Spring weather is just about arriving in the UK and yet the Brexit saga continues. I feel like I need to mention the ‘B’ word given the current situation, but there is not much to report from our perspective. We reflect on previous financial and political crises over the past 35 years which affected investment markets including 1987, 2000, 2008 and look at how the markets and economy eventually recovered, and in a similar manner we are very much looking forward to having Brexit behind us.
I’m sure you’re aware that market movements reflect the mood of investors, and the decisions that are made as a result of external events. These decisions are based on both intellectual and emotional factors, but when markets are fluctuating quickly it is easy to let emotions overtake logic. I’ve enclosed a factsheet which covers the range of emotions that investors are likely to feel and it is likely that most are currently sitting somewhere between anxiety and despondency based on media reports of US/China Trade Wars, Eurozone recession and the uncertainty surrounding Brexit (amongst others). However, wherever you may sit it is always useful to remember the benefits of looking past short-term fluctuations and concentrating on the bigger picture.
One step at a time
There is no easy route to financial security, but by making the most of your annual tax exemptions and allowances in each tax year, you are moving one step closer to your objective.
ISAs have proved a very popular way to save and invest since their introduction in 1999. These provide you with the opportunity to generate income and capital growth free of any further liability to Income Tax or Capital Gains Tax. The maximum you can save into an ISA in this tax year is £20,000, but any unused allowance is lost after 5 April.
Then there are the obvious advantages of saving into a pension. If you can afford it, and subject to your eligibility, you should consider paying a contribution into your personal pension to take advantage of tax relief, which boosts the value of your contribution by 20% from day one. Additional reliefs can be claimed by higher earners via their annual tax return.
It’s also a time of the year when estate planning and the problem of Inheritance Tax comes under the spotlight. Only effective and early planning can mitigate the full impact of Inheritance Tax, but if your estate is likely to be hit by a tax bill, and you can afford to give some money away, now could be the ideal time to do it.
The enclosed Tax Year End checklist provides some more information on making the most of this year’s tax-saving opportunities.
To discuss any of these ideas that need action before the end of the tax year, or to talk through any concerns about the markets, please get in touch on 01452 223822.
The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief generally depends on individual circumstances.