Christmas may be over, but the financial aftermath lingers. While you can still imagine the aroma of turkey and red wine, for many, the festive season left behind a burden: debt. Research shows that many people rely on credit (credit cards or loans) to enjoy their holiday, leaving them with bills that can take months—or even longer—to pay off. Among those who used credit cards to fund their holidays, about a third admitted lacking confidence in their ability to repay.   The Holiday Hangover Some have joked, "Let me stay in my Christmas daze forever", dreading the moment they wake up to face mounting bills. But how can you tackle these post-holiday financial hangovers? Here are some practical tips to get back on track: Tip 1: Don’t Bury Your Head in the Sand Avoidance won’t help. Start by calculating your short-term debt, including credit cards, overdrafts, and ‘Buy Now, Pay Later’ agreements. Understand your instalment obligations, due dates, and minimum repayment requirements. While it’s not ideal to stick to just minimum payments, knowing this figure can provide a safety net in case of emergencies.   Tip 2: Assess Your Repayment Capacity Avoid overworking yourself or accruing new debts to pay off existing ones. Instead, create a budget and scrutinise your finances to identify areas where you can cut costs. This will determine how much you can reasonably allocate to repayments.   If your current budget doesn’t cover even minimum repayments, consider seeking help from debt charities like StepChange. These organisations can help you set up a budget, negotiate with creditors, and explore available options.   Tip 3: Prioritise Your Repayments Focus on keeping up with ‘Buy Now, Pay Later’ instalments and minimum credit card payments. Beyond that, tackle the highest-interest debts first using the ‘avalanche method’ — pay off the debt with the highest interest, then move to the next. This minimises interest costs.   Alternatively, the ‘snowball method’ involves paying off smaller debts first, which can provide a psychological boost. However, this approach may result in paying more interest overall.   Tip 4: Transfer Debt to Lower-Interest Options Research shows over half of borrowers aim to clear their Christmas debt within a month. However, nearly 40% take 1–6 months, and about 5% take over six months. During this time, interest accumulates: overdraft rates can reach 40%, store cards 30%, and credit cards over 20%.   To save on interest, consider transferring your debt to a lower-interest credit card. Look for balance transfer cards with interest-free periods, allowing you to allocate more money to the principal instead of interest. Essentially, prioritise consolidating debts onto the card with the lowest interest rate.   Tip 5: Develop Good Financial Habits Once your debts are paid, focus on cultivating better financial habits. Build both an emergency fund and a holiday savings fund for next year’s festivities. Consider longer-term goals such as pensions or Stocks and Shares ISAs. By planning ahead, you can avoid relying on credit for next year’s holiday season. Bonus Tax Tips for Side Income If you’ve taken on a side job to repay holiday debts, don’t forget to declare your additional income! In the UK, side hustles often require registering as a Sole Trader and filing a Self-Assessment Tax Return.   Sole Trader Status is Ideal for: Freelancers (e.g. designers, writers, consultants) Small business owners (e.g. online shops, restaurants, repair services) Part-time personal projects   Managing Taxes for Full-Time and Part-Time Work in the UK: Identify your main job: Typically, the job with higher income is considered your primary role. Use the correct tax codes: The primary job uses tax code 1257L (tax-free allowance up to £12,570). The secondary role uses BR (Basic Rate), taxing income at 20%. File your taxes correctly: Your primary job taxes are handled through PAYE, while your side income requires registering as self-employed and filing a Self-Assessment Tax Return. Adjust as needed: Inform HMRC if your work situation changes, such as your side gig becoming your main source of income. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

Many people unknowingly overpay their taxes when filing with HMRC - don't underestimate this potential oversight. Over the course of a tax year, individuals could end up overpaying by thousands, even tens of thousands of pounds. If you let HMRC keep this money, you'd be taking a big loss! Recently, we’ve helped many clients successfully reclaim their overpaid taxes. Checking for Overpayments Sometimes, HMRC will automatically send you a refund via cheque. However, this isn’t always the case, and some refunds may be missed. You can verify your tax situation by registering and checking through the Government Gateway: Log into your account. Check your annual tax details. Contact online support to explain your situation. Apply for a refund. Refunds can only be issued via cheque sent to a UK address, so be sure to plan ahead! Tax Codes: How They Work and Why They Matter Your tax code is assigned by HMRC and tells your employer how much Income Tax to deduct. It reflects your personal tax allowance and applicable tax rate for the specific tax year. Tax codes, such as 1257L or BR, can be found on your payslip, P45 (employment termination form), or P60 (annual tax summary). Breakdown: Numbers: Indicate your Personal Allowance (tax-free income limit). For example, 1257 means a tax-free allowance of £12,570 (2023/24 tax year). Letters: Reflect specific circumstances or adjustments to allowances. Common Tax Codes: L: Standard tax code for full Personal Allowance M/N: For Marriage Allowance (transferred or received allowance between spouses) BR: Basic Rate (20%) applied to secondary income D0/D1: Higher (40%) or Additional (45%) tax rates K: Benefits or income exceeding your allowance, requiring additional tax NT: No tax due (e.g., certain overseas income) S/C: Scottish or Welsh tax rates Emergency Codes: Codes ending with W1, M1, or X (e.g., 1257L W1) indicate temporary emergency codes When and Why Tax Codes Change Tax codes can change due to factors like changes in Personal Allowance, job switches, or multiple income sources. Common triggers include: Starting a new job without a P45 form Receiving additional income (e.g., from a second job or pension) Changes in salary or benefits Starting or stopping taxable state benefits If your tax code changes, HMRC will notify you and your employer via a P2 Notice of Coding.   Ensure Your Tax Code is Correct To avoid overpaying or underpaying tax: Check your payslip regularly for the correct tax code Update your tax details if your circumstances change (e.g. marriage, new job) Apply for allowances like Blind Person’s Allowance or professional expenses Review HMRC notifications for accuracy and explanations If your deductions seem incorrect, it may be due to a tax code error. Contact HMRC promptly to correct it. Need Help? If you’re unsure about your tax situation, overpayments, or how to file your return, consult a professional tax expert or accountant. A specialist can help you reclaim overpaid taxes and navigate the filing process with ease. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

