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Don’t leave it to the last minute

Dominic Thomas
April 2023  •  3 min read

Don’t leave it to the last minute

One of the things we take seriously here at Solomon’s is finding ways to improve what we do for our clients and how we do it.

The tax year end period in the last few years has been very busy indeed with a number of transactions being processed very close to the deadline of 5th April.  The team here (once again) stepped up marvellously this year and we all worked incredibly hard to ensure good outcomes for all – but we would like to try and ensure that we don’t have a similar ‘last minute rush’ next year!

So what’s the answer?  Possible solutions rely fairly heavily on our clients joining with us in our endeavours.  I have been encouraging clients for many years to set up monthly Direct Debit payments to ISAs and pensions (where appropriate) and many of our clients are now doing this (and reaping the benefits of pound cost averaging – see our video here!).  I would be happy to discuss this with you if you haven’t already had ‘that conversation’ with me.  The alternative (for clients who are able and would prefer to make their contributions in lump sum payments) is to make sure that you do this as early in the tax year as possible (you can invest from the 6th April onwards).

Don’t leave it to the last minute2023-12-01T12:12:33+00:00

TAX YEAR END 2020/21 PLANNING

TODAY’S BLOG

TAX YEAR END 2020/21 PLANNING – OVERVIEW

It probably goes without saying, but the tax year end is something that we are always mindful of. There has already been a lot of coverage in the media about what the Chancellor might do. We get to find out on 3rd March 2021. The reality is that due to the pandemic and enormous spending by the Government (and some very expensive contracts awarded to Conservative party donors), there is a obvious pressure to refill the public purse.

Last year, Autumn arrived without an Autumn Budget. To be fair, the Chancellor, Rishi Sunak, had already presented one 2020 Budget – in March – and the pandemic made forecasting for 2021/22 all but impossible. The result was that, for the second year running, the Budget was deferred to the Spring. Whether Mr Sunak’s reading of the economic runes will prove any easier on 3 March 2021 is a moot point.

It is equally difficult to assess what the Chancellor might do in his second Budget. On the one hand, he will be ending the current financial year with a record-breaking government deficit of around £400bn. On the other hand, he will be wary of trying to fill the large black hole with the near inevitable tax increases until an economic recovery is well under way. It could be one of those Budgets where the bad news is announced but has a deferred start date or is, at least initially, targeted at the more affluent.

Every year there is speculation about tax relief reducing or ending. Every year. Every year I largely ignore the speculation. However this year, to be blunt, the changes to taxes are more likely than any in the last 3 decades. There are some things that we can consider together. In truth as the Budget is 3rd March, time is against us. Whilst normally we expect Budget announcements to forewarn of rules for the following April, George Osborne was one of the few Chancellors to initiate immediate pension changes. You have been warned. As the tax year end is on the Easter Bank Holiday, the reality is that the last week of March is really your deadline. If you make allowance for slow post, many working from home, the normal efficiency of a tax year end is arguably “not as normal”… so the sooner you take action on anything important the better.

GET TUIT TAX YEAR END PLANNING SOLOMONS IFA

PENSIONS

A change in the personal tax relief on pension contributions from marginal income tax rates to a single flat rate is a regular pre-Budget rumour. That could mean a cut from a maximum rate of relief of 45% (46% in Scotland) to perhaps a flat rate of 20%-25%. Higher and additional rate taxpayers would thus lose out.

Depending upon where the Treasury pitched the flat rate, it could save billions while making most pension contributors – basic rate taxpayers – better off or at worst unaffected. Even without the revenue benefit, the result has a clear appeal to a government that regularly talks of ‘levelling up’.

Last year Mr Sunak increased the cost of pension tax relief by adding £90,000 to the two income thresholds that govern the tapering of the annual allowance. That could mean in 2020/21 you have an opportunity to make a higher contribution than in previous tax years. In any case, it is worth checking whether you have scope to take advantage of unused annual allowances from the past three years (back to 2017/18) at current rates of tax relief.

