As the first flowers and shoots of spring appear, we share in your concern, exasperation, fatigue and uncertainty at the times we’re living in. None of us can predict the future, so we just have to prepare as best we can and accept that change is inevitable.
We aim to provide advice that can weather the short-term storms because we help you plan for the longer term. We avoid one-off advice knowing that it rarely aligns with future goals. Our clients tell us that their regular reviews with us provide reassurance and confidence in their financial lives so that they can make informed decisions as to how they will enjoy their wealth.
Here, Stuart, one of our four Chartered Financial Planners, updates us on the forthcoming Budget and the Tax Year End.
With Budget Day approaching on 23 March, the world is now a different place from the 2021 Spring and the Autumn Budgets. Inflation is now rocketing and being felt each time we fill up the car or buy groceries. The cost of heating our homes is also very noticeable over the last few months. Interest rates are rising too but banks are not necessarily passing on the full increase to savers.
Last year, the Government announced a freezing in the rise of income tax thresholds until 2026. As incomes increase, people will move into higher income tax bands if the thresholds are not increased – known as Fiscal Drag. Historically, the threshold increases were in place to account for the increase in the cost of living. With inflation now rising, more people will move to a higher income tax band through increases in salary and statutory increases to pensions in payment. Whether the Chancellor allows for rising inflation by allowing increases to thresholds before 2026 remains to be seen.
The rise of 1.25% in the rate of National Insurance begins from April. Increases in National Insurance produce much less headline news than direct tax rises but have the same impact. With rising costs for everyone, this increase will bite hard for many people already struggling to make ends meet from their disposable income, so that they have to dip further into their savings. The Government’s reason for the increase is to fund spending on health and social care, an area which will also have rising costs due to inflation.
Just beyond Budget Day is the tax year end on 5 April. At our meetings with you over the last year we will have already mentioned using annual allowances that are available, such as topping up your ISAs or making a pension contribution. If you decided to postpone adding to these plans and now feel that you have spare money to do this, which you won’t need in the short term, do contact us.
Insurance and investment companies need to receive and process the money before the 5th April and their turnaround times always slows due to the huge inflow of money right on the tax year deadline. We suggest you act as soon as possible if you wish to top up existing plans, and certainly in the next two weeks so that the applications are received by the provider to process well before the end of March.
Remember the main ISA allowance is £20,000 per tax year, with a £9,000 allowance for children under age 18. The allowance can be spread across the two types of ISA – stocks and shares ISA and cash ISAs, so you don’t have to invest it all into investment markets if the current market volatility, discussed in the next section, is putting you off acting.
Markets and Investing
For many of our clients, investing in single stocks and shares is too risky. Multi asset funds have become a firm favourite as the portfolio manager can choose any number of assets to meet a particular objective such as higher growth potential or ethical investing, and is nimble in changing assets within the fund quickly if its performance falls short or changes in market conditions occur. All of this helps to mitigate some of the risks of investing in single funds or assets.
It’s natural, especially in these uncertain times, to worry whether you should take your money out. Typically, it’s a personal event that prompts a client to take their money out of their assets when markets are low. Unless this is the case, our view remains consistent – do nothing and sit tight.
There is no crystal ball to investing as no one can successfully predict when markets rise or fall. We advise our clients based on a long-term horizon to use time as an advantage to smooth the inevitable blips.
We are always available to discuss your particular concerns and welcome your call.
As a business, we are growing and developing, and we’d like to explore some positive and optimistic stories with you. Our team grows stronger, more qualified and capable each year. Our two Apprentices have successfully completed their training and we’re all very proud of them. Chris Hinchcliffe and James Bryan went above and beyond to achieve this during the backdrop of Covid and virtual learning. As they hone their new skills, they continue to take professional exams that will provide them with industry recognised qualifications to achieve their career goals. Their contribution complements the vast experience our Client Support Team has and endlessly benefits our clients.
Rob Barnes has also achieved a milestone in becoming a Chartered Financial Planner. Rob joined us as a Senior Paraplanner and you may have had the pleasure of speaking with him over the past few years. We look forward to seeing him blossoming further and developing the kind of long-term relationships we foster with our existing clients.
Our commitment to developing the next generation of financial services professionals continues with our scholarship for Excellence in Economics at Alton College. This year’s recipient is Bridget Human, who stood out for her leaning towards global economies building economic models that are focused on sustainability rather than purely on growth. Bridget plans to use the funds to pay for additional learning in this very topical subject.
Our discussions with clients has highlighted a shift of opinion from purely wanting the value of their money to grow, to wanting it grow without it being at the expense of the planet. We need some brave and focused economists to help the shift and hope this award is the first step to helping Bridget become one of them!
Jane presenting the scholarship to Bridget
Charities we support.
The Kings Arms
Stamp Out Suicide
We look forward to working with you in 2022 and continuing to help you enjoy life enriched
Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. This newsletter is provided strictly for general consideration only and is based on our understanding of current law and HM Revenue & Customs practice. No action must be taken, or refrained from, based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.