As part of the Autumn 2024 Budget measures, the government introduced new anti-avoidance provisions to prevent the abuse of the existing close company anti-avoidance rule. The measure will have effect for any tax avoidance arrangements falling within the scope of the announcements that are made on or after 30 October 2024.

The government has said they are introducing this new measure as they have become aware of arrangements using a group of companies or amongst associated companies, so that new loans are made and then repaid in a chain such that no s455 charge arises on the increasing amounts extracted. Chapters 3A and 3B cannot catch the behaviour.

It will be clear under new legislation in Finance Bill 2024-25, that where the TAAR applies (where companies and their shareholders are attempting to avoid the s455 charge on any extractions), tax is payable whether or not there has apparently been a repayment, or a repayment is subsequently made. Section 464B of the CTA 2010, which currently provides relief from the charge in cases where a return payment is made (even if the payment is made for avoidance purposes), will be repealed and relevant amendments will be made to Section 464D.

A trust is an obligation that binds a trustee, an individual or a company, to deal with assets such as land, money and shares and which form part of the trust. The person who places assets into a trust is known as a settlor and the trust is for the benefit of one or more ‘beneficiaries’. The trustees make decisions about how the assets in the trust are to be managed, transferred or held back for the future use of the beneficiaries.

IHT planning can involve the careful use of trusts. There are a number of types of trusts which are subject to different tax rules. The main types to be aware of are bare trusts, discretionary trusts, interest in possession trusts and mixed trusts.

A discretionary trust is a type of trust where the trustees have some authority to decide how to distribute income and capital among the beneficiaries. Unlike fixed trusts, where beneficiaries have a set entitlement, discretionary trusts allow trustees to exercise their discretion based on various factors, such as the trust deed, the beneficiaries' needs and circumstances. Trustees must act in the best interest of the beneficiaries and follow the terms of the trust deed

Discretionary trusts are sometimes set up to put assets aside for:

• a future need, like a grandchild who may need more financial help than other beneficiaries at some point in their life; or
• beneficiaries who are not capable or responsible enough to deal with money themselves.

The vehicle benefit charges for 2024-25 were announced at Autumn Budget 2024. The government will introduce legislation by statutory instrument in December 2024 to ensure the changes are reflected in tax codes for tax year 2025-26.

Where employees are provided with fuel for their own private use by their employers, the car fuel benefit charge is applicable. The fuel benefit charge is determined by reference to the CO2 rating of the car, applied to a fixed amount. The car fuel benefit charge will increase in 2025-26 to £28,200 (from £27,800).

The fuel benefit does not apply when the employee pays for all their private fuel use.

The standard benefit charge for private use of a company van will increase to £4,020 (from £3,960). A company van is defined as ‘a van made available to an employee by reason of their employment’. There is an additional benefit charge for fuel for a van with significant private use. The limit will increase in 2025-26 to £769 (from £757). If private use of the van is insignificant then no benefit will apply.

Despite an appeal, the Courts recently found against Bolt in relation to their attempts to evade the statutory entitlements of their drivers to a minimum wage and holiday pay.  The ruling confirms that 10,000 Bolt drivers employed on what was erroneously conceived to be an ‘agency arrangement’ as freelance contractors are indeed entitled to minimum pay, sick leave and paid vacations.

Under the Employment Rights Act 1996, National Minimum Wage Act 1998, National Minimum Wage Regulations 2015, and the Working Time Regulations 1998, Bolt’s drivers were considered by the Courts to be ‘exclusive’ employees unless they also drove for other ride-hailing apps or were part of the ‘Link’ scheme.  Bolt’s contention of self-employment was refuted based on its contractual control over their livelihoods and the absence of any valid notion of ‘free agency’. The Courts gave Bolt a scathing rebuke for the fictional nature of its contract that sought to deny any employer-worker relationship with the drivers.

Once again, the attempt to cut costs and responsibilities by creating sham contracts inferring that long-term employees are part-time freelancers has backfired. This ruling reaffirms that such sham contracts are no longer acceptable in the UK and that any employers operating under this attempted abrogation of responsibilities will find themselves on thin ice at tribunals. If you are currently employing any staff on zero-hours contracts or on an extended contractual freelance basis, you are advised to seek legal advice.

Determining an acceptable level of pension income for retirement depends on individual circumstances, including lifestyle expectations, health, and financial commitments. However, several guidelines and studies provide benchmarks to assist in planning.

Retirement Living Standards

The Pensions and Lifetime Savings Association (PLSA) outlines three retirement living standards in the UK:

• Minimum Lifestyle: Covers essential needs with some social activities. As of 2024, a single person requires £14,400 annually, while a couple needs £22,400.
• Moderate Lifestyle: Offers more financial flexibility, including short-haul holidays and increased leisure activities. This standard suggests £31,300 per year for singles and £43,100 for couples.
• Comfortable Lifestyle: Allows for luxuries such as long-haul travel and a new car every five years. The recommended income is £43,100 annually for singles and £59,000 for couples.

Average Retirement Incomes

According to government data, the average weekly income for pensioners in 2023 was £267, equating to approximately £13,884 per year. This figure varies regionally, with higher living costs in areas like London potentially reducing disposable income.

Gender Disparities

Studies indicate a gender gap in retirement incomes. Women are projected to receive an average of £12,000 annually, compared to £17,000 for men. This 33% disparity highlights the need for targeted financial planning, especially for women.

Replacement Ratio

A common measure is the replacement ratio, which is the percentage of pre-retirement income needed to maintain lifestyle post-retirement. Typically, replacing 60% to 80% of pre-retirement income is recommended. However, the average retirement income often falls short of this benchmark, underscoring the importance of personalized retirement planning.

State Pension

The UK State Pension provides a foundational income. As of April 2024, the full new State Pension is £221.20 per week, totalling £11,502.40 annually. Eligibility depends on an individual’s National Insurance record, with 35 qualifying years required for the full amount.

Planning Considerations

To achieve a desired retirement income:

• Assess Lifestyle Needs: Determine the lifestyle you wish to maintain and estimate associated costs.
• Calculate Required Income: Use tools like the MoneyHelper pension calculator to estimate the income needed to support your desired lifestyle.
• Review Pension Savings: Evaluate your current pension savings and contributions to ensure they align with your retirement goals.
• Seek Professional Advice: Consulting a financial adviser can provide personalized strategies to optimize retirement income.

In summary, while benchmarks offer general guidance, an acceptable pension income is highly individual. Regularly reviewing and adjusting your retirement plan is essential to meet your specific needs and aspirations.