The Coronavirus Vaccine and the World Around Us

3 Dec

What an incredible turn of events but with many positives to consider. As always there are pros and cons; and care is needed. We may have a Covid-19 vaccine but not quite yet, stock markets have performed well relative to the real economies but there are many scenarios, which could impact us individually, personally and from an investment perspective.

The world is changing in front of our eyes, Coronavirus infections are rising internationally but could the vaccines be here soon? We are led to believe this is so, admittedly with a few hiccups, plus the economic environment is challenging – a contraction in the real economy but sectors to watch are pharmaceutical, health related, technology and distribution. These have performed excessively well under the changes leading to their extensive use. There are always winners and losers through a significant economic and environmental change.

Also, I think we should highlight the change of leadership in the US, and we may only be weeks away from Donald Trump acknowledging the outcome. The appointment of a Democratic President and a Republican majority in the Senate has created optimism through the markets as a conciliatory and balanced government without excessive or extreme legislative changes expected. I also believe balance and mutual agreement creates better policies. So, if it helps, I also see this as a positive outcome for the markets and ongoing investment expectations.

Coronavirus Covid-19 vaccine
The month of November has been fruitful in terms of the quest and announcements for an elusive Covid-19 vaccine. Our understanding is based on existing reports, we may have three vaccines with the potential of a high effective rate. Three frontrunners in the ongoing Coronavirus vaccine race-Oxford-AstraZeneca, Pfizer-BioNTech, and Moderna.

An admitted hiccup was the startling news of a “dosing error” by Oxford-AstraZeneca and this has cast some doubt over the authenticity of their efficacy data. We are expecting a delay while an additional global trial of the vaccine candidate is performed, data gathered, and results recorded. The positive is there are several (with possibly more alternative vaccines to follow). So, we accept the counsel provided that in a reasonable time distribution will ensue, but I don’t believe this will be until Q1 2021, at the earliest.

How Will the UK Government Reclaim the Costs of the Pandemic?
There are multiple thoughts and speculation but those receiving most traction are:

1. The Chancellor is expected to target the 6.4 million people on defined benefit pension schemes by confirming a change in the way the UK Government measures inflation. Rishi Sunak signalled this in a letter to the UK Statistics Authority chairman (Sir David Norgrove), earlier this month. The chancellor told Sir David he would escalate the results of a consultation on reform to the methodology behind Retail Price Index. (One of the current measures of inflation for many financial products, including pension schemes, Gilts, and multiple financial products.)

Hetty Hughes, a policy adviser at the ABI, believes the inflation measure will remain named “RPI” to maintain the legality of gilt contracts, the methodology will mirror the Consumer Prices Index plus housing costs, known as CPIH.

2. The chancellor could set out a longer-term vision for fixing the public finances, including through higher taxes. Changes are unlikely to be announced until the Budget 2021, but these could be progressive or regressive in nature. The most common assertion include a change in capital gains tax after a government review, tax relief on pension contributions, a freeze and future nominal increases on Public Sector Salaries, reduced foreign aid, reduced and more restrictive public services (receiving less funding). The list continues but to be clear, for now, these are in some cases, just speculation and expectation rather than verified and confirmed.

3. Road pricing could also be used to plug the hole left by fuel taxes, after bringing forward the ban on the sale of petrol and diesel cars to 2030.

Investments in A Changing World
The world continues to surprise, with the pandemic in full force and the effects on most economies. There is the potential for more surprises and market volatility; and therefore, we constantly review and remain forever vigilant.
We are very optimistic for the future but this is in part due to the results achieved through this pandemic and beyond, for you as our client. Our belief is, these results help to endorse our systematic approach with tactical overlay to investing, where we focus on multi-asset investing, carrying out sensitivity analysis and targeting total return strategies.

We believe this will give you more grounds for confidence, and especially true as the longevity of investment increases. We see these times of uncertainty as an opportunity from an investment perspective, over the business and economic phases ahead.

Watch this space – the only guarantee we have is “things will change”.

On behalf of all at Waverley Court Consulting Ltd.

Be well, be safe – All our very best

This communication provides information, it is not advice. Any opinions are given in good faith and may be subject to change without notice. Opinions and information included within this document does not constitute advice.

Waverley Court Consulting Newsletter July 2019

14 Aug

The Admin Team

Nathan, Melissa and Aneta provide our core to the administration service and have taken on the additional obligation as we have been short a member of staff. Nathan is specialising his focus on Investment Analysis, Melissa in early stage Paraplanner Support. This is only possible with the help, support and care provided by Aneta.


We are pleased to announce the appointment of two new members of staff, who will help with the implementation and application of our new back-office system. Implementation of changes in administration and protocols are driven by the everchanging environment of financial services and our focus to provide a personal, professional and industry leading service.


Our recruitment has taken an interesting, slight variation in path – originally the plan was to take on one additional staff member but two with great potential were interviewed. We’ve chosen to take both:


Beth Welch

We have taken on an undergraduate in June 2019. She is in the last year of her Finance and Accounting Degree, who will be working with us on a part-time basis while she completes her final year over the next two years. She will assist in an Administration Role developing understanding and skills with the aspiration of a career in financial services.


If all proceeds to our mutual plan, following her graduation she would like to move into a full time Administration/Paraplanning Role with aspirations to develop knowledge and skills to become a Financial Adviser with Waverley Court Consulting Ltd in the future.


Linh Lieu

Linh is joining us in the beginning of September 2019, in the role of Assistant Administrator/Trainee Paraplanner.


She is a graduate with a Finance and Accounting Degree and will be developing skills and knowledge to assist both, the Admin Team and Bernadette to strengthen our Research and Paraplanning Function.


