News

Recommendations by the Office of Tax Simplification (OTS) on the future shape of capital gains tax (CGT) could have a significant impact on investment, and the advice we provide.

The Government requested the OTS undertake a review of CGT in July with a particular focus on areas where the existing rules can distort taxpayer behaviour. The OTS report asks the Government to consider making changes which will have a significant impact on some investors.  It is therefore important that you understand what changes could be on the horizon.

The key proposals:

From 6 October the state pension age has gone up to 66, for both men and women.

The age at which people qualify for this benefit has been gradually increasing over the past few years — and further increases are planned reflecting increased longevity. Now it is 66 for both sexes, although it will rise to 67 in stages between 2026 and 2028.

The clock is ticking for millions of taxpayers who need to file a self-assessment return for 2019/20 by 31 January.

The self-employed, those who are partners in a business, and those who receive an income from savings, investment or a buy-to-let property, are all expected to pay by the January deadline.

As well as completing an online return, savers must pay any tax due by this date. Those that miss this deadline face a £100 penalty, plus interest on the outstanding tax bill.  The tax relates to earnings from April 6 2019 to April 5 2020.

Fraudsters preying on people’s financial and health fears have been responsible for a sharp increase in scams during the Covid-19 crisis.

Criminals are increasingly sending out fake emails or SMS texts disguised as a trusted body such as HMRC, a local council, TV licensing or even the NHS.  These messages may claim you are due a rebate or refund. In some cases people have been told they qualify for “Covid relief funds”.

Those looking for income from their savings face an uphill challenge, with banks and building societies making swinging cuts to the interest paid on leading accounts.

This latest round of rate reductions was started by National Savings & Investments (NS&I), which has imposed brutal cuts to some of its most popular accounts. The interest paid on its NS&I income bonds, for example, has fallen from 1.15% a month to just 0.01%. Returns on ISAs and Premium Bonds have also been squeezed.

Has Covid-19 disrupted your retirement plans?

The economic effects of Covid-19 stretch far beyond those people infected by the virus. The obvious example is the billions of pounds of government spending, but there are many others, such as the impact on those approaching retirement.  

The pandemic has highlighted the value of holding a well-diversified portfolio of investments.

The Covid-19 pandemic has already taught us a great deal; and some people have been faced with relearning old lessons they may have forgotten. Global stock market performance has changed radically since February. While nearly all markets took a sharp downturn in February and the first three weeks of March, there has been a marked divergence in behaviour since then. The table below shows how differently the various main markets have performed.

The season of year-end tax planning is nearly upon us as 5 April creeps closer.

The Autumn Budget has been rescheduled for spring for a second successive year. Once again, that means it is best to complete year-end tax planning before the Chancellor returns to the despatch box. Such a precaution is all the more important in 2020/21 as several areas of tax have come under scrutiny following earlier Treasury-commissioned reviews. With that warning in mind, your year-end planning checklist should include the following.

Income planning

The first Child Trust Funds (CTFs) have reached their maturity date, but many have been overlooked.

The first CTFs reached maturity on 1 September 2020, when their owners turned 18.

A government payment of at least £250 was made at birth to a CTF, for children born between 1 September 2002 and 2 January 2011. Thereafter government payments stopped. HMRC had to set up nearly 30% of the 6.3 million CTFs where a child’s parents had failed to open an account within 12 months of the issue of the government payment voucher.

UK dividends were down more than 50% in the second quarter of 2020

The pandemic has hit the global economy hard and devasted the dividend payments of many leading UK companies. Between April and June 2020, total UK dividend payments were 57.2% lower than in the second quarter of 2019, according to Link Asset Services. Many companies – notably the big banks – stopped dividend payments altogether.