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What’s in the 2024 Spring Budget?


Against the backdrop of changing economic conditions and a forthcoming General Election, Chancellor Jeremy Hunt announced a series of measures in the 2024 Spring Budget. Here’s a rundown of some of the key announcements.

 

INFLATION DOWN, GROWTH SLIGHTLY UP

 

The Office for Budget Responsibility (OBR) has forecast that UK GDP will grow by 0.8% this year and 1.9% next year.

Inflation has receded, and markets are expecting a decline in interest rates accordingly.

However, output has stagnated, and there are reports that higher and rising levels of inactivity offset the impact and size of the UK workforce.

 

PENSIONS, SAVINGS & INVESTMENTS

 

Individuals will soon be able to access a new Great British ISA (GB ISA), that Hunt explains would “encourage more people to invest in UK assets”. This will give people an additional £5,000 to save alongside the existing £20,000 ISA allowance, but some in the industry are concerned this may add another layer of complexity to ISAs for consumers.

A British Savings Bond will be made available through National Savings and Investments (NSI), to help people “save for the long-term”, according to the Chancellor. It offers a guaranteed rate, fixed for three years, but the actual rate itself has yet to be announced.

The Chancellor once again mentioned that the ‘pension pot for life model’ is still being explored. This was first mentioned in the Autumn Statement in November 2023, and – at the time – we at Beacon wondered if the practicalities of such a scheme would be viable for consumers.

A major theme in the Chancellor’s statement was ensuring adequate investment in UK assets and businesses. To this end, new powers will be given to the Pensions Regulator and Financial Conduct Authority to judge performance on their returns, not just costs. Defined Contribution (DC) and local government pension funds will need to publicly disclose their level of UK and international equity investments.

The Government’s remaining shares in Natwest will be sold later this year, subject to market conditions.

 

TAXATION

 

National Insurance has been cut for the second Budget in a row, by 2p for workers – from 10% to 8%, following the previous cut in last year’s Autumn Statement,

Stamp Duty multiple dwelling relief has been abolished. This applies to people who are buying more than one dwelling, including those owning holiday lets.

Higher-rate Capital Gains Tax (CGT) on property will be reduced from 28% to 24%. The Chancellor remarked this would bring in more money, as more transactions would be covered. The lower rate of CGT remains in place.

For parents receiving Child Tax Credit, if either parent begins paying over £50,000, they have to start paying back 1% on each £100 they earn over £50,000. From April 2024, this threshold will increase to £60,000. The amount at which the tax credit is withdrawn entirely has been increased from £60,000 to £80,000. A reformed household model is set to be introduced in 2026.

The non-dom tax break for foreign residents within the UK will be abolished, to be replaced by a new scheme. New arrivals will not pay tax on foreign income and gains in their first four years within the UK.

Fuel duty will stay frozen for a further 12 months.

Alcohol duty will remain frozen until February 2025.

 

BUSINESSES

 

The VAT threshold for small businesses was increased from £85,000 to £90,000.

Full Expensing will soon apply to leased assets, as well as owned, as part of draft legislation the Chancellor announced. Last Autumn, the tax break had been applied to businesses investing in ‘plant and machinery’. This is something we at Beacon hoped would be included, in our pre-Budget article.

Small Businesses will continue to receive support from the post-pandemic Recovery Loan Scheme, which will receive a further £200mn.

 

FURTHER INTEREST IN CAMBRIDGE

 

For clients based near our base in Huntingdonshire, you may be interested to learn that a further £10mn will support transport and health infrastructure in Cambridge. The city continues to receive interest from the Government, which wants to see it as the world’s leading scientific powerhouse.

 

This summary was written on 6th March 2024. We will continue to monitor developments, but if you have any questions or concerns about your situation following the announcements, you can reach us on 01480 869 466 or email info@beaconwealth.co.uk.  

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What should be in this year’s Spring Budget?


With a General Election on the horizon, all eyes are focussed on what the forthcoming Spring Budget will contain. Tony Larkins, Managing Director of Beacon Wealth Management, reveals what he believes the Budget should consider at the Spring Budget announcement in March 2024.

