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ABC Europe Launch

In an earlier News & Views, we confirmed our plans to launch ABC Europe Limited and I am delighted to say that not only have we gone live with the business, but we can also announce that Jennie Poate and Hazel Matthews have joined the ABC Europe team.

Jennie is an experienced financial adviser who trained and worked originally in the UK before moving to France in 2008 with her family, where she retrained and has been providing specialist financial planning advice for over 15 years. In addition to bringing with her the majority of her clients, Hazel Matthews, her long-term PA has also joined us, which not only strengthens our team but also, provides even more continuity for the clients concerned.

We therefore extend a very warm welcome to Jennie and Hazel and we look forward to growing the business in France and throughout Europe.

ABC Europe will deliver our services to the highest standards in a fully compliant way. To achieve this, we have teamed up with Nexus Global Network, which is a division of Blacktower Financial Management, who are our licencing partner and compliance support provider for this business.

For more details, please visit www.abc-eu.com or email info@abc-eu.com

Inheritance Tax (IHT) – Panel Breakfast in Tunbridge Wells – 2nd July 2024

On 2nd July, Martyn Bates will be joined by Nathan Blackmore from Way Trustees and Adam Saunders from Sutton Winson, International Insurance Brokers, to co-host a panel discussion. They will be looking at possible IHT liabilities and effective planning solutions to help minimise or avoid IHT, whilst retaining control of assets.

This will be held at 10.00 AM at The Finance Hub offices, located at the southern end of the Pantiles in Tunbridge Wells. There is no charge for attendance, but places are limited, so if you are interested, please email martynbates@abc-ifa.com to reserve your place or to find out more details.

End Of Q1 And Values Are Up

How refreshing it feels to be able to report that globally most markets showed positive returns over the first quarter of this year and have built on the gains made in the last quarter of 2023.

Even though we have recently seen a small hiccup with inflation rates, both in the UK and US, these were minor and it is not anticipated that that they will derail the planned cuts in interest rates which are widely tipped to start in June or July this year.

The economic news in the UK has also been more positive, with a return to growth in January and February and the numbers for March are looking promising too. If this follows through, it will mean the UK is out of its technical recession and that it will have been a very soft landing.

These are all positive noises which markets like and so the cautious optimism with Fund Managers is still in evidence and should be reflected in continuing market growth as the year unfolds.

The Devil In The UK Pension Detail

(This is only relevant to UK tax residents with UK pensions so if this is not you, please skip this section.)

When it was announced last year that the Lifetime Allowance (LTA) for all pension benefits was being removed, this seemed a very positive announcement and immediately, we thought we would be back to where we were before the LTA was introduced in 2006. What a relief that would have been but as with most pension related things, as the detail unfolded, we began to appreciate there was a lot more to it!

The LTA was first introduced in 2006 at a level of £1.5m. This was the maximum amount that could be accrued in pension benefits and enjoy the full tax breaks. The LTA had several increases to £1.8m, then reduced to £1m and subsequently increased again to £1,073,100 – isn’t political interference great!

So, what is the detail to be aware of? One of the attractions for UK tax residents, is that up to 25% of the pension fund value can be withdrawn tax free. With no LTA before 2006, there was no upper limit. With the introduction of the LTA, the maximum was restricted to 25% of the LTA. But, even though the LTA has now been removed once more, the tax free cash limit is restricted to 25% of the last LTA i.e. £1,073,100. In monetary terms, this amounts to a maximum of £268,275. (Are you nodding off yet?)

From 6th April 2024, we simply have a monetary amount as a limit, but what about existing pensions, where benefits have been taken – well, that’s where it gets “really interesting”!

Prior to these changes, when benefits were taken from a pension, this was called a crystallisation event. At that point, a decision is needed regarding the amount of lump sum to be taken tax free. The total fund being crystallised would then be measured as a percentage of the LTA applicable, to record the percentage of the LTA that had been used.

As an example, in 2006, when the LTA was £1.5m, crystallising £150,000 of the pension fund, would have used 10% of the LTA. The tax-free lump sum that was available would have been up to 25% = £37,500. However, you could have opted to take a lesser amount or not to take a lump sum at all and if that was the case, you would still have used 10% of the LTA.

Under the new rules, which simply measures the amount of lump sum taken as a monetary amount, if a lump sum was not taken, (or if less than 25% was taken), then less of the lump sum allowance and possible none of it will have been used. (now you really can be forgiven for nodding off!)

This means that we have had to check for all of our clients with UK pensions, whether relevant circumstances applied and they would be better off under the new rules. Where this is the case, we need to apply for a TTFAC (Transitional Tax Free Amount Certificate – a catchy little name!) before the next benefits are drawn from the pension.

Where we have the records, we can check but because we don’t have the records for every pension our clients may have, we wanted to raise awareness here as there could be merit in reviewing if you have other pensions.

This will only impact people over age 55 now or who are in an occupation which allows retirement before age 55 – professional sports people as an example or perhaps taking benefits early due to ill health.

Whilst this does not impact anyone who had a protected LTA at a higher level, (which was possible at various stages), and is unlikely to impact those who took 25% and have total pension fund values that are not close to the LTA but, the following circumstances could give rise to benefiting from a TTFAC, which should now be applied for.

If any of these circumstances apply to you and you would like us to complete a review for you, then please get in touch with your usual contact at ABC or email info@abc-ifa.com

If none of the above circumstances apply to you, then feel free to breathe a sigh of relief!

As always, if we can assist in any way, please do let us know and we will keep in touch.

Best wishes from all at ABC.

“We have capacity and would welcome personal referrals.”

Most of our clients come to us by way of personal referral, which is a very strong starting point, and we would therefore be very pleased to receive any introductions that you might think appropriate. Rest assured, our follow up will be totally confidential and without cost or commitment for an initial chat or meeting to determine if we are able to assist.

