Making strategic use of your allowances before the deadline could reduce your tax bill, protect your wealth, and strengthen your long-term financial plan.

Here are the key opportunities to consider before 5 April 2026.

1. ISA Allowance – £20,000

You can contribute up to £20,000 across your ISAs in 2025/26.

ISAs remain one of the most tax-efficient wrappers available:

• No Income Tax on interest
• No Capital Gains Tax on investment growth
• No further tax on withdrawals

There are several types available, including Cash ISAs, Stocks and Shares ISAs, Lifetime ISAs, and Innovative Finance ISAs.

From April 2027, changes will limit how much under-65s can contribute to Cash ISAs. Planning ahead may help you maximise flexibility while current rules apply.

2. Junior ISA Allowance – £9,000

If you’re saving for a child or grandchild, you can contribute £9,000 per child in 2025/26.

Growth is free from Income Tax and Capital Gains Tax, and funds become accessible when the child turns 18.

If your child has a Child Trust Fund, you may wish to review whether transferring to a Junior ISA would be beneficial.

3. Dividend Allowance – £500

If you receive dividends outside of an ISA, you can earn £500 tax-free in 2025/26.

Dividend tax rates are set to rise from April 2026 for basic and higher-rate taxpayers. This makes reviewing dividend strategy particularly important before the tax year ends.

4. Capital Gains Tax Annual Exempt Amount – £3,000

When selling investments outside tax-efficient wrappers, you can realise gains of up to £3,000 before CGT applies.

The allowance cannot be carried forward. Strategic disposals before 5 April may reduce future tax liabilities.

Current CGT rates are:

• 18% (lower rate)
• 24% (higher rate)

5. Marriage Allowance – Transfer £1,260

If one spouse or civil partner earns below the Personal Allowance (£12,570), they may transfer £1,260 of unused allowance to their partner.

This could reduce your tax bill by up to £252 in 2025/26.

You can also backdate claims for up to four years — but the deadline to claim for 2021/22 is 5 April 2026.

6. Pension Annual Allowance – £60,000

The pension Annual Allowance for 2025/26 is £60,000.

Contributions benefit from tax relief, and you may be able to carry forward unused allowance from the previous three tax years.

However, higher earners and those who have flexibly accessed pensions may face reduced allowances.

With pensions offering powerful tax advantages, reviewing contributions before year-end can be highly valuable.

7. Inheritance Tax Annual Exemption – £3,000

You can gift £3,000 per tax year without it forming part of your estate for Inheritance Tax purposes.

Couples may gift £6,000, and if last year’s exemption was unused, potentially £12,000.

Early estate planning can significantly reduce a future Inheritance Tax liability.

Why planning now matters

Many allowances are “use it or lose it.” With tax thresholds frozen and some tax rates increasing, proactive planning is more important than ever.

Rather than rushing at the end of the tax year, building a structured financial plan can help you:

• Reduce unnecessary tax
• Improve long-term investment growth
• Protect your estate
• Align allowances with your goals

Download the full guide

This article highlights just some of the tax opportunities available before the end of the 2025/26 tax year.

To explore all 7 key allowances in detail, including important rule changes and planning considerations, download our full guide:

“7 Key Allowances You Might Want to Use Before the End of the 2025/26 Tax Year.”

If you would like personalised advice on how these allowances fit into your financial plan, please contact Innes Reid.

Talk to us

If you are new to financial planning and have any questions about your tax allowances do not hesitate to contact our team. We provide a free initial meeting worth up to £300 with one of our trusted, independent financial planners.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

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Please note: This article is for general information only and does not constitute financial
advice, which should be based on your individual circumstances. The information is
aimed at individuals only.

All information is based on our current understanding of legislation and correct at the
time of writing (January 2026), and is subject to change in the future.
The Financial Conduct Authority does not regulate tax planning.

The post 7 Allowances to Use Before 5 April 2026 appeared first on Innes Reid.

Last year, in her maiden Budget, the Chancellor sought to balance the public finances with tax rises to cover a reported £22 billion black hole.

This year, Reeves arguably faced an even more difficult landscape. In turn, she has announced an estimated £26 billion of tax rises by 2029/30.