ISAs – INDIVIDUAL SAVINGS ACCOUNTS

Plans to put a cap on ISAs were reportedly considered by the Treasury in 2013, an idea that was recently revised by the Resolution Foundation in a paper examining ways to repair public finances. As with reforming pension contribution relief, the main impact would be on those who pay tax at more than the basic rate. For most basic rate taxpayers, the combined effect of the personal savings allowance, dividend allowance and CGT annual exemption is to render ISAs of little relevance.

If you pay tax at more than the basic rate, all types of ISA offer a quartet of tax benefits:

  • Interest earned on cash or fixed interest securities is free of UK income tax.
  • Dividends are also free of UK income tax.
  • Capital gains are free of UK capital gains tax (CGT).
  • ISA income and gains do not have to be reported on your tax return.

In addition, if you are eligible, the Lifetime ISA (which the Resolution Foundation said should be scrapped) gives a 25% government top-up on contributions.  The overall total contribution limit for ISAs has been frozen since April 2017 at £20,000 (of which the Lifetime ISA ceiling is £4,000). However, the limit for Junior ISAs was more than doubled to £9,000 in last year’s Budget.

CAPITAL GAINS TAX

In July 2020,Rishi Sunak asked the Office of Tax Simplification (OTS) to review Capital Gains Tax (CGT). The request came out of the blue but arrived at a time when increasing the CGT tax take was being discussed by several think tanks. It had also been proposed in the 2019 Election manifestos of both Labour and the Liberal Democrats. Mr Sunak would not be the first Chancellor to ‘borrow’ money-raising ideas from the Opposition.

The OTS published the first of what will be two reports on CGT reform in November. Its suggestions included:

  • ‘More closely aligning Capital Gains Tax rates with Income Tax rates’, which could mean more than a doubling of the current tax rates in some instances.
  • Reducing the level of the annual exemption from the current £12,300 to an ‘administrative de minimis’ of between £2,000 and £4,000.
  • Removing the rule which gives a capital gains tax uplift on death. As a result, if you inherited an asset its base value for CGT purposes would be that of the deceased, not the value at the date of death.

That trio of measures, which could be introduced with immediate effect on 3 March, is a good reason to review the unrealised gains in your investments as soon as possible. Although it is no longer possible to sell holdings one day and buy them back the next to crystallise capital gains, there are options which can achieve a similar effect, such as making the reinvestment via an ISA or a pension.

INHERITANCE TAX

A report on CGT is not the only OTS document on capital taxes occupying the Chancellor’s in tray. On taking over the job last February, he inherited a pair of reports on Inheritance Tax (IHT) which had been commissioned by Philip Hammond. These had been expected to feed through into last year’s Spring Budget. They may still do so in the forthcoming Budget, possibly alongside – and complimentary to – CGT reforms. The consequence could be a radical restructuring of capital taxation.

Ahead you should consider using the three main IHT annual exemptions:

1.    The Annual Exemption Each tax year you can give away £3,000 free of IHT. If you do not use all of the exemption in one year, you can carry forward the unused element, but only to the following tax year, when it can only be used after that year’s exemption has been exhausted.

2.    The Small Gifts Exemption You can give up to £250 outright per tax year free of IHT to as many people as you wish, so long as they do not receive any part of the £3,000 exemption.

3.    The Normal Expenditure Exemption  The normal expenditure exemption is potentially the most valuable of the yearly IHT exemptions and one most likely to be reformed. Currently, any gift is exempt from IHT provided that:

a.     you make it regularly;

b.    it is made out of income (including ISA income); and

c.    it does not reduce your standard of living.

If you have the surplus capital available, you should also think about making large lifetime gifts. This could include gifting investments, thereby also using your CGT annual exemption. One of the OTS reform suggestions was the abolition of the normal expenditure rule and the introduction of an annual limit of IHT-free lifetime gifts.

