U3A Investment group web page Please let Janet know if you find this useful Taxation Death and taxation are unavoidable. Click here for a warning for those either living abroad now, or thinking about it in the future and have ISAs. *** *** *** *** *** *** *** *** *** Changes to ISA reforms from April 2024 - Martin Aitken Other changes to be introduced from April 2024 include: Partial transfers between ISA providers will be possible during the tax year. For example, if £15,000 has been paid into a cash ISA since 6 April, £5,000 could be moved to a different provider. Currently, the whole £15,000 would have to be moved. Below are the Martin Lewis’s ISA rates as at 28/2/24. Click here to go to his ISA page for the latest rates. All have Financial Services Compensation Scheme savings protection of up to £85,000. Top easy access ISA rates shown are: Moneybox 5.09% Zopa 5.08% Virgin Money 5.06% Charter Savings Bank 5.03% Harpenden BS 5.01% One year ISA rates shown are: Shawbrook Bank 5.03% OakNorth Bank 5.02% Aldermore 5% Virgin Money 5.25% Two year ISA rates are: Shawbrook Bank 4.69% UBL UK 4.68% Zopa 4.67% The three year rates are even lower at present, so best to leave them for a while. *** *** *** *** *** *** *** *** *** ‘Paying Away’ to save tax on non-isa bonds. Click here for an article on ‘Paying Away’ interest when choosing a non-isa bond. Use your £1000pm Personal Savings Allowance (PSA) *** *** *** *** *** *** *** *** *** Dividend Tax There are two ways you make money from investing. One is when the shares increase in value (by the price going up - ‘supply and demand’) and then you reap a nice profit when you sell them. The other is when they pay dividends (actually ‘investing’ in a business and if they do well they give you some of their profit). Dividends are a bit like interest on a savings account. If a company makes a profit, it gives some of it back to you – it could be on a regular basis or as a one-off. And just as you have a personal savings allowance for tax-free interest on savings, you also have a tax-free dividends allowance. The allowance for tax-free dividends is halved to £1,000 for the 2023/24 tax year, but there's no change for dividend tax. Any dividends received above this allowance are taxed at the rates shown below, unless your shares are held in a stocks & shares ISA (where dividends are always tax-free). If you earn more than £1,000 a year in dividend income outside of a stocks & shares ISA, you'll need to inform HM Revenue & Customs. Dividend tax in 2022/23 TAX BRACKET RATE Basic rate 8.75% Higher rate 33.75% Additional rate 39.35% *** *** *** *** *** *** *** *** *** The Personal Savings Allowance (PSA) tax gap; currently £1000 pa (£500 for higher tax payers) All income from savings or shares outside an ISA are subject to tax. You are allowed to earn £1000 per year in interest on savings without paying tax on it. However if you earn more than £1000 per year you have to pay tax on the amount over £1000. Earn £1500.00 interest and you need to pay tax on the £500, usually through Self Assessment Tax. The year is the Tax Year April 6th to April 5th. From Money Saving Expert web site So April 2021 when the bank rate was 0.1%, April 2023 it was 4.25% On £20,000 you would get £20 interest in 2021, but £850 interest (flat rate) Current rate is 5.25% so that would be £1050 At the current rate (17/9/23) you need £16250 savings at the highest rate to go over the PSA (MSE) *** *** *** *** *** *** *** *** *** Capital Gains Tax 2023/24 capital gains tax Annual exempt amount £6,000 for individuals Standard CGT rate 18% on residential property, 10% on other assets Higher CGT rate 28% on residential property, 20% on other assets Your rate of CGT will depend on your other taxable income. See Gov.uk for more on how to work this out, and for more on the increased annual exempt amount, see this Gov.uk webpage. You have 60 days from the completion of the sale of your property to report and pay your capital gains tax to HM Revenue & Customs. *** *** *** *** *** *** *** *** *** National insurance is separate from income tax While your income tax rate is important, it's not the only thing to affect your take-home pay. In addition to plain old income tax, most UK workers also have national insurance contributions deducted from their pay. These kick in based on your earnings from the age of 16, and you usually stop paying when you reach state pension age. The table below shows the current national insurance rates you're paying. What's my 2023/24 national insurance rate? EARNINGS NATIONAL INSURANCE RATE (FOR EMPLOYED, NOT SELF-EMPLOYED) A week Annual salary Under £242 Under £12,570 No national insurance payable. £242 and £967 £12,570 to £50,270 12% on everything earned between £242 and £967 a week Over £967 Over £50,270 12% on everything earned between £242 and £967 a week, 2% on everything above that • Some advanced national insurance rules are complicated. See the HM Revenue & Customs website for full rates. • If you're employed, class 1 national insurance will be collected through your usual payslip at the relevant level. • If you're self-employed, class 4 national insurance contributions will automatically be calculated when you file your self-assessment tax return for 2023/24. • If you have gaps in your national insurance record, for example because you earned less than the national insurance threshold or were living abroad, it could mean that you don't qualify for the full state pension. Might be worthwhile for women who have been at home with children but have worked otherwise. If you want to plug these gaps, you may be able to pay voluntary class 3 NICs. Since 6 April 2023 you'll only be able fill gaps dating back six years. For more information, see MSE national insurance contributions guide • *** *** *** *** *** *** *** *** *** Gifting to members of family, charities and political parties; the Tax situation Click here to go to the Tax Office web site which lists the current situation regarding the Inheritance situation regarding giving gifts of money or of value. Click here for Gov.UK web site on gifting *** *** *** *** *** *** *** *** *** Tax free Gifting (from a web site giving advice) - you would be best to check these. I will try to find further information on a HM Tax website. The gift exemptions: There are many exemptions which are potentially available to an estate, but only a few are specific to gifting. These gift related exemptions are discussed below. The first is the annual exemption, whereby each individual has the ability to gift £3,000 per year, tax free. If unused, this exemption can be rolled over by one tax year only, which potentially gives a maximum £6,000 tax free allowance for that year. Another useful exemption is the wedding gift exemption. If you are due to dust off your best hat, you may be interested to know that a wedding gift has the potential to be free from inheritance tax, providing the gift is no more than £1,000. If you are the parent of one half of the betrothed couple, you can make a gift £5,000 and a grandparent is able to gift £2,500, tax free. The third exemption to consider is the small gift exemption, which allows small gifts to be given free from inheritance tax. A small gift for the purpose of this exemption is categorised as being up to the value of £250. This exemption is available providing the total amount gifted to that individual for the relevant tax year, does not exceed the £250 limit. Any gifting over this limit to an individual, would lead to the availability this exemption being lost for the gift receiver, during that tax year. On the list of gift related exemptions, the fourth and final exemption, is for a gift that forms part of your normal expenditure. Gifts that form part of a pattern of gifting are potentially exempt from inheritance tax, providing they allow the donor to be left with sufficient funds for their usual standard of living. This exemption can likely include the Christmas presents that you have just gifted, providing an annual pattern of gifting can be shown. *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** ***