Even though more than two months have passed since the Labour Party released its first Autumn Budget, the financial measures included continue to spark heated discussions online—especially the pension policies. The New Pension Policy Could Trigger a Chain Reaction Since Rachel Reeves announced the end of the inheritance tax exemption for pensions starting from April 2027, the policy has led to strong reactions from different groups, with predictions of potential ripple effects. 1. High Taxes on Inherited Pensions Previously, pensions were considered a tax-efficient way to save. However, from April 2027, pensions will be included in the calculation of estate value and will be subject to a 40% inheritance tax. Estimates suggest that this policy change will cost grieving families an additional £65,000 on average. Additionally, it may discourage people from saving into their pension accounts due to concerns over taxation. Experts warn that beneficiaries of those who pass away after the age of 75 may face a combination of inheritance tax and income tax. This means that, in some cases, high-rate taxpayers inheriting a pension could face a marginal tax rate of up to 90%. 2. Complex Tax Calculations for Pensions Pension providers have raised concerns over the Chancellor’s plan, noting that the tax calculation process is highly complicated. This could pose an ongoing administrative challenge for pension managers. How Can You Increase Your Pension Income? In recent years, inflation has driven up the cost of living significantly, yet pension amounts have not increased proportionally. The rising cost of retirement means that more people are struggling to meet their financial needs. The average pension shortfall—the gap between what you have and what you need for a moderate retirement income—has grown to £31,546, four times the figure in 2019. Simply put, the amount of money that once bought a whole loaf of bread now buys only a quarter of one. So, how can you boost your pension income? Here are a few strategies to consider: 1. Increase Your Pension Contributions If you receive a pay rise or switch jobs, consider increasing your pension contributions. This will have a significant impact on your final pension amount. You can also discuss with your employer whether they are willing to increase their contributions to your pension fund. 2. Locate Your Lost Pensions When planning for retirement, reviewing pensions from previous employers is crucial. Frequent job changes and house moves make it easy to lose track of old pension accounts. According to the Pensions Policy Institute, over 3 million pension accounts in the UK are currently unclaimed. Recovering these lost pensions could significantly improve your retirement security. If you suspect that you have lost a pension, you can contact the government’s Pension Tracing Service. By providing your employer’s or pension provider’s name, the service can help you locate and retrieve your pension funds. Once you find your lost pensions, you may consider consolidating them for easier management. Combining pensions can help streamline tracking and planning. However, before making this decision, ensure that consolidation does not result in high exit fees or the loss of valuable benefits. 3. Plan Your Pension Carefully Once you have a clear understanding of all your pension assets, you can estimate your retirement income in advance. Regular reviews will help you stay on track towards your ideal retirement lifestyle. If any issues arise, early planning gives you time to adjust your strategy accordingly. On a broader scale, the government is currently reviewing pension policies to explore ways to provide better retirement security for the public. The goal is to reduce the number of lost pensions and address the increasing number of small pension pots, ensuring that every pound of pension savings reaches its intended recipient without being overlooked or wasted. If you find pension rules confusing or need assistance with pension tax planning, don’t worry! Simply click the link below to get in touch with us. At TB Accountants, our team of professional tax experts is here to provide free one-on-one financial and tax consultations, helping you navigate the complexities of pension regulations and develop a tailored tax strategy to safeguard your wealth. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

As many people know, the UK’s social welfare system covers healthcare, education, housing, and more, forming one of the most comprehensive and equitable social security systems globally. However, this welfare system is facing unprecedented challenges. Data reveals that over half of UK residents are net welfare recipients, meaning the benefits they receive from the state exceed the taxes they pay. This phenomenon highlights the current state of welfare and tax distribution in the UK and serves as a financial wake-up call for businesses and individuals alike. Over Half of UK Households Are Net Welfare Recipients According to data from the Office for National Statistics (ONS), 52.6% of UK households in 2024 received more in benefits—including cash payments, NHS services, schooling, and free childcare—than they paid in taxes. While this is slightly lower than the 53.6% reported in 2023, it underscores the challenges faced by Prime Minister Keir Starmer and Chancellor Rachel Reeves in managing an aging population and economic pressures. Among working-age individuals, who are typically net contributors, 45.3% still received more benefits than they paid in taxes. Much of this was tied to education and childcare benefits. Meanwhile, 85.3% of pensioners are net welfare recipients. With the population aged 85 and over expected to double to 3.1 million by 2045, the pressure on national finances is only set to increase. Impact on Income Equality The ONS report also highlights that, despite the cost-of-living crisis, income inequality in the UK is at its lowest in a decade. This is partly due to the steady rise in the minimum wage, which has limited income growth for high earners while benefiting low-income workers. Adjusted for inflation, the poorest 20% saw their incomes grow by 9.1% (£9,800), while the richest 20% experienced a 10.6% decrease (£114,300).   The Financial Implications of Growing Welfare Dependence While the increasing proportion of net welfare recipients reflects the effectiveness of the UK’s welfare system in redistributing wealth and narrowing income gaps, it also raises concerns about sustainability. Welfare reforms and spending cuts are expected to be announced in 2025, but implementation dates remain uncertain. How Individuals Can Optimise Their Finances in the ‘Welfare Era’ In this context, how can individuals and businesses legally and effectively use the UK tax system to reduce tax burdens and achieve long-term wealth accumulation? 1. Maximise Use of Individual Savings Accounts (ISAs) ISAs are tax-free savings and investment tools. Each tax year, individuals can deposit up to £20,000 into an ISA. Returns, including interest, income, and capital gains, are tax-exempt and do not need to be reported in tax returns. Cash ISAs: Low-risk, interest-earning savings. Stocks & Shares ISAs: Investments in stocks, funds, or bonds, with tax-free gains and dividends. Innovative Finance ISAs: Higher returns through peer-to-peer lending. Lifetime ISAs (LISAs): For individuals aged 18-39, allowing up to £4,000 annual contributions with a 25% government bonus (up to £1,000), suitable for first-time homebuyers or retirement savings. 2. Contribute to Pension Schemes The UK pension system includes State Pension, Workplace Pension, and Personal Pension options, each offering tax benefits. State Pension Eligibility: At least 10 years of National Insurance contributions. Full rate (2024/25): £221.20 per week, adjusted annually based on the ‘Triple Lock’ system (highest of wage growth, inflation, or 2.5%). Workplace Pensions Flexible withdrawal options, with 25% tax-free and the remainder taxed as income. Annuities can provide fixed annual retirement income. Personal Pensions Options include Stakeholder Pensions (low fees) and SIPPs (self-invested personal pensions) for more investment control. 3. Leverage Tax Relief Schemes Marriage Allowance: Transfer unused personal allowance (up to £1,260) to a spouse, saving up to £252 in taxes. Gift Aid: Charitable donations can provide tax relief. Child Benefit Adjustments: Manage income to avoid the High-Income Child Benefit Charge by increasing pension contributions or other adjustments. Some Advice from TB Accountants Strategic financial planning that incorporates available tax reliefs is key to optimising personal finances. However, navigating the UK tax system can be complex. With significant tax hikes introduced in recent budgets, reducing tax expenditures has become increasingly challenging. If you're unsure about your tax situation or want professional guidance, consulting with a tax advisor or accountant can be invaluable in managing your financial health effectively. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

