The on again-off again nature of the summer, followed by a short-lived early Autumn heatwave, mirrored some of the economic news of the last months. Growth has edged up, then down, as has inflation, with interest rates still high before an expected slow decline later in the year. By mid-September the average rate of wage increases had finally caught up with inflation and those higher interest rates have been filtering down to savers.
Our feature for this edition of our newsletter highlights these changes while considering the broader investment landscape – government bonds are also showing much more positive returns. For investors and those looking for income from their capital, market conditions have created more options.
The latest figures published by HMRC show how many more people are affected by the on-going tax threshold freezes and static level of personal allowance. You may be caught up as the number of higher rate taxpayers is predicted to increase yet again in 2023/24 to a likely 18% of all those paying tax, up from 13.9% in 2020/21.
Our other stories include:
· Beyond a minimum retirement – One third of people appear set to fall short of the pension funds needed to afford their retirement, according to a survey by Scottish Widows. You may need more than you realise to achieve the retirement living standards you aspire to.
· The dividend or bonus decision – If your financial year aligns with the calendar year end, the time is coming up for owner directors to focus on the most efficient way to choose between bonus or salary. Recent tax changes mean the calculations around drawing profits this year may have changed.
· Managing your pension legacy – The tax treatment of pension death benefits has been under HMRC scrutiny again. Further change could be on the way, but the current rules, with any payments to beneficiaries free of inheritance tax if the scheme holder dies after age 75, mean many now consider their pension an important part of estate planning.
We will share the next phase of developments with you in December following the Autumn Statement. Please do get in touch if we can continue to help or provide you with more information on any of the topics covered.