As my first blog post I would like to take the opportunity to thank my good friend and local photographer, Stephen Moore for the fantastic shots of local County Durham landmarks that he has provided for use within the new website.

Being proud of and passionate about County Durham I wanted the website to reflect this and to celebrate the stunning architecture and natural beauty of our local area and I'm sure you'll agree that these stunning photographs certainly do exactly that!  

If you would like to find out more about Stephen and his work I've included the link to his website and a statement from him below. 

About Stephen Moore

Following the Office for Tax Simplification report of Inheritance Tax in 2019 and the All-Party Parliamentary Group report into Inheritance Tax Reform, there has been much speculation that changes to what happens to your estate on death may be forthcoming.

Regardless of whether there are changes announced in the March 2021 Budget or even the anticipated November 2021 Budget and also whether your estate will be subject to Inheritance Tax, it is really important that you plan for your legacy (however big or small) and that you make sure all of your affairs are in order.

For such planning, there is no time like the present.

During the current coronavirus pandemic, I am sure we all know someone who has suffered ill health or died prematurely.

The following sets out three actions that you should consider now.

1. Leave a well-written Will and avoid intestacy
2. Create a lasting power of attorney
3. Engage with a probate and estate administration provider

Leave a well written Will and avoid intestacy

It is no secret that it is so important to leave an up-to-date Will with clear instructions on how you would like your estate to be dealt with when you pass away.  This ensures that your estate is distributed in line with your wishes and your loved ones rightfully inherit your legacy.  Furthermore, a Will makes the process of handling your affairs, known as “estate administration”, easier for your loved ones and prevents unnecessary stress at an already difficult time.

What’s often less well understood is how your estate will be distributed if you do not create a Will.  There are common misconceptions about who will inherit, especially regarding step-children and partners who are not married.

There are different rules of intestacy for England and Wales, Scotland and Northern Ireland.  The following flow chart shows what happens in England and Wales.

Create a lasting power of attorney

Creating a lasting power of attorney (LPA) is often not thought about until we get older or gradually become ill.  Less than 1% of the adult UK population has an LPA, according to the Office of the Public Guardian (January 2021).

An LPA is a document that allows a person, known as the “donor”, to give one or more people, the ‘attorney(s)’, the legal authority to make decisions on their behalf.  This would apply if the donor ever lacks the physical or mental capacity to make decisions for themselves.

Again, it is often misunderstood how little you can do with a loved one’s assets without an LPA.  If you do not have one in place:

• You have no say in who the court appoints as your deputy
• You have no say in the scope of power granted to your deputy
• A deputy’s application could be refused, so the council may be appointed instead
• Your family will have to pay extra to apply for and maintain a deputyship
• You may not be able to sell jointly held assets until the court appoints a deputy

Engage with a probate and estate management provider

When you lose someone close to you, often the last thing you want to do is sort out the estate.  However, estate administration is required after every death - whether or not there is a Will.  It involves dealing with the deceased’s assets (such as property, shares and personal possessions), paying debts, paying any Inheritance Tax and Income Tax and transferring the inheritance to the beneficiaries of the estate.

A difficult time can often by made easier by using a professional service, who can take control of the following:

• Gathering information
• Prepared tax forms and applying for the Grant of Probate (Confirmation in Scotland)
• Closing accounts
• Completing the legal work
• Selling and transferring assets and paying debts
• Selling property
• Finalising tax work
• Producing estate accounts

With announcements relating to energy bills, Income Tax, the State Pension, tax allowances, and Stamp Duty, there are plenty of ways your finances could be affected in 2023 and beyond.

Here are the key points of the autumn statement and what they mean for you.

You may pay more Income Tax in 2023/4The chancellor’s announcements mean many millions of workers are likely to pay more Income Tax over the next few years, for two key reasons.

1. Personal Allowance and higher-rate threshold frozen

The Personal Allowance – the amount you can earn before you pay Income Tax – has been frozen at its current level of £12,570 until 2028.

Additionally, the threshold at which the higher rate of Income Tax begins (£50,270) has also been frozen until 2028. So, as your earnings rise, you’ll pay more tax than if these thresholds rose each year in line with inflation.

1. Reduction in the threshold at which individuals pay additional-rate tax

Additionally, Hunt reduced the threshold at which additional-rate Income Tax becomes payable.

