New Chancellor Rishi Sunak delivered a Budget that the Government believes will help to protect the economy amid the continuing Coronavirus outbreak.
The raft of spending pledges made by Mr Sunak, who has only been in the job for four weeks, were aimed at trying to minimise the impact of the outbreak and market turbulence on people’s lives.
As you would expect, a focus was on small and medium sized businesses (SMEs), providing vital support to help them navigate the choppy waters of the coming weeks as the UK and the wider world seeks to limit the damage caused by the pandemic.
This is the first Budget since the Conservatives won the General Election in December and, as such, the multitude of spending pledges were about setting the scene for what the Government wants to achieve during the lifetime of this Parliament. Having waited 500 days since the last Budget, there will be two this year with another one scheduled for the Autumn.
Prior to the Budget itself, the Bank of England declared a cut in interest rates from 0.75% to 0.25%, bringing borrowing costs back down to the lowest level in history.
Among the key announcements in the Chancellor’s Budget were:
Entrepreneurs’ Relief
As anticipated, Entrepreneurs’ Relief has been cut with immediate effect from a lifetime limit of £10million to £1million.
The Chancellor some calls to abolish the relief entirely, saying “we need more risk taking and creativity in this country”.
The rules allow business owners of more than two years to pay less Capital Gains Tax (CGT) when they sell – 10% rather than 20%. Any capital gains on businesses which exceed the new £1million limit will be taxed at the higher rate of 20%.
Pension Tax Relief
The income threshold that may reduce the amount high earners can contribute to a pension will rise from £110,000 to £200,000.
The Chancellor had come under pressure to make the change following a row involving NHS professionals, but the change will benefit any high earners including entrepreneurs who have spent a lifetime building a successful business but who only have a relatively small window to maximise their pension contributions.
The pension annual allowance is the maximum amount of pension savings that someone can build up in a year. From April 6, the threshold will increase to £200,000, meaning anyone who earns under this amount will not be affected by the tapered annual allowance of £40,000.
Pension Lifetime Allowance
The lifetime allowance – the maximum amount you can have in a pension over a lifetime – will also increase from £1,055,000 to £1,073,100 for 2020/21.
National Insurance
As widely trailed, the Chancellor announced an increase to the National Insurance threshold.
The NI threshold will increase from £8,632 to £9,500, handing an extra £104 a year to the typical employee.
The rise in the threshold, which will take effect from the new tax year on April 6, will benefit around 31 million taxpayers.
ISAs
The ISA subscription limit will remain at £20,000, but there was good news regarding Junior ISAs where the amount you can save will increase from £4,368 to £9,000.
Growth Forecasts
The Office for Budget Responsibility (OBR) is predicting that the UK economy will grow at just 1.1% this year compared to its prediction of 1.4% a year ago. This would mark the slowest pace since the financial crisis a decade ago. And this does not consider the impact of the Coronavirus pandemic.
While the Budget headlines focus on the raft of spending commitments, if the growth forecast is anything like that predicted, the Chancellor will find that future Budgets prove even more challenging.Please contact Alan Mellor or another member of the Phillip Bates & Co Financial Services team with any questions.
Budget that “protects the economy”
/0 Comments/in News /by EdwardLambNew Chancellor Rishi Sunak delivered a Budget that the Government believes will help to protect the economy amid the continuing Coronavirus outbreak.
The raft of spending pledges made by Mr Sunak, who has only been in the job for four weeks, were aimed at trying to minimise the impact of the outbreak and market turbulence on people’s lives.
As you would expect, a focus was on small and medium sized businesses (SMEs), providing vital support to help them navigate the choppy waters of the coming weeks as the UK and the wider world seeks to limit the damage caused by the pandemic.
This is the first Budget since the Conservatives won the General Election in December and, as such, the multitude of spending pledges were about setting the scene for what the Government wants to achieve during the lifetime of this Parliament. Having waited 500 days since the last Budget, there will be two this year with another one scheduled for the Autumn.
