Has anything changed?
It might be hard to discern straight away if there are changes which might affect you, but some changes are inevitable sooner or later, and it is better to be prepared for them rather than be blindsided and have to respond quickly.
As an indicator of what might happen, the only guidance we have so far is what is in the Labour manifesto, which you can view here. On page 19, for example, they pledge to abolish non-dom status, to end the use of offshore trusts to avoid inheritance tax and examine loopholes in private equity.
Some of the areas where clients have already expressed concerns, or sought advice on include:
- Capital Gains Tax – while Labour has indicated it has “no plans” to raise CGT rates (or reduce the current CGT exemption), this is one area the new government could consider targeting to raise additional revenue. If clients are already considering future disposals, then such plans may be best brought forward. You should also see if you could pass on more to your loved ones through smarter tax planning.
- Pensions – changes to pensions could take a while to consult upon and then carry out, but the impact could be considerable. While the reintroduction of the Lifetime Allowance has been ruled out by the new government, areas which could be targeted are the potential for change in death benefits or the pension relief available on pension contributions (for example, change in the relief to a flat rate of 30%).
- Dividend rates and allowances – if these change there may be implications for those who depend on a pension for income.
- Other investments – any changes to ISAs, for example (where they are potentially designated as UK-only investment vehicles) could have wide consequences for diversified portfolios with international exposure.
- School fees – the addition of VAT to school fees has been pledged already. There may be options to consider such as prepaying school fees, but any action should be approached with caution.
The proposals so far may or may not affect you, and of course, like any new government, their positions could change once they have closely assessed and have a better idea of how they intend to pay for various spending commitments. If you think you may need financial advice as a result, or wish to pre-empt any potential changes, please get in touch.
When should you seek financial advice?
We generally suggest you should seek financial advice when your circumstances change, or if you want to assess whether you are on the right path for your future. It’s worth asking some important questions to help you decide.
- How do you effectively leave money for the next generation?
Many of us want to pass on wealth to our family, but managing the balance between tax efficiency and control while maximising the benefits for the next generation requires careful thought and planning. How much should you gift and when? What is the impact on your pension? The right mix of outright gifts and more complex structures will depend on your objectives and in many cases the level of assets you would like to pass on.
- Have your circumstances meaningfully changed?
Certain events in life such as a divorce or a death in the family may require a reassessment of your overall finances. When your circumstances have changed in a big way it is worth finding out if you need to put more aside for the future, how to better manage cash flows or if a planned retirement date needs to change.
- Are you taking an appropriate level of risk to achieve your goals?
Taking more risk when investing usually leads to higher returns, but typically over longer timeframes. You should find out whether the risk you are taking now is enough to meet your future goals, or whether you can afford to take less risk if, say, you are approaching retirement.
- Have you enough to retire comfortably?
Optimising your pension planning ensures you don’t just retire, but have enough to retire comfortably. The nature of pensions and effective retirement planning is complex and you should consider numerous factors such as your risk levels, the fees you pay and the impact of inflation on how long your pot could last. Our free Retirement Ready Scorecard lets you find out in two minutes – with a personalised report – whether you are on track.
- Do you pay too much in fees?
Paying excessive fees when investing or for your pension can have a surprisingly outsized negative outcome. It seems reasonable not to lose too much sleep over an extra 1% in fees a year, but this excess can add up considerably over time as we show here.
The above questions are just a sample of when financial advice might be appropriate. However, there are many situations when you may feel advice could be of benefit, so in the first instance you can get in touch with us for a free discussion.
If you don’t need advice, more clarity can help
Whether you should get financial advice or not is an individual consideration. Many factors will contribute, such as your level of knowledge and experience or the complexity of your requirements.
It may be that you don’t need advice and that with some self-research and by using our powerful tools you can get a clearer picture of your finances now and how they might progress over time. MyNetwealth is a free service that lets you track all of your investments in one place. You can plan for your financial future and gain detailed insights into how to meet your long-term goals – with our expert advisers on hand to help.
The tools provide a remarkable picture of your financial potential, and allow you to change numerous parameters (including amount invested, risk level, inflation assumption, timeframe) to let you explore multiple outcomes and to see the effect of changes to any of these inputs.
When you have a specific need for advice, however – that may or may not have been generated as a result of the election – please get in touch.
And if you would like more in-depth analysis of how the new government could affect your financial plans and investments, please join us for our free webinar on 18th July at 12 pm.
Please note, the value of your investments can go down as well as up.
Netwealth offers advice restricted to our services and does not provide independent advice across the market. We do not offer advice in relation to tax compliance, personal recommendations with regards to insurance and protection, or advise upon the transfer of defined benefit pensions.
