possessions worth more than £6,000; and property that isn't your main home. That could include a second home, a buy-to-let rental, or even a house or room that's only occasionally occupied. Has the rate of Capital Gains Tax changed? CGT was, as anticipated, targeted by the Chancellor in her Autumn Budget, and the increase in Capital Gains Tax was one of the steepest for investors. New rates for disposing of assets other than property rose from 10% to 18% for basic rate taxpayers, and from 20% to 24% for higher or additional rate taxpayers. This change took effect immediately. The rates for disposing of property remained unchanged. How much CGT will I pay? How much CGT you pay depends on your income bracket, and the value of the asset you're selling or giving away. If you pay basic-rate tax, you'll pay 18% CGT on disposing of assets, whether residential property, investments or valuables. Higher and additional rate taxpayers pay 24% on any gains above the annual allowance. However, if your gains tip you into the higher-rate tax threshold, you may pay tax at both rates. If you're selling all or part of your trading business – and you've had the business for two years – you may be eligible for a special rate of 10%. This is known as Business Asset Disposal Relief (BADR), which is set to increase to 14% in April 2025. Our Business Advisory Services can guide you through this critical moment for your business. What is the Capital Gains Tax allowance? The CGT allowance for 2025-26 remains £3,000 per individual. Therefore, £3,000 is the maximum profit you can make on the sale of chargeable assets this tax year before you have to pay CGT. As far as CGT is concerned, if you are living with a spouse or a civil partner, you each currently have a £3,000 tax-free annual allowance, giving you a £6,000 tax-free buffer if you sell a jointly-owned asset, or one that you've already split between you. Your CGT allowance resets each year. So if, for example, you're considering selling an asset other than property, such as shares, you could split the sale over two years and take advantage of two years' worth of allowance. However, do be aware that if you don't use your allowance one year, you can't carry it forward. Can gifting assets to my spouse or civil partner cut our CGT bill? Married couples or those in a civil partnership can maximise their Capital Gains allowances by splitting assets between them. Such a transfer must be on an outright and unconditional basis. Splitting assets allows you to double your tax-free CGT allowance – and you may reduce or avoid paying CGT altogether. This only applies to individuals who are married, in a civil partnership and living together. If you are living together, even in a long-term relationship, but not married or in a civil partnership and you give an asset to your partner, there may be CGT to pay. Read more: Retirement planning: how to maintain your living standards Splitting assets is a neat and legitimate means of reducing your CGT liability. Do be aware that, once you've given that asset away, your spouse or civil partner will become its legal owner. Therefore, give consideration to the possibility of relationships breaking down before splitting assets. If, for any reason, your relationship breaks down and you separate or divorce, you cannot ask for the asset back. Are there other ways to cut my CGT bill? Splitting your assets isn't your only option to reduce CGT. You could: Stagger the sale of assets over several tax years. You could sell part of a share portfolio on 3 April and the rest on 6 April to take advantage of two years' CGT allowance. Offset any losses you've made on other assets against your gain. So, if you have a share portfolio or family heirloom that sold at a loss, for example, you can use that to reduce the taxable gain against another asset you're selling, such as property. Special rules apply when it comes to offsetting losses, so do check with a financial adviser. Invest your assets in an ISA or pension – sheltering them from tax. You might want to consider a Bed and ISA – this is where you sell shares (the Bed part) and buy them back within an ISA wrapper to shelter them from future gains. Always speak to a financial adviser if you're considering this option, to make sure it's the right choice for you. Ben Stark is a chartered financial planner with over a decade of experience advising businesses and families. He is partnered with St. James's Place Wealth Management.
