Author: Glenn

Most self-employed people are required to pay Class 4 National Insurance contributions (NICs) if their profits are £12,570 or more a year. Class 4 NIC rates for the tax year 2024-25 are 6% for chargeable profits between £12,570 and £50,270 plus 2% on any profits over £50,270.

A number of categories of people are exempt from paying Class 4 NICs, these include:

• People under the age of 16 at the beginning of the year of assessment.
• People over State pension age at the beginning of the year of assessment. A person who attains State pension age during the course of the year of assessment remains liable for Class 4 NICs for the whole of that year.
• People receiving profits in their capacity as a trustee, executor or administrator of a person liable to tax.

The mandatory payment of Class 2 National Insurance Contributions (NICs) for the self-employed was abolished effective from 6 April 2024. It can be beneficial for some self-employed people who do not pay NICs through self-assessment to make voluntary Class 2 NICs. This can help them access certain contributory benefits including the State Pension. It is important to confirm that this would be beneficial before making any voluntary payment. The current weekly rate for making voluntary Class 2 NICs is £3.45.

If you turned 18 on or after 1 September 2020, there may be cash waiting for you in a dormant Child Trust Fund (CTF).

If your children recently turned 18 you should check to see if they have claimed the money, to which they are entitled.

Children born after 31 August 2002 and before 3 January 2011 were entitled to a CTF account with the government contributing an initial deposit, usually of at least £250. These funds were invested in long-term saving accounts for newly born children. HMRC has confirmed that there are many thousands of teenagers that have turned 18 and not yet claimed the cash to which they are entitled.

An estimated 6.3 million CTF accounts were set up throughout the duration of the scheme. If a parent or guardian was unable to set up an account for their child, HMRC opened a savings account on the child’s behalf.

If you are over 18 and already know who your CTF provider is you can contact them directly to access your cash. This might be a bank, building society or other savings provider. If this information has been lost or is unavailable, then you can check and track down your provider online using a simple online tool created by HMRC.

Business Asset Disposal Relief (BADR) applies to the sale of a business, shares in a trading company, or an individual’s interest in a trading partnership. When this relief is available, a reduced Capital Gains Tax (CGT) rate of 10% is applied instead of the standard rate, potentially resulting in significant tax savings for those exiting their business.

To qualify for BADR, certain conditions must be met:

1. Sale of a Business or Business Closure:
   • you must be a sole trader or business partner;
   • you must have owned the business for at least 2 years leading up to the sale or closure; and
   • you must dispose of your business assets within 3 years to qualify.
2. Sale of Shares or Securities: Both of the following must apply for at least 2 years up to the date you sell your shares:

• You must be an employee or office holder of the company (or a company within the same group).
• The company’s main activities must involve trading, not non-trading activities like investment, or it must be the holding company of a trading group.

Additional rules can apply if the shares are from an Enterprise Management Incentive (EMI).

Currently, you can claim a total of £1 million in BADR over your lifetime, allowing you to qualify for the relief multiple times. The lifetime limit may be higher if you sold assets before 11 March 2020.

A 1% reduction in the Bank Rate would reduce the UK government's annual interest charges on the national debt, but the exact amount of the reduction depends on the proportion of the debt that is sensitive to changes in short-term interest rates.

According to the Office for Budget Responsibility, a 1% decrease in short-term interest rates would lead to a reduction in debt interest payments of approximately £6.5 billion in the first year. This impact would diminish slightly over time as the immediate effect on short-term debt lessens, and only newly issued debt benefits from the lower rates​.

Compare this saving with the expected £2bn saving by restricting the winter fuel payment to pensioners receiving Pension Credits.

Reducing the Bank Rate by 1% in the UK would have a number of potential consequences aside from the reduction in debt interest charges:

1. Lower Borrowing Costs: For businesses and consumers, loans and mortgages would become cheaper, potentially boosting spending and investment.
2. Weaker Pound: A lower interest rate typically makes a currency less attractive to investors, which could weaken the pound, potentially increasing inflation due to higher import costs.
3. Increased Inflationary Pressure: Cheaper borrowing could stimulate demand, potentially leading to higher inflation, particularly if the economy is near full capacity.
4. Boost to Economic Growth: Lower rates could stimulate economic activity by encouraging borrowing and spending, helping to counteract economic slowdowns.

However, the effectiveness of such a rate cut would depend on the broader economic context, including inflation levels and global economic conditions. But it does beg the question, why is the Bank of England holding back further interest rate cuts when the advantages would seem to outpace the disadvantages?

The UK's new National Wealth Fund (NWF) represents a significant shift in the government's approach to fostering economic growth and addressing climate change. Established by the Labour government, the NWF is designed to catalyse private investment in key industries, particularly those related to green technology and infrastructure.

With an initial injection of £7.3 billion, the NWF will channel funds through existing institutions like the UK Infrastructure Bank and the British Business Bank. These institutions have a proven history of unlocking substantial private capital, and under the NWF, they are expected to mobilize billions more to support emerging sectors such as clean energy, decarbonized heavy industry, and advanced manufacturing​.

The fund aims to address two critical challenges: the need for significant investment in green technologies to meet the UK's net-zero goals and the broader objective of stimulating regional economic growth. By doing so, the government hopes to create thousands of high-quality jobs across the country, reduce economic disparities between regions, and ensure the UK remains competitive on the global stage​.

Critically, the NWF is also seen as a response to the global trend of using public wealth funds to drive economic transformation. By leveraging public funds to attract private investment, the UK hopes to position itself as a leader in the green economy while also generating returns for taxpayers​.

Overall, the NWF is a bold initiative that seeks to reshape the UK economy, ensuring it is both sustainable and inclusive, though its success will depend on the government's ability to effectively engage with private investors and local stakeholders.