Following the end of a tax year, if you have paid either too little or too much income tax, HM Revenue and Customs (HMRC) will provide you with a P800 tax calculation to confirm your position.

Previously, if you were due a refund of overpaid tax, a cheque would be issued to you automatically within 21 days of the calculation being sent, if this hadn’t been claimed online. However, since 1^st June 2024, cheque payments are no longer automatic. Instead, individuals will need to claim their tax refund online, by telephone, or via the HMRC app. If left unclaimed, the refund will not be received.

Typically, you have four years to claim a refund, after which the tax year becomes ‘closed’ to claims and it is not usually possible to receive the payment unless it can be proven that it arose due to ‘official error’ on HMRC’s part. For instance, if a refund is due for the 2020/21 tax year, you typically have until 5^th April 2025 to claim this.

The current payment options for receiving a refund are:

• Bank transfer payment
• Cheque payment

At present, the timescales for receiving refunds are:

• 5 working days if you have claimed online and requested a bank transfer
• 6 weeks if you have asked HMRC to send you a cheque

For more information on the refund process and how to claim, you can visit: https://www.gov.uk/tax-overpayments-and-underpayments/if-youre-due-a-refund

At Eldon, we regularly check our clients’ tax positions and documentation to ensure that everything is as expected. It is important that individuals keep on top of their affairs in this respect, particularly now that the onus of claiming tax overpayments has shifted towards the taxpayer.

If you would like to speak to a member of the team about any of the above, please don’t hesitate to get in touch.

This week, we would like to take the opportunity to highlight the 1407(Newton Aycliffe) Air Cadets, a group close to home who aim to ready the next generation for the world of work.

The Newton Aycliffe Squadron endeavours to promote leadership, teamwork and citizenship skills among young people aged 13 to 17, alongside a practical interest in aviation. Cadets undertake a diverse range of activities in doing so, which aren’t limited solely to flying. Other ventures include rock climbing, mountain biking, target shooting, and other sports.

Members also have the opportunity to work towards recognised awards and certificates, such as the Duke of Edinburgh’s Awards and BTECs in aviation and music, providing valuable life skills.

First aid training is another essential element to cadet training, vital for squadron activities but also useful day-to-day. Eldon recently supported the Squadron in purchasing an extensive range of first aid equipment, with the goal being to ensure that cadets are well-trained in delivering this if ever required.

We are impressed with the Squadron’s wide-reaching support and vision for young people, and are pleased that we could play a part in helping them to deliver a positive overall experience to those involved.

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.

Understandably, the topic on many people’s minds is elections. Given the UK General Election on the 4^th of July, we have been getting asked more frequently how any result is likely to impact investment markets, and therefore an investment portfolio.

We know uncertainty leads to volatility in investment markets. Investment markets are forward-looking hence known information is reflected in stock prices rapidly.

So what is priced in at present? Well, bookmakers have a Labour majority at 1/20 odds and a Conservative majority at 150/1 odds. With odds like this in betting, you can see where the consensus is heading. Investment markets have priced in a likely Labour majority already. As with any election, some volatility in the run up to polling day and the days after is expected, with more if unexpected results come to pass. However, as we have always advocated at Eldon, looking through short term volatility at the longer term returns is more important to your Financial Plan.

Looking back at historical elections, it is hard to pick out any particular trend in what the stock market has done, however the most relevant appears to be 1997, when a comfortable Labour win was widely expected at the time. However in all instances, an election that had a likely majority tended to result in more favorable market performance.

What often occurs through periods of volatility, particularly after significant daily drops, is that we see significant daily increases too. Ahead of time, it would be great to be able to pick and choose the days spent in the market, avoiding the downs, yet being invested for the ups. In reality, we know this just isn’t possible.

As ever, we come back to the adage that it’s “the time spent IN the markets, rather than trying to time the markets” that will reward investors in the long term. It’s important to remain disciplined through periods of volatility, should they occur over the remainder of this year, particularly with a US Election due in November too.

As part of this, investors need to ensure they are taking an appropriate level of investment risk in a well-diversified portfolio, resulting in a level of volatility they can tolerate from an emotional perspective (as well as financial) in the pursuit of returns over time.

So, although a General Election may cause some volatility (but also may not), there’s no reason to panic or make knee-jerk changes in light of this. Sticking to the long-term view is far more likely to benefit your Financial Plan.

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.