Tax year end planning: Investments

The Budget is on March 19, so tax year end planning time has arrived.

Although the UK economy is now generally seen as firmly in recovery mode, the austerity regime of tax increases – disguised or otherwise – is continuing.  Much as politicians will like to talk about tax cuts, a Budget deficit of around £110bn shouts more loudly.

Among the items to review on the investment front are:

  • ISAs The maximum ISA investment in 2013/14 is £11,520, of which up to £5,760 may be in a cash ISA (probably earning interest below that 2% inflation rate).  You cannot carry forward unused ISA allowances, so as far as possible you should contribute each tax year.  The tax benefits of ISAs are well demonstrated by the fact that last year the Treasury examined the option of capping their value.
  • Capital Gains Tax  In 2013/14 you can realise gains of up to £10,900 with no capital gains tax liability.  As the developed markets generally rose last year, you may find some gains in your portfolio that you can realise.  You cannot simply sell and then immediately repurchase to crystallise a gain, but there are other options which have similar effect.  For example you could sell your direct holding and then buy back in an ISA.

The value of your investment can go down as well as up and you may not get back the full amount you invested.  Past performance is not a reliable indicator of future performance.  Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.  The value of tax reliefs depends on your individual circumstances. Tax laws can change.  The Financial Conduct Authority does not regulate tax advice.

28th February 2014