Prior to the Budget itself, the Bank of England declared a cut in interest rates from 0.75% to 0.25%, bringing borrowing costs back down to the lowest level in history.
Among the key announcements in the Chancellor’s Budget were:
Entrepreneurs’ Relief
As anticipated, Entrepreneurs’ Relief has been cut with immediate effect from a lifetime limit of £10million to £1million.
The Chancellor some calls to abolish the relief entirely, saying “we need more risk taking and creativity in this country”.
The rules allow business owners of more than two years to pay less Capital Gains Tax (CGT) when they sell – 10% rather than 20%. Any capital gains on businesses which exceed the new £1million limit will be taxed at the higher rate of 20%.
Pension Tax Relief
The income threshold that may reduce the amount high earners can contribute to a pension will rise from £110,000 to £200,000.
The Chancellor had come under pressure to make the change following a row involving NHS professionals, but the change will benefit any high earners including entrepreneurs who have spent a lifetime building a successful business but who only have a relatively small window to maximise their pension contributions.
The pension annual allowance is the maximum amount of pension savings that someone can build up in a year. From April 6, the threshold will increase to £200,000, meaning anyone who earns under this amount will not be affected by the tapered annual allowance of £40,000.
Pension Lifetime Allowance
The lifetime allowance – the maximum amount you can have in a pension over a lifetime – will also increase from £1,055,000 to £1,073,100 for 2020/21.
National Insurance
As widely trailed, the Chancellor announced an increase to the National Insurance threshold.
The NI threshold will increase from £8,632 to £9,500, handing an extra £104 a year to the typical employee.
The rise in the threshold, which will take effect from the new tax year on April 6, will benefit around 31 million taxpayers.
ISAs
The ISA subscription limit will remain at £20,000, but there was good news regarding Junior ISAs where the amount you can save will increase from £4,368 to £9,000.
Growth Forecasts
The Office for Budget Responsibility (OBR) is predicting that the UK economy will grow at just 1.1% this year compared to its prediction of 1.4% a year ago. This would mark the slowest pace since the financial crisis a decade ago. And this does not consider the impact of the Coronavirus pandemic.
While the Budget headlines focus on the raft of spending commitments, if the growth forecast is anything like that predicted, the Chancellor will find that future Budgets prove even more challenging.Please contact Alan Mellor or another member of the Phillip Bates & Co Financial Services team with any questions.
Coronavirus highlights importance of “well-balanced portfolio”
/0 Comments/in News /by EdwardLambThe continuing spread of Coronavirus in the UK and elsewhere has inevitably caused turbulence on the global markets.
Last week, the major stock markets saw their worst performance since the 2008 financial crisis.
The Organisation for Economic Cooperation and Development (OECD) is predicting that the global economy could grow at its lowest rate for over 10 years.
It is now forecasting growth of 2.4% in 2020, down from 2.9%, but is forecasting that this could fall further to 1.5% if there is a more “intensive” outbreak of the virus.
The Bank of England and other banking institutions around the world are on standby to take emergency action if required.
Any long-term investor is advised to avoid some of the doomsday scenario headlines you might see in the media.
If you are invested for long enough, history tells us returns are the reward for taking risk.
Inevitably, some people will sniff an opportunity as stocks fall, but it is never a sensible strategy given how difficult it is to pick both the top and bottom of a market.
Such an approach can never be anything other than speculation – something we do not practise at Phillip Bates & Co Financial Services.
Part of our responsibility to our clients is to ensure they have the necessary information to understand why we make the recommendations that we do.
The markets need buyers and sellers and there are currently more sellers, but this position will turn again. This is what creates the equilibrium that the markets require.
If your objectives are short-term, you should not be in the markets. They are very much for the longer-term investor seeking a well-balanced, diversified portfolio.
A balanced investor, such as one with a risk profile of 6 (RP6), will have experienced an uplift of 5.5% during the last 12 months – including the last two weeks of turbulence on the markets caused by the outbreak and spread of Coronavirus. Someone with such a risk profile will typically have 55% of their portfolio in equities and 45% elsewhere.