I appreciate that my title for this News & Views is a mis-quotation – with the original being attributed to Mark Twain, when he was talking about Statistics rather than Politics, but with all that is going on in the world of politics now, it seemed to me to be a rather apt adaptation.

As I have expressed previously, I like to think of myself as being apolitical and able to keep an open mind, but with all the political hot air and rhetoric going on both sides of the Atlantic, it becomes ever more difficult to decipher fact from fiction. As we know, it is against their creed for any politician to use the word yes or no in reply to a question – far too straightforward, but the levels of politicians talking in riddles, half-truths and clear spin, seems to be reaching new heights, with no effective means of calling them out it would seem.

The problem is, we have most of this year to look forward to more of the same – in that regard, I will be glad when the year is over, or at least the Elections!

A real concern though, which is often raised, is whether the results of Elections, either in the UK or US, are likely to have serious impact on the markets and in the main, my answer has to be, probably not. History shows that this is not normally the case and if you think about it, even if the people in the ‘driving seat” change overnight, that is the only thing that does immediately change. The financial and economic situation they inherit does not suddenly change and as we have often said, markets are trying to guess what the future may bring and with lack of real clarity until way after any Election result, there is unlikely to be a severe knee jerk reaction in markets.

To my mind, the main drivers remain inflation and interest rate expectations and unless or until something changes drastically in either regard, Election results should not make a great difference in the short term.

Another concern though is with the Central Banks and the “knife-edge” that they work on when setting interest rate policies – there has to be a real concern here that delaying rate reductions could have a negative impact and potentially even fan the flames of stagflation which, combined with a wave of shrinkflation, which is becoming all too evident in many areas, could totally stifle any real chance for growth to return to the economy. As always, we will have to wait to see and hope that some lessons can be learnt from the past!

“What News From The UK Budget Statement?”

I deliberately delayed the timing of this News & Views, to enable us to see what the March 6th Budget Statement in the UK had to say, as I had hoped there would be something of interest to talk about, but it would seem that was a forlorn hope!

With much talk about a Budget to stimulate growth, this to my mind, was a big disappointment and arguably, saw the continuation of a major U-turn by the current Conservative Government, which to many has gone unnoticed.

The further 2% cut in National Insurance Contribution (NIC) rates for both employees and the self-employed, will be welcomed by them I am sure. However, this goes hand in hand with a continuing freeze on Income Tax thresholds and tax bands, which arguably, more than wipes out the NIC savings for most people. A strong political headline but also political sleight of hand.

The NIC reductions may help the working population, but the tax band freezes hurt everyone from those who are new to the workplace right up to the retired population.

Sadly, nothing was done to ease the tax burden for employers, with their NIC rates remaining the same and with the impact of increased Corporation Tax, (increased from 19% to 25% from April 1st 2023) which will impact corporate year ends now, many of which fall on 31st March, it is very difficult to see how this latest budget could be described as a “budget for growth”.

The political U-turn I was referring to, is that earlier Conservative Government’s pledges to reduce Income Tax and remove more people from Income Tax altogether – it would seem this commitment, like so many others, has been forgotten!

There was one potential bright spot though and that is the introduction of the new British ISA £5,000 allowance but sadly, we have no details as yet. This has been flagged as an attempt to stimulate growth via new investment, but with this proposal only now entering a consultation phase, we do not know how it will work and whether it will attract significant new investment – another one on the “watch list”.

As we are now approaching the tax year end in the UK (5th April), I thought it might be useful to repeat the key year end considerations that I mentioned last time which are below.

“New UK Tax Year Looming!”

Pension contributions remain a favourite topic, for those with earned income, in view of the tax savings that can be made and, in some circumstances, the ability to lower tax bands and/or extend the basic rate tax band can be achieved.

With the abolition of the Lifetime Allowance, (LTA) for pension funds, this has largely removed a fear of overfunding. Also, with total flexibility in accessing benefits over the age of 55, an exemption from Inheritance Tax (IHT) and the ability for pension funds to “cascade” down the generations; rather than being a “stuffy old pension,” they are in fact an exceptional IHT and succession planning tool which can be used to great effect.

With the ability to contribute up to £60,000 per year and to carry forward unused allowances from the previous 3 years, the scope for planning is huge.

As a reminder, pension contributions will attract tax relief in the tax year they are paid which is why considering your tax position now could identify that a pension contribution before April is appropriate to make.

“Most allowances work on a use it or lose it basis.”

The pension allowance is rare as it can be carried forward – most allowances work on a “use it or lose it” basis and this applies to things like ISA contributions as well as personal and Capital Gains Tax allowances, including some IHT allowances.

We also saw a major change this tax year with Capital Gains Tax, (CGT) as the personal allowance reduced by over 50% to £6,000 each person – worse still, this is due to halve again in April. If you might have capital gains and unused allowances, consider using them before April.

If any of these areas are of interest or concern to you, please get in touch with your usual contact at ABC or email info@abc-ifa.com and we will follow up from there.

“A Quick Look At The Markets”

Over the last month, markets have been largely in positive territory, with one notable exception being the UK AIM market which has shown a very small decline.

With the latest inflation data being due in the US later this week, Jerome Powell, (Chairman of The Federal Reserve) has once again said that the next interest rate movements should be downwards but won’t yet commit to a time scale – perhaps the figures this week will offer some clues.

The Bank of England are making similar noises and therefore markets will be factoring this into their pricing going forwards and the “cautious optimism” we are hearing from the Fund Managers we work with is continuing and we look forward to seeing this reflected in fund performance.

As always, if we can assist in any way, please do let us know and we will keep in touch.

Best wishes from all at ABC.

“We have capacity and would welcome personal referrals.”

The majority of our clients come to us by way of personal referral, which is a very strong starting point, and we would therefore be very pleased to receive any referrals that you might think appropriate. Rest assured, our follow up will be totally confidential and without cost or commitment for an initial chat or meeting to determine if we are able to assist.

