Typically, people tend to invest or take action with their finances towards the end of a tax year, meaning that February and March are extremely busy. This is largely driven by fears that certain benefits, such as the ISA allowance, will be lost if it’s not used by the end of the tax year, as it cannot be rolled over into the next one.

If you tend to invest at the end of a tax year, you may inadvertently be damaging your wealth. Investing in April or May could expose your money to greater growth potential and allow it to enjoy more tax benefits – both of which could help to boost your wealth.

So, if you’re wondering: “Should I invest at the start of a new tax year?”, read on to discover three clever reasons why you may need to consider it.

1. It could increase your investment’s growth potential

Investing earlier in the tax year means that your money is invested for longer, which in turn could expose it to greater growth potential. This may help to boost your money’s long-term wealth. 

To demonstrate this, you may want to consider an article by Investor’s Chronicle, which provides food for thought. It used data from the MSCI World Index, which tracks the performance of a basket of companies across 23 developed markets.

It reveals that if you had invested £20,000 at the beginning of the tax year for 10 years leading up to April 2021, your investment would have been worth £356,353. If, however, you had invested at the end of each tax year it would have been worth £329,316 – a drop of £27,037. 

Please note, the calculations are for illustrative purposes only, and don’t consider the effects of charges on any investment. It also assumes that £20,000 was put into the ISA every year, even though the ISA allowance was lower in some years.

Even so, it illustrates that investing earlier in the tax year could be something you want to consider as it may help boost your money’s growth potential. Always remember though, past performance does not guarantee future performance.

2. Investing in an ISA could mean more tax-free cash to spend

As you can see, investing early in the tax year could help increase your money’s potential growth. That said, you may also be able to enjoy a higher level of growth potential in a much more tax-efficient way.

Investing in a Stocks and Shares ISA in April or May means that any growth your money enjoys will not typically be liable to Capital Gains Tax (CGT). This might be particularly attractive when you consider that the CGT annual exempt amount is £3,000 (2025/26 tax year). Any amount you then take from your Stocks and Shares ISA as income will typically be tax-free. 

Investing early in a Stocks and Shares ISA early not only means that your money could enjoy greater tax-efficient growth potential, but it also ensures you retain the annual exempt amount. This could then be used to reduce exposure to CGT if you have other assets which could be liable to the tax. 

In 2025/26, you can contribute up to £20,000 into a Stocks and Shares ISA. If you would like to learn more about the benefits of investing in a Stocks and Shares ISA earlier in the tax year, please read my blog about them.

3. Contributing early could boost your retirement lifestyle

A defined contribution pension (DC) – otherwise known as a money purchase pension scheme – is an investment as it holds a range of assets including stocks and shares. With this in mind, the above Investors Chronicle example demonstrates how contributing into your pension scheme earlier in the tax year could help increase its value over time.

This could be further enhanced by the tax relief pensions typically receive. As a 20% basic-rate taxpayer, every £100 you place into your pension costs you just £80 in 2023/24. If you’re a higher-rate taxpayer it will cost just £60, and additional-rate taxpayers may pay £55.

This means that the more you contribute, and the longer you contribute for, the greater the tax relief you receive. In other words, the government effectively puts more money into your pension, which could help to boost its value over time. 

As a result, you may be able to enjoy a better standard of living or finish work earlier.

Please remember that the level of contributions that receives tax relief is typically limited to your Annual Allowance. This equates to £60,000 or the amount you earn, whichever is the lower (2025/26 tax year).

Get in touch

If you’re considering: “Should I invest at the start of a new tax year?” and would like to discuss why it may be the best policy for you, please email me. I can be contacted at a.douglass@grosvenorconsultancy.co.uk or by calling 01793 766 123. Alternatively, you can reach me on my mobile, which is 07525 177 046. 

Please note that while I offer high standards of service and ensure that any solution I recommend is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

Tax levels and reliefs could change and the availability of tax reliefs will depend on individual circumstances.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

The post 3 clever reasons investing at the start of a new tax year could boost your wealth appeared first on Alice Douglass.

