Do you have a strategic tax and wealth management plan in place? If so, is it up to date with all the latest developments locally and internationally that might affect you?
If not, this is a good time to review your tax planning, investments and pensions. Are they ready for what this year will bring along in its stride? Are they designed to preserve your wealth over the long term and meet your objectives?
Savings and investments
Many people have built up a portfolio of shares and funds bought over the years, without much consideration to how they work together or suit your aims. The chances are your portfolio is too risky for you and not best set up to meet your needs.
Consider these principles for successful investing. If you do not have them in place, it is time to make changes.
Your appetite for risk: The starting point is to obtain a clear and objective assessment of your appetite for risk, or your portfolio will not be suitable for you.
Matching your risk profile to the optimum portfolio: Every investment strategy can be forecast to display a given amplitude of risk. Low amplitude, less risk but also lower likely returns. A higher amplitude of risk brings greater potential returns. The key is ensuring your investment portfolio matches your attitude to risk.
Diversification: It is critical to ensure your investments are suitably diversified, so you are not over-exposed to any given asset type, country, sector or stock.
Review: Review your portfolio around once a year to rebalance it. Your portfolio can shift away from the one designed to match your risk profile and objectives, and your personal circumstances, as well as the financial markets, may have changed.
Tax planning
You want to ensure your investments and wealth are placed in the most suitable arrangement to limit your tax liabilities. British expatriates should take advice from someone who is well-versed in the nuances of local, UK and cross-border taxation, otherwise you could see your investment returns slashed by taxes that could have been avoided or mitigated. The right tax efficient arrangement can also keep most of your investments in one place.
It is important to ensure your tax planning is up-to-date and designed to take advantage of tax planning opportunities in Malta.
Moving to Malta?
If 2015 is the year you intend moving to or become a tax resident of Malta, it is important to take specialist advice in advance to help you reduce tax liabilities in both countries. Consider when is the best time to sell assets and the best time to buy new ones.
Succession planning
This is another important factor and generally linked to tax mitigation and passing assets on to chosen beneficiaries. However, you should also ensure that you have made appropriate succession planning so that on first death between a couple, the surviving spouse/partner has peace of mind that their financial affairs are in order and will continue to be managed to maintain the desired lifestyle. None of us want to leave behind a spouse/partner to pick up the financial pieces. It is far better if you have already established a relationship with a wealth manager who will continue managing this responsibility for you.
British expatriates also need to consider UK inheritance tax and explore ways of reducing it. This can be a significant liability since it currently stands at 40 per cent of the value of worldwide assets on anything over the nil rate exemption.
UK pensions
This year is a big year for pensions if you are a UK national. You need to understand all the new rules and options, and the tax implications in Malta, to establish the best way forward for your personal situation.
Whether it is your investment, pension, estate or tax planning, you need to seek specialist advice to ensure you do what works best for your personal situation. Use an adviser who can guide you on all these aspects and provide holistic solutions.
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices, which are subject to change. Tax information has been summarised. An individual is advised to seek personalised advice.
Jean Chapelle is a private client manager with Blevins Franks Financial Management Ltd.