There’s a new government and a budget coming. What should I change?
A question that I’ve heard a lot recently. Many clients are concerned that their hard-earned savings and investments will be raided by taxation after the next budget. They feel that if they don’t do something now, they’ll regret it.
So, what should you do? Crystallise Pensions? Take all of your tax-free cash? Sell anything with Capital Gains Tax (CGT) liability? Sell anything with income tax liability? Move investment to cash on deposit?
Well, my personal opinion, is that you don’t do anything differently to what you are currently doing or planning. Why? Because I unfortunately get to speak to too many people who have made significant financial decisions based on what they thought might happen at various points in the past. Many of these decisions are like firing a bullet from a gun, you pull the trigger and there’s no going back.
The UK is one of the most protected places in the world to be a private investor (if you use FCA authorised and regulated products and services!); arguably at the pinnacle of that protection is the modern Personal Pension. Within the pension, monies grow free of all taxes; any value is outside of your estate for inheritance tax (IHT) purposes; monies can be left to any beneficiary of your choice in the event of your death, and they may receive the money tax-free for the rest of their lives (if you are under the age of 75 on death). All of these things are incredible and should be treated very, very carefully.
The bottom line?
Don’t make irreversible decisions on precious investments like your Personal Pension. Make decisions based on facts, not guesses.
However, if you have assets that have exposure to CGT, and you were planning on selling them anyway(!), that might be a good idea.
David
David Hinch is the Managing Director of David Burnell Financial Services.