Research and Paraplanning

We have taken further steps to integrate the functional components of the advice process into the role within Admin. This allows us to bring all closer together and help facilitate a team approach allowing all staff to add value to the financial services program.


In addition, we are proud to announce Bernadette has recently passed a further qualification in relation to Business Relief Schemes.


Advisory Services and Ongoing Investment Advice

Brett is effectively developing through the Competent Adviser program to his designation of Independent Financial Adviser. We expect him to will pass his Stage 1 Competent Adviser Status imminently, whereby Brett is able to provide support and specific advice directly. This will allow Brett to help facilitate his role within the advice function of the financial planning program.


The plan is as a growing practice, we will move to a system where more complex and specified situations will continue to be provided through Darren Nathan but where suitable and possible, Brett will offer the support and guidance his role facilitates.


Investment Committee

The Investment Committee reviews product development, existing contracts, contract and investment proposition due diligence review, our ongoing investment Assessment, Review and Rebalance Programme and Protocols.


The team receives professional advice through many sources, including Financial Express plus information through platforms, fund management groups, product providers, reviewing complex products (including Structured Deposits and Products).


We assess the existing programs, their success and any changes for consideration and implementation where appropriate.


The core team is Darren Nathan, Brett Harding, Nathan Oliver and Bernadette Hoyle.


Compliance Documentation

Simplification of compliance documentation for completion for ongoing advice. Prior to future meetings, when required, we will be sending you a four page document (if you could complete pages 2 & 3) and this records any changes in circumstances to ensure we fulfil our responsibilities and allows us to provide the existing and robust service.


These need to be updated at least every three years. The exception that will bring the date nearer, is a material change in personal circumstances.


Client Agreement – this document is being updated as there has been an update to the Financial Services Compensation Scheme whereby the cover for Deposits and Investments have been standardised to £85,000.



There are further additional legislative and compliance changes later in 2019. This is the Senior Management and Certification Regime. We will update you to any implications  to you once  finalised.


Any questions, please ask me to explain further. You can email, telephone or write to me or us.

Investment Bulletin – July 2019

14 Aug


We have moved into a time where there are many fears in the markets and world in general. From an investment perspective, this becomes the ideal environment where through our defined approach to investment and portfolio construction. This is where we have been able to add real value.


This manifests itself in losing less when the market drops and making a decent return the rest of the time. The strategy is a multi-asset and diverse approach seeking out sectors in the market where the risk of being over-priced is minimised and utilising niche sectors to target potential future profits.


These are the times where the quality of the strategy shows. This is where we plan to make a notable difference.


FTSE 100 Index Values

Start Date End Date Increase/Decrease
01.10.2018 31.12.2018 -10.24%
01.01.2019 31.03.2019 8.19%
01.04.2019 30.06.2019 1.48%


After stocks’ seemingly strong start to the year and a minor correction in May, investors have reason to be satisfied with the market’s 2019 performance. But by some measures, the stock market is lagging after shaking off the Q4 panic.


Through the second half of 2019, trade troubles still gnaw at investors. President Donald Trump said he will have an extended meeting with Chinese President Xi Jinping but the issue is clouded with uncertainty.


Markets are caught between the incoming data pointing to slower global growth and forward-looking factors that suggest improvement later in the year. History tells us that global equities can continue to rally late in the cycle, even as Government Reserve Banks potentially tighten.


Markets have been in ‘wait and see’ mode. The tensions between the US and Iran have continued. How this dispute plays out from here depends on if we see further attacks on shipping and how the US responds?


The new Prime Minister. In terms of the campaign, there has been plenty of noise with both Boris Johnson and Jeremy Hunt appearing to still believe the EU is willing to reopen negotiations.


In terms of the portfolios and our views, there’s been no change to recent recommendations. The immediate outlook for risk assets will be driven by headlines from the G20. We are mindful though that with markets at or close to record levels in many cases, and a lot of positive outcomes being assumed on the many geopolitical issues that remain ongoing, there is a lot of good news priced in to current market levels, and the potential for bad news remains elevated with complacency aplenty.


What can we expect in the next six months of 2019?

Making stock market predictions is about as effective as forecasting the number of rainy days in a year. Investors can prepare by focusing on market conditions at hand and the factors that could change, for good or bad.


The US Federal Reserve can take credit for much of the good start to 2019, after a dreadful fourth quarter and an especially nasty spell in December 2018.


We would blame this year’s modest rebound on the trade war with China. This is arguably the single largest factor influencing the stock market forecast. Practically every economist and brokerage pins tariffs as the biggest issue facing the financial markets.


Optimistic White House comments about an imminent trade agreement with China were a reason the stock market climbed the first few months of 2019. Then on May 5, President Trump and U.S. officials suddenly said Chinese negotiators reneged on key parts of the talks. The news rattled the market.


China getting more stimulus

China’s economy continues to slow. The positive outcome is the downturn is pushing authorities toward more aggressive policy stimulus measures. Looking through the noise, there appears to have been a strong lift in bank lending and the broader total social financing measure over early 2019.


Chinese authorities have announced a broad range of tax cuts, and it’s likely that local government spending on infrastructure projects will be ramped up over the next few months.


Stock Market Predictions: Tariffs And The Economy

The surprising turns in the trade war show that the issue is volatile and make the stock market forecast for the remainder of 2019 difficult to make.


Rather than trying to predict the market, we follow a structured approach of multi-asset assessment, stress testing and historic back-testing. We believe this time of volatile mispricing supports are systematic with a tactical overlay approach. Our expectation, given time, is to make a profit.


This bulletin provides information, it is not advice. Any opinions are given in good faith and may be subject to change without notice. Opinions and information included within this document does not constitute advice.

The Budget 2017

8 Mar

For the last Spring Budget Phillip Hammond provided a few surprises from what was, on a the whole, a reasonably low key budget.


