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HMRC continues its winning streak

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HMRC continues its winning streak

Wednesday, December 2nd, 2015

Last year HM Revenue & Customs (HMRC) gained new powers to demand that users of many tax avoidance schemes pay tax up front. This was a complete reversal of what previously happened, where scheme users would withhold any disputed tax payment until the protracted legal process had run its course.

In August 2014 HMRC started to issue notices to scheme users seeking “accelerated payment” of disputed tax. Thirteen months later HMRC announced they had sent out over 25,000 notices and collected £1bn. By March 2020 HMRC is expecting to have issued 64,000 notices and brought forward £5.5bn of tax payments.

Not surprisingly there have been legal challenges. Two film scheme users went to the High Court seeking a Judicial Review, but their case was rejected in late July. As the end of the tax year nears, HMRC’s success is a reminder that when it comes to tax planning, there is much to be said for using tried-and-tested plans rather than the more ‘exciting’, aggressive schemes.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.

Autumn Statement 2015

Thursday, November 26th, 2015

Our guide the Chancellor’s Autumn Statement has been published and can be found here

Our latest newsletter

Wednesday, September 16th, 2015

Our latest newsletter has been published and can be found by clicking here.

Please don’t hesitate to contact us if you want further information on any of the topics covered.

Emergency Budget Summary

Thursday, July 9th, 2015

The Chancellor promised a radical Budget and we got one. But will it radically change the advice our clients need? The following summarises the changes likely to be of most interest to our clients:

Pension Annual Allowance cut for high earners from 2016 – get it while you can

Those with ‘adjusted income’ over £150k will have their Annual Allowance (AA) cut from the 2016/17 tax year, creating a ‘get it while you can’ pension funding window this tax year.

The standard £40k AA will be cut by £1 for every £2 of ‘adjusted income’ over £150k in a tax year. The maximum AA reduction is £30k, giving those with income of £210k or above a £10k AA. Carry forward of unused AA will still be available, but only the balance of the reduced AA can be carried forward from any year where a reduced AA applied.

The ‘adjusted income’ the £150k test is based on is broadly the total of:

  • the individual’s income (without deducting their own pension contributions); plus
  • the value of any employer pension contributions made for them.

The reduced AA won’t however apply where an individual’s net income for the tax year plus the value of any income given up for an employer pension contribution via a salary sacrifice arrangement entered into after 8 July 2015, is £110k or less.

More changes to come? The Government has kicked off a fundamental review of the pension tax framework to ensure it remains fit for purpose, and sustainable, for a changing society. In a consultation launched today, HM Treasury is seeking views on a range of very open questions around what changes (if any) would simplify pensions and increase engagement.

Other pension news

  • Lifetime allowance: The proposed reduction in the Lifetime Allowance from £1.25M to £1M will go ahead as planned from the 2016/17 tax year. It will be indexed in line with CPI from 2018/19. Details are awaited of a new transitional protection option for those with existing pension savings already over £1M who would otherwise face a retrospective tax hit.
  • Death tax: As promised as part of the ‘freedom and choice’ reforms, all pension lump sum death benefits paid after 5 April 2016 in relation to a death at age 75 or above will be taxed as the recipient’s income (removing the flat 45% tax that applies in the 2015/16 tax year).
  • Salary sacrifice: Despite wide pre-Budget rumours, there are no changes to salary sacrifice rules. The Government will, however, be monitoring the growth of such schemes and their impact on tax take.
  • Transfers: To improve consumer access to ‘freedom and choice’, the Government will consult about how to improve the pension transfer process and, potentially, cap charges for over 55s.
  • Annuities: The ability for pensioners to sell their annuities will be delayed until 2017. This allows more time to ensure the related consumer safeguards are in place. More details will be announced in the autumn.

Individual tax allowances

Both the personal allowance and higher rate income tax thresholds will increase over the next two years as follows:


  • Personal Allowance increases to £11,000;
  • Higher rate threshold increases to £43,000.

A basic rate taxpayer will be better off by £80. Higher rate taxpayers will be better off by £203.


  • Personal Allowance increases to £11,200;
  • Higher rate threshold increases to £43,600.

A basic rate taxpayer will be better off by a further £40, and higher rate taxpayers by £160.

These increases are on the way to meeting government pledges to raise the personal allowance to £12,500 and the higher rate threshold to £50,000 during this Parliament.

New dividend allowance

The system of dividend tax credits will be abolished from April 2016. It will be replaced by a new tax free dividend allowance of £5,000. Dividends in excess of this allowance will be taxed at the following rates, depending on which tax band they fall in:

  • Basic rate – 7.5%;
  • Higher rate – 32.5%;
  • Additional rate – 38.1%.

This means that from April 2016, a basic rate taxpayer could have tax free income of up to £17,000 pa when added to the personal allowance of £11,000 and the new ‘personal savings allowance’ announced in the Spring Budget of £1,000. Higher rate taxpayers could have up to £16,500 (as the personal savings allowance is restricted to £500 for these individuals).

Certain individuals may also have savings income falling into the £5,000 savings rate ‘band’, currently taxed at 0%. There is no mention of any change to this band, in which case certain individuals may have tax free income of up to £22,000, depending on the sources of their income.

Making full use of these new allowances can make savings last longer in retirement and potentially leave a larger legacy for loved ones. And strengthens the case for holistic multiple wrapper retirement income planning.

Inheritance Tax: family home nil rate band – but not yet

The Government will introduce a new IHT nil rate band of up to £175,000 where the family home is passed to children or grandchildren. This is in addition to the current nil rate band of £325,000 which has been frozen since 2009 and will remain frozen for the next 5 tax years, until the end of 2020/21.

