FREQUENTLY ASKED QUESTIONS

Income Tax is charged on many forms of income, including earnings and pensions, after any personal allowance has been applied. The bands and rates can vary, so the amount you pay depends on your total income and where you live in the UK. Scurfield & Associates can help you review the tax position alongside your retirement and estate planning.

Capital Gains Tax may apply when you sell, gift, or exchange an asset that has increased in value. The tax-free allowance and the rates that apply can change, and they may differ for property and other assets. If you are planning to transfer or dispose of assets, Scurfield & Associates can help you understand the wider planning impact before you act.

An Individual Savings Account (ISA) serves as a straightforward and widely-used option for tax-free saving and investment. Funds within an ISA are exempt from both Income Tax and Capital Gains Tax. However, there is an annual contribution limit, currently set at £20,000, to balance these tax advantages.

The dividend allowance is the amount of dividend income you can receive before tax applies. The allowance can change, and any dividends above it may be taxed at different rates depending on your overall income. If dividends form part of your wider wealth plan, Scurfield & Associates can help you understand how they fit into your estate and retirement planning.

Venture Capital Trusts (VCTs) are ‘pooled’ funds that invest in smaller and younger companies. VCTs are high risk as these companies can struggle and fail, and their shares can also be difficult to sell. To offset these risks, VCTs offer tax benefits. These include a 30% Income Tax rebate on investments up to £200,000 each tax year, but only if you have paid the amount of tax being rebated and stay invested in the VCT for a minimum of five years.

The Enterprise Investment Scheme (EIS) allows direct investment into small, unquoted companies (those that are not listed on the London Stock Exchange). Similarly to VCTs, EIS offers a 30% Income Tax rebate on investments up to £1 million. However, you must have paid the amount of tax being rebated and hold the shares for at least three years.

The Seed Enterprise Investment Scheme (SEIS) is similar to EIS, and encourages direct investment into start-ups. However, the tax benefits are more generous than EIS as these companies are younger and may not have fully developed a product or service yet. You receive a 50% Income Tax rebate on investments up to £100,000 as long as you have paid the amount of tax being rebated and stay invested for at least three years.

Inheritance Tax is usually charged at 40%. The charge drops to 36% if you give at least 10% of your estate away to charity when you die.

The nil rate band is your personal allowance that is free from Inheritance Tax. It is currently £325,000 per person. Any unused allowance can be transferred between married couples and civil partners when one spouse dies.

Gifts that are not immediately tax-free are considered potentially exempt. If you die within seven years of making a potentially exempt gift, it counts as part of your estate and may be subject to Inheritance Tax.

If you made a potentially exempt gift that was bigger than the nil rate band, you could benefit from taper relief (also known as the seven year rule). This gradually reduces the amount of Inheritance Tax that is chargeable over the seven years after you made the gift.

You can usually make use of several gifting exemptions. The annual exemption allows you to give away £3,000 each tax year, and you can carry forward one unused year. You can also make small gifts of up to £250 per person, while gifts to a husband, wife or civil partner are generally exempt. Regular gifts from surplus income may also be exempt if they do not affect your standard of living. Larger gifts may be reviewed if you die within seven years, so careful planning is advisable.

Any money left in your pension when you die does not form part of your estate, meaning it isn’t taken into account when your Inheritance Tax bill is calculated. Taking income from other sources in your retirement means you might be able to reduce the size of your estate (and future Inheritance Tax bill) while passing on your pension to your beneficiaries tax-free.

A defined benefit pension (also known as a final salary pension) is usually set up by your employer. It guarantees you a regular income in retirement, usually based on your salary and the number of years you have worked. The level of income may also increase in line with inflation. On the other hand, defined contribution pensions do not offer you a guaranteed level of income. The amount of money you will have in retirement depends on how much you or your employer has contributed and how well your pension investments have performed.

Usually you can pay as much as you earn each year into your pension, up to a maximum of £40,000. This is your annual allowance. The allowance reduces for people with more than £150,000 of annual income, down to a minimum of £10,000. This is known as the tapered annual allowance.

If your income is high enough, your pension annual allowance may be reduced under the tapered annual allowance rules. The exact thresholds can change, so it is important to check the current position before making large contributions. Scurfield & Associates can help you plan pension savings with your wider financial goals in mind.

Pension carry forward lets you pay more than your annual allowance into your pension by ‘carrying forward’ unused allowance from the previous three tax years (as long as you have sufficient earnings). You still will receive tax relief on the payments and it can be useful for those affected by the tapered allowance.

The lifetime allowance rules have changed, so the old cap no longer applies in the same way. What still matters is how much you contribute, when you take benefits, and how withdrawals are taxed. If your retirement planning involves pensions, Scurfield & Associates can help you check the current rules and plan with confidence.

