Spring Statement 2018bb

The 25 minutes of Mr Hammond’s first Spring Statement came as a welcome relief after 2017 – a year that that contained two Budgets and three Finance Bills.

The Spring Statement was relatively brief, whereas previous Chancellors have used their Autumn Statements as mini-Budgets. Instead, it was what the Autumn Statement was originally meant to be: a between-Budgets review of the public finances. No doubt the Chancellor was helped by revised projections from the Office for Budget Responsibility (OBR), which were marginally better than last November’s numbers.

One reason Mr Hammond revived the Autumn Budget was to give more time for tax legislation to reach the statute book. In theory, 
a Spring Statement lets the Chancellor publish consultations, including early-stage discussion papers or calls for evidence, before announcing specific measures in the following Autumn Budget. These can then be subject to further, policy-specific consultations, eventually reaching the legislative stage about a year later. It ought to prevent anomalous situations such as in 2017, when the tax rules changed seven months before the relevant law was passed.

The outcomes of the consultations announced in the Spring Statement may not take effect until 2020/21. And consultations there were aplenty, ranging from ‘Tackling the plastic problem’ to a call for evidence on the VAT registration threshold.

 

 

 

 

 

 

Autumn Budget 2017bb

The Chancellor’s second Budget of 2017

Mr Hammond will probably be pleased if commentators decide that his Autumn Budget was a steady-as-she-goes, broadly modest Budget. After the national insurance u-turn he was forced to make after his March Budget this year, that was probably his aim.

In any case, for a variety of economic and political reasons, the Chancellor announced a relatively modest net tax giveaway of just under £1.6 billion for the coming tax year.

His main attention-seeking move was to give first time buyers an exemption from stamp duty land tax on the first £300,000 of value for properties worth up to £500,000. Rumours – probably from the Treasury itself – had trailed changes along these lines, and the new relief represents more than a third of his net giveaway.

With income tax, the changes were much less dramatic – increasing both the personal allowance and the higher rate threshold by 3% – the standard inflation-linked increase. ISA investors saw their main ISA and lifetime ISA investment limits frozen and only children saw a small increase in their specialist ISAs. There was better news for pension savers who enjoyed a £30,000 increase in the lifetime allowance and thankfully no cuts to the annual allowance.

Several measures were designed to introduce much more of a focus on risk investment for venture capital trusts, enterprise investment schemes and seed enterprise investment schemes.

Most Chancellors tend to cram all the painful announcements into Budgets at the start of a Parliament; for a range of reasons, Mr Hammond decided that he did not need – or perhaps couldn’t afford – to do this.

 

 

 

Be Happy – Buy Timebb

A new study has found that paying to free up your time is linked to increasing your level of happiness. Individuals taking part in a psychological experiment said that they felt happier when using $40 (around £30) to save themselves time rather than buying material goods.

Stress over not having enough time can lead to reduced well-being, as well as being a contributing factor in conditions such as insomnia and anxiety. However, it has been reported that even the wealthiest people are generally unwilling to pay others to carry out tasks they dislike.

Whilst the average level of income is increasing in many countries around the world, a new phenomenon known as ‘time famine’ is being observed, particularly in Europe and North America. This is recognised as stress over the demands made on an individual’s time each day. The study, carried out by psychologists in the US, Canada and the Netherlands, looked at whether using money to free up time can counteract this stress.

Over 6,000 adults – in these three countries and Denmark – including 800 millionaires – were questioned about how they spent their money on buying time. Whilst those who did so said that they felt a greater sense of satisfaction in their lives, less than one in three reported spending money to buy themselves time on a monthly basis.

This then led to a two-week experiment taking place in Vancouver, Canada. Sixty adult participants were asked to spend $40 on something that would save them time during the first weekend. Purchases included having lunch delivered to work, paying for cleaning services, or even paying children in their neighborhood to run errands.

On the second weekend, the participants were told to spend the money on material goods, with purchases including wine, books and clothes. The researchers found that the time saved reduced feelings of time stress, increasing happiness more effectively than the material purchases.

The study backs up previous research that concluded those who prioritise time over money are generally happier than those who prioritise money over time. So, next time you come home from work and plan to start your ‘second shift’ of housework, think about whether spending some of your salary to free up that time would make you happier than going on a shopping spree.

Taylored Money Summer Round Up 2017bb

The children are back at school, it’s getting darker and you’re starting to think about the central
heating. Summer is drawing to a close and we thought it might be interesting to reflect on some
key events over the last few months – and see if they give us an idea of what might happen in the
run up to Christmas…

Finance Acts 2017: the sequel?bb

The long-running saga of the final spring Budget and subsequent Finance Bills is one step nearer the end.

The Chancellor’s spring Budget was thrown into disarray by the snap election. It was billed as the last spring Budget, since from now on all Budgets will be autumn events. However, only about a fifth of the Budget’s proposals made it onto the statute book before Parliament shut up shop ahead of the election. The question of what would happen to the four fifths lost in action has been up in the air ever since.

It was (and is) an important question because large parts of the missing legislation were originally intended to take effect for this tax year from 6 April 2017. A good example is the proposed 60% reduction in the money purchase annual allowance (MPAA) to £4,000, which could affect you if you both draw pension income and your (and/or your employer) also make pension contributions. In theory, the current £10,000 limit still applies, but in practice acting on such a premise could be an expensive mistake should the proposed change eventually be enacted with an April 2017 start date.

Autumn Finance Bill on the cards

A week before the politicians left Westminster for their summer holidays, some clarification emerged in a written statement from the new Financial Secretary to the Treasury.  The Government will “introduce a Finance Bill as soon as possible after the summer recess containing the withdrawn provisions”. The start date for provisions “will be retained”, meaning the £4,000 MPAA will be backdated to the start of the current tax year. This assumes that the Government will succeed in passing the Bill, which is not 100% guaranteed, even with DUP support pledged for Budget measures. As the Chancellor learned during the March Class 4 NICs battle, the best laid plans can falter in the face of backbench opposition.

