Listen to Episode 537
In this episode, I look at Vanguard's newly announced LifeStrategy "Global" range. I provide a back-tested comparison versus the existing LifeStrategy fund range to help you decide if these new funds could be a good fit for your portfolio. In addition, I discuss the changes to the existing LifeStrategy fund range that aims to remove their inherent "home bias".
Next, after it was revealed that approximately 1 million people missed the 31st January self-assessment tax deadline, Andy provides a reminder of who should have filed a return, as well as the steps you can take to appeal a penalty.
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Episode 537 Podcast Summary
HMRC self-assessment tax return - Fines and deadlines
Summary:
HMRC recently revealed that while 11.5 million people filed their tax returns on time, roughly 1 million individuals missed the 31st January 2026 deadline. This has triggered an immediate wave of automatic £100 fines. Many people are caught out because they are unaware that secondary incomes, property rentals, or high earnings can pull them into the self-assessment system. We discussed the triggers for filing and how to navigate the appeals process if you've been penalised.
Key Insights:
- Automatic penalties - A 1-day delay results in an immediate £100 fine, even if no tax is owed. After three months, daily fines of £10 accrue, up to a maximum of £900.
- Filing - You must file if 1) You earned more than £1,000 before expenses from freelance work or a side business. 2) You received more than £1,000 in income from renting out property or land. 3) You or your partner had an income over £60,000 and one of you claimed Child Benefit. 4) You earned more than £10,000 from savings interest or investment dividends. 5) You sold an asset, such as a second home or shares held outside of an ISA, and made a profit that exceeds your annual allowance. 6) You received more than £2,500 in untaxed income, such as tips or commission.
- Claiming money back - A tax return is also the mechanism for higher-rate taxpayers to claim additional pension tax relief (the extra 20% or 25%) on private contributions.
- The appeals process - HMRC may cancel a penalty for "reasonable excuses" such as serious illness, bereavement, or IT failures. Forgetting the deadline or receiving poor advice from an accountant is generally not accepted
Vanguard Global LifeStrategy review
Summary:
Vanguard is making significant structural changes to its flagship LifeStrategy range to reduce its long-standing "home bias." In addition to reducing UK exposure in existing funds, Vanguard has launched a new "Global" LifeStrategy range with no UK tilt. We explored how these changes impact asset allocation and used back-tested data to compare the performance of the traditional 60% Equity fund against its new Global counterpart.
Key Insights:
- Reduced UK bias - In the existing range, UK equity exposure within the equity portion is falling from 25% to 20%. For the 60% Equity fund, the total asset allocation to UK shares will drop to 12% by June 2026.
- New global range - The new funds reflect global market weighting, meaning UK shares will make up only about 3.4% of the equity portion, while US exposure will be significantly higher (around 40-47% of total assets for the 60% version).
- Performance comparison - Back-testing suggests that while the Global version would have outperformed over five years due to its high US exposure, it also carries higher volatility and is more sensitive to a falling US dollar.
- Currency impact - The equity components remain unhedged. This means currency fluctuations, particularly between the Pound and the US Dollar, will continue to play a major role in total returns.
Resources
Links referred to in the podcast:
- 7 tips for completing your self-assessment tax return
- How to fill gaps in your national insurance record
- 1 million people miss Self Assessment deadline: What to do if you’re late
- MTTM Podcast episode 435 - Best Vanguard LifeStrategy alternatives
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- Take out a free trial of 80-20 investor
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