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    What does the Autumn Budget mean for Family Law?

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    Labour’s first budget in 14 years was delivered on 30th October 2024, bringing in significant changes for tax particularly. But what does this mean for family law, and people going through divorce and relationship breakdown?
    Capital Gains Tax 
    One of the biggest changes for couples going through divorce is the increase to Capital Gains Tax (CGT). From the end of October 2024, the tax rates will have increased from 10%-18% for basic rates taxpayers, and 20-24% for the higher rate taxpayer.
    This significant rise is likely to impact a wide spectrum of couples who have assets where CGT will be applied upon sale. For example, couples with investment properties, second homes, stocks outside Isas and even collections of jewellery or artwork will be affected.
    The increased rate will mean any assets sold as part of the financial agreement will be subject to more tax. This reduces the overall profit from sale, shrinking the matrimonial pot and therefore how much is available to share between the separating couple.
    Where couples are amid their financial negotiations, it is best to seek expert legal and financial advice to fully understand the effect that this change might have, and where adjustments might need to be made before making a final settlement.
    If the ex-couple has finalised their financial consent order and it has been approved by the court, unfortunately the agreements made within this settlement will be legally binding. Once a financial order is made by the court, it is extremely difficult for it to be amended, so the ex-couple may be faced with less income from yet-to-be sold assets.
    If you are already divorced, with a financial settlement in place, you may be able to make an informal agreement with your ex-spouse based on the updated income you are likely to get from CGT-applied assets. However, your legal arrangement will still stand. If you have concerns, please contact an expert financial adviser.

    Inheritance Tax
    In the weeks leading up to the Budget, the media reported a number of expected changes around inheritance tax. However, the Chancellor announced that inheritance tax rates would continue to be frozen for the next two years.
    Although this does mean no change yet to lower the nil-band rate, the further freeze will mean that an increasing number of people will be subject to greater tax liability as the value of assets increases over time. This therefore means their beneficiary receives less in the way of inheritance.
    Please speak to an expert financial adviser
    Private School VAT
    From January 2025, the VAT exemption currently applied to private schools in England and Wales will be removed, meaning some schools may have to increase their fees. This could well have a direct impact on divorced couples, and those currently negotiating settlements. Where private schools feature, fees should always be included as part of a settlement. However, if these fees rise by 20% because of the removal of the VAT exemption, further negotiation may be required.
    It is important to note that if the rise in school fees means there is not enough money to share between the separating couple, a judge is likely to require that the children be moved out of private education.
    Parents who have sealed agreements will be bound to these, although it may be possible to make an informal arrangement and ask the non-paying parent for more money. Where this is refused or impossible, children may need to be moved into state education.
    Conclusion
    If you are currently going through divorce, please seek expert legal and financial advice to understand the potential impact of the autumn budget on your negotiations.
    If you struggle to make progress in discussions with your ex, mediation and other non-court resolution methods can be very helpful. Talk to an expert family lawyer about your suitable options.
    Useful Links
    How to protect your money during divorce
    Private school fees after divorce
    Do I need a financial settlement?

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      in Advice & Features

      Why You Should Give Your Kids an Allowance

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      By Tanni Haas, Ph.D. | Contributor

      Experts agree that an allowance can teach kids important money management skills, like how to save for things they want, how to budget their money, and how to choose between competing spending goals. Personal finance expert Brad Munson says an allowance “is a great way to teach kids about the real value of money, how to be organized and responsible, and how to plan for the future.” Financial counselor Ray Martin, who’s the author of several books on money management, adds that an allowance is a great opportunity for kids to experiment with money and to learn from their mistakes. “It’s a way for them to learn big lessons with small amounts of money at an early age.”

      It’s important that you talk to your kids about the value of money, and it’s best to do so in the context of an actual allowance. Certified financial planner Marty Allenbaugh says that talking to your kids about money without giving them an allowance is like trying to teach them how to play the piano without ever letting them sit at the keys.

      Research shows that giving kids a regular allowance while discussing with them the importance of money makes them more financially responsible as adults. They become, as personal finance expert Evonne Lack succinctly puts it, “less likely to arrive on your doorstep years from now with a duffel bag full of dirty laundry and a mountain of credit card debt.”

      If an allowance is such a great tool for teaching kids money management, at what age should you start giving them one?

      Many parents start at age 8, but experts agree, as Mr. Martin puts it, that it’s the kid’s “aptitude not the age that really matters.” So how do you know if your kids are ready to receive and learn from an allowance? Research shows that they are ready to benefit from an allowance once they have reached certain developmental milestones, like 1) understanding that money can be exchanged for things they want, and 2) they can confidently add and subtract.

      And, here, kids differ widely. While some kids reach these milestones at age 4 or 5, others get there by age 8 or 9. “So if your child tends to shrug at money, losing it before it can find its way to his dusty piggy bank, hold off until you see signs that he enjoys saving it or thinking about how he might use it,” says Mrs. Lack.

      Finally, but not least importantly, what amount should you give your kids?

      Experts agree that, as a rule of thumb, you should give them $1 per year of age on a weekly basis: for example, a six-year-old would receive $6 a week and a ten-year-old $10 a week. The advantage of this approach is that kids get an automatic raise every birthday, eliminating the question of when their allowances will be increased. If you are really lucky, it may even reduce sibling arguments, because the younger kid will understand why the older siblings get more.

