The most anxiously anticipated budget in some years. Here is our summary of the main points from the autumn budget for our clients and considerations for next steps.
Capital Gains Tax
The Capital Gain Tax news we have all been waiting for; Capital Gains Tax (CGT) will rise immediately.
Lower rate of 10% will rise to 18% and higher rate will rise from 20% to 24%.
The annual CGT personal allowance remains at £3000 for individual and £1500 for trusts.
There continues to be no CGT on the sale of your primary residence but for additional properties it increases to 24% at the higher rate.
Inheritance Tax
Inheritance Tax (IHT) is one of the most emotive tax topics in the autumn budget and the new measures will bring more estates into the net.
The current IHT nil rate band and residential nil rate band provisions will be frozen until 2030. That means the first £325,000 of any estate can be inherited tax-free, rising to £500,000 if the estate includes a residence passed to direct descendants, and £1m when a tax free allowance is passed to a surviving spouse or civil partner.
Shares on the AIM market will only attract IHT relief at 50% reduced from 100%.
From April 2026, the first £1 million of combined business and agricultural assets will be exempt from IHT. The value in excess of this £1 million, will be subject to IHT at 50% of the prevailing rate.
Inherited pensions will be brought into scope for inheritance tax from April 2027
Private Schools
The scrappage of VAT allowances for private schools will start from January 2025. This will be followed by the removal of business rates relief.
Business NI
Businesses and business owners have the heavy burden of increased employers NI (national insurance) from 13.8% to 15% from April 2025.
Property
Second homeowners also face a bigger tax bill. Starting 31 October 2024, there will be a 2% rise in the stamp duty land surcharge, taking the new rate to 5%.
How does the autumn budget impact me and do I need to change my Will?
It’s hard to be precise at this very early stage and without having access to the more minor details. However, our initial thoughts are that if you are a business owner or own agricultural land and either/both of which would have qualified for Business Property Relief (BPR) or Agricultural Property Relief (APR), you might wish to review the contents of your Wills. In this scenario, it is quite common for Wills to incorporate what are often known as “BPR/APR Discretionary Trusts” (the Trust). The Trust may stand to inherit your assets which qualify for either BPR/APR if you die before your spouse/civil partner.
If this is the case, the wording of the gift to the Trust is important and should be reviewed. Sometimes, the Trust will receive assets that qualify for APR/BPR at a rate of 100% and/or 50%. If your business/agricultural assets are now valued at over £1m then the value over and above this will, under the new rules, only attract relief at a rate of 50% – not 100%.
As such, if the Trust inherits all of your business/agricultural assets and the combined value of the same is over £1m, this could trigger an Inheritance Tax liability on your death at a new effective rate of 20%.
With that in mind, depending on the current value of your business/agricultural assets and the likelihood that this will ever exceed £1m, it might be worth ensuring that only business/agricultural assets attracting 100% relief (i.e. up to £1m in value) is passed into the Trust. The rest (those that only qualify for 50% relief) could pass to your surviving spouse/civil partner along with the Residue of your estate and benefit from Spouse Exemption. This will result in no Inheritance Tax liability arising.
If you would like to discuss this further please contact Jessica Partridge(Tax and Trusts) or Matt Parr(Private Client Wealth).
If you’re thinking about divorce, take your time to understand the legal steps and make the best choice for you and your loved ones
What divorce means?
Divorce is the legal process that formally ends a marriage. It usually involves dividing up shared assets and property, figuring out child custody arrangements, setting up child support and/or spousal support agreements, and settling any other legal issues that arise.
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Understanding how to get a divorce can make things simpler and less overwhelming. Here’s a detailed breakdown of each step:
The stages of divorce
Step 1: Initiating the divorce application
The divorceapplication can be started by you alone or jointly with your spouse. There are two main ways to submit your application:
Online Application: This is the most common method, providing a convenient way to file for divorce.
Paper Application: In certain circumstances, you may choose to file a paper application.
The new divorce law enacted in 2022 eliminates the need to provide a reason for the divorce. Instead, you can file based on the irretrievable breakdown of the marriage.
Step 2: Court review of your application
You must send in your application to the court with your original or official copy of your marriage certificate.
After your application is processed, a 20-week reflection period begins.
Step 3: Notification to your spouse
If you filed a sole application, the court will notify your spouse by sending them a copy of the application.
We suggest talking about your application with your spouse before you apply. Talking openly can prevent delays in acknowledging, which can make the divorce process longer and cost more.
Step 4: Granting of the conditional order
Once the court is satisfied with your application, they will grant a conditional order. This indicates the court’s preliminary approval of your divorce.
Step 5: Applying for the final order
The final order can be applied for six weeks and one day after the conditional order is given. This document officially dissolves your marriage.
At Mayo Wynne Baxter, we typically advise waiting to apply for the final order until any financial arrangements related to your divorce are resolved.
Learn more about settling finances during divorce here.
Step 6: Granting of the final order
Once the court grants the final order, you are officially divorced and may remarry if you choose.
Going through a divorce can be one of the most challenging experiences in life. If you have questions or need clarity on the divorce process, our dedicated divorce law team at Mayo Wynne Baxter is here to help.
Contact us today
Reach out to our expert divorce solicitorsfor personalised guidance tailored to your situation. Let us support you during this difficult time.
Frequently asked questions
How long does the divorce process take?
