By MIKE NEUMANN 10/06/2010
The Con-Lib Coalition has announced its first budget will be held on 22nd June 2010. The Government has already announced capital gains tax (CGT) is set to rise, which will affect many of our clients.
We believe the rise in CGT will not be introduced until April 2011. This will give investors plenty of time to rebalance their portfolios and realise gains using the 18% tax rate. This approach may actually help the government increase tax receipts this year as investors pay the lower rate of tax. Of course, we don’t know for certain when the rise will apply so there are some things we recommend investors do as matter of course;
- If you are selling an investment anyway then do so ahead of the budget, on the off-chance any change will take immediate effect.
- If you are married then make sure assets are held in the name of the lower earning partner. This will save income tax on interest and dividends and might also help with CGT.
- Don’t let the tax tail wag the investment dog. It is important that your asset allocation does not alter as a result of the sale of assets.
Any rise in taxes will make those tax wrappers available more attractive. Use your ISA allowances, if you don’t have the money to invest then consider a Bed and ISA (Selling a fund outside the ISA wrapper to buy it back inside).
If there is anything you wish to discuss please call one of our Investment Professionals on 020 7189 9999.