At least there is now some greater certainty about the shape of the tax legislation. If you have been delaying any planning action while waiting for the dust to settle, now is the time to start talking to us. You might also want to discuss whether any pre-(autumn) Budget planning is necessary…

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.

China becomes an emerging market as MSCI finally opens upbb

China-listed shares are finally to be included in the leading emerging markets index.

As we as highlighted in May, China has the world’s second largest equity market, but at present shares listed on the Chinese stock exchanges don’t figure in the MSCI Emerging Markets Index. The MSCI index is the most important equity index for emerging markets, with an estimated $1,600 billion of funds using it as a benchmark. While the index already has a 28% China weighting, this relates to Chinese companies listed on stock exchanges outside China, notably Hong Kong and in the United States.

For each of the last three years, MSCI has reviewed whether conditions in the Chinese stock markets were appropriate to warrant including shares listed on them in the emerging markets index. In 2014, 2015 and 2016 the answer was no. Various technical reasons were given and each time the Chinese authorities made adjustments in the hope that next year MSCI would change its mind. Last month, the answer finally switched to yes.

Look out for May 2018

The change will not happen overnight: adding such a large market to an index in a single move would be too disruptive. Instead, MSCI has set out a gradual approach. In May next year, MSCI will add shares in the largest 222 listed Chinese companies to its index, with an initial 5% weighting. The weighting is expected to rise over time until it reaches the full 100%, at which point Chinese-listed shares will represent about 15% of the MSCI Emerging Markets Index and total Chinese content, including the existing non-China listings, will approach 45%. Other smaller Chinese listed companies may also be added in the future, further raising the Chinese exposure of the index.

MSCI’s decision has been widely seen as a coming of age for investment in China and, on some estimates, could produce $500 billion of inflows over the next five to ten years. If you want to increase your exposure to China ahead of that predicted rush, there are a variety of options available which we would be happy to discuss.

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. 

Ex-youth boss at Man City gives some tipsbb

Taylor & Taylor Director, Ross Taylor was very pleased with the outcome of a game of Golf. He was to hear some top tips about leadership, management and teamwork from is playing partner.

To find out what happened next click here to read more

Probate fees changes – an election casualty few will mournbb

The election has put a stop to planned increases in probate fees for England and Wales.

 Once a general election is called, there is usually a period known in parliamentary jargon as a ‘wash up’, during which outstanding legislation is passed, modified and passed or simply killed off, all in a matter of days. Unsurprisingly it is the more controversial proposals which generally get buried, as the timescale requires cooperation from the opposition to rush law onto the statute book.

Theresa May’s decision to call an election at seven weeks’ notice meant that all the outstanding legislation – including a 762-page Finance Bill – had to be dealt with in the space of a fortnight. One of the pieces of legislation which was dropped was “The Non-Contentious Probate Fees Order 2017”. It had reached the draft regulation stage, at which point it was proving to be anything but non-contentious.

The order would have restructured probate fees in England and Wales, moving them from a flat fee of up to £215 to a variable fee that started at £300 for estates valued at between £50,000 and £300,000 to a £20,000 fee for estates worth over £2,000,000.

The higher fees prompted the inevitable ‘new death tax’ headlines and one committee of MPs questioned their legality, arguing that the revised charges “appear…to have the hallmarks of taxes rather than fees”. Rather than face a battle for which it did not have time (nor probably the political appetite), the Ministry of Justice abandoned the legislation. It is unclear whether it will return after the election.

While the probate fee increase has disappeared, at least for the time being, the legislation introducing the new residence nil rate band came into force from April. If you have not yet reviewed your estate planning in the light of its introduction, now is the time to do so.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.

Article posted: May 2017

A round-up of Budget non-startersbb

The Spring Budget has become a victim of the snap election.

Philip Hammond has not had much luck with what he said would be his first and last Spring Budget. His proposal to increase Class 4 national insurance contributions from April 2018 survived only a week before being dropped. Then when the Finance Bill was published in March, he won the dubious accolade of producing the longest ever Bill, at 722 pages. Just over a month later, the early election forced him to cull over half the Bill’s contents so that he could push a slim-line consensus version through before Parliament shut up shop.

As a result, several important changes that were pending have now disappeared. For example:

  • The reduction in the money purchase annual allowance from £10,000 to £4,000 from 6 April 2017. This could have created problems for people who phase their retirement, both drawing pension benefits and contributing to a pension.
  • The cut in the dividend allowance from £5,000 to £2,000 from 6 April 2018.
  • The introduction of making tax digital. This was due to begin for traders with income above the VAT threshold level from 6 April 2018, with others starting one year later.
  • The pension advice allowance. There was to have been a new tax exemption from 6 April 2017 for up to £500 per tax year for employee pension advice, paid for by an employer. The old, more restricted £150 allowance now remains in place.
  • The property and trading allowance of £1,000 each from 2017/18. These new allowances were aimed at keeping small amounts of trading income and property income out of tax.

It seems likely that most of the “lost” legislation will re-emerge in a summer Finance Bill after the election, if the pollsters are right and the Conservatives are returned to power. However, the start date for some measures, such as the money purchase annual allowance cut, may be pushed back to 2018/19 because of the delay in reaching the statute book. Others may be overtaken by fresh proposals, as a new May government would not be constrained by pledges in the 2015 manifesto.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.

Article posted: May 2017

The last Spring Budget date has been setbb

The Treasury has announced the date of the next Budget.  

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

In theory, this will be the last Budget to take place in spring, as in November Mr Hammond announced 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.

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