"With inflation so high, will my pension be enough when I retire?" "Do I really have to pay 90% tax on my parents’ inherited pension?" Even though some time has passed since the Labour Party released its first Autumn Budget, the financial measures included continue to spark heated discussions online—especially the pension policies. The New Pension Policy Could Trigger a Chain Reaction Since Rachel Reeves announced the end of the inheritance tax exemption for pensions starting from April 2027, the policy has led to strong reactions from different groups, with predictions of potential ripple effects. 1. High Taxes on Inherited Pensions Previously, pensions were considered a tax-efficient way to save. However, from April 2027, pensions will be included in the calculation of estate value and will be subject to a 40% inheritance tax. Estimates suggest that this policy change will cost grieving families an additional £65,000 on average. Additionally, it may discourage people from saving into their pension accounts due to concerns over taxation. Experts warn that beneficiaries of those who pass away after the age of 75 may face a combination of inheritance tax and income tax. This means that, in some cases, high-rate taxpayers inheriting a pension could face a marginal tax rate of up to 90%. 2. Complex Tax Calculations for Pensions Pension providers have raised concerns over the Chancellor’s plan, noting that the tax calculation process is highly complicated. This could pose an ongoing administrative challenge for pension managers. How Can You Increase Your Pension Income? In recent years, inflation has driven up the cost of living significantly, yet pension amounts have not increased proportionally. The rising cost of retirement means that more people are struggling to meet their financial needs. The average pension shortfall—the gap between what you have and what you need for a moderate retirement income—has grown to £31,546, four times the figure in 2019. Simply put, the amount of money that once bought a whole loaf of bread now buys only a quarter of one. So, how can you boost your pension income? Here are a few strategies to consider: 1. Increase Your Pension Contributions If you receive a pay rise or switch jobs, consider increasing your pension contributions. This will have a significant impact on your final pension amount. You can also discuss with your employer whether they are willing to increase their contributions to your pension fund. 2. Locate Your Lost Pensions When planning for retirement, reviewing pensions from previous employers is crucial. Frequent job changes and house moves make it easy to lose track of old pension accounts. According to the Pensions Policy Institute, over 3 million pension accounts in the UK are currently unclaimed. Recovering these lost pensions could significantly improve your retirement security. If you suspect that you have lost a pension, you can contact the government’s Pension Tracing Service. By providing your employer’s or pension provider’s name, the service can help you locate and retrieve your pension funds. Once you find your lost pensions, you may consider consolidating them for easier management. Combining pensions can help streamline tracking and planning. However, before making this decision, ensure that consolidation does not result in high exit fees or the loss of valuable benefits. 3. Plan Your Pension Carefully Once you have a clear understanding of all your pension assets, you can estimate your retirement income in advance. Regular reviews will help you stay on track towards your ideal retirement lifestyle. If any issues arise, early planning gives you time to adjust your strategy accordingly. On a broader scale, the government is currently reviewing pension policies to explore ways to provide better retirement security for the public. The goal is to reduce the number of lost pensions and address the increasing number of small pension pots, ensuring that every pound of pension savings reaches its intended recipient without being overlooked or wasted. If you find pension rules confusing or need assistance with pension tax planning, don’t worry! At TB Accountants, our team of professional tax experts is here to provide free one-on-one financial and tax consultation, helping you navigate the complexities of pension regulations and develop a tailored tax strategy to safeguard your wealth. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

In recent years, extreme weather and unforeseen events have become more frequent in the UK due to global climate change. These incidents not only disrupt people's daily lives but also place immense financial strain on the insurance industry. According to the latest data from Deloitte, UK insurance companies are expected to pay out a total of £5.5 billion in claims to cover 2024—the highest level since the summer floods of 2007. For many homeowners facing costly repairs, insurance coverage may help cover part of the expenses. However, there is another often-overlooked opportunity—making use of tax relief policies. Today, we’ll explore whether home repair costs qualify for tax relief, break down relevant regulations, and provide practical advice to help you manage your finances and maximise tax benefits. Rising Payouts Could Lead to Higher Insurance Premiums Deloitte’s analysis predicts that UK insurers will pay out £5.5 billion in claims in 2024, marking the highest natural disaster-related pay-out since 2007. Industry experts warn that, after years of underwriting losses, insurers may further increase premiums. In Q3 2024, the average annual home insurance premium (covering both buildings and contents) was £407, up 16% from the previous year. Adjusted for broader inflation, this brings prices back to 2017 levels. However, claims volumes have surged by 72% compared to 2017.   Tax Relief on Home Repairs – What Qualifies? With insurance costs on the rise, which home repair or renovation projects qualify for tax relief in the UK? What are the eligibility requirements, and how can you claim? Let’s break it down. In the UK, home repair and renovation tax relief generally applies to the following situations: Essential Repairs & Maintenance – This includes repairs due to natural disasters or ageing, such as fixing a roof, replacing damaged plumbing, or repairing electrical systems. Energy Efficiency Improvements – If renovations improve energy efficiency—such as installing insulation, upgrading to energy-efficient windows, or replacing a boiler—you may qualify for tax relief or even government grants. Listed Building Repairs – If your property is a listed building, certain repair costs may be eligible for tax relief. Repairs for Rental Properties – Landlords can deduct maintenance and repair costs as allowable expenses from their taxable rental income. However, the UK has strict criteria and limitations on tax relief for home repairs. The property’s usage is taken into account, and original invoices and proof of expenses are required. Here are key considerations: Purpose & Functionality – The repair must be essential to the home's maintenance or improvement. Luxury renovations (e.g. building a swimming pool, high-end decor, or entertainment facilities) do not qualify. Compliance with UK Regulations – Works must meet Building Regulations and tax laws. Extensions or significant structural changes typically do not qualify. Proof of Expenses – Keep all invoices, contracts, and payment records in case of HMRC review. Residential vs Rental Property – Homeowners have fewer tax relief options, whereas landlords can deduct repair costs as business expenses. No Double Dipping with Insurance Payouts – If an insurance claim has already covered the repair, you cannot claim tax relief on the same expense. Real-Life Examples Case 1: Roof Repair & Energy Efficiency Upgrade Homeowner A’s roof was damaged in a storm and needed replacement. During repairs, he opted for an energy-efficient insulation upgrade, bringing the total cost to £12,000. £8,000 was covered by insurance. The remaining £4,000 was out-of-pocket. Since he used energy-efficient materials, he qualified for a VAT reduction and claimed a £400 tax relief on his Self-Assessment tax return. Case 2: Leak Repair in a Rental Property Landlord B owns a rental flat in London. A burst pipe caused water damage to the kitchen ceiling, affecting the tenant’s living conditions. She hired professionals to fix the plumbing and repair the damage, costing £4,500. According to HMRC rules, landlords can deduct necessary repair costs from rental income. By keeping all invoices and contracts, she classified the £4,500 as a deductible expense, saving £900 in taxes. How to Claim Tax Relief on Home Repairs 1.Gather All Required Documents – Ensure all invoices, insurance claim records, and repair-related documents are complete and accurate.   