Monthly Archives: January 2017

The last Spring Budget date has been sent
January 2017

The Treasury has announced the date of the next Budget

It may feel like Mr Hammond’s Autumn Statement was only a few weeks ago, but shortly before Christmas the Treasury announced that the Spring Budget will be on Wednesday 8 March 2017.

In theory, this will be the last Budget to take place in spring, as Mr Hammond announced in November that he would be reverting to Autumn Budgets, last seen when Ken Clarke was Chancellor.  That means 2017 will have two Budgets, but no Autumn Statement, and 2018 will witness the first Spring Statement.

The tax year dates will not be changing, so the 2016/17 tax year will end on 5 April – exactly four weeks after the Budget.  Your tax year end planning therefore needs to start as soon as possible.  On this occasion, there are two areas which warrant especially prompt action:

Pensions
This is the last chance to carry forward unused annual allowance of up to £50,000 from 2013/14.  The calculations for maximising contributions and picking up unused allowances can be complex and have become more so with the introduction of a tapered annual allowance this year.  Assembling all the necessary data can be a slow process, hence the need to start discussion early.

Venture Capital Trusts
The changes introduced to venture capital trusts (VCTs) last year have slowed down the investment process according to many VCT managers.  As a result, some managers have decided not to raise any fresh funds this year, while others are making limited new share issues, primarily to existing investors.  The potential reduction in supply comes at a time when the 30% income tax relief offered by VCTs is attracting increased interest from those affected by the latest reductions in the pension annual and lifetime allowances.  Good offers could sell out quickly, so do let us know if you wish to invest in VCTs this year and be prepared to act promptly.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.  Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.  The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.

Russell Ulyatt Achieves Chartered Success
January 2017

Russell Ulyatt Financial Services ended the year on a high by achieving Chartered status from the premier professional body for the insurance and financial planning professions.

We are incredibly proud to have been awarded the landmark “Chartered Financial Planners” title by the Chartered Insurance Institute (CII) following rigorous scrutiny of our professional practise in our business dealings.

All Chartered Financial Planners are required to demonstrate their commitment to the CII’s Code of Ethics, reinforcing the highest standards by ensuring that its employees are competent, knowledgeable and ethical in their work.  With our commitment to facilitating the ongoing professional development of our staff team, we’re delighted to receive this external validation in recognition of our business practises.

Ian Browne

As Ian Browne, Head of Advice, explains “Achieving this status is a significant milestone for the company and demonstrates the expertise, knowledge and professionalism of our staff.  Often, ‘Chartered’ status is awarded to individuals or smaller companies as it is based on the percentage of senior staff who meet the criteria.  The larger the company, the harder it is to gain Chartered status.  I am therefore delighted that we have achieved this highly prestigious endorsement from the CII and that the integrity and capability of our staff has been recognised.  It’s a great way to end the year!”

To date, fewer than 750 firms have achieved Chartered status illustrating that this is a highly exclusive award reserved for leading firms within the financial advice market.

Increase to FSCS deposit limit confirmed
January 2017

It has now been confirmed that the amount the Financial Services Compensation Scheme (FSCS) protects for deposits will increase  by £10,000 from 30th January 2017.  Deposits at banks, building societies and credit unions will be protected up to £85,000 with joint accounts protected up to £170,000.

The level of protection available on deposits was reduced from £85,000 to the current £75,000 level back in July 2015 following the implementation of the EU Deposit Guarantee Scheme Directive (DGSD).

The DGSD requires non-euro member states to adjust their deposit protection limits every five years to ensure that they remain equivalent to €100,000.  Member states must also make an earlier adjustment following the occurrence of unforeseen events such as currency fluctuations.  The Prudential Conduct Authority (PRA) has decided that an adjustment to the limit is needed due to developments in financial markets and the exchange rate between sterling and the euro, following the UK Brexit vote in June last year.

Tight turnaround for year end tax planning before Spring Budget
January 2017

The Treasury has announced the date of the next Budget

On 15 December, the US Federal Reserve (Fed) raised its key short term interest rate by 0.25%, to a range between 0.5% and 0.75%.  It had made the same increase 12 months previously.  When the Christmas 2015 rate rise occurred, the central bank was implicitly expecting to raise rates four times during 2016.  However, a collection of events from wobbles in China to the uncertainties caused by the Brexit vote put paid the rate rise every quarter that had been pencilled in.

Last month when the Fed repeated its end-of-year increase, it suggested that there would be three further increases in 2017, taking the target rate to 1.25%-1.50% by the end of the year – the same range it had originally struck for the end of 2016.  A trio of rate rises would represent a dramatic acceleration in activity by the Fed – December’s rate rise was only the second in the last ten years, as the graph shows.

Whether the Fed’s predictions prove any more accurate this year is a matter of some debate.  One problem the bank faces in looking at 2017 is the economic impact of President Trump’s actions, as opposed to candidate Trump’s campaign rhetoric.  If he succeeds in giving the US economy a boost through tax-cutting measures, the Fed is likely to raise rates steadily, as unemployment is already at low levels.

On this side of the Atlantic the Bank of England will probably not raise rates in 2017.  The uncertainties surrounding Brexit will stay the Bank’s hands, even though inflation is on the rise – the November 2016 the CPI annual rate of 1.2% was 1.1% higher than 12 months’ previous.

As the year turns, the US interest rate outlook means that a review of your investments could be a wise move.  If you’d like to arrange a review of your investments with us, please get in touch.

The value of your investment can go down as well as up and you may not get back the full amount you invested.

Another pension annual allowance cut
January 2017

The Autumn Statement revealed plans for another annual allowance cut.

When pensions flexibility was announced in March 2014, it did not take long for tax planners to realise that it offered an interesting opportunity to “pay” the over-55s. The idea was that, instead of pay which is subject to national insurance contributions (NICs) and full income tax, contributions to a pension could be made from which the employee immediately drew benefits. As a result, NICs would disappear and income tax would be reduced by a quarter because of the tax-free lump sum.

Before pension flexibility became reality, the Treasury acted to limit the scope for such creative remuneration by introducing a £10,000 money purchase annual allowance (MPAA) to apply in such cases. In the Autumn Statement, the Chancellor announced another turn of the MPAA screw: from 2017/18 it will be reduced to just £4,000, saving the government an estimated £70m a year.

The rules for triggering the MPAA mean that once you become subject to it, there is no escape. However, it is possible to extract money from your pension in a way that does not bring the MPAA into play. This can be particularly useful if you are a private company shareholder planning a gradual retirement. Please talk to us for more details.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.