Tax planning strategies in light of the UK’s Autumn budget changes

Expert advice on asset gifting and financial planning after recent tax reforms

In the wake of the UK’s Autumn budget, financial experts are urging individuals to reassess their tax planning strategies. With new regulations introduced by Chancellor Rachel Reeves, the landscape of inheritance tax has shifted significantly, prompting a need for proactive measures. Graeme Cran, an associate director at Azets, emphasizes the importance of early decision-making regarding asset management.

Understanding the implications of the new tax rules

The recent changes in tax legislation mean that individuals must now consider gifting assets earlier than before.

Cran advises, “Get rid of it before it’s too late. Gift, gift, gift.” This shift in strategy is crucial for avoiding the hefty 40% inheritance tax that could otherwise apply to assets passed on to heirs. The new rules necessitate a reevaluation of financial planning, particularly for those who have traditionally held onto their assets until death.

The benefits of marriage in tax planning

Another key point raised by Cran is the financial advantages of marriage.

He notes that couples who live together without formalizing their relationship may miss out on significant tax allowances and reliefs. “If individuals are effectively man and wife without the formalities, then they lose out on a significant ability to plan or to benefit from the tax allowances and reliefs that are available,” he explains. This highlights the importance of legal recognition in optimizing tax strategies.

Reassessing wills and financial exposure

With the new budget changes, many individuals are now compelled to revisit their wills and financial plans. Cran has observed a surge in inquiries from high-net-worth clients who are suddenly facing substantial tax liabilities on their businesses. “The goalposts have been moved on a lot of people,” he states, referring to clients who previously believed their businesses were shielded from inheritance tax. The potential exposure for some clients has increased dramatically, necessitating urgent action to mitigate risks.

Proactive gifting and spending strategies

Cran’s advice is clear: individuals should consider gifting and spending their wealth while they can. “Gift it. Do it early, do it often,” he urges. By passing on surplus assets now, individuals can enjoy their hard-earned wealth and reduce their tax liabilities. Many clients, he notes, hold onto funds they are unlikely to use, which could be better utilized through gifting or spending. “Enjoy it, spend it, you’ve worked hard for it,” he concludes, advocating for a more dynamic approach to personal finance.