Welcome
Welcome to our Q1 2025 Newsletter, a particular welcome to all of you for whom this is your first newsletter under Perspective branding.
Financial Planner , Perspective (Chelmsford)
As we navigate the early months of 2025, financial planning remains as crucial as ever. With new regulatory changes, economic shifts, and ongoing developments in tax legislation, it’s important to stay informed and proactive in managing your wealth.
In this edition, we provide insights into key financial strategies to help you make the most of the year ahead, look at intergenerational wealth transfer and give an update on the continuing impact of the Budget in October 2024.
Helping you achieve your long-term financial goals is our total focus. If you have any questions, your Financial Planner is always here to assist you.
Kind Regards
Niel Donnelly
Expert, specialist financial planning and wealth management advice for individuals, corporates and trustees.
Whilst enjoying the scale of a national group, we deliver a very personal service from our local offices, most of which have been established for over 30 years.
Over 650 staff including over 165 financial planners, a quarter of whom have been awarded Chartered status, the CII’s premier designation.
Our in-house Perspective Academy grows our next generation of financial planners who share our client-centric ethos.
‘Whole of market’ approach meaning our advice is not limited to certain providers.
High proportion of new clients coming from recommendations by existing clients and fellow professionals.
06-07 08-09
Take Control of Your Finances: Essential Steps to Maximise Tax Savings Before 6th April 2025!
As the new tax year approaches on 6th April 2025, it’s important to review your finances and take advantage of potential tax-saving opportunities.
Take Steps Now to Reduce Your Future Inheritance Tax Liability: Smart Strategies to Protect Your Wealth
Inheritance Tax (IHT) can significantly impact the wealth you pass on to your loved ones. With careful planning, you can legally minimise your IHT liability and ensure more of your estate benefits your family.
The articles in this newsletter are for information only and must not be considered as financial advice. We always recommend that you seek financial advice before making any financial decisions.
Agricultural Property and Business Relief post the October 2024 Budget
Navigating Inheritance Tax (IHT) is critical for business owners and farmers to protect their legacy.
How the UK Budget 2024 Affects Your Financial Planning
The October 2024 Budget continues to impact both personal and business finances.
Take Control of Your Finances: Essential Steps to Maximise Tax Savings Before 6th April 2025!
As the new tax year approaches on 6th April 2025, it’s important to review your finances and take advantage of potential tax-saving opportunities.
Making strategic financial decisions before the deadline can help you reduce your tax liability and maximise your savings. As a reminder, here are some key steps you should be considering before the new tax year begins.
1. Use Your ISA Allowance
Individual Savings Accounts (ISAs) offer taxfree savings and investment opportunities. For the 2024/25 tax year, the annual ISA allowance is £20,000. If you haven’t maxed out your allowance, consider topping up your ISA before 5th April 2025 to benefit from tax-free growth and withdrawals. You can split the allowance between a Cash ISA, Stocks & Shares ISA, Lifetime ISA, or Innovative Finance ISA.
2. Maximise Pension Contributions
Pension contributions are a highly tax-efficient way to save for retirement.
Contributions receive tax relief at your marginal rate, meaning basic rate taxpayers get 20%, higher rate taxpayers get 40%, and additional rate taxpayers get 45% in tax relief. The pension annual allowance for 2024/25 is £60,000, but you can also carry forward unused allowances from the previous three years. Consider increasing your pension contributions before the tax year ends to lower your taxable income and enhance your retirement savings.
3. Review Your Capital Gains Tax (CGT) Allowance
For the 2024/25 tax year, CGT annual exemption is £3,000. If you plan to sell assets such as stocks, property (excluding your primary residence), or other investments, consider using your CGT allowance before the new tax year to avoid paying unnecessary tax. If you have significant gains, you might also consider spreading sales across two tax years to utilise multiple allowances.
4. Make Use of Your Dividend Allowance
The dividend allowance for 2024/25 is £500. This means you can earn up to £500 in dividends tax-free. If you have a business or investments that pay dividends, consider optimising your withdrawals before the tax year ends to take full advantage of this allowance.
