It’s only a matter of weeks until the financial year-end, so now is a great time to take stock of your financial health and plan for the next year. Here are some of the areas to look at so you can identify tax planning opportunities, manage your wealth transfer plans, and prepare for your retirement.
Assess Your Investment Portfolio
The financial year-end is the perfect time to look at your investment portfolio, particularly the following areas
Recognising Capital Gains/ Losses At Financial Year End
Assess the gains and losses you have made throughout the year to calculate your tax obligations. Can you get rid of your losses to reduce your gains taxes?
It’s important to report your losses even if you don’t intend to use them in the current financial year. Losses can be carried forward to a future tax year for up to four years.
Rebalance your portfolio
We recommended rebalancing your portfolio at least once a year to stay in line with your investment strategy. Throughout the year, investment portfolios can drift off course and need rebalancing to return them to their original state.
Rebalancing occurs through buying and selling portions of your portfolio with reference to your original investment strategy. It can also highlight any areas where diversification is required (typically if you have more than 10% of your total investments in one asset or area)
While rebalancing your portfolio you should also reassess your risk tolerance. If it has changed then you may need to make changes to your investments too.
Plan For Your Retirement
Paying into your pension
Pensions are a tax-efficient way to prepare for your future and any contributions you make receive income tax relief at your highest marginal rate. The financial year end is a good time to assess your pension and pay into it to reduce your tax liabilities.
The Annual Allowance for paying into your pension tax-efficiently is set at 100% of your earnings or £40,000, whichever is lower. Unused pension contribution Annual Allowances can be carried forward, and used, from the previous 3 years.
Pay into your spouse or child’s pension
If you’ve used all of your annual allowances, you can contribute to your spouse’s or child’s pension too, and receive tax relief. Non-earners can pay £2,880 each tax year and receive an additional £720 in tax relief.
Review your retirement date
When you started paying into your pension you should have calculated the amount of money you need to live comfortably in your twilight years and set a date for that retirement. Review your pension pot and calculate if you are on track to meet those goals.
Wealth Transfer and Legacy Planning At Financial Year End
What happens to your estate after your death? If you’re planning to gift money to your family, you can mitigate the cost of Inheritance tax by taking advantage of annual IHT allowances.
You can gift up to £3000 per year tax-free and if you don’t use your full exemption in one year you can carry it forward to the next year (for one year only).
If your child, grandchild, or great-grandchild is getting married in 2024 you can give them tax-exempt cash gifts too. Parents can gift £5000 tax-free, or grandparents can gift £2,500 to a grandchild or great-grandchild.
Tailored advice from The Bateman Group
Since 1967, The Bateman Group has provided a full range of services to help our clients manage their cash, pensions, and investments.
As totally independent experts we can review the whole market and we’re regulated by the Financial Conduct Authority so you know you are safe with us. We currently control client assets in excess of £120 million – can we help you?
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