Chancellor Rishi Sunak has built up quite a bit of credit with the British public during the Coronavirus crisis.
He won plaudits for the speed with which he introduced the furlough programme, which has been accessed by 9.5million workers, the roll out of various business loans and grants and, most recently, his Eat Out To Help Out scheme.
But, as we know, all the above came at a huge cost to the Treasury, something that will have to be recouped over the coming months and years.
November’s Budget will give us the first indication as to how the Chancellor intends to get the UK economy back on track.
Media briefings suggest that he will announce various tax rises, but probably staggered to avoid too much pain too quickly for a public still very much in the early stages of recovery from the impact of the crisis.
Officials are even said to be considering reforming CGT so it is paid at the same rate as income tax.
As a result, the tax on profits from selling assets would rise from 10 to 20% for basic-rate taxpayers.
The tax rate would also increase from 18 to 20% for profits on the sale of second homes.
For higher-rate and additional-rate taxpayers, the levy could rise from 20% on asset sales and 28% on property sales to 40% respectively.
I anticipate having calls with clients over the coming weeks looking at various options including the possibility of liquidising assets rather than being hit by potential increases in CGT taxes later.
Corporation tax is almost certainly also in the Chancellor’s sights with a likely rise from the current level of 19% – one of the lowest rates among leading economies – to as much as 24%.
The other big area of reform is likely to be around pensions with an expectation that pension tax relief will have to change with the possibility that a flat rate of 20% might be introduced, hitting higher rate tax payers.
Those with company final salary schemes, including key emergency workers like doctors and police officers, are also set to be impacted by tax changes.
All of which makes for the most important and contentious Budget in a generation or more. Rishi will be hoping he is still in credit with the British public once the full implications of his decisions become clear.
What does a Biden win mean for the markets?
/0 Comments/in News /by EdwardLambPresident Trump may continue to refuse to concede defeat, but virtually everyone else in the US and the rest of the world is starting to ask: ‘What will a Joe Biden presidency mean?’
Unless there is some dramatic legal challenge that turns last week’s delayed result on its head, Biden will become the US’s 46th President on January 20 next year.
The one thing the markets hate more than anything else is uncertainty, not least in the most powerful nation on earth.
This is evident from the reaction of the markets since Biden and his running mate Kamala Harris clinched victory. All the global markets saw healthy gains when they reopened at the start of the week.
Attention will turn next to the likely policies of the incoming administration where there have been suggestions that many Trump initiatives will be reversed. These include the likelihood of re-joining the Paris Climate Agreement and new measures to combat the spread of Coronavirus.
But any desire for spend and tax packages are likely to be checked by the continuing balance of Congress with the Democrats maintaining control of the House of Representatives and the Republicans likely to hold sway in the Senate.
Return to the Office
/0 Comments/in News /by EdwardLambThere is plenty in the news about the pros and cons of returning to the office.
At Phillip Bates & Co, we are actively planning to return to our Neston office as soon as it is safe and sensible to do so.
In the meantime, it remains business as usual with clients having the option of either arranging a face-to-face meeting, telephone call or virtual meeting.
Please don’t hesitate to drop us a line if you would like to fix a meeting or catch-up call if there is something you would like to discuss.
Trump v Biden
/0 Comments/in News /by EdwardLambNever one for understatement, President Donald Trump recently described the looming US Presidential Election as “the most important in the history of our country”.
As Trump would have it, the election is a battle for the soul of America, pitting his administration against Joe Biden’s “left wing radicals”.
The reality is likely to be somewhat different. Most impartial commentators see many differences between the two candidates, but not so much when it comes to the economy.
Trump himself has not really had a major economic agenda since entering the White House almost four years ago, other than some tax reorganisation near the start of his term in office.
Whoever wins in November, I doubt there will be as dramatic a change in financial policy as President Trump would have us believe.
What will Rishi do?
/0 Comments/in News /by EdwardLambChancellor Rishi Sunak has built up quite a bit of credit with the British public during the Coronavirus crisis.
He won plaudits for the speed with which he introduced the furlough programme, which has been accessed by 9.5million workers, the roll out of various business loans and grants and, most recently, his Eat Out To Help Out scheme.
But, as we know, all the above came at a huge cost to the Treasury, something that will have to be recouped over the coming months and years.
November’s Budget will give us the first indication as to how the Chancellor intends to get the UK economy back on track.
Media briefings suggest that he will announce various tax rises, but probably staggered to avoid too much pain too quickly for a public still very much in the early stages of recovery from the impact of the crisis.
Officials are even said to be considering reforming CGT so it is paid at the same rate as income tax.
As a result, the tax on profits from selling assets would rise from 10 to 20% for basic-rate taxpayers.
The tax rate would also increase from 18 to 20% for profits on the sale of second homes.
For higher-rate and additional-rate taxpayers, the levy could rise from 20% on asset sales and 28% on property sales to 40% respectively.