In my last News & Views of 2023, I made reference to some of the projects we have been working on, one of which was our new “Who are we and what do we do” document.

On many occasions, we have found that although we enjoy solid, long-term relationships with clients, what we actually do as a business and the disciplines we meet behind the scenes often remain one of the best kept secrets of all time!

“Welcome to ABC attached to this message.”

You will find attached to this email a copy of the Introductory Document and whilst this will be used with new clients, we felt that we should share it with you as well, not only to “take a look under the bonnet” at what we do but also to introduce our new look. We have taken the opportunity to redesign our Terms of Business, (in look & layout only - the content remains the same) and when we next update these with you, you will see the style of presentation is in the same theme and we hope is a little more user friendly.

I have talked previously about the new Consumer Duty regulatory standards which were introduced by the FCA in the UK in July last year, which have a number of requirements, one of which is clarity of information. This has resulted in a far-reaching overhaul of our procedures and the attached is a small part of that review.

Although Consumer Duty is an on-going standard we will be adhering to, having now completed our inhouse updating, we find we have capacity to look after additional clients and have plans to expand our client base.

Have no fear, this is not thinly disguised empire building, but rather a wish to increase the critical mass of the business, such that it can strengthen our ability to respond to change but most importantly, to continue to provide friendly, professional, compliant, and cost-effective services, all of which are our core aims.

“We have capacity and would welcome personal referrals.”

The majority of our clients come to us by way of personal referral, which is a very strong starting point, and we would therefore be very pleased to receive any referrals that you might think appropriate. Rest assured, our follow up will be totally confidential and without cost or commitment for an initial chat or meeting to determine if we are able to assist.

For the majority of our Private Clients, whether located in the UK or overseas, they typically have accumulated capital in a variety of investment areas, including pension funds, with key concerns to preserve wealth, grow value, generate income, minimise tax and for many, to pass on as much as possible to the next generation.

Other aspects of regulatory influence that we are seeing, is putting pressure on the investment industry to reduce costs and ironically to my mind, the focus is on cost rather than value for money, which I think is missing a key point. The results we are seeing are twofold: firstly, we may well be witnessing a “race to the bottom” in respect of charges and whilst instinct might say this is a good thing, I do not believe that is necessarily the case. Cheap is not necessarily cheerful!!

The second impact is consolidation in the industry, examples of which are the merger of Rathbones and Investec and the acquisition of the discretionary management business of ABRDN by LGT Wealth, both of which being announced last year. We have seen this type of consolidation across the pension and insurance industry over many years and whilst the main driver is often cost saving, as we know too well, it can lead to lower service standards and less choice. Curious when you consider one of the regulators stated objectives is to increase competitiveness at the same time as forcing the pace on cost reduction, which results in consolidation!

Fortunately, consolidation is not the only way to address cost management; new technology is and will continue to drive a lot of changes and hopefully improvements going forwards but that of course will take investment, not only in cash terms but time allocation as well.

“Flexibility to make recommendations where we feel change would be beneficial.”

One of the advantages we enjoy as an independent firm, is that we can and do keep a close eye on these changes and have the flexibility to make recommendations where we feel change would be beneficial. We would not advocate change for change’s sake but will take advantage of better outcomes for our clients.

New UK Tax Year Looming!

Although we have just started a new calendar year, our thoughts are already turning to tax year end considerations and any pre and post tax year-end financial planning opportunities.

Pension contributions remain a favourite topic, for those with earned income, in view of the tax savings that can be made and in some circumstances, the ability to lower tax bands and/or extend the basic rate tax band can be achieved.

With the abolition of the Lifetime Allowance, (LTA) for pension funds, this has largely removed a fear of overfunding. Also, with total flexibility in accessing benefits over the age of 55, an exemption from Inheritance Tax (IHT) and the ability for pension funds to “cascade” down the generations; rather than being a “stuffy old pension,” they are in fact an exceptional IHT and succession planning tool which can be used to great effect.

With the ability to contribute up to £60,000 per year and to carry forward unused allowances from the previous 3 years, the scope for planning is huge.

As a reminder, pension contributions will attract tax relief in the tax year they are paid which is why considering your tax position now could identify that a pension contribution before April is appropriate to make.

“Most allowances work on a use it or lose it basis.”

The pension allowance is rare as it can be carried forward – most allowances work on a “use it or lose it” basis and this applies to things like ISA contributions as well as personal and Capital Gains Tax allowances, including some IHT allowances.

We also saw a major change this tax year with Capital Gains Tax, (CGT) as the personal allowance reduced by over 50% to £6,000 each person – worse still, this is due to halve again in April. If you might have capital gains and unused allowances, consider using them before April.

Although it is not a tax-year sensitive issue, if you are reviewing your finances, it is probably a good idea just to ask the question whether your Will is up to date and should you be considering setting up Powers of Attorney.

If any of these areas are of interest or concern to you, please get in touch with your usual contact at ABC or email info@abc-ifa.com and we will follow up from there.

For Our Overseas Clients.

My apologies, most of the above points are not directly relevant to you as your tax year is very likely to be the calendar year. The same allowances and reliefs as described will not typically apply to you (although the UK IHT rules may have some impact) but the questions you ask could be similar and worth exploring. Certainly, the point about Wills is important for everyone and if you have assets in more than one jurisdiction and/or remain UK domiciled, there are some areas to be explored.

“We recommend regular reviews.”

We recommend regular reviews, normally on an annual basis, but interim if circumstance change. In this way, we are able to bring you up to date with any changes which may affect you but as importantly, it enables you to tell us about your changes in circumstances or plans, that might impact your investments and future financial planning.

A Quick Look At The Markets

Just over 4 years ago, I remember feeling at the end of 2019 that the markets had ended the year in a fairly strong position and we were expecting to see a positive year going forwards. Then came February; Covid landed and since that time, we have been on a rollercoaster, lurching from one concern to the next.