This is particularly true with women, the article adds, because they often don’t know where to start when it comes to investing, and are more concerned about scams.

Britons preference to keep wealth in cash is also backed up by government statistics, which reveal that 75% of all ISA accounts subscribed to during the 2019/20 tax year were in cash. Yet keeping your money in cash as inflation soars could significantly reduce its value in real terms.

As investing typically provides greater growth potential, if you are interested in the tax benefits offered by ISAs and want to inflation-proof your cash, you might want to consider a Stocks and Shares ISA instead.

Read on to discover more, and how you could give the growth potential of your Stocks and Shares ISA a boost with one simple step.

Investing could help inflation-proof your wealth

According to the Office for National Statistics, inflation reached 7% in March 2022, up from 6.2% the month before – the highest since 1992.

While the Bank of England has increased its rate to 0.75% to tackle soaring inflation, Moneyfacts reveals that the best easy access account in April 2022 offered an interest rate of just 1%.

It also shows that the best fixed-term rate, which would mean locking your money away for five years, offered 2.4%. When you consider these are significantly below the rate of inflation, you can see how your money could lose value in real terms.

Compare this to the average Stocks and Shares ISA, which, according to the above Independent article, returned 6.92% between February 2021 and February 2022.

Further evidence investing could provide greater growth potential can be found in the 2019 Barclays Equity Gilt Study, which tracked the nominal performance of £100 invested in cash, bonds or equities between 1899 and 2019.

It found that if you invested the money in cash, it would have been worth just over £20,000 in 2019. If you had put the money into the stock market, it would have been worth around £2.7 million.

Always remember, past performance is no guarantee of future performance, and you may not get back the full amount you invested.

While investing in a Stocks and Shares ISA might be an effective way to inflation-proof your money, you need to be aware of a useful tip that could increase its growth potential. Let’s consider this now.

Many invest in ISAs at the end of the tax year

In 2025/26, you can place up to £20,000 into an ISA, or up to £9,000 into a Junior ISA (JISA). This means you could build a significant amount of tax-efficient money relatively quickly.

That said, many people tend to invest in the weeks leading up to the end of a tax year, as they want to use their ISA allowance before losing it when the next tax year starts on 6 April.

Waiting until the end of the tax year, however, means that your money misses months of potential tax-efficient growth.

As such, the long-term value of your Stocks and Shares ISA could be significantly reduced.

Always aim to invest at the start of the tax year

To demonstrate how much more growth your money might enjoy if you invest at the start of the tax year, consider the following example. It was featured in Investor’s Chronicle and uses data from the MSCI World Index, which tracks the performance of a basket of companies in developed nations.

It reveals that if you had invested £20,000 at the beginning of the tax year for 10 years leading up to April 2021, your investment would have been worth £356,353.

If you had invested at the end of each tax year, it would have been worth just £329,316 – a drop of £27,037.

Please note, the calculations are for illustrative purposes only, and don’t consider the effects of charges on any investment. For ease, it also assumes £20,000 was put into the ISA every year despite the ISA allowance being below this amount in some years.

That said, the illustration highlights that investing at the start of the tax year could provide your money with a significant boost.

A Stocks and Shares ISA could also help the planet

Investing your money may not only help you inflation-proof your wealth, but it could also be better for the planet if you invest in “sustainable” funds.

According to Pensions Age, placing your money into sustainable investments, which are today known as “Environmental, Sustainable and Ethical” (ESG) funds, could be 40 times more powerful in tackling climate change than switching to a renewable energy provider.

Get in touch

If you would like to invest to help inflation-proof your money, but don’t know where to start, please get in touch. I would be happy to discuss your options and identify the best strategy for you.

You can contact me by emailing a.douglass@grosvenorconsultancy.co.uk or calling 01793 766 123.

