Your next steps... and if all else fails, you can ‘do a Lord Sugar’
1 IF YOU have children at a fee-paying school, see if the bursar is prepared to offer a discount on fees paid in advance, covering multiple years. Although this will not allow you to escape Labour’s plan to charge 20 per cent VAT on private school fees – VAT is due when a service is delivered – it will help you mitigate the impact.
2 CONSIDER reshaping your investment portfolio to take into account a weaker pound under Labour. A falling pound is bad for listed businesses reliant on imports and which see their costs rise. But it is good for companies which generate a big chunk of their earnings overseas. A diversified investment portfolio, with both UK and international exposure, is the best idea.
3 SOME people with large pension pots that they have not contributed to in the last couple of years could see if they are eligible for a higher lifetime allowance. The value of assets that can be accrued under a pension without being subject to punitive tax when benefits are taken is currently capped at £1.03 million. Any fund surplus is liable to tax when it is accessed – 55 per cent if it is taken as a lump sum rather than income. But recent non-contributors could apply for something called ‘fixed protection 2016’ which allows them to lock into a £1.25 million allowance. 4ENSURE your mortgage rate is fixed. Interest rates are rising but a plunge in the value of sterling following the election of Labour could cause them to soar.
5 PROTECT your assets from the threat of higher inheritance tax rates. This can be done by making gifts using an assortment of allowances – the ‘annual’ £3,000 allowance, the ‘small gifts’ allowance of £250 per person and regular gifts from income (provided they do not impact on your lifestyle). Other tax-free gifts can be made provided you survive for at least seven years.
6 IF YOU own an overseas property, think about opening a foreign currency account (if you have not done so already) and shovel money into it. This will provide protection against a falling pound.
7 ASSESS whether you still need to hang on to a buy-to-let property. Recent tax changes have made it more difficult for investors to make a profit. Labour does not like second-home owners. 8 CONSIDER investment bonds that allow you to take limited annual income without triggering an immediate tax charge. The bond can be cashed in when most tax advantageous.
9 SEE an independent financial adviser who will give you a financial MOT and ensure your finances are robust enough to withstand anything – politically, economically or financially. AND FINALLY: ‘Leave the country? Not such a daft idea if you fear the worst.’ So says adviser Alan Steel, echoing Lord Sugar’s woes. The MoS panel of experts: Alan Steel, Alan Steel Asset Management; Jason Hollands, Tilney; Patrick Connolly, Chase de Vere; and Ned Francis, James Hambro & Co.