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The Chancellor has announced his most recent budget. Our clients have been most concerned about potential changes to the UK Inheritance Tax (IHT).
There was no mention of any changes to IHT; however, some tax amendments would affect our clients, particularly those involved in property transactions.
The main changes are highlighted below by our Wills, Trusts, and Probate Team.
Currently, you can claim relief for multiple dwellings when you buy more than one dwelling if a transaction includes freehold or leasehold interests in more than one dwelling.
Multiple Dwelling Relief is to be abolished. This relief has been beneficial to clients purchasing larger residential properties where there is more than one ‘dwelling’ within the property, such as a main house with outbuildings or annexes and enabled the client to reduce their overall liability.
The relief was also used by many investor clients who purchased residential properties, which included self-contained flats.
We envisage this will be an unpopular change for many of our clients, which may mean they have more to consider when purchasing certain properties.
CGT is currently payable, after allowances, at a rate of 28% on sales or gifts of UK property.
The rate of tax is to be reduced to 24%. The government hopes to encourage more property transactions through tax reduction.
Although this 4% is a welcome saving, CGT planning when it comes to inheriting property, gifting or selling will still be relevant.
We often advise clients on appropriating assets from an estate to fully utilise CGT allowances, and we also have clients who choose to gift property over tax years.
The tax regime for people who are residents in the UK but are not domiciled here will change.
The government has announced that the current regime will be abolished and replaced with a new residency scheme, which the Chancellor said will be fairer and more competitive with other countries.
The Chancellor acknowledged that individuals in employment have to pay both NI and income tax, which penalises working people.
To encourage people to get into work, the government is going to cut employee national insurance by an additional 2p, taking it from 10% to 8%.
The Chancellor has announced a new British ISA tax allowance for individual savers to invest in UK-listed companies.
This allowance is in addition to the existing ISA allowance.
If you would like to discuss your affairs further, please get in touch. Our wills, trusts, and probate lawyers are happy to work with your accountant to advise you on your estate planning and tax affairs.
Clara has over 15 years of experience acting as a Wills, Trusts, and Probate solicitor. Clara has specialist expertise in dealing with complex estates and trust administration.
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