At the time of writing this article, I have just read the Chancellor’s announcement of spending cuts (with the removal of the Winter Fuel Allowance for most pensioners), while also promising some large spending increases.
Put simply, the announced cuts will not be sufficient to cover the increases.
Taxes will need to rise.
Labour already committed, during the election campaign, not to increase Income Tax, National Insurance, or VAT, leaving Capital Gains Tax and Inheritance Tax in the firing line.
The next Budget, on 30th October 2024, will provide the details on which taxes will rise.
At the moment, the smart money seems to be on an increase in Inheritance Tax.
That increase could come from making pension policies subject to IHT, reducing the Nil Rate Band (from the current maximum of £1 million), or even increasing the tax rate (currently 40%).
Time will tell.
So, what can you do now to prepare for any changes?
Check the value of your estate
Make sure you know what is in your estate and what it is worth.
This includes property, savings, investments, life insurance, pensions, and any share in a business.
I recommend asking a local estate agent to value any property you own, as guesswork is unhelpful, and Zoopla can be unreliable.
Check what happens to your pension when you die
If you are not absolutely sure, do contact your pension provider or IFA to find out.
Your Will does not determine who inherits your pension.
If pensions become subject to IHT, considerable complications are likely if your pension does not pass to the same beneficiaries as the rest of your estate.
Book a professional review of your Will
Dust off your copy of your Will and arrange for it to be professionally reviewed by a solicitor.
Already, old Wills (especially those made before 9 October 2007) can increase the IHT payable on your estate, depending on what technical clauses are included in it.
Budget changes could make the situation even worse.
If you do not have a Will, make one
If you are compos mentis, there is really no excuse for not having a Will.
No Will means that you have no choice about who inherits your estate, which can also increase the tax bill on your death.
At Monan Gozzett LLP, we offer a free appointment to professionally review existing Wills, and a free initial appointment to discuss making a Will.
These meetings can take place in our Arundel office (1 Tarrant Street), at your home, or as a video call (Teams, Zoom, or WhatsApp).
To arrange an appointment, please contact the Private Client team at our Arundel office on 01903 927055, or email me: ssampson@monangozzett.com
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