Opportunity knocks, but not for long
special report: year-end planning; Clifford German introduces a three-page guide to making the most of seasonal bargains
Wednesday 20 March 1996
The right time to buy financial services, of course, is when they are needed, or when they are affordable and cheap. Insurance comes into the first category, mortgages are in category one, remortgages in category two, pensions probably have a foot in both camps, while investments are strictly second-category purchases.
A fixed-rate loan taken at a high interest rate when rates are set to fall, or a fixed-rate deposit placed at a low rate when rates are due to rise is quickly made to look hasty, and shares, unit trusts and even Personal Equity Plans bought when values are looking over-cooked are soon regretted.
Most tax advisers actually recommend that investment and especially tax planning moves should be made early in the year in order to get the maximum advantage of the earning power and the tax concessions that might be available, as well as to beat the rush.
But there is no denying that many investments depend for their appeal on tax rules drawn up by successive chancellors and applied to the financial year, which traditionally begins on 6 April and ends the following 5 April. And sometimes it is better to wait until the last minute to see exactly how different investments are shaping up and exactly how much money you can prudently afford to set aside.
This year it is also worth remembering that 5 April is Good Friday, so the tax year ends for investment purposes on 4 April. If you want to take advantage of the traditional seven-day cooling-off period you should really make any decision by 28 March.
The main tax rulings involve pensions, PEPs, and special tax shelters, ie venture capital trusts and enterprise investment schemes. But the year- end also has implications for inheritance tax planning, the calculation of taxable capital gains and the opportunities to shelter gains and postpone the day when any tax may have to be paid.
If you have not put the maximum you are allowed by law tax-free into a company pension plan or into additional voluntary contributions each year, you will have lost at least some of the opportunities.
The tax clock on Tessas starts on the day you open the account and ticks for five straight years, regardless of the intervening tax years. But if you have not bought your full allowance of pounds 6,000 invested in a Personal Equity Plan or corporate bond PEP, plus pounds 3,000 invested in a single-company PEP or bond PEP by the end of the tax year, the opportunity will, like Clementine, be gone and lost forever. If you have not invested the (up to) pounds 100,000 you can put into a venture capital trust or enterprise investment scheme you will have missed the boat, for the current year at least.
Capital gains are also liable for tax in the year in which they are taken. This year you can realise a capital gain of up to pounds 6,000 without any liability. From 6 April, this ceiling rises to pounds 6,300. So if you want to sell assets that will create taxable gain it makes sense to sell some of the asset this year and some next year to reduce or even eliminate the taxable gain in each year.
Likewise if you expect to realise future gains that will be over the limit, it makes sense to realise up to pounds 6,000 before 4 April and buy the asset back when markets reopen on 9 April. Unless prices have moved sharply you will have crystallised a gain that will be tax-exempt and reduced any subsequent gain on which to pay tax and it will only have cost you the commission charges on the transactions.
- 1 Heavy metal producer's corpse to be mutilated by models as per his dying wish
- 2 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 3 Nineteen-year-old student left gifts for parents before taking her own life
- 4 Deliberately urinating before sex can increase risk of urinary tract infections
British Muslim leaders outraged after Eric Pickles says followers of Islam should 'prove their identity'
UK terror fears: My jihadist son returned from Syria mentally scarred – now he is being ignored
Nigel Farage: NHS might have to be replaced by private health insurance
Billy Crystal: 'Stop shoving gay sex scenes in my face'
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
David Cameron says anyone criticising Eric Pickles' letter to Muslims 'really has a problem'
iJobs Money & Business
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...
£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village