The Chancellor had to start her speech, however, by acknowledging the “deeply disappointing” and “serious error” of the Budget announcements being released early by the Office for Budget Responsibility (OBR).

It’s also notable how many predictions ultimately proved to be wide of the mark.

Now that we know exactly what’s included, it is important to understand the Autumn Budget changes and how they could affect you.

The headlines regarding GDP, national debt, and inflation

The Chancellor says the government’s plans will reduce borrowing more over the rest of this parliament than any country in the G7.

GDP is expected to grow by 1.5% in 2025, higher than the OBR’s 1% forecast from earlier this year. In subsequent years, the estimations are as follows:

• In 2026, the economy is forecast to grow by 1.4%, below the previous forecast of 1.9%.
• In 2027, GDP is forecast to expand by 1.6%, falling short of March’s estimate of 1.8%.
• In 2028, GDP is estimated to rise by 1.5%. In March of this year, the OBR said this figure would be 1.7%.
• In 2029, the economy will expand by 1.5%, again falling short of the previous estimate of 1.8%.

Due to weaker underlying productivity growth, the OBR estimates that tax receipts will be £16 billion lower in 2029/30 than initially forecast in March 2025.

Average inflation is expected to fall over the next three years.

• In 2025: 3.5%, an increase of 0.2% from the OBR’s original forecast.
• In 2026: 2.5%, up from the OBR’s 2.1% forecast from March.
• In 2027: 2%.

National debt will stand at £2.6 trillion this year. £1 in every £10 the government spends is on debt interest.

Tax threshold freezes extended until 2031

The Labour manifesto promised not to increase Income Tax or National Insurance (NI), and despite pre-Budget speculation, the government has kept to that promise in this Autumn Budget.

However, the Chancellor did announce that the Income Tax thresholds will remain frozen for a further three years beyond the previous 2028 freeze, staying where they are until April 2031. This move will raise £8 billion for the government. Similarly, the Inheritance Tax (IHT) threshold freeze is extended from 2030 to 2031.

While this will not increase your Income Tax or IHT bills directly, this fiscal drag means more of your income and wealth may be exposed to tax over time.

The government is also upholding its commitment to bringing pension pots into the scope of IHT from April 2027, and reforms to relief for business and agricultural assets from April 2026.

The tax rates on dividends, savings, and property income will rise by two percentage points 

Tax rates are set to rise for dividends, savings, and property income.

• Dividends: From April 2026, ordinary and upper rates of tax on dividend income will rise by two percentage points to 10.75% and 35.75% respectively. There is no change to the additional rate, which will remain at 39.35%.

• Property and savings: From April 2027, the rate of tax on property and savings income will increase by two percentage points across all tax bands to 22%, 42%, and 47% respectively.

The government confirmed that, even after these reforms, 90% of taxpayers will still pay no tax on their savings. However, these changes are set to impact business owners and landlords.

The Chancellor says these increases will raise £2.2 billion in 2029/30.

The ISA allowance will be reformed for under-65s, and some allowances have been frozen

The Chancellor announced that from April 2027, the Individual Savings Account (ISA) allowance will change for under-65s.

As it stands, adults can contribute £20,000 across their ISAs, including Cash ISAs and Stocks and Shares ISAs, each tax year.

From April 2027, £8,000 of this allowance will be reserved exclusively for investments, leaving an available £12,000 that savers can pay into their non-investment accounts, such as Cash ISAs.

Savers over the age of 65 will continue to be able to save up to £20,000 in a Cash ISA each year.

The allowances for Junior ISAs and Lifetime ISAs are frozen until April 2031 at £9,000 and £4,000 a year, respectively.

Salary sacrifice on pension contributions to be capped at £2,000

The Chancellor put a cap on NI-efficient pension contributions made under salary sacrifice.

Salary sacrifice schemes cost the government £2.8 billion in 2016/17, but this figure was set to triple to £8 billion by 2030/31.

The government will charge employer and employee National Insurance contributions (NICs) on pension contributions above £2,000 a year made via salary sacrifice. This will take effect from 6 April 2029.

