December 2024

Technical and Client Update

In this issue

Check your State Pension entitlement

Agricultural and Business Property Relief

Tax Investigation Service

Christmas opening hours

Check your State Pension entitlement

HMRC have developed an app that can help people prepare for their retirement.  Individuals can use the app to check their State Pension Forecast, allowing them to:

  • see their State Pension age;
  • view their forecast State Pension amounts based on potential contributions; and
  • view how much their State Pension would currently be worth, based on National Insurance contributions to date.

The app can also be used to check National Insurance contribution (NIC) years, and view any gaps in your record, including how many weeks you have paid and how much you need to pay for it to become a full qualifying year.  If you have any NIC ‘gap years’, you may be able to make voluntary payments online or through the HMRC app.  Note that you have until 5 April 2025 to make up any gap years since 2006/07. Contributions made prior to 5 April 2025 will be at the Class 3 voluntary NI rate of £15.85 per week (£824.20 p.a.) which will provide an additional £342.86 a year State pension – a pretty good return! From 6 April 2025 it will only be possible to go back 6 years.

Agricultural and Business Property Relief

What happened in the Budget?

Changes to inheritance tax were announced in the Budget that have caused consternation and resulted in protests by farmers and business owners across the UK. What exactly is changing and what could this mean for you?

What are agricultural and business property relief?

Agricultural property relief (APR) is a type of inheritance tax relief that helps reduce the amount of tax that is paid when farmland is being passed down to the next generation. Currently, the relief has no financial limit, meaning that regardless of the value of the farmland, it could be passed on with no inheritance tax payable.

Business property relief (BPR) is similar but relates to business assets included in a person’s estate. Again, this relief currently applies without any financial limit to the relief.

Clearly, both reliefs have played an important role in families being able to pass on agricultural and business assets without having to worry about inheritance tax.

What changed in the budget?

Based on the Autumn Budget announcement, there will be a new £1 million limit where 100% relief will be given. The relief will then reduce to 50% on the value that exceeds £1 million.

It is important to note that the £1 million allowance is a combined one for APR and BPR purposes. An estate that has both qualifying business and agricultural assets will only have a single £1 million allowance to use.

In addition, (quoted) shares that are designated as “not listed” on the markets of recognised stock exchanges, such as AIM, will only ever get 50% relief regardless of whether they would otherwise qualify as agricultural or business assets.

When will the change take effect?

The intention is that this change will take effect from 6 April 2026. So, these changes do not take immediate effect and mean that there could be some scope for planning or transferring of assets that will minimise your exposure to inheritance tax when the new limits come into force.

If I have agricultural assets valued at more than £1 million, will I have to pay inheritance tax?

Not necessarily. Inheritance tax is calculated by first deducting any reliefs (such as APR and BPR) and then deducting any allowances that apply. Each individual has a nil rate allowance, currently £325,000, and there is a residence nil-rate band limit of £175,000.

What should I do now?

If your estate is likely to be subject to inheritance tax, then it can pay to consider using some estate planning strategies to reduce your exposure to inheritance tax. As a starting point, it is a good idea to assess the current value and makeup of your estate.

Please get in touch with us if you would like any help with doing this, or if you would like to discuss whether there are any estate planning strategies that are open to you.

Tax Investigation Service

With a national debt of over £2.72 trillion, as of March 2024, we fully expect HMRC to raise more tax investigations to reduce this deficit. Some are launched at random, whilst others are targeted towards specific business sectors. All taxpayers are at risk.

Representation costs for a tax investigation can often escalate even in cases where no mistake has been made and it is eventually agreed that there is no further tax to pay. The average cost of an HMRC investigation is in excess of £3,200. Unfortunately, we cannot stop you from being selected for an investigation, but we can ensure you are able to afford a full defence if it happens.

Humphrey & Co has offered a Tax Investigation Service (TIS) to our clients for several years now, and we invite all our clients to share in the protection offered. During an investigation, the questions can be detailed and time consuming to answer. Whether or not HMRC finds extra tax to pay, the costs to defend you can be substantial. Indeed, it has been known for clients to agree to HMRCs demands simply because of the costs involved in continuing to fight the case. For our subscribers, there is no cost whatsoever (subject to policy limits).

Please remember that businesses are also entitled to unlimited free access to the business helplines. Qualified experienced specialists are available in the fields of employment, health & safety and commercial law to assist in these increasingly litigious areas. Your business could potentially save considerable amounts of time, expense and disruption from this add-on service.

We believe that we know you and your business best and we want to be there for you when you need us most. We will manage your case from start to finish, reducing stress and providing peace of mind.

For a reminder of the benefits of the service, exclusions and extent of cover provided, please refer to the TIS leaflet and/or browse our dedicated website at www.humph.co.uk/tis.

Christmas opening hours

The office will be closed from 11.30am on Monday 23 December 2024 reopening on Thursday 2 January 2025.

Our Opening Times during the Christmas Period will be:-

Monday23 DecemberClosed from 11.30am
Tuesday24 DecemberClosed
Wednesday25 DecemberClosed
Thursday26 DecemberClosed
Friday27 DecemberClosed
Monday30 DecemberClosed
Tuesday31 DecemberClosed
Wednesday1 JanuaryClosed
Thursday2 JanuaryOpen

On behalf of everyone at Humphrey & Co we would like to wish you a very Merry Christmas and a happy, healthy and prosperous 2025.