Article by Phil
Using the best financial advisors can help you to pay less tax and let’s be honest most people are fed up with the ever-increasing tax burden.
Figures from HMRC show that the amount of Capital Gains Tax (CGT) has been falling for the last three years, doing the exact opposite of what the government said would happen when they increased the taxes. That’s because people have had enough.
Back in 2022 the Conservative government tried to increase CGT by cutting the tax-free allowance from £12,300 to £3,000. In 2024 Rachael Reeves increased the CGT rate from 10% to 18% and 24% for higher rate taxpayers. Factoring extra tax revenue into her future revenue forecasts. What has happened is the complete opposite. CGT tax revenue has fallen from almost £17 billion in 2022 down to £13 billion in 2024/25. A £4 billion or 22% loss in tax revenue as a direct result of putting taxes up. Why? Because people have stopped cashing in their investments and re-investing their money, or they have spoken to one of the best financial advisors and putting trust and other structures in place to mitigate paying CGT. Either way the result has been the same. Less tax paid.
Higher rate tax
The same thing happened when Gordon Brown put the higher income tax rate up to 50% in his last year in office. The result was that less high-rate tax was paid the following year, making the country poorer. The old trope that taxing the rich is the answer to the country’s problems has been proven time and again to be counterproductive. People are prepared to pay tax, but only to a certain point. The freezing of tax allowances dragging more and more people into the tax regime could ultimately have the same effect.
We already know that over 10,000 millionaires have left the country since Labour came to power. What we haven’t seen yet (but are about to) is how much tax we’ve lost as a result.
The real solution to the country’s financial deficit is to cut government spending. Sadly, this is unpopular, so we continue to talk tough on tax and get the opposite result.
Inheritance Tax
Inheritance Tax (IHT) is the next one in the cross hairs. Last year the government announced its intention to include the value of pension schemes into future IHT calculations from 2027. This on top of the fact that the IHT threshold hasn’t changed since 2010. This has dragged more and more estates into the IHT tax band. However, there are signs that this is starting to slow. IHT tax take for the first nine months were £6.6 billion. An increase of £200 million, but that is only a 3% increase. Perhaps we have reached the plateau for IHT.
Although HMRC has increased the number of IHT investigation it undertakes. Last year that led to the recovery of an additional £250 million in IHT. Most of the investigations are around the valuation of residential property.
People have been increasingly talking to their best financial advisors about more efficient IHT planning for a while now. This is now starting to take effect. For example, 120,000 new trusts were registered last year alone. These are all likely designed to reduce IHT liabilities.
Tax returns
If you use one of the best financial advisors, then your tax return will no doubt have been filed in plenty of time. But you might be surprised by how many people don’t file their returns on time. This year HMRC reported that over 1 million people missed the 31st of January deadline, although they did receive over 11.5 million tax returns.
That will already raise an extra £100 million from the fixed £100 late filing fine. Plus, interest for late payment. Last year HMRC raised over £300 million in fines and interest. This year will be significantly higher.
Financial journalist Meg Bratley has written a good article in IFA Magazine where she sets out 10 tips to save money for before the end of the tax year. Worth reading.
Don’t forget interest rates on your savings.
Saving money on tax is one thing. But don’t forget to make sure your savings are also working for you. Research from Fidelity found that UK savers potentially lost over £7 billion in interest on their cash savings last year. That’s because the average interest rate over the year was 1.94% but inflation averaged over 3.4% meaning peoples savings were worth less.
The best financial advisors can help you avoid this.
Get more information.
If you are looking for the best financial advisors – then why not contact Christina today. She offers a free initial meeting to discuss your requirements and explain how our service works. You are under no obligation to use us after that if you don’t want to and we won’t pester you.
So why not call us today on 01282 614444 or e mail us enquiries@ccfps.co.uk or use our contact form online.