The Spring Budget is always a guessing game on what it will contain, and who the winners and losers will be. With the economic climate as it is – the UK dipping into a technical recession at the end of 2023 (Office for National Statistics) – there are some key areas the Government should consider, to boost economic activity and support people’s personal finances.

A stamp duty holiday, to increase house sales and boost spending

Having another stamp duty holiday for 12 months would help stimulate housing sales and encourage people to add to the economy by spending money on decoration and renovation.

The UK housing market has slowed significantly – November 2023 saw a 22% fall in completed housing transactions compared to the previous year (ONS).

The UK is a nation of people who love their homes, and love home ownership. Making it easier for people to move would increase spending on decorations, renovations, extensions, and the VAT receipts from this spending would contribute positively to the economy.

Boost business spending and productivity with more tax allowances

Increasing tax allowances for business capital expenditure will encourage companies to spend more and improve productivity.

The full-expensing policy for businesses announced in April 2023 is only due to last until 2026. Ending it then would have little or no long-run effect on the economy (Institute for Fiscal Studies). The Government should follow through on its desire to make this policy permanent.

The current policy also biases towards purchases of plant and machinery, at the expense of other assets – extending this policy to other types of investment would be welcome.

The CBI has also called for extending business capital allowances to hired or leased assets, not just owned ones. This would give more money back to small businesses, many of whom find it more effective to rent assets than to buy them outright.

Increase R&D spending to promote innovative, sustainable growth

The 2023 Spring budget announced £3.5billion in funding towards making the UK a science and technology superpower (GOV.UK), as part of its wider aim to invest £20bn in R&D in 2024/25 (GOV.UK). The Government also lowered the threshold for how businesses qualified as R&D intensive from 40% to 30% of total expenditure. This ensured another 5,000 SMEs qualified for R&D tax relief.

Continuing this trend in funding would help businesses innovate, grow sustainably and contribute to growth in the UK economy.

Support an ageing workforce with business National Insurance relief

People who work past state retirement age no longer have to pay Class 1 or Class 2 National Insurance (NICs), but employers, however, still have to pay their contributions.

Removing this requirement for employers would bring parity between employee and employer, encourage businesses to take on older workers and, subsequently, this would increase the number of people working past state retirement age and contributing to the economy.

Inheritance Tax: Remove or Reform

Inheritance Tax has always been seen as unpopular – a move on this would be no doubt resonate with voters ahead of a General Election.

Inheritance Tax should either be abolished, or at least changed so that the main residence is not subject to the tax, regardless of value, and remove assets inherited. With house prices increasing the way they are, Inheritance Tax could be payable on a 1-bedroom flat in London, but not a 4-bedroom house somewhere else in the UK! And why should inherited assets cause you to pay tax when the assets have already been taken into account for the deceased.

The Government has said that any movement on Inheritance Tax is just speculation. But abolition or reform by removing a primary residence from the tax calculation could be a popular policy for our nation of homeowners.

At Beacon Wealth Management, we help people and businesses in Cambridgeshire and the East Midlands manage their finances and plan for their financial futures. We always keep an eye on the latest developments in UK policy to help our clients navigate the ever-changing economic landscape.

For a free, informal chat with one of their experts, you can contact us on 01480 869466 or info@beaconwealth.co.uk, or visit their website at www.beaconwm.co.uk.

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Raising money for the Angels Foundation


We’re delighted to say our team raised £1,100 for our Charity of the Year, The Angels Foundation, helping families across Huntingdonshire.

A huge thank you to our Social Committee for their fundraising efforts over 2023!

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Preparing for Tax Year End: Maximise Your Savings


With taxation rates in the UK being so high, it’s important to take advantage of the many allowances you could be eligible for ahead of tax year end.

There are straightforward steps you can take to make sure you’re not overpaying more than you should be:

Personal Savings Allowance – the impact of higher interest

For investors, 2023 ended up being a good year, with real growth happening in November and December. With interest rates going up, those with a decent amount in the bank may now see a tax bill.

Through the Personal Savings Allowance, the first £1000 (or £500 if you’re a higher-rate taxpayer) of any income from interest is tax-free. That means any interest income over that threshold is subject to tax.