The Chancellor says that many of those on low and middle incomes will be able to continue using salary sacrifice as normal, while high earners can expect to pay increased NI.

New “mansion tax” on high-value properties

The Chancellor announced the much-speculated “mansion tax” that will affect the top 1% of properties.

The new property surcharge will be paid alongside Council Tax.

There will be four price bands starting with £2,500 for a property valued between £2 million and £2.5 million. For properties valued more than £5 million, the levy will be £7,500.

The measure is estimated to raise £400 million by 2031.

Welfare reforms expected to increase by 2029/30

The BBC reported that changes to the government’s previously announced winter fuel payments and health-related benefits will cost £7 billion in 2029/30.

In addition, Reeves revealed she would remove the two-child benefit cap. This will cost £3 billion by 2029/30.

State Pension: Removal of overseas access to Class 2 National Insurance contributions and committing to the triple lock 

As a result of a loophole in the Class 2 voluntary NICs regime, overseas individuals with a limited connection to the UK can build a State Pension entitlement through cheaper rates.

The government is looking to end this by removing access to the cheapest Class 2 NICs for these individuals. Additionally, it will increase the initial residency or contribution requirements for those living outside the UK.

The Chancellor also confirmed the government’s commitment to the triple lock. From April 2026, this will increase the basic and new State Pension by 4.8%, offering up to an additional £575 per year to pensioners, depending on their entitlement.

A range of significant changes for business owners

In addition to the Dividend Tax increase, the Chancellor announced a range of changes that could affect business owners, including:

• Increases to both the National Living Wage (NLW) and National Minimum Wage (NMW). From 1 April 2026, the NLW paid to workers aged 21 and over will rise by 4.1%, from £12.21 to £12.71 an hour, increasing annual income by approximately £900 a year for full-time employees. For those aged 18 to 20, the NMW will rise by 8.5% from £10 to £10.85 an hour, equivalent to around £1,500 a year if working full-time. For 16- and 17-year-olds, and those on apprenticeships, the NMW will rise by 6%, going from £7.55 to £8 an hour.
• Listing Relief from Stamp Duty Reserve Tax for some businesses. The Chancellor said this will “make it easier for entrepreneurs to start, scale, and stay in the UK”.
• Reduced Capital Gains Tax (CGT) relief for Employee Ownership Trusts (EOTs). When a business is sold to an EOT, CGT relief will fall from 100% to 50% starting from November 2025. This will raise £0.9 billion from 2027/28 onwards.
• Fully funded apprenticeships for under-25s. This will make them effectively free for small- and medium-sized businesses (SMEs) from April 2026.
• Lower business rates for more than 750,000 retail, hospitality, and leisure properties. That move will be funded through higher rates on properties worth £500,000 or more, such as warehouses used by online retail.
• Customs duty will apply to parcels of any value from March 2029 at the latest. There is an existing exemption for parcels worth less than £135, favouring large-scale importers.

Other announcements that may affect you

• Household energy bills will fall. Reeves is scrapping the Energy Company Obligation (ECO) scheme, saying that on average, families will save £150 a year in 2026.
• A new tax on electric vehicles. The Electric Vehicle Excise Duty (eVED) will come into effect in 2028 and equal 3p per mile for battery electric cars and 1.5p per mile for plug-in hybrids. The rate per mile will increase annually in line with the CPI.
• Fuel duty will be frozen until September 2026. In addition, a new “fuel finder” will help drivers find the cheapest fuel, saving the average household £40 a year.
• Reducing the levy threshold on soft drinks. From 1 January 2028, the sugar tax will also be applied to milk-based drinks, including bottled milkshakes and lattes.
• A spousal exemption for agricultural and business asset IHT relief. Unused combined business and agricultural asset IHT relief will become transferable between spouses and civil partners.
• Tobacco Duty and Alcohol Duty will both be uprated. Tobacco Duty will be uprated as announced last year, and Alcohol Duty will now rise with inflation.
• Rising taxes on online gambling. From April 2026, Remote Gaming Duty will increase by 21% to 40%. A new Remote Betting Rate set at 25% will be introduced from April 2027, though horse race betting will be exempt from the changes.

