WizeUp Financial Education

Recently, paraplanner Natasha had the privilege of attending one of WizeUp’s impactful visits at Framwellgate School Durham. The sessions throughout the day catered to both Sixth Form students and Year 10 pupils, offering them invaluable insights into personal finance management.

The engaging workshop covered essential topics such as savings, budgeting, flat sharing, and understanding credit cards and credit ratings. These subjects are crucial in equipping young people with the knowledge they need to make informed financial decisions and build a secure financial future.

In addition to Framwellgate School, WizeUp has also recently visited schools in Newton Aycliffe, Hartlepool and South Tyneside with Eldon’s sponsorship, further extending their reach and impact.

WizeUp Financial Education is committed to fostering financial literacy among young people, empowering them with the skills and confidence needed to navigate the complex world of finance. By partnering with WizeUp, Eldon aims to support this mission and help create a financially literate future generation.

Careers Day

James and Beth also volunteered their time last week to attend a Careers Fair at St John’s School & Sixth Form College in Bishop Auckland. The event provided an excellent opportunity for students to explore career paths in financial planning and gain valuable insights into the financial industry. By participating in events like this, we hope to inspire the next generation of financial planning professionals.

As we welcome summer, the weather seems to be playing tricks on us. The recent spell of cold and wet days has left us all wondering if we skipped right past the sunny season. Despite the lack of summer warmth, we are thrilled to share some wonderful news and updates from Eldon.

Find out more here.

There has recently been an influx of convincing scams circulating the UK and with the development of Artificial Intelligence (AI) continuously progressing, so are the methods fraudsters use. It is important to stay alert and take preventative measures to help avoid these scams.

What can you do to avoid a scam?

• Treat all unexpected communications with caution.
• If a firm or your bank calls you unexpectedly and you are a customer of that company, use the contact details provided on official communications or their website to call them back.
• Look out for poor branding, spelling and grammar.
• Don’t click links in suspicious texts or emails.
• Use unique passwords for all of your online log ins and never share your password.
• Keep your passwords safe.
• Be wary of urgent deadlines and never rush into making a payment – legitimate organisations will never pressure you to action anything immediately.
• Beware of adverts on social media.
• Keep your virus protection software up to date.
• If you’re unsure about a financial services company, check the FCA register to ensure they are genuine and regulated.

 
 Who to report a scam to?

• Contact your bank straight away if you think you are a victim of a scam and report it to the Police or Action Fraud on 0300 123 2040.
• You can also seek advice from Citizens Advice Consumer Helpline on 0808 223 1133.

HMRC have made improvements to their mobile phone app which could help individuals to find information and manage taxes, without needing to pick up the phone.

The app allows you to:

• Check your PAYE tax code – this ensures you are paying the correct amount of tax on your income.

• Claim a P800 repayment – if you have paid too much tax, you can claim the repayment through the app and receive the refund via BACS.

• Check your State Pension forecast – this shows the State Pension you could get when you reach State Pension age. You can also then check if there are any gaps in your National Insurance contribution record and the benefits of paying them.

• View your Self-Assessment – you can pay your bill through the app and add deadline reminders to your phone calendar.

• Track any forms and letters sent to HMRC.

• Claim Child Benefit and view your child benefit payment history.

The app is free, easy to use and is secure and can be downloaded from either the iOS App Store or the Android Google Play Store.

Once you have downloaded the app, you can either log-in if you already have a Government Gateway account or sign up.

There’s no requirement to use the app, so you can still use the Government Gateway online as normal or contact HMRC by phone on 0300 200 3300 or by post at:

Pay As You Earn and Self Assessment
HM Revenue and Customs
BX9 1AS

For working parents, there have been some recent changes to the benefits available from the Government, which are coming into force during the 2024/2025 tax year. Two of the main changes were announced in the Spring 2024 budget which affect Child Benefit, as well as the provisions for free childcare.