While the minimum time frame is around six months, the process may take longer depending on factors such as court backlogs, financial negotiations, and any disputes between parties.
What documents do I need to file for divorce?
Divorce Petition (Form D8), Marriage Certificate, Application Fee, Statement of Arrangements for Children (Form D8A) (if applicable), Financial Disclosure (optional but recommended), Acknowledgment of Service (Form D10), Decree Nisi and Decree Absolute. If any other documents are required during the process, we will advise during the process.
What is a conditional order in divorce?
A conditional order signifies that the court is prepared to grant your divorce, pending the completion of any necessary steps, such as waiting periods or financial settlements. Always consider seeking legal advice to navigate the divorce process effectively.
With elevated public debt and struggling public services, it seems clear that the changes will focus on laying the groundwork for tax increases and spending cuts in order to try and address that £22bn black hole of overspend from this year alone.
Inheritance Tax
The previous government made promises about increasing the Inheritance Tax (IHT) allowances on second death for married couples to £1m and they took their time in doing so, only introducing the residential nil rate band until 2017 incrementally so the full allowances were only claimable from 2020. Despite the increase in exemptions, inheritance tax revenue is at an all-time high with receipts of £7.5bn. Will the chancellor deem that its middle England’s time to feel the tax pinch? Reform options could include:
Abolishing the residential nil rate band, which will result in an additional £140,000 for spouses on the second death, seems likely. Especially as this is a relatively recent exemption.
Reducing or capping the current 100% relief for Agricultural or Business Property or tightening the criteria to make it more difficult to claim.
Increasing the rate of IHT for larger estates to say 50%.
Capital Gains Tax
Capital Gains Tax (CGT) rates are at a historic low so increasing them would be an obvious choice. Other options could be:
Bringing CGT back in line with Inheritance Tax (IHT) to 40%.
Reviewing some of the most used exemptions, for example, putting a threshold on private residence relief at say £2m.
Scrapping holdover relief is often used when transferring assets into discretionary trusts.
The other concerning consideration is when they will deem the changes to take effect. Will it be from budget day or will individuals have some time before the next tax year to make disposals, this could result in a mass sell-off of assets which would provide a short-term boost for CGT revenues.
Of course, we can only speculate at this stage but we do know that changes to personal circumstances and legislation are constant. Having regular reviews and undertaking tax planning exercises will give you the bespoke information and you can then choose the best options for your own personal circumstances.
If you’re thinking about ending your civil partnership, read our guide below where you can make the best choice for you and your loved ones
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Changes in Law: The Divorce, Dissolution and Separation Act 2022
In April 2022, the Divorce, Dissolution and Separation Act was introduced, simplifying the process of dissolving civil partnerships. This law aligns the dissolution of civil partnerships with divorce proceedings, making it more accessible for couples.
Key Features of the Act
No Blame Required: The Act allows either partner to initiate dissolution proceedings without needing to apportion blame or provide a specific reason for ending the partnership.
Who Can Apply: Both individuals in a civil partnership can now start the dissolution process, streamlining the journey towards separation.
How We Can Help
Our experienced team is ready to provide comprehensive advice on the changes to the law and guide you through the dissolution process. With specialist civil partnership dissolution solicitors serving clients across Sussex—including Brighton, Chichester, Crawley, Eastbourne, East Grinstead, Lewes, Peacehaven, Seaford, Storrington, and London—we are here to support you.
Steps to Dissolve Your Civil Partnership
Ending your civil partnership involves several important considerations, much like the divorce process. Before you proceed, ensure you meet the following criteria:
Eligibility: Confirm you have been in your civil partnership for over a year.
Type of Application: Decide whether you want to make a joint application or a sole application to end the partnership.
Children’s Arrangements: Consider arrangements for any children, including child maintenance payments.
Financial Settlement: Understand that each partner is entitled to make financial claims equivalent to those in marriage and divorce. It’s crucial to negotiate a financial settlement to protect your future interests.
For further guidance on specific aspects, explore our additional resources:
At Mayo Wynne Baxter, our dedicated team is here to assist you. For a confidential and personalised consultation regarding civil partnership dissolution, contact us today.
Why Choose Us?
Expertise: Our solicitors specialise in civil partnership dissolutions, ensuring you receive informed guidance.
Local Knowledge: With offices across Sussex and London, we understand the local landscape and can provide tailored support.
Frequently Asked Questions
How long does it take to dissolve a civil partnership?
The process typically takes at least 6 to 8 months. However, it can take longer if there are disputes or complications.
Can I dissolve my civil partnership without my partner’s consent?
Yes, you can initiate the dissolution without your partner’s consent. However, your partner will need to be informed and given the opportunity to respond.
What are the financial implications of civil partnership dissolution?
Financial implications can include the division of assets, debts, and potential spousal maintenance. It’s advisable to sort these out through negotiation or mediation.
Do I need a solicitor to dissolve my civil partnership?
You don’t need a solicitor, but it can be beneficial to have one, especially if there are complex financial issues or disputes involved.
What if my partner and I cannot agree on the terms of the dissolution?
If you can’t reach an agreement, you may need to consider mediation or seek legal advice. If that fails, court proceedings may be necessary.
What is a conditional order in the context of civil partnership dissolution?
A conditional order (formerly known as a provisional order) is a court order that indicates the court’s intention to grant the dissolution. After this, there is a waiting period before you can apply for the final order, which officially ends the civil partnership.