As we have often said, markets are driven by sentiment and trying to anticipate where things are heading, typically looking 6 to 9 months into the future.

The big question therefore, is whether we have reached a turning point and if the last quarter of 2023 was just a blip or indeed is this the start of what should be a sustainable rally?

The only sure way to answer that question will be to wait-and-see but many indicators are looking positive and the general mood with the Fund Managers that we work with is far more optimistic than it has been for some time.

Central Banks are notoriously tight-lipped, but over the weekend there were some comments in the press speculating that interest rate reductions in the UK could start as early as May this year. We have always thought that rates would reduce more quickly in the US and as these expectations grow, we may well see optimism reaching the markets which will drive values forwards.

“Time in the market rather than trying to time the market.”

With High Street interest rates for savers climbing over the last year to around 5%, this is great news for short term savings but longer-term investment still needs a broader approach. What is often quoted, is that time in the market rather than trying to time the market is the best strategy and, in many ways, November 2023 proved that! Had you been out of the market that month, you would have missed growth that would take more than a year to recover from cash on deposit.

As always, if we can assist in any way, please do let us know and we will keep in touch.

Best wishes from all at ABC.

As we contemplate Christmas Day being just one week away, I’m sure we are all asking ourselves the question “where did 2023 disappear to?” Without any doubt, the year seems to have disappeared very quickly and as it draws to a close, we start to wonder what 2024 will have in store for us.

The title of this News and Views is referring to Stock Markets and last week, we saw a significant rally following a fairly dovish announcement by Jerome Powell, Chairman of the Federal Reserve. He indicated that not only have interest rates reached a peak in the US but during 2024, he is expecting a downward trend with a series of interest rate reductions being anticipated. (One would like to think that this reflects his view of the US economy rather than perhaps being related to the Presidential election which will take place in November 2024.)

It's a shame that Andrew Bailey, Governor of the Bank of England, struggles to find anything positive to say and most recently, commented that the outlook for the UK economy is as bad as he has ever known it – thanks for the positive thoughts Andrew!

Following the comments from the US, all that the Bank of England could say is that it anticipates interest rates remaining higher for longer and yet we see some contradictory information, inasmuch that mortgage lending rates have started to fall, and it is anticipated that two year fixed terms will drop below 6% for the first time since rates were hiked.

As always, markets are trying to anticipate 6 to 9 months ahead and the now expected interest rate reductions in 2024, will have prompted the positive movements last week. It’s often said that if the US sneezes the rest of the world catches a cold, so let’s just hope with some positivity and good news, the rest of the world can follow the upward trend. Time will tell whether this was just a temporary bounce pre-Christmas or if indeed we have reached that longed for turning point!

Christmas Opening and Seasons Greetings

Please note that over the Christmas period our office will be closed, with the last working day being 22nd December and we will reopen on the 2nd of January.

If you have an urgent need to contact us, please use my email – richardalexander@abc-ifa.com and we will do our best to help out.

As in previous years, rather than sending Christmas cards, we have decided to make charitable donations and I can confirm that we have sent £100 each to the Kent Hospice in the Weald and Macmillan Cancer Support.

What’s Coming in 2024 – Our New Year Resolutions!

Once the Christmas celebrations are over, our attention will turn to the New Year, and we have a number of projects and issues that we have been working on that should be rolled out during 2024.

In July 2023, we saw the introduction of the Consumer Duty requirements by the Regulator in the UK, which are an ongoing measurement of how well we meet a number of standards and the onus is on us to provide the evidence that we are doing so.

Who we are and what we do! - We thought this would be a good opportunity to have a think about the services that we provide and what we do professionally behind-the-scenes to ensure that our standards are maintained in support of our client relationships. We are just putting the finishing touches to this document and will be sharing it with you in the New Year and we hope that you will find this to be both informative and useful.

Cyber Security - One of the key concerns that we have to keep in mind is that of cyber security and we recognise that as a profession, we gather and retain a lot of information about clients that could be misused if it fell into the wrong hands. For this reason, we are constantly reviewing our security arrangements and in principle, we use robust, cloud-based solutions which in themselves have several layers of protection.

We are also concerned about information that we share by email, and we need to look at methods of passwording or encryption to ensure security of sensitive data. We are also using digital signatures where possible and as the industry increasingly accepts these, we expect to do so more in the future.

Client Portal - With all of this in mind, we are in the process of looking at a client portal which will be totally secure and will enable unique access for each of our clients through a heavily protected, but easy to use system, through which you will not only be able to access your data and update it, but also we will be able to exchange documents securely.

We anticipate running a pilot in the early part of 2024 with a view to rolling it out to all clients thereafter. It is quite likely that we will introduce you to this at a future annual review meeting to ensure that you are totally comfortable using the portal or alternatively to agreeing other arrangements if you prefer.

European Regulation – for our European clients, since Brexit, when our cross-border regulatory passport was revoked, I personally have been authorised through a European network to maintain fully compliant advice where it is needed for clients resident in the EU.

This was intended to be a temporary fix and we have been looking at alternative solutions and I’m pleased to say that we have now formed a new group company, Alexander Bates Campbell Europe Ltd, which is in the process of gaining authorisation within Europe which will enable us to both maintain and develop relationships further for clients resident in the EU all within the ABC group.

All in all, 2024 will be anything but dull and that’s before we even think about the pantomime of elections in the US and the UK!

As we think about others and the struggles that they are facing, we sincerely hope that there can be a resolution to the conflicts in both Ukraine and Palestine and come to that, wherever there is suffering in the world.

Stay say and we wish you and your loved ones a very Merry Christmas and thumbs up for 2024.

As always, if we can assist in any way, please do let us know and we will keep in touch.

Best wishes from all at ABC.