Alternatively, call my mobile on 07525 177 046. Please note that while I offer high standards of service and ensure any plan is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

The post How can you boost your ISA’s growth potential? Here’s what you need to know appeared first on Alice Douglass.

This article will look at those benefits.

Invest early in the tax year

Investing in a pension or an ISA early in the tax year could give you an additional 12 months of investment returns.

If we look at this in the context of the FTSE 100, a period of 10 years with a cumulative return of 68% would equate to 6.8% per annum if we take the average return. This would amount to growth over 12 months of £1,360 a year based upon a £20,000 investment into an ISA.  Or £2,720 if you invested £40,000 into a pension. In reality, the return could be more or much less than this over one year.

Where I have clients who have money invested within a General Investment Account (often called OEICs), I may recommend that we move £20,000 out of the investment where there are no overt tax advantages into their ISA to utilise the allowance and have an additional 12 months of tax-free returns. ISAs are free from Capital Gains and Income Tax, unlike GIAs and OEICs.

It is worth noting that there is no guarantee that investments will generate positive returns, and values could fall as well as rise.

Invest Regularly

If you cannot afford to make a one-off payment at the beginning of the tax year, or even if you can, it may be a good idea to make regular payments into an ISA or Pension.

By doing this, you not only miss the tax year-end panic, but you can also benefit from something called pound cost averaging. Pound cost averaging means that as the markets move up and down, investing on, say, a monthly basis, can smooth out the impacts of sudden stock market movements because you buy shares at different prices. When the value is down, you buy more for your money, and when the markets are high, the converse is true. Thus, it averages out the price you pay to invest in the stock market over time.

This avoids investing a large sum before a possible market fall, where the loss would be keenly felt. By investing smaller amounts at regular intervals, market falls will have less impact and mean that the contributions can buy more shares for the same money.

It is worth noting that there are limits to the amount you can pay into a pension and an ISA. The ISA allowance for 2025/26 is £20,000. For more details on the amount you can pay into a pension, read my previous blog here or seek financial advice.

Conclusion

To plan your finances early and avoid the last-minute rush, contact me for a no-obligation, complimentary initial meeting.

Tax rules, rates and allowances are all subject to change and are dependent on individual circumstances. The Financial Conduct Authority does not regulate tax advice and some forms of offshore investments. The value of investments and the income from them can fall as well as rise, and you may not get back the full amount you invested

The post New tax year – now is the time to do your Financial Planning appeared first on Alice Douglass.

There are allowances each year that can reduce tax, receive tax relief and/or provide tax free growth. These need to be used up before the tax year end (5^th April each year) and if they aren’t, they may be lost. Tax years run from 6^th April to 5^th April. In a series of blogs, I will look at the various allowances for Pensions, ISAs, Capital Gains Tax, gifting annual exemptions, VCTs and EISs. This blog will cover ISAs.

ISA allowances

ISA

Each year, individuals can pay an allowance into ISAs.   For this tax year (2025/26), the maximum that can be paid into a cash ISA/Stocks and Shares ISA or a mix of the two is £20,000.  You have to be over 16 to open a Cash ISA and over 18 to have Stocks and Shares. The capital growth, dividends and any withdrawals taken are free from tax. Cash ISAs invest into just that, while Stocks and Shares ISAs invest into a variety of “assets” and their value can go down as well as up. To find out more about ISAs, click here.

Help to Buy ISA

There are also Help to Buy ISAs that are for first-time buyers’ use only. In a Help to Buy ISA, you can save £1,200 in the first month of opening, and then £200 per month after that. When you use the funds to buy your first home, the government adds a 25% bonus (up to a maximum of £3,000) onto your savings, helping you to buy the property.

Help to Buy ISAs are a type of cash ISA, which means you can’t usually contribute to both in the same tax year, although some providers may allow you to split your allowance between the two.