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

7 QUESTIONS, NO WAFFLE

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PRIVACY POLICY  |  DATA PROTECTION

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

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY  |  DATA PROTECTION

TAX YEAR END 2020/21 PLANNING2023-12-01T12:13:10+00:00

SHOULD I INVEST NOW?

TODAY’S BLOG

SHOULD I INVEST NOW?

The global stock markets have fallen further and look likely to remain volatile for some time. Whilst there are lots of good reasons to be concerned, we also believe that markets will recover. Every time there is a “crash” we hear people say that this time it is different… but it never is different, it’s the same problems reframed in a different way, for a new crisis. The problem is essentially the same. Fear.

If you believe that over the long-term businesses listed on stock markets deliver jobs, security and wealth then there is no reason to believe anything will change when you have a long-term mindset. Remember that commercial innovation always happens, some companies go bust as they are unable to adapt, new ones step in, technology evolves, everyone moves forwards. If you are investing for days or weeks, then frankly that isn’t investing its speculation and I wouldn’t advise anyone to do that. Investing is designed for long term wealth creation.

TIMING THE BOUNCE BACK

Trying to time an investment for the exact bottom of the market is impossible (well it would be luck). The truth is that the markets may fall further, we don’t know. However, we expect them to recover – much like the overwhelming vast majority of people will recover from coronavirus. It may take weeks, months or even years, but it will recover. That it not to say that life may be more difficult in the short term and require patience and assistance.

So to my mind, this is a good time to invest due to low market valuations. However, as always I would remind you that I advise everyone (including businesses) to hold somewhere between 3-12 months of typical spending in reserve for an emergency. This is that time. If you have this and have reviewed your numbers, including perhaps making some minor reductions to spending, then if this still fits your plan for your life, then there are good reasons to invest.

The one concern I have is the practicalities of getting investments done in time for the tax year end, primarily due to a reduced workforce and lots of demand. So I would encourage anyone wanting to make tax year specific investments to do so as quickly as possible.

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

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY  |  DATA PROTECTION

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

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY  |  DATA PROTECTION

SHOULD I INVEST NOW?2023-12-01T12:13:21+00:00

TAX YEAR END PLANNING PART 3

TODAY’S BLOG

TAX YEAR END PLANNING PART 3 – IHT

Inheritance Tax is one of the most unpopular taxes, yet it is a tax that you will not pay – your estate might. There are various solutions to reducing or avoiding inheritance tax – talk to me if you want to know more about them. However, each tax year you get some basic allowances that you can use to pass on wealth without any inheritance tax.

  • ANNUAL EXEMPTION

Each tax year you can give away £3,000 free of IHT. If you do not use all of the exemption in one year, you can carry forward the unused element, but only to the following tax year, when it can only be used after that year’s exemption has been exhausted.

  • SMALL GIFTS EXEMPTION

You can give up to £250 outright per tax year free of IHT to as many people as you wish, so long as they do not receive any part of the £3,000 exemption.

  • NORMAL EXPENDITURE EXEMPTION

The normal expenditure exemption is potentially the most valuable of the yearly IHT exemptions and the one most likely to be reformed. Currently, any gift is exempt from IHT provided that:

    • you make it regularly;
    • it is made out of income (including ISA income); and
    • it does not reduce your standard of living.

One way to combine the use of your CGT annual exemption with IHT planning could be to make an outright lifetime gift of investments. Such gifts would count as a disposal for CGT purposes and a potentially exempt transfer for IHT. The recipients of the gifts would start with a base cost for the investment equal to the gift’s value and there would be no IHT to pay at any time, provided you survived for the following seven years (possibly reduced to five under OTS proposals).

ANNUAL GIVING

ISAs – INDIVIDUAL SAVINGS ACCOUNTS

There are five important tax benefits which are common across the different types of ISA:

·         Interest earned on cash or fixed interest securities is free of UK income tax.

·         Dividends are free of UK income tax.

·         Capital gains are free of UK CGT.