There were no pension surprises in the budget. Ordinarily, that would be a good thing, but on this occasion we had hoped for a U-turn on the reduction to the Money Purchase Annual Allowance.


We got what we expected in the form of the reduction to the Money Purchase Annual Allowance, and reform of the tax system for the self-employed has been on the agenda for some time with the Treasury concerned that the self-employed aren’t paying enough tax. The increase to Class 4 National Insurance Contributions for self-employed individuals from April 2018 goes some way to fill that estimated ‘tax gap’.


With advisers and the financial services industry just coming to terms with the impact of the removal of the dividend tax credit and introduction of the dividend tax allowance, it is somewhat concerning that this has again been changed and the amount of dividend income which can be earned tax free will be reduced to £2,000 from April 2018.


Income tax

Personal allowance
The tax-free personal allowance is being increased to £11,500 in 2017/18.


For higher rate taxpayers, the threshold above which higher earners start paying 40% tax is being increased to £45,000 in 2017/18.
Starting rate band for the starting rate of savings income tax
The Government has confirmed that the limit for the 0% starting rate for savings will remain at its current level of £5,000 for 2017/18.


Deduction of income tax at source from savings income
The Government consulted on the draft legislation, removing the requirement for tax to be deducted at source from:

interest distributions of open-ended investment companies
authorised unit trusts and investment trust companies, and
interest on peer-to-peer loans.
They have now announced that the legislation will be implemented unchanged with effect from 6 April 2017.



From 2018/19 tax year the amount of dividend income that is charged at the nil rate will be reduced to £2,000.


National Insurance

Self Employed – an increase in the rate of Class 4 National Insurance contributions (NICs)
The Government has announced that it will legislate to increase the main rate of Class 4 NICs from 9% to 10% with effect from 6 April 2018 and from 10% to 11% from 6 April 2019. This measure offsets the increased differential between the rates of NI paid by employees and the self-employed, particularly with the abolition of Class 2 NICs from April 2018.



The Money Purchase Annual Allowance (MPAA)
Regulations were introduced from 6 April 2015 to restrict money purchase pension contributions to £10,000 per annum for individuals who have flexibly accessed pension benefits. The Government consulted on reducing the MPAA to £4,000 per annum and has confirmed that this change will be made with effect from 6 April 2017.


The Government will publish its full response to the consultation on 20 March 2017.


State Pension Age
The Government will publish its first statutory review of the State Pension Age by 7 May 2017. This will take into account the independent report on the State Pension Age by John Cridland.

Master Trust Tax Registration
There has been much discussion regarding master trust pension schemes not providing sufficient protection to their members. To ensure greater member protection, the Government will amend the tax registration process for master trust pension schemes to align it with the Pensions Regulator’s new authorisation and supervision regime.


Overseas Pension Schemes
Legislation will be introduced in the Finance Bill 2017 so that:

transfers to QROPS requested on or after 9 March 2017 will be taxed at a rate of 25%, unless at least one of the following apply:


Both the individual and the QROPS are in the same country after the transfer.
The QROPS is in one country in the EEA (an EU Member State, Norway, Iceland or Liechtenstein) and the individual is resident in another EEA country after the transfer.
The QROPS is an occupational pension scheme sponsored by the individual’s employer.
The QROPS is an overseas public service pension scheme as defined at regulation 3(1B) of Statutory Instrument (SI) 2006 No. 206 and the individual is employed by one of the employers participating in the scheme.
The QROPS is a pension scheme established by an international organisation as defined at regulation 2(4) of SI 2006 No. 206 to provide benefits in respect of past service and the individual is employed by that international organisation.
UK tax charges will apply to a tax-free transfer if, within five tax years, an individual becomes resident in another country so that the exemptions would not have applied to the transfer UK tax will be refunded if the individual made a taxable transfer and, within five tax years, one of the exemptions applies to the transfer the scheme administrator of the registered pension scheme, or the scheme manager of the QROPS making the transfer, is jointly and severally liable (with the member) to the tax charge and, where there is a tax charge, they are required to deduct the tax charge and pay it to HM Revenue & Customs (HMRC). This applies to scheme managers of former QROPSs that make transfers out of funds that have had UK tax relief if the scheme is a QROPS on, or after, 14 April 2017 and at the time the transfer to the former QROPS is received payments out of funds transferred to a QROPS on, or after, 6 April 2017 will be subject to UK tax rules for five tax years after the date of transfer, regardless of where the individual is resident
It will take some time to understand how these changes work in practice.


These significant changes are in addition to the changes previously announced.


The requirement that at least 70% of a member’s fund must be used to provide an income for life will be removed from the conditions that a pension scheme has to meet to be an ‘overseas pension scheme’ or a ‘recognised overseas pension scheme’, thereby enabling such a scheme to provide flexi-access drawdown.
To limit abuse, rules are in place that a tax charge may apply to individuals who have been resident outside the UK for less than 5 years. This period is to be extended to 10 years.
Where a foreign pension or lump sum is paid to a UK resident, 100% of the pension arising will be chargeable to UK tax (to the same extent as if they had been paid from a registered pension scheme).
There is a very niche group of overseas individuals who may have pension benefits under Section 615 of ICTA 1988. No new schemes can be accepted from 6 April 2017, and no further contributions can be made to existing schemes from that date.
Tax avoidance

Promoters of tax avoidance schemes (POTAS)
The Finance Act 2015 introduced changes to legislation to ensure that promoters of such schemes could not use associated or other new entities to circumvent the intention of the POTAS legislation. The Government clearly believes that the 2015 legislation didn’t go far enough and they are therefore introducing changes to Part 5 and Schedules 34 and 36 Finance Act 2014.