Other key thresholds that remain the same

More broadly, the Chancellor made no mention of other key thresholds that will remain the same. These include:

• The pension Annual Allowance
• Stamp Duty Land Tax for residential properties
• The headline rates of Income Tax, NI, and VAT, as outlined in the government’s election manifesto.

Talk to us.

If you have any questions regarding the Autumn Budget and how it may affect your financial plan, please get in touch. We provide a free one-hour consultation with an independent financial planner.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

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Please note

All information is from the Budget documents on this page.

The content of this Autumn Budget summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

While we believe this interpretation to be correct, it cannot be guaranteed, and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.

The post Autumn Budget 2025 update appeared first on Innes Reid.

According to a report in the Telegraph, between July and November 2024, CGT generated more than £1 billion for the government – more than a £200 million increase when compared to the same period in 2023.

The rise in CGT has been associated with uncertainty in the lead-up to the government’s Autumn Budget. Speculation that tax rates would rise sharply, and tax breaks would be cut, led to some investors, who worried they might face a much larger tax bill if they delayed decisions, selling assets.

As CGT is a tax that’s paid on the profit you make when selling certain assets, this panic increased the amount of CGT collected.

While the Labour government did unveil changes to CGT during the Autumn Budget, including a rise in tax rates, they weren’t as drastic as some investors feared. Following the Budget on 30 October 2024:

• The basic rate of CGT increased from 10% to 18%.
• The higher rate of CGT increased from 20% to 24%.

The increase could mean the amount of CGT collectively paid continues to rise. Indeed, according to the Office for Budget Responsibility, the changes could increase CGT revenue by around £1 billion by 2029/30. However, it also assigned the figure a “high” uncertainty rating as it can be difficult to judge behavioural responses.

If you could face a CGT bill in the future, read on to discover some practical steps you might take to reduce your liability.

1. Consider your overall tax position

Rather than looking at your CGT liability in isolation, reviewing it alongside your overall tax position and wider financial plan could be useful.

For example, if you’re a basic-rate taxpayer and the profits you make when selling an asset are below the higher-rate Income Tax threshold (£50,271 in 2024/25) when added to your other income, you could pay the lower CGT rate. So, if your other sources of income are flexible, you might wait to sell assets until you’d potentially benefit from the basic rate of CGT.

If you plan to delay selling assets, keep in mind the value of them could change.

2. Use your Capital Gains Tax exemption

Each tax year, you can make a certain amount of profit before CGT is due. This is known as the “Annual Exempt Amount”.

In 2024/25, the Annual Exempt Amount is £3,000 for individuals. Crucially, you cannot carry this exemption forward into a new tax year if you don’t use it.

Spreading asset disposals across multiple tax years to use the Annual Exempt Amount could help you reduce your overall tax bill.

3. Use tax-efficient wrappers when investing

If you could face a CGT bill when you sell investments, you might want to consider using tax-efficient wrappers, such as ISAs and pensions.

In 2024/25, you can deposit up to £20,000 into ISAs. If you choose to invest in a Stocks and Shares ISA, the returns you make won’t be liable for CGT.

If you’re investing for the long term, a pension could also be suitable. Again, returns from investments held in a pension are not liable for CGT. In 2024/25, you can usually add up to £60,000 (your “Annual Allowance”) to your pension before you could face additional tax charges.

However, the amount you can tax-efficiently add to a pension could be as low as £10,000 if you’ve already taken a flexible income from your pension or if your adjusted income is more than £260,000 a year. If you’d like to understand your pension Annual Allowance, please get in touch.

Remember, you cannot normally access the money held in a pension until you’re 55 (rising to 57 in 2028). So, it’s important to weigh up your reason for investing and your wider financial circumstances before you increase pension contributions.

4. Pass assets to your spouse or civil partner

You can usually transfer ownership of assets to your spouse or civil partner without facing a tax bill. As many tax allowances and exemptions are individual, passing assets to your partner could be useful.

For instance, if you’ve already used your Annual Exempt Amount in the current tax year, you might transfer ownership of an asset to your partner before you dispose of it to use theirs. You might also do this if your partner would benefit from the lower CGT rate.

