Autumn Budget 2017: What you need to know

Autumn Budget Summary - Green & Co

Yesterday, the Chancellor announced his second Budget of 2017. Among the key changes to note for this year are:

  • The personal allowance will rise to £11,850 and the higher rate tax threshold for the UK will rise to £46,350 for 2018/19.
  • Automatic enrolment pension minimum contributions increase significantly from 6 April 2018. Employer’s minimum contribution will increase from 1% to 2% with the total minimum contribution increasing to 5% (including 3% staff contribution).
  • The inheritance tax residence nil rate band rises to £125,000 from 6 April 2018.
  • Half of any interest tax relief for personal buy-to-let borrowing will be limited to a 20% tax credit from 2018/19.
  • The VAT threshold will be frozen at £85,000 until March 2020.
  • The diesel supplement for company cars will be increased from 3% to 4% from April 2018.
  • The First time buyers of residential property outside Scotland will pay no stamp duty land tax on the first £300,000 of the purchase price for a home, provided its value does not exceed £500,000.

Download our budget summary to see the rest of the changes announced by Mr Hammond.

If you have any questions about the summary’s contents or how any aspects of your tax and financial planning may be affected by the Budget, please contact us to discuss them.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Is It Time to Review Your Estate Plan?

Estate Planning

Planning to minimise the inheritance tax (IHT) due on your estate is always important, but the recent introduction of the residence nil-rate band (RNRB) means now could be the ideal time to review your existing plans.

What is the RNRB?

IHT is charged at 40% on estates worth in excess of the nil-rate band, which is currently £325,000. Married couples and registered civil partners can pass any unused nil-rate band on death to one another.

However, 6 April 2017 saw the introduction of an additional nil-rate band – the RNRB – which is intended to take the family home out of IHT for all but the wealthiest. The RNRB is set at £100,000 for deaths in 2017/18, rising to £125,000 in 2018/19, £150,000 in 2019/20, and £175,000 in 2020/21. It is then set to increase in line with the Consumer Prices Index from 2021/22 onwards.

The introduction of the RNRB means that up to £1 million of a married couple’s estate could eventually be taken outside the scope of IHT if the full nil-rate bands (£325,000 + £175,000 x 2) are available to each spouse.

The RNRB is also available when a person downsizes or ceases to own a home on or after 8 July 2015 where assets of an equivalent value, up to the value of the RNRB, are passed on death to direct descendants.

It is important to note that the additional band can only be used in respect of one residential property, which does not have to be the main family home but must at some point have been a residence of the deceased.

There will also be a tapered withdrawal of the additional nil-rate band for estates with a net value of more than £2 million (at a withdrawal rate of £1 for every £2 over this threshold).

Reviewing your estate plan

It is always advisable to review your Will and planning strategies on a regular basis, but it is particularly pertinent following changes in your personal or family circumstances or significant new tax rules. The introduction of the RNRB is one such example.

The additional nil-rate band will only apply when a main residence is passed on death to one or more descendants (including a child, stepchild, adopted child or foster child) of the deceased and their descendants. In order to utilise the RNRB, you may need to review your Will to check that the property is being bequeathed to the correct beneficiaries. The home doesn’t have to be specifically mentioned in the deceased’s Will, as long as it has at some point been a residence of the deceased.

It is also important to review your Will where property has been left in trust, as certain types of trusts may not be eligible for the RNRB. This is a complicated area and we suggest that you consult an expert for further advice.

If downsizing is contemplated, special care is needed to include provisions in a Will which will satisfy the conditions of obtaining the additional band.

For more information on the RNRB or for advice on other tax-efficient estate planning strategies, please contact us.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Landlord Forum – 25 November 2015

www.greenandco.com

We are delighted to announce that our 2nd Landlord Forum is taking place on Wednesday 25th November

After our last event, which covered the new tax legislation for Landlords, it was apparent that keeping up to date with all the other legislative changes is becoming increasingly difficult but significantly more important. So if you are a landlord currently letting properties or thinking about buying to let in South Wales this event is for you.

Speakers will include:

  • Dave Brassey of Underwood Insurance who will be bringing you up to date on the insurance options for Landlords and Employer’s Liability.
  • Nick Park, Director at Green & Co Accountants and Tax Advisors who will be discussing estate planning and the new residence nil rate band.
  • Damian Lines, Partner and Head of the Private Client team at Rubin Lewis O’Brien who will cover Lasting Powers of Attorney.

Enquiries

For any enquiries about this event, please contact Katie Williams at Green & Co on 01633 871122 Email: katie@greenandco.com  or Penny Jarman at Rubin Lewis O’Brien on 01633 626359 Email: pennyj@rlob.co.uk.

Eventbrite - Landlord Forum