Child Benefit

Child Benefit is available if you’re responsible for bringing up a child under the age of 16 (or under 20 if they remain in approved education or training). An allowance is paid every 4 weeks which for the 2024/25 tax year is £25.60 per week for the first child and £16.95 per week for each additional child thereafter. This can only be paid to one of the parents, not both.

However, for those earning above £50,000 pa, this previously meant they would suffer the High Income Child Benefit Charge. This applied regardless of which parent was in receipt of the Child Benefit and the charge is incurred at a rate of 1% for each £100 earned over £50,000 pa. Therefore, when income was above £60,000 pa, the High Income Child Benefit Charge was applied in full and the full amount must be repaid.

As an example, a household, with two partners earning £50,000 pa each, would not incur the charge. However, a household with one partner earning £60,000 pa and the other earning £0 pa, would incur the full charge.

Since 6th April 2024, the threshold for the High Income Child Benefit Charge has increased to £60,000 pa and the charge is at a rate of 1% for each £200 earned above £60,000. Therefore, once earnings for an individual exceed £80,000 pa, the High Income Child Benefit Charge is applied in full and the full amount must be repaid.

Individuals who are liable to pay the High Income Child Benefit Charge are required to file a Self Assessment tax return to declare this and pay the charge, each January after the end of the tax year the charge applies.

Going forward there are further consultations planned to base the charge on ‘household income’, rather than the income of the highest earner in the household. These future changes are expected to be implemented by April 2026. There are no further details on how this will work at this time, however.

Childcare

Free childcare hours are now being expanded, and since 6th April 2024, those with 2 year old children have been entitled to 15 hours a week free. From September 2024, children aged 9 months will be entitled to 15 hours a week free, and from September 2025 all children from 9 months old will be eligible for 30 hours a week free childcare.

In order to qualify, both parents must be working and earning at least £9,518 pa but less than £100,000 pa, on an adjusted net income basis. This is income after certain deductions such as pension contributions and gift aid donations.

Eligible parents of 3 year old and 4 year old children already receive 30 hours a week free childcare, so this will not change for them.

For each of these benefits, with some careful planning, it is possible that you can still qualify for them both if you currently don’t due to income levels. As Financial Planners, we assist our clients with such planning where possible.

The 2024 Spring Budget announced the launch of British Savings Bonds.

British Savings Bonds are a savings account offered by National Savings & Investments (NS&I) and are intended to be priced mid-market in relation to similar products with the aim of savings being “invested back into supporting the UK”.

The account on offer is a 3-year fixed-term deal with an interest rate of 4.15% pa gross. As expected, in terms of competitiveness, you can achieve better interest rates on the open market at present, with the most competitive on a 3-year fixed-term account currently being 4.70% pa gross (as of 15th April 2024).

As the NS&I British Savings Bonds are not ISA accounts, any interest earned is paid gross, and hence, if you receive interest over your personal savings allowance (£500 for higher rate taxpayers and £1,000 for basic rate taxpayers) the excess will be taxed at your marginal rate of income tax. There are slightly different rules that apply to nil rate taxpayers and all interest received by additional rate taxpayers is taxable.

It is also important to note that as the interest rate is fixed for 3 years, you cannot withdraw your money within those 3 years, so you must ensure that you do not require the capital you place in one of these accounts until it has matured. It is therefore important to ensure an adequate accessible cash reserve is available for emergencies and short-term needs.

One benefit of holding your cash with NS&I is that it is backed by the Treasury and therefore your capital is fully protected. Savings deposited with most other banks and building societies are covered by the Financial Services Compensation Scheme (FSCS) but your capital is only protected up to £85,000 per person per institution.

You can deposit from £500 up to £1million in a British Savings Bond account, so for those seeking the simplicity of holding savings with one provider and can afford to tie up capital in the short term, the British Savings Bond may be of interest.