Investments in pensions grow free from Income Tax and Capital Gains Tax. Pension contributions are paid from gross (pre-tax) income. Where tax has already been paid on a pension contribution it is refunded. The taxman will automatically top up pension contributions up to your annual allowance by 20% to cover basic rate tax. Higher or additional-rate tax payers can then claim back any higher or additional-rate tax that they have paid on contributions through their tax return.

You can normally take up to 25% of your pension tax-free – either as a single lump sum or as a series of smaller withdrawals. You can also take a regular income from your pension by making lump sum withdrawals, buying an annuity or setting up income drawdown.

A defined benefit pension, often referred to as a final salary pension, typically ceases to provide income upon the death of the pension holder or their dependant. Conversely, a defined contribution pension can be transferred to beneficiaries. If the pension holder passes away before reaching the age of 75, the pension is transferred tax-free. For deaths occurring after the age of 75, beneficiaries are subject to their standard Income Tax rate on any withdrawals.

Pensions are generally excluded from your estate and are not subject to Inheritance Tax upon your death. However, any income or lump sum death benefits derived from your pension may be considered part of your estate and could therefore be subject to taxation.

If a person dies without a valid will, the estate is distributed under the rules of intestacy rather than according to personal wishes. That can mean partners, family members, or other loved ones inherit differently from expected. A properly drafted will helps provide clarity, reduce delay, and support a smoother administration process.

You may need probate when you need legal authority to deal with the deceased person’s assets, such as bank accounts, property, or investments held solely in their name. Whether probate is required depends on how the estate is structured and which assets are involved. We can help you assess whether probate is likely to be needed and explain the next steps with clarity.

You should review your will after major life changes such as marriage, divorce, the birth of a child, buying or selling property, changes in finances, or the death of an executor or beneficiary. Even without a major event, it is sensible to review it regularly so it continues to reflect your wishes and circumstances.

An executor should be trustworthy, organised, and willing to take on the responsibility of managing the estate. This may be a family member, a close friend, or a professional adviser. In many cases, appointing more than one executor can provide practical support, provided they are able to work well together.

A Lasting Power of Attorney, often referred to as an LPA, allows a trusted person to make decisions on someone’s behalf if they are unable to do so themselves. There are separate LPAs for property and financial affairs, and for health and welfare. It is an important part of estate planning because it helps ensure that affairs can be managed smoothly if capacity is lost through illness, injury, or age.

It helps to bring any existing will, details of your assets, property ownership, pensions, life insurance, debts, and the names of the people you would like to benefit or appoint as executors. If there are any concerns or recent changes in your circumstances, it is useful to note those too. This preparation helps us give you more tailored guidance.

If someone dies without a valid will, their estate is distributed under the rules of intestacy. That means their assets may not pass to the people they would have chosen, and the process can be more complicated for family members. A valid will gives clear instructions and helps reduce uncertainty at a difficult time.

Scurfield & Associates can assist clients with the practical steps involved after a death, including guidance on probate and estate administration. The aim is to make the process as clear and manageable as possible while ensuring the estate is handled in line with the deceased person’s wishes and the relevant legal requirements.

A Lasting Power of Attorney allows someone to choose trusted people to make decisions on their behalf if they lose the ability to do so themselves. It can cover both financial matters and health and welfare decisions. Putting one in place early can help ensure that important choices are handled by people the individual trusts, rather than by default arrangements.

A will should be reviewed whenever there is a significant life change, such as marriage, divorce, the birth of a child, a change in assets, or the death of a beneficiary or executor. Even without a major event, it is sensible to check a will regularly to ensure it still reflects current wishes and circumstances.

Trusts can help you control how assets are managed and passed on, support vulnerable beneficiaries, and, in some cases, improve flexibility in estate planning. The most suitable structure depends on your personal circumstances, so tailored advice is important before deciding whether a trust is right for you.

A will is not only about larger estates. It also allows a person to decide who should receive their assets, appoint executors, name guardians for children, and reduce the risk of family uncertainty later on. Even a modest estate can be distributed more smoothly and in line with personal wishes when a valid will is in place.

If you own property as joint tenants, the deceased owner’s share usually passes automatically to the surviving owner or owners. If you own the property as tenants in common, the deceased share forms part of the estate and passes under the will or intestacy rules. The way the property is owned matters, so it is worth checking the ownership structure carefully.

A codicil is a formal document used to make a small amendment to an existing will without replacing it completely. It can be suitable for limited changes, although it must be executed correctly to remain valid. Where more than one or two changes are needed, a new will is often the cleaner and more reliable option.

A well-drafted will should set out who is to receive the estate, who will act as executor, and, where relevant, who should care for any minor children. It can also include specific gifts, funeral wishes, and instructions for the remainder of the estate. Including these details helps ensure that a person’s wishes are recorded clearly and carried out with minimal uncertainty.