For example, if you are a basic tax rate payer with £20,000 in a savings account at a 5% interest rate, this gives you an annual interest income of £1000. Your entire Personal Savings Allowance has been used up. A higher interest rate may increase your income interest, but may also increase your tax bill.

Dividends: Reduction in allowances

The Dividends Allowance – the amount you can receive in dividends before paying tax – has reduced for this financial year, from £2000 to just £1000. It will reduce again to £500 in the 2024-25 tax year. This means that you could be paying more tax on your dividends.

However, dividend income from assets held in ISAs continue to remain tax-free.

Capital Gains Tax

The Capital Gains Tax Allowance (CGT) for 2023-24 is £6000, a significant reduction from £12,300 in the previous tax year. It is paid on the gain when you sell, for example, a second home, or a personal possession over £6000 that isn’t a car.

However, if you held funds in an ISA, you don’t pay Capital Gains Tax on the gains you make.

Furthermore, the amount of CGT you pay is linked to your income. Increasing pension contributions reduces your taxable income, which may change your tax band and the rate of Capital Gains Tax you are charged.

Rent a Room Relief

If you rent out a room in your home, you can earn up to £7,500 per year tax-free (halved if you share the income with a partner, for example).

This exemption is automatic – if you don’t earn above this threshold, you won’t need to do anything.

ISA Allowance

Using an Individual Savings Account (ISA), you can save funds and not need to pay tax on cash, interest, income or capital gains from investments, as well as offering flexible access to your savings.

You can save up to £20,000 per year within an ISA tax-free. However, if you don’t use up your ISA allowance by the end of each tax year, it is gone, and can’t be carried forward.

How pension contributions can provide tax relief

The examples above demonstrate some tax implications you may face. However, you can benefit from tax relief to help offset this via your pension. This kind of tax relief exists because the government wants to incentivise people to save for their retirement.

By paying into your pension, you can help reduce the amount of tax you pay, increase your savings for the future and ensure you don’t lose certain entitlements.

If you earn over £100,000, your tax-free Personal Allowance starts to taper, and reaches zero if your income exceeds £125,140. However, by paying more of your salary into a pension, your final amount of adjusted net income is reduced. If it is reduced to under £100,000, you maintain your Personal Allowance.

Increasing your pension contributions can also ensure you don’t lose out on certain entitlements. For example, if you earn over £50,000, the amount of Child Benefit entitlement you receive reduces in the form of a ‘tax charge’. By reducing your net income through pension contributions to under £50,000, this charge will be avoided.

The level of tax relief available varies depending on how your pension works, or the rate of income tax you pay. It’s very important to ensure your pension is set up correctly, and that you are aware of any restrictions in place. A Chartered financial planner can help you with this.

Conclusion

There are many more forms of tax to be mindful of in the UK, and if you ask me, it’s far more complicated than it needs to be.

If a tax is due, there are allowances and reliefs you can take advantage of to mitigate your final bill. I would also recommend reviewing if your funds should be shared with a spouse or partner, or remain in the individual’s name – a financial planner can support you with these decisions.

If you find yourself paying a tax, stop and think: could some or all of it be avoided?

If you would like to speak with one of our pension experts, message us or call us on 01480 869466 for a free initial, no obligation chat.

Future fees may apply. Registered and regulated by the FCA No. 526604.

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Letters to Santa 2023


Are you looking forward to Christmas? Do you or a family member want to write a letter to Santa?

Our friends, the Elves of the North Pole, have left a postbox at our Kimbolton office for you to post your letters to Santa. All you need to do is:

  • Download and print the ‘Letter to Santa’ template here >
  • Write your letter – don’t forget to include your return address!
  • Post it to Santa at the postbox location at: Beacon Wealth Management, The Old Chapel, Thrapston Road, Kimbolton, PE28 0HW
  • The Elves will collect your letter and deliver it straight to Santa! You don’t need a stamp!
  • You’ll then receive your reply from Santa in the post.

Hurry though, the postbox is only here until Friday 15th December 2023– the Elves will be busy helping Santa after that date!