With the 2024/25 tax year fast approaching, it’s worth considering the various allowances available to individuals. Such allowances will ‘reset’ from the beginning of the new tax year; 6th April 2024.

Below, we have outlined some of the key considerations and the current rules:

ISA Allowance

This is the maximum amount that can be invested into an ISA each tax year and is currently £20,000. This allowance can be split across the following:

– Stocks & Shares ISA
– Cash ISA
– Lifetime ISA (maximum of £4,000 pa)
– Innovative Finance ISA

A new rule coming into force in the new tax year is that you are now able to contribute into multiple ISAs of the same type, as long as you keep within the overall limit.

Money held within an ISA is free from Income and Capital Gains Tax and withdrawals can be made tax-free.

Pension Allowance

Your Annual Allowance is the maximum amount you can save into pensions each tax year and receive tax relief, before incurring a tax charge. The standard Annual Allowance is £60,000 pa, although separate limits may apply that can reduce this i.e. Tapered Annual Allowance.

The maximum you can contribute to a pension and qualify for Income Tax relief is the higher of 100% of your relevant UK earnings or £3,600 gross. This is however limited by the Annual Allowance. Income Tax relief can only be received until age 75.

Capital Gains Tax (CGT) Annual Exempt Amount

Every tax year, individuals have an Annual Exempt Amount for Capital Gains Tax. This is the amount that capital gains can be realised without tax implications. A gain is the ‘profit’ that is made on the disposal of certain assets.

The annual exempt amount for 2023/24 is £6,000, which is reducing to £3,000 for the 2024/25 tax year.

Inheritance Tax Gifting Exemptions

Every individual is entitled to an annual gifting exemption of £3,000 pa. This amount can be gifted and will immediately fall outside of their estate for the purposes of Inheritance Tax. Any unused amount can be carried forward to the next tax year, but no further.

Individuals can also take advantage of the ‘gifts out of surplus income’ exemption, which also immediately fall outside of their estate for inheritance tax purposes. Certain requirements must be met to be eligible.

Summary

Within our ongoing service, we manage the above allowances and exemptions within our clients’ wider financial planning. This ensures that they are making good use of their resources each tax year.

If you would like any more information on the above, please do not hesitate to contact a member of our team.

Earlier this month, we welcomed Laura to Eldon. Laura will be strengthening the administrative arm of our team.

Below is a short introduction from Laura:

“I moved back to the North 6 years ago after living in London for several years, where I worked in the city for a boutique VCT investment company. Since moving back, I have spent my time as an administrator within a FTSE 100 company specialising in Financial Planning & Wealth Management.

I joined Eldon in 2024 as I wanted to work for a firm that prides itself on putting clients first.

Outside of work, I am usually found running around after my two young children, attempting to perfect my sourdough bread, exploring nature, and watching the latest film on the big screen.”

We are thrilled to have Laura as part of the Eldon team.

There were no great surprises in the Spring Budget announced on Wednesday 6th March 2024. We’ll consider the impact for each of our clients at their planning meetings but for those who would like a general update, we’ve set out some of the key takeaways below:

National Insurance

• The big saving this time was a further reduction to the main rate of Class 1 National Insurance, with a cut of 2p from 10% to 8%. This new reduction will come into effect from 6^th April 2024 and is in addition to the previous 2p cut announced in the 2023 Autumn Statement that came into effect from 6^th January 2024.

• Class 4 National Insurance is also being cut by 3p from 9% to 6% from 6^th April 2024 replacing the previous cut to 8% announced in the 2023 Autumn Statement.

Capital Gains Tax

• The higher rate for capital gains tax on residential properties will be reduced from 28% to 24%. As previously planned, the annual exempt amount for capital gains tax will also reduce from £6,000 to £3,000 from 6^th April this year too.

High Income Child Benefit Tax Charge

• The child benefit income threshold at which the benefit is tapered will rise from £50,000 to £60,000. The benefit will also now not be fully tapered away until an individual earns £80,000.

