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PENSIONS AND INHERITANCE TAX This MAJOR change was slipped into todays budget and the revenue it will generate HMRC is astronomical! 🫤Years of being told save into your pension for later life funding, in exchange for tax breaks are no more. This could be very damaging for the country, as it is my view, people may no longer opt to save into pensions now. If this is the case - who will fund later life care etc when people have undertaken tax planning and possibly divested themselves of capital which they might have otherwise saved? So, if you die with any pension pot left then it will be taxed to IHT. This is regardless of whether you die before or after 75 years of age. Your pension trustees will be expected within 6 months of your death to calculate the IHT and pay it to HMRC. What’s left after that can be paid to your successors but if you were over 75 years old at death they will also be subject to income tax. Let’s take a £2m pension pot (assume nil rate band used up already), so that’s £800k in IHT, leaving £1.2m to pay to your heirs. They will pay 45% income tax, a further liability of £540k, meaning that your heirs are left with only £660k from a £2m fund. That’s an effective rate of tax of 67%!!! However, 25% tax free withdrawals appear to remain viable and as such expect to see many using this element as an effective estate planning strategy moving forwards in an attempt to remove it from the 40% IHT tax charge….

BUDGET SUMMARY; As the dust settles on the budget and we get our head around things…. Here is a snap shot! Inheritance Tax currently impacts approximately 6% of the population. This figure is going to rise considerably over the years partly due to freezing of allowances and slashing rates of relief available…. Key notes as follows; Inheritance Tax The nil rate band of £325,000 is frozen for a further two years (£325,000 from 2008), until 2030. The residence nil rate band is also frozen at £175,000. This applies where an estate includes a residence passed to direct descendants. There will be reforms to Agricultural Property Relief and Business Property Relief from April 2026. The first £1m of combined business and agricultural assets will continue to be exempt from inheritance tax, but for these assets over £1m, inheritance tax will apply at a rate of 20%. The full inheritance tax relief on AIM shares has been halved so that only a 50% relief will be applied, setting the effective tax rate at 20%. Inherited pension pots will also be subjected to inheritance tax from April 2027. This is going to be HUGE! Capital Gains Tax Capital Gains Tax increases from 10% to 18% at the lower rate and from 20% to 24% at the higher rate. The rates on residential property will remain at 18% and 24% respectively. Stamp Duty Land Tax The higher rate of Stamp Duty Land Tax that applies to the purchase of additional residential properties will increase from 3% to 5% from tomorrow, 31 October 2024. This applies where, at the end of the day of the transaction, individual purchasers own two or more residential properties and are not replacing their main residence. This has the serious risk of stagnating the property market and will impact housing stock. I dread to think what percentage of renters live in private rented properties…. Private landlords will increase rents to cover additional SDLT charges to acquire properties? As ever, estate planning and building a sucession plan is essential. Please do reach out if you need help with your estate planning www.grangelegal.co.uk

🤟love this latest client review. Going the extra mile for clients is something I strive for in every case, without targets, chargeable hours holding me back as I often found to be the case in law firm’s. www.grangelegal.co.uk

Another sad intestacy case landed on my desk today. At this early stage I am hoping we can get through with no Grant of Letters of Administration (if his savings account is below the building society’s threshold). Gent lived in what’s sounds like the most isolated rental property, alone, aged 82 (independently) following the passing of his wife 2 years ago. He left the house once a week to go to the post office, head to the Co-Op and that was it. He was described to me as a “recluse” and never had children. He is survived by an 89 year old sister who now takes all (but doesn’t need/want any money - and likely to vary her entitlement to her children) but also has the responsibility (in the first instance) of administering her brothers estate. I always “bang” on about the importance of making a Will but cases like this remind me that someone’s personal circumstances or lifestyle are major contributors as to reasons people don’t make one.

Budget speculation is now driving everyone crazy. It risks causing real damage to investor and business confidence. I don't know who's to blame; politicians, civil servants, journalists, or everybody. Let’s wait until budget day! Heard of stories from fellow advisors with clients disposing of entire property portfolios for CGT reasons, crystalising business property in structures all based on “speculation”. Those who have moved early might end up winning but they might not…. Stop panicking and let’s hope the chancellor has a balanced approach particularly in relation to the taxation of Non-Dom’s…. As a country, for cultural and fiscal reasons we VERY much need Non-Dom’s to stay!!