For the last two years, the one thing that seems to have dominated financial headlines more than anything else is the inflationary trend. This was misunderstood at an early stage by the central banks which led to very late activity with interest rate policies.

The knee-jerk reaction that then followed, saw interest rates rising on, an almost monthly basis, and some would argue that having reacted too late, the central banks are then being guilty of prolonging, the interest rate increase policy too long.

As always, it’s easy with the benefit of hindsight to look back and to identify errors of judgement, but it would seem that we are now going into the next stage, where once again, central banks will play a key role and their task from here and to use technical jargon, to manage a “soft landing” – and avoid a damaging recession.

One of five pledges made by Rishi Sunak was that he would halve inflation by the end of this year in the UK. At the time this was announced, it was fairly obvious that inflation would peak, and the trend would reverse, and there was much cynical comment in the press, that this was a political headline grabbing moment for something that was destined to happen in any event!

It would however seem that there are increasing number of indicators to suggest that we have indeed passed a pivotal point both in inflation and interest rate terms and the focus now has to be on managing the next steps.

As always, market makers are trying to anticipate several months ahead and will be making decisions that drive the markets accordingly. In fact, even though lumps and bumps remain, major markets have over the last 2 weeks or so, seen some positivity and the hope is that this will continue into the New Year and beyond.

Although, in theory, central banks have their autonomy, and should not be impacted by political influence, (whilst this may not happen directly), there will be pressures brought to bear behind the scenes I am sure. Particularly when you consider that the next 12 months will see a general election in the UK and a presidential election in the US. Both of these contests are likely to be hard-fought, and who knows what tactics we are likely to see unfolding on both sides of the Atlantic. For those who are not politically biased nor concerned about outcomes, this could be quite an entertaining 12 months or so!

Whilst I’ve said in the past, I do not have strong political views in any particular direction, I did make the mistake of thinking when Boris Johnson won such a significant majority four years ago, that this in itself should lead to a period of political stability that would enable the UK to really start to move forward – how wrong can you be?

Thanksgiving (and then Christmas) – a bad time for turkeys!

At the time of writing, I am in the US and this Thursday it will be Thanksgiving. This holiday tends to be celebrated as much ,if not more, than Christmas and the traditional Thanksgiving dinner includes either roast or deep-fried turkey.

It was a few years ago on a previous visit when we were discussing Thanksgiving traditions that we were introduced to the idea of deep-fried turkey. In fact, it would seem this is quite popular. The idea is to have a large vat of boiling oil which the turkey is lowered into and deep fried accordingly. Apparently, it does not take very long!

We said to the people telling us the story that this seemed a bit of a dangerous exercise, and they confirmed that there are many accidents each year, and even some fatalities as a result of this practice. However, they did go on to say that once you have tasted deep-fried turkey, you will never want it any other way! I have to say we resisted the temptation, and although we’ll be here for Thanksgiving, it will be barbecued steak for us!

One last Thanksgiving story, the Americans do like outdoor decorations and the one that we saw this week, I am sharing below, because it gave us a chuckle!

We will be back to the UK at the end of the month and then we start the countdown to Christmas with the staff party on December 2nd. We are going back to the South of England showground at Ardingly in Sussex, which is the venue we went to last year and it worked out very well.

We are able to join many other groups celebrating, with entertainment before and during dinner and then a disco for the more energetic to dance off the meal! I am just hoping that the jet-lag will not kick in and leave me snoozing at the table! (It hasn’t happened yet, but there is always a first time!)

As always, if we can assist in any way, please do let us know and we will keep in touch.

Best wishes from all at ABC.

I know we are often surprised at how quickly time goes, but when I looked back and saw that the last News & Views was at the beginning of June, I was astonished, as I had not realised I’d left it so long and tomorrow it will be September!

On reflection, it’s been a busy few months, not only in the business sense, but on the home front as well.

Consumer Duty

You may recall that back in June I was talking about Consumer Duty, which is a whole raft of new regulatory requirements brought in by the Financial Conduct Authority in the UK, with effect from 31st July and like every other firm in the UK, we have spent many hours pulling together all of the new requirements and ensuring that not only do our processes and systems fully meet with the new standards, but, that we can also evidence that we can tick every box as required. I have to say, the biggest challenge is the evidencing and I think by now, our staff are getting fed up with hearing me use that word. Unfortunately, our Regulator has, for a long time now, had the approach that “if it’s not written down it didn’t happen”, and this is one of the reasons why we have to create so many copious notes about all that we do. Oh for that paperless society we had expectations of!

Whilst we were given the best part of a year to get all our ducks in a row for Consumer Duty with a deadline of 31st July, rather than this being a finishing line, it is a starting point and from here, going forwards, we will be evolving our processes to ensure that we stay on top of the requirements.

The most important thing to stress here is that this is all about consumer protection and ensuring that we, as Financial Advisers, not only have sufficient knowledge of the regulatory requirements, but also, that we know our clients well enough to make sure that everyone we work with is benefitting from these protections.

Ironically, one of the requirements of Consumer Duty is clarity of information and ensuring that our clients understand what is being provided to them. That goes hand in hand with an ever increasing amount of information, both technical and regulatory, that we are supposed to provide as part of the service – without doubt, this creates a conflict and one of the decisions that we have therefore taken, is that going forward, as far as possible, we will be separating the summary of objectives and advice that we are giving from all the technical and regulatory information that will be provided at the same time, but as an Appendix or Adendum to our advice document rather than creating one huge un-user friendly document. The fear here is that providing too much information in one place, can create snow blindness, such that the important factors are not clear to see.

Whilst this is a challenge for us, my message to you is that if ever you receive information from us that you are not clear about or uncertain of, please do raise your questions, as not only will this help us clarify things for you, but will also help us to learn how we can do things better going forward.

Consumer Duty is without doubt, a turning point in the financial services industry in the UK, but one, which should in time, be beneficial for all.