The amendment introduces the term ‘significance influence’ to ensure that promoters of schemes cannot re-organise their business so that they put a person between themselves and the promoting business. The change provides greater clarity and strengthens the Government’s commitment crackdown on tax avoidance schemes.


Disclosure of indirect tax avoidance schemes
The Government will legislate in the Finance Bill 2017 to strengthen the regime for disclosure of Indirect Tax Avoidance. Scheme promoters will primarily be responsible for disclosing schemes to HMRC in respect of indirect taxes.


Strengthening Tax Avoidance sanctions and deterrents
The Government will legislate in the Finance Bill 2017 to introduce a new penalty for individuals or entities who enable the use of tax avoidance arrangements which HMRC later defeats.


Offshore evasion: requirement to correct previous non-compliance
The Government will legislate in the Finance Bill 2017 to apply a new ‘requirement to correct’ for those who have failed to declare UK tax on offshore interests. Tougher sanctions will be applied for those who fail to this so before 1 October 2018.


Other changes

Trading and property income allowances
The Government will legislate in the Finance Bill 2017 to create two new income tax allowances of £1,000 each for trading and property income. The allowances can be deducted from income instead of actual expenses.


What we already knew
The government already announced a number of changes which would come into effect from the 6 April 2017. Our article provides some detail which includes the changes to the domicile rules.





The information provided in this article is not intended to offer advice.

It is based on interpretation of the relevant law and is correct at the date shown on the title page. While we believe this interpretation to be correct, we cannot guarantee it. We cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained in this article.

Recruiting an experienced IFA

13 Jun

Waverley Court Consulting are a specialist IFA Practice in Cardiff, who solely provide investments, pensions and tax planning advice. We are developing the practice and our next planned placement is for a senior adviser to join our happy team.


Are you an ethical and experienced adviser in the area, most likely in your 50s, possibly struggling under the compliance obligations, looking for help to ensure you provide your agreed client service proposition? You may have started to plan or are considering your options as per – an exit strategy – looking to find a safe long-term home for your clients? Looking for the peace of mind they will receive the care and on-going service you had always wished for them.


This is our story, we offer a robust and bespoke client experience with on-going advice, support, service and care as core to our proposition. We are looking for someone with the same values.


Since the late 1990’s we have grown a successful record of working with medium to high net worth individuals, all have joined our service through word of mouth and recommendations. We are looking for support in developing a financial advice team to provide on-going advice to both existing and future clients, and to help us develop the next phase for Waverley Court.


If you are looking for an opportunity to join and potentially, in the fullness of time, partially and/or fully retire and want a home for your clients but still maintain that relationship you have built up over may years and still benefit from any renewals and ongoing fees then talk to Darren Nathan to discuss how we may be able to help you. Telephone now on 029 2020 1240 or email :

Main Residence Additional Inheritance Tax Threshold

5 May

This tax information and impact note affects individuals with direct descendants and personal representatives of deceased persons with total assets above the Inheritance Tax threshold.

George Osborne revealed in July 2015’s Summer Budget that he’d scrap the duty when parents or grandparents pass on a home that is worth up to £1m (£500,000 for singles). This will be phased in gradually between 2017 and 2020.



In recent years, property prices have risen far more quickly than the Inheritance Tax (IHT) nil-rate band. As a result the number of estates subject to IHT has been increasing rapidly.

This is contrary to the aim of the current government that only the wealthiest estates should be subject to IHT. The measures announced in the Summer Budget were widely publicised beforehand and formed part of the Conservative Party manifesto.

It was commonly reported that the new measure would give an effective IHT allowance of £1 million, although we can see that the full allowance of £1 million is not scheduled to come into force until 2020/21.

Policy Objective
This measure will reduce the burden of IHT for most families by making it easier to pass on the family home to direct descendants without a tax charge.


Background to the Measure
The measure was announced at Summer Budget 2015.


Operative Date
The measure will take effect for relevant transfers on death on or after 6 April 2017. It will apply to reduce the tax payable by an estate on death; it will not apply to reduce the tax payable on lifetime transfers that are chargeable as a result of death.

The main residence nil-rate band will be transferable where the second spouse or civil partner of a couple dies on or after 6 April 2017 irrespective of when the first of the couple died.


Current Law
Section 7 of the Inheritance Tax Act 1984 (IHTA) provides for the rates of IHT to be as set out in the table in Schedule 1 to that Act. The current table provides that the nil-rate band is £325,000.

IHT is charged at a rate of 40% on the chargeable value of an estate, above the nil-rate band, after taking into account the value of any chargeable lifetime transfers. The chargeable value is the value after deducting any liabilities, reliefs and exemptions that apply.

Where an estate qualifies for spouse or civil partner exemption, the unused proportion of the nil-rate band when the first of the couple dies can be transferred to the estate of the surviving spouse or civil partner, sections 8A-C IHTA. The nil-rate band can be transferred when the surviving spouse or civil partner dies on or after 9 October 2007, irrespective of when the first of the couple died, so that the nil-rate band can be up to £650,000. There is currently no specific exemption for a residence, or for assets being transferred to children and other direct descendants.

Section 8(3) to Finance Act 2010 provides for the nil-rate band to be frozen at £325,000 up to and including 2014 to 2015. Section 117 and paragraph 2 of Schedule 25 to Finance Act 2014 extends the freeze on the nil-rate band until the end of 2017 to 2018.