You will now pay the 45% rate of tax on any earnings over £125,140 (it was previously £150,000). In simple terms, if you earn more than £150,000, this specific move means you’ll likely pay just over £1,200 a year in additional Income Tax.

You may pay more Dividend Tax and Capital Gains Tax from 2023
As part of his plan to increase tax revenue, the chancellor announced reductions to two key tax allowances.

Dividend Tax
The Dividend Allowance – the amount you can earn from dividends before you will pay Dividend Tax – will reduce from £2,000 to £1,000 in 2023, and then to £500 in 2024.

If you receive any income from dividends, it’s likely that you will pay more tax on these dividends from April 2023 onwards.

Capital Gains Tax
The Capital Gains Tax (CGT) annual exempt amount will fall from £12,300 to £6,000 in 2023, and to £3,000 in 2024.

This means that you will only be able to make profits of £6,000 on non-ISA investments (things like company shares or a second home) in the 2023/24 tax year before CGT becomes due.

Your State Pension will rise
Under the “triple lock”, brought in by the coalition government in 2010, the State Pension increases each year by the higher of:

• The average increase in wages across the UK
• Inflation, as measured by the Consumer Price Index (CPI)
• or 2.5%.

Hunt announced that he would increase the State Pension in line with September 2022’s inflation rate of 10.1%. So, if you’re in receipt of the State Pension, that means a significant boost to your payments from April 2023.

If you’re on the full, new State Pension, the BBC reports that you will receive £203.85 a week, up from £185.15.

Pension Credit and other benefits will also be uprated in line with inflation.

You’ll likely pay more for energy from April
One of Hunt’s initial moves on becoming chancellor was to scale back Liz Truss’s Energy Price Guarantee.

This guarantee ensures that, for six months from 1 October 2022, the average household will pay energy bills of around £2,500 a year.

In his speech, Hunt announced that, while support for energy bills will remain in place, it will become less generous from April 2023. The guarantee will rise to £3,000 for a further 12 months, meaning you could well see your gas and electricity bills rise again in the spring – although the government say their measures would save the typical household £500 in a year.

There will be additional support for more vulnerable households, such as pensioners and those on benefits.

Inheritance Tax thresholds frozen until at least 2028
At present, qualifying estates can pass on up to £500,000 with no Inheritance Tax (IHT) liability using the nil-rate and residence nil-rate bands.

The qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an IHT liability.

These two thresholds had already been frozen until 2026. The chancellor announced an extension to this freeze, meaning that the nil-rate bands will remain at these levels until at least 2028.

As house prices and asset values rise, it will become increasingly likely that the value of your estate exceeds the combined nil-rate bands, and that your family may face an IHT bill on your passing.

Stamp Duty changes become a “holiday”
In September, Kwasi Kwarteng announced some increases in the thresholds at which Stamp Duty is payable.

Stamp Duty in England and Northern Ireland is now only paid above £250,000 while first-time buyers only pay the tax on purchases over £425,000 (and discounted Stamp Duty on properties up to £625,000).

While these changes will remain, the chancellor said they will now be time-limited, ending on 31 March 2025.

Other key announcements at a glance

• The largest-ever rise in the UK’s national living wage. For workers aged 23 and over, it will rise by 9.7% to £10.42 an hour from April 2023.
• Confirmation that the main rate of Corporation Tax will increase to 25% for companies with over £250,000 in profits from April 2023.
• The lifetime cap on social care costs in England due to come into force in October 2023 will be delayed by two years.
• Electric cars, vans, and motorcycles will begin to pay Vehicle Excise Duty in the same way as petrol and diesel vehicles from April 2025.
• Councils will have more flexibility in raising Council Tax without asking voters.
• HS2 and the Northern Powerhouse Rail schemes will continue as planned.
• A £13.6 billion package of business rates support over the next five years.
• Spending of £2.8 billion in 2023/24 and £4.7 billion in 2024/25 for adult social care and an additional £3.3 billion in 2023/24 and a further £3.3 billion in 2024/25 to improve the performance of the NHS.
• A significant increase in windfall taxes. The oil and gas companies' tax rate will increase from 25% to 35% of profits on UK operations from January 2023 until March 2028, while there will also be a 45% tax on profits of older renewable and nuclear electricity generation.

Get in touch

If you have any questions about how the autumn statement could affect you, we can help. Please get in touch to arrange a time to chat.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.