·         There is nothing to report on your tax return.

·         On death, the income tax and CGT benefits of your ISAs can effectively be transferred to a surviving spouse or civil partner.

The overall maximum that can be invested in all ISAs in 2019/20 is generally £20,000 (£4,368 for Junior ISAs). There are no carry forward provisions, so like the CGT annual exemption it is a case of use it or lose it.

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

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY  |  DATA PROTECTION

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

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY  |  DATA PROTECTION

TAX YEAR END PLANNING PART 32023-12-01T12:13:23+00:00

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

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY  |  DATA PROTECTION

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

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY  |  DATA PROTECTION

TAX YEAR END PLANNING PART 22023-12-01T12:13:24+00:00

TAX YEAR END PLANNING PART 1

TODAY’S BLOG

TAX YEAR END PLANNING PART 1

As you will have gathered, the Chancellor Sajid Javid resigned on 13 February just a month before his first Budget. There will be many that offer reasons for this, perhaps some of them will be something resembling the truth, but as they say “a week in politics is a long time”. We have a new Chancellor – Rishi Sunak (who?) … who sent most of us into a google spin. He’s the 39 year-old who worked for Goldman Sachs immediately following graduating from Oxford in 2001, who he left in 2004 to become a Hedge Fund 2006-2010. He became an MP in 2015 taking over William Hague’s seat in Richmond, Yorkshire.

As a result of the rather sudden changes in arguably the most important job in UK politics, there was concern that the Budget may have to be resceduled. However we have been reassured that 11 March remains the date for the 2020 Budget date. We also have an effective deadline for tax-year-end planning. There could be a range of measures announced on 11 March (normally operative from the beginning of Budget day) which could impact on such planning. The Government has loosened the purse strings on capital investment, but in terms of day-to-day spending it has little room for manoeuvre. The Treasury may thus be tempted to make some subtle tax changes to boost its coffers.

Rishi Sunak - UK Chancellor

PENSIONS

More than in most years, 2020 is the year to ensure you make your pension contributions before the Chancellor delivers his speech. As explained earlier, the risk of a major pension tax reform, potentially reducing higher rate tax relief, is greater now than for some while.

One important point to check is whether you have any unused annual allowance from 2016/17, when the maximum annual allowance (before tapering) was £40,000. You have until the end of 2019/20 to use up this past allowance, or it is lost forever. However, it can only be utilised once your full annual allowance for the current tax year is exhausted. So, for example, if you are not affected by the taper rules and you have £10,000 annual allowance unused from 2016/17, to mop it up completely would require a total contribution of £50,000 in 2019/20 – £40,000 for the current tax year and £10,000 carried back three years.

Unused relief can also be used from later years, but once you have paid the current year ‘entrance fee’, the excess contribution is offset in chronological order, starting with 2016/17. Under current rules unused relief can be carried forward for three tax years (hence the 2016/17 deadline), but that principle – and the rate of tax relief – could change.

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

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY  |  DATA PROTECTION

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

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY  |  DATA PROTECTION

TAX YEAR END PLANNING PART 12023-12-01T12:13:24+00:00

Talking Money…. again

Talking Money… again

As you will have gathered from the plethora of adverts in the weekend papers and advertising hoardings everywhere, the tax year is coming to a close. This means it is your last chance to use up your 2016/17 ISA allowance of £15,240 or perhaps a Junior ISA for those young enough.

This tax year has had many unwelcome changes, most significantly the pension tapered annual allowance, which has reduced the annual allowance (normally capped at £40,000) to a £10,000. This applies to anyone with “adjusted income” over £150,000. But that doesn’t make you “safe” if you don’ earn £150,000. As the annual allowance is £40,000, the maths starts at £110,000 of income. Pension contributions paid are added to income, indeed any income, be it rent, dividends or interest are all counted. So many may well find that they have exceeded the annual allowance.