This weeks reflection following lots of conversations lately is: An “alarming gap” in public understanding about inheritance laws affecting cohabiting couples. 🌟 REMINDER 🌟There is no recognition in law of “common law marriage”. What is crystal clear is that many cohabitees are unaware of the rules of “intestacy”and what happens to their estate if they die without a will. This lack of awareness could have devastating consequences for many families across the UK, as cohabiting couples—regardless of how long they have lived together or whether they have children—are not automatically entitled to inherit from one another if one partner dies without leaving a Will. Recent findings from a Will Aid poll, include: ✔️32% mistakenly believe their estate would automatically pass to their partner ✔️17% admitted they were unsure what would happen ✔️11% said they had never even thought about the issue ✔️8% thought their estate would go to close friends The Rules of Intestacy dictate how a person’s estate is distributed when they die without a will. These rules prioritise spouses, civil partners, and blood relatives, often leaving cohabiting partners with no legal right to inherit anything. This could leave surviving partners facing significant financial hardship, particularly in cases where they are dependent on the deceased’s income or home. Sadly, things can then get very messy and protracted with a cohabitee needing to claim against the estate of their former partner for financial provision! Without a Will, surviving partners may not be automatically entitled to inherit, leaving them in a vulnerable position – and it’s particularly worrying that so many people aren’t aware of this, and don’t fully understand the Rules of Intestatcy. 🌟NOW THE GOOD NEWS🌟 However, complicated you feel things are, they probably aren’t! Different Will structures exist which enable you to include provision for a partner whilst preserving the capital value of your estate for your children (if any/other intended benficisires). Please do not hesitate to get in touch for an no obligation chat. www.grangelegal.co.uk

Starting off the week with another ⭐️⭐️⭐️⭐️⭐️ review. Please get in touch for all your estate planning needs Wills and Lasting Powers of Attorney. www.grangelegal.co.uk

Kids could scupper your IHT planning by not having a Will….. HOW? Mum and Dad have a sizeable estate and liable to IHT. Mum and Dad both healthy and fit at present currently use annual 3k annnual allowance for IHT to make small gifts to kids. Doesn’t sound a lot but over 10 years that’s 60k passed through to children which if it remained in their estate would incur an IHT bill of £24k…. Not to be sniffed at. Mum and Dad wish to gift larger sums outright over coming years and set up lifetime trusts for more asset protection. Mum and Dads estate subject to surviving 7 years is decreasing and their tax bill falling whilst watxhing their children have a little more “financial freedom”. However, what if a child/children died before them without a Will? GASP…. Let’s assume child is unmarried and has no children (facts of recent clients I have met). The intestacy rules (applicable when someone dies without a Will) means the deceased child’s estate passes 💯 % to parents in equal shares. Years of considered planning by parents to get money out of their estate for IHT comes back!!! DISASTER The unmarried children ought at least to have a simple Will which might for example leave their estate to such of their siblings/friends and so on and NOT Mum and Dad. This is why holistic planning is needed and why I enjoy working with Mum and Dad and children to ensure they all have appropriate Wills in place to avoid and nasty surprises! If you need to make a Will/LPAS or need other legal advice please do get in touch! www.grangelegal.co.uk

☎️ ☎️ ☎️ 🌟 🌟 🌟 NEWSFLASH 🫵🖕👋Following another enquiry from a married couple asking “do we really need wills when it all goes to each other anyway”, let’s consider the position and put this common misconception to bed! (For context this couple had a combined estate of 1.25m and had x2 adult children (one soon to embark upon a divorce). In short, the law does not stipulate everything passes to a spouse on death and the “intestacy rules” (you die intestate if you die without a will) are prescriptive and often lead to complicated and undesired condequnces! In this case the first £332,000 would have passed to the surving spouse along with personal effects and the remainder split 50/50 between the spouse and x2 children! DISASTER!!!! ⛔️ ⚠️ Whilst inheritance tax allowances remain frozen for the foreseeable future, since 26 July 2023 the statutory legacy payable on intestacy to a deceased person’s spouse or civil partner has increased from £270,000 to £322,000. Given current rates of inflation, this announcement is welcome as it will increase the number of intestate estates where no inheritance tax is payable due to the rise in value passing to a spouse or civil partner. It is, however, inadvisable for anything other than the most straightforward of estates to rely on the application of the intestacy rules. IHT is still payable if the estate is valued at over £1 million and when we return to an era where the IHT nil rate band increases, incurring an IHT charge on both deaths will generally lead to a higher IHT charge than if the tax bill was deferred to the second death when the nil rate band may be higher. In addition, assets passing to the deceased’s children under the intestacy rules will come under the children’s control when they reach eighteen, which most parents would consider to be too young for a beneficiary to receive a large inheritance. It is also in there estate for divorces and so on! Finally, making a Will allows you to choose your executors, trustees and guardians for minor children all of which is facilitated by a Will. Ongoing protection for young beneficiaries and tax planning that reaches several generations into the future can also be achieved in a Will. Make a Will and move forwards knowing you have structured your estate in a tax efficient manner and to ensure there are NO SURPRISES 😳 please do not hesitate to get in touch; danielboyle@grangelegal.co.uk Grange Legal are insured, regulated and operate under fixed fees for your peace of mind!

Wrapping up the week with some great client feedback:  19 hours ago NEW We asked Grange Legal to write our wills and lasting powers of attorney for us, and we are so glad we did. Daniel was incredibly informative, patient and quick to answer all our questions. We felt like we were in very safe hands, and would highly recommend Grange Legal.  2 days ago NEW Professional and excellent service received. 1 weeks ago Daniel was extremely patient, professional and answered many questions we had with clarity. We were pleased Daniel was recommended to us and we feel in very safe hands and excellent value for money.