2.File the Correct Forms  Homeowners can claim tax relief on energy efficiency improvements through Self-Assessment. Landlords must report repair costs on Form SA105 (Property Income). 3.Submit Your Claim – Apply via HMRC’s online system or by post and keep copies for future reference.   Need Help? Get Expert Guidance Although tax relief applications may seem straightforward, they involve complex regulations and eligibility criteria. Mistakes could lead to rejection or potential tax risks. For professional guidance, consider consulting an experienced accounting firm.  At TB Accountants, our team of tax specialists can provide personalised financial and tax advice, ensuring you maximise on tax relief opportunities while staying compliant with UK tax laws. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

As one of the first countries in the world to implement a pension system, the UK has developed a highly structured pension scheme. Similar to paying social security contributions for pension insurance in other countries, individuals wishing to receive a pension in the UK must first pay National Insurance (NI) for a certain number of years during their working life. However, many people have a common question: does paying more tax mean receiving a higher pension? This article will answer this question and provide practical tips to help you enhance your pension entitlement and make informed long-term financial planning decisions. Will My Pension Increase if I Pay More Tax? First, let’s address the question: does paying more tax in the UK mean a higher pension? Many people assume that the more tax you pay, the more pension you receive. In reality, this is a misconception. The amount of UK State Pension is solely determined by your NI record and is not linked to the amount of other taxes paid. However, since there are various types of pensions, in addition to the basic State Pension, many individuals choose to participate in workplace pension schemes or set up private pension accounts to increase their pension entitlement. Types of UK Pensions and Eligibility Rules The UK pension system consists of three main types: State Pension, Workplace Pension, and Personal Pension. Each has different rules and payment amounts.   State Pension The State Pension is a regular payment from the government upon reaching the State Pension Age. The amount received is entirely based on your NI contribution years and is not directly linked to the tax you pay. Eligibility Rules: A minimum of 10 years of NI contributions is required to qualify for any State Pension. The maximum contribution period for a full pension is 35 years. If contributions fall below this, the pension amount is calculated proportionally. For example, 25 years of contributions would entitle you to 5/7 of the full pension. If your NI record is incomplete, you may be able to voluntarily top up contributions. State Pension Payment for 2024/2025: The latest weekly State Pension payment is £221.20. The amount increases annually according to the ‘Triple Lock’ policy, which ensures pension growth in line with wage increases, inflation, or 2.5% (whichever is highest). Deferring your State Pension can increase your entitlement by 1% for every 9 weeks delayed, equating to approximately a 5.8% increase per year. Workplace Pension Workplace Pensions are jointly contributed by employers and employees. Under the Auto-Enrolment scheme, employees aged over 22 and earning above £10,000 per year are automatically enrolled in a pension plan.   Eligibility Rules: Contributions are based on salary levels. Higher earnings generally lead to larger pension savings. Employees contribute 5% of pre-tax salary, while employers must contribute at least 3%, making a total minimum contribution of 8%. Employee contributions qualify for tax relief.   Important Considerations: Employers’ contributions do not affect employees' take-home pay, so negotiating higher employer contributions can be beneficial. Employees can opt out within one month of enrolment and receive a refund of contributions. They can re-join at any time. Workplace Pensions can usually be accessed at the same age as the State Pension, though this may increase in the future.   Withdrawal Options: Lump Sum Withdrawal – Up to 25% tax-free, with the remainder subject to income tax. Annuity Purchase – Converts pension savings into a guaranteed income for life. Investment Options – Explore investment plans with higher potential returns.   If you leave a job and face an employment gap, your employer will stop contributing to your pension. However, your existing pension savings remain yours. In most cases, pensions cannot be withdrawn early unless under exceptional health circumstances. You may choose to continue contributing via a Personal Pension during employment gaps.   Personal Pension Personal Pensions are self-funded savings plans, suitable for self-employed individuals, those without workplace pensions, or anyone looking to increase their retirement savings.   Eligibility Rules: Personal Pensions can be set up through financial institutions, insurance companies, or pension providers, offering tax relief. Two common types: Stakeholder Pensions – Flexible contributions with capped fees, allowing investment in stocks, bonds, and other assets. Self-Invested Personal Pensions (SIPP) – Allows greater investment control within a tax-advantaged framework. Tax Benefits: Contributions receive 20%-45% tax relief, depending on income tax rate. The annual contribution allowance for 2024/2025 is £60,000, with penalties for exceeding this limit.   Example: Basic-Rate Taxpayer’s Pension Plan A 30-year-old earning £3,000 per month contributes £300 per month to a personal pension. After tax relief, they only pay £240, while their pension receives the full £300. Assuming a 5% annual return, by age 55, their pension pot could grow to £198,000, with £49,500 available tax-free and the rest subject to income tax when withdrawn. Unused Pension Funds to Be Included in Inheritance Tax from 2027 From April 2027, unused pension funds will be considered part of an individual’s estate for Inheritance Tax (IHT). Under current IHT rules: If an estate exceeds £325,000, the excess is subject to 40% tax. If a home is passed to direct descendants, the threshold increases to £500,000. If the estate is inherited by a surviving spouse or civil partner, the threshold increases to £1 million (extended until 2030).   While these changes are a few years away, it is advisable to consider them in your estate planning. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