Deliberate Complexity

Yes, the Government could have made things easier, but why bother when there are so many willing voters who will forget the hassle at the ballot box. In fact, Mr Hammond, the Chancellor has had two opportunities to abolish this utterly ludicrous rule in either in his Autumn Statement or his Budget last week. There are tax penalties and charges if this is exceeded and you don’t have any unused relief from any of the three previous tax years 2015/16, 2014/15 and 2013/14. Pensions have the ability to go back 3 tax years if you exceed your annual allowance.

Shrinking heads?

To provide a little more context – ten years ago, the annual allowance was £215,000 in 2006/17, it rose each tax year to £255,000 by 2010/11. It was then slashed to £50,000 for 2011/12 and remained at that level until 2014/15 when it became £40,000. Today in 2016/17 it is likely to be £10,000 for many high earners.

Of course the Government knows what they are doing, by encouraging us all to save for our retirement and financial independence…. I expect that we will soon hear “lessons will be learned”. Oh and no, this is not fake news, its just unwelcome news.

Clients will be receiving a printed copy of Talking money this week, which has some more facts.

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

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Talking Money…. again2023-12-01T12:18:39+00:00

What can investors learn from sport?

What can investors learn from sport?

I apologise to those of you that do not like sport, the purpose of this post is not to bleat on like some bloke at the pub who is attempting to name his best eleven… again… but to make an observation about the way people behave and in particular what investors can learn from sport.

I wonder if you watched the final of the T20 World Cup at the weekend. It was a thrilling match – (spoiler alter) England were eventually beaten by the West Indies. The “English” team (nationality in sport is debatable) started badly, losing Roy, Hales and Morgan very quickly. At 23 for 3 things looked pretty bad.

These days I delude myself that I can multi-task, so flicked between TV stations, watching football, Grand Prix, the cricket and keeping an eye on the social media (yes it would appear that I’m rather sad and lacking an attention span). However, getting to my point – social media exposes an array of reactions (commentators term them emotions) that people reveal as they experience an event.

Too early to call

Many had written off England with the fall of the third wicket, several used terms like “game over” before the team had even completed their attempt to score as many runs as possible within 20 overs. The game had not even reached its half-way point, but thousands had already conceded victory.

Its not over until its over

The English fortune turned around equally as quickly once the West Indies began to bat, crumbling to 11 for 3 and struggling for runs. Suddenly there was “hope”. Indeed by the end of the 19th over (of 20) another 19 runs were needed, which seemed out of reach for Carlos Brathwaite, the facing West Indies batsman, who had 10 runs to his name. England were in the proverbial “driving seat” and now expected to win. Brathwaite had other ideas and promptly smashed each of the next deliveries for six runs, resulting in a dramatic victory and tournament win. Of course sad and desperate for Ben Stokes, the English bowler.

Investor behaviour is invariably no different from those on social media at the weekend. Reacting too quickly, feeling depressed, exasperated, then gaining some hope , followed by over confidence, followed by…. Repeat.

Your goals, not someone else’s

Investing is not a hobby, it is not a sport (unless you really are very rich). It is no way to learn about yourself and no place for reactive emotions. We approach the end of the 2015/16 tax year tomorrow. The deadline invariably pushes prices up. Whilst I am obviously (I hope) of the view that allowances ought to be used when appropriate, any investing should only be done if it helps you to reach your goals, not those set by HMRC.

Part of my job is to keep clients disciplined, avoiding mistakes and sticking to their own plans (not mine). This has been termed “adviser alpha” and adds an unquantifiable amount of value, though many attempt to quantify this.

The media in all its forms constantly stirs feelings of anxiety or missing out on opportunity. The vast majority of commentary about investing is about as relevant to your financial plan as any sporting event – completely irrelevant! Trying to perfectly time the market (the opportune moment to buy and sell) is frankly impossible to achieve with consistency. In practice few do so and fewer still can demonstrate this as skill rather than luck.

