Murray Beith Murray LLP is a leading Scottish private client law firm.
For 175 years we have specialised in meeting the legal, financial and administrative needs of individuals and families, family trusts, charities and private companies.
Murray Beith Murray LLP is a leading Scottish private client law firm.
For 175 years we have specialised in meeting the legal, financial and administrative needs of individuals and families, family trusts, charities and private companies.
Now is a pertinent time to take expert advice for those affected by changes announced in the recent budget writes Alec Stewart in The Scotsman today. Read the full article below, republished by kind permission of The Scotsman:
The Autumn Budget brought some unpleasant surprises as the Chancellor endeavoured to raise £40 billion of tax, the biggest package of tax rises since the 1990s.
As widely anticipated, we saw an increase in Capital Gains Tax (CGT) from 10 per cent to 18 per cent at the lower rate and 20 to 24 per cent at the higher rate. Arguably, this was less than initially anticipated, and it means that the UK continues to have one of the lowest rates of CGT in the G7.
This perhaps augurs the possibility for future tax rises. However, it should also be a good reminder to investors that taking capital from investments may be more tax-efficient than relying on dividends – which at the Additional Rate of Income Tax are taxed at 39.5 per cent.
Furthermore, it should be borne in mind that many companies (particularly foreign companies) and investment sectors commonly offer very little by way of dividend yield.
An understanding that investment returns can come from capital growth, income, or a mixture of both may help to diversify some portfolios, whilst enhancing the return to investors (after tax). For those who did crystallise gains at a rate of 20 per cent, they may be grateful that they saved the additional 4 per cent whilst taking the benefit of the capital growth, bearing in mind that typically portfolio yields will be much lower than this (after costs and tax).
There had also been rumours that there would be a change to the tax treatment of pension death benefits. This will materialise from 6 April 2027, and it is anticipated to raise £1.46bn for the exchequer by April 2030. From 6 April 2027, most unused pension funds and pension death benefits will be included in the estate for Inheritance Tax (IHT) purposes. This is not new for pensions – it was only the changes in 2015 that allowed tax-free death benefits (up to the available lifetime allowances) to be paid where death occurred under age 75. A consultation process has been opened for the administration of this tax and more detail can be expected in the new year.
Perhaps the biggest change for some will be the reduction in Agricultural Property Relief and Business Property Relief, which effectively introduces Inheritance Tax (IHT) at a rate of 20 per cent on relevant assets valued at more than £1 million from 6 April 2026. The first £1m of aggregated qualifying business and agricultural property will still benefit from 100 per cent relief, with anything in excess of that cap only benefiting from 50 per cent relief. Inevitably, the ‘devil will be in the legislative detail’. However, this will be a significant concern for many family-owned businesses and working farms.
Now is a pertinent time to take advice for those affected by the changes, with careful consideration given for the timing of possible gifts and the passing of assets. No doubt, some areas of the life assurance industry will be fully expectant of an increase in business, as individuals prepare to protect against the impact of the new tax regime.
In the meantime, we shall wait to see whether the overall package of tax rises helps to generate the desired growth. The Office of Budget Responsibility seems sceptical, with forecasts downgraded to a projected growth of 1.6 per cent in 2029 (a possible election year, when the Government is targeting grown of 2.5 per cent).
Murray Beith Murray LLP Partner, Alec Stewart is an expert in succession, inheritance, and tax planning, and he is a dual qualified solicitor (Scotland and England/Wales). He is also authorised to provide financial advice.
If this article has raised any questions or you would like to discuss your affairs then please call us on 0131 225 1200 or complete our enquiry form.
Murray Beith Murray LLP was established in 1849, as advisors for generations of clients, committed to our values of integrity, expertise and trust. This aim and these values continue to this day, as does our commitment to be here when you need us.