This month, the Bank of England has lowered the base rate from 4.75% to 4.5%, marking the third interest rate cut since August 2024 and reaching its lowest level in 18 months. Changes in interest rates also impact millions of people’s mortgages, credit cards, and savings rates. For savers, a rate cut may mean banks will reduce the Annual Percentage Yield (APY) on savings accounts, resulting in lower interest earnings. If the Bank of England continues to cut rates, banks may further decrease fixed-term deposit rates (such as one-year or five-year savings products), affecting long-term savings returns. Aside from interest rate changes, savers are also concerned about the following questions: Do savings interest earnings need to be taxed? Will there be an investigation if they are not declared? Today, we’ll provide detailed information on taxation of bank interest earnings. Do Savings Interest Earnings Need to Be Taxed? In the UK, the principal amount of savings is not subject to tax, but any interest earned on savings is taxable. This is known as tax on savings interest, and the specific tax obligations depend on your total income within a tax year (from 6 April to 5 April of the following year) and the applicable tax-free allowances. These include: Personal Allowance Starting Rate for Savings Personal Savings Allowancees the proportion of their income (4.8%) to Council tax compared to the wealthiest fifth (1.5%). Personal Allowance Most individuals can earn a certain amount tax-free before paying income tax, known as the Personal Allowance. The standard Personal Allowance for the 2024-25 tax year is £12,570. If your total income (including wages, pensions, and savings interest) does not exceed this amount, you do not need to pay tax. However, if your income exceeds £100,000, the Personal Allowance is reduced. For every £1 over £100,000, the Personal Allowance is reduced by £1. Starting Rate for Savings If your non-savings income (such as wages or pensions) does not exceed £17,570, you can benefit from up to £5,000 in the Starting Rate for Savings. This means that qualifying savings interest earnings within this threshold are taxed at 0%. It is important to note that as non-savings income increases, the applicable threshold for the Starting Rate for Savings is reduced. For every £1 of other income above the Personal Allowance, the starting rate allowance is reduced by £1. For example: If Alex earns a salary of £16,000 and receives £200 in savings interest, their salary, after deducting the Personal Allowance of £12,570, is £3,430. This means the remaining Starting Rate for Savings is £1,570 (£5,000 - £3,430 = £1,570). Since this is higher than the £200 interest earned, Alex does not need to pay tax on their savings interest. Personal Savings Allowance In addition to the above, you may be eligible for a Personal Savings Allowance of up to £1,000, depending on your income tax band. These tax-free allowances apply to savings interest earnings. Any interest exceeding the allowance is taxed at the applicable rate. Additional rate taxpayers (considered high-income earners) are not eligible for the Personal Savings Allowance. Therefore, if your annual income exceeds £125,140, you will need to pay tax on all savings interest. The allowances mentioned generally apply to interest earned from the following accounts: Bank and building society accounts Savings and credit union accounts Unit trusts, investment trusts, and open-ended investment companies Peer-to-peer lending Trust funds Payment Protection Insurance (PPI) compensation Government or corporate bonds Life annuity payments Certain life insurance policies Savings within tax-free accounts such as Individual Savings Accounts (ISAs) and some National Savings and Investments (NS&I) accounts are not included in these allowances. Different tax rules also apply to foreign savings and children's accounts. Tax Planning Strategies You can optimise your tax strategy by making use of tax-free savings tools and maximising available allowances. Here are some recommendations: Individual Savings Accounts (ISAs): Interest earned within an ISA is completely tax-free. For the 2024/25 tax year, you can deposit up to £20,000 into an ISA. Tax-free investment products: Such as Premium Bonds, issued by NS&I. While they do not pay interest, they offer monthly prize draws with tax-free winnings. Individuals can hold up to £50,000 in Premium Bonds. Although returns are uncertain, winnings are tax-free. Spousal asset allocation: If you are married and your spouse has a lower income, consider holding savings accounts in their name to maximise their Personal Allowance and Personal Savings Allowance.   Declaration Requirements and Consequences of Non-Disclosure If your interest earnings exceed the tax-free allowances, you must pay tax on the excess amount according to the usual income tax rates. Additionally, if your income from savings and investments exceeds £10,000, you must register for Self Assessment with HM Revenue & Customs (HMRC) and file a tax return. Failure to declare taxable savings interest may result in: A tax investigation: HMRC may review your tax affairs. Penalties and interest: Late tax declarations and payments may incur penalties and interest charges on overdue tax. To avoid potential legal and financial consequences, ensure you accurately report all taxable income, including savings interest. Tax Treatment Based on Employment Status If you have no employment income and do not receive a pension: Your bank or building society will report your interest earnings to HMRC at the end of the year. HMRC will then inform you whether you owe tax and how to pay it. If you are employed or receive a pension: HMRC will adjust your tax code so that tax is deducted automatically. HMRC estimates your interest earnings based on the previous year’s figures and will notify you of any overpayment or underpayment of tax. If you have not received a tax calculation letter by 31 March 2025, you must contact HMRC as soon as possible to avoid penalties. Can You Claim a Refund If You Have Overpaid Savings Interest Tax? If you have overpaid tax on your savings interest, you can claim a refund within four years of the relevant tax year’s end. If you complete a Self Assessment tax return, you can claim your refund through your tax return. If not, you must complete an R40 form and send it to HMRC. Refunds typically take up to six weeks to process. If you have further questions regarding taxation of bank savings interest, or if you are unsure whether you need to pay tax and how much, or if you would like to explore financial and tax planning strategies to reduce tax liability, feel free to contact us. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

As the tax increases from the Labour Party's Autumn Budget gradually come into effect, changes to Council tax, which directly affect households, have largely been finalised. Among the 139 upper-tier local authorities in England that have proposed or confirmed tax increases, 85% plan to set the increase at the default maximum of 4.99% from April. For most areas in London, the 4.99% increase includes an additional £95.01 for Council tax and an extra £18.98 levied by the London Mayor. Under normal circumstances, local authorities must hold a local referendum to gain residents' approval if they wish to increase Council tax by 5% or more. However, six areas have applied for special permission and received Treasury approval for further increases: Bradford: 9.9% Birmingham: 7.49% Newham, London: 8.99% Somerset: 7.5% Trafford, Greater Manchester: 7.49% Windsor and Maidenhead: 8.99% The Resolution Foundation think tank reports that the lowest-income fifth of UK households spent 4.8% of their income on Council tax in the 2020-21 financial year. Overall, lower-income households tend to allocate three times the proportion of their income (4.8%) to Council tax compared to the wealthiest fifth (1.5%). How is council tax calculated? Council tax in the UK is collected by local authorities to fund public services such as waste management, social care, and the maintenance of public facilities. While Council tax is typically calculated annually, most local authorities allow instalment payments, meaning you can choose to pay monthly, quarterly, or by other agreed methods. Key factors in council tax calculation 1. Valuation Band Properties are categorised into valuation bands based on their market value. Each band has a corresponding tax rate, ranging from Band A (lowest value) to Band H (highest value). In England, the valuation bands are as follows: (Image source: GOV.UK ) 2. Tax Amount Calculation The specific council tax amount is determined by your local authority, meaning rates may vary between different areas. Each valuation band has a designated tax amount, which the local authority uses to calculate your bill. For example, if the Band D council tax in your area is £1,500 and your home is classified as Band D, you will need to pay £1,500. If your home falls under Band A, the tax amount will typically be lower. 