Welcome to our September/October 2022 edition of our financial planning magazine.

Rising cost of living

Rising living costs have been so significant in recent months that most UK households will have noticed a squeeze on their monthly budgets. Not only does this have a direct impact on people’s lifestyles, even though they are making every effort to cut back, but it has a knock-on effect on their lifelong goals such as owning a home or retiring comfortably. On page 05 new research highlights millions of people across the UK fear that the long-term impact of today’s rising living costs could see their life goals delayed or even missed altogether.

Inheritance Tax receipts

Inheritance Tax receipts totalled £6.1 billion in the 2021/22 tax year, up £729 million on the year prior. This 14% increase marks the largest single-year rise in Inheritance Tax receipts since the 2015/16 tax year. The increase is the result of the ongoing freeze on the nil-rate Inheritance Tax band and residence nil-rate Inheritance Tax band. On page 03 we look at why making plans for Inheritance Tax is so important.

Retirement

Choosing what to do with your pension is a big decision. On page 06 we explain how by making the wrong decision it could cost you heavily in the form of an unwanted tax bill, eventually running out of money in retirement and even a tax credits and benefits overpayment. So before you do anything, take a look at what you should consider.

Higher rate taxpayer

If you’re a higher rate taxpayer, the freeze on the Income Tax threshold will have meant an increase in your tax bill. The reason for the increase stems from the Chancellor’s decision in April 2021 to freeze the higher rate tax threshold rather than increase it in line with inflation. With inflation running at a 40-year high, pay increases will mean more people are being pushed into the higher rate tax bracket. Read the article on page 12.

Ready to talk about your future plans?

Only by recognising and meeting your distinct requirements can we have a positive impact on your life and business. This is why we provide an extensive range of services, plus the ability to tailor solutions based on your specific needs. If you would like to discuss your concerns or requirements, please contact us. We hope you enjoy reading this issue.

For more information on our latest financial planning magazine or to discuss any of the issues raised in this article, please contact us. Further information can also be found at gov.uk.

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Personal circumstances differ and not all of this information is applicable to every client and/or their business, this information is general in nature and should not be relied upon without seeking specific professional financial advice.

The Financial Conduct Authority (FCA) does not regulate tax advice, estate planning, trusts or will writing.

The content in this article is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice.

Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.

Thresholds, percentage rates and tax legislation may change in subsequent finance acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future results.

Pareto Financial Planning Limited is authorised and regulated by the Financial Conduct Authority (FCA).