5. Consider Gift Aid and Charitable Donations
Donations to registered charities through Gift Aid allow you to claim tax relief if you are a higher or additional rate taxpayer. You can claim back 20% or 25% of the donation value via your tax return. If you’re looking to reduce your taxable income, consider making charitable donations before the end of the tax year.
6. Utilise Inheritance Tax (IHT) Exemptions
If you’re planning to pass on wealth, take advantage of the annual IHT gifting allowance of £3,000 per tax year. You can also make smaller gifts of up to £250 per person, and these won’t be subject to inheritance tax. Gifting before 6th April 2025 helps reduce the value of your estate and potential tax liabilities:
Annual Gift Exemption: You can give away up to £3,000 per year tax-free
Small Gift Allowance: You can give up to £250 per person annually without incurring IHT
Wedding Gifts: Parents can give £5,000 to a child, £2,500 to a grandchild, and £1,000 to anyone else tax-free
Regular Gifts from Surplus Income: If you can prove that the gifts come from your excess income and don’t affect your standard of living, they are immediately exempt from IHT
7. Review Your Tax Code and PAYE Status
Ensure your tax code is correct to avoid overpaying or underpaying tax. You can check your tax code through your payslip or HMRC’s online portal. If you’ve had multiple sources of income, changed jobs, or received taxable benefits, an incorrect tax code might mean you owe HMRC money or are due a refund.
8. Plan for the New Tax Year
Once you’ve made the most of the current tax year’s allowances, consider planning for the next one. Set financial goals, review your investments, and create a tax-efficient strategy for 2025/26.
Taking these steps before 6th April 2025 ensures you’re making the most of available tax breaks and positioning yourself for financial success in the new tax year.
Take Steps Now to Reduce Your Future Inheritance Tax Liability: Smart Strategies to Protect Your Wealth
Inheritance Tax (IHT) can significantly impact the wealth you pass on to your loved ones. With careful planning, you can legally minimise your IHT liability and ensure more of your estate benefits your family. Here are some of the strategies you should be considering.
1. Use the Nil-Rate Band and Residence Nil-Rate Band
The nil-rate band (NRB) allows the first £325,000 of your estate to be passed on tax-free. If your estate exceeds this threshold, IHT is charged at 40%. The residence nil-rate band (RNRB), currently £175,000, applies if you pass your main home to direct descendants. Married couples and civil partners can combine their allowances, potentially shielding up to £1 million from IHT.
2. Make Use of Tax-Free Gifts
Gifting money during your lifetime is a great way to reduce your taxable estate. Regular gifts out of income, such as funding grandchildren’s education, can also qualify if they do not affect your standard of living. Unused allowances can be carried forward for one year.
It is crucial you keep accurate records of the gifts you make so you, or your heirs, can evidence these if required in the future.
3. Consider the Seven-Year Rule
If you gift assets and survive for seven years, the gift falls outside your estate for IHT purposes. If you pass away within this period, the gift may be taxed on a sliding scale known as ‘taper relief’—reducing the tax burden depending on how many years you live after making the gift.
4. Place Assets in Trusts
Setting up a trust can help manage your estate efficiently and reduce IHT liability. Trusts allow you to pass on assets without them forming part of your estate for tax purposes. Options include:
Bare Trusts: Assets belong to beneficiaries but are managed by trustees
Discretionary Trusts: Trustees control distributions, useful for complex family arrangements
Interest in Possession Trusts: Beneficiaries receive income while assets remain protected
5. Leave Money to Charity
Donations to registered charities are exempt from inheritance tax. Additionally, if you leave at least 10% of your estate to charity, your IHT rate on the remaining taxable estate reduces from 40% to 36%.
6. Take Out Life Insurance
Life insurance is another, often overlooked option. A life insurance policy placed in trust can help cover IHT liabilities without increasing the taxable estate. These policies are designed to ensure your heirs have the liquidity to pay taxes when they fall due without selling key assets, giving them the full benefit of your estate.
Crucially, placing life insurance policies in trust is essential. This step ensures the payout is not included in the taxable estate, allowing funds to go directly to beneficiaries without additional tax liabilities. Trust arrangements also simplify access to funds, ensuring timely payouts to cover IHT.
