August 2025 Newsletter | Cylchlythyr Misol Awst 2025
With the Government under continued financial strain, it has been widely reported that Rachel Reeves will need to raise taxes in the next Budget, due around the end of October.
Whilst no changes have been confirmed, potential changes discussed in the press include:
1. ISAs: a reduction in the annual cash ISA allowance (current annual limit is £20,000).
2. Capital gains tax: increasing capital gains tax rates (specifically from selling property)
3. Pension contributions: possible restrictions on higher rate tax relief on pension contributions. There are also rumours of potential changes to salary sacrifice schemes used to generate tax savings, such as workplace pension contributions and electric company cars.
4. Pension withdrawals: the financial press have long reported the potential for reducing the cap on the amount of tax-free cash that can be taken from your pension.
5. Inheritance tax: changes to the rules around the '7-year rule' for gifting assets and a potential lifetime cap on the value of gifted assets. Ahead of potential changes, the Financial Times have reported that more individuals are gifting assets to "start the 7-year clock running", worrying that future changes may change gifting rules for the worse.
Whilst none of these changes are guaranteed, the general advice is, if you are planning on any major financial decisions, you may wish to consider making them under the known rules and tax rates.
Please contact us if you wish to discuss any matter. Aled has seen a recent uptake in capital gains tax queries from property sales, whilst Huw has noticed a marked increase in inheritance tax enquiries.
Ask Huw & Aled
Q: I am a pensioner and I understand that winter fuel payments will be made to all pensioners this winter. I've also heard that if you earn more than £35,000, you will need to pay this back to the Government. How will this all work?
A: There has been much confusion as to how the new winter fuel payment process will work.
Winter fuel payments will now be made to all pensioners in England & Wales this winter (different rules apply in Scotland & Northern Ireland).
If a pensioner's total income is above £35,000, HMRC will recover the winter fuel payment either via their tax code for 2026/2027 (if they receive a workplace or private pension taxed at source), or, if they are completing annual self-assessment tax returns, the winter fuel payment will be repaid via their tax return instead, with the amount added to their overall tax bill.
If you know that your income will be over £35,000, you can opt out of receiving the payment by completing an online opt out form, or by calling or writing to HMRC. However, to opt out, this process must be completed before 15 September 2025.