Have a Successful investing experience

Unlike sport, investing does not have to be about “winner takes all”. Everyone can win if they are investing in a way that fulfils their financial planning goals. They key is remaining calm, disciplined and clear about what you are really trying to achieve.

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

What can investors learn from sport?2023-12-01T12:19:18+00:00

Planning for the Tax Year End?

Solomons-financial-advisor-wimbledon-blogger

Planning for the Tax Year End?

The tax year end is rapidly approaching and you don’t have long to use up various allowances that expire on 5th April 2015, so it really is time to take action now should you wish to do so. Despite the media and politicians doing their best to confuse everyone about tax, tax avoidance is actually perfectly legal and something that is encouraged. By way of example….solomonsIFA-talking-money-sm60-1

  • NS&I Premium Bonds & Children’s Bonds
  • ISAs – Annual Allowance
  • Pensions – Annual Allowance, Lifetime Allowance, Carry Forward Allowance
  • Capital Gains Tax Allowance
  • Personal Allowance
  • Nil Rate Band Allowance (inheritance tax planning)
  • Giving Allowance (£3,000 per person)
  • Enterprise Investment Schemes, Venture Capital Trusts, Small Enterprise Investment Schemes
  • Business Property Relief

There are lots of ways to reduce tax, married couples have even more options. Tax evasion is illegal not tax avoidance. It is certainly true that some schemes are deliberately aimed to test the law on this, but nothing that any of our clients use or would even want to use. Hopefully by now you will have received the lates copy of Talking Money, let me know if you haven’t  – we have run out of stock, but you can see an online copy here.

Dominic Thomas

 

Planning for the Tax Year End?2023-12-01T12:39:58+00:00

Tax Year 2012-13 Ending

The 2012/13 tax year is nearly at an end. Time is running out. HMRC essentially operate a world of “use it or lose it”. For most people this means ensuring that you have maximised your pension allowances (£50,000 is the maximum permitted in the tax year, subject to a plethora of qualifying rules – aren’t we all thankful for pension “simplification”). These days pretty much the only advantage of a “pension” is the tax relief – which is applied at your highest rate of tax. Thereafter, have you used your ISA allowance, all £11,280 of it? capital gains tax allowances? and a heap of others for those with more sophisticated planning.

Most people give money to charity, so do remember that this attracts tax relief in a similar way to pensions. Also you are able to use your annual giving allowance of £3,000 per person (the giver) moving money from within your estate to those that you want to benefit, a very basic form of inheritance tax planning – it can certainly become much more complex based upon the size of the IHT problem that you expect.

There are other forms of allowances, but please treat these with caution and remember the adage “fools rush in where angels fear to tread”. I was on the train on Saturday evening, coming back from a very good performance of “The Judas Kiss” when the couple next to me started discussing their financial planning rather loudly ( I really wasn’t trying to listen). The subject of their conversations was about VCTs (Venture Capital Trusts) and the tax relief available. They had clearly not attended the same meeting as one was describing how the VCT worked to the other. Their “adviser” had not charged for his “advice” (not permitted nowadays) and I was rather concerned about their understanding of the risk involved and the lack of compensation coverage if or when things go wrong. The FSA would suggest that only around 3% of all investors are likely to find this sort of investment suitable (3% of investors, not 3% of the population). Of course some VCTs can be a great solution, others require you to be more of an expert than a Dragon in the Den. Please be aware that there will always be someone willing to discuss a “guaranteed winner” to an unsuspecting person. When it comes to investing, there is no such thing as a guarantee, despite what it may say on the tin. Be warned – and sadly I have to say that the information on the MAS website fails to adequately convey the degree of risk with a VCT. You can lose all of your money. It is not called venture capital for nothing!

We will be closed for Easter (Good Friday is this Friday!). We re-open on Tuesday 2nd April and I can assure you that despite every good effort, attempting to make a tax-year end payment by Friday 5th April will create some significant stress if you leave it late.

Dominic

Tax Year 2012-13 Ending2023-12-01T12:23:29+00:00

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