Lifetime ISA

The Lifetime ISA (LISA) launched in the current tax year to help save for an individual’s first house or their retirement. You can pay up to £4,000 each tax year into a LISA as a lump sum/multiple lump sums or regular payments. Like the Help to Buy ISA, the government will add a 25% bonus on top. So if you save the full £4,000, you’ll get an additional £1,000. LISAs can be held in Cash or Stocks and Shares. To find out more about the LISA, click here.

Junior ISA

Junior ISAs (JISA) – can be opened by or on behalf of anyone under the age of 18. The annual amount that can be invested is £9,000 (2025/26).

If you do not use your ISA allowances before 5^th April, they will be lost.

The tax year-end is a significant cut-off in Financial Planning. These allowances, if not used, on the most part will be lost. I work with my clients to ensure utilising these allowances is not left until the very end of the tax year. However, if you haven’t utilised these allowances, you may want to speak to a Financial Adviser pretty sharpish.

The post Tax year end planning – ISAs appeared first on Alice Douglass.

The key changes in tax on Property Investments

There have been a number of changes to the way people who have buy to let properties are taxed as follows:

• Stamp duty – individuals face a stamp duty surcharge of 3% when purchasing a 2nd home unless they are replacing their primary residence. This would include those who already own one residential property and are purchasing an additional property to rent out
• Capital gains tax – when selling a property, buy-to-let investors pay higher taxes on capital gains than investors in other asset classes
• Mortgage interest relief – restrictions on tax relief on mortgage interest means that the tax relief Higher Rate Taxpayers receive from rental income may reduce the net income some landlords will receive

Comparing rental properties with other asset classes, there are a number of other changes:

• Tax allowances on investments and shares mean these are now potentially more attractive such as lower capital gains tax rates and new tax-free allowances on savings interest and dividends
• The annual ISA subscription limit is now £20,000, enabling investors to build a pot of tax-free assets more quickly (NB ISAs are not free from Inheritance Tax unless invested in AIM shares/Business Property Relief)

Examples

To make a comparison, let’s look at two clients who have £200,000 to invest. Mrs Property purchases a 2 bed property and rents it out, Mrs Investment invests into a moderate portfolio utilising her ISA allowance and invests the rest in OEICs moving into their ISA each year to use their ISA allowance.

What do they each pay?

On Purchase

Stamp Duty

Professional Fees

So far, the BTL has cost £9,500 on top of the price of the property. Everything being equal, the property will have to return £3,000 more than the investment in order to match the investment.

Ongoing charges

On disposal

Let’s assume they both sell after 5 years.

Over the 5 years Mrs Investment has utilised some of her CGT and all of her ISA allowances each year by moving £20,000 from her GIA to ISA each year. At the end of 5 years, she has invested £100,000 into an ISA.

Both the property and investment have grown in value by £50,000.

The property is now worth £250,000 and Mrs Investment has £125,000 in ISAs and £125,000 in her GIA.

Capital Gains Tax

 Capital gains tax on the sale of a second property can be offset with the stamp duty, buying & selling costs and any home improvement costs (normal maintenance such as decorating does not count).

There is a really handy calculator on the HMRC website that can help you calculate the tax to pay on the disposal of a property. You can access it here.

Risks of investing in property

There are a number of risks of investing in property which are not always apparent. Some of these are as follows:

• Falling property prices – although property prices have risen for many years, prices can go down as well as up
• Liquidity – buying and selling properties takes time, which locks up capital. A forced sale nearly always means accepting a price considerably below market value. If you want to raise some capital, you can’t just sell the bathroom.
• Lack of diversity risk – for many investors, owning buy-to-lets means that their investments are concentrated in one asset, in one sector (property), in one economy (the UK). A diversified portfolio, in contrast, is typically invested across multiple sectors, industries and countries
• Void risk – the property may be vacant for extended periods of time which means that there will be no rent to cover any mortgage repayments
• Maintenance risk – properties need regular maintenance and upkeep – this can be expensive
• Mortgage risk – interest rates may mean that mortgage repayments increase and reduce the profitability of the property
• Lifestyle risk – being a landlord can be stressful and time consuming, even for those that employ a managing agent

Conclusion

There are of course risks of investing in assets other than Property – you may not get back as much as you invested, past performance is not a guide to future performance, and fund values can fall as well as rise.

