3 ways that Budget 2014 affects my wealth

Budget 2014 and your investments

Chancellor Osborne’s budget 2014 promises to reward those who work hard and save hard in what is deemed a bold political budget. But looking through the detail, what are the most important changes that will affect our savings and investments – and how does this relate to gold.

1. ISA allowance increased

Cash and Shares ISAs have been merged into one overall ISA allowance making annual limits less complicated. Most importantly, the annual tax free allowance has almost doubled to £15,000.

This is great news for investors. It’s amazing how many people overlook the importance of being tax efficient in their investments. They don’t realise that they can invest in the same equity fund through an ISA as they can direct – except that any growth within the ISA is tax free. While I’m sure that some are ignorant to this fact, others are simply apathetic. But in this day and age, every penny saved in tax, helps. Therefore, when assessing your finances, one of the first areas to look at is filling your annual ISA allowance, whether it’s with cash, equities or a mix.

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If you invest into certain UK gold coins, any growth is tax free due

Insider's Guide to gold and silverto their status as legal tender in the UK. This means that they can be seen as an alternative tax free shelter to an ISA. Certainly, if you’re able to fill the new £15,000 annual ISA limit but still have funds to put to work, then it makes sense to continue the tax efficient theme. Due to gold’s safe haven hedging properties, there’s also a strong argument for owning some Tax free gold coins alongside your ISA, even if you don’t fill the entire £15,000 allowance.

2. Abolition of 10% savers tax rate

Not all the budget 2014 measures provide tax relief. From 6 April 2015, savers will no longer be able to claim 10% of the tax back on their savings accounts. This is a shame because savers have already been hit hard by low interest rates over the past few years. To be taxed the full 20% on that interest means that any returns will fall well below inflation – essentially devaluing your money’s purchasing power.


The very nature of savings is to prudently put money to one side for a rainy day while maintaining the purchasing power of that cash. Gold Savings is a way of putting aside a set amount of savings per month and purchasing physical gold. Gold has historically more than kept pace with inflation, essentially providing a secure store of wealth. The bonus with the Gold Savings scheme is that the gold is tax free, so any growth is exempt from the 20% tax charge applied to regular savings.

It’s still worth keeping some savings in cash, but gold provides a far more tax efficient way of saving.

3. No need to buy an annuity with your pension pot

By far the most exciting policy in the budget is the change from next April, enabling anyone aged 55 or over with a pension fund to take the entire pension pot as cash. Previously, law limited the drawdown to only 25% of the total value, with the remainder being forced to purchase an annuity.

Annuities, or contracts to pay you an income, have notoriously fallen in value over recent years. This means that even substantial pension funds were only able to provide very modest incomes in retirement. It was the single worst element of the UK pension system. Now, you will be able to have total control and flexibility over your money to re-invest, buy property, or spend. The first 25% is completely tax free with the remainder attracting tax at your underlying rate.



Physical Gold bars are the only precious metal permissible within a UK Self Invested Personal Pension (SIPP). The benefits of owning Pension Gold within your SIPP is that it can smooth out any volatility in the markets, providing growth and protection from market events. This means that the value of your pension pot is more predictable as owning gold will hedge possible losses in traditional paper assets. We expect the loosening of the annuity requirements will lead to a surge in pension  investment, consequently pushing the gold price up.

So I must agree that overall, budget 2014 has been one for the hard working, proactive amongst us. It’s certainly worth reassessing your personal finances to ensure that you capitalise on any new tax breaks which you may be entitled to.


Will Ukraine Invasion impact my gold investment?

Ukraine and its impact on finance

While you may feel detached from proceedings in Ukraine while reading about the crisis in your comfy slippers, it may have a more direct impact on your life than you realise.

Momentum in a UK recovery is building, so we can’t blame ourselves for thinking that our investments are on a steady path upwards. But continued political and economic unrest on the global stage will directly affect our recovery and the value of your assets, including your gold investment.

Globalised markets

The way investment markets have evolved over the years, means that various

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regions and different products now overlap and intertwine with one another. Investing in an Asian bank stock may be impacted by the performance of a European bank due to the Asian bank’s exposure to that European bank.

Similarly, the performance of a UK stock may be impacted by events in the US, as America may provide a large part of the UK company’s export business. You could even see the value of your ISA fall due to the possible change in sentiment something like the Ukraine crisis could cause.

Traditional stocks and funds

Russian stocks have suffered a 15% fall since the Ukrainian developments. While most UK investors may not hold these shares directly, they may unwittingly own some through funds. Eastern European shares have also suffered from 10% declines, while the US and emerging market indices have been flat. The length of time the crisis takes to resolve will affect how quickly these shares will get back on track. A prolonged crisis could see further declines.


If matters in Ukraine are resolved quickly and amicably, then the UK property juggernaut will be unaffected by the crisis. However, it’s well known that the heart of the UK property market beats in London. The capital has seen the largest price rises and is predicted to enjoy the biggest increases over the next few years. One of the main drivers for London’s property boom is Russian money. The super-wealthy Oligarchs have invested billions into the very top end of the housing market. This huge cash injection has single-handedly pulled up the rest of the market into prosperity.

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While the UK is currently trying to avoid condemning Russia for its aggressive stance, a prolonged situation may well force politicians to deal with the situation.   Their motivation for appeasement is to maintain the Russians’ investment in the Capital. However, there may come a time in the not too distant future when we’re forced to condemn their actions and even become involved militarily. Undoubtedly, this could lead to a withdrawal of Russian funds and a collapse of the so-called property boom.


Renowned as the safe-haven asset of choice, gold has been one of the few beneficiaries of the crisis. Prices have risen a modest 0.5% but the prospects for gold in 2014 have increased significantly in the face of Ukrainian developments. Investors are watching events closely, so gold will likely prove volatile in the short term as every move is scrutinised and then reacted upon. However, the downside risk, especially when you factor in gold’s decline last year, is very limited. Meanwhile, the potential for it to rise much higher is significant. If military action is used and if the crisis becomes protracted, then gold is likely to rise further. The real catalyst could come if the UK and the US are forced to become involved.

Either way, I’d say that reacting to the developments by selling investments is too hasty. Ideally, a spread of asset classes and regions should help protect the value of your portfolio from events. Certainly, an allocation, of physical gold provides a further degree of protection and comfort.