      Parents should feel free to deviate from this rule of thumb depending on whether they live in an expensive or inexpensive area, their particular financial situation, how many kids they have, and which regular expenses they or the kids are expected to pay for. As Susan Borowski, the author of “Money Crashers,” puts it, “If a straight $5 or $10 per week (or even per month) makes more sense to you than paying a dollar per year of age, then pay what works for you.”

      If your kids are very mature, you can discuss this issue with them and reach a mutual agreement on a reasonable amount. It’s useful to go through such a process with your kids, says Mr. Martin, because it “helps to develop budgeting skills, teaches responsibility, and prepares them for the realities of personal money management.”

      The allowance shouldn’t be too high. If you give kids too much, they won’t learn how to budget and allocate money because they never get a chance to prioritize among competing spending goals.

      However, the allowance shouldn’t be too high. If you give kids too much, they won’t learn how to budget and allocate money because they never get a chance to prioritize among competing spending goals. Ron Liebler, the author of “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money,” says to “give your kids just enough so that they can get some of what they want but not so much that they don’t have to make a lot of difficult trade-offs. Let them own those, so they know what it’s like to make financial decisions that resemble grown-up ones.”

      Whatever amount you ultimately decide on, make sure to follow a consistent schedule and stick with it – whether weekly or monthly. As child psychologist Dr. Mary Kelly Blakeslee says, “random payments will be frustrating and confusing, and will reduce the opportunity for learning.”

      Editor’s Note: Click Here for insights on how you can help your kids maximize their money management skills.

      ABOUT THE AUTHOR

      Tanni Haas, Ph.D. is a Professor in the Department of Communication Arts, Sciences & Disorders at the City University of New York – Brooklyn College. More

    • 166 Shares129 Views

      in Parenting

      Budgeting For Kids: Teaching Your Children To Budget

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      As parents, it is our responsibility to teach our children financial awareness. This includes showing them how to budget their money from an early age. Including them as a part of the family budgeting plans is a great thing, but it does not relate directly to them on their level. Therefore, helping your kids set up a budget of their own will teach them on a smaller scale what it is that you do every month with your finances.  If you child is old enough to have an allowance, they are old enough to learn budgeting for kids.
      Budgeting For Kids Provides A Firm Foundation 

      “Choose my instruction rather than silver, and knowledge rather than choice gold; for wisdom is better than jewels, and all that you may desire cannot compare with it. I have good advice and sound wisdom; I have insight, I have strength.” ~ Proverbs 8:10, 11, 14

      Being money wise is very important to your child being able to get started on their own and make it in the world. Knowledge about money and how it works should be shared with them naturally as they grow and opportunities for discussion arise. Whether you are teaching them how to look at the price per ounce part of the stickers at the grocery store, or teaching them to save a portion of their earnings, learning these basic principles will help them immensely when they have to manage money on their own. A great place to start is by introducing a budget worksheet for kids.
      Teach Them To Use A Budget Worksheet For Kids
      There are many budget worksheet options out there that you can find to help you with the basics. Or just use a spreadsheet program on your computer. The left hand column can be for the days of the week and the columns that span the page across will be the categories like games, food, clothes, gifts, and savings. A budget worksheet for kids can be made to suit your child’s age and earnings.

      A budget worksheet for kids should include a place for what they earn, expenses, savings, and charity. Explain to them that they need to fill out their chart or do it together the first few times. Help your kids see how to disperse the money into the categories. If you incorporate a rule that 20% goes into savings and 10% to charity, those should come out first as well as any expenses. The rest can be divided into the fun areas and once they spend it, the money is gone. They will learn that they need to earn more.
      You can find 13 different budget worksheets for kids and pick what best matches your child’s age and monetary experience level at moneyprodigy.com
      Set Goals And Provide A Budget Project For Kids
      When you were younger, before the time of children and marriage, you dreamed of having a family and a home. These dreams became goals for you, things to accomplish and make your life richer in a more spiritual way. To be a realist though, money truly does make the world go ‘round. There is nothing wrong with wanting to feel comfortable in your situation or provide your family with a home. In fact, it sets a great example for your children.
      Sit down with your kids and help them learn to set a short term goal (realistic) and a long term goal (big dream). It is great for kids to learn to work towards achieving their goals.  Have them draw a picture of the goal and hang it by the budget chart so they see it every day and remember why they are saving their money. The short term goal can be something as simple as buying a Matchbox car or saving for new clothes. The long term goal can be putting their money towards a car and/or college. Have them pick an actual dollar amount to work towards. Once they reach it, they can set the same goal again or another goal.
      Now that your child has some budgeting goals, give them a project! You should only use this budget project for kids if they are old enough. Also wait until they have become familiar with using the budget sheet. See if they can use their budget sheets to calculate how long it will take them on their current allowance or supplementing with additional earned income of blank dollars each month to reach their small goal and their large goal.

      Reward Your Child For Learning To Budget
      You can expect some hesitation, a little bit of resistance even. As your children begin to take initiative in budgeting, be sure to encourage them with a shopping trip to buy that item they had been saving for. Every new program needs to be tackled with a loving and supportive attitude. When the family steps up and applies the learnings, let them know how much you love and appreciate them back. Your reward comes much later in life when they are financially stable people!
      Being a parent is a true blessing, but one that does not come without its responsibilities. It will feel really good to know that by teaching budgeting for kids, you are helping to prepare them for a successful future.
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