June 2023 Newsletter | Cylchlythyr Misol Mehefin 2023
- The Bank of England base interest rate rose to 4.5% last month amid persistently high inflation. Financial markets now expect the Bank of England base rate to rise to around 5.5% later this year, which has led to mortgage providers increasing rates and pulling many mortgage products from the market with little notice.
If you are currently on a fixed-term mortgage which is coming to an end in the next 6 months, start planning ahead and you may benefit from engaging with a mortgage broker who can assess your options.
- From the 2023/24 tax year onwards, the self-assessment threshold for taxpayers taxed through PAYE only will rise from the current level of £100,000 to £150,000. This means that those who are taxed through PAYE only will still need to submit a tax return for 2022/23 if their income exceeds £100,000.
- The West Ham chairman David Gold died intestate recently leaving a fortune of £125,000,000. With no will in place, his whole estate passed straight down the bloodline to his daughter and grandchildren. His long-term partner and fiancé of 15 years was left with nothing under the rules of intestacy. His lack of planning could lead to the family paying a huge Inheritance Tax bill. The lessons are simple, make a valid will to ensure your assets are distributed according to your wishes and for those fortunate to have a large estate, plan early to minimise your Inheritance Tax liabilities. His fiancé may be able to make some claim against the estate if he was supporting her financially.
- In recent weeks, significant media attention has been given to developments in the world of Artificial Intelligence (AI). This new technology has already led to a number of suspicious "investment" opportunities where websites state that by using AI, they can promise consistently high returns for their customers.
If it sounds too good to be true, it probably is and a number of these websites state that they will be closing to new members very soon due to the high demand. Rushing people into making unsound financial decisions is a clear hallmark of a scam. Once the money is gone, it may be lost forever.
Ask Huw & Aled: I am retired and am in the fortunate position of having a good pension and substantial assets. I wish to gift monthly sums to my children and grandchildren. What effect does this have on my Inheritance Tax liability?
An individual can give away a total of £3,000 worth of gifts each tax year without them being added to the value of their estate (known as the 'annual exemption'). A separate, annual small gifts allowance of up to £250 per person is also available, as long as you have not used another allowance on the same person. Larger gifts are treated as part of an individual’s estate if made within 7 years of death.
However, there is a valuable exemption for regular gifts from your income. For example, if annual net pension and savings income is, say £60,000 and your normal annual expenditure is, say £42,000, you can make gifts from your income of, say £18,000 per annum, split into monthly gifts of a total of £1,500. These gifts will be exempt from Inheritance Tax. Remember to keep clear, detailed records and bank statements to evidence the gifts and your monthly income.
