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 government has announced that it will put legislation in place to allow parents and carers to apply for National Insurance Credits where they have not claimed Child Benefit, to ensure that people do not miss out on their State Pension entitlement.

In most cases, you can get a full State Pension if you have 35 qualifying years of National Insurance contributions, and you need a minimum of 10 qualifying years to receive any State Pension entitlement. One way to earn a credit other than through employment or making voluntary contributions is by claiming Child Benefit. This means a parent or carer can be credited with National Insurance Contributions until their youngest child is 12, even if they are not earning.

Child Benefit payments are received tax-free as long as neither parent earns more than £50,000 a year. However, if earnings are higher than this, some or all of the Child Benefit will need to be repaid in an extra form of Income Tax known as the ‘High Income Child Benefit Charge’.

In April last year, the government recognised concerns that some eligible parents who had not claimed Child Benefit, often to avoid the High Income Child Benefit Charge, could miss out on their future entitlement to a full State Pension. The government said the issue would be addressed to ensure that those affected are not disadvantaged due to not claiming Child Benefit.

HMRC said legislation will be brought forward and will allow individuals to claim this credit from 2026, and eligibility will be closely based on the criteria for receiving Child Benefit. The credit will add qualifying years of National Insurance where eligible, which will support future State Pension eligibility. Transitional arrangements will ensure those affected since 2013 are still able to claim.

Going forward, applications will be available for 6 years following the relevant tax year and the government plans to bring forward secondary legislation as soon as possible.

You can read more about checking your State Pension entitlement here.

The end of 2023 saw positive news in markets, despite experts predicting doom and gloom for the economy at the start of the year. Inflation came in lower than expected and markets speculated that major central banks could cut interest rates through 2024. The Federal Reserve Bank set the table for as many as 3 interest rate cuts through 2024, whilst the Bank of England awaits further evidence that inflation will fall to the 2% target, and stay there, before lowering rates.

With many commentators suggesting that markets may be too optimistic about rate cuts this year, it is clear that the path to falling interest rates remains uncertain; both this and inflation will continue to dominate markets in the short term. So, what does this tell us about what we can expect in the coming months? The truth is nobody knows!

It is not possible to predict the short-term direction of markets and we can never know when they might fall suddenly, whether rallies will continue, and how long they will go on for, despite what headlines might say. Uncertainty in markets causes volatility and, as you might expect, the main factors that contribute to uncertainty are unknown events that cannot be predicted.

So, what does matter? We know it is important as Financial Planners to ensure that our clients are happy with the amount of investment risk they are taking within their invested portfolios. When we talk about risk, we generally mean the level of volatility within the portfolio, rather than the risk of losing all of your money. It’s really important to make sure this is ‘right’ for you as this, as well as maintaining a comfortable cash reserve, can make the difference between being able to accept market movements or not.

No matter what the forecasts are for the months ahead, our philosophy remains the same at Eldon – remaining invested in a well-diversified portfolio, appropriate for your circumstances, risk tolerance, and long-term goals, is what will ultimately lead to a much better outcome from an investment perspective, rather than trying to predict the short term and the unknown.

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.

We are delighted to announce that Eldon has partnered with WizeUp Financial Education.

WizeUp, a financial education and employability charity, was founded as a not-for-profit company in 2011 and granted charitable status in 2020. They are highly experienced in making financial education accessible and interactive through the delivery of workshops in schools across the country.

Financial education equips young people with the tools to develop good money habits in preparation for adulthood, and we are passionate about supporting the provision of meaningful education in our area.

Eldon’s partnership with WizeUp will see workshops delivered in ten schools across the North East, and we look forward to seeing the experts at WizeUp in action.

The Autumn Statement on Wednesday 22nd November announced a few key changes, which we have summarised below:

State Pension

Prior to the announcement, we had been waiting for confirmation as to whether the Triple Lock guarantee would be retained for State Pensions. The guarantee sees the State Pension increase by the higher of inflation (measured by September’s CPI), the increase in average earnings (over the year to September), and 2.50%.

