Latest news with #InheritanceTax
Daily Mirror
17 hours ago
- Business
- Daily Mirror
Inheritance tax rules for anyone who wants to leave grandchildren tax-free cash
MoneyMagpie Editor and financial expert Vicky Parry explores how grandparents can help their families without large tax bills Grandparents and parents often want to help out their families with cash gifts – but if they're not careful, a gift can quickly become a financial burden. Giving money while you're still here might seem like a great way to avoid Inheritance Tax, but you could end up lumping your loved ones with a big bill. Inheritance Tax threshold Inheritance Tax (IHT) is paid on the estate you leave behind when you die. Each person has an allowance of £325,000 on their estate before IHT needs to be paid. But, with the cost of properties these days, that takes many people over the threshold even if they are cash-poor. The allowance doubles when a couple is married, as the surviving spouse takes on the other's allowance. This increases the threshold to £650,000. If you leave your home to your children or grandchildren, that allowance increases to £500,000 (or £1million between a married couple). Inheritance Tax seven-year Rule The IHT rate is 40%. That means anything above the allowance is taxed at 40% before your beneficiaries can receive the money or assets from your estate. This means many grandparents and parents try to implement a 'living inheritance' by passing money and assets on while they're still alive. However, if you gift outside of the allowed limits, this money could be subject to IHT even if you gave it several years before you die. There is a seven-year rule on gifting cash and assets: if you give money or property while you're still alive, it is subject to IHT for the next seven years. So, if you pass away within seven years, IHT is still due on that gift. There is a taper. If you die within 4 years of the gift, IHT is 32%, 4 to 5 years is 24%, 5 to 6 years is 16%, then 8% for 6 to 7 years. At seven years and one day post-gift date, IHT is not due. Permitted gifts There are ways to avoid the seven year rule. First, you can gift up to £3,000 a year to anyone you want (that's the total amount you can give away, either split into several smaller gifts or as a lump sum). If you didn't give any gifts the previous year, you can roll forward the allowance, to make it £6,000. You can also give birthday and Christmas gifts from your regular income of any amount without incurring IHT. This must be from your regular income and not deprive you of your living standards. Additional gifts There are some circumstances when you can gift more than £3,000 in a year. If your child gets married, you can give them £5,000, or £2,500 for a grandchild or great-grandchild. You can give up to £1,000 for anyone else as a wedding gift. You can combine this gift with your allowances. So, if your child gets married and you didn't make any gifts in the last tax year, that could be a maximum of £11,000 tax-free (£6,000 allowance plus £5,000 wedding allowance). Regular payments Another way to support your grandchildren without accidentally lumping them with a large IHT bill is with regular payments. There's no limit to how much you can give. There are a few rules. First, you must be able to afford the payments after your own standard living expenses. You can't deprive yourself to make the payments. Second, it has to come from your regular monthly income such as your pension. It can't come from a savings pot. Many people use this option to help grandchildren with things like paying rent, or sending regular payments to a Junior ISA for a grandchild under the age of 18 to establish a safety net when they become an adult. You can also use it for financial support of a dependent adult child or other relative. Gifting your house Be very careful when considering gifting your home or other property to your child or grandchild before you die. First, if you do this shortly before requiring long-term care, it could be seen as deprivation of assets to avoid paying for care. This could result in the forced sale of the home to recoup funds for your care. Second, if you gift a portion by adding a child to the title deeds as joint property owner, they could face a large Capital Gains Tax bill as the property increases in value over the time they are a joint owner. If you leave them the property after you die, CGT may not need to be paid if they sell it quickly, as it is only paid on the 'profit' i.e., the property value difference between the inheritance date and sale date. Finally, giving away some or all of your home puts you at risk of being forced out of your home. It can also leave you in a tricky tax situation if you continue to live there without paying market share rent, as it is considered a 'gift with