Markets – Sell in May and Go Away….!

‘Sell in May and go away’ is a well-known saying in the financial sector and really, is based on historical underperformance during the 6 month period from May to October. It is also often the case that the levels of trading during the summer months are much lighter and therefore, arguably thinner trading markets are more easily influenced.

Looking back over the last 3 months, whilst the UK may be showing signs of underperformance, other areas around the globe, including the US, Europe and Japan, are bucking that trend.

Taking the US as an example though, the S&P 500 Index on a year to date basis, is showing growth in the region of 18% and yet, if you strip out the top 7 Companies listed, those being Apple, Microsoft, Amazon, Nvidia, Alphabet, Tesla and Meta, the picture is somewhat different.

Those 7 tech stocks are the ones that have been driving the market largely this year and ironically, they were the biggest losers in 2022. Without these, the rest of the Index is relatively flat and arguably, looks much more like the UK FTSE 250.

The rollercoaster route of these 7 Stocks through huge negativity in 2022 and an equally huge rebound in 2023, highlights the dilemma that Investment Managers have – do they chase the big names only and accept the rollercoaster ride or is this a dangerous game to play?

The answer to my mind is clear, that for the majority of people, they need diversity and whilst these Stocks should form a part of the portfolio, either directly or through funds that invest in them, achieving a balanced and sensible return over time (without too many sleepless nights) relies on a diversity through a spread of investments, which of course, is the approach the Fund Managers we work with take.

Over the last few days, we have seen some positivity in markets globally, and as always, it begs the question as to whether this is a short term blip or the start of a rally towards sustainability. As always, that’s a question that can only be answered accurately with hindsight, but as the rate of inflation continues to fall, we will see interest rate policy take a breather at some point and there will undoubtedly come a point in time where Banks need to start lowering interest rates once more, to stimulate the economy and by association, the markets and so the cycle goes on!

Autumn Colours and Home News

I’ve always been slightly confused as to whether autumn starts on 1st September or with the autumn equinox later in the month. I thought therefore, that I would try looking up the definition of autumn and the first “helpful” answer I came across is that it’s the period between summer and winter! A little further research then went on to say that actually, it’s September to December in the northern hemisphere and March to June south of the equator.

Whichever definition you care to use, it’s clear that the evenings are getting longer and before long, we’ll see the colours turning on the trees – we’re just starting to see the first hints of that as I look out of my window at the East Sussex landscape.

We actually moved to Battle in East Sussex at the end of July, and this is the first time that we’ve lived outside Kent, so to a degree, it feels as though we’re simply on holiday, but we’ve taken all of our furniture with us!

Looking ahead for the remainder of the year, I wonder just how long it will be before I hear the first Christmas jingle in the shops, or the first advertisements will appear.

With the autumn, also brings winter flu jabs and Covid jabs for those who are eligible, and we’ve just heard from NHS England that they’re bringing forward the programme this year because of the concerns about a new Covid variant. The Covid vaccine will be available from 11th September, with a recommendation that all people over the age of 65, together with those who are considered vulnerable, should have these as soon as they are available and the roll out will probably be between 11th September and the end of October.

As the NHS website states ‘vaccinations are our best defence against flu and Covid 19 ahead of what could be a very challenging winter’ – we should also perhaps remind ourselves of the precautions we took in terms of hand washing, sanitising and mask wearing – prevention being better than cure.

My plan going forward is to be writing News & Views more often and so I will be in touch again shortly, but in the interim, take care and stay safe.

Best wishes from all at ABC.

Starting with the myths, I was chatting to a client the other day about news in the financial world and the conflicting information that we continue to see, and he really capped it all by saying really, “nobody knows”, which in many ways, I think is the case.

One of the big problems when considering financial markets and what might be in store just round the corner, very often these things are driven by sentiment and expectations looking ahead several months as to where markets might be, rather than where they are today.

Markets can appear to be very fickle at times in not reacting to bad news and yet, overreacting to short term issues and relatively benign events.

When I pass on my thoughts and express my views, my main objective has always been to steer away from the extreme views of both doom and gloom on one extreme and unrestrained bull market optimism on the other, because of course, there is no one answer to every situation.

We saw this clearly demonstrated in 2022 when most market sectors, including global Stock Markets and Bond markets (Government debt like UK Gilts and US Treasuries) all suffered greatly and yet the FTSE 100 Index appeared to outperform. This was largely because the Index was driven by Companies in the oil, gas and armaments sectors, who were beneficiaries to the impact of the war in Ukraine and associated inflation of energy prices.

It is therefore as difficult as ever to forecast the route that markets will take from here, although in recent days, we have seen quite a rally globally, largely due to the “sigh of relief” breathed following the US avoiding a debt ceiling crisis and associated default on Government debt.

Even though inflation may have peaked, it remains stubbornly high and as a result of which, we are likely to see further increases in interest rates that may in turn, peak higher than previously anticipated. Slowly the higher rates are filtering through to investment accounts, but the major impact has been on the mortgage market, particularly in the UK, with many borrowers now facing significant increases in their repayments. Much of this is yet to filter through the system and so I think it’s fair to say that we’re likely to see volatility continuing for the foreseeable future, but as one Fund Manager put it to me the other day, flat markets create little potential whereas volatile markets, whilst more challenging, can deliver greater opportunities.

On the personal scene, 2023 is a milestone year for us with Chris and I celebrating our golden wedding anniversary last weekend and naturally enough, it makes you reflect on how things have changed over that time.

Our wedding reception was a buffet lunch at a local pub for around 30 people at a cost of £1.50 each plus drinks and our honeymoon took us to the west country, where we were paying £1.25 a night for bed and breakfast! I also recall that £1’s worth of fuel, would put around 3 gallons in the tank!

Mind you, to put it in perspective, I was earning £13.50 a week!

