April 6 marked the start of another new tax year.
The end of any tax year rightly receives a great deal of attention. April 5 is always an important date for savers, who must make contributions to pensions and individual savings accounts by then if they are to take full advantage of tax allowances.
But what should savers do next? Richard Watkins, certified financial planner at national advice firm Continuum, identifies three basic steps:
- Review expenditure, with a view to increasing disposable income. What spending can be reduced? What can be removed?
- Review income: if you have a job and an employer’s pension scheme is open to you, are you making sufficient contributions? Even a small increase in monthly contributions can have a significant effect over the long term. The same considerations apply to the self-employed or those running their own Limited company.
- Take stock of investments. Think through your risk profile, and investments in your portfolio, ISA or pension. Can you increase contributions to your ISA, for example? A competent adviser will guide you on risk profile, asset allocation and capacity for loss. This is hugely important. “Asset allocation” – where your money is invested and in what proportion, in line with your risk profile – drives about 90% of returns.
Continuum’s Richard Watkins said:
“Construct a long-term financial plan. If you were retired today, how big would your retirement fund have to be to pay for your chosen lifestyle? And for how long?
“This is the most important part of financial planning. Don’t turn away from planning. If you do, you will fail. Seek advice!
“If you have a financial plan in place, review progress and tweak accordingly.”
Other things to think about include capital gains tax. “It does not take much to generate a chargeable gain these days,” Mr Watkins says. “Do you have the right wrappers in place?”
“Might you be subject to a charge to CGT? If so, consider how you might offset taxable gains.
“If your total income pushes you into a higher tax band (the impact of fiscal drag), then consider a one-off pension contribution.
“How has the Autumn Budget affected you? If you are part-owner of a family business and have built up good pension funds, then you may have to re-examine your entire financial plan and consider tax mitigating strategies.”
About Continuum
Continuum is an independent financial advice firm with offices across England, Scotland, Wales and Northern Ireland. It advises on nearly £2.4 billion for more than 16,000 clients.
For further details:
Martin Brown
Managing Partner at Continuum
martin@mycontinuum.co.uk
Gary Parkinson
Media Relations
T: 0345 643 0770 M: 07756 668500
garyparkinson@mycontinuum.co.uk / press@mycontinuum.co.uk
Katherine Mitchell
Brandon Consulting Services
T: 07917 855881
kmitchell@brandonconsultingservices.co.uk
