What’s Ahead in the October Budget? Inheritance Tax, Interest Rates, and a Frugal Christmas

October 2024

Welcome to our October blog. As we head deeper into autumn, there is quite a bit of financial news buzzing around, and I am here to break it down in a way that makes sense to you. So, grab a cuppa, and let us dive into what is happening this month!

The October Budget: What Might Be Coming?

At the end of this month, the government will announce its new budget. There has been a lot of talk about what might happen, and one word we keep hearing is "taxes." In particular, inheritance tax (IHT) is in the spotlight.

But what is inheritance tax?

Simply put, inheritance tax is a tax on the money or property you leave behind when you pass away. If the value of your estate—things like your home, savings, or possessions—is above a certain amount (currently £325,000), anything over that may be taxed at 40%. If you leave your home to children or grandchildren, you might get an extra allowance, so not everything gets taxed.

Who does it affect?

Well, not everyone! Many people will not have to pay inheritance tax, but if you own your home and have some savings, it is something worth thinking about. There has been chatter about possible changes to this tax, with some people worried it could be increased in the upcoming budget. This might mean more families start to consider gifting money to their loved ones while they are still alive—whether it is helping someone with a house deposit or simply giving them a helping hand.

If you are thinking of doing this, there are rules around how much you can give without it being taxed. We can always help guide you through that if you are unsure.

Interest Rates: Good News for Borrowers!

Now, let us talk about interest rates. You may have heard that in September, the Bank of England decided to keep its rates the same. But even though the official rates stayed put, something surprising happened—mortgage lenders started to reduce their rates!

Yes, you read that right. Mortgage lenders took the bull by the horns and started lowering their rates, which is great news if you are thinking about borrowing. This has also happened with some later life lenders, who offer special mortgage products for people over 55.

Why does this matter?

When rates go down, it has different benefits depending on the type of mortgage. For normal mortgages, it means your monthly payments could become cheaper, making it easier to manage your budget. For lifetime mortgages, lower rates could mean lenders may be willing to lend you more, and it also reduces the overall cost and impact of borrowing. So, if you have been thinking about releasing some equity from your home, now might be a suitable time to explore your options. The choices are becoming more attractive, and we are always here to help you understand what it could mean for your situation.

Autumn Is Here—Is Christmas Around the Corner?

Can you believe we are already in autumn? With the leaves changing colour and the night's drawing in, you might be starting to think about Christmas. It seems to sneak up on us quicker every year!

Many people have already started planning their celebrations and may have even begun buying presents. But with everything that has been going on financially, you might be asking yourself: When is the right time to start? Should we hold back a bit this year?

With the cost of living going up and budgets tightening, it could be a more frugal Christmas for many of us. But that does not mean it cannot be a wonderful one! It is always nice to give gifts, but we all know the best part of Christmas is being with loved ones, sharing stories, laughter, and a good meal.

If you are worried about costs, it might help to set a budget and spread your shopping out over the next few months. That way, you are not hit with a big bill in December. And do not forget, thoughtful gifts do not have to be expensive!

Despite the news of possible tax changes and the ongoing squeeze on our wallets, there is always a silver lining. With lenders lowering their rates and giving us more options, it is a reminder that good things are happening too. And as we move towards Christmas, even if it is a bit more frugal than usual, let us keep focusing on what truly matters—spending time with the people we love.

As always, if you have any questions about your finances, interest rates, or even just how to make the most of your money as we head into the new year, we are here to help.

Until next time, take care, and enjoy the beautiful autumn days ahead!

Iain