Furnished Holiday Lettings

• From 6^th April 2025, the Furnished Holiday Let (FHL) tax regime will be abolished.

UK ISA

• A new ‘UK ISA’ is to be launched, with an additional allowance of £5,000 pa of tax free investment into UK assets in an effort to drive growth in British businesses. The government is to consult on the creation of the UK ISA and further details are expected in due course.

Business and Investment

• The threshold at which small businesses must register to pay VAT raised from £85,000 to £90,000 from 6^th April 2024.

• The government loan scheme introduced during Covid for small businesses has been extended until March 2026.
  
• Tax reliefs for touring and orchestral productions have been made permanent.

Other Key Items

• Stamp duty tax break when purchasing multiple properties in England or Northern Ireland will end in June.
• The government has announced that National Savings & Investments (NS&I) will launch a product which will offer consumers a guaranteed interest rate, fixed for three years. This product will increase savings opportunities available to consumers in the UK and will be brought on sale in early April 2024.

• The previous 5p reduction to fuel duty will be extended and fuel duty will be frozen for the 14^th year running.

• Alcohol duty remains frozen until February 2025.

• New tax on vaping products will be introduced from October 2026 and tobacco duty is will go up £2.00 per 100 cigarettes at the same time.

• Windfall tax on the profits of energy firms will now apply until 2029, extended from March 2028.

• Tax paid on flights known as air passenger duty will increase for business class tickets.

• For the NHS, an upgrade in full of the computer systems is being planned, costing £3.4bn.

• The ‘non-dom’ tax regime will be scrapped. This applied to people who are not UK domiciled and hence don’t pay tax on worldwide income, only the income received in the UK, for the first 7 years of being resident in the UK. From April 2025, new arrivals to the UK (provided they have been non-tax resident for the last 10 years) will not have to pay UK tax for the first 4 years of residency. After this point, the tax rules applicable will be the same as to other UK residents.
  • There will be a transitional arrangement for those currently benefitting from the non-dom status:
    • A temporary 50% tax reduction in foreign income subject to tax in the 2025-26 tax year.
    • For the disposal of foreign assets after 6 April 2025, non-doms can choose to be taxed only on capital gains since that date.
    • Under a ‘temporary repatriation facility’ in the tax years 2025-2026 and 2026-2027, non-doms will be able to remit foreign income and gains at a rate of 12%.
    • Income and gains that have arisen before 6 April 2025 will not be taxed unless they are paid to UK residents who have been here for more than four years.

The Budget also confirmed that UK inflation is forecast to fall below 2% later this year (the Bank of England’s target is 2% pa). Growth in the UK economy is predicted to be 0.8% during 2024 and 1.9% during 2025. As with all forecasts, these are estimates and predications can go awry, but they can be useful insight when helping us assess the choices we make about our finances.

The deadline of 31st January 2024 for submitting Self Assessment tax returns for the 2022/23 tax year is looming. If you need to submit a tax return, it is important to do so by the deadline to avoid paying late filing penalties.

You can check whether or not you need to complete a tax return for 2022/23 by using the government tool.

If you submit your return later than the deadline, you will typically face a £100 penalty if the tax return is up to 3 months late. Should the return be submitted over 3 months late, you may be faced with a larger penalty.

Any payment for underpaid tax must also be received by HMRC by 31st January 2024. You will be charged interest by HMRC on any late tax payments:

• 30+ days late – you’ll need to pay a 5% penalty of the tax owed
• 6+ months late – you’ll need to pay a further 5% penalty of the tax owed
• 12+ months late – you’ll need to pay an additional 5% penalty of the tax owed

You can complete your Self Assessment tax return online here.

You can pay any outstanding Self Assessment tax bill online here.

For a fee, professional accountants can help you complete your Self Assessment, or complete it on your behalf, however you will need to provide them with the relevant figures. Please get in touch if you would like a recommendation for accountants we have previously worked with.