7. Invest in IHT-Exempt Assets
Certain investments qualify for Business Relief (BR), allowing them to be passed on free of IHT if held for at least two years. These include shares in qualifying businesses and some AIM-listed stocks.
Act Now to Protect Your Wealth:
Minimising IHT requires careful planning. By taking proactive steps now, you can ensure more of your wealth stays with your family and beneficiaries. Combining these strategies can have a material impact on a potential IHT liability. Your Financial Planner can help you decide the most suitable arrangements for your situation.
Agricultural Property and Business Relief post the October 2024 Budget
Navigating Inheritance Tax (IHT) is critical for business owners and farmers to protect their legacy. Significant changes were made in the October 2024 Budget, which are already causing many people to review their arrangements.
Both Agricultural Property Relief (APR) and Business Relief (BR) remain valuable tools, but the recent changes created new complexities. Expert advice and a proactive approach to estate planning are essential to ensure your assets qualify and you maximise available reliefs.
APR and BR can significantly reduce the IHT burden on qualifying assets. APR offers relief on agricultural land, property, and certain farm assets, while BR applies to shares in trading businesses and other business-related assets. Both reliefs provide up to 100% tax savings under specific conditions, but changes are on the horizon.
Recent government revisions will adjust the thresholds and relief levels:
From April 2026, APR and BR will only provide 100% relief on assets valued up to £1 million, although assets exceeding this threshold will qualify for 50% relief on IHT
APR has also been tightened, with stricter enforcement of active farming requirements and more precise distinctions between eligible and ineligible land use
The new £1 million threshold may require creative solutions, such as using trusts or lifetime gifts to manage high-value assets. Regular valuations, meticulous documentation, and expert advice are indispensable for navigating these updates.
Common pitfalls
Recent changes have increased the risks of non-compliance for APR and BR. For example:
Business owners often misunderstand BR’s “active business” requirement - investments or non-trading activities within a business can disqualify it from full relief
With APR, farmland not actively farmed or leased under certain agreements may lose eligibility
Strategic restructuring may be necessary for estates with highvalue business assets to minimise tax liabilities
A lack of clarity around asset valuations can also lead to disputes or unexpected tax bills
New
regulations may compel next-generation farmers/ businesses to sell land or assets to cover inheritance tax liabilities
Thorough record-keeping and regular reviews are critical to avoid these pitfalls. By working with your Financial Planner (who understands the updated rules), you can align your estate with the new requirements and ensure your family benefits from these valuable reliefs.
How the UK Budget 2024 Affects Your Financial Planning
The October 2024 Budget continues to impact both personal and business finances. Here are some measures you can take to help optimise your finances.
1. Income Tax Adjustments
The government froze income tax thresholds until 2028, meaning more people may fall into higher tax brackets due to wage increases (fiscal drag). To mitigate this:
Consider salary sacrifice schemes to reduce taxable income
Maximise pension contributions to lower your income tax liability
2. Changes to National Insurance Contributions (NICs)
Starting from the 2025/26 tax year, the Chancellor announced that secondary Class 1 NICs will increase by 1.2% to 15%, with Class 1A and Class 1B rates rising accordingly. The Class 1 NICs secondary threshold will be reduced to £5,000 (from £9,100) and the Employment Allowance will rise to £10,500, becoming available to all eligible small businesses.
Employers: Optimise the employment allowance
Employers: Potential increase in pension contributions to offset NIC rise
Employees: Consider salary sacrifice to reduce NICs
Employees: Review pension contributions to maximise tax relief
3. Capital Gains Tax (CGT) Adjustments
Changes to CGT, from 30 October 2024, saw the lower rate increase from 10% to 18%, the higher rate to 24%, and for trustees/personal representatives, it increased to 24%.
Maximise personal and trust CGT allowances where applicable
Spread asset sales across multiple tax years to maximise allowances
Consider utilising tax-efficient investment vehicles such as ISAs and pensions.
