Investment Monthly Round-Up
You can view our Investment Monthly Round-up for April, written by our Investment Manager, Nicholas Carr, by clicking here.
The New Tax Year
The New Tax Year
The ending of a tax year means that your tax allowances will reboot.
If you are self-employed, you submit a tax return; if you’re employed, your tax code will automatically refresh. Not only this, but it will make a difference to your ISA allowance, Inheritance gifting, and Capital Gains tax. It may also make a difference to your pension.
With the new tax year beginning this April, it may be too late to implement any last-minute tax efficient strategies before the renewal. However, if you do find that you are someone who leaves things to the last minute, perhaps making a plan with a financial adviser from the get-go will ensure that the end of the tax year period runs smoother in the future.
Your £20,000 ISA limit.
If you aren’t closing in on your allowance limit, then the end of the tax year isn’t something to worry about; if you find that you are close to reaching this limit, you may benefit from tax efficiencies as your allowance doesn’t roll over. Any returns on an ISA aren’t subject to income tax or Capital Gains tax. So, an ISA top-up may be the right option for you.
Your Capital Gains tax.
Everybody has an annual Capital Gains tax allowance: for 2022/2023 it was £12,300. So, if you sell or dispose of any assets, such as property, stocks, shares, etc. you won’t be taxed on your profits as long as they’re within this limit. An important note is that the Capital Gains tax allowance will reduce in 2023/2024 to £6000, which may impact your financial planning decisions for the next tax year.
Your Inheritance tax.
A tax-efficient way to reduce your estate value for Inheritance tax is gifting. The annual allowance is £3000. In addition, you can gift small amounts of up to £250 as many times as you wish to as many people as you choose, as long as they haven’t already received anything from your annual allowance.
Your Pension.
Similarly, it may be beneficial to top-up your pension. The annual allowance at the time of writing is roughly £40,000, but this depends on your circumstances, as is the income tax relief you can receive.
If you are uncertain about what is best for your circumstances, a financial adviser can help. So, even if you are a person who leaves things to the last minute, you don’t have to miss out. One tax year ends, and another one begins.
The advisers at Beacon Wealth Management can guide you.
Please call us on 01480 869466 for a free initial, no obligation chat.
Future fees may apply.
Ukraine Exports
War has highlighted nation’s crucial role
The first anniversary of the war in Ukraine was in February. Before the war, I suspect many people weren’t aware of just how significant a role Ukraine plays in the world’s economy and exports. However, the devastating events that took place are certainly highlighting the impact that it is having and just how important the country is.
Over the last decade, Ukraine has exported roughly half of the world’s sunflower oil. Due to the Russian invasion in February 2022, there was an abrupt global shortage in supply that had a knock-on effect on the price increase for vegetable oil, which was a substitute.
Ukraine is also a top three supplier of grain and corn. In July of last year, The Black Sea grain initiative allowed Ukraine to ship 25mn tonnes of grain and oils to alleviate pressure on global food prices. The UN has confirmed that there is a deal to extend this initiative, but at the time of writing, the length of the extension is still being debated. The initiative has been a lifeline for Ukrainian farmers and traders, as the alternative routes are not as accessible. There have been complaints that Russian inspections are slow and cause delays to the shipping processes, potentially impacting global food security.
Needless to say, the economic impact of this war has been profound. The repercussions, unfortunately, may be felt globally for years. Ukraine and Russia have had the biggest economic impact but the global fallout has seen both: direct and indirect consequences. As we have seen the trading halts have had a direct effect on the supply of global commodities, the indirect effects are the likes of rising inflation and the energy crisis.
The world is a stage for large international companies and whilst many are coming under scrutiny for trading ethics, many are seeking to profit from this. The in-house investment team for my company manages £200m in funds, with world-wide investments, so it is necessary to understand what is happening globally to assess what implications this will have on client portfolios. This is especially important when assessing Ethical funds, as these cannot stray from their Environmental, Social, and Governance (ESG) criteria.
Hopefully, the above gives ‘food for thought’ to how companies like mine with discretionary permissions have to consider different factors when conducting client investments.
You can view more useful articles like this one by clicking here.
Investment Monthly Round-Up
You can view our investment monthly round-up for March, written by our Investment Manager Nicholas Carr, by clicking here.
Interest Rates and Tax
Interest Rates and Tax
Interest Rates
Over the past year, we have seen interest rates increase.
Currently, at the time of writing, they are 4%, and whilst we expect another rise (or two), we hope they will be small.
High-interest rates are a cause for concern, especially for people with mortgages. I’m sure those of us a little older can remember when rates were considerably higher. The average rate over the
last 50 years has been just over 7% though we are not expecting to reach that this time. The all-time highest rate was 17% in November 1979, and the lowest was 0.1% in March 2020.
It will be tough to reduce rates without fueling inflation, so I think that, although rates will come down later in the year, they won’t be by too much or too quickly. Mortgage rates have been going down for a month now and long-term rates are coming close to being reasonable again.
Tax
Tax is very high and, in my opinion, still unfair in certain areas. Many individual rates have not been increased percentage-wise, but don’t be fooled. The government will receive a lot more money this year and in future years. The rates may not have gone up but we will all be paying more because allowances before you pay tax, have not increased. Which means that as our income goes up, we have more liable for tax.
With tax allowance rates having been frozen at 40% until 2028, it means that many more people fall into the high-rate taxpayer bracket, even with low annual increases.
From April 2023, the allowance before hitting 45% has reduced considerably.
It has been about 80 years since personal tax rates hit their highest at 99.25% and just 50 years since they were 75%. Rates may not be going up drastically at the moment, but by reducing allowances they are going up in real terms.
Last year investment returns were hit, and although 2023 is starting to show strong returns, now is the time to be smart about taxes and taking advantage of tax reliefs will help.
