Hitchin Nub News is delighted to provide a platform for expert financial commentary through our innovative partnership with Lyndhurst Financial Management, who support our coverage of the local community by being our headline sponsor.

Founded in 1992 operating from Harpenden and having acquired an office in Hitchin in 2015, the firm has supported the local community for many years.

They value the contribution their staff make to helping Hitchin, Harpenden and the surrounding areas such a thriving place to live and work.

So, read on for expert financial commentary from Lyndhurst financial advisor James Wyman as he discusses the two main areas that have affected his clients following the October budget: changes in Capital Gains Tax (CGT) and, from 2027, Inheritance Tax (IHT) on pensions.

Capital Gains Tax

CGT used to have differing rates if the asset being sold was a property or not. Last tax year, if you had directly held shares any gains made in excess of the £3,000 annual exemption allowance would be taxed at either 10% or 20% depending on if you were a basic or higher rate tax payer. If you held property this was taxed at 18% & 28%. At the start of this tax year (24/25) the higher rate for property was reduced to 24%. The budget has seen CGT on non-property assets be aligned to property i.e taxed at 18% & 24% with the annual exemption allowance remaining £3,000.

Whilst this is a tax rise, there is a large proportion of property investors who have benefited from a tax cut this tax year.

Even if you are someone who has directly held assets that will now be taxed at a higher rate you can still make use of the £3,000 annual exemption allowance. Over time you can realise gains within this allowance and either use those funds for something else or place them into a tax-efficient wrapper such as an ISA or Pension.

Inheritance Tax on Pensions

From April 2027 pensions will be taxed as part of the estate on death, until then the current rules still stand.

Currently, pensions are outside of the estate meaning IHT does not apply to them. If you pass away before age 75 the pension funds will be tax free to the beneficiary. After age 75 they will be taxable at the beneficiaries' marginal rate of tax. The rules differ slightly for defined benefit schemes.

The pre/post rules will not change meaning if you pass away before age 75 the benefits will be income tax free. However, the total value of the pension will be added to the estate which could result in an IHT bill.

One key piece of information is there is no IHT on the transfer of assets between spouses. IHT would only be applicable on death of the spouse that has inherited the assets or if assets above the allowances are left to someone other than a spouse on death.

This rule change will likely push many households into paying IHT. One positive is that there is plenty of time to implement a plan with these rule changes 2 ½ years away.

Our guide to the budget which explains more areas the budget affected can be found here. https://lyndhurstfm.b-cdn.net/wp-content/uploads/2024/11/Guide-to-the-Autumn-Budget-Statement-2024.pdf

Lyndhurst Financial Management Limited is authorised and regulated by the Financial Conduct Authority