4. Inheritance Tax (IHT)
Despite speculation, IHT thresholds remain unchanged. However, families should still take proactive steps to reduce potential IHT liabilities:
Use gifting allowances and trusts to manage estate transfers
Consider Business Relief and pension strategies to reduce taxable estate value
5. ISA and Savings Benefits
The ISA allowance remains at £20,000, but new flexible savings options are being introduced. To optimise savings:
Maximise ISA contributions for tax-free growth
Explore high-interest savings accounts in response to inflation concerns
6.
Pension Reforms
Starting in April 2027, unused pension assets will be included in estates for Inheritance Tax (IHT) purposes, eliminating the longstanding exemption. To adapt to this change, consider the following strategies:
Maintain or increase contributions to benefit from tax relief while this option remains advantageous.
Reassess your pension assets as part of your broader taxable estate to optimise IHT efficiency and align with your long-term financial goals.
7. Business Tax Adjustments
Corporation tax rates remain at 25% for larger businesses, but small businesses benefit from increased investment allowances. If you own a business: Take advantage of investment incentives to offset taxable profits
Review dividend payments versus salary structures for tax efficiency
8. Cost of Living Measures
Support for energy bills and targeted costof-living payments continue. Households should:
Take advantage of government grants and subsidies
Adjust budgeting strategies to account for ongoing economic pressures
Act Now: The impact of changes introduced by the 2024 Budget means many people need to review their financial plans. Speak to your Financial Planner to discuss any necessary adjustments to make the most of new opportunities and avoid unnecessary costs.
Perspective Cares: Spotlight on Our Community and Charitable Initiatives
Perspective (South West) Limited attend Moving On Fair
Ross Perry and Tom Llewelyn from our South West office recently attended the Moving On Fair at a local high school for the second consecutive year.
Tom, who has a special connection with the school as a former student, started his journey with us through work experience as part of his degree course at university. He returned after graduating on a flexible contract while traveling, and last year he joined us full time becoming a member of our Perspective Academy.
Moving On helps students explore their potential career options, engaging with students in Years 9 to 12. We were able to introduce them to the world of finance and share valuable knowledge that will help them make informed decisions about their future careers. Many students also learnt about the importance of financial planning, encouraging them to think critically about their financial futures as they leave home and begin their careers.
Our team is returning to the school in March to help Year 10 students with their mock interviews, continuing our commitment to supporting the local community and helping students prepare for their futures.
Staff at our office in Marlborough have been busy volunteering at Age UK Wiltshire’s newly opened branch on the High Street in the town https://www.ageuk.org.uk/wiltshire/our-services/charityshops/
Will Male, Becky Smith, Tom Llewelyn, Steve Leech, Kacey Millard and Becky Jones have all spent enjoyable time over the last few months helping sort donations from members of the public.
They will be doing this on a monthly basis with many people in our Marlborough office volunteering their time.
Andrew Heap coaches new airline pilots on Pensions
The British Airline Pilots’ Association (BALPA), the professional association and registered trade union which represent the interests of all UK pilots, recently welcomed Andrew Heap, our Office Principal in Darlington to speak at their recent Elevate induction programme in Manchester.
This initiative provides BALPA members with knowledge on a range of subject areas such as pensions and professional upskilling. As a former commercial pilot himself, Andrew’s talk was well received.
Perspective (Home Counties) Limited sponsors new playground Perspective (South West) Limited | Age UK
Our Home Counties offices are proud to be a Silver Sponsor of the Friends of Lowndes Park project in Chesham
Friends of Lowndes Park is a voluntary community group formed to protect and improve Chesham’s central park now and for future generations, by creating a new 5-11s playground.
The project, which is set to be completed by March 2025, will feature a variety of modern play equipment such as swings, slides, climbing walls, and interactive play areas that are designed to stimulate creativity and physical development. Additionally, the playground will include accessible features, ensuring children of all abilities can enjoy the space.
This sponsorship is part of our offices’ ongoing efforts to support local causes and give back to the surrounding community. They have been actively involved in charity work and local events, and this is another step in their goal to make an enduring positive impact.
Perspective (Chelmsford)