I anticipate having calls with clients over the coming weeks looking at various options including the possibility of liquidising assets rather than being hit by potential increases in CGT taxes later.
Corporation tax is almost certainly also in the Chancellor’s sights with a likely rise from the current level of 19% – one of the lowest rates among leading economies – to as much as 24%.
The other big area of reform is likely to be around pensions with an expectation that pension tax relief will have to change with the possibility that a flat rate of 20% might be introduced, hitting higher rate tax payers.
Those with company final salary schemes, including key emergency workers like doctors and police officers, are also set to be impacted by tax changes.
All of which makes for the most important and contentious Budget in a generation or more. Rishi will be hoping he is still in credit with the British public once the full implications of his decisions become clear.
Diversification is key
/0 Comments/in News /by EdwardLambThe Coronavirus pandemic has highlighted more than anything the importance of having a well-diversified financial portfolio.
Overall the markets have stabilised at a reasonable level – down on where they were in February, but still reasonably solid. We are now seeing daily movements of between 1 and 1.5%, compared to nearer 2.5% when I last wrote a couple of months ago.
From time to time, there are dramatic corrections such as last week when the tech stocks fell back, but they had done abnormally well until that point.
Key UK stocks have struggled compared to other parts of the world with banks, travel and retail stocks among those worst affected.
The final quarter of 2020 will be interesting with Brexit coming back to the fore again and the Chancellor’s Budget scheduled for November.
The pandemic has knocked Brexit off the front pages of the papers for the last few months, but that is unlikely to remain the case as the window to secure a free trade deal or leaving with no deal gets ever shorter.
Having said this, the global economy is remarkably resilient. Given how steep the fall was when the crisis began, it is quite remarkable the speed at which the recovery is now underway.
Phillip Bates & Co Financial Services featured in Shire magazine
/0 Comments/in News /by EdwardLambWe are delighted to be featured in the July/August edition of popular lifestyle magazine, Shire, which circulates in Wirral, Cheshire, North Wales and Shropshire as well as online.
We were invited to provide expert advice for their retirement planning feature looking at some of the questions we get asked most frequently including ‘when can I retire?’ and ‘how much is enough?’.
To read the article in full please follow this link and go to page 35 here.
Happy reading!
Meeting Up
/0 Comments/in News /by EdwardLambI would also like to re-emphasise that it is very much normal service.
Although our team continue to work remotely, they are available for phone calls and virtual calls. We have even held pre-arranged face-to-face meetings with a couple of clients at our offices in Neston.
Flexibility is our watchword. We will always do our best to ‘meet’ with you in the way that works best for our clients.
For now, the intention is for our team to continue working remotely, but we keep this under regular review and will let you know when we intend to relocate back to the office on a regular basis.
Encrypted Emails
/0 Comments/in News /by EdwardLambWe have had a small number of enquiries from clients asking about the encrypted emails they have received.
This is something we introduced a few months ago and is part of our responsibility to you to keep your data as secure as possible.
The process should be straightforward, but please do contact us should you have any questions about the encryption service we provide.
Review of portfolios
/0 Comments/in News /by EdwardLambThe team has been working hard on reviewing client portfolios, something that is less straightforward than is normally the case due to the impact of the pandemic.
We are looking closely at the balance between different assets, what should stay the same and what should change.
The broad message is that portfolios have held up well, demonstrating more than ever the value of diversification.
We will be in touch with all our clients over the next few weeks.
Markets showing resilience in face of global pandemic
/0 Comments/in News /by EdwardLambThe markets have held up reasonably well in the face of the worst crisis the world has seen since World War II.
They are demonstrating decent levels of confidence, not back to pre-coronavirus levels but not as bad as some of the commentators were predicting a few weeks ago.
There is still volatility, much more than you would see in more normal times, between 2-2.5% most days.
The US and most of the developed economies have begun to bounce back from the shockwaves of March and April.
Even some of the recent global unrest has failed to have an impact on the fragile confidence we are seeing return.
There is a US Presidential Election in November and the polls are currently suggesting Donald Trump may struggle to gain re-election. Big business and the markets have generally liked Trump, but even if his Democrat rival Joe Biden wins, I doubt there will be any seismic shifts in the overall confidence of the US economy.
In the UK, there is a lot of talk of Chancellor Rishi Sunak holding an emergency Budget at some point in July, with the intention of setting out the direction of travel now that we are beginning to emerge from lockdown.
It is highly unlikely we will see any tax rises or targeting of the pension tax relief. This would send out the wrong signals. More likely, if media reports are right, is that VAT may be reduced to provide a boost to business and encourage consumers to spend.
Expect a further economic stimulus package as the Chancellor tries to avoid vast job losses as the furlough scheme starts to wind down. This is likely to fast-track infrastructure spending, skills training and largescale investment in green technologies.
The great unknown is whether we will witness a second spike of coronavirus in the coming months. The one reassuring thing is that at least the world will be much better prepared second time around.