How This Works in Practice

  • The current allowance whereby no inheritance tax is charged is on the first £325,000 (per person) of someone’s estate – which is the value of their total assets they leave behind when they die. This remains unchanged. Above the threshold, the charge is 40%.
  • A new tax-free ‘main residence’ band will be introduced from 2017, but it is only valid on a main residence and where the recipient of a home is a direct descendant (classed as children, step-children and grandchildren). It is being phased in gradually, starting at £100,000 from April 2017, rising by £25,000 each year till it reaches £175,000 in 2020.
  • So in 2017 the maximum that can be passed on tax-free is £850,000 for married couples or those in a civil partnership, £425,000 for others. For singles, this is made up of the existing £325,000, plus the extra £100,000. For couples, when the first one dies their allowance is passed to the survivor, so that £425,000 is doubled to £850,000.
  • In 2020, the tax-free amount will rise to £1m for couples, £500,000 for singles, as the main residence allowance rises.
  • Currently, without the ‘main residence’ additional allowance, couples can leave a home worth £650,000 without it attracting inheritance tax (singles £325,000).
  • On properties worth £2 million or more, homeowners will lose £1 of the ‘main residence’ allowance for every £2 of value above £2m. So for a couple, properties worth £2,350,000 or more will get no additional allowance.

2. It can be offset against the value of the owner’s interest in a property, which, at some point, has been occupied by the owner as a residence. It will be available when an owner dies on or after 6 April 2017 and their interest in it is transferred to direct descendants.

3. The transfer must be on death and can be made by will, under intestacy or as a result of the rule of survivorship.

4. In general, the transfer must be outright but certain other transfers into trust on death are permitted: for example, bare trusts, IPDI trusts, and 18-to-25 trusts and trusts for bereaved minors.

5. Special rules will be introduced to protect those who downsize. How this will work is currently subject to consultation.

6. Where the value of the deceased’s estate exceeds £2m (after deducting liabilities but before reliefs and exemptions) the RNRB will be reduced by £1 for every £2 excess value. It is important not to underestimate the “before reliefs” part of this condition. It means you ignore business property relief and agricultural property relief, for example, which could make quite a difference.

7. The £2m threshold and the RNRB are due to increase in line with the CPI from 6 April 2021.

8. Where death occurs after 5 April 2017, the deceased’s RNRB will be set off against any chargeable transfers of a residence before the set off against the standard nil rate band.

9. Any RNRB that is not used on first death can be transferred to a surviving spouse or civil partner. This is the case regardless of whether the deceased could have used their RNRB or not. The amount unused will be applied to uplift the survivor’s RNRB entitlement on second death


What If I Downsize?

There are measures in place to make sure the new proposals do not discourage individuals from downsizing. These measures will only apply to someone who ceases to own their main residence on or after 8 July 2015.

Initially it looks like this would only apply in a very limited number of circumstances. The example given in the Treasury policy paper is that if someone downsized from a house worth £200,000 to a home worth £100,000 they could still benefit from the maximum allowance of £175,000 in 2020/21 if they leave the home and £75,000 of other assets to direct descendants.

Where we could see the rules having more practical relevance is where someone has sold their main residence and moved into a nursing home. In these circumstances, they would be able to leave assets worth up to £175,000 (by 2020/21) to a direct descendant.


Who is likely to be affected
Individuals with direct descendants who have an estate (including a main residence) with total assets above the Inheritance Tax (IHT) threshold (or nil-rate band) of £325,000 and personal representatives of deceased persons.


General description of the measure
This measure introduces an additional nil-rate band when a residence is passed on death to a direct descendant.

This will be:

  • £100,000 in 2017 to 2018
  • £125,000 in 2018 to 2019
  • £150,000 in 2019 to 2020
  • £175,000 in 2020 to 2021

It will then increase in line with Consumer Prices Index (CPI) from 2021 to 2022 onwards.

Any unused nil-rate band will be able to be transferred to a surviving spouse or civil partner.

The additional nil-rate band will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 and assets of an equivalent value, up to the value of the additional nil-rate band, are passed on death to direct descendants.

There will be a tapered withdrawal of the additional nil-rate band for estates with a net value of more than £2 million. This will be at a withdrawal rate of £1 for every £2 over this threshold.

The existing nil-rate band will remain at £325,000 from 2018 to 2019 until the end of 2020 to 2021.




Husband dies in 2020/21 and leaves his share in the residence, valued at £87,500, to his children; balance of his estate to his wife

  • £87,500 of £175,000 RNRB (Residential Nil Rate Band) set off against transfer
  • Extra 50 per cent RNRB to widow for possible set off on her subsequent death
  • Full standard NRB and transferable standard NRB also available
  • Where the first death occurrs before 6 April 2017, both the amount available for carry forward and the RNRB at the time of first death are deemed to be £100,000, thereby ensuring that, in these circumstances, the residence nil-rate band is always increased by 100 per cent on second death unless the estate of the first to die exceeded the taper threshold.
  • This is the case regardless of whether or not the estate of the first to die included a qualifying residential interest and irrespective of what dispositions occurred on their death.


Example 2.

When the first to die dies with an estate of more than £2m, entitlement to the RNRB is tapered away at the rate of £1 for every £2 of excess value. This applies on the first or second death and regardless of when the first death occurred.

Husband dies in 2021/22 with an estate valued at £2.2m

  • Husband leaves the whole estate (including an interest in the main residence) to his wife
  • RNRB on first death is reduced by £100,000 (4/7) or 57.2 per cent
  • Transferable RNRB is 42.8 per cent
  • On the subsequent death of the widow, if she dies with an estate of £1.5m, she can use all of the standard NRB, 100 per cent transferable NRB, full RNRB and 42.8 per cent transferable RNRB
  • If both deaths occur before 6 April 2017, no RNRB is available to offset against the deceased’s estate.
  • If first death occurs before 6 April 2017, the RNRB is available for transfer if the subsequent death occurs after 5 April 2017.

So, quite a lot more to it than first meets the eye – and these are just the fundamentals.


Should I Plan / Should I Take Professional Advice?

There is quite a lot more to this change in legislation than first meets the eye – and these are just the fundamentals detailed above.