Where it used to be compelling to invest in property, the case is no longer quite so water tight. If you are considering investing in property, make sure you fully understand the associated risks, costs and taxes before doing so. If in doubt, speak to an Independent Financial Adviser or Accountant.

The small print

Tax rules, rates and allowances are all subject to change and are dependent on individual circumstances. The Financial Conduct Authority does not regulate tax advice and some forms of offshore investments. The value of investments and the income from them can fall as well as rise and you may not get back the full amount you invested

The post Buy to Let vs Investments appeared first on Alice Douglass.

What is a LISA?                     

• You can save up to £4,000 a year into a LISA
• At the end of the tax year the government will add a 25% bonus to the LISA based on contributions in that tax year e.g., if you save £1,000 you’ll receive a £250 bonus, if you save the full £4,000 you’ll receive a £1,000 bonus
• Bonuses are paid from age 18 to 50
• Anyone aged over 18 and under 40 can open an account
• The £4,000 will be counted against the annual ISA savings allowance – £20,000 (as at 2025/26 tax year). If fully subscribing, the remaining £16,000 will not receive bonuses
• The Lifetime ISA is designed for two specific purposes:
  • for first-time buyers to use towards a residential property
  • To take out and use in retirement after age 60 

Using the LISA to save for retirement

The LISA can be accessed from age 60

• It doesn’t have to be taken all at once and partial withdrawals can be taken
• Withdrawals from a LISA are all tax-free

There are penalties if the money is taken before 60 and is not used to purchase a first home: 

• the government bonuses will be lost along with any interest that these have accrued
• There will be a 5% penalty on the amount withdrawn

It’s a horrible circumstance, but there is a provision in the Lifetime ISA rules that allows you to access the cash as a tax-free lump sum if you’re terminally ill, provided that you have 12 months or less to live.

If you die, and you’re married or have a civil partner, your Lifetime ISA allowance passes to him/her to invest your Lifetime ISA savings as well as their own. This is on top of their usual ISA allowances. However, the funds in the Lifetime ISA do form part of the estate for inheritance tax purposes.

Pensions Vs LISA 

So, how does a LISA compare to a pension:

• Auto Enrolment means for the employed, employers have to make minimum contributions into a pension on employees’ behalf. They don’t have to do so into a LISA.
• Higher-rate taxpayers get tax relief at 40% on contributions into a pension
• LISAs can affect your benefit entitlement whereas pensions do not
• Money can be taken from a pension from age 55 (rising to 57 in 2028); the minimum age is 60 to withdraw from a LISA without penalty.
• Money invested in a pension is currently outside of the estate for inheritance tax (IHT) purposes (this will change in 2027) whereas money within a LISA will form part of an individual’s IHT allowance (the IHT threshold is currently £325,000)
• 100% of your earned income or £60,000 per annum (whichever is lower) can be paid into a pension each year and receive tax relief (there are certain exceptions to this for more information, click here.
• Business owners can make payments into their pensions as a business expense – they cannot into LISAs
• On bankruptcy, Pensions cannot be taken to pay creditors whereas ISAs can
• Tax relief is applied to pension contributions immediately whereas with an LISA, the bonus is not received until the end of the tax year
• Pension contributions paid via salary sacrifice into an employer scheme, are not be subject to national insurance this is not the case with a LISA

However:

• On taking money out of a pension, 25% of it is tax-free– the rest is taxed as income. Money can be withdrawn entirely tax-free from a LISA. Having said that, the tax rates on pensions, encourage individuals to take it as income so that they do not breech tax bands thus providing retirement income
• The LISA is more flexible with the option to withdraw the money before age 60 (with penalties) but again will this mean that individuals may not make adequate retirement provisions if they are tempted to withdraw their money before age 60 ?
• Apart from with critical illness and death money cannot be withdrawn from a pension early, but if prepared to pay a 5% penalty money can withdrawn from a LISA.

