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Seven Rules for Building Powerful Professional Relationships

Powerful professional relationships are often the foundation of tremendous success enjoyed by the self-made Super Rich, who prove to be quite remarkable at connecting interpersonally with other businesspeople and motivating them to help the self-made Super Rich achieve their goals.

Here are just a few ways you can build powerful professional relationships:

  • Demonstrating your passion gets other people to want to align themselves with you and your endeavours.
  • Harness the power of reciprocity – help others get what they want and they’ll return the favour.
  • Admitting and revealing your imperfections can actually create stronger relationships and better results.

Click the image below to read the full article:

Professional Relationships

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Selling a Business? Avoid These Four Big Mistakes

Successful entrepreneurs spend much of their lives building valuable companies. Eventually, many of them end up selling those businesses.
In some cases, no one else is available to carry on the business. Other times, health problems interfere. Often, an opportunity to sell comes along that is just too good to pass up.

  • Key personnel in a company must be well-prepared for the sale of that business.
  • Company financials must be strong and well-documented for potential buyers to get and stay interested.
  • Support from the right team is usually essential to having a smooth and successful sale of a company.

Click the image below to read the full article:

Business Sale

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

The Two Types of Professional Networks You Need to Become Super Rich

There are two types of professional networks that you need in order to support your business and gain an abundance of wealth. Expansive networks and nodal networks are vital to becoming super rich.

  • Top entrepreneurs use expansive networks of many people and nodal networks with just a few contacts to generate tremendous wealth.
  • Nodal networks are tougher to build – they require deep relationships with exactly the right people – but they offer a tremendous return on investment of your time and energy.
  • Leveraging the connections of your own network members can work like rocket fuel – rapidly accelerating your success.

This article explains exactly what these networks consist of and how they could benefit you.

Click the image below to read the full article:

Professional Networks

 

 

 

 

 

 

 

 

 

 

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Brexit and Your Portfolio

Whichever way one voted, it is hard not to be dismayed by the shambles that is Brexit, concocted by all sides. In the event that any deal agreed gets voted down in Parliament, or there is no deal, there is a material chance that the government could fall. One or both of these events would come with great uncertainty.

We set out three key investment risks relating to Brexit and how sensible portfolio structures can mitigate them.

Risk 1: Greater volatility in the UK and possibly other equity markets

In the event of a poorly received deal or no deal, it is certainly possible that the UK equity market could suffer a market fall as it tries to come to terms with what this means for the UK economy and the impact on the wider global economy.  A collapse of the Conservative government and a Labour victory would add further uncertainty.

Risk 2: A fall in Sterling against other currencies

In 2016, after the referendum, Sterling fell against the major currencies including the US dollar and the Euro.  There is certainly a risk that Sterling could fall further in the event of a poor/no deal.

Risk 3: A rise in UK bond yields (and thus a fall in bond prices)

The economic impact of a poor/no deal and/or a high-spending socialist government could put pressure on the cost of borrowing, with investors in bonds issued by the UK Government (and UK corporations) demanding higher yields on these bonds in compensation for the greater perceived risks. Bond yield rises mean bond price falls, which will take time to recoup through the higher yields.

Mitigant 1: Global diversification of equity exposure

Although it is the World’s sixth largest economy (depending on how you measure it), the UK produces only 3% to 4% of global GDP, and its equity market is around 6% of global market capitalisation.  Well-structured portfolios hold diversified exposure to many markets and companies.  Changing your mix between bonds and equities would be ill-advised.  Timing when to get in and out of markets is notoriously difficult. Provided you do not need the money today, you should hold your nerve and stick with your strategy.

Mitigant 2: Owning non-Sterling currencies in the growth assets

In the event that Sterling is hit hard, it is worth remembering that the overseas equities that you own come with the currency exposure linked to those assets.  Remember too that a fall in Sterling has a positive effect on non-UK assets that are unhedged.  The bond element of your portfolio should generally be hedged to avoid mixing the higher volatility of currency movements with the lower volatility of shorter-dated bonds.

