April 2025 Newsletter | Cylchlythyr Misol Ebrill 2025
1) The new tax year has arrived! As a reminder, here is an overview of some of the tax allowances to bear in mind this tax year:
a. Personal allowance: the amount of income an individual can earn/receive before paying income tax remains at £12,570.
b. Personal savings allowance: the amount of interest income an individual can receive tax-free each year remains at £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers (with interest rates remaining high, more taxpayers will be paying tax on their savings interest).
c. Dividend tax-free allowance: remains at £500 of dividends this tax year (any additional dividends are taxed at your marginal rate of tax).
d. Capital gains tax allowance: remains at £3,000. If you have a portfolio of stocks & shares, care will be needed if you intend to only dispose of shares with gains of up to the tax-free annual allowance.
e. ISA allowance: despite recent speculation of potential changes, this remains at £20,000 across all ISA sources.
f. Pension annual allowance: the maximum amount you can contribute to your pension in a tax year remains at £60,000 (or your total income, whichever is lowest). However, if you have already accessed a pension, or if you are a high earner, this allowance may be restricted to an amount as little as £10,000.
2) The interest rate charged by HMRC for late payments of most taxes has risen from 7% to 8.5% from 6 April 2025. The basis of this late payment interest rate used to be the Bank of England (BOE) base rate plus 2.5 percentage points. However, this has now increased to being the BOE base rate plus 4 percentage points from 6 April 2025.
HMRC no longer send automatic payment reminders either, therefore we strongly encourage taxpayers to diarise their tax payments.
Ask Huw and Aled
Q: My elderly aunt now lives in a care home. She has a Lasting Financial Power of Attorney and I am one of the attorneys. How do I activate the Lasting Financial Power of Attorney?
A: If she still has mental capacity, a letter from her to the various financial institutions authorising you to act as her attorney should suffice.
If she does not have mental capacity, the first steps are to contact the nursing home manager and have a doctor's assessment to confirm she does not have mental capacity, then request a letter be prepared accordingly. This can then be presented to the various financial institutions.
Once this is confirmed you can "step into her financial shoes". The Gov.uk guidance states:
"Making decisions in someone’s best interests:
Any decisions you make for someone must be right for them and you need to take into account what they would have decided, if they could, based on their values and wishes."
The existence of a Financial Power of Attorney will make your life a lot easier and ensure that you can look after the financial needs of your elderly relative.