Over the year, the increase in earnings was the higher of the three, at 8.50%. The Chancellor is honouring the Triple Lock, so a full flat rate State Pension will rise to £221.18 pw (£11,501 pa) from April 2024. This is particularly interesting as the full rate is now nearing the tax-free Personal Allowance of £12,570, which has been frozen until April 2028. Many pensioners who previously haven’t incurred income tax could soon begin to face this as a result of the rising State Pension.

Pensions – Lifetime Allowance (LTA)

The Lifetime Allowance (LTA) is officially being rescinded, with this now written into legislation and due to take effect from 6th April 2024. Long-awaited clarification on some of the finer details has been provided:

• Tax-free cash will be limited to a lifetime amount of £268,275 (unless any protections apply). This will be known as the lump sum allowance (LSA).

• On death, a pension death benefit allowance will apply, which is the same as the previous LTA of £1,073,100 (assuming no protections apply).

o Any death benefit lump sums paid within 2 years of death and falling within the allowance will be tax free. Anything exceeding the allowance will be taxed at the beneficiary’s marginal rate of income tax.

o For any residual pension fund, if death occurred before age 75, beneficiaries will be able to draw from it entirely free of income tax.

o If death occurred after age 75, beneficiaries will be able to draw from the pension subject to income tax at their marginal rate.

• Protections will still be available to apply for, with a proposed deadline of 6th April 2025:

o Fixed Protection 2016 (FP2016) – This maintains an LTA of £1.25 million (or now, a tax-free cash allowance of £312,500). Under FP2016, unless you applied prior to 15th March 2023, you cannot contribute further to a pension plan.

o Individual Protection 2016 (IP2016) – This maintains an LTA (now tax-free cash allowance) based on the value of your pension benefits at the point the LTA reduced in April 2016, if over £1 million at the time. IP2016 does not limit further pension contributions.

ISAs

• The ISA allowance will remain at £20,000 for the upcoming tax year.

• Individuals will now be able to contribute to multiple ISAs of the same type each tax year, up to the overall £20,000 limit. Previously, this was limited to contributions to one stocks and shares ISA, one cash ISA, and so on.

• The government will allow partial transfers of ISA funds between providers during the year, with effect from April 2024.

National Insurance

• For employed individuals, the rate of Class 1 National Insurance (NI) contributions will reduce from 12% to 10% (where income falls within the relevant bracket to be paying at this rate). This will take effect from 6th January 2024.

• For self-employed individuals, the rate of Class 4 NI on profits will reduce from 9% to 8%, taking effect from 6th April 2024.

• Class 2 NI will no longer be mandatory for the self-employed where profits are above £12,570. However, individuals will still retain their State Pension entitlement.

• The rates for Class 3 NI will remain at £17.45 pw (£907.40 for a full year) for 2024/25. This is relevant for individuals making voluntary NI contributions to increase their State Pension.

Other Points to Note

• No changes were made to inheritance tax, despite reports that this was being considered. The Office for Budget Responsibility (OBR) report estimates that inheritance tax receipts will grow to £9.8 bn in 2028/29.

• State Benefits are set to increase by CPI (6.70%) from April 2024, including Attendance Allowance.

• Whilst not included in the Autumn Statement, we have since received confirmation from Ofgem that the energy price cap will rise by 5% from January, up to an annual average of £1,928.

We are delighted to announce that we have made the 2023 New Model Adviser Top 100 list for the 12^th year in a row! There is only one other company (in addition to Eldon) to feature every year since the inception of Citywire’s accolade.

Citywire’s New Model Adviser® magazine provides news on personal and business development and insights into the financial services industry. The assessment process for their Top 100 list includes a range of criteria such as professional qualifications, investment philosophy, staff training, fees, service offering, community engagement, and client education. The award recognises outstanding achievements and prominent leaders in the UK financial planning profession.

Congratulations to the Eldon team and thank you to our clients – we couldn’t have achieved it without you!

On 1^st October 2023, the McCloud remedy regulations came into force to remove age discrimination across public sector pension schemes.

What is the McCloud judgment?