Mitigant 3: Owning short-dated, high quality and globally diversified bonds

Any bonds you own should be predominantly high quality to act as a strong defensive position against falls in equity markets.  Avoiding over-exposure to lower quality (e.g. high yield, sub-investment grade) bonds makes sense as they tend to act more like equities at times of economic and equity market crisis.

Some thoughts to leave you with

Even if you cannot avoid watching, hearing or reading the news, it is important to keep things in perspective.  The UK is a strong economy with a strong democracy.  It will survive Brexit, whatever the short-term consequences that we will have to bear, and so will your portfolio.  Keeping faith with both global capitalism and the structure of your portfolio and holding your nerve, accompanied by periodic rebalancing is key.  Lean on your adviser if you need support.

‘This too shall pass’ as the investment legend Jack Bogle likes to say.

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Pier-to-Pier: How The Sharing Economy Gets You Access to Luxury Boats

Few things send a clearer message to the world that you’ve made it than owning a yacht or other type of high-end boat. Boating can quickly become one of life’s great pleasures and thanks to the sharing economy, boats are more accessible than ever. This is due to the cost and hassle of boat ownership, which has led to a big growth in services that allow more and more people to rent amazing watercraft.

Most people don’t know that:

  • Most boat owners use their boats just 11 days a year.
  • Traditional boat membership clubs can get you access to a fleet of different types of watercraft.
  • Online services will link you to boat owners looking to rent their luxury vessels for anywhere from a few hours to several weeks.

Click the image below to read the article

boats

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Buy to Let – better than a pension?

Buy to let changesNow there’s a question, and believe me it’s one that I hear on a regular basis.

Let’s face it – as a nation we’re suckers for property. Unhealthily so. We can’t get enough of it. The television channels are saturated with aspirational property programming while newspapers and websites are filled with the latest property deals and mortgage offers.

It’s very easy to view property as a quick route to instant wealth – ‘once you’re on the housing ladder, you’re off and away’ goes the general consensus. It’s also easy to see pension pots in a negative light – after all, the same media outlets we’ve mentioned above have dished out plenty of miserable stories regarding pensions over recent years, leading investors to perceive the UK equity market as unstable. Pensions are also a lot less tangible than physical property. With property you can actually see and feel your investment, whereas a pension feels like something that will only yield benefits far away in the future.

However, it’s a little more complex than that. Government-enforced changes are on the way that are going to have a substantial effect upon landlords of buy-to-let properties.

Changes to Buy-To-Let Tax Policy – What You Need to Know

Firstly, in order to make the tax system a little fairer the government will restrict the amount of Income Tax Relief that landlords can receive on residential property finance costs. This change will occur gradually from April 2017 to 2021. The two main changes come in Wear & Tear Allowance and tax relief on mortgage interest.

As a result of these changes, landlords of rental properties could see their tax credits reduced. In the case of wear and tear allowance, such an allowance will only be given on expenditure actually incurred in maintaining the property and furniture as opposed to the current system which pays out irrespective of the actual costs paid. The tax relief on mortgage interest will be phased out at 25% per year so that eventually it is only available at the basic rate.  It’s also possible that some basic rate taxpaying landlords could find themselves moved into a higher rate tax band.

In the recent Autumn Statement it was also announced that from 1st April 2016 the stamp duty land tax rates will be increased by 3% for purchasers of buy-to-let and second homes.

Do you understand the capital gains tax implications of owning a buy-to-let property? Gains on the sale of a buy-to-let property will usually be taxed at the capital gains tax rate of either 18% or 28%, whereas gains on investments held within pension funds are usually free from capital gains tax. Also from April 2019, it has been proposed the payment of any capital gains tax on the sale of a buy-to-let property will be required within 30 days of the sale completion.

If you need help with the tax implications on your existing buy-to-let property get in touch because we have tax experts in this area within our Professional Network.

Clearly, careful thought now needs to be given as to whether getting involved in buy-to-let property is the choice for you, based on the potential future repercussions. You needn’t hit the panic button just yet, as these changes have not been set in stone and there are likely to be more discussions and changes to come in the intervening period.