So, is this the start of a new pensions ISA?  Is the LISA the new way to plan for retirement? Should I invest in a LISA or a Pension? It could form part of your plan and it’s a good idea to have a plan for retirement!

If you would like to meet for a complimentary initial meeting to plan for your retirement, please contact me.

The information contained within this document is correct as at 2025/26 tax year and is based on current government legislation. This can change. Tax rules, rates and allowances are all subject to change and are dependent on individual circumstances. The Financial Conduct Authority does not regulate tax advice and some forms of offshore investments. The value of investments and the income from them can fall as well as rise and you may not get back the full amount you invested.

The post Lifetime ISA (LISA) the new pension? appeared first on Alice Douglass.

* Children also qualify for tax relief on pension contributions therefore, parents/grandparents could pay into a pension on their behalf.

** The way in which the tax relief is applied to pension contributions and the bonus is applied to the LISA means that the amount credited is the same for basic rate taxpayers. For example, a basic rate tax payer pays £80 into a pension, they get £20 tax relief (20% of £100). If £80 is paid into a LISA, the bonus applied is £20 (25% of £80)

*** unless invested in assets that qualify for Business Property Relief at date of death that have been held for longer than 2 years

Both the Pension and ISA have pros and cons and both have their place within clients’ financial plans.  Although this hasn’t directly answered the question Should I invest in an ISA or a Pension? It should give you a better understanding of each tax wrapper and where it could fit depending upon your goals and objectives. If you would like to know more or would like to ensure your financial plans are on track to meet your objectives, please contact me for a complimentary initial meeting.

Tax rules, rates, and allowances are all subject to change and are dependent on individual circumstances. The Financial Conduct Authority does not regulate tax advice and some forms of offshore investments. The value of investments and the income from them can fall as well as rise and you may not get back the full amount you invested.

The post ISAs and Pensions compared appeared first on Alice Douglass.

When buying a house

When you are in the process of buying a home, you should speak to a financial or mortgage adviser. An adviser in this situation can help find the most suitable mortgage for your circumstances.  Whether it be repayment, interest only, fixed or variable interest rate, an adviser will ask suitable questions to find the best fit. They will also have knowledge of which providers consider certain circumstances. Such as someone with one year’s accounts, a zero hour’s contract or a job offer only for example. This would save you time in searching the market yourself.

An adviser will also help you to consider how you would continue to pay the mortgage should anything happen to you.  For example; inability to work, being diagnosed with a critical illness or if you should die. They would be able to recommend suitable protection products to insure against these eventualities. This is something that people often overlook. But imagine if the worst happened and then you had to leave your home because you could no longer pay the mortgage.

You may also want to consider talking to a Financial Adviser if you are considering a buy to let investment. Due to tax changes, this isn’t as attractive as it once was and other alternatives may be more suitable to your requirements.

On marriage or when a baby is born

When you get married or have children, due to the change in circumstances, you may wish to provide an element of family protection. You may already have cover in place to protect your home – as detailed above. Family protection could provide additional insurance so that if anything should happen to you or your spouse, there would be either a pot of money or an amount each year or month to replace the lost income and provide breathing space.

You may also wish to talk to an adviser regarding planning for your child’s future and investing money for school fees or university fees. The sooner you start, the better.

It is also wise at this stage to talk to a Solicitor or Will writer to write your Wills.

On Divorce

So, you’ve just got married and now you’re getting divorced! Of course, none of us enter marriage thinking about divorce however, it does happen. Naturally, those getting divorced will speak to a solicitor however, it may also be wise to talk to a financial adviser. It is often the case that during divorce proceedings, the separate parties argue over certain assets. An adviser can help look at income requirements and cash flow to work towards a suitable and fair settlement rather than looking at assets alone. If the divorce involves pensions, an adviser can work with either party to get a fair amount for the recipient or to build the pension back up for the settlor.

