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Autumn Budget 2021 - Personal and Employment Taxes

  • 27th October, 2021
  • Jane Smith

The personal allowances reached 12,570 GBP in April 2021 and were then promptly frozen from that date until April 2026. This will mean that as wages increase, and the Chancellor indicated that these were increasing by 3.5% a year, more people will find themselves either being dragged into paying tax or pushed into the higher tax bracket.

Furthermore, the rate at which dividends are taxed was also increased by the same 1.25%. Dividends are received by lots of people, from those in retirement to business owners and whilst there is an exemption for the first 2,000 GBP of dividends received, anything above this will be subject to the new levy.

Another announcement that was leaked prior to the budget, was the increase in the National Living Wage, which will go up from GBP 8.91 to GBP 9.50, and will bring much needed relief to the lower paid, although for employers this will obviously increase their costs and may also have an onward increase on other staff costs too.

The only other point of note in this Budget was perhaps what was not announced around capital taxes. There had been many comments that reliefs, such as the Business Asset Disposal Relief (BADR) were going to be restricted or abolished, but there were no such changes announced. In fact, the Chancellor announced no changes to either Capital Gains Tax, where rates were thought to be in line for some increase, or Inheritance Tax, where the rates were thought to be under review, or some of the reliefs may have been abolished but neither of these taxes were changed. This is surprising given the number of consultations the Government has undertaken in both areas, however, for now, things remain as they were.

Investment Market Update: July 2021

  • August 25, 2021
  • Jane Smith

The pandemic recovery continues to pick up pace in economies around the world. However, there are still reasons to be cautious and signs suggest the pace of growth is beginning to slow in some regions.

The UK’s economy continues to grow, but the pace is slowing. In May, the economy expanded by 0.8%, figures from the Office for National Statistics (ONS) show. This is weaker than the 1.5% expected and means the UK economy is still 3.1% below pre-pandemic levels.

One of the challenges the government now faces is repaying debt. To provide household and business support throughout the pandemic, the government borrowed at record levels. In July, government debt interest payments were a record GBP 8.7 billion, around three times the amount paid just a year earlier. This is partly due to government bonds being linked to inflation, which has increased as lockdown measures have lifted.

One of the challenges businesses across many sectors identified is the “pingdemic”. With members of staff needing to self-isolate, some firms are struggling to continue operating even as restrictions lift.

The Office for Budget Responsibility stated that UK debt stock is increasingly exposed to shocks from both inflation and interest.

3 Signs You Could Benefit from Income Protection

  • May 14, 2021
  • Jane Smith

Income protection can provide financial security when you need it most, but it’s often something that’s overlooked. If you recognise these 3 scenarios, it may be worth looking at how income protection could fit into your wider plans.

1. Your employer doesn’t offer sick pay

It’s worth looking at the benefits your employer offers when weighing up the pros and cons of income protection. You should check what your employer’s sick pay policy is and how long it lasts. Many employers offer an enhanced sick pay policy that means you’d continue to receive an income in the short term if you were unable to work. However, it’s worth noting that these policies rarely go beyond 12 months. So, an income protection policy with a long deferment period may still be beneficial.

2. You are self-employed

If you’re self-employed, taking time off work can have a huge impact on your income and may even affect long-term projects. It may mean you’re tempted to work despite being ill or that you rush back too soon without giving yourself enough time to recover. Receiving a reliable income through an income protection policy means you can focus on your health without having to worry about financial security.

3. Your emergency fund wouldn’t cover essentials

If you have to rely on your emergency fund, how long would it last? An emergency fund is an excellent option for providing short-term financial security if the unexpected happens. This money should be readily accessible and ideally cover three to six months of expenses. If your emergency fund wouldn’t be enough to provide peace of mind, income protection could help. While your emergency find may provide security for a few months, if a long-term illness affected you, you could still find that you face financial insecurity. Again, income protection with a long deferment policy can give you confidence while reducing premiums in this case.

What Is an Investment Portfolio?

  • July 10, 2020
  • Jane Smith

An investment portfolio is a basket of assets that can hold stocks, bonds, cash and more. Investors aim for a return by mixing these securities in a way that reflects their risk tolerance and financial goals. There are many different types of investment portfolios, as some are built into 401(k)s, IRAs and annuities, while others exist on their own through a brokerage or financial advisor firm. For more hands-on help, consider working with a local financial advisor who can guide you through building an investment portfolio that’s right for you.

An investment portfolio is a basket of assets that can hold stocks, bonds, cash and more. Investors aim for a return by mixing these securities in a way that reflects their risk tolerance and financial goals. There are many different types of investment portfolios, as some are built into 401(k)s, IRAs and annuities, while others exist on their own through a brokerage or financial advisor firm. For more hands-on help, consider working with a local financial advisor who can guide you through building an investment portfolio that’s right for you.

Determining Your Investment Portfolio’s Asset Allocation

If you’re looking into investing, you’ve probably heard of asset allocation. This describes how you break down an investment portfolio based on asset class. An asset class is a category of different securities. For example, equities are stocks, shares of which you own as a slice of a company that do not offer fixed returns. Meanwhile, fixed-income can include bonds and certificates of deposit (CDs). While diversification is key, your asset allocation should adhere to your risk tolerance.

Creating an Investment Portfolio Using Your Risk Tolerance

Risk is the potential for your investments to lose money when the market or a particular asset class doesn’t perform well. There is always a degree of risk when you invest. If you absolutely cannot afford to lose your money, you might want to consider putting it into a savings account or the best CD you can find. That means you won’t lose all your money the way you might with a stock. Your risk tolerance is the amount of variability that you can handle with your investments. In other words, it reflects how well you can stomach the ups and downs that come with any investment. This is what investors call market volatility.

If you need your money in a few years and can’t afford to lose any of it, you have a low risk tolerance. This means you will likely not recover from a major downturn in the market. On the other hand, someone who won’t need his or her money for 40 years can probably tolerate more volatility and weather the ups and downs. That investor has time to wait out a decrease in the value of his or her investments before the market bounces back.

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