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Post-lockdown investment considerations: what should you be keeping a close eye on in this new financial year?

Post-lockdown investment considerations: what should you be keeping a close eye on in this new financial year?

With lockdowns easing and the world looking to get itself back to some form of business as usual, you would be forgiven for giving the new financial year little more than a passing acknowledgement. But 2021 was a bit different. And In the wake of the COVID-19 crisis, a host of financial changes were introduced that could change things for the businesses and individuals that had been relying on relief and support.

Issues such as household bills, taxes, household utility prices and an end to the ban on home repossession are significant for many of us. Yet these changes have also passed many people by.

In order to squeeze real value out of your financial management, it’s important to be aware of how these changes may impact you and how it affects your plans for investment going forward.

COVID-19 support measures changed on 1st April

From 1st April, some of the support measures put in place during the COVID-19 pandemic were withdrawn. This included permission from the Financial Conduct Authority for mortgage lenders to enforce the repossession of homes once again – meaning that borrowers would no longer be excused from being unable to make repayments. As property owners and landlords will be aware, repossessions had been paused for obvious reasons during the COVID-19 lockdowns.

For homebuyers, there is a new look to government-backed home ownership schemes, including the Help to Buy Equity Loan scheme. Meanwhile, the Lifetime ISA is once again charging 25% for accessing money before the age of 60, having cut it down to 20% during the pandemic.

Household bills have also changed

Many of the changes to come out of the new financial year involve household bills, which impact everybody. These largely involve price rises that are small enough to go unnoticed but which add up over time.

Council tax bills have risen by an average of 4.4% to £1,898 for band D properties across England and Wales. This works out at around £6.75 a month. However, specific changes will vary by council, and there are no increases currently in place in Scotland.

Other household costs to be aware of include:

  • An increase in the energy price cap, which has seen default tariffs for 11 million people go up by £96 per year to £1,138.
  • An increase in car tax for vehicles shown to have high carbon emissions
  • Increases to water rates across many parts of the UK. Thames Water, for example, is increasing its costs by £14 per year.
  • A £1.50 hike in the cost of a colour TV licence to £159.
On 6th April, the new tax year started

Several tax thresholds also changed on 6th April with the start of the new financial year. Income tax thresholds have had their final rise before being frozen, with personal allowance rising from £12,500 to £12,570. At the same time, the higher rate threshold has increased from £50,000 to £50,270 and the state pension rose by 2.5% to £179.60 per week. The National Living Wage has also now increased by 2.2% to £8.91 per hour, and starts at age 23 instead of 25. Minimum wage for younger workers has also increased, depending on the age band.

While many of the changes to tax bands, wages and property laws may not seem relevant to investors at first glance, they can have far reaching implications and relevance for those looking to maximise their returns and inform future financial decisions.

Whether it’s making informed decisions regarding property investments, understanding how and when to contribute to pension pots or even just understanding responsibilities as an employer, it can help to keep a close eye on the decisions coming out of the chancellery.

For example, a booming residential property market is enough to make many investors think that a buy-to-let may well be a good addition to any investment portfolio right now. However, with changing work arrangements for millions of people who may now be working remotely and only small deposits required for prospective homeowners, those looking to invest should perform careful research before speculating with their cash.

One thing is for certain, however. With interest rates remaining extremely low and the Bank of England reluctant to increase base rate for many months, simply leaving hard-earned income in a standard savings pot is not the route to financial rewards this year.

What’s happening in retail?

There’s no doubt that retail has had a torrid time of it over the last year years. But understanding where the future of retail is heading is a key question that fund managers are keeping close tabs on right now. Already it seems that those hybrid retailers able to marry a good online and bricks-and-mortar presence over the coming years will be the big winners.

According to some experts, this shift will also mean that the pandemic, and the growth in home delivery in particular, has substantially increased the demand on warehouse space. For those investors keen to keep their money in property, the evolution of e-commerce makes this kind of trend an interesting one to say the least.

Not sure where you should be putting your money as we work back towards normality?

The right wealth management service can help you take control of your finances and uncover the best opportunities for growth and stability, even in times of chaos such as the ongoing COVID-19 pandemic. If you’re unsure how to protect your finances and make the most of your money, transparent independent financial advice can give you the peace of mind you need when it comes to keeping your finances in check.

Get in touch with the team at Carrick Financial Management today. Our financial planning services will help you get to grips with your finances and make smart investments in your future. Call us on 0191 217 00 07.