When planning for retirement or have another specific goal or objective

When looking towards retirement, it is an important time to seek financial advice. However far off it is. If you don’t know what plans you have got, where these are invested, and what its worth or if it is going to meet your requirements in retirement, you should consider speaking to an adviser. They will help you arrange your plans so that they are structured and invested appropriately. They will also advise on the contributions required to meet your goals.

If you haven’t reviewed your pensions for 1-2 years or more, I would suggest that you do so. It is important to review financial plans regularly as legislation and regulations change as do personal circumstances. It would also be wise to speak to an adviser if and when you leave employment or change jobs.

At retirement

When you are approaching retirement or thinking about taking money out of pensions or investments, it would be wise to speak to a financial adviser. Although you may have in mind what you wish to do, this is a complex area and talking to a financial adviser could open up different avenues that you hadn’t considered and could save you money in the form of tax.

Death

When a loved one dies it is often the most difficult time in someone’s life. By talking to an adviser, following the death of a close relative, it can provide peace of mind. There may also be some important financial decisions to make such as what to do with an inheritance or making a death claim and how to generate an income from the proceeds.

Conclusion

Although not exhaustive, this blog has considered the question When should I talk to a financial adviser? If ever in doubt about your financial plans, speak to an adviser, it won’t hurt.

Tax rules, rates and allowances are all subject to change and are dependent on individual circumstances. The Financial Conduct Authority does not regulate tax advice and some forms of offshore investments. The value of investments and the income from them can fall as well as rise and you may not get back the full amount you invested.

The post When should I talk to a financial adviser? appeared first on Alice Douglass.

Cash savings

If you’re looking to save money in cash using products such as savings accounts, cash ISAs or fixed rate savings bonds, you can use comparison sites to find the best rates and deals available. You don’t need to get financial advice for cash savings and some advisers’ won’t actually advise on these types of products. These can usually be easily bought directly from the providers.

It may however, be worthwhile talking to an adviser regarding your options. They may be able to help with saving tax efficiently and talk to you about other options, especially if you will be saving the money over a long period of time.

Investments

If you have some money to invest and you are thinking of investing into the stock market, this is also something that you could do yourself. This can be more risky however, due to the nature of investing and they type of products that you will be investing into and as with most investments in the stock market you could lose money.

You could buy a product that’s not suitable for you or invest in areas that are very risky and therefore you may lose money.

Some people love investing themselves however it may be worth considering:

• How much money you can afford to lose
• How much risk you wish to take
• Do you understand financial products and their tax implications
• If you have the time to do the research
• Your experience, knowledge or skills when it comes to investing
• Are you comfortable taking the responsibility if things go wrong

If the answer to any of these is ‘No’ then the answer to the question Do I need financial advice? Would be yes.

Pensions

If you’re looking to invest into a personal pension, to review your existing pensions or consolidate several existing pensions it’s usually best to get advice unless you really understand how pensions work. Many older style plans will have guarantees that could be lost on transfer for example.

Insurance or mortgages

Some insurance products and mortgages can be purchased using price comparison websites, or bought directly from providers.

However, Financial Advisers will discuss your requirements and find the product to best suit your needs and they might be able to get you a better plan to suit your needs.

Conclusion

This article has looked at the types of products you may be considering when asking Do I need financial advice? In some circumstances you may be better off speaking to a financial adviser, in others, you may be able to “go it alone”.  The choice is really yours.

To understand more about the benefits of financial advice, read What is the Value of Financial Advice and The Value and Benefits of Financial Advice

In the next blog on Thursday, I will look at “When should I talk to a financial adviser?” which will look at the different stages and events in life that may be assisted with financial advice.

