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.
Business as usual at Bates & Co
/0 Comments/in News /by EdwardLambThis month marks the 22nd birthday of Phillip Bates & Co Financial Services.
While we won’t be able to celebrate as we might normally, we continue to strive to provide clients with the same high standard of service.
Despite a further Government lockdown, our intention is very much to return to our office as soon as it is safe and feasible to do so. We know this is something the team are keen to do at the appropriate time.
Until then, we continue to be available to ‘meet’ with clients to suit their requirements, whether that is face-to-face, by phone or in a virtual setting!
No Budget in November
/0 Comments/in News /by EdwardLambAs many of you will have heard, the Chancellor has confirmed that there will no longer be a Budget this month or a multi-year Spending Review.
Instead, Rishi Sunak will deliver a one-year review on November 25 with a focus on how the Government is going to continue meeting the challenges of Covid-19 and the need to continue protecting jobs and businesses.
Investors keen on ESG
/0 Comments/in News /by EdwardLambThe term ‘Environmental, Social and Governance’ or ‘ESG’ is something that is coming up increasingly in conversations with clients.
It covers a wide range of factors that influence an investor’s decision as to whether to invest in a company.
Factors could include a company’s labour practices, product safety, treatment of animals and energy usage.
For a growing number of clients, ESG is something they want us to consider for them to ensure that the companies they invest in are in line with their own values. It is also something that financial regulators are paying greater attention to.
For the team at Phillip Bates & Co, it means adding an extra layer to our already rigorous due diligence processes.
But, from the trend we are seeing, ESG is only likely to become more mainstream over the coming months and years.
What does Lockdown 2 mean for the UK markets?
/0 Comments/in News /by EdwardLambThe Government’s decision to extend the full furlough through to the end of March 2021 and the Bank of England’s additional £150billion in quantitative easing (to spur spending and investment) surprised many commentators.
It followed the announcement by Prime Minister Boris Johnson that England would enter a second national lockdown during the month of November to help combat the surge in Covid-19 cases with the resulting impact on the NHS.
Chancellor Rishi Sunak has reacted to ensure that as many businesses and jobs as possible can be protected in the face of the continuing struggle with the pandemic.
While some businesses and many thousands of jobs have, unfortunately, been lost this year, the damage is not so far as bad as many forecasters thought it might be.
Undoubtedly, the many billions of pounds of support provided by the Government has helped to prevent companies from pulling the plug.
There is, however, serious concern in some of the sectors worst hit – such as bricks and mortar retail and hospitality – that there is a need to start trading again when the current lockdown ends so that the peak Christmas season is not lost in its entirety.
The hope remains that a vaccine for the virus is ready for mass use sooner rather than later, something that received a spur this week with the exciting news that preliminary analysis by Pfizer had indicated that its vaccine was 90% effective. Pfizer’s own shares immediately leapt by 14% and the FTSE100 by 5%.
While it is unlikely to be the ‘silver bullet’ that will see the markets soar to pre-Coronavirus levels, it is likely to support the gradual recovery as confidence returns in the UK and globally.
Further, prolonged delays lasting deep into next year are likely to lead to longer-term structural problems in the world’s economy, something everyone is keen to avoid.
As things stand, client portfolios have continued to hold up well, emphasising once again the importance of long-term, diversified, balanced financial plans with a global outlook. It is about the power of planning rather than reacting to individual events.
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!