Insignis 013: Get Cash Clever - The Impact of Rising Inheritance Tax and CGT on Managing Client Cash

Welcome to this week's edition of Get Cash Clever by Insignis Cash.

Get insights on the news impacting your cash in just 2 minutes and 30 seconds.

In this edition, we cover key topics including the latest savings rates, the fastest salary growth in three years, and the impact of rising inheritance tax and CGT on managing client cash. Plus learn about Insignis' new solution designed to enhance cash held in SIPPs.

Current Bank Rate: 4.75% (Bank of England) - The next update is due on December 19th, 2024

CPI Inflation Rate: 2.3% (Bank of England)

TOP INSIGNIS SAVINGS RATES*

Easy Access –? Cynergy Bank: 4.66%?

6 Months Fixed – Sainsbury's Bank : 4.71%

1 Year Fixed – AI Rayan Bank : 4.80%?

TOP EURO ACCOUNTS:

Easy Access: Santander Financial Services Plc: 1.95%?

95 Day Notice: Santander Financial Services Plc: 2.70%?

To enquire about our USD or Euro products please reach out to your Account Manager

Insignis launches solution to enhance cash held in SIPPs (FT Adviser)

Looks like we’ve made headlines! The FT Adviser outlines our new pension solution, which lets advisers manage client cash within a SIPP wrapper, combining flexibility and diversification.??

Salaries rise at fastest rate in three years (The Times)

The UK job market is seeing renewed activity, with Christmas hiring boosting demand in sectors like trade and retail, while average advertised salaries have risen 6% year-on-year to ￡39,234, the fastest growth since 2021. Businesses face mounting costs from rising salary expectations and increased employer NICs.??

UK wealth managers warn Rachel Reeves over plan to levy inheritance tax on pensions (Financial Times)

Proposed changes to inheritance tax on pensions risk complicating the retirement savings system, with potential double taxation and delays in beneficiaries receiving funds, industry experts warn. Wealth managers have urged the government to consider simpler, fairer alternatives to avoid administrative challenges and financial strain on grieving families.?

What Rising Inheritance Tax and CGT Mean for Managing Client Cash?

What happened?

The latest HMRC figures show inheritance tax (IHT) receipts reached ￡5 billion between April and October 2024, up ￡0.5 billion year-on-year.? This increase reflects the fact that, with inflation impacting the value of property and assets, more people are being drawn into IHT as a result of the threshold remaining frozen until 2030. Unsurprisingly, Capital Gains Tax (CGT) receipts also rose by ￡180 million, as many converted property or equities into cash ahead of anticipated policy changes. This signals a growing preference for cash amid market and tax uncertainty, creating new considerations for estate and tax planning.?

Why does it matter?

Clients who are holding significant cash balances following the realisation of assets need to manage these funds effectively - especially in a higher interest rate environment. ? ?

Some points worth thinking about:??

• Maximising returns on cash: With interest rates elevated, choosing the right savings products can significantly enhance returns.?

• Inflation’s impact: While holding cash can provide flexibility, prolonged inflation may erode its real value, underscoring the importance of balancing liquidity needs with purchasing power preservation.?

• Tax efficiency: Those holding large cash balances may need to consider strategies to minimise further tax exposure, such as utilising ISAs or planning around thresholds.

What could this mean for your clients?

If your clients have recently sold assets and now hold significant cash reserves, there’s an opportunity to help them make informed decisions about managing these funds. In today’s environment of rising tax receipts and economic uncertainty, offering guidance on appropriate savings solutions can add real value—helping clients protect against inflation and plan for future liabilities.?

We invite you to visit our website if you have any questions.

Wishing you a wonderful rest of the week. Until next time!

The Insignis Cash team

*Rates are correct on the Insignis Cash Platform as of 26th November 2024. All interest rates displayed are quoted gross p.a. and easy access may be variable. Rates are subject to a minimum and maximum deposit size, please shop around. Availability of products will vary depending on the client type. Check your FSCS coverage. Fixed-term deposits cannot be broken early. Insignis Cash does not provide financial advice.

Market information does not constitute financial advice. Forecasts may change and actual performance may vary. Please seek your own professional financial advice before making a decision.

Insignis Cash is a trading name of Insignis Asset Management Limited (Company number 09477376). Insignis Asset Management Limited is authorised by the Financial Conduct Authority under the Payment Service Regulations 2017 (813442) for the provision of payment services.