Sometimes, it is easy to be influenced by the shock headlines you see on TV in a given week when what an investor really needs to look at is what happens over a longer timeframe.
The job of an experienced Chartered Financial Planner is not to be stock pickers. This is far too short-term. As the name suggests, our role is to plan for our clients, plotting their income needs for the future.We will continue to carefully track the spread of Coronavirus and its impact on our clients’ portfolios, keeping you fully informed of any developments. As ever, please also feel free to contact our team if you have any questions or concerns.
New donors back Neston & District Community Fund
/0 Comments/in News /by EdwardLambWe are delighted to announce that several new donors are supporting the Neston & District Community Fund.
The Fund was launched in February 2015 by four local businesses – Phillip Bates & Co, Rightway, Clive Watkin and G Tilby Engineering. Current High Sheriff of Cheshire Mark Mitchell and his wife Anita subsequently became a donor.
To date, the Fund has donated a total of £37,260 to a range of charities and grass roots organisations working to support the community within the CH64 area of Neston, Little Neston, Ness, Burton, Parkgate, Puddington and Willaston.
Organisations that have been supported include Neston Community Youth Centre, Cheshire and Warrington Carers Trust, Healthbox CIC, Ellesmere Port and Neston Association of Voluntary and Community Organisations and the Royal Air Force Air Cadets, 2375 (Neston) Squadron.
Now, with the support of Mark and Anita Mitchell, the Fund has attracted several new supporters including Uren Foods. The company’s staff and social committee approved the decision to join the Fund.
The Fund is administered by Cheshire Community Foundation which receives applications from the CH64 area for consideration for funding.
CCF also actively looks for organisations within the Neston & District area which might want to apply for project funding.
Phillip Bates, Principal at Phillip Bates & Co Chartered Accountants, our sister company, said: “We are extremely proud of the organisations and projects we have been able to support since setting up the Fund almost five years ago.
“We set up the Fund with the goal of ensuring that local money goes back to local causes.
“We are now delighted that, thanks to the help of Mark and Anita Mitchell, several new donors, both local businesses and private individuals, have agreed to get behind the Fund.
“We look forward to building on the impact that the Fund has already had locally over the coming months and years.”
If you would like to find out more about becoming a donor to the Neston & District Fund, please contact Phil Bates on 0151 353 0003.
Have you got a retirement plan?
/0 Comments/in News /by EdwardLambThe end of one year and the start of a new one is often the time when people begin to look ahead.
January is one of the peak times for our chartered financial planners starting to work with new clients.
Our first conversation is about ascertaining what the client wants.
We need to understand the stage of life they are at. Are they approaching retirement or do they still have children at school or university? Do they own a business or are they employees? Has the mortgage been paid off? Do they have savings or have recently inherited?
We like to know what makes people tick away from work too. Do they have hobbies or enjoy dining out or taking holidays? Or do they have more of a cautious mindset to spending?
It is our job to ask the right questions to be able to advise the client in the most appropriate and personalised way and start to build an effective investment plan.
We would expect to gain a good insight at our no-obligation first meeting, which is always free, from which we can respond with a bespoke proposal we believe is right for the client.
Once someone becomes a client, we will agree their priorities and start to create a plan with the objective of providing long-term financial security.
We will look at your various policies, pensions, investments and accounts and, using industry-leading software, provide a detailed analysis of the current position and what needs to be done to achieve those future goals.
Markets are forever changing. Part of our responsibility to you is to keep abreast of fluctuations in terms of financial models, products, risks and cost of funds.
The one thing that is certain is that the financial services industry has changed a lot – and for the better – since I first started out 30 years ago.
Putting in place a long-term financial plan, that is carefully considered but maintains an element of flexibility, is the essential starting point.
The fun bit of our job is not so much watching our clients save money, but helping them to achieve and enjoy the retirement they envisage when the time comes.