If you would like to speak with one of our expert financial advisers about what tax saving options are available to you, please call us on 01480 869466.
For a free initial, no obligation chat.
Spring Budget 2023
Spring Budget Overview 2023
You can view our summary of the Spring Budget 2023 here
Investment Monthly Round-Up
You can view our investment monthly round-up for February, written by our Investment Manager Nicholas Carr, by clicking here.
Uncertainty and Volatile Markets
Uncertainty and Volatile Markets by Tony Larkins
The general public probably understands the UK market best as it includes companies we know. The UK has been volatile due in part to uncertainty caused by Brexit, the instability caused by the Mini Budget, and currency rates. Having a new Prime Minister and Chancellor appeared to have stemmed the tide of despair, but we still have a huge fiscal black hole and borrowing equates to 99.5% of GDP, which has seen some less-than-ideal decisions made.
India has been performing well as a result of the problems that China is facing- property contagion, technology regulation, and their covid policy have stifled productivity. While India expects to grow its GDP by about 250% over the next ten years, the shift from China to India could mean India’s share value now is already more expensive. Subsequently, China continues to “look” cheap by comparison; with the adage buy- low sell- high, restrictions on growth and outside investors may not mean this represents value.
High inflation has caused mass unaffordable wage demands and strikes; although they help to draw our attention to ineffective systems, often at the point of despair, they can further aggravate lack of supply issues, changing working patterns, and changing demands. In the same way, downloads reduced demand for CDs and CDs reduced demand for Vinyl, working from home and virtual administrative tools have reduced demand for postage, train travel, and large commercial offices. In the future, the electric car’s popularity will certainly change demand for many industries.
The FTSE is near an all-time high, not because the UK looks good, but because of the performance of companies like Shell and BP. The FTSE 250 is perhaps a better gauge of the UK, the index fell in 2022 about 20%, and smaller companies were down about 30%. Smaller companies can adapt quickly to change compared to larger companies, but they are also more vulnerable as they carry less cash to see them through, and borrowing at high-interest rates will hurt them.
Unsurprisingly, share prices and funds are both volatile. It seems as though the more you look at them, the more volatile they appear. So, unless you manage a portfolio and know how to measure the changing price pattern, you would be better off looking at them less frequently. The more you look, the more you worry.
COP 26 and 27 have re-examined the problems the world is facing but the solution is too expensive, especially when the world has no money. I believe the way to save our planet rests with technology that hasn’t been discovered or harnessed efficiently yet. It has been forecast that the population will hit eight billion next year and grow exponentially, and with food wastage at arguably its highest-ever level, finding a solution is paramount.
So, where do we stand for 2023? It depends on when the world peaks for inflation, it will differ between countries, and may have already happened, and when interest rates start to fall. Recession will also continue to have an effect. Unfortunately, you can’t time the market, but you can consider investment time horizons and have a plan ready. An expert financial adviser can help you with this.
You can read more useful articles like this one by clicking here
Family Disputes
Family Disputes
Nobody wants to have a family dispute. Unfortunately, they happen all the same. They can start for numerous reasons, but it is no surprise that finances are a common cause of family conflict.
Typically, family financial disputes vary from fighting over inheritance (and who will receive what from an estate), funding family events, divorced parents splitting tuition fees, and funding care for elderly parents.
In some cases, they could have been resolved by those involved speaking to one another and forming a proper plan.
But when money is at stake, emotions naturally run high.
Without expert guidance, conversations can quickly become arguments, especially when executing on behalf of someone who has passed away without a plan.
Therefore, estate planning is necessary at any time in your life and any level of wealth. It can eliminate the risk of a family member feeling forgotten, excluded, or disrespected. It can also prevent someone from taking on too much responsibility.
Not to mention, an ill conceived plan can also have unintended tax burdens.
Losing a loved one is one of the hardest things a person can go through, but if their Will or estate is in dispute, this will make it even harder, as it can be expensive and sometimes take years to resolve.
A family dispute over finances can be devastating, so it must get resolved with urgency and care.
A clear, up-to-date, and flexible plan can make all the difference. Our experts can help you with this.
You can find out more about estate planning here.
If you would like to speak with our financial experts, please call us on 01480 869466 or email info@beaconwealth.co.uk
For a free initial, no obligation chat.
The Purpose of Wealth
The Purpose of Wealth
During our lives, we acquire various levels of wealth, accumulated in the value of our homes, pensions, other properties, savings, etc. but why?
Is this just something we find we’re doing instinctively? Acquiring wealth simply because ‘we have to’, or does it have a different purpose?
Many people worry about accumulating sufficient wealth, so I ask ‘sufficient’ for what?
Navigating your finances is stressful enough as is. Now imagine doing so without a clear goal in mind.
What financial goals have you set for yourself?
Is it to retire early? Or perhaps to help finance your children’s lives? Or is it to live comfortably now?
If you haven’t given this much thought before now, do not panic. Financial anxiety about achieving specific goals is normal. Especially since things such as inflation, interest rates, and your health are out of your control.
An important thing to remember is that goals, numbers, and circumstances change throughout our lives. A good plan should be able to adapt and change over time.
I have included a list of financial goals to help identify what could be important to you.
Once you have highlighted the ones that apply to you, speak with an experienced financial planner to look at the numbers and construct a manageable plan for you to achieve these goals.
Financial goals list:
- Have financial security for your lifestyle
- Pay for personal self improvement e.g., return to education or skills training
- Start a business
- Buy a house
- Help fund your children going to university
- Retire early
- Go on a dream holiday/travelling
- Relocate
- Provide care for elderly parents
- Donate to charity/causes
- Leave an inheritance for your loved ones
- Prepare for any future medical costs
- Prepare for cost of care when you grow older
