Consider All The Variables

From many people’s perspectives, the Budget may have left a feeling that nothing much had changed in the world of personal financial planning, as there were no major changes announced to Income Tax, Capital Gains Tax, Inheritance Tax or pensions. However, the key consideration is how outside factors such as higher inflation could affect your finances and what steps you should take before the end of the tax year to make the most of any allowances and exemptions.

Inheritance Tax (IHT)

Official figures from HM Revenue and Customs (HMRC) for April to September 2021 show that IHT receipts totalled  3.1bn,  0.7bn higher than the same period in 2020. With the nil rate band and residence nil rate band now frozen until April 2026 at £325,000 and £175,000 respectively, the importance of effective estate planning shouldn’t be overlooked.

Individual Savings Accounts (ISAs)

The annual ISA limit has now been frozen at £20,000 for five years. If the allowance had increased with inflation each year since 2017, it would stand at £21,440 today, sheltering an  additional £1,440 from the taxman. JISAs celebrated their tenth birthday in November – the allowance remains at £9,000.

Dividend Tax
The government revealed in September that it would increase Dividend Tax by 1.25 percentage points from 6 April 2022 to help fund health and social care. This means investors will have to pay more on any income from shares held outside ISAs and above the £2,000 Dividend Allowance.

The Lifetime Allowance remains at £1,073,100 and the Annual Allowance remains at £40,000. As these allowances haven’t increased with inflation, it effectively means those saving to the  maximum extent possible with tax concessions can save less in real terms each year.

Variables at play

It’s important to be aware of all the variables at play; inflation, interest rates, taxation and frozen allowances all affect your finances. Talk to us for help with your individual circumstances.


a key consideration is how outside factors such as higher inflation could affect your finances and what steps you should take before the end of the tax year…


Great Expectations For The Year Ahead

Great expectations for the year ahead

Given the challenges of the past two years we could be forgiven for focusing on life’s trials and tribulations as a new year dawns. However, while concerns about supply chain disruption, new COVID variants and rising inflation may be disconcerting for investors, all the signs are that the coming 12 months will be a time of opportunity as well as risk, as we move towards a postpandemic future.

Recovery continues

In its final 2021 assessment of economic prospects, the International Monetary Fund (IMF) predicted a continuation of the global recovery in 2022, with the world economy forecast to grow by 4.9% this year. The international soothsayer did, however, acknowledge that the degree of uncertainty surrounding future prospects has risen with policy choices becoming more difficult and increasingly complex.

Inflation-proof your wealth

In particular, concerns surrounding global supply chain issues and rising inflation have created a policy dilemma for central banks. These twin concerns have also heightened
the need for investors to employ careful and considered strategic thinking in order to reposition their portfolios to take advantage of new growth opportunities while ensuring
their wealth is inflation proofed.

Beware investment scams

Although the spectre of rising inflation is expected to see central banks tighten monetary policy as the year progresses, deposit-based savings rates are forecast to remain at historically low levels. Such meagre returns have prompted many savers to shift their money into investments, with research* suggesting over half of all adults have done so. This move though has raised concerns that unrealistically high return expectations could leave some investors susceptible to investment scams.

Advice remains key

While the coming year is sure to present ongoing challenges for investors, the key to successful investing will remain the adoption of a carefully considered strategy based on sound financial
planning principles. Attractive investment opportunities are likely to present as 2022 unfolds and, with our help and careful repositioning of your portfolio, you should be able to make the most of these as and when they arise.

*Aegon, 2021

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.