For more information or to arrange a free initial consultation visit www.phillipbatesfs.co.uk or call 0151 353 1066.
Alan celebrates 30 years as financial advisor
/0 Comments/in News /by EdwardLambOur Managing Director Alan Mellor celebrates a career milestone this month.
It is exactly 30 years since he started out as a financial advisor with Barclays, subsequently becoming the bank’s regional director for financial planning.
For the past 15 years, Alan has been Managing Director of Phillip Bates & Co Financial Services.
Alan says: “The financial services industry has changed beyond all recognition during those 30 years.
“When I started out, it was very much a sales-oriented industry, whereas today it is much more of a service profession in which building long-term, trusted relationships is of key importance.
“For us, it is not just about the relationship of the chartered financial planner with the client. Instead, it is about the whole team. All our staff have a role to play in ensuring our clients’ experience is a great one.
“The way we interact with our clients varies from one to another. While many still enjoy the face-to-face contact, some will now use virtual meeting technology. Technology has also advanced in terms of the software we are able to use to develop a client’s long-term financial plan and predict changing patterns relating to the likes of cashflow along the way.
“Long-term planning is integral to the work we do today on behalf of clients. We want to understand their goals and then build a robust plan that will help them realise their objectives.”
One of Alan’s proudest moments was achieving chartered status for Phillip Bates & Co Financial Services – the benchmark of excellence in the financial services sector.
Alan says: “There are many financial advisors in our industry, but only a relatively small number have chartered status.
“We go a step further than this because we are also part of a Chartered Partnership with our sister company, Phillip Bates & Co chartered accountants.”
Brexit and a General Election – An update
/0 Comments/in News /by EdwardLambEarlier in the year, there was lots of chatter about companies and the wider public stockpiling in preparation for a possible no-deal Brexit.
A few months on, and further deadlines having passed, there continues to be political and financial uncertainty, but a determination among people to get on with life.
The next key dates would appear to be the General Election on December 12, followed by the latest Brexit extension which is due to run out at the end of January next year.
Prime Minister Boris Johnson called the election in the hope of securing a majority Government. The electorate will decide whether he – or one of the other parties gets their wish – or whether the country finds itself continuing in a hung Parliament but with a slightly different set of MPs.
As we near the end of 2019, the financial markets are relatively sound with the returns higher year on year.
The positive results are principally due to the falls of the previous year and they are currently too good to be sustained.
But the current position is that all assets are continuing to grow in an economic environment lacking in confidence.
Whatever happens with the General Election and the ensuing Brexit saga, we will continue to monitor the markets and react accordingly.
One consequence of the end of year political drama is that we will delay the release of our annual client portfolio financial review, usually published in November/ December, until January next year to ensure it takes full account of any impact caused by the General Election.
Hospice Africa and Bates & Co client appears on BBC North West Tonight
/0 Comments/in Uncategorised /by EdwardLambA long-standing client of Phillip Bates & Co Financial Services is Dr Anne Merriman.
Anne is the founder of Hospice Africa, a Liverpool-based charity, and recently appeared on BBC’s North West Tonight talking about her work.
You can watch the film here:
Anne has also kindly shared her experience of working with the team at Phillip Bates & Co. Our chartered partnership looks after all of Anne’s accountancy and financial planning requirements.
Anne said: “I have been with Phillip Bates & Co for so many years I cannot remember when it all started!
“But having accountants who understand my unusual situation and ensure that my money, made only over 7 years of my life, was invested securely and without risk, has given me the confidence to carry on with my work without remuneration.
“I have been in Africa 37 years and most of that as a volunteer. I needed solid financial advice from those I trust.
“Without Bates and Co. working with me and my friends in Liverpool, I would not be able to have founded Hospice Africa in 1993, and to have continued in Uganda, where we have our model for the vision of Hospice Africa, for 26 years.”
Anne added: “Africa has millions of cancer patients who do not receive any form of treatment for their cancers. They suffer terribly, suffering that we, in the developed world, never see.
