Private Client Tax Update

Whilst there are quite a few changes that have arisen from the 2023 budget of the Chancellor Jeremy Hunt MP, we have highlighted the following points which may be of interest to you.

Inheritance Tax

There has been no change for Inheritance Tax; the rate of Inheritance Tax on death estates remains at 40%, an individual’s Nil Rate Band is £325,000.00, the Main Residence Allowance remains fixed at £175,000.00 and the Annual Lifetime Gift Allowance is still £3,000.00.

Whilst on the surface it seems as if there is no change for Inheritance Tax, it is important to note that people’s estates are increasing in value as house prices are going up.  In the future we will therefore see more estates which are liable to Inheritance Tax.

Capital Gains Tax

The main change to Capital Gains Tax is that the Capital Gains Tax annual exemption amount (personal allowance) has been decreased.  For the tax year 2022/2023 this exemption was £12,300.00, for the tax year 2023/2024 this will be reduced to £6,000.00 and for the tax year 2024/2025 this will be reduced further to £3,000.00.  Capital Gains Tax is a tax which is applied to certain profits made and therefore this is something people should be aware of and note, especially when thinking about estate planning.

Income Tax

For an individual the Income Tax position has not changed.  The government has frozen the personal tax thresholds for four years.

However, from a trust point of view, it is important to note a small change for Relevant Property Trusts.  Previously the first £1,000.00 of income would be taxed at a basic rate (as a starting rate band).  Now this has been removed so that all income will be taxed at a higher rate.

From 2024 to 2025, Trusts’ Estates and estate beneficiaries receiving an income of less than £500.00 will no longer need to pay tax.

If you would like to read more about the 2023 budget, please visit the government page on the spring budget.

Telephone to speak with a member of the Private Client team at Kerseys Solicitors in Ipswich on 01473 213311 or Kerseys Solicitors in Colchester on 01206 584584 or email us at [email protected].  We are only a click away, visit our website and click “Call Me Back” and a member of our team will be happy to call you.