reservation' and the house value is included in your estate valuation when you die. A gift with reservation doesn't come under the seven year rule, so could be applied ten, twenty or more years down the line. Consider paying directly If you want to help your grandchildren out now, rather than waiting to leave an inheritance, there are ways to help. For example, you could consider paying for your grandchild's university tuition or accommodation fees directly. Or, if they need support with things like buying their first home, you could help them buy their furniture or pay for contractors for renovations and redecorating. Some grandparents enjoy paying for family holidays to create memories together that their grandchildren may not be able to afford on their own. This is a good way to provide support to your grandchildren, while having control over what your 'living inheritance' is spent on. Taking these costs away from them helps them to save their own cash, so you're still providing them an opportunity for financial stability – without possibly landing them in hot water with the tax office later on. Some of the brands and websites we mention may be, or may have been, a partner of
North Wales Live
a day ago
- Business
- North Wales Live
First Minister's relief at welfare cuts U-turn but Plaid slam 'artificial intelligence' speech
The First Minister of Wales today spoke of her "relief" after planned welfare cuts were reversed by the UK Government and criticised the opposition. But Plaid Cymru insisted part of her speech could have been written by artificial intelligence. The political sparring came as Welsh Labour held its conference in Llandudno 's Venue Cymru. Outside the building farmers protested about Inheritance Tax changes among several other issues. Pro-Palestine and pro-Israeli supporters were also in the resort to promote their causes. The conference in Llandudno comes on the heels of Sir Keir's U-turn on welfare policy to avert a major backbench rebellion that will leave Chancellor Rachel Reeves facing a scramble to fill a potential hole in her budget this autumn. Join the North Wales Live Whatsapp community now First Minister Eluned Morgan MS welcomed fellow Labour Party member Prime Minister Sir Keir Starmer to the event. She said she was 'glad' the UK Government listened to her concerns and reversed planned welfare cuts. The decision will bring 'huge and welcome relief' to thousands in Wales, she added. Baroness Morgan also said she was not 'afraid to speak up when it matters. "I'm glad the UK Government is a listening government and they heard our concerns and changed their approach to welfare cuts,' she said. 'We were really concerned about the impact these changes could have on some of our poorest and most vulnerable communities, and we made that clear to our colleagues in Westminster. 'And I am really glad they listened because that decision brings huge and welcome relief to thousands of people in Wales who rely on this support to live with dignity.' However, Plaid Cymru branded part of Baroness Morgan's speech "vague", claiming it "could have been written by ChatGPT". A Plaid Cymru spokesperson said: "Eluned Morgan's speech was all slogan, no substance. "Her big announcement was that Wales should 'get ready for the AI revolution' - a line so vague and disconnected from reality, it could've been written by ChatGPT." Baroness Morgan had promised to modernise the NHS. But Plaid hit back: "She talked about making the NHS"fit for the 21st century", but Labour 's been running it for the entire 21st century so far, all 25 years of it. If it isn't fit by now, whose fault is that?" Plaid added: "Wales needs fresh ideas, practical solutions, and genuine ambition - not the hollow promises of a party that's run out of steam. It's time for new leadership with Plaid Cymru." As for Reform UK, the Prime Minister described leader Nigel Farage as a 'wolf in Wall Street clothing' who has 'no idea what he's talking about'. He claimed the Reform UK leader 'isn't interested in Wales' and has no viable plan for the blast furnaces at Port Talbot. While Baroness Morgan said: 'While Nigel Farage is in Port Talbot peddling fantasies about sending people's grandchildren down coal mines and reopening blast furnaces, we're dealing with the reality that they left behind, the scars of decades of Tory neglect, the the cost of industrial decline,' she said. 'We're not romanticizing the past. We're cleaning it up.' Meanwhile Pro-Palestine protesters gathered outside the Welsh Labour conference. A group of some 150 demonstrators waving Palestinian flags walked solemnly to the venue in Llandudno where they stood for a few minutes to the beat of a drum. A small group of pro-Israel protesters shouted 'free the hostages' and held signs saying 'free Gazans from Hamas'.