There are a few basics you should think about:

  • It’s crucial to make a will
  • Take professional tax advice


Oh and finally, inheritance tax planning is important, but don’t forget, the main thing is that you (or your parents) should have financial security in old age. Don’t sacrifice everything just to plan for someone else’s future. You’ve earned your money, so let it make you comfortable.

Inheriting ISAs : Changes to the ISA Rules on Death

23 Apr


Some are still unaware of the change in legislation.

Did you know that you can inherit your partner’s ISA savings? New rules came into being in April 2015 that mean ISA assets can now be passed on to spouses or civil partners and retain their tax-friendly status, and although it may not be nice to think about, it could make a huge amount of difference should the time come.

If you save into an Isa, it means you can grow your money in a tax efficient way. Unfortunately, when you die, this benefit dies with you – unless you’re married or in a civil partnership.

New rules introduced by the government enable your surviving spouse or civil partner to inherit your Isa savings when yoU die.


Why The Change?

Under the previous system, when someone died, any savings held in an ISA automatically lost their tax-free status. This meant that the surviving partner would have to start paying tax on any returns or income earned from it, which could add up to a significant sum if the ISA holder had been saving for many years.

The system was widely thought to be unfair, particularly given the fact that couples tend to save from joint incomes – they’d have to pay tax on money they thought was protected, and thousands of people were caught by these unexpected tax charges every year. Happily, things have now changed.


Pass on the benefits

The rules mean that if an ISA holder dies, the surviving spouse or civil partner will be able to inherit the ISA and retain its tax benefits. This is in the form of an additional allowance – the surviving partner is given an ‘additional permitted subscription’ (APS), a one-off ISA allowance that’s equal to the value of the ISA at the date of the holder’s death, which won’t be counted against the normal ISA subscription limit but will instead be added on to the survivor’s own ISA limit.

In other words, you’ll be entitled to an additional allowance that would cover the value of your partner’s savings as well as your own. For example, if your partner had £50,000 in ISA savings, your ISA allowance for the year would be £65,240 (the value of your partner’s savings and your own ISA allowance for the 2016/17 tax year, which stands at £15,240).

Essentially, the rules mean that the tax-efficiency of the ISA won’t be lost, and that you’ll be able to benefit from the money that could well have been saved together. The changes have been specifically designed to ensure that bereaved individuals will be able to enjoy the tax advantages they had previously shared with their partner, offering more flexibility and a much fairer outcome.

“Approximately 150,000 married ISA holders die each year, so these changes will benefit spouses or civil partners by increasing the amount that they can save by offering the tax advantages in an ISA wrapper,” said Carol Knight, operations director at TISA. “We see it as a much fairer outcome and one we have long advocated. [Surviving partners could have] lost out significantly under the previous rules whereby investments held by deceased ISA savers lost their tax-free status… Allowing ISA savings to be transferable will enhance flexibility and will act as a further incentive to save within these vehicles.”

Rules at a glance

  • Anyone whose spouse/civil partner died on or after 3 December 2014 is eligible, and the APS could have been claimed since the start of the 2015/16 tax year.
  • The rules apply irrespective of the size of the deceased’s ISA pots – no matter how much they’d saved in an ISA, you’ll have that amount as an additional allowance.
  • In the event that more than one ISA was held by your partner, the pots will be combined to give an overall additional subscription amount that you can claim.
  • APS allowance subscriptions (referred to as payments) can be made to a cash ISA and/or a stocks & shares ISA, either with the deceased’s ISA provider or with an alternative that will accept APS subscriptions (not all will).
  • Some ISA providers will allow payments to be made in instalments whereas others only allow a lump sum, so make sure to check.
  • Chances are, arranging your new allowance won’t be at the forefront of your mind on the death of your partner. In most cases, at least for subscriptions made in cash, the allowance is available for three years after the date of death.
  • ISA providers will require key information and personal details from the spouse/civil partner to open a qualifying ISA, and they’ll also require an application form to use the APS allowance.
  • The APS allowance can be transferred to another ISA provider, subject to the new provider’s acceptance.
  • It can only be transferred once and only where no subscriptions have been made under the allowance. But, after an APS allowance payment has been made, the cash and/or investments related to that subscription can be transferred to another ISA.




How are ISA Allowances Inherited?
Anyone whose spouse or civil partner died on or after 3rd December 2014 is eligible for a one-off additional Isa allowance equivalent to the value of the deceased person’s Isa at the time of death.

This is referred to as an ‘additional permitted subscription,’ or APS allowance.

Say, for example, that you’d saved up £50,000 in your Isa when you die. Your spouse will be able to make an additional contribution to their Isa of up to £50,000, in addition to their own Isa allowance for the year (£15,240 in the 2015/16 tax year).

This allowance is regardless of what’s in your will. Which means that even if the money is left for someone else to inherit, such as your son or daughter, your partner is still entitled to an increased allowance equivalent to the value of your Isa assets on the day of death.

So if you left £50,000 worth of Isa assets to your child, your partner would still be entitled to an increased Isa allowance of £50,000, although they would be using their own money to fund it.


Where can I invest the Isa savings I’ve inherited?
The surviving partner can choose where to transfer the inherited savings. They can:

  • Keep the money with the original Isa provider
  • Put the money with their own Isa provider
  • Open up a new cash Isa or a new stocks and shares Isa and place the additional subscription there
  • An APS allowance can only be transferred once but if there is more than one Isa to inherit, you’ll have an allowance with each provider.

Under the Isa rules, you can only have one cash Isa and one stocks and shares Isa per tax year. However, you won’t breach these rules if you open up an Isa for the sole purpose of transferring inherited savings.

So, you could have some money in your own cash Isa with one bank, and place the Isa savings you’ve inherited in another bank.

Once the transfer has been made, the normal Isa rules apply and the money is treated as previous years’ subscriptions.


