30 March 2023

Welcome to the New Tax Year

Expert investment commentator provides his latest commentary on factors impacting markets.

As the month and the first quarter of 2023 draw to a close, there is little emerging in the way of hard news on either the economic or the company front. The fall in the wholesale price of gas has yet to be translated into lower domestic tariffs, though the emergence of fixed price deals suggest that the corner is being turned. Food inflation remains a worry, though, while water bills are expected to rise sharply, so the cost of living crisis is far from over.

And as we move properly into spring, we find the end of the tax year fast approaching. Investors need to take whatever action is appropriate for their circumstances before the 5th April. Taking advantage of capital gains tax (CGT) concessions and putting money into Individual Savings Accounts (ISAs) spring to mind. With Chancellor Jeremy Hunt clamping down on CGT exemptions, this tax year could be important for those fortunate enough to have made capital gains.

But to return to the state of markets, volatility has returned as fears of a fresh banking crisis weigh heavily on sentiment. Despite the take-over of the troubled Credit Suisse and an apparent line being drawn under the problems created by the collapse of Silicon Valley Bank, investors have become particularly cautious over the future of the banking sector. And this despite reassuring words from the Governor of the Bank of England.

On the face of it, the concern expressed appears to be overdone, though there are clear lessons to be learned from what we might expect when interest rates suddenly start to rise after a prolonged period of cheap money. However, with inflation expected to fall sharply as the year progresses, we may be close to the peak of the interest rate cycle, though further increases on both sides of the Atlantic cannot yet be ruled out. It is also worth noting that social media appears to have hastened the run on banks viewed as risky.

Rather than worry too much over what might be going on in the banking sector, my advice would be to concentrate on tax year-end financial planning. There is, after all, little time left in this tax year. Of course, it is usually wiser to act early in the tax year, though like many others, I have a tendency to leave things until the last minute. If you haven’t already done so, perhaps it is time to talk to your investment manager.

Brian Tora

Bespoke Discretionary Portfolio Management

Discretionary Portfolio Management

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