WITH the end of the tax year on the horizon, we enter a period of reflection.
Looking back over the past 12 months, we take stock of what we have gained, what we have lost, and how best we can anticipate what is to come.
I’ll leave the deep philosophical implications for more learned minds, but I’m sure we can all agree that the last 12 months have been a bit of a rollercoaster.
Casting our minds backs to April 2016, Ted Cruz, the then leading Republican Presidential candidate was striding towards success in the US Election primaries after beating ex-reality TV star Donald J Trump rather convincingly in Wisconsin.
The Panama Papers leak was causing the Icelandic Prime Minister to find himself in a bit of hot water and the S&P 500 Index was licking its wounds after hitting a two-year low earlier in the year.
An altogether different picture has emerged since then.
With the S&P 500 recording consecutive record highs recently, and in a world of constant change and upheaval, it is more important than ever to make the most of what is financially available to you and plan ahead for the future.
To that end, it is worth considering whether you have utilised your annual allowances.
Tuesday, April 5 is the deadline to scribble immediately on your calendar or diary.
As well as looking at ISAs to make your investment portfolios more tax efficient, and pensions to prepare for the future, this can be a good time to review what money you may like to gift to reduce any inheritance tax (IHT) liability, gifts made seven years from death being tax-free.
You may also wish to begin saving for the benefit of loved ones through Junior ISAs, for which there is an allowance of £4,080 per child, per year.
For those operating as Trustees, it is worth noting that a large number of trusts are at, or approaching, an important ten-year tax deadline.
Called the ‘periodic charge’, it can’t be ignored - if you are a trustee it is essential that you check whether a tax charge is due.
Fail to pay what you owe and you could face penalties from HMRC.
Accordingly, getting the right advice and taking appropriate action is paramount.
A new inheritance tax allowance will also be introduced in April 2017 (catchily called the Main Residence Nil Rate Band) that will significantly increase the inheritance tax threshold for many people.
The changes mean that eventually some parents and grandparents will be able to pass on assets worth up to £1m, including a family home, without any IHT being charged.
However, qualifying for the allowance is not straightforward.
It is important to be prepared for what is in store and ensure that your affairs are in order.
However, the benefits of tax-saving products, services and structures depend upon your individual circumstances and are not necessarily available to everyone.
Furthermore, the Government’s favourable treatment of these tax-saving methods is under constant review, and although there may be no current expectation of any significant changes, there can be no guarantee this will be maintained in the future.
Irrespective of your political persuasion, I think we can all agree that the next few months and years will provide many opportunities and many threats, and the best thing that we can do as investors is to make sure that we are adequately prepared.
Saving regularly, providing for the future and making use of what’s available to us is the first step in this direction means you will be prepared for the worst and can hope for the best.
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