Tax rules, rates and allowances are all subject to change and are dependent on individual circumstances. The Financial Conduct Authority does not regulate tax advice and some forms of offshore investments. The value of investments and the income from them can fall as well as rise and you may not get back the full amount you invested.

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After all the pre-budget talk of reducing tax relief on pensions, the government introduced “bonuses” on ISAs available from April 2017. But what is a LISA? And how does it compare to a pension?

 What is a LISA?                     

• You can save up to £4,000 a year into a LISA
• At the end of the tax year, the government will add a 25% bonus to the LISA based on contributions in that tax year e.g., if you save £1,000 you’ll receive a £250 bonus, if you save the full £4,000 you’ll receive a £1,000 bonus
• Bonuses are paid from the age of 18 to 50
• Anyone aged over 18 and under 40 can open an account
• The £4,000 will be counted against the annual ISA savings allowance – £20,000 (as at the 2025/26 tax year). If fully subscribing, the remaining £16,000 will not receive bonuses
• The Lifetime ISA is designed for two specific purposes:
  • for first-time buyers to use towards a residential property,
  • To take out and use in retirement after age 60 The LISA can be accessed from age 60

 Using the LISA to save for retirement

• It doesn’t have to be taken all at once and partial withdrawals can be taken
• Withdrawals from a LISA are all tax-free

 There are penalties if the money is taken before 60 and is not used to purchase a first home: 

• the government bonuses will be lost along with any interest that these have accrued
• There will be a 5% penalty on the amount withdrawn

It’s a horrible circumstance, but there is a provision in the Lifetime ISA rules that allows you to access the cash as a tax-free lump sum if you’re terminally ill, provided that you have 12 months or less to live.

If you die, and you’re married or have a civil partner, your Lifetime ISA allowance passes to him/her to invest your Lifetime ISA savings as well as their own. This is on top of their usual ISA allowances. However, the funds in the Lifetime ISA do form part of the estate for inheritance tax purposes.

Pensions Vs LISA 

So, how does a LISA compare to a pension?

• Auto Enrolment means for the employed, employers have to make minimum contributions into a pension on employees’ behalf. They don’t have to do so into a LISA.
• Higher-rate taxpayers get tax relief at 40% on contributions into a pension
• LISAs can affect your benefit entitlement whereas pensions do not
• Money can be taken from a pension from age 55 (57 from 2028); the minimum age is 60 to withdraw from a LISA without penalty.
• Money invested in a pension is outside of the estate for inheritance tax (IHT) purposes whereas money within a LISA will form part of an individual’s IHT allowance (the IHT threshold is currently £325,000)
• 100% of your earned income or £60,000 per annum (whichever is lower) can be paid into a pension each year and receive tax relief
• Business owners can make payments into their pensions as a business expense – they cannot into LISAs
• On bankruptcy, Pensions cannot be taken to pay creditors whereas ISAs can
• Tax relief is applied to pension contributions immediately whereas, with a LISA, the bonus is not received until the end of the tax year
• Pension contributions paid via salary sacrifice into an employer scheme, are not subject to national insurance. This is not the case with a LISA

However:

• On taking money out of a pension, 25% of it is tax-free– the rest is taxed as income. Money can be withdrawn entirely tax-free from a LISA. Having said that, the tax rates on pensions, encourage individuals to take it as income so that they do not breach tax bands thus providing retirement income
• The LISA is more flexible with the option to withdraw the money before age 60 (with penalties) but again will this mean that individuals may not make adequate retirement provisions if they are tempted to withdraw their money before age 60?
• Apart from situations of critical illness and death, money cannot be withdrawn from a pension early, but if prepared to pay a 5% penalty money can be withdrawn from a LISA.

So, is this the start of a new pensions ISA?  Is the LISA the new way to plan for retirement? It could form part of your plan and it’s a good idea to have a plan for retirement!

The information contained within this document is correct as at 2017/18 tax year and is based on current government legislation. This can change.

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