Buy To Let vs. Pension: Get a Second Opinion

In fact, it’s not all doom and gloom. Where there is threat and risk for some, there is also opportunity for others. If cash-strapped rental property owners find themselves wanting to sell as a result of the changes, this could mean that a wealth of lower-priced properties suddenly become available on the market.

But again – how would these property opportunities compare with a solid and well-planned structured pension plan? What are the long-term benefits and risks of both investment strategies?

I’d be more than happy to tell you. If you’re a little unsure of what steps you should take now or in the near future to secure the best form of investment suited to you and your needs then all you have to do is get in touch and we can chat through the options based on your own individual situation.

Do drop me a line by calling 0121 308 8034 or via email at info@donaldwm.co.uk and we can talk things through. Regardless of what changes may come, a little careful and considered financial advice can help to ensure that you and your investments stay on top.

 

Other notes and risk warnings

This article is a financial promotion of the services provided by Donald Wealth Management (the Firm). The article contains the opinions of the Firm but does not represent a recommendation of any particular security, strategy or investment product. The Firm believes investors make more informed investment decisions after seeking financial advice.  For more information about the services of the Firm, visit https://www.donaldwm.co.uk.

Donald Wealth Management does not provide mortgage or buy-to-let mortgage advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of a unit linked investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

 

 

Smoke, mirrors and the true cost of investing

iStock_000020174840Medium - Copy (400x266)It is unlikely that many readers of this blog will have noticed that the industry body that represents the fund management industry in the UK – The Investment Association – is in turmoil.  By way of background, the Investment Association has over 200 member firms managing more than £5.5 trillion globally.  Its aim is an honourable one: ‘to make investment better for clients, companies and the economy so that everyone prospers’.

Yet its CEO has just resigned, and two of the largest member firms – Schroders and M&G – are allegedly quitting the organisation because of recent reforms being undertaken.  These reforms, delivered as a non-legally binding ‘Statement of Principles’ to be signed by members, are aimed at aligning interests, placing clients first and providing investors with greater transparency on costs.  Apparently only 25 out of 200 signed up!  Every investor, surely, has the right to know what costs are being incurred to manage his or her money.

A recap on why costs matter

In order to understand the importance and impact of costs – and perhaps the reluctance of active managers to sign up to the new principles – one needs to understand that transacting in markets is a zero-sum game, in aggregate.  The return of the market is simply the average return of all investors, before any costs have been deducted.  In real life, the returns achieved by investors need to take into account the costs of transacting in the market.

The simple maths of the less-than-zero-sum-game-after-costs means that the average investor in lower cost passive funds will beat a majority of investors invested in higher cost active funds.  That is a galling conclusion for the clever and hardworking active fund management community.  Yet time and time again, the empirical evidence[1] suggests that the vast majority of active managers fail to deliver on their promise to beat the market.

The elements of investment cost

The range of fees and costs incurred by investors is long, complicated and hard to put an accurate figure on, something the Investment Association’s ‘Statement of Principles’ would have done much to improve. We have a go.

Ongoing Charges Figure (OCF):

The ongoing charges figure (OCF) is the overt cost that investors incur by investing in a fund.  This is the sum of the Annual Management Charge (AMC) charged by the fund manager and the other direct costs incurred by the fund, which can be offset against the fund’s performance.  As such, the OCF is nearly always higher than the AMC alone.  OCFs can be found in the Key Investor Information Documents (KIIDS) that each fund or ETF is required to produce.

Turnover (dealing) costs:

These are the covert costs incurred by investors when securities within a fund are bought and sold.  The costs are the product of the proportion of the fund that has been turned over and the costs of transacting the trades to sell and buy securities.  Investors are, by-and-large in the dark when it comes to dealing costs.

Costs in practice

The figure below provides a summary of the estimated cost differential based on the latest research that we can find, capturing both the seen and hidden costs.  The figures relate to a 60% growth assets (equity) and 40% defensive asset (bond) mix.  The representative passive portfolio is based on a global portfolio with allocations to value and small cap equities, emerging markets and global commercial property, balanced by short-dated global bonds and inflation linked bonds.  The average active portfolio is based on the same asset allocation and dealing costs, but uses average OCFs of UK domiciled equity and bond funds and sector specific turnover rates.