Who will benefit
The extra nil rate band will be fully available to anyone who:

  • passes the family home to their children or grandchildren on death; or
  • or had a family home, then downsized (passing on assets of equivalent value to children/grandchildren); and
  • has an estate below £2M.

However, the full £175,000 won’t be available until 2020/21. The allowance will first become available in 2017/18 at £100,000 and increase to £125,000 in 2018/19, £150,000 in 2019/20 and £175,000 in 2020/21. It will then increase in line with the Consumer Price Index (CPI).

Like the existing nil rate band the new property nil rate band can be transferred between spouses or civil partners. This means a married couple could pass £1M in 2020/21 to their children tax free on death provided the family home is worth at least £350,000, saving £140,000 in IHT.

Who may miss out
But not everyone will benefit from the additional IHT free allowance. Anyone with a net estate over £2M will begin to see their property nil rate band reduced until it is completely lost once the estate is over £2.2m (2017/18) £2.25m (2018/19), £2.3m (2019/20) or £2.35m (2020/21).

It will only apply to transfers to children and grandchildren. Meaning those without children will miss out. And it is not possible to use the exemption for lifetime transfers which may discourage some clients from passing on their wealth during their lifetime.

Clients who could benefit from the property nil rate band may need to revisit their existing wills to ensure they continue to reflect their wishes and remain as tax efficient as possible.

ISA changes

Replacing withdrawals
The proposed changes to ISA, allowing savers to dip into the savings and replace them without it affecting their annual subscription limits, will go ahead from 6 April 2016.

The new contributions would have to be paid within the same tax year as the withdrawal for it not to be counted. These new flexible funding rules will only apply to cash ISAs and any cash element within a stocks and shares ISA. However, it is now possible to move ISA holdings between cash and stocks and shares without restriction, so clients in stocks and shares will be able to benefit provided they move into cash first.

Buy To Let landlords – restriction on interest relief from April 2017

Under current legislation, individuals who use debt to finance the acquisition of residential buy to let properties can claim a tax deduction for finance costs incurred in servicing that debt.

From April 2017, tax relief for interest and finance costs will be restricted for residential buy to let individual landlords. The changes will not affect qualifying furnished holiday lets. The restrictions will be phased in over four years, resulting in tax relief only being available for finance costs at the basic rate of income tax (currently 20%) from April 2020. The restrictions will be phased in as set out below:

Tax Year % Fully Deductible Finance cost % Restricted to Basic rate of tax
2017/18 75 25
2018/19 50 50
2019/20 25 75
2020/21 0 100

With thanks to Standard Life technical department for some of the background. The value of tax reliefs depends on your individual circumstances. Tax law can change. The Financial Conduct Authority does not regulate tax advice.

Justin Urquhart Stewart talks to our clients and colleagues

Thursday, March 19th, 2015

We are very grateful to Justin Urquhart Stewart of Seven Investment Management for again attending our client evening last week and providing his expert insight on world markets and investments in is usual inimitable way.


We were pleased to also be able to arrange for Justin to talk to local 6th form students at Saffron Walden County High School in the afternoon and grateful to Justin for finding the time to do this.


A3This year we interspersed Justin’s commentary with wine-tasting from the various areas of the world that Justin covered in his talk. This was hosted by local wine expert Andy McGonagal. Our thanks to Andy for his wisdom.

Thanks as well to Linda Passfield for her superb catering!


We would like to thank those clients and local business people who attended and hope that you all enjoyed the evening.

Mike & Richard


Thoroughly enjoyed the wine, food, insights and company last night.  A well put together event and much appreciated. Paul – client

Thank you for Thursday night! It was a very entertaining and enjoyable evening…please pass our thanks on to your wife, partners and all the others whose efforts made the whole thing so worthwhile. Good stuff! John – client

Thank you so much for Thursday. Top night. Andy – solicitor

Thank you very much for a most enjoyable financial evening, especially with the wines and Justin Urquhart Stewart. David – estate agent

On behalf of Philip and myself we would like to thank you both for hosting a very enjoyable, entertaining and educational evening. Could you also congratulate your wife on a fabulous spread. Derek – client

Spring newsletter

Wednesday, February 18th, 2015

Our Spring 2015 newsletter has been published. You can find it here.

2014 Autumn Statement

Thursday, December 4th, 2014

Big benThere were no surprises in George Osborne’s Autumn Statement to match the seismic pension changes in his last budget. However, he did pull one rabbit out of the hat for savers in the shape of new inheritability of ISAs for married couples. He also confirmed how pension wealth can be cascaded down the generations.

Remember the devil may be in the detail so we will need to review the Finance Bill but in the meantime you can view or download our summary of the announcements by clicking below:

Open full report

Please contact us if you would like to discuss the implications for you.

Greenwood Financial Planning LLP is authorised and regulated by the Financial Conduct Authority


Budget 2014

Thursday, March 20th, 2014

The 2014 budget offered a radical vision of the future of pensions and savings. Greater freedom and control than ever before could be possible. You can open our full report by clicking here.

The most eye-catching changes are those proposed for pensions. These include:

  • Increasing the maximum that can be withdrawn from drawdown pensions as income from March 27th and consultation will begin regarding removing the limits completely.
  • Reducing minimum required secured income for flexible drawdown to £12,000 from March 27th until full reform is implemented.
  • More flexibility for people with small pension pots.

And more news for savers:

  • ISAs are to become NISAs and the investment limit jumps to £15,000 from July 2014 with no separate limit for cash.

If you would like to discuss the implications for your own arrangements then please call us.


Wednesday, March 12th, 2014

Our latest newsletter has been published.