Scotsman
7 days ago
- Business
- Scotsman
Renewed interest in farm diversification
Expanding into renewables? Get the best advice, writes Henrietta Talbot Sign up to our Scotsman Money newsletter, covering all you need to know to help manage your money. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... The Royal Highland Show, which finished yesterday, provided an excellent opportunity for Davidson Chalmers Stewart to speak with farmers and landowners. As lawyers for business, we are deeply invested in understanding our clients' needs and aspirations. Attending events like the Show enables us to understand precisely the issues they face here and now, and hone our advice in light of that. Advertisement Hide Ad Advertisement Hide Ad At the Show, farming meets politics, commerce and community on an equal footing. But for all the tradition and pride on display, this year's conversations revealed a sector bracing for serious change. Henrietta Talbot can help farmers negotiate the transmission queue Continued uncertainties, including upcoming changes to Inheritance Tax and a shift in the farming subsidy framework, alongside typical challenges such as extreme weather and fluctuation in commodity prices, threaten the financial stability of many rural businesses. Diversification continues to act as a means to generate new income streams. Research by NFU Mutual last year found the number of UK farmers planning to diversify in the next five years has jumped from 3 per cent in 2023, to 17 per cent in 2024. It's a shift we continue to see at Davidson Chalmers Stewart with new and existing clients seeking advice on diversification. Whilst the projects we advise on can be varied in nature, by far the most sought-after route is renewables. Advertisement Hide Ad Advertisement Hide Ad With Scotland's geography, natural resources and climate ambition, renewable energy is a logical fit. Solar farms, battery energy storage, and onshore wind projects can provide long-term income and help landowners contribute to national net-zero goals. But the road to realising those projects is far from straightforward – and it's about to get tougher. A new UK-wide energy body, the National Energy System Operator (NESO), is reforming how new energy projects connect to the electricity grid. There are currently more than 3,000 projects waiting in the transmission queue, far more than the system can accommodate. Projects will be assessed and assigned a status based on their readiness and alignment with the UK's energy goals. An evidence submission window opens on 8 July, lasting until 29 July, after which the NESO will begin the task of reorganising the transmission connection queue. It's a deadline already putting pressure on landowners who may be interested in renewables but aren't yet fully prepared to proceed. Those with agreed contractual terms with a developer, may find if contract negotiations have stalled, their project will be potentially put on ice, terms renegotiated or even mothballed completely. Advertisement Hide Ad Advertisement Hide Ad It is important that landowners seek specialist legal advice and financial and project management counsel to make the call that's right for them. If progressing, they need to submit well considered plans that meet regulatory requirements, along with a solid financial plan. A landowner does not want to be locked into commitments that don't suit the land or the long-term goals of the business. A renewables project might not be the best fit for every landowner, but the wonderful thing about the sector is its adaptability and there are so many other diversification options open to explore. Allying extensive knowledge of the rural sector and the challenges it faces with deep understanding of what makes successful renewables schemes, we help clients navigate the regulatory framework of renewable developments including connection reform and contribute to a thorough and meaningful project response to ensure they can make the most of the opportunities available. This could not only have a real impact on helping achieve renewables targets, but also ensure the ongoing financial viability of their businesses.
The National
7 days ago
- Business
- The National
Free it from England's yoke and Scotland is laden with opportunity
Time and again, he, like many others in the SNP leadership, fails to provide an argument for why Scotland should be independent. In addition, and vitally, he fails to provide an explanation of the benefits of Scotland being independent. I am not going to pretend that control of Scotland's economy is the biggest reason for Scotland being independent. I genuinely do not think it is. However, to pretend that economics is not a matter of significance in this debate would be entirely incorrect. Having an independent Scotland with an economic policy designed to achieve the best outcomes for the people of Scotland is fundamental to the delivery of the best benefits for the people of the country and John Swinney didn't even scratch the surface of this issue. Let me touch on three reasons why Scotland does need control of its economy and can only get this by being independent. I will also mention a necessary condition for success. READ MORE: John Swinney calls for 'diplomatic solution' after US bombs Iran Firstly, Scotland does need to decide for itself what its economic priorities are. They are not the same as those of the rest of the UK. Scotland will not, for example, ever want to promote financial services in the way that the Westminster Parliament does, given that the latter lives in fear of the City of London. Scotland can see through all the problems that has created. In addition, Scotland not only believes in renewable energy, it also has the power to deliver it. In addition, it has ample water, and England does not. What is more, Scotland has great universities. With its own economic policy, aligned to these strengths, and to the social priorities of its people Scotland could be managed to deliver economic outcomes that could certainly be as good as, if not better than, those that are achieved now. They could also be much better than those England might achieve in the future, oppressed as it is by the dominance of the culture of the City. The burdens of wealth and inequality that it creates prevent any chance of real economic