The Herald Scotland
04-06-2025
- Business
- The Herald Scotland
How TrinityBridge helps businesses navigate change with confidence
As he reflects on the changes we have seen since the Financial Crisis, Bruce Saunderson, Private Client Director with TrinityBridge, tells us how a deep understanding of business exits, succession planning and wealth preservation allows him to help clients navigate life's financial turning points. 'I'm proud to be able to provide holistic financial planning and investment management services to clients and their families,' Bruce explains. 'My particular specialty is advising business owners in the run-up to an exit and helping them manage their finances after a business sale.' This tailored approach is especially critical in today's volatile financial climate. Recent changes proposed in the UK's Autumn Budget last year – particularly around Inheritance Tax (IHT), pensions, and family businesses – have added complexity to the wealth management landscape. Bruce notes: 'We have seen significant fiscal and economic upheaval before and my experience of advising clients through such troubled times allows me to help clients address the issues and concerns affecting them today' 'A significant amount of my work at the moment is centred around Inheritance Tax planning,' Bruce notes. 'The challenges presented by the proposed IHT changes are shared by a number of my clients and go beyond tax planning, to wider family succession issues. Given this added complexity, my focus is to deliver proven wealth management solutions that are tailored to individual clients and are designed to safeguard assets across generations.' (Image: TrinityBridge's Bruce Saunderson is celebrating his 30th year working in Glasgow) At TrinityBridge, the strategy is about combining time-tested solutions with a deep understanding of each client's unique circumstances. 'We work closely with our in-house investment specialist team to provide advice based on the specific needs, concerns, and objectives of our clients,' Bruce says. 'Having worked in professional practice for most of my career, I understand the importance and value that collaborating with clients' tax, legal and other professional advisers adds.' This collaborative mindset is essential as shifts in financial legislation as well as geopolitical events can occur rapidly. 'Close coordination between financial planners and investment managers is vital to optimise clients' finances' Bruce emphasizes. 'We aim to take an integrated approach - everyone's financial situation and aspirations are different, so it's important to have a financial planner who understands these bespoke needs.' Though TrinityBridge may be a new name, the firm's roots in Scotland – and Bruce's in Glasgow – run deep. 'I joined TrinityBridge in 2017. Glasgow has been my home for nearly 30 years, since graduating from Edinburgh University with a joint degree in Law and Accountancy.' Bruce's career has spanned boutique firms and legal and Big Four giants, giving him a distinctively broad perspective. 'As a company, we are able to offer a great mix of expertise to clients – having a wide-reaching talent pool across the UK to draw from, paired with the ability to engage in local one-on-one relationships thanks to our regional footprint.' Looking ahead, Bruce sees the firm's new name as a natural evolution. 'It's just another step on our journey,' he says. 'We have to the platform to continue to show clients that we are a great avenue to achieving their financial goals – not just for themselves, but for their families for years to come.' As for personal milestones, there's one more on the horizon: 'I need to think about how I'm going to celebrate my 30th year of living in Glasgow,' Bruce laughs. With a legacy of trust and a future-focused mindset, TrinityBridge is not just managing wealth – it aims to shape financial legacies. ■ Please be aware that no investment, or investment strategy, is without risk. The value of investments can fall as well as rise and you may get back less than you invested
Scotsman
21-05-2025
- General
- Scotsman
A quick guide to navigating probate in Scotland in 2025
When a person dies, someone needs to deal with all their accounts, property and belongings (their 'estate'). The process of dealing with this is called 'estate administration', but often referred to as 'probate'. Sign up to our daily newsletter – Regular news stories and round-ups from around Scotland direct to your inbox Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... In Scotland, around 50% of estates will require a special document from the Sheriff Court called a 'Grant of Confirmation'. This document gives the authority to the person or people responsible to deal with all the assets/accounts in the estate. This guide outlines all the essential terms you need to know, the processes you need to follow if you are responsible for dealing with it, and the changes you need to be aware of for 2025, particularly in terms of inheritance. Key terms explained Advertisement Hide Ad Advertisement Hide Ad Dealing with a deceased's estate in Scotland shouldn't be