The latest Budget announcement has introduced a range of changes, impacting both individuals and businesses.
To help you navigate the Autumn Budget 2024, Cottons brought together a panel of tax and financial experts to share their insights and answer your pressing questions. Our speakers each bring extensive expertise in their respective fields:
- Luke Prout – Corporate Tax Specialist – Luke provides in-depth knowledge on corporate tax matters, helping businesses understand complex tax regulations and identify potential tax-saving opportunities.
- Jo Surley – Personal Tax Expert – With her expertise in personal tax, Joanne advises individuals on strategies to optimise tax efficiency and ensure compliance with evolving tax laws.
- Dan Payne – Financial Advisor at Golden Oak Wealth Management – Dan offers a wealth of knowledge in financial planning, guiding clients through decisions on investment, inheritance, and retirement to support their long-term financial goals.
Each expert shared actionable insights in our Budget Debrief, but if you have specific questions or would like tailored advice, feel free to contact them directly.
In addition to the video, we’ve provided answers to all the audience questions from the day, covering essential topics from inheritance tax planning and corporate tax strategies to property and pension advice.
Key questions & answers:
Q1: Can you gift unlimited agricultural land into a Trust without an initial IHT lifetime charge?
- A1: Until April 2026, this may be possible. Whether it is feasible will depend on the value of the land, its use and ownership, and whether it meets the qualifying conditions for 100% Agricultural Property Relief. If these conditions are met and you survive the gift by 7 years, then yes, there would be no IHT charge for placing the agricultural land into the trust.
The amount of tax due on the first 10-year anniversary of the trust would be calculated based on the rules in place at that time.
Q2: The difference between GDP (“sugar rush”) and GDY suggests we will spend more, unmatched by income. How do you think business expenditures will be impacted?
- A2: For businesses, this could mean short-term gains in sales or output but may lead to hesitation regarding long-term investment and capital expenditure due to concerns about sustainability. Without an income foundation (GDY), businesses may favour flexible, low-risk spending strategies, such as short-term staffing, reducing or delaying recruitment, or scaling back expansions, to prepare for possible demand declines.
Q3: Is tax avoidance illegal? Isn’t all tax planning tax avoidance, while only evasion is illegal?
- A3: No, tax avoidance itself is not illegal, whereas evasion is a criminal offence. You are entitled to organise your financial and personal affairs in a tax-efficient manner. However, the press often conflates the two terms. It is essential that any planning undertaken is for commercial or personal reasons, not solely to avoid tax. Advisors may therefore ask clients to explain their motivations aside from tax benefits (e.g., succession, wealth or asset protection, simplification).
Q4: If you’ve previously put business assets/farmland into a trust, should you be worried, or does it not affect these?
- A4: There is no need to worry about tax changes, but it is important to understand their impact. Changes may alter the tax payable on each 10-year anniversary of the trust if asset values are no longer covered by 100% relief. We generally recommend reviewing the 10-year charge a couple of years beforehand to understand and plan for any potential liability. If your trust’s anniversary is approaching, consider reviewing this with an advisor. If it is some years away, you may wait to see what the legislation is nearer the time.
Q5: For inheritance tax advice, should we consult our accountant or an independent financial advisor?
- A5: Inheritance tax planning generally starts with your tax adviser (accountant), who can outline your tax exposure and potential planning options. They may then involve your IFA and, where relevant, solicitors. Usually, the tax adviser (accountant) will manage the inheritance tax planning process.
As a rule, IFAs are not qualified tax advisers, and most tax advisers are not regulated IFAs. Collaboration between advisors is key. If either your IFA or tax adviser is unwilling to work alongside the other, it may be worth questioning the quality of advice you’re receiving.
Q6: Should I consider buying businesses or properties in a year’s time, as high sales and lower prices are expected?
- A6: A market change could present opportunities for some. However, we cannot predict the exact impact. In the short term, property sales may increase as people try to complete transactions before the Stamp Duty Land Tax thresholds are reduced next April, which will significantly affect any Stamp Duty Land Tax payable.
Q7: Not much has been mentioned about trusts. Should I take any action?
- A7: This is because there haven’t been substantial changes affecting trusts directly. While certain reliefs that some trusts rely on have been modified, the regulations surrounding trusts themselves remain unchanged.
