| Good morning, and welcome to another working week.
We’re now well into March, traditionally the most important month of the year for finances and, consequently, often the busiest for advisers.
March is the last full month of the tax year, which ends on April 5. This means that, if savers are to take full advantage of tax allowances, contributions to pensions and individual savings accounts must be made.
There is an allowance of £3,000 per year before Capital Gains Tax is levied, which can be carried back a year if unused.
But if that annual limit is exceeded, then consideration should be given to tax-efficient investments to offset gains. Venture capital trusts are useful for mitigating income tax liability.
For advisers, these matters take time to put in place, and the last day for completing them is usually April 3. This makes March important!
As well as maximising allowances, there are other factors to consider, such as the structure of investment “wrappers”.
Wrappers are products like pensions, ISAs, investment bonds or general investment accounts. Each has its own distinct features, and advantages and disadvantages that come to the fore or recede depending on the political policies in play.
For example, investment bonds are surging in popularity at the moment because they offer benefits not enjoyed by general investment accounts due to CGT restrictions.
Aside from the approaching end of the tax year, March is also the month in which the Chancellor delivers the UK Spring Budget, an annual update on the state of the economy and the government’s tax and spending plans.
On the 26th of this month, Rachel Reeves is likely to focus on growth, against a backdrop of sticky inflation and a slow economy. The official line is that no new policy changes are coming, but the potential for adjustments to national insurance, or even new measures to stimulate employment, can’t be entirely dismissed.
As always, thanks for listening.
Martin.
Martin Brown, Managing Partner at Continuum, was talking to Gary Parkinson, former financial journalist at The Times and BBC. |
