TAX YEAR END PLANNING PART 2

TODAY’S BLOG

TAX YEAR END PLANNING PART 2 – CAPITAL GAINS

2019 was a good year for nearly all investors in share or bond-based funds. Even the Brexit-buffeted UK stock market, something of laggard in global terms, grew by over 14%. If your portfolio does not show some decent capital gains for the year, it is probably in need of a serious review.

As a general rule, it makes sense to realise gains up to the Capital Gains Tax (CGT) annual exempt amount each tax year. The exemption, covering £12,000 of gains in 2019/20, cannot be carried forward: use it by 3 April (the tax year ends on Sunday 5 April), or you lose it. Systematically using the exemption can help avoid building up large gains over the years which attract tax. Currently, the maximum tax rate on gains is 20% for higher and additional rate taxpayers (28% for gains involving residential property and carried interest).

If you want to crystallise gains to use your exemption, but would prefer to retain the same investments, you cannot simply sell them one day and buy them back the next. Anti-avoidance rules prevent this from being effective, but there are alternatives that achieve a similar result, such as reinvesting in an ISA or self-invested personal pension.

CAPITAL GAIN

CAPITAL GAINS TAX IN PRACTICE

CGT applies to nearly all forms of investment, the notable exceptions being ISAs, Pensions and Investment Bonds. In simple terms, you want to trigger gains by selling an asset that has increased in value. Ideally you want to trigger as close to the allowance (£12,000) as possible. Thats a gain. So by way of example, if you invested £10,000 in 2010 and the investment is now worth £22,000 you would need to sell the entire investment to trigger a gain of £12,000.

The important issue is to know when you invested and how much. This is often more complicated than it appears because funds or holdings may well generate income which might have been paid to you, but may well have been re-invested. Over time the sums get very complicated.

We do a lot of work for clients that have a portfolio that we gradually convert into ISAs. Each year we trigger gains to move over into your ISA, ideally until the taxable investment has nothing left as it has all been moved into a tax-free ISA pot. This is a good way to gradually convert a portfolio into a tax-free portfolio.

A married couple have their own allowance each, but this is only relevant if the investment is jointly owned. Trusts also have a CGT allowance, but only at half the rate of the personal allowance (£6,000 in 2019/20).

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

=

TAX YEAR END PLANNING PART 22020-02-18T19:01:25+00:00

NS&I Pensioner Bonds

Solomons-financial-advisor-wimbledon-blogger

NS&I Pensioner Bonds

Her Majesty’s Treasury announced the new rates for the NS&I Pensioner Bonds last week. These look incredibly competitive for fixed interest rate cash deposits (bonds). These will be offered in the new year at some point in January. There will be a 1 year fixed rate of  2.80% and a 3 year rate of 4.00%.  There is a maximum investment of £10,000 into each. You can have both (£20,000 in total). The interest will be added at each anniversary.

bond-pic-2-600x325

The World Is Not Enough… well £20,000 isn’t

When comparing Bond rates for cash against market equivalents, they are incredibly good – but clearly restricted to a maximum holding of £20,000 per person, I expect that there will be a high demand and as a result the offer could be withdrawn fairly quickly. Blink and you may miss it.

If you would like more information about this please consider the NS&I website. Remember that this is for cash balances that you can afford to lock away for 12-36 months. If you expect to have this money longer than that, then please consider proper investment advice as despite the fact that these rates are “good by comparison” they would be an unwise use of your money as a long-term investment plan (5 years or more). Cash is for your emergency safety net and planned expenses in the 0-48 month window.

Pensioner Bond

The “Pensioner Bond” is only available to those aged 65 or over… which if you are interested would enable 4 of the living 6 actors that played James Bond, 007 to apply.

Timothy Dalton (70); George Lazenby (75); Sean Connery (84), Roger Moore (87). The current James Bond Daniel Craig is 46 and his predecessor Pierce Brosnan is currently 61. The other Bond story is that the new 007 film “Spectre” is scheduled for release in November 2015.

Dominic Thomas

NS&I Pensioner Bonds2017-01-06T14:39:33+00:00
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