Do Isa providers have to accept payments?
In short, no.

Isa providers aren’t obliged to accept APS allowances – so you may not been able to deposit inherited savings with your own Isa savings.

The 11 providers below, although could change their approach and are not the only but rather a few I can detail. This could change and there will be others. It’s just to demonstrate that even though the legislation has changed ISA providers may not offer the flexibility – please check with your provider their stance on this. I have found, these do not accept the additional allowance :

  • Bath BS
  • Buckinghamshire BS
  • Harpenden BS
  • Leeds BS
  • Manchester BS
  • Mansfield BS
  • Melton BS
  • Mowbray BS
  • GE Capital Direct
  • Furness BS*
  • Al Rayan Bank*


*Furness BS and Al Rayan Bank have said they are planning to accept inherited Isa savings in the near future.


Is there a time limit for additional Isa subscriptions?
When someone dies, their estate has to be administered. This means that all of their assets have to be gathered and debts must be repaid, before it can be distributed to the people named in the deceased’s will.

During this period, interest earned on savings in their Isa is taxable, and income tax may need to be paid.

To help couples keep the tax benefits of their savings, the increased Isa allowance can be claimed by filling out an application form and is available for three years after the date of death, or if longer, 180 days after the estate has been administered.


What happens when you inherit a stocks and shares Isa?
Stocks and shares Isas are treated in the same way as cash Isas under the reforms, with surviving spouses entitled to make additional subscriptions into either a stocks and shares Isa or a cash Isa.

There are two ways for a surviving partner to use their inherited stocks and shares allowance:

  • All of the investments – such as funds and shares – could be sold, and the resulting cash can be used to open a new Isa. This is known as a ‘cash transfer.’
  • Alternatively, the investments can be transferred directly without being sold. This is known as an ‘in specie’ transfer.
  • Additional subscriptions made via an ‘in specie’ transfer must be made within 180 days of the surviving partner inheriting the funds and can only be made to the deceased Isa provider.


The Tax System Explained – Thank You David R. Kamerschen, Ph.D.

14 Apr

I read this earlier and felt it was a great explanation :-


Suppose that every day, ten men go out for beer and the bill for all ten comes to £100…
If they paid their bill the way we pay our taxes, it would go something like this…

The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7..
The eighth would pay £12.
The ninth would pay £18.
The tenth man (the richest) would pay £59.

So, that’s what they decided to do..

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by £20”. Drinks for the ten men would now cost just £80.

The group still wanted to pay their bill the way we pay our taxes.

So the first four men were unaffected.

They would still drink for free. But what about the other six men?
The paying customers?

How could they divide the £20 windfall so that everyone would get his fair share?

They realised that £20 divided by six is £3.33. But if they
subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth man, like the first four, now paid nothing (100% saving).

The sixth now paid £2 instead of £3 (33% saving).

The seventh now paid £5 instead of £7 (28% saving).
The eighth now paid £9 instead of £12 (25% saving).

The ninth now paid £14 instead of £18 (22% saving).

The tenth now paid £49 instead of £59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

“I only got a pound out of the £20 saving,” declared the sixth man.

He pointed to the tenth man,”but he got £10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a pound too. It’s unfair that he got ten times more benefit than me!”

“That’s true!” shouted the seventh man. “Why should he get £10 back, when I got only £2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works.

The people who already pay the highest taxes will naturally get the most benefit from a tax reduction.

Tax them too much, attack them for being wealthy, and they just may not show up anymore.

In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics.

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible

Investment Bulletin – January 2016

22 Mar

From a momentum perspective, the pessimists were clearly in charge since mid-2015. On the other hand, the sheer size and scope of the setback opens the door to a possible market bounce… a volatile mode the market has been in for recent times. Only time will really tell if this oddly excessive poor start to the New Year was a fluke or the shape of things to come. It’s best to prepare for both possibilities. I’m pleased to say – this is part of our core philosophy.


We have been very busy reviewing and reassessing your portfolios, considering the impact of the recently and sometimes violently changing market conditions. The general outcome of our review so far, there are possible changes required and we will speak about this on a one-to-one basis.


The results so far indicate, a seriously vulnerable market but I’m pleased to report, we have seen excellent results relative to the general market. We’ve had the panic phase, so is it now time for the panic to subside? I believe there are strong indicators and potentially positive scenarios but as always, only in certain market geographies, sectors and themes.


Market Outlook

We believe the key catalysts have been :


  • concerns about Chinese exchange rate policy and associated GDP
  • a renewed collapse in oil prices
  • the problems in the Middle East have led to a dire refugee situation
  • the rate hike in the US followed by increased fears of a slow-down in the US economy.
  • the news that Brexit might become a reality after the June Referendum.


Macroeconomic and geopolitical factors look certain to play a key part in investor thinking again in 2016, and the outlook is as mixed as it was a year ago. Most western economies are improving slowly, with the US Federal Reserve finally raising its interest rate in December after holding it at an historical low for seven years. European economies also appear more steady, even on the periphery, it appears 2016 will see the continued divergence of central bank monetary policy, with the European Central Bank (ECB) and Japan both continuing their quantitative easing stance.


Fixed income was one of the stragglers in 2015, with low yields forcing many investors to seek alternatives, or to move higher up the risk spectrum. The expected divergence in monetary policy between the US and Europe will be a key theme in bond and currency markets.


Unless there is some surprise from central banks, it seems clear that the momentum for an even stronger dollar is likely to persist into 2016.


An increase in volatility is expected in the months ahead given the shift in the US monetary stance and the increasingly accommodative strategy of the ECB. If there is any sense that the Federal Reserve may be more aggressive than currently priced in, this could possibly lead to higher bond yields and a more negative reaction from credit markets.