Figure 1: Cost comparison – costs matter

 

costs matter

Source: Albion Strategic Consulting

Conclusion

It is impossible to overstate how important it is to manage costs of all kinds tightly. It is something that we continue to do on behalf of our clients, through our approach to selecting managers with a systematic low cost approach to investing.  Over the past few years passive fund costs have fallen significantly, which is great news for investors. As the legendary Jack Bogle[2] once said:

‘In investing, realize that you get what you don’t pay for.  Whatever future returns the markets are generous enough to deliver, few investors will succeed in capturing 100% of those returns, simply because of the high costs of investing—all those commissions, management fees, investment expenses, yes, even taxes—so pare them to the bone.’

We agree.

 

Other notes and risk warnings

This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of a unit linked investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

[1]     For example http://us.spindices.com/resource-center/thought-leadership/spiva/

[2]     In Investing, You Get What You Don’t Pay For.  Remarks by John C. Bogle, The World Money Show February 2, 2005, Orlando, Florida https://personal.vanguard.com/bogle_site/sp20050202.htm

New Model Adviser’s Top 100 for 2015

NMA_2015We were delighted to learn this week that for the third year running we have made the New Model Adviser’s Top 100 UK adviser list.

The judges commented: ‘It is a competitive market place where staying ahead of the curve is key.  As such, the Top 100 highlights the advisers who are at the cutting edge of financial advice in terms of their profitability, qualifications, assets under advice, recurring income and overall commitment to the profession.’

Congratulations to the whole team at Donald Wealth Management.

 

Other notes and risk warnings

This article is a financial promotion of the services provided by Donald Wealth Management (the Firm). The article contains the opinions of the Firm but does not represent a recommendation of any particular security, strategy or investment product. The Firm believes investors make more informed investment decisions after seeking financial advice.  For more information about the services of the Firm, visit https://www.donaldwm.co.uk.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of a unit linked investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

 

Is your wealth manager in your corner?

Many of my clients will know I was a keen follower of boxing and before family commitments I used to regularly head across to Las Vegas to watch the big fights.

So I took the opportunity on my recent holiday to read Mike Tyson’s autobiography ‘Undisputed Truth’. One particular section struck a chord…

11th February 1990 & impossible odds

Boxing fans amongst you may remember the date. This was the night that 42-1 underdog James Buster Douglas knocked out Mike Tyson in stunning fashion at the Tokyo Dome in Japan. The result was unthinkable prior to the fight with Tyson entering the ring undefeated in all of his previous professional contests and seemingly on course to reign supreme in the heavyweight division for many years to come.

Tyson – by his own admission – had taken Douglas for granted and barely trained for the fight. Douglas had come into the ring in the best shape of his life, heavily motivated by the death of his mother and new found religion.

Tyson’s usual peek-a-boo defensive style and head movement was replaced by a static target which Douglas found difficult to miss on the night.

Chaos in the corner

Tyson wasn’t helped by the serious lack of experience in his corner that night either. His decision to replace his trainer had come back to haunt him. As his book says: ‘After the third round, I went back to my corner and it was obvious that Aaron and Jay were in over their heads’.

It got worse as the fight progressed.

During the fifth round, my eye began to swell, but when I went back to the corner, they didn’t even have the End-Swell to keep my eye open. I couldn’t believe it when they filled what looked like an extra-large condom with ice and water and held it to my eye.’

What might have been?

The resulting loss and fall from grace leaves many unanswered questions about the career Tyson could have had. If he had maintained the original training regime and guidance he received in his early boxing career, how long would he have remained unbeaten? At the time he needed help and support most, his lack of support was frightening.

So who’s in your corner?

Tyson’s story made me think about the vital role we, as wealth managers, play for our clients. When times are good it’s easy for clients to forget the basics and all the hard work that must go into protecting and building their wealth. When markets are going up it can be incredibly tempting to take more financial risks and not diversify. However, it’s vital the wealth manager is there guiding clients through difficult markets when things turn around.