As part of our celebration this year, we’ve recently been on a family holiday to Egypt, taking on some of the historic and cultural sights in Cairo and Luxor in addition to 7 nights on-board a cruise ship going down to Aswan.

The sheer scale of the monuments that we saw, and the number of statues created, in particular for Rameses II and the quality of some of the tombs that have been preserved in the Valleys of the Kings and Queens were all really quite spectacular.

Egypt as a country is very reliant on the revenues derived from tourism and therefore, the last 2 – 3 years have been particularly painful for them.

Egypt is certainly a country of contrast as well, with a huge desert reclamation programme underway south of Aswan, where many acres of wheat are now being grown in what was previously unproductive land. By comparison, you see people living in conditions that are reflective of Biblical times, with many small parcels of land being farmed with hand tools and oxen still being used to pull the ploughs.

I thought our Egyptologist and guide captured the sentiment very well when he said that going back in history, Egypt had nothing and achieved everything, whereas today, they have everything but achieve nothing. Whilst that’s not quite true, given my comments about the desert reclamation programme above, it is without doubt a country of huge extremes, but a great place to visit nonetheless. We came back with over 2,000 photographs – don’t panic, I won’t bore you with them all, but here’s just a couple to share.

Returning now to the theme of milestones, by the end of July 2023, the Financial Conduct Authority will have fully launched the Consumer Duty initiative, which comprises a complete overhaul of the way that financial advisory firms, conduct themselves, deliver their services and have to be mindful of a whole raft of new requirements and standards.

I am pleased to say that many of these disciplines we have in place already, but over recent months, we have been completing a thorough review of those practices and ensuring that they are fully compliant with Consumer Duty.

We have also joined the Consumer Duty Alliance, which is a not for profit organisation, specifically established to ensure that the intended improved outcomes for clients of advisory firms are achieved and maintained going forwards.

The Alliance introduces a Code of Professional Standard that we agree to abide to and is summarised below.

The Consumer Duty Alliance
Code of Professional Standards

These seven underlying principles of professional advice are designed to help consumers understand the standards and behaviours they should expect from an Alliance Member.
Members of the Consumer Duty Alliance shall:

  1. Act in good faith in all dealings with clients.
  2. Always avoid causing foreseeable harm to clients.
  3. Inform, empower and support clients to pursue their financial needs, objectives and aspirations.
  4. Fully disclose, clearly explain and consciously mitigate any conflicts of interest identified in our dealings with clients, including where commercial interests might conflict with a client’s best interests.
  5. Only offer products or services that are both suitable and needed, offering fair value and transparent pricing.
  6. Ensure clients receive the support they need, when they need it.
  7. Embrace a focus on customer vulnerability including adherence to the Consumer Charter of the Financial Vulnerability Taskforce.
    You should always feel empowered to make informed decisions, and never feel reluctant to ask questions or request more time if you’re unsure.
    Before proceeding, always take time to consider recommendations or seek an alternative opinion, even if from family and friends. Professional advisers will always want you to be confident in the advice given and recommendations made.

In addition, we are also committed to the Financial Vulnerability Task Force Charter, which is a further development in recognising where changing circumstances can create vulnerability and how this needs to be recognised and handled. The following link will take you to the Consumer Guide, where you can read more about the Charter and its objectives.

Financial Vulnerability Taskforce consumer guide (260kb)

Rather than Consumer Duty being a finishing line to reach, it is actually a new milestone and the starting point for a completely new approach in the industry, which we full embrace.

If you have any questions about Consumer Duty or any other points raised, please do let us know, otherwise stay safe and best wishes from all at ABC!

6th April is the start of the new tax year in the UK and from this date, we will see the impact of the recent Budget coming home to roost in the form of a freezing of allowances for personal Income Tax, a reduction in Capital Gains Tax allowances and an increase in Corporation Tax from 19% to 25%. 

On the flip side, for those receiving State Pension Benefits, these are due to increase this month by 10% and as always, there are opposing thoughts as to whether each or any of these measures are appropriate or if in fact, there is more political motivation than any other.

Talking of politics, the recent Budget also suspended the lifetime allowance, which is the cap on the amount that can be held by individuals in pension funds, with an announcement that with effect from next tax year, the lifetime allowance will be scrapped altogether.  This was quickly followed within 24 hours by a statement from the Labour Party to say that in the event that they come to power, they will immediately reverse this and reintroduce the lifetime allowance once more.  As the polls currently suggest that the Labour Party will form the next Government, I think we have to view the current suspension of the lifetime allowance as a potentially temporary measure although I do think that on reflection, the Labour Party might well review their initial statement as being premature and in fact, the reintroduction may not occur.  Arguably, this creates a planning opportunity for those concerned during the current tax year, but of course, it has no impact for the majority of people.

More of a concern is the reduction of the Capital Gain Tax allowance for individuals from £12,300 down to £6,000 in this tax year, with a further reduction to £3,000 next tax year.  This change will potentially impact on many more people and places more emphasis on the need to hold investments where possible, in tax protected environments, such as ISAs (Individual Savings Accounts), pensions and life insurance Bonds, as all of these are exempt from Capital Gains Tax.

For people with direct portfolios of Stocks and Shares and those who use collective investment funds outside tax protected wrappers, more care is going to be needed to avoid unwittingly crystalising Capital Gains Tax assessable transactions.  Arguably, this could be a good time to review investments to determine whether recent market volatility has created any losses that could be crystalised and used against any other gains, with a view to restructuring investments.  Early in the tax year is a good time to consider this.

Market Opportunities

Since the beginning of 2022, we’ve seen quite a rollercoaster in global Stock Markets and for most of last year, the traditional safe havens of the Bond market (Government debt like UK Gilts and US Treasuries), underperformed every bit as much as the Stock Markets, with similar reductions in values.  However, during the last 6 months. We’ve seen that position reversing and the Bond market once more provides a safe haven for Investment Managers to include in portfolios.

