News

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.

The Covid-19 pandemic has highlighted the low level of social security benefits.

Do you know the weekly value of Statutory Sick Pay (SSP)? (Answer at the end).

The Covid-19 pandemic has changed higher education, with a new emphasis on online learning mixed with some in-person teaching. But this hasn’t reduced the cost or debts associated with going to university.

Undergraduate freshers will begin their studies this autumn. Most students in England will have taken out maintenance loans, plus tuition loans (of up to £9,250 a year). Different systems apply in the devolved nations, with Scottish students charged up to £1,820 a year in tuition fees at Scottish institutions.

More women should ask the Department for Work and Pensions (DWP) to check their state pensions, according former pensions minister Sir Steve Webb.

Cuts to stamp duty land tax (SDLT) and its Scottish equivalent have reduced the purchase costs of buy-to-let property. But property investors should also evaluate other factors.

In July, the Chancellor increased SDLT nil rate threshold in England and Northern Ireland to £500,000 until 31 March 2021. The equivalent thresholds were then increased to £250,000 in Scotland and, for main home buyers only, in Wales. All the countries kept their full price surcharges (4% in Scotland and 3% elsewhere) on buy-to-let (BTL) purchases.

Taking a more principled approach to investing doesn’t mean you have to sacrifice returns.

When buying and selling shares, funds analysing a range of environmental, social and governance (ESG) factors, alongside traditional financial metrics, appear to have performed better than traditional funds during this period of recent stock market turbulence.

Unlike some ethical funds, ESG funds don’t automatically avoid whole sectors. Instead they assess how, for example, a company’s environmental policies – or lack of them – might impact its future share price.

The second Budget of 2020 could mark the start of a round of tax increases.

The first of 2020’s two Budgets took place on 11 March, the day that the World Health Organisation declared Covid-19 a pandemic. At the time, the Office for Budget Responsibility (OBR) calculated that the government would need to borrow about £55bn in 2020/21. By mid-July, that estimate had risen to £322bn – almost six times the original figure.

A surprising number of people have picked up the savings habit in recent months as lockdown has curtailed opportunities to spend. How can this unexpected nest egg be put to good use?

In some cases, the savings have been substantial, with the average household holding on to £2,879 during the 13-week lockdown. It’s not hard to see where these savings have come from: commuting costs have been slashed, holidays postponed, and spending on daily coffees, beauty treatments, restaurant trips or cinema tickets entirely curtailed.