Welcome to your February instalment of the Danbro Financial Planning Newsletter! As we edge ever closer to the new tax year (6th April 2025), we’re going to look at some interesting news and insights in the personal finance space, and take a deeper dive into Insurance & Protection.
In The News
Firstly, a couple of reminders to consider before the switch to the new tax year. As mentioned last month, 31st March will see the end of the stamp duty holiday – a temporary tax break that afforded home buyers savings on the stamp duty payable on the purchase price of property. Under the current rates, the value threshold above which it must be paid is £250,000 (or £425,000 for first-time buyers). From 31st March however, this drops to £125,000, (or £300,000 for first time buyers).
As a result, it could be beneficial to complete before the stamp duty holiday ends.
Need mortgage advice or brokerage? Get in touch with Danbro Financial Planning.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Speaking of making the most of the current tax year, the 5th April will also be your last chance to take full advantage of any allowances or reliefs. A good example of this is your ISA allowance. As a reminder, you can pay up to £20,000 a year into ISA products - Cash, Stocks & Shares, Lifetime and Innovative Finance.
(Please note, the allowance for a Lifetime ISA is £4,000 per annum. This will go towards your overall £20,000 ISA allowance. You can open a Lifetime ISA if aged 18 and under 40. This should be used to purchase your first home or aged 60, otherwise there will be tax penalties).
ISAs are, therefore, often a good option for tax efficiency as there is no tax to pay on the interest they accrue, nor the capital gains of investments they hold.
Depending on your circumstances, you could save by making full use of them. Here’s an example. Let’s say you had a General Investment Account (GIA), and you also have an investment which has gained a profit of £5,000. Because GIAs don’t enjoy the same tax breaks as ISAs, the £2,000 chunk of that profit that exceeds the £3,000 Capital Gains Tax (CGT) allowance will attract a CGT bill. Had you held that investment in an ISA, there would be no tax to pay at all.
Did you know – ISAs are sometimes referred to as ‘wrappers’ because assets held or ‘wrapped’ within them are shielded from tax and CGT!
If you weren’t already taking advantage of this, you’re not alone. Around this time last year, it was revealed that just one in seven in Britain made the full use of the annual ISA allowance, with approximately half not having one at all.
So, if you’d like to ensure you’re optimising your tax efficiency and keeping more of your hard earned money, Book a Consultation with Danbro Financial Planning today.
The Financial Conduct Authority does not regulate tax advice. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor. Investments carry risk.
Looking now at February’s news headlines, we started the month just after the deadline for submitting self-assessment tax returns. According to HMRC, over 30,000 only just made it, submitting in the final hour before the deadline.
Still, at least they did meet the deadline – unlike over a million who missed the cut-off entirely. If you’re one of them – don’t despair. Our friends at Danbro Accounting can still help you submit your self-assessment, even if it’s late.
In other news, the Association of British Insurers reported the highest sales of annuities in 10 years, seeing a 24% increase in 2024. This is thought to be due to providers giving better rate offers on account of high interest rates. As a result, these pension products, with the promise of guaranteed, regular income, more attractive to those in or approaching retirement.
Whether you’re already in retirement, or you’d like to get ahead on your retirement plan, get in touch. We want to help you get to where you want to be, at a pace that suits you.
On the topic of interest rates, February 6th saw the Bank of England reduce the base rate to 4.5% - down from 4.75%. A minor alleviation of inflationary pressures influenced this. However, in the 12 months to January 2025, it is reported inflation jumped back up to 3%. While it’s a far cry from the 11.1% inflation of October 2022, its also notable higher than the BoE’s target of 2% - a figure set by the government to keep the economy growing stably. As a means of bringing it back under control, the BoE may rethink its’ plans for further interest rate cuts throughout 2025. As ever, we’ll be keeping our eye on this and keeping you posted.
You’ve also likely heard talk of government bonds, gilts and yields lately. In case you’re unfamiliar, a gilt, or government bond, is where an investor loans money to the government, who promise to pay it back at the end of the agreed term (the ‘maturity date’). The bonds also give annual payments, which is the ‘yield’ - the focal point of recent headlines. Back in January, yields hit their highest level in years. While higher yields may sound like a positive -and indeed can be for things like annuities- it’s not all good news. A higher yield is typically caused by a drop in the ‘face value’ of a bond, despite the annual yield remaining the same. This means that the government must pay back more on the loans it takes, making the cost of borrowing higher. Paying for this can necessitate spending cuts or tax hikes.
Did you know – The reason government bonds are often called gilts comes from the ‘gilded edge stock’ they were printed on in the past – paper with a gold edge.
For investors, the impact of this depends on what they do with their gilts. If holding onto it until maturity, they’ll get back their original face value, meaning they won’t be impacted. However, those who were hoping to sell their gilt will lose out, as the gilt is worth less than it was when they bought it.
Featured Article – LV Reaching Resilience
For this months featured article, we’re sharing some interesting insights from LV’s 2025 Reaching Resilience report, which looks at how people would cope if they were unable to work.
Amongst the most striking statistics were the following:
- Despite 65% of those surveyed believing they were financially resilient, 4 in 10 wouldn’t be able to last beyond 3 months if they experienced a loss in income due to injury or illness.
- Almost 20% of Self-Employed people would need to work through injury or illness in order to make ends meet.
- A third of all those surveyed have less than £5,000, while almost a quarter have less than £1,000.
- The average working person supports 3 other people.
The purpose of this research is to illustrate that the value of appropriate insurance and protection is frankly incalculable. To put it into perspective:
- 56% of those surveyed had a life event which means they could have benefited from protection.
- Three quarters of first time buyers, as well as almost 60% of the self-employed, with a protection policy in place experienced a change in life circumstances since their cover started.
- 50% stated income cover would help their feelings of financial resilience.
Does any of this sound like you? Are you totally confident in your Plan B?
Danbro Financial Planning is here to put your worries to rest, with Insurance & Protection Advice & Brokerage services tailored to you and your circumstances.
We can help arrange the most suitable cover for you and your family, including:
- Income Protection
- Life Insurance
- Relevant Life Cover
- Critical Illness Cover
- Home & Contents Insurance
We can even arrange to write your protection policy under a trust, if suitable.
Insurance plans typically have no cash in value at any time and cover will cease at the end of term. Income Protection will usually pay up to 60% of your monthly income – up to your retirement date or the end of the policy term. If premiums stop, then cover will lapse.
We hope you enjoyed reading this newsletter. If you have any questions about the points raised, please don’t hesitate to get in touch. We look forward to continuing to work with you.
Best Wishes,
Your Team at DFP
The content of this newsletter is for your general information purposes only and does not constitute advice. It is not an offer to purchase or sell any particular asset and it does not contain all of the information which an investor may require in order to make an investment decision. Please obtain professional advice before entering into any new arrangement. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.
February 27, 2025
Charlie Sturgess
Charlie is a Designer in Danbro's Marketing team. He is responsible for producing creative assets and content for use across the group's various channels.
His background is varied, having studied Design and English, and worked in the financial services as an administrator.
Outside of Danbro, Charlie can be found up a climbing wall, or watching the F1.