development in England and always will now. Secondly, to achieve this, Scotland does need control of its own tax policies. Scotland has always believed in progressive taxation in pursuit of greater equality. While it is integrated into the tax system of the UK, which is designed to promote inequality, achieving that goal is not possible. As my work has shown, this might not require a wealth tax in Scotland. Radical transformation of existing taxes –such as Capital Gains Tax, National Insurance, Inheritance Tax, the higher rates of Income Tax, Corporation Tax and VAT –could deliver substantial increases in tax revenue in Scotland without requiring the vast majority of the Scottish population to pay more. Additional burdens would fall on the wealthiest, large companies and tax cheats, and I assure you that there are still far too many of them. And Scotland need not be worried that the wealthy will leave if it does these things. If progressive taxation is linked to investment in the economy and the people of the country, then the evidence from Scandinavia and elsewhere is that wealth wants to come into a country, not leave it, because they want a part of the success. Thirdly, Scotland needs more control over its public services. Westminster-focused political parties appear, without exception, to now hate both government and government services, even though they claim to be desperate to control them, whilst wanting to destroy both. Scotland is fortunate in having some politicians who actually believe that the job of a Scottish government is to partner with the people of the country to provide the essential safety net required to help all those who need it, while supporting those suffering temporary misfortune, and providing opportunity for those who wish to learn, innovate and develop Scotland as a whole. A Scottish government that genuinely adds value to the country, which that of the UK does not, could be created and deliver something that has not been seen in the UK since 1979. The transformational possibilities are staggering, and yet John Swinney never made any reference to this. Finally, and I cannot avoid the issue, none of this would be possible if Scotland had a currency tied to the English pound and the fortunes of the City of London. It is that City which has dragged down the UK, imposing what is best described as a finance curse on everyone in the rest of the economy as they are forced to work to meet the rapacious demands of bankers and the finance industry. Leaving the City in charge of Scottish money and interest rates would, as a consequence, be ruinous for the newly independent Scotland's fortunes. As a result, a commitment to a Scottish currency from day one of independence will be essential. But if that were done and the above-noted policies were put in place, I suspect the currency in question would, within a short period of time, be worth more than the English pound. Scotland is a country laden with opportunity if only it could be rid of the yoke that England imposes upon it but SNP politicians appear to lack the courage to say so. I have no idea why, because the opportunity is glaringly apparent to me. But if they will not, it is time for others to lead the call for independence, because that is what Scotland requires if it is to ever realise its potential.
Daily Mirror
20-06-2025
- Business
- Daily Mirror
Millionaires may be eligible for Winter Fuel Payments in new rules
The Winter Fuel Payment U-turn could open up an unexpected loophole for wealthy retirees After facing severe backlash for cutting back Winter Fuel Payments shortly after winning the election last year, the Labour party has made a U-turn. Announcing new rules to means-test the seasonal benefit to assure vulnerable retirees are helped through the harshest months. To be eligible for the Winter Fuel Payment, which offers either £200 or £300 every winter to help cover heating costs, people over state pension age will need to have a taxable income of under £35,000 per year. Experts at Forbes Dawson warned: 'Although this may seem like a sensible approach, as many pensioners are asset-rich but have relatively low levels of income this could have unintended consequences and exclude many 'poor' people. 'Wealthy pensioners are generally in a unique position to control their level of taxable income on a year-to-year basis. Most pensioners will generally have some control over the amount of taxable income they extract from their pensions on an annual basis and many pensioners will have no 'income' and live off their built-up capital.' However, the experts added: 'We are not seriously suggesting that wealthy individuals will manipulate their income just to enjoy a £200 benefit, there will be cases where the very wealthy still qualify, while more deserving cases go without.' To break it down, the finance experts shared a fictional example of a retired NHS consultant called Dr Sam who has an estate worth £5million and makes specific moves with his money already in order to cut down a future Inheritance Tax bill. Including making loans to his Family Investment Company that sits outside his estate. As none of the shares are held by him directly, he doesn't pay tax on it and instead gets £200,000 annually as a repayment on his loan to the company. So while his general income is sitting at six-figures, his taxable income is zero so he will qualify under the new Winter Fuel Payment rules. In another fictional example, the money experts pointed out how people with less assets in retirement don't have as much control over their finances and might be excluded from the benefit. Retired teacher Doris uses a defined benefit public sector pension which is taxable income. She gets £40,000 a year from it, roughly £2,600 after tax, and with little money elsewhere she is reliant on nearly every penny so she can't cut it down. Because of her taxable income, she will not qualify for the benefit despite getting £160,000 less each year than Dr Sam. The new rules will make nine million more pensioners eligible for Winter Fuel Payments. And people can still opt out of receiving it but will need to do so before 15 September, 2025. Eligible people over state pension age will be receiving £200 between November and December 2025. Meanwhile those over the age of 80 who are eligible will receive £300.