Timing is precious and mistakes can be extremely costly. All those years of hard work can be undone by poor decisions in the moments of strife in the financial markets.

That’s where your wealth manager earns their fees: by being the great corner-man when everything appears to be going against you while offering sensible and succinct advice to guide you through the market pain and to keep your finances on track.

If you don’t feel like your current wealth manager is in your corner when things start to get tough, why not take a look at our second opinion service?

It might just stop your finances taking a knock-out blow.

Call us now on 0121 308 8034 or email jamie.donald@donaldwm.co.uk

Other notes and risk warnings

This article is a financial promotion of the services provided by Donald Wealth Management (the Firm). The article contains the opinions of the Firm but does not represent a recommendation of any particular security, strategy or investment product. The Firm believes investors make more informed investment decisions after seeking financial advice.  For more information about the services of the Firm, visit www.donaldwm.co.uk.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of a unit linked investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

In the news – October 2015

dog reading newspaper

Here are the latest stories in the news – October 2015 – which may be of interest to our clients.

Family disputes on the rise

The number of family financial disputes that reach the courts is rising, says the Financial Times. An expert explains that one reason is the rising value of people’s assets. The typical cost of a court case over a will is £60,000, and rising property values means there is often a lot more than that at stake if someone feels they have been left less than they were due. Another factor is complicated families, with people wanting to provide for children by earlier marriages. One lawyer says home-made wills are a gift for him since they are rarely adequate.

Millions won’t get new flat-rate pension

The flat-rate state pension starting in April 2016 was billed as simple but is anything but, says the Mail. It turns out that because of complex qualifying rules, as many as two million people will not get the full flat rate pension. For most, this will be because for some part of their working life they were ‘contracted out’ of the state scheme. What baffles most people is that even if they have the 35 years of NI contributions that are required for a full state pension, if they were contracted out at some point they will still suffer a deduction.

Listing slump hits London properties

There has been a slump in new residential property listings for sale, says the Mail. Nationwide, listings have fallen 20% since June but in many London boroughs new listings are down over 30%. Some agents say the average rise in prices of 5.2% in the year to July is partly due to this shortage of supply.

The place to buy is Birmingham

The Mail quoted estate agents tipping Birmingham as a likely top performer in property over the next year. The last major pieces of city centre redevelopment are happening, including the second largest John Lewis store in the country above New Street station, and 2-bed city centre flats are still available for under £250,000. By London standards that seems absurdly cheap. Birmingham’s population is 1.1 million and growing with a surprisingly low average age of 35.

HMRC chases contractors

The taxman is chasing thousands of self-employed contractors who used mass-marketed schemes to avoid PAYE on their earnings, says the Mail. Last year HMRC gained new powers to force people to pay up the amount of tax HMRC says is due, and then argue their case through tribunals. The result is that many contractors have received demands for tax equal to their annual earnings. Experts say the HMRC assessments are often wrong, in which case people will eventually get refunds, but they still have to stump up the cash. The campaign against tax avoidance is becoming more aggressive.

Beware 70% pension tax charge

Thousands of people aged over 55 who take money from their pension funds face possible 70% tax charges, says the Mail. This is because if you take a tax-free cash sum of over £7,500 from a pension fund, and then add to your regular pension contributions, HMRC can claim that you are abusing the tax relief system and impose a 40% tax charge on the tax-free cash withdrawal plus 30% in other charges and penalties. The issue arises because many people are taking cash from old pension pots, typically worth less than £50,000, while remaining in their employer pension scheme to which they make contributions. It’s open to HMRC to say that if the tax-free cash was used to, say, pay off debt, that was what enabled someone to pay more into their pension – and this is defined as abuse.

This is yet another example of why you really do need to take care – and advice – on pensions to avoid the tax traps.

Pension tax relief under threat

The government launched a review of pension tax relief in July, and is expected to announce a policy change, perhaps as early as November, says the Times. Most experts believe the tax relief system will be changed to reduce tax relief to a flat rate of about 30%, and suggest that higher rate taxpayers make hay while the sun shines.

