UK stock market in the red? Here’s how to protect your cash

By Mridul Khariwal, Partner

In 2022, the London Stock Exchange – one of the most powerful exchanges in the world and an institution of the UK economy – lost its position as the most powerful in Europe.

France took the top spot due to a weak pound and the fear of recession in Britain.

It was the first time Paris overtook London since records began.

Since then, the stock market hasn’t seen significant improvement – nor do the coming months and years show any signs of change.

Financial specialists, This is Money, say: “The economy and stock market are predicted to move sideways at best” in 2024.

Others are even less optimistic.

Christopher Ruane, writing for The Motley Fool UK, said: “The global economy does not look in great shape to me. Nor does Britain’s. So… I would not rule out the possibility of a 2024 stock market crash.”

All this doom and gloom, but what does it mean?

With financial experts decrying the UK’s economy, bemoaning the weakness of our currency, and suggesting that we are going to be facing even harsher times in the short-to-medium future, we wanted to give our clients some advice.

Judging by the current rhetoric, people are seriously concerned about their financial health.

And rightfully so – it’s been a tough few years for the economy.

However, while there might not be light at the end of the tunnel just yet, there are ways you could protect your wealth during these tumultuous times.

How to protect your finances from the oncoming storm

We’ve started to recommend that our clients maintain a higher level of liquidity in their finances than usual.

This is for two reasons:

  1. If there is indeed a stock market crash, you might need the extra cash in hand to survive it. The extra cash can help you plug holes, rescue business assets, and reduce your need to acquire loans.
  2. Once the financial crash is over you can utilise the unused cash to invest wisely, leaving you in a better position than your competitors who are still recovering.

In either of these scenarios, having a little extra cash lying around could be your saving grace during hard times.

How to protect your finances from the taxman

The second thing we have been talking to our clients about is reducing their tax liabilities through legitimate allowances, exemptions, and clever tax planning strategies.

Allowances like the Business Asset Disposal Relief (formally known as Entrepreneurs Relief) could help you save significant amounts of Capital Gains Tax (CGT).

Equally, strategically altering your income sources and revenue streams, with the help of a qualified accountant, might allow you to change your Income Tax bracket, reducing your personal liabilities.

There are, of course, several clever ways in which an accountant can influence the amount of tax you pay and boost both your business’s bottom line and your personal wealth protection strategies.

That’s why it is so important to have an experienced financial expert – a professional – on your team.

Get in touch and we can talk you through all your options and help you protect your wealth from a turbulent economic year.

Posted in blog, Business, Payroll.