In Europe, a sharp fall in the euro could trigger a steeper bond curve if inflationary expectations start to build, and this may be temporarily negative for credit spreads.



To paraphrase the late Jude Wanniski – the history of man is a battle between the creation of wealth and the redistribution of wealth. Jude was a Supply-Sider, which means an economist who believes that entrepreneurship and supply (not demand) drives economic growth.


Many pseudo-economists have sprung up since the recession voicing opinion rather than understanding, fuelled by a misunderstanding of 2008. They have clearly, used selective excerpts from Economists (such as, Hyman Minsky and the Minsky Cycle), have created an entire theory that the US economy (for example) is in a “crack-up boom.” The boom, according to these “pundits”, has been suggested to be solely caused by the Federal Reserve (Fed), Quantitative Easing (QE) and 0% interest rates, and now that the Fed has tapered and started hiking rates, it’s over and a bust is on its way.


These Pseudo-Economists have focused almost solely on money; they’ve forgotten the entrepreneur. We believe quantitative easing did not boost economic growth because banks shovelled that money straight into excess reserves.  We also believe in new technologies – simply, good old entrepreneurship is driving profits and economic output inexorably upward.


Volatility in The Markets

Most people think of volatility as a bad thing. It is assumed that higher volatility leads to higher risk of a negative outcome and as it is in our nature to be risk-averse, this tends to take the form of trying to avoid or hedge a loss.


Volatility can, however, be an investment opportunity and there are strategies that focus on exploiting bouts of market uncertainty to capture a return premium. Investors need to treat volatility like any asset that has a long-term expected return and a risk profile.


Investors should also bear in mind that periods of high volatility are usually short-lived. It is therefore key, to focus on the important developments and ignore the transient ones.



Maintaining a nimble and responsive portfolio is more important than ever. We have chosen to employ a systematic investment approach and diversifying across a number of underlying volatility strategies has the potential to add value to an investor’s portfolio. Particularly in this high-volatility environment, a number of different risk strategies to achieve the desired risk/return outcome to meet investment objectives is considered.


We have found the most effective and successful approach to investing, is to focus on the macro-backdrop potentially identifying short-term investment risks and with the potential of tactical advantages. The short-term volatility helps to provide longer term buying opportunities. We see these recent events as a superior opportunity to add value through the service we provide. Our wish is, within your attitude to investment risk, to target potential returns while focusing on capital preservation, where possible.


This bulletin provides information, it is not advice. Any opinions are given in good faith and may be subject to change without notice. Opinions and information included within this document does not constitute advice.

(If you require personal advice based on your circumstances, please contact me.)

Investment Bulletin – October 2015

12 Nov

2015 has been a poor investment period so far, seeing the most significant losses since 2011. The question I’m asking – are we about to see a similar outcome to 2011 with the investment markets rallying and posting significant returns? The answer I have is “maybe” – no one knows but what is clear is the markets have been in the grip of panic, leading in my opinion to being oversold. I believe that this will offer opportunities in certain investment markets for the future.


In recent years, the investment markets have been “trading in a range” and this has seen a fall from the top of the range. So, if the markets follow a similar model this could realistically lead to positive returns.


It has been our strategy to position your portfolio, within your risk profile, with the focus of relative capital preservation and real total returns. Relative to the market situation, we have performed above expectations and produced pleasing returns.


Our portfolios are well diversified and where relevant, we have already made recommendations leading to changes in the asset allocation and some of the fund selections.



Market Overview

It has been impossible to ignore the recent dramatic sell-off in the Chinese markets and the subsequent falls in other equity markets around the world. Despite the opening up of the Chinese economy its impact on the developed world is fairly limited as regards first round effects, with exports of goods and services to and from China a very small part of GDP (Gross Domestic Product) for all mainstream economies.




I think it is economies that kill markets not the other way around so I believe the current decline is overstated.


On a more positive note, lower commodity prices are, of course, producing a significant boost to the western consumer and we are seeing an acceleration in consumer spending across the US, Europe and the UK in 2015. Inflationary pressures are also likely to remain muted for longer and interest rate increases which, until recently, seemed almost a certainty over the coming months could well be pushed back. The US rate increase heavily tipped for December.


It is also worth noting that although we have seen sharp falls in equity prices, the moves in bonds have been much less pronounced.


Whilst we shouldn’t be complacent, bearing in mind that equity markets can often be a good signal of trouble ahead, I think weakness in China is not sufficient to bring down the global economy. We maintain a modest preference for equity markets but do expect volatility to remain. I am inclined to think the recent drama has been a bit of an over-reaction and is unlikely to have a significant impact in a raw economic sense.




We are expecting the prospect of the first interest rate rise since June 2006 and we await the December Federal Reserve meeting. The Fed’s actions in the coming three-to-six months could have wide-reaching implications for the global economy. We expect that if (and based on the Federal Reserve’s commentary and dialog, a rate rise is imminent), this will be closely followed by the Bank of England to raise rates. In both cases, we are expecting small incremental steps based on the strength of the economies. So do not expect large or quickly followed further increases. The expectation is this will not lead to a rise in bank interest rates paid to the consumer, as banks based on recent results and the multitude of fines and legacy problems are not anticipating paying a higher base to account holders.


We do expect more volatility but anticipate buoyant equity markets in the near future but with clear risks in several sectors, themes and geographies.


Therefore, we reaffirm our focus on valuation discipline and total return strategies, where care and attention is and will always be needed. This focus has allowed us to achieve above average returns in less than average markets over a longer term, always with a clear relative focus on capital preservation, targeted returns and risk profile.


This bulletin provides information, it is not advice. Any opinions are given in good faith and may be subject to change without notice. Opinions and information included within this document does not constitute advice.

(If you require personal advice based on your circumstances, please contact me.)