2014 Budget

Budget Highlights

·         Radical reform of pensions, effectively introducing flexible drawdown for all defined contribution schemes.

·         Major relaxations to the rules for turning small pension pots into cash lump sums.

·         Reform of ISAs, with a new £15,000 annual contribution limit and full transferability in both directions between stocks and shares and cash.

·         The savings tax rate reduced from 10% to 0% and the savings rate band increased to £5,000, both from 2015/16.

·         The personal allowance is increased to £10,000 for 2014/15 and to £10,500 for 2015/16, with small reductions in the basic rate band for both years.

·         The transferable tax allowance for married couples is set at £1,050 for 2015/16.

·         The annual investment allowance (AIA) is doubled to £500,000 and there is a one-year extension of the higher AIA to 31 December 2015.

·         Seed enterprise investment scheme (SEIS) is made permanent and new rules are introduced for venture capital trusts (VCTs) and enterprise investment schemes (EISs).

·         Higher premium bond investment limits and, from January 2015, a new series of National Savings & Investments fixed rate bonds for people aged 65 and over.

This summary has been prepared very rapidly and is for general information only. The proposals are in any event subject to amendment before the Finance Act is passed. You are recommended to seek competent professional advice before taking any action on the basis of the contents of this publication.

Gold Price - Some good news at last!

Followers of KSK will know how I quite often provide updates on the price of gold. Having monitored its spiralling downward fall over a three year period I am pleased to at last report some good news in that the price of gold reached a six month high last week to close at $1,375 per ounce. Having reached this level it seems as though investors are now waiting to see if this level can be sustained or whether or not it is time to take some profits. In fact the price has come back slightly to $1,359.20. It seems that nevertheless trading volumes are good as institutional interest seems to be increasing.

So why has a rise occurred when only at the start of the year traders were talking about a price of $1.20? There doesn't seem to be a single reason…

First of all with what is occurring in the Ukraine (and the stand-off between the Western Powers and Russia) there has been huge volatility in the global financial markets. If one was to examine the previous peaks it was when it was disclosed that chemical weapons were being used in Syria. This does clearly illustrate how the price of gold reacts to international conflict. Trading charts then show how the price of gold drifts lower once the conflict comes to a close.

Then secondly there is the not so publicised debt crisis which is presently unfolding in China. Since 2007 China has become the largest gold producer in the world. China is also the top consumer of gold and the Chinese love to store the metal. So again for the Chinese it is a safe haven.

So for the first time in a long time I am writing about a rising gold price. Where next… $1,425 per ounce or a fall back to $1,300 per ounce? Does this not depend on President Putin and how he steers his armed forces?