Another Year Over, A New One Just Begun


Please note that this article is over six months old. While Blevins Franks takes care to make sure that information is accurate on the date of publication, some content may change over time. You should not rely on the accuracy of legislation and tax information in this article; take professional advice for your circumstances.

Here we are at the start of a new year, when we tend to reflect on the previous 12 months and ahead to what the coming year may bring.  It is a good time to review your financial planning to ensure it is up to date, forward looking and designed to protect your long-term wealth.

Here we are at the start of a new year, when we tend to reflect on the previous 12 months and ahead to what the coming year may bring.  It is a good time to review your financial planning to ensure it is up to date, forward looking and designed to protect your long-term wealth.

Tax planning

Looking back over 2013, one of the key financial themes was the stepping up of the global campaign against offshore tax evasion.

We saw a pivotal shift from bilateral to multilateral agreements, and unprecedented political support for automatic exchange of information.

More data than ever is being shared between countries, helping tax authorities track tax evasion.  This will increase when proposed new agreements come into effect.  Governments will be able to track your wealth like never before.  Your wealth management needs to take all these developments into consideration.

In April, the G5 (UK, Spain, France, Germany and Italy) announced that they would develop a new multilateral tax information exchange agreement.  By the beginning of December, 37 jurisdictions had signed up to the pilot.

A few months later, G20 leaders also announced plans to have all members automatically exchanging information on tax matters by the end of 2015, and called on other jurisdictions to join as soon as possible.

The Swiss Private Bankers Association urged the government to opt for automatic exchange of information instead of bilateral agreements with individual EU countries.  A Swiss government panel report suggested that Switzerland should be ready to share data with the EU.

All this signals a step change in the international community’s ability to clamp down on hiding assets offshore to evade tax. It will continue to develop over 2014 and beyond, until most countries are sharing information with each other.

In Spain, 2013 introduced the infamous Form 720. The tax consequences will roll on for a while, with the implications of declaring overseas assets for the first time slowly becoming apparent.  The next deadline is 31st March.  Spanish residents need to review their assets and their tax efficiency now, before it is too late.

Recent years have seen tax rises across Europe, with most people now paying more tax, sometimes considerably more.  2014 is looking a better year in that fewer tax rises are on the cards, but governments are unlikely to be in a position to cut tax rates for a while.

You should review your assets to ensure they are structured to protect your income and wealth from unnecessary taxation, in a fully legitimate manner, and that your tax planning takes all the latest tax developments into consideration.

Savings and investments

Besides tax, a key issue that affects savers is interest rates. The Sterling base rate has been at the historic low of 0.5% since March 2009, and is unlikely to change in 2014.

The Bank of England appears to be in no hurry to increase the rate, and in November implied that it could remain at 0.5% even after the economy improves.

In August it said interest rates would remain frozen until unemployment fell to 7%, expected to be towards the end of 2016. The Bank now believes the target may be reached at the end of 2014, but the minutes of its November Monetary Policy Committee meeting said:

With the proviso that medium-term inflation expectations remained sufficiently well anchored, the projections for growth and inflation under constant Bank Rate underlined that there could be a case for not raising Bank Rate immediately when the 7% unemployment threshold was reached.

It looks like the Bank will wait until the economy is safely out of the woods and there is no risk of hindering growth before it considers increasing rates.

In contrast, stockmarket indices have been delivering strong performances.  The US indices S&P 500 and Dow Jones Industrial Index both hit new highs a few times over 2013.

The FTSE 100 came close to its record high of 6930 last May, and most experts remain positive looking ahead.  Many predict the index will hit an all-time high in 2014.  Analysts at Citigroup have said it could even reach 8000, but others, such as Capital Economics, expect around 7400-7500.

There is of course no guarantee that these predictions will happen, but it is an encouraging way to start the New Year.

As always, remember that your investment choices should not be based on such predictions, but rather on your personal objectives, circumstances and risk tolerance.  You also need to consider what other investments you already own, to ensure that you have a balanced overall portfolio which is suitable for you.

If you have not reviewed your portfolio over the last year, you should do so now to ensure it remains in line with your objectives and risk profile, and takes any changes to your circumstances into account.

You should seek expert advice from a wealth manager who can review both your tax and investment planning and recommend the best integrated solution for you.

18 December 2013


Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.