5. Offset your losses

Making a loss when selling assets can be disappointing, but it could be used to reduce a CGT bill.

You can often offset losses against the gains you’ve made, which may lead to a lower CGT bill and potentially mean you pay the lower CGT rate. In some cases, you may also carry losses forward to offset future profits.

If you plan to offset losses against your gains, it’s important to keep accurate records. You will also need to register losses with HMRC by completing a tax return.

6. Work with a financial planner

Making your CGT liability part of your wider financial plan could help you identify steps you might take to reduce a potential bill in a way that aligns with your long-term goals. Please contact us to arrange a meeting and discover how we may work together.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The post How to reduce your Capital Gains Tax bill in 2025 appeared first on Innes Reid.

1. ISA allowance

ISAs provide a popular way to tax-efficiently save and invest. Indeed, the latest government figures show in 2022/23, 12.4 million ISAs were subscribed to with around £71.6 billion being collectively added to accounts.

For the 2024/25 tax year, you can add up to £20,000 to ISAs. If you hold money in a Cash ISA, the interest you receive wouldn’t be liable for Income Tax. Similarly, if you invest through a Stocks and Shares ISA, any returns generated aren’t liable for Capital Gains Tax (CGT).

If you don’t use your ISA allowance before the tax year ends, you’ll lose it. So, it could be worthwhile reviewing your saving and investing goals now.

Before you place money into an ISA, it’s often a good idea to consider your goal. For short-term goals, a Cash ISA might be suitable for your needs. On the other hand, if you’re putting money away for a goal that’s more than five years away, you may want to consider if you could benefit from investing.

In addition, if you’re aged between 18 and 39, you could open a Lifetime ISA (LISA). In the 2024/25 tax year, you can add up to £4,000 to a LISA and receive a 25% government bonus. The £4,000 LISA allowance counts towards your overall £20,000 ISA allowance.

However, if you withdraw money from a LISA before the age of 60 for a purpose other than buying your first home, you’d pay a 25% penalty. As a result, a LISA is often most suitable for those saving to get on the property ladder.

2. Dividend Allowance

If you’re a business owner or hold shares in some companies, you might receive dividends.

You don’t pay tax on dividends that fall within your Personal Allowance, which is £12,570 in 2024/25. In addition, you can receive up to £500 in dividends before Dividend Tax is due under your Dividend Allowance. So, dividends could offer a valuable way to boost your income without increasing your tax liability.

You cannot carry forward unused Dividend Allowance.

Even if your dividends could exceed the allowance, the tax rate you pay could be lower than receiving a comparable amount that was liable for Income Tax. The rate of Dividend Tax you pay depends on your Income Tax band. In 2024/25, the rates are:

• Basic rate: 8.75%
• Higher rate: 33.75%
• Additional rate: 39.35%

So, making dividends part of your financial plan could reduce your overall tax bill even if you’re liable for Dividend Tax.

3. Capital Gains Tax Annual Exempt Amount

Chancellor Rachel Reeves made several changes to CGT in the Autumn Budget, including increasing the main rates. Consequently, you could find your tax liability is higher than expected when you make a profit when you dispose of some assets.

Indeed, the Office for Budget Responsibility estimates CGT could raise £15.2 billion in 2024/25, which may then increase to £23.5 billion in 2028/29.

From 30 October 2024, the standard rates of CGT are:

• 24% if you’re a higher- or additional-rate taxpayer
• 18% if you’re a basic-rate taxpayer and the gains fall within the basic-rate Income Tax band.

Importantly, the Annual Exempt Amount means you can make profits of up to £3,000 in 2024/25 before CGT is due. So, if you plan to dispose of assets, timing the decision to make use of this exemption could be valuable.

You cannot carry forward the Annual Exempt Amount into the new tax year if you don’t use it.

4. Pension Annual Allowance

Pensions provide a tax-efficient way to save for your retirement as contributions benefit from tax relief and the interest or investment returns generated are tax-free.