In 2010, the government determined that the cost of public sector pension provision was not sustainable and in 2015, reforms were made to public service pension schemes, which meant some members moved from Final Salary into new Career Average Revalued Earnings (CARE) schemes. This changed the way in which their pension benefits in the new schemes were calculated from this point onwards.

Scheme members that were close to retirement at the time were protected from moving to the new schemes and could therefore remain in their existing arrangements. Subsequently, the Court of Appeal found these protections to be discriminatory against younger members. This ruling is called the McCloud Judgment, after a member of the Judicial Pension Scheme involved in the case.

The changes that have been introduced to remove the age discrimination are known collectively as the McCloud remedy.

For reference, the six largest public sector pension schemes in the UK are the NHS, Civil Service, Local Government Pension, Teachers’ Pension, Police and Firefighters, and Armed Forces schemes.

How are public sector schemes changing?

The government is now taking action to remedy the above by reverting affected members of public sector schemes back into the legacy schemes for the seven-year period between April 2015 and March 2022. The intention is to recalculate their benefits based on what their position would have been if they hadn’t switched to the new CARE arrangements during this time. All members will then join the reformed CARE schemes from April 2022 regardless of their age.

At retirement, those affected will be able to make a choice between the benefits provided by the two different schemes, to ensure they receive the most beneficial option for them.

Overall, this will either improve their current position or leave it unchanged; members will be no worse off as a result of the remedy.

What do I need to do?

If you have already retired, your pension fund administrators will work out if you are due an addition to your existing pension. Schemes will be in contact as soon as they can after 1^st October 2023.

For those who are yet to retire, your scheme will provide you with sufficient information to allow you to make an informed decision prior to you taking your benefits.

For those still in active service (contributing to your benefits), in some schemes, there may be new opportunities available to you as a result of being classed as a ‘new entrant’ to the reformed scheme. If this applies, your scheme will contact you to make you aware of your options. Please be aware that there may only be a small time-window to make a decision, so it’s important to read any notification you receive regarding this.

If you have any questions about the impact of the McCloud Judgment on your pension, please get in touch with one of the team.

Santander launched their new ‘Edge Up’ current account earlier this year, effectively replacing the 1-2-3 account which is no longer available to new customers.

Existing customers can still keep their 1-2-3 account if they wish, but it is worthwhile to check whether switching to the new Edge Up account will be more beneficial.

The Edge Up account is similar to the 1-2-3 account in many ways, with interest payable and cashback paid on selected bills. There are a few differences however, illustrated below:

	Edge Up Account	1-2-3 Account
Cashback on bills	1% on selected household bills when paying by direct debit (max £15 per month)	• 1% on council tax bills, mobile/home phone, broadband and TV packages (capped at £5 per month). • 2% on energy bills and home and life insurance policies (capped at £5 per month). • 3% on water bills (capped at £5 per month).
Cashback on essential spending	1% at supermarkets and travel costs when using debit card (max £15 per month)	N/A
Monthly interest	3.50% AER on balances up to £25,000	2% AER on balances up to £20,000
Cost	£5 monthly account fee	£4 monthly account fee
Account requirement	• Over age 18 • Pay in at least £1,500 per month • Have 2 active direct debits	• Over age 18 • Pay in at least £500 per month • Have 2 active direct debits

As you can see there is potential for a greater amount of cashback to be achieved each month, with a maximum of £30 pm with the Edge Up account vs a maximum of £15 pm with the 1-2-3 account.

In addition, interest is paid at a higher rate and up to a higher balance. Santander have a handy tool on their website which allows you to assess which of their accounts is the most beneficial depending on the way you use your account. See https://www.santander.co.uk/.

Existing Santander 1-2-3 account holders can move to the new Edge Up account free of charge. To do this, you can simply log in online and complete the process through your online banking account.

Alternatively, it can be done in branch or by telephone. Once changed, you cannot move back to the 1-2-3 account as it is no longer available. Your existing account number and sort code will remain unchanged if you do decide to convert your account.

Note: This article is not intended to be advice and should not be viewed or relied on as such.