Download the Letter to Santa Template >

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Chitty Chitty Bang Bang at Priory Centre, St Neots


At Beacon, we are proud supporters of the arts and recently supported a production of Chitty Chitty Bang Bang by VAMPS, an amateur dramatic society based in St Neots, running from 9-12 November 2023. Formed in 1961, the group stages a popular musical or variety show each Spring and Autumn, and is a staple of the local arts scene.

Tony Larkins – MD of Beacon Wealth Management – test drives Chitty Chitty Bang Bang in St Neots city centre!

 

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Charity Quiz for The Property Angels Foundation


We recently hosted a Charity Quiz and Raffle in aid of the The Property Angels Foundation, our Charity of the Year for 2023. The evening raised a total of £764, which will go towards the charity’s vital work supporting families across Huntingdonshire.
Congratulations to the quiz winners and to all those who won raffle prizes!
A big thank you is in order for to The Anchor Pub and Restaurant for hosting the night, and another big thank you and to all the businesses that donated wonderful raffle prizes!
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Kimbolton Fireworks 2023


Fireworks at Kimbolton Castle 2023

We were very proud to once again sponsor the fantastic annual Fireworks display at Kimbolton Castle, organised by the Kimbolton School Parents Association.

Each and every year this display brings over 9,000 people to Kimbolton to enjoy one of the very best displays in the region by the brilliant Titanium Fireworks, who themselves have ties to Kimbolton.

Congratulations and well done Lily, our competition winner in collaboration with Black Cat Radio, who won the chance to go up on stage and start the display!

Thank you again to all the teams who worked so hard to put the night together, and to Funk Odyssey for their fantastic performance too.

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Beacon has been selected for the Top 100 for New Model Adviser 2023


We are very proud to announce that Beacon Wealth Management has been honoured with the Citywire New Model Adviser Top 100 award for 2023. This marks the eleventh consecutive time we have received this recognition, and is testament to the hard work of our staff and the care we take with our clients.

“We want to highlight how some of the best firms in the country are thinking about offering value to clients,” explained Charles Walmsley, Editor of Citywire. “Whether it is changes to fees and disclosure in light of the consumer duty or the adoption of artificial intelligence, all these firms have interesting stories about how they are delivering financial advice in 2023.”

Citywire said of Beacon Wealth Management:

“Like all advice businesses, Beacon Wealth Management has been grappling with the FCA’s consumer duty this year. The firm has introduced three new service levels, with fresh terms for each one. In order to improve and confirm client understanding, the firm has changed its suitability reports; a new feature checks that clients understand the fees they pay and the service they can expect.

The firm, which is co-owned by managing director Tony Larkins and his wife Karen, plays an active role in the local community. As well as sponsoring events including Kimbolton’s fireworks and a local cricket match, Beacon raised £11,492 for Sue Ryder St John’s Hospice.”

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What Defines You?


Your upbringing and circumstances are not what define you. It’s your choices and the decisions you make that define who you are.

There are circumstances early on in life that shape you, from where you grow up and go to school, to the friends, partners, further education, and jobs you have that shape you in later life.
Life may not always be easy but each action, reaction, or non-action helps to define you as the person you are now.
Your actions and circumstances have got you this far, but where will life take you in the future?

When planning for your retirement, just like the rest of your life, it’s determined by a series of decisions and actions. Some things will be out of your control. By the time you retire, the State Income amount will likely not be enough for what you need.

Therefore, you’ll need to take action to secure the pension fund that suits your lifestyle, whether that be from pension contributions, investment decisions, savings, or property portfolios. You must also decide on things such as long-term care costs, your Will, Power of Attorney, and Inheritance Tax planning (if required).

Preparing for the future isn’t something you have to do alone, however. Our expert financial planners have the most up-to-date advice to create a bespoke plan tailored to your needs now, and what you want for your future.

At Beacon, we work around you with virtual or face-to-face meetings, whichever suits you best. Plus, you can access your plan every step of the way using our online portal.
Whether you want to travel the world or finally sit back and relax, knowing that your loved ones are taken care of, the perfect plan is waiting for you.
Start planning for your retirement now, so that you can focus on living the life you want and being the person you want to be.

If you would like to speak with one of our pension experts, please call us on 01480 869466 For a free initial, no obligation chat.

Future fees may apply.

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