In 2024/25, the Pension Annual Allowance is £60,000 – this is the amount you can tax-efficiently add to your pension in a single tax year, so you might also need to consider employer contributions and those made by other third parties. However, you can only claim tax relief on up to 100% of your annual earnings, or £2,880 if you’re a non-taxpayer.

There are two reasons why your Annual Allowance may be lower.

• If your adjusted income is more than £260,000 and your threshold income is more than £200,000, the allowance will taper. For every £2 your income exceeds the adjusted income threshold, your Annual Allowance will fall by £1. The tapering stops at £360,000, so everyone retains an allowance of £10,000.
• If you’ve already flexibly accessed your pension, the Money Purchase Annual Allowance may affect you. This reduces the amount you can tax-efficiently add to your pension to £10,000.

You can carry your Annual Allowance forward for up to three tax years. So, you have until 5 April 2025 to use any unused allowance from 2021/22.

5. Inheritance Tax annual exemption

Government figures suggest Inheritance Tax (IHT) bills are on the rise. Indeed, IHT tax receipts between April 2024 and October 2024 were £5 billion – around £500 million higher than the same period last year.

If your estate could be liable for IHT when you die, passing on wealth during your lifetime could be a valuable way to reduce a potential bill.

However, not all gifts are considered immediately outside of your estate for IHT purposes. Some may be included in your estate for up to seven years, which are known as “potentially exempt transfers”.

So, using allowances and exemptions that enable you to pass gifts to your loved ones without worrying about IHT might be an important part of your estate plan.

In 2024/25, the annual exemption means you can pass on £3,000 without worrying about IHT. You can carry forward your annual gifting exemption from the previous tax year, so you could gift up to £6,000 in a single tax year and have it fall immediately outside your estate.

There are often other allowances or ways you could reduce your estate’s potential IHT bill. Please contact us to talk about steps you may take.

Get in touch to discuss 5 useful allowances and exemptions that will reset at the end of the tax year

If you’d like to talk about which allowances and exemptions you may want to use to reduce your tax bill in 2024/25, please get in touch. We’ll work with you to help you understand which steps could be right for your circumstances and aspirations.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate tax planning, Inheritance Tax planning, or estate planning.

The post 5 useful allowances and exemptions that will reset at the end of the tax year appeared first on Innes Reid.

Every year the Government gives back billions to investors in pension tax relief. For example, a basic rate taxpayer can turn an £80 pension contribution into a £100 investment, and even better still, a 45% taxpayer can turn a £55 pension contribution into a £100 investment with the benefit of tax relief.

The investment growth is free of income tax and Capital Gains Tax, and there is a tax free element when you draw benefits. Your family can even inherit your unused pension without paying Inheritance Tax. No other investment grants the same tax benefits.

The antithesis of a pension investment is currently a buy-to-let investment, where the rules are designed to tax you at every turn.

Buy-to-let investments have suffered a marked slowdown in popularity as the rules have dramatically changed:

• A 3% surcharge on the current rate of stamp duty, announced in 2015, has hit anyone buying additional residential properties, including buy-to-let investors.

• The help that landlords currently receive via the tax relief they can claim on mortgage interest will also change from April 2017. At the moment they pay tax on their profits according to their income tax band. The relief will be whittled away until by 2020 it will be replaced with a 20 per cent tax credit against mortgage interest

• Also landlords can no long deduct 10 per cent of their rental profits for estimated ‘wear and tear’ – now they can only claim relief on costs they have incurred and will have to keep receipts to prove they have spent money on replacement items and repairs.

• Capital Gains Tax rates of 18% and 28% still apply to profits on buying and selling property, whereas tax rates for other assets such as shares has been reduced to 10% and 20%.

• As an extra worry, landlords will have to pay Capital Gains Tax on any profits within 30 days of selling a property from April 2019.

• Selling off properties does not come cheap – there are lots of fees and charges to consider, and it could take time. And even if you manage to find a buyer, they might not be prepared to pay the price you are looking for.

This could mean a sizeable hit in income for many buy-to-let investors.

Perhaps it is time to seek out someone speaking words of wisdom on alternative investment opportunities, including pensions.

If you are considering entering the buy-to-let market, speak to one of our specialist advisers for professional and impartial guidance on the alternative options available which could earn you a better return on your investment.

