Surprises It is difficult to prepare to be surprised. But sometimes that is just what you must do. Some of you may remember that in my last cover letter I was heralding the arrival of Liz Truss from my French enclave. That went well didn’t it! Boris has many admirers but when he was forced to leave by his MPs’ his critics were acclaiming him as the worst ever prime minister. Now I am not sure whether that is fair, but if it was, it was certainly not a title he held very long! Liz Truss’s 7-week term has had a disproportionate impact on the economic landscape at least in the short term. I could not have imagined those events unfolding as I wrote my cover piece. I guess we should always be surprised if we are not surprised. If I were to tell you that I had an uncle who was a ballet dancer, many of you would find it unlikely with my body kinetics. Be surprised. This is true; Jack Healey, who ended up as the Wardrobe Manager of Sadlers Wells. Clearly no Nureyev, you will find no record of him. If you do, please let me know as I have tried! The events in the financial markets over the last year are not surprising. But they are just the symptoms. It was the cause that was surprising. If you feel yourself coming down with a cold, you will know exactly how you will feel for the next 5 days but before the manifestation occurred you would be blissfully unaware of the coming event. The boom bust cycle is a key characteristic of capitalist economies. I always like to clearly differentiate between the economic cycle and the financial market cycle. Although the shape is similar the financial market curve will normally be ahead of the economic curve. The reason for this is that the misery of an economic recession with the associated poor growth and unemployment levels has already been priced in by the financial markets through “sentiment.” So, although we can see that the last year has been a bad one for the values of assets (reflected in your investments) which have fallen markedly, we are only now just starting to enter recession. Counter intuitively, when you are travelling along the trough during an economic recession the financial markets can do quite well. You will find that the values of assets, and hence your investments will “bounce” and rise at some point well before we officially start climbing out of recession. Be ready to be surprised. Des Fitzgerald ACII FPFS Chartered Financial Planner Director 2 The Chancellor's Autumn Statement delivered both expectations and some surprises: two-year extensions on the tax threshold freezes, scaled back financial support for energy bills and cuts on both dividend allowances and capital gains exemptions. Our feature in this edition focuses on how these and other changes may affect your tax planning ahead of the new financial year. We also consider the effects of recent market behaviour on pensions, particularly the ‘mini-Budget’ in September. Whether you’re coming up for retirement or still making plans, fund turmoil and the rise of over 65s remaining in employment may spur you towards reviewing your retirement planning. Investors looking for income may be encouraged by recent improvements to government bond yields to investigate their fund holdings. Those with some surplus funds are increasingly helping their adult children with meeting cost of living needs, from new homes to daily expenses, essentially spending potential inheritance early. Such gifting should be done within the inheritance tax framework to ensure a tax-efficient outcome and minimal effect on your own standard of living in retirement. 03 Retirement now and later Market place volatility could affect your retirement plans, with more over 65s still in work 04 In focus – year end planning Strategies to mitigate high taxation ahead of 2023/24 05 Cash is making a comeback Cost of living may have prompted surge in cash use 06 Bonds come in from the cold Interest rate rises have increased returns available in bonds and gilts 07 Inheritance gifting – why wait? Financial help to adult children could have implications for parents' IHT planning 08 Untangling NICs development The awkward timing of the NICs change could affect your year end planning In this issue... This newsletter is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The newsletter represents our understanding of law and HM Revenue & Customs practice. © Copyright 1 December 2022. All rights reserved. Cover image: studiostoks/ Shutterstock.com Credit: Nataliia Melnychuk /Shutterstock.com
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