complicated. Before you begin to navigate probate, it's helpful to understand the key terms involved. Most people are already familiar with a Will – a legal document written by the deceased person before they died, which details how their estate should be distributed upon their death, and who is responsible for dealing with it – the 'executor(s)'. If there's no Will, either the spouse or the closest blood relative will need to be appointed as the 'executor-dative'. Strict rules are in place to decide how the estate will be distributed, these are called the 'rules of intestacy'. Rules of intestacy When there's no Will. if there is a surviving spouse or civil partner they will be entitled to inherit a portion of the estate called 'prior rights' first, which include the deceased person's house up to £473,000 in value, a portion of their 'movable' estate (everything except property) up to the value of £50,000 if there are children and £89,000 if there are none, and household contents up to the value of £29,000. The rest of the estate will be distributed using a strict hierarchy, which may or may not reflect the deceased's wishes. Advertisement Hide Ad Advertisement Hide Ad If no immediate family exists, the estate will pass to other relatives, such as siblings or cousins – and if no relatives can be found, the estate will be transferred to the Crown. Administering an estate Executors must determine how much the estate is worth to make sure no Inheritance Tax is due. As part of the court Grant of Confirmation process, executors need to compile a detailed inventory of all assets and liabilities. Once submitted, applications typically take 1-3 months to process and, when Confirmation is granted, executors will have the legal authority required to access all the deceased person's accounts, sell or transfer their property, and distribute the estate to the beneficiaries. Key considerations for 2025 It's important to note that executors are also responsible for settling any outstanding debts, including mortgages, loans and taxes. The individual Inheritance tax (IHT) threshold is currently £325,000, but other exemptions can be used in certain circumstances. Advertisement Hide Ad Advertisement Hide Ad The IHT threshold is currently frozen, but house prices nonetheless continue to rise, meaning an increasing number of middle-income families are liable for inheritance tax. Executors must therefore assess their need for professional assistance carefully. Changes to Agricultural Property Relief and Business Property Relief could likewise impact previously exempt estates, adding further complexity. A proactive approach is advised here, with concerned parties advised to seek expert advice even in cases where a solicitor isn't legally required, to ensure they fully understand their tax obligations. Recent changes to the rules also mean that, from April 2027 onwards, pension pots will be included in the estate, which will increase the number of taxable estates. What happens if the executor can't or won't act? In Scotland, executors of a Will can be removed or replaced in certain circumstances after the death of the Will writer. The most straightforward is when the executor themselves agrees to step down. A simple document will be drafted and must simply be signed by the executor to formalise their resignation. In the case of voluntary replacement, the new executor would also sign. Advertisement Hide Ad Advertisement Hide Ad If an executor becomes physically or mentally incapable of performing their duties, however, a medical certificate that confirms their incapacity is required from their GP. Executors can be removed if they act improperly and/or fail to fulfil responsibilities as an executor, though these rare cases require a petition to the Court of Session, which will only accept very specific circumstances, beyond mere lack of cooperation. Legal thresholds and the role of solicitors One key thing to be aware of during probate is that Scottish law does not require a solicitor to administer an estate, unless there is no Will and the estate exceeds £250,000 in value. Even where a solicitor isn't required, however, particularly given recent changes in inheritance tax rules, it is advisable to seek expert guidance. Weighing up professional assistance Many executors choose to work with a solicitor due to the complexity of probate. Yet, whilst they can ensure all the necessary paperwork is completed correctly, reducing the chances of application rejection or errors, solicitors' fees can be significant. Because legal firms often deal with high caseloads, relying on a solicitor for probate when not strictly necessary can also introduce unnecessary delays up to a year long. Advertisement Hide Ad Advertisement Hide Ad Those managing estates with a Will, or below the £250,000 threshold when there is no Will may therefore find handing probate independently, with the help of online probate guidance services, like My Probate Partner, much easier. This reduces the stress and risk involved in handling probate completely alone, presenting a more accessible, cost-effective, time-efficient form of help.
