Looking Ahead and Around

Lee Smythe considers the budget and the wider world.

It is difficult to predict accurately what impact successive governments and their policies will have on individual long-term financial planning, which is why a holistic approach to your finances is better than just an occasional look. This allows you to adapt and take advantage of new opportunities so that you stay on track.

The importance is particularly evident at this time of year as we digest the effects of the Budget and the impact it will have on us, although thankfully there were no bombshell announcements for individuals.

Most difficult to gauge, of course, is the unpredictable. The tragic aftermath of the tsunami that struck north-eastern Japan is being somewhat overshadowed by the uncertainty surrounding the fate of the nuclear facility at Fukushima. The short-term impact of the disaster on investment markets is largely dependent on sentiment driven by the length and severity of the nuclear crisis, although we have already seen markets rebound strongly from the initial falls.

Whatever the outcome, it is certain to further fuel debate regarding the benefit versus the risk of nuclear power. The result, whilst unlikely to spell the end for nuclear power, will probably favour increased development of other clean energy solutions, such as wind and solar.

Individuals investing in these areas have so far found it possible via a number of tax efficient options. It was suggested that such tax perks could be lessened. However, in the Budget the tax relief available on Enterprise Investment Schemes was increased to 30 percent (from 20 percent). With a minimum holding period of only three years, expect some attractive investment options to arise.

We extend our thoughts to the people of Japan at this difficult time. Whilst it may seem a long way away, the world is a small place and we mustn’t ignore the impact such events have on the UK.

Lee Smythe is Managing Director of chartered financial planners Smythe & Walter. smytheandwalter.co.uk