Q9: Will the changes to mortgage relief for furnished holiday lets impact properties held in Ltds as much as those in individual names?
- A9: No, the changes for furnished holiday lets do not impact properties held within a limited company.
Q10: Is cash treated the same way in BADR (Business Asset Disposal Relief)?
- A10: For BADR (formerly Entrepreneurs’ Relief), excessive cash on the balance sheet can disqualify the business from relief if it is enough to alter the company’s status from trading to non-trading. To qualify for BADR, a business must be “substantially trading” (typically 80% or more of activities), meaning surplus cash not used for operations or growth may compromise this status. For businesses with significant cash balances, we recommend reviewing the purpose for holding these funds (e.g., working capital, customer/supplier requirements). Similarly, significant cash can impact BPR (Business Property Relief) eligibility for inheritance tax purposes if not actively used for trading. HMRC assesses whether cash reserves are necessary for business; cash held solely as an investment usually does not qualify for BPR. Businesses with high cash levels should ensure that funds are essential to operations or capital investment to maintain BADR and BPR eligibility.
Q11: Should I be cautious about the associates ruling and POA (payments on account) under Corporation Tax legislation?
- A11: The associates ruling in Corporation Tax can affect tax rates and the calculation of payments on account (POA). When associates (like family members or business partners) hold shares or interests in the company, combined holdings can influence the applied tax rate. This is particularly relevant when associated businesses elevate a company’s profits into higher tax bands, potentially increasing the Corporation Tax rate due. For POA, associated entities or individuals may lead to larger advance payments as HMRC adjusts expectations if taxable profits increase due to associated holdings. Monitoring these associations helps ensure accurate tax rate applications and POA calculations, reducing unexpected tax liabilities.
Q12: As a mortgage adviser for landlords/co-directors, what punchy openers could help emphasise the value of proactive accountancy beyond just filing returns?
- “Maximise your tax savings, not just meet deadlines—let’s uncover strategies that work for you.”
- “It’s not just about filing returns; it’s about positioning your business for long-term success.”
- “Are you leveraging all tax benefits available to your business? Let’s explore proactive strategies together.”
- “While most focus on compliance, I help clients reduce taxes, boost profits, and grow wealth.”
- “Proactive advice goes beyond the basics—let’s optimise your business for maximum growth and minimal tax.”
Q13: For Catherine Wheeler (see the video), what are the tax implications if contracts had already exchanged pre-Budget but completion was set for post-1st November?
- A13: The higher Stamp Duty Land Tax (SDLT) rates take effect from 31 October 2024. Contracts entered into before this date but completed or substantially performed afterwards will be subject to the higher rates unless exceptions apply (e.g., contract variations, rights assignments). If substantial performance occurred before 31 October 2024 and completion follows, no additional tax is due if the rate increase only affects the higher rate change (from 3% to 5%) post-31 October.
For contracts substantially performed between 31 October 2024 and 31 March 2025, but completed after 1 April 2025, no extra tax applies if the 3%-5% increase is the only factor. These transitional rules ensure fair SDLT application during rate changes.
Q14: How much can you gift for inheritance tax purposes for a wedding?
- A14: Parents can gift £5,000 per recipient, and grandparents £2,500 per recipient. Note that this is a gift per recipient, not per donor.
Q15: Should I reconsider my pension strategy?
- A15: A current consultation, set to conclude before 2027, may bring new changes, so quality financial advice is crucial. When the rules change, we will proactively advise clients on the most suitable steps. In the meantime, pensions remain a vital part of any financial plan. They are tax-efficient, held outside the estate for Inheritance Tax purposes, and flexibly accessible in later life. Given that pensions have evolved significantly over the past 30 years, flexibility and proactive planning are key. Diversifying your tax wrappers alongside pensions is also wise, so consider contributing to ISAs, general investment accounts, and Offshore Bonds as applicable. This provides exposure to multiple tax wrappers and allowances, enabling more tax-efficient income in retirement.
Take proactive steps with expert advice.
For tailored guidance, we recommend speaking with your accountant and financial advisor to ensure these changes are addressed effectively in your financial plans.