3. Discounts and exemptions You may be eligible for a discount or exemption in certain circumstances, including: Single Person Discount: A 25% discount applies if only one adult resides in the property. Student Exemption: Properties occupied solely by full-time students are entirely exempt from Council tax. Low-Income Households: You may qualify for Council tax Reduction (CTR) if you are on a low income or receiving benefits. Special Hardship Relief: If you are experiencing financial hardship due to reasons such as long-term illness or unemployment, you can apply for further reductions. Does council tax always increase? Since council tax is a key revenue source for local councils to fund public services, factors such as inflation and rising costs often result in annual increases. However, it is not always a one-way increase. In some cases, your property may be reassessed and placed in a different valuation band, leading to a change in your tax amount. Situations that may lead to reassessment include: Partial demolition of the property without rebuilding Conversion of a property into two or more separate units (e.g., an annex), each with its own valuation band Splitting a single property into multiple flats Merging multiple flats into a single property Starting or ceasing to work from home Structural modifications by a previous owner Significant changes in the local area, such as new roads being built A general revaluation of properties in the area What if your Council tax bill is incorrect? Council tax bills are usually issued between March and April each year, depending on your local authority. The bill outlines the amount payable for the new financial year (starting 1 April). Most councils send these bills by late March to allow residents time to arrange payment. If you recently purchased a property or moved into a new home, you may receive a temporary bill covering only the remaining months of the financial year. If you believe your council tax bill has been sent to the wrong person, contains an incorrect amount, or if you are entitled to a discount or exemption but have not received it, you can appeal the bill. However, if your only reason for appeal is that you find the bill too high, your appeal will not be accepted. You should write to your local authority explaining the reason for your appeal. A response is typically provided within two months. If your appeal is successful, a revised bill will be issued. However, you must continue paying your current bill until the new one arrives. If your appeal is rejected, the council should explain the reasoning behind their decision. What happens if you miss a council tax payment? If you miss a payment, your local authority will send a reminder notice, giving you seven days to make the payment. If you fail to pay within this period, you will be required to pay the full annual council tax amount. If you miss another payment, a second reminder will be sent. Each financial year (1 April – 31 March), you can receive a maximum of two reminder notices. If you miss a third payment, the council will issue a final notice requiring full payment of the year's tax. If you do not pay within seven days, the council may take legal action, including applying to the local court for a liability order to recover the debt. If you still fail to pay, the council may instruct your employer to deduct the unpaid amount directly from your wages. In extreme cases, some local authorities have taken non-payers to court. Courts will assess whether you have the means to pay but have refused to do so, or if you genuinely cannot afford the payments. If the court determines that you have no valid reason for non-payment and you refuse to pay, you could face up to three months in prison. However, if you owe money, you may be able to negotiate a repayment plan with the council. Some Advice from TB Accountants As an annual tax that must be paid, the rise in council tax will increase living costs for homeowners and tenants alike. Although landlords typically cover this tax, they may pass on the additional costs to tenants in certain situations. TBA UK has 16 years of experience in tax management and is dedicated to providing practical tax planning and savings strategies to help you reduce your tax burden and optimise your financial management for long-term wealth growth. Whether you need assistance with personal tax matters or are looking for more efficient business financial solutions, our team of professional tax accountants offers tailored services. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

On 10 February, the streets of London witnessed a large-scale protest. Thousands of farmers drove approximately 2,000 tractors into Westminster to voice their strong opposition to the Labour Party's plan to impose an inheritance tax on farms. The trigger for this protest was a new inheritance tax policy proposed as part of Labour’s fiscal strategy. The policy plans to levy a 20% inheritance tax on farms valued at over £1 million (or £3 million in some cases). For farmers who have been running family farms for generations, this policy comes as a heavy blow. Many fear it will force them to sell off land inherited from their ancestors in order to pay the high tax bill, ultimately leading to the collapse of family-run farms and posing a threat to the UK’s food security. Since Labour released its first Autumn Budget after taking office, debates over its tax policies have been ongoing. This is not the first time farmers have taken to the streets in protest. On 11 December 2024, thousands of farmers and hundreds of tractors flooded central London, carrying banners with slogans such as ‘No Farmers, No Food, No Future’ and ‘Save British Farming’ using the most direct approach to express their dissatisfaction with the government. British Farmers and the Government’s Battle Over Inheritance Tax Since the 1990s, British farmers have enjoyed inheritance tax exemptions on agricultural assets. However, under the latest fiscal regulations, from 6 April 2026, agricultural assets worth over £1 million will be subject to a 20% inheritance tax. Many see this as a ‘betrayal’ of farmers. Some may wonder how farm assets could exceed £1 million so easily. It is important to note that the policy clearly states that the valuation includes not just farm income but also agricultural machinery, such as tractors, harvesters, and trailers. In reality, the total value of agricultural equipment on most farms already exceeds £1 million, making the vast majority of farms liable for the inheritance tax. Many farmers worry that if the law is implemented, they will have no choice but to sell land to pay the tax, gradually losing their status as farmers, a role that has defined their families for generations. If that happens, who will be left to sustain British agriculture? Meanwhile, Chancellor Rachel Reeves has assured farmers that the expanded inheritance tax revenue will be used to fund the NHS. The NHS, established in 1948, is the UK’s national healthcare system providing free and comprehensive medical services to all residents. However, farmers are not convinced by this explanation, with many believing that the increased tax burden is merely an attempt to plug the £21 billion financial deficit left by the previous government. On 16 November last year, Prime Minister Keir Starmer delivered a speech at the Welsh Labour Conference, where dozens of farmers drove their tractors straight from their farms to protest in the cold wind and rain.  