“Since 1993, palliative care has moved in Africa, from 3 countries in 1993 to 35 countries in 2019. In Uganda, Hospice Africa has looked after 33,000 patients with cancer and/or HIV. Palliative care is available in nearly all districts and 90% of districts have a palliative care leader who can prescribe oral morphine for the severest pains of cancer. Meanwhile, based on the African type service, we have trained initiators from 35 countries.
“Still, aged 84 and after 26 years, I am able to carry on, without worrying unduly about finance, and I trust that when my time comes to leave this world, there will be something left to help Hospice Africa to continue with service and education, bringing a suitable African palliative care to all in need, which is culturally acceptable and affordable within the economy of each country.
“Over the years I have seen friends of my age group, lose money through poor advice and taking risks. This has not happened to me due to the great planning and investments made by Bates and Co. In my short times back in Liverpool they have come to my home to advise me when I am concerned.
“I have never had to worry about my own financial situation. My biggest worry is the financial situations of my patients and families and the sustainability of our work in Africa, which is so needed.”
Visit the Hospice Africa website to learn more about their fantastic work.
Why Chartered status matters
/0 Comments/in News /by EdwardLambChartered Financial Planner status is widely accepted as the ‘gold standard’ qualification for professional financial planners and financial advisers in the UK.
The Chartered Financial Planner qualification is overseen by the Chartered Insurance Institute (CII). The CII says on its website that gaining Chartered status “is challenging and takes commitment” and “places you among the top professionals in your field”.
It is recognised and respected by consumers as a mark of trust.
We have three chartered financial planners at Phillip Bates & Co Financial Services – Alan Mellor, Helen Brown and Margo Dorozik.
Alan has held the status for a number of years, while Helen and Margo both qualified last year.
Alan says: “To have three chartered financial planners in the team is recognition of our commitment to delivering high quality financial planning services to our clients.”
We are also proud to be part of a Chartered Partnership with our sister business, Phillip Bates & Co, holding chartered accountant status.
GPs hit by tax changes
/0 Comments/in News /by EdwardLambOne of the biggest talking points with higher earning clients working in the NHS has been the Government’s tax charges on pensions.
The NHS Pension Scheme has undergone quite drastic changes in recent times.
The annual cap on how much pension pots can increase by, tax-free, has been set at £40,000 since 2016.
GPs and consultants are therefore hit with tax if they attempt to grow their pension savings by more than this in one year.
Alongside this, the Government brought in new rules regarding the amount of tax-free pension benefits that can be built up over a lifetime – cutting the limit from £1.25million to £1million.
Then there were changes to the amount of tax relief on pension benefits that the highest earners could gain. It means the tax-free limit was cut to as low as £10,000 for those earning the most.
The upshot of the changes was a growing number of the highest earning medics saw no reason to carry on working until retirement age, while others opted to reduce their clinical hours to avoid the pension charges.
It seems that the Government has listened and is proposing new reforms aimed at trying to stem the tide of retiring GPs.
The thrust of the reforms focus on allowing NHS employees the chance to build their pension pots more gradually, thereby avoiding charges.
Currently, there is no flexibility with the highest earners required to pay 14.5 per cent of salary.
The immediate reaction from GPs has been somewhat underwhelming with one GP saying: “You will take a bit more home at the end of each month by avoiding tax bills – but your pension is halved. That doesn’t seem very generous or like a way of encouraging me to work harder.”
Refer a friend
/0 Comments/in News /by EdwardLambWe pride ourselves on providing our clients with an outstanding service.
It’s important to us because we value our client relationships and want you to be delighted with the advice we provide.
One of the benefits of providing a great service is that many of our clients are pleased to refer us to friends, family and other contacts.
If you know someone who would benefit from an initial free consultation with one of our three chartered financial planners, please do get in touch.
At the end of every quarter, we will look back at the referrals we have received and award a bottle of bubbly to the best one!