Don’t underestimate illness risk

Half of all workers think the risk of being unable to work though illness is less than one in ten, says the Independent. In fact the risk is a lot higher, and every year 300,000 people go from work to welfare as a result of illness. There are several types of insurance that can be used alone or in combination to provide cover for a family, but experts and insurers agree that this is something the general public knows almost nothing about.

Income protection is especially important for the self-employed and business owners.

Automatic train delay refunds from Virgin

Virgin Trains has become the first operator to offer automatic refunds if trains are delayed or cancelled, says the Sunday Times. Refunds start at 25% for a 30-minute cancellation, rising to a full refund if the delay is over two hours. The refunds will go direct to customers’ accounts, but only if they have bought direct from Virgin. It’s estimated that three-quarters of those entitled to refunds don’t currently get them because of the need to fill in forms from operators’ websites. But as many as 50 million journeys a year could qualify for some form of compensation.

A £2 billion ISA rip-off

Savers are losing as much as £2 billion a year in interest because banks have cut their interest rates on cash ISAs so much over the past two years, says the Sunday Times. According to the Bank of England, the average interest rate on cash ISAs two years ago was 2.35%, but today – even though the Bank’s base rate has remained the same at 0.5% – the average is just 1.43%. In November, National Savings & Investments will cut the rate on its popular cash ISA from 1.5% to 1.25%. The Sunday Times suggests readers forget cash ISAs and use bank accounts that offer high interest rates up to 5% on up to £5,000 of savings – even after paying tax, these offer higher returns.

Losers complain about state pension rules

Hundreds of thousands of people retiring after April 2016 will get less than the new flat-rate State pension, says the Times. Most do not understand why, since the pension statements they get from the Department of Work and Pensions don’t explain. In fact, for the majority of those who get smaller state pensions, the extra pension they get from their employer for the period for which they were ‘contracted out’ of the state scheme will more than make up the deduction. But the rules are complex and are different depending on when and for how long you contracted out.

Pension recycling

Taking tax-free cash from your pension fund and investing it back into your pension can be an easy way to pick up extra cash, says the Mail. This is because tax relief is added to your contributions. But nobody is yet sure how HMRC will apply its ‘anti-avoidance’ rules that can result in high penalties for people who do this on a large scale or regularly. In theory, anyone drawing more than £7,500 in tax-free cash and contributing to a pension scheme at the same time could be caught by these rules.

Can’t afford to downsize

The Telegraph featured the story of an elderly couple living near Cambridge who wanted to downsize. Their detached 4-bed home was in a village and was valued at £280,000, but they couldn’t find a suitable retirement property – ideally a flat with a small garden – for less than £350,000, and would have had costs of some £20,000 on top.  This shortage of suitable property is preventing many older people from downsizing and freeing up family homes.

HMRC cracks on with digital

HMRC is on a mission to eliminate paper forms, says the FT. It is already starting to send out self-assessment forms with a lot of pre-populated data. That will increase as it moves towards online accounts where it no longer sends out self-assessment forms by about 2020, saving 12 million people from their least favourite task of filling them in.  HMRC also told the FT how useful its Connect system is in tracking down tax evaders by pulling together information from public sources as well as its own records.

Crackdown on risky pension investments

The regulator is changing its rules to make it harder for investors to use their pension pots for risky investments. Until now, they have been able to qualify as ‘high net worth’ investors by counting their pension pots among their assets, but now they will not be able to include their pension tax-free cash in their assets, so fewer will qualify. Though high-risk investments are unsuitable for most investors, some have been lured by the promise of high returns from schemes that have collapsed or proved fraudulent.

Household staff pensions

People who employ household staff, both full and part-time, will have to make arrangements to set up auto-enrolment pension schemes for them, says the Financial Times. Anyone earning over £10,600 has to be enrolled and those earning over £486 per month are entitled to join if they wish. The timing depends on the numbers involved, but for most will be in the next 18 months.

Better protection

The Consumer Rights Act that took effect from 1st October has improved consumer rights, says the Independent. It sets a definite period of 30 days within which you can get a full refund for faulty items, and extends that right to digital downloads, which were not previously covered.

 

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