Starmer, however, did not appear and instead exited through the back door after the conference ended. On 19 November, another large-scale protest was launched, with around 40,000 farmers gathering in Westminster to protest the tax reforms. On 10 February, British farmers once again drove their tractors en masse into Westminster, making this the largest protest to date. Tips for Managing Agricultural Inheritance Tax Following the inheritance tax reform, British farmers are facing a greater tax burden, especially those who own high-value farms and agricultural land. How can farmers manage these high taxes to ensure their farms can be successfully passed on to the next generation? This issue has sparked extensive discussions online. Here are some of the most popular strategies: 1.Utilising Agricultural Property Relief (APR) Agricultural Property Relief is a tax relief policy provided by the UK government that allows eligible agricultural assets to receive either 50% or 100% inheritance tax relief. Farmers must ensure their land is actively used for agricultural purposes, such as farming or grazing, and that they meet the required ownership or usage period (at least two years for ownership or seven years for usage). Proper planning can help farmers incorporate most of their farm assets into APR exemptions, significantly reducing inheritance tax liabilities. 2.Business Property Relief (BPR) If a farm operates as a business rather than merely an asset, it may qualify for Business Property Relief, which offers 50% or 100% inheritance tax relief. Farmers should ensure their farms are run as businesses and keep detailed financial records. By aligning farm assets with commercial activities, farmers can further reduce inheritance tax. 3.Setting Up a Trust A trust is a legal arrangement allowing farmers to transfer farm assets into a trust, managed by trustees and designated for beneficiaries (such as their children or heirs). By establishing a trust, farmers can transfer assets before death, thus reducing the taxable estate. Certain types of trusts, such as "Life Interest Trusts," may offer tax benefits. However, setting up a trust requires expert legal and tax advice to ensure compliance and optimise tax savings. 4.Gifting Strategies Farmers can gift farm assets to heirs during their lifetime to reduce the taxable estate. Annual Gift Exemption: Each individual can gift up to £3,000 per year tax-free. Seven-Year Rule: If the donor lives for seven years after gifting assets, the gift becomes entirely tax-free. Gifting Agricultural Assets: Gifts of agricultural property may qualify for additional tax relief, especially if they meet APR or BPR criteria. 5.Paying Inheritance Tax in Instalments The UK tax system allows farmers to pay inheritance tax in instalments, particularly when the estate primarily consists of agricultural or business assets. Farmers can choose to spread payments over ten years, paying 10% annually plus interest, providing more time to gather funds and avoiding the need for an immediate sale of assets. 6.Diversifying Farming Income Farmers can expand income streams to increase cash flow and manage potential tax burdens. Developing agritourism, such as farm shops or restaurants. Selling produce directly to consumers for higher profit margins. Leasing land for renewable energy projects, such as solar or wind farms. Some Advice from TB Accountants Inheritance tax planning involves complex legal and financial matters, making expert advice essential. Tax professionals can assist farmers in: Assessing asset structures and tax risks. Creating long-term estate planning strategies. Ensuring compliance with tax laws and avoiding potential legal issues. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

How charitable donations can help you save on taxes The United Kingdom has a long-standing tradition of charitable giving, which has not only driven many important innovations but also provided crucial funding for charitable services nationwide. The British royal family, wealthy individuals, and celebrities play a significant role in promoting charitable donations and social welfare. But did you know? In the United Kingdom, charitable donations are also regarded as an essential tool for wealth planning and tax optimisation. The tax exemptions and incentives available are not just for high-net-worth individuals and corporations but also for ordinary taxpayers. Today, we will take you through the key tax-free rules for charitable giving in the United Kingdom and how to use these policies effectively in tax planning. 1.The wealthiest 1% in the United Kingdom donate nearly £8 billion annually Let us start with some recent data. According to the Charities Aid Foundation (CAF)'s latest Major Donor Giving Report, which analysed the giving behaviour of around 3,000 wealthy individuals in the United Kingdom, researchers estimated the total donations from people with investable assets of at least £1 million. The report found that in 2023, the wealthiest 1% in the United Kingdom donated nearly £8 billion to charity. High-net-worth individuals contributed around 0.4% of their £2 trillion in investable assets. For comparison, the general public donated around £13.9 billion, which accounted for 1.6% of their total income. The report also highlighted that those who donate the most tend to be around 63 years old and are twice as likely to have inherited wealth. This brings us to a key tax planning strategy: the role of charitable giving in Inheritance Tax (IHT) reduction. 2.How is United Kingdom inheritance tax (IHT) calculated? The United Kingdom imposes Inheritance Tax (IHT) on the estate of deceased individuals. Given its high tax rate, IHT is a crucial consideration in wealth transfer planning. IHT applies to: All worldwide assets of United Kingdom tax residents, regardless of location United Kingdom-based assets of non-residents (such as property, bank accounts) As of 2024, the IHT thresholds are: Nil-Rate Band (NRB): £325,000 tax-free allowance, with anything above taxed at 40% Residence Nil-Rate Band (RNRB): An additional £175,000 allowance for direct descendants inheriting a home, bringing the total tax-free threshold to £500,000 Married couples or civil partners can combine their allowances for a total exemption of up to £1 million However, strategic charitable giving can further reduce or even eliminate inheritance tax liabilities. 3.How can charitable donations reduce inheritance tax? Full IHT Exemption for Donations Under United Kingdom tax law, if a will specifies that part or all of the estate is donated to a registered United Kingdom charity, that portion of the estate is completely exempt from IHT and does not count towards the taxable estate. For example, if an estate is worth £1,000,000 and £200,000 is donated to charity, the taxable amount is reduced to £800,000, lowering the IHT liability. 10% donation rule lowers IHT rate If at least 10% of the taxable estate (after deducting allowances) is donated to charity, the remaining estate's IHT rate is reduced from 40% to 36%. 4.How to effectively use charitable giving in estate planning Charitable donations can be structured in different ways: Charitable bequests: Allocating a fixed sum, specific assets, or a percentage of the estate to a charity in your will Charitable trusts: Setting up a trust to donate assets gradually during your lifetime or posthumously, providing tax benefits while maintaining control over assets Other major charitable tax relief schemes Gift Aid (for individual taxpayers) Gift Aid is a government scheme allowing charities to claim an extra 25% on donations at no additional cost to the donor. For every £1 donated, the charity receives £1.25. Basic rate taxpayers (20%): No extra action needed; charities claim the additional 25% Higher rate (40%) and additional rate (45%) taxpayers: Can claim extra tax relief in their Self-Assessment Tax Return For example, if a higher-rate taxpayer donates £1,000, the charity receives £1,250 (with Gift Aid), and the donor can claim back £250 or £312.50 in tax relief, effectively lowering their cost of donation. To use Gift Aid, donors must fill out a Gift Aid form and ensure their donations do not exceed four times their paid tax in that tax year. Payroll giving (for PAYE employees) Employees can donate directly from their pre-tax salary via Payroll Giving. Since donations are made before tax is deducted, donors benefit from immediate tax relief. For example, a 