Tax year-end planning... it's time for action

Posted on Thursday 25th February 2016

The last year has seen huge change in the personal savings landscape and increased still further the need for individuals to understand their options, and take responsibility for securing their own financial future. That responsibility includes making time to explore the tax-saving and investment opportunities presented by the end of the tax year.


Your annual ISA allowance is one of those valuable opportunities to provide capital and income for the future, yet many savers will fail to take full advantage of it.

Although the Chancellor left the annual ISA allowance unchanged in his Autumn Statement instead of applying an inflation-linked increase, the opportunity to shelter up to £15,240 with no further tax to pay on income, and growth free from Capital Gains Tax, is still a very attractive and valuable one. What also hasn’t changed is that your allowance will be lost forever unless you invest before the end of the tax year.

Yet the majority of ISA savers still fail to make the most of the opportunity.

A recent survey conducted by BlackRock explored the savings views and habits of 4,000 individuals in the UK. While it revealed an encouraging increase in the number of people saving for retirement, it also confirmed that Britain’s cash-centric savings culture remains a problem. Around two thirds of all personal savings and investments are stuck in cash, compared to an average of 12% invested in equities; and this is despite those surveyed acknowledging that the figure is too high¹.

The trend is equally concerning when it comes to how people are utilising their ISA allowance. Figures from HMRC show that over £79 billion was saved into ISAs in the last tax year, of which a staggering 80% was deposited in Cash ISAs². This figure was backed up by BlackRock’s research, in which 70% of respondents said they held a Cash ISA, whereas just 11% had invested in a Stocks & Shares ISA.

False economy?

Consequently, over £240 billion is languishing in Cash ISAs on which, according to the Bank of England, savers are receiving an average interest rate of just 0.85% – lower than the 0.99% reported in December³. Many banks are now paying higher rates of interest on current accounts than savings accounts⁴.

Based on the average figure, savers depositing their full allowance in a Cash ISA would save themselves tax of just £26 on the interest if they were a basic rate taxpayer; and £52 if they paid tax at the higher rate.

The introduction of the Personal Savings Allowance from April makes the real value of such tax savings even more questionable. The new allowance applies to standard current and savings accounts and will enable basic rate taxpayers to earn tax-free interest of up to £1,000. For higher rate taxpayers the tax-free limit is £500, whilst those with total income of over £150,000 a year will not get an allowance.

If you can deposit cash in an instant access account earning tax-free interest, why would you need a Cash ISA? In theory, you might if you would exceed the tax-free limit in earned interest.

The average instant access rate is currently 0.48%³: at that level, a basic rate taxpayer could deposit over £208,000 in a regular savings account and receive all their interest tax-free. For higher rate taxpayers the figure is just over £104,000. Of course, for those who secure a more attractive rate, these amounts would be reduced.

The primary role of cash is as a home for emergency funds. It seems unlikely that many people would need a larger emergency pot than they can now save tax-free in an instant access account.

BlackRock’s survey also offered an insight into why the cash saving habit is proving hard to kick. Participants said they feel “responsible” and “purposeful” when they opt for cash saving, but “anxious” and “cautious” when they invest in other assets, such as stocks and shares. But faced with the prospect of record-low returns on cash, and little likelihood of a significant rise in interest rates, some might question whether this confidence is justified if the money saved in ISAs is intended to help secure their financial future.

Long game

BlackRock’s research reaffirmed that ISAs have a major role to play in encouraging retirement savings. Over half of those aged 55–64 said they were using ISAs to help fund their retirement; and across all age groups, 36% are saving with that objective in mind.

Pension changes due to be introduced in April will see a reduction in the annual allowance for higher earners, and a lower lifetime allowance for pension savings. It is therefore anticipated that the flexibility offered by ISAs will see them used even more widely as part of a well-structured retirement planning strategy.

The long-term benefits of ISAs were further enhanced by changes introduced last year, which enable spouses to inherit an additional ISA allowance equal to the value of their deceased partner’s ISAs, so preserving the tax benefits that would previously have been lost.

The reality is that the tax benefits of an ISA can only be maximised by investing for the long term in assets that offer the scope for attractive levels of income and capital growth.

There is still time for those looking to take advantage of the tax-saving and investment opportunities presented by the end of the tax year. Making the best use of your ISA allowance before it’s too late would be a good start.


The value of an ISA with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than invested. An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a Cash ISA. The favourable tax treatment of ISAs may not be maintained in the future and is subject to changes in legislation.

¹ BlackRock Investor Pulse Survey, December 2015

² HMRC, August 2015

³ Bank of England, January 2016

⁴ BBC website, January 2016

‘With-profits’ plans may be a disappointment

Posted on Tuesday 9th February 2016

People in their 50s and 60s who are planning for their retirement need to dig out their policies and seek advice on how to use those funds.

With-profits are medium to long term investments that may have been sold as an endowment for mortgage repayment, a pension, an investment bond or an annuity.

Nowadays with weak stock market returns and greater regulation most of these plans pay minimal or no annual bonuses. This can make them poor value for your money.

Quite often people think that they are guaranteed a terminal bonus, which is not necessarily the case. However, the annual bonus cannot be taken away once added to the plan.

Some ‘with-profits’ providers have cut the annual bonuses to the bone, because they cost them too much money, and then they emphasise the final bonuses, which can be reduced or withdrawn without warning.

Exit penalties for getting money out of these plans early can be crushingly expensive and potentially destroy any profits.

Some ‘with-profits’ investments have worked well and given a solid return, while others have not. The only way to get a real understanding of what is the best course of action, is to ask a financial expert to review it for you. Only then will you know whether to hold onto the investment or not.

This article is brought to you by CGA Financial & Investment Services Ltd

Announcing the launch of our own new home insurance policy

Posted on Wednesday 20th January 2016

The CGA has pleasure in announcing the launch of our new home insurance policy, CGA Signature, this policy is bespoke to The Country Gentlemen’s Association and covers both non-thatched and thatched houses.

The Signature policy replaces the old CGA Classic policy, which has been withdrawn following the sale of our partners, Sterling Insurance, to a large French national company.

More extensive details will be released in the next edition of the CGA magazine which is due to arrive with you in early March.

If you require a quotation before March then please email or call 01985 850706 if you prefer to speak to a person, as we still have receptionists and no call centres.


Neil Simmons dispels the myths and concerns of Equity Release

Posted on Thursday 14th January 2016

In today’s financial climate it’s important to view your retirement arrangements in a holistic way, not only your pension but also to look at equity release as part of those plans. Equity release should form part of the discussions with your financial adviser to find out the suitability of that approach; a safe, viable and professional product that is right for you.



The Equity Release information Centre is part of the CGA, to find out more call today 0800 077 6885, Monday to Friday: 9.00am - 5.30pm, or visit their website

Modern Law Awards 2015

Posted on Thursday 22nd October 2015

Congratulations are in order for CGA Legal Services, having been shortlisted for the “ABS of the Year” award at The Modern Law Awards. CGA Legal Services was one of the first “Alternative Business Structure” law firms to be licenced in the UK.

James Baker, the Managing Director of CGA Legal Services, said "I’m delighted to be shortlisted for this award just two years after CGA Legal Services received its licence to practice. I am proud of what the firm has achieved in that time, and I am expecting a good year ahead. To win this award would be the icing on the cake". 

The Modern Law Awards, which are now in their 3rd year, were launched to celebrate and identify talent and success in entrepreneurship, market development, business management and best practice in the modern legal services area. We're extremely pleased for James and the firm in being shortlisted for this award, and we wish them good luck for the awards on 19th November, which will be hosted by comedian Jimmy Carr.