Over the last ten years – from 31 December 1999 to 31 December 2009 – cash was a clear winner, according to the authoritative Barclays Capital Equity Gilt Study (EGS) 2010.
UK shares produced a gross return of –1.2% a year, once reinvestment of dividends and inflation were both taken into account. Cash, on the other hand, offered a post-inflation return of +1.8% a year. However, there are two key factors to note:
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The March 2010 Budget contained little to frighten the voters. The June Budget could well be rather different.
Alistair Darling’s final Budget was predictably heavy on politics and light on new measures. For all its pre-election caution, the Budget still produced a raft of detailed proposals, although not all became law before Parliament shut down.
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The pound has had a rough time of late, but for some investors that has been good news.
It was not so long ago – December 2007 – that the pound would buy you over US$2 or €1.40. Since those heady days, sterling has fallen sharply, but that is not necessarily bad news from an investment viewpoint. If you hold overseas assets or investments, their sterling value will rise, even if the home-currency value remains unchanged.
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If you are thinking of retiring abroad to enjoy a better climate and escape the UK tax system, you might find it harder than you expect, especially after a recent well publicised tax case in the Court of Appeal concerning Mr Robert Gaines-Cooper, who retired to the Seychelles.
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Investors now have access to a much wider range of investment funds than in the past and they can provide some really valuable new opportunities. These funds go under the name of UCITS(Undertakings for Collective Investment in Transferable Securities). It’s taken years for UCITS funds to grow and develop in popularity, but they are finally bringing the offshore market to onshore UK savers.
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Did your 2009/10 tax return arrive in early April?
In 2008/09 HM Revenue & Customs (HMRC) managed to answer only a little more than half of the 103 million calls to its main tax helplines, according to a House of Commons report issued recently.
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Consumer Focus has made a ‘super complaint’ to the Office of Fair Trading about cash ISAs. There is a good case to answer.
If you have a cash ISA, you are not alone. There are 15 million cash ISA holders with a total of around £158 billion invested according to Consumer Focus, a statutory organisation campaigning for consumer rights. Consumer Focus says that the average interest rate being paid on these ISAs is under 0.5%: one major provider pays just 0.05%.
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Legal changes will boost the earning potential of trusts – but those trusts already in existence generally won’t benefit.
The Perpetuities and Accumulations Act 2009 came into effect on 6 April this year, and finally abolished the 21-year limit that previously restricted how long income could accumulate for. New trusts can now build up income for their entire 125-year lifespan, bringing them more in line with popular offshore structures.
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Annuity rates are mired at ultra-low levels. But could this be about to change?
At about 6.5% (for a man aged 65), it is many decades since UK annuity rates appeared so unattractive. In 1990, a 65 year old man would have received more than 15% from an annuity. The massive decline means today’s retirees see their hard-earned retirement savings converted to annuities that produce income levels similar to late 1990s bank base rates.
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Two of the main pension limits are now frozen until at least April 2016.
The lifetime allowance effectively fixes an upper tax-efficient limit on the value of your pension benefits, unless you opted for transitional protection before 6 April 2009. The lifetime allowance limit was set at £1.5 million in April 2006 and has gradually increased to £1.8 million now.
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The basic state pension rose by 2.5% in April, to £97.65 a week for a single person and £156.15 a week for married couples.Other state pensions, such as the old graduated pension, were frozen.
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Independent tax for married couples opened up a variety of tax planning opportunities when it was introduced in 1990. New opportunities have now appeared with the arrival of 50% income tax and the phasing out of personal allowances in 2010/11.
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