40% taxpayer donates £100 via Payroll Giving. The actual cost to the donor is only £60, but the charity still receives the full £100. To participate, employers must offer Payroll Giving through an HMRC-approved scheme. Donating shares, land, or property (for high-net-worth individuals) Donating assets such as stocks, land, or property to a registered charity qualifies for income tax relief and capital gains tax (CGT) exemption. The main tax benefits include: Full income tax deduction: The market value of the donated asset is deductible from taxable income CGT exemption: No Capital Gains Tax applies on appreciated assets For example, if an individual owns shares worth £50,000, selling them would incur 20% CGT (£10,000 tax). However, donating them avoids CGT and provides a £50,000 income tax deduction. Corporate donations (for businesses) Businesses can donate cash, assets, or services to charities and fully deduct the value from taxable profits, reducing Corporation Tax. For example, with the 2024 corporate tax rate at 25%, a business donating £100,000 can deduct this from taxable profits, saving £25,000 in taxes. Eligible corporate donations include: Cash gifts Products (such as food, medicines, computers) Employee volunteer hours (while on payroll) Shares, land, or buildings Some Advice from TB Accountants Whether you are an employee, high-net-worth individual, or business owner, charitable donations can significantly reduce your tax burden while supporting good causes. For personalised tax planning and to maximise your tax relief, we recommend consulting a professional tax accountant. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

Labour plans to implement a 2% wealth tax to generate additional billions of pounds in revenue. Before Chancellor Rachel Reeves announces the Spring Budget next week, there is a growing call for the introduction of a 2% wealth tax on the richest individuals. Many Labour MPs and activists supporting the policy argue that it would address economic inequality and generate tens of billions of pounds in revenue. The tax increase proposal, spearheaded by the campaign group Patriotic Millionaires UK, also claims that the absence of a wealth tax is costing the UK £460 million per week. How Would a Wealth Tax Work? The exact eligibility criteria and tax rate remain unclear. However, according to Patriotic Millionaires UK, a wealth tax should apply to individuals with assets exceeding £10 million, ensuring that only a tiny fraction of the population—just 0.04% (around 20,000 people)—would be affected. Labour MP Diane Abbott stated: "If a 2% wealth tax were imposed on those with assets over £10 million, it could raise an additional £24 billion per year." Anti-Brexit campaigner and founder of MoneyShe.com and SCM Direct, Gina Miller, also supports a 1% or 2% wealth tax. According to Patriotic Millionaires UK, 72% of respondents support taxing individuals with wealth over £10 million, while 65% of UK millionaires also back the idea, believing it could help fund public services and tackle the cost-of-living crisis. Meanwhile, Chris Etherington, a private client partner at tax consultancy RSM, commented: "The Treasury is considering raising funds through a wealth tax rather than exploring potential spending cuts." Will Labour Actually Introduce a Wealth Tax? Before the Autumn Budget in September 2024, Chancellor Reeves stated on the Today programme: "We will not introduce a wealth tax, but we will have to make many tough decisions regarding taxation, spending, and welfare." Earlier this month, when asked whether the government was considering a wealth tax, a Treasury spokesperson told MoneyWeek: "Our progressive tax system means that the top 1% of earners contribute nearly a third of income tax revenues, and funds from wealth and asset taxes—such as capital gains tax and inheritance tax—support billions of pounds in public services." Whether this stance will change remains uncertain. Read more... More than a fifth of UK adults still not looking for work Last week, Work and Pensions Secretary Liz Kendall announced significant cuts to disability and sickness benefits, aiming to save £5 billion annually by 2030. The government hopes these measures will encourage more people into work while ensuring that benefits remain available for those who genuinely face employment difficulties. According to the Office for National Statistics (ONS), more than one-fifth of the UK’s working-age population is currently not employed or actively looking for work. In the three months leading up to January 2025, the UK’s economic inactivity rate (the proportion of people neither working nor seeking work) stood at 21.5%, showing a slight decrease compared to the previous quarter and the same period last year. At present, 9.27 million people in the UK are classified as economically inactive, with key reasons including long-term illness, studying, retirement, and caregiving responsibilities. The Labour government aims to raise the employment rate to 80%, compared to the current rate of 75%. A report by Keep Britain Working found that 8.7 million people in the UK currently face work limitations due to health issues, marking a 2.5 million increase over the past decade. This includes: 1.2 million people aged 16-34 900,000 people aged 50-64 The study also revealed that individuals unemployed for less than a year are five times more likely to return to work than those who have been unemployed long-term. At the same time, layoffs have increased for the first time in a year, with 124,000 people made redundant in the three months leading up to January 2025. Meanwhile, the Bank of England is monitoring wages and employment data to guide its interest rate policy. In its latest decision, the central bank held the base rate steady at 4.5%. The base interest rate influences lending rates at high-street banks and financial institutions. While higher rates in recent years have led to increased borrowing costs (such as mortgages and credit cards), they have also improved returns for savers. Economists predict that there will be two interest rate cuts before the end of 2025, with most expecting the first reduction in May. Read More... Official data shows that government borrowing last month increased by £15 billion compared to the same period last year, with the budget deficit surpassing economists’ expectations. According to the Office for National Statistics (ONS), the government's fiscal shortfall in February reached £10.7 billion, as both spending and borrowing exceeded projections, while tax revenues fell short of expectations. This marks the fourth-highest borrowing figure on record since 1993 and £4.1 billion higher than economists' estimates in a Reuters poll. With public finances under mounting pressure, Chancellor Rachel Reeves faces difficult choices in the upcoming Spring Budget, including the possibility of tax hikes or spending cuts. Additionally, tax revenues fell short of estimates from the Office for Budget Responsibility (OBR): ● Tax receipts were £11.4 billion lower than OBR’s forecast. ● Government borrowing was £20.4 billion higher than projected. By the 11th month of the financial year, government borrowing had risen from £117.5 billion last year to £132.2 billion, an increase of £15 billion. This is bad news for Chancellor Reeves, who is set to update the UK's economic outlook in the Spring Budget statement. Meanwhile, last month's reported budget surplus was revised down by £2.1 billion, further highlighting the challenging fiscal environment. Economic analysts warn that these figures will likely lead to spending cuts and tax increases. Pantheon Macroeconomics predicts that the government will announce spending reductions in next week’s Spring Budget, followed by further tax hikes in the October Budget. The Resolution Foundation agrees, stating: "If the economy does not improve quickly, tax increases will have to be reconsidered." With sluggish tax revenues and rising borrowing costs, the UK government faces tough decisions to restore fiscal stability. Read More... For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .