Spring arrived on 20 March and now we are into a new tax year. This time of year is for new beginnings. The question I am often asked at this time of year is, ‘Shall I make my ISA contribution now or wait?’ To a large extent, the answer lies in the source of the money and market conditions. If the money is sitting in the bank earning little or no interest and the markets are not overpriced, then the answer should be an uncomplicated ‘go ahead’. However, if the markets are high and you have to make a sale, creating a CGT liability, the correct answer is most probably to wait for the market to come down. You can then sell later, creating a lower capital gain, and hopefully watch the ISA units you have purchased increase in value CGT-free.
April is also the time to review your gifting. If you are utilising the £3,000 free IHT allowance, I would get on with the task. The recipients will be glad to receive this earlier rather than later, and it is one less thing to remember later in the year.
If you are making use of the IHT gifts out of normal expenditure exemption, now is the time to fill out a copy of the IHT403 on which you should be recording your gifting for the last tax year, and providing a rough estimation of your expenditure. The easiest method of recording expenditure is to note the figures from each month’s bank statements.
Having recorded the past, you should turn your attention to the amount you will be able to afford for the new tax year. If you are fortunate enough to receive a pension income which increases in line with some measure of inflation, you may discover that, if inflation has not expanded your expenditure, you have a little more to give on a regular basis to the family. For those of you who may never have heard of the IHT403, just send me an email and I will explain.
If your thoughts on the use of the IHT exemptions have led you to muse on later life financial planning, April may be the time to check the terms of your will and your Powers of Attorney. In particular, I would stress the importance of selecting executors and attorneys who are younger than you, and likely to be fully able, physically and mentally, to carry out the tasks you have asked them to perform. We can offer a Power of Attorney service and an introduction to a will writer if required, just let us know.