Call 01244 347583 for a free, initial consultation to discuss your options – we are available at times to suit you.

The post Is it time to say Let It Be to buy-to-let? appeared first on Innes Reid.

The capital gains tax rate was reduced in the 2016 Budget. From April 2016, individuals who pay basic rate income tax will pay CGT at 10% (previously 18%), and higher rate taxpayers, or investors whose gain takes them into a higher rate band will pay CGT at 20% (previously 28%).

What is CGT?

CGT is a tax that you pay on the profit of something that has increased in value that you then sell or dispose of. CGT is only paid on the increase you have made, not on the value of the item you have sold. However, you don’t pay capital gains tax on the full amount you make as everyone is entitled to a yearly tax-free allowance – which currently stands at £11,100 for 2016-17.

What is meant by ‘disposing’ of an asset?

The government list for disposing of an asset includes:

• selling it
• giving it away as a gift
• transferring it to someone else
• swapping it for something else

What do l pay it on?

You pay CGT on what the government call ‘chargeable assets’ these include:

• most personal possessions worth £6,000 or more e.g. jewellery, paintings, antiques etc
• buy-to-let properties, inherited property, business property
• shares that aren’t in an ISA or PEP and certain bonds
• business assets – fixtures and fittings, plant and machinery etc

Are there any exclusions to paying CGT?

Yes. You don’t have to pay CGT if all your combined gains in one financial year fall under your tax-free allowance and also if you ‘gift’ an asset to your husband, wife, civil partner or a charity – although they may have to pay CGT themselves if they later sell or dispose of the asset.

With careful planning, gains can be managed each tax year so that they remain tax free and when combined with the new dividend allowance of £5,000 (also available from 6th April, 2016), investors can build tax efficient portfolios well above the current ISA subscription limits.

CGT planning also includes other tax efficient strategies to maximise investment returns, such as:

• ‘Bed and ISA’ – this allows you to sell your shares (free of charge) and then use the profits to open, or top up, an ISA.
• ‘Bed and Spouse’ – this allows one spouse within a marriage or civil partnership to sell assets (such as shares) to a broker to create a profit, while the other buys them back at the same time.
• ‘Bed and SIPP’ – this is a very popular strategy for saving towards your retirement by selling assets and then buying them back under the umbrella of Self-Invested Personal Pension plan (SIPP). All income and profits made inside the SIPP are tax-free.

To check whether you are making the most of your tax planning opportunities with your investments, call the investment specialists at Innes Reid today on 01244 347583 for an independent assessment.

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The first bitter pill was the introduction of an increased rate of Stamp Duty Land Tax (SDLT) payable on the purchase of second properties worth more than £40,000 from April 2016.

An additional 3% will be payable on top of the standard SDLT residential rates (separate rules apply in Scotland).

Mr Osborne said the new surcharge, which will see an additional £5,520 slapped onto the average buy-to-let purchase of £184,000, would raise £1bn extra for the Treasury by 2021.

Secondly, the chancellor announced that Capital Gains Tax (CGT) payable on second homes will need to be paid within 30 days of a disposal from April 2019.

This could bring forward the payment of tax by almost 22 months for some sales.

Of course, these measures are in addition to the proposals to restrict mortgage interest relief on buy-to-let properties, which were unveiled at the Summer Budget.

So why does the chancellor have buy-to-let owners in his sights? More importantly, is buy-to-let still an attractive proposition for wealthy individuals looking for a decent return on their investment?

Regarding Mr Osborne’s thinking, aside from the boost to the Treasury’s coffers it seems he is keen to win the support of younger voters belonging to what has been dubbed Generation Rent.

“There is a growing crisis of home ownership in our country. Fifteen years ago, around 60% of people under 35 owned their own home; next year it’s set to be just half of that,” he said in his speech to the House of Commons.

As for the viability of buy-to-let as an investment, only time will tell. Some commentators are predicting a surge of investment before April 2016.

We would urge anyone considering entering the market to seek professional, impartial guidance from an independent financial advisor.

Call 01244 347583 for a free, initial consultation to discuss your options – we are available at times to suit you.

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