Latest news with #BedandIsa
Daily Mail
24-04-2025
- Business
- Daily Mail
How to take advantage when stock markets are down: Financial planning moves that pay off
Stock markets have taken a tumble off the back of Trump's flip-flopping tariff announcements. While global markets have regained some ground, uncertainty remains. This was highlighted when Trump knocked US stocks again by calling Federal Reserve Chair Jerome Powell a 'major loser' for not lowering US interest rates. Investors, understandably, might be feeling a little sorry for themselves and their holdings, while pension savers too may have seen thousands wiped off their pots. The world's leading stockmarket, the S&P 500, is down 8 per cent this year, while the FTSE All Share is flat for 2025 but down 5 per cent on its early March peak. But such a market downturn also provides opportunities to make the most of a bad situation. Sarah Coles, head of personal finance at Hargreaves Lansdown, said: 'Market downturns are times for steely resolve, and sticking with your long-term plan, but this doesn't mean you should do nothing at all. 'There are opportunities in down markets to make a few changes that can not only improve your investment prospects, but could help you save tax too.' Lump sum boosts With stock valuations dipping in recent weeks, sharp investors might want to take advantage of lower prices currently on offer. Stock market indices have recovered some ground but there are still many individual stocks, funds and investment trusts trading well below previous levels. The new tax year having just kicked off, so investors also now have the opportunity to make the most of their refreshed Isa and Sipp allowances. Renewed Isa allowances mean that Isa holders can invest £20,000 in stocks and shares via their Isa and up to £60,000 via a self-invested personal pension. Investing a lump sum at the start of the tax year can also offer better returns over time compared with investing a lump sum at the end of the year. Coles said: 'There are plenty of investors who view market falls as a buying opportunity. It's one reason why Hargreaves Lansdown had a record day of trading in the midst of the tariff trauma on 7 April, and most of those trades were people buying into investments.' Meanwhile, Lifetime Isa users can make the most of the 25 per cent top up offered by the government, while pension holders will also get rax relief. Coles said: 'Both will give you more bang for your buck, putting more money into the markets on day one. It means you can buy more investment units at a lower price and benefit more from market gains.' Protect your investments When investing, an Isa or pension wrapper offers protection from tax charges that you could face if your returns go beyond the annual dividend tax or capital gains tax allowances. With the new tax year's allowances in play, it can be a good time to shift any investments held outside of these wrappers into your shielded accounts. This transfer can be done using the Bed and Isa process which sees your assets sold outside of the wrapper and repurchased within, making them protected from any future tax liability. Coles added: 'You need to pay attention to the gains your investments have made. Ideally you want to move assets that have made gains below the annual allowance of £3,000.' Recent falls in markets means that any gains made are likely to be lower so you can move larger chunks of your portfolio without facing a tax bill. Time to rebalance Over time, investments perform differently, with some doing better than others. This can mean that what was once a diversified portfolio into an unbalanced one. Diversified investments are important to protect your funds from a poor performance from any one investment or geography. Significant market downturns can highlight if it is time to rebalance your portfolio. Coles said: 'They may have exposed how your investments have become unbalanced over time, and provided a timely reminder that some housekeeping is in order. 'Over time, some investments will do better, so they'll come to make up more of your portfolio that you might have initially planned. It will usually make sense to sell some of those that have done better, and rebalance your portfolio.' Carry your losses forward If you do hold investments outside of a tax wrapper, market losses can sometimes be beneficial for capital gains tax purposes. Coles said: 'It's never ideal to sell at a loss, but there are times when it can make sense for your overall investment strategy. ' If you are selling at a loss, you can offset the losses against any gains you have made in the same tax year, which could push you below the annual capital gains tax allowance. Coles added: 'Alternatively, make sure you report them to HMRC on your tax return, and they'll be offset against gains in future years.' Get your financial planning question answered Financial planning can help you grow your wealth and ensure your finances are as tax efficient as possible. A key driver for many people is investing for or in retirement, tax planning and inheritance. If you have a financial planning or advice question, our experts can help answer it. Email: financialplanning@ Please include as many details as possible in your question in order for us to respond in-depth. We will do our best to reply to your message in a forthcoming column, but we won't be able to answer everyone or correspond privately with readers. Nothing in the replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.
Telegraph
17-03-2025
- Business
- Telegraph
The little-known investment strategy wealthy savers are using to avoid Reeves's tax raid
The number of investors using the 'Bed and Isa' strategy soared last year as they sought to avoid Labour's capital gains tax raid. Stockbroker Hargreaves Landsdown said the amount of their clients deploying the tactic had increased by 59pc compared to the previous tax year. This follows Rachel Reeves's decision to raise capital gains tax rates on stocks and shares from 10pc to 18pc for basic rate taxpayers and from 20pc to 24pc for higher and additional rate taxpayers in last year's Budget. The Bed and Isa strategy involves selling investments held outside of a tax wrapper and buying back the same holdings inside an Individual Savings Account (Isa) to shield future investment growth from capital gains tax and dividend tax. Sarah Coles, of Hargreaves Lansdown, said: 'There has been a jump in Bed and Isa this tax year, as higher capital gains tax rates and miserably low allowances make the move even more rewarding.' However, Ms Coles said investors should 'take care' not to exceed their capital gains tax annual allowance. Wealthier investors could trigger a charge if they sell up and their profits for the year exceed the £3,000 tax-free limit. That said, the costs could still be worth the benefits of tax-free growth over the long term. The platform Interactive Investor reported a record-breaking summer for Bed and Isa transactions last year ahead of the capital gains tax rise in October. This followed the previous government's decision to slash the capital gains tax allowance from £12,300 down £3,000. The combined changes mean a higher earner sitting on investment gains of £4,000 would now face a £240 charge, whereas in 2022-23 there would have been no tax to pay. On top of this, the Conservatives cut the dividend allowance from £2,000 to £500. This has cost a higher-rate taxpayer earning £2,000 a year in dividends about £500 in tax. Capital gains tax revenue is expected to double between 2023-24 and 2029-30 from £15bn to £31bn. The Office for Budget Responsibility predicts the capital gains tax rises announced last year and the crackdown on non-doms will account for £1bn of this 2029-30 tax take. Investors have until the end of the tax year in April to make the most of their tax-free allowances. Up to £20,000 can be stashed into Isas each year with no tax due on the growth or income.