During the last quarter of 2022, we saw improvements in Stock Markets, which spilled over into the beginning of this year, only to be tempered by more recent volatility.

The most recent jitters were caused by Bank failures, initially with the collapse of Silicon Valley Bank in the US followed very rapidly by the forced takeover of Credit Suisse by UBS.  There was a concern of contagion in the banking sector, but central Banks and commentators were quick to point out that the failures with both Silicon Valley and Credit Suisse were largely driven by poor management and bad investment decisions, rather than a collapse of the banking sector in general.

Some commentators were writing that it was an over aggressive interest rate policy from Central Banks, that will continue to be aggressive until things start to break, were the root cause for both Silicon valley and Credit Suisse, but whilst this might have been a contributory factor, it was not the main reason.

Whilst there could still be some Bank failures going forwards, it is likely that the main Banks will benefit significantly from the increasing interest rates that are passed on to borrowers quickly, whilst the same is not true for savers and therefore, the Bank margins will widen, returning some to profitability that has not been seen arguably, for the last 15 years.

The expectation is that the rate of interest rate increases will slow and stop, probably at some time during or towards the end of this year, and that the rate of global inflation will continue to fall, albeit that it will not fall as rapidly as some would expect, with some forecasters saying that we will be back to the 2% or 3% inflation targets that Central Banks want by the end of this year or early 2024.

As always, it’s difficult to predict when these cycles may peak and reverse, but the general consensus is that inflation has already peaked, and the rate of inflation should fall away quite rapidly this year.  Markets will be watching both this and the Bank interest rate policy closely to try to judge when the pivotal point comes and in reality, we are likely to see increasing market values long before we see the improvements in economic figures.  The general consensus therefore is that over the next 2 or 3 years and beyond, we are likely to see a return to sustained market growth, but as always, there is the potential for disruptors along the way.

Attached Articles from TAM Asset Management

You will see that I am attaching 2 articles recently published by TAM Asset Management, one of which is looking at the banking situation and the second one is looking at the impact of the recent UK Budget.  I think both of these articles have been written in a way that avoids too much jargon and thought therefore, that you might find them of interest.

Political Pantomimes and a Name from the Past

Once again, we are being ‘entertained’ by senior political figures on both sides of the Atlantic.

Most recently, we saw the public hearing in relation to party-gate and the investigation into Boris Johnson, but to date, no official verdict on the actions of Boris have been made just yet and so the investigation goes on.

Across the pond this week, we have seen the arrest of former President Donald Trump, with his hearing in New York on Tuesday of this week, which led to him being criminally charged, but he has pleaded not guilty to 34 charges of falsifying business records. 

Only time will tell how each of these events roll out and whether Mr Trump will be able to turn these events to his political advantage, with his aspirations to return to the White House next year.

In the last few days, we have also had the news that former Chancellor of the Exchequer Nigel Lawson, has died at the age of 91.  For many years (before their falling out), he was considered to have been the main architect of Margaret Thatcher’s economic reforms and whether you agreed with his politics or not, he was an old school politician and Member of Parliament for Blaby from 1974 – 1992.  His other claim to fame is that he has a rather well known daughter!

Easter Greetings

Leaving all the political and financial considerations behind, I just want to close by conveying our very best wishes for the Easter weekend and let’s hope that we can enjoy a little Spring weather!

With best wishes from all at Alexander Bates Campbell

March-2023-TAM-Budget-viewsDownload
March-2023-TAM-Banks-winners-losersDownload

With the snowdrops and crocuses in full bloom, the daffodils starting to show and the evenings slowly getting lighter, these are all increasing hints that Spring is almost here, although of course we are not there yet and the old saying about March – “in like a lion, out like a lamb” is worth remembering as we may be in for another cold snap.

As we shake off Winter, we go into what I always feel is a very positive time of year and despite all the issues we are bombarded with on a daily basis in the news, I feel it is a time for optimism.

It is too early to judge whether the new agreements reached between the UK and EU regarding the Northern Ireland Protocol will succeed, but the markets seemed to respond in a positive way and the value of GBP also strengthened briefly. Whilst 2022 was an extremely challenging year in markets to say the least, most markets have shown positivity over the last 6 months, although we have yet to regain the values at the end of 2021 in most cases.

As always, there are opposing views as to whether we are simply witnessing a “Bear Market Rally” or the beginnings of a new “Bull Market Run”; the majority view seems to be that over the next few years we are likely to see a return to sustained growth and that perhaps in the short term, Europe and Emerging Markets will be the areas that shine.

As ever, there are no certainties when it comes to the markets and the sentiment that drives them but as we approach the end of the tax year in the UK, and a Budget statement later this month, we can be certain of one thing - tax will be in the spotlight once more. The political debate rages on about whether higher taxes or lower tax rates and greater consumer spending lead to a stronger economy, but there is a consensus that no one likes to pay more in tax than they need to and so I thought I would take a look at one particular tax which was in the headlines recently.

In 1986, Roy Jenkins, Labour politician, famously said that “Inheritance Tax, is broadly speaking a voluntary levy paid by those who distrust their Heirs more than they dislike the Inland Revenue”

If you look today at the HMRC Internal Manual (and I am not suggesting this is a top 10 best seller, must read to add to your list!) It’s opening paragraph states “Inheritance Tax (IHT) is the successor to Capital Transfer Tax (CTT), which was an integrated lifetime transfer and estates tax. Under CTT, all lifetime transfers were charged to tax when they were made. Under IHT, certain types of lifetime transfer remain taxable when made. Most are only taxable if the transferor dies within seven years of making the transfer.”

Why then I ask myself, do we see current reports quoting that HMRC receipts from IHT from April 2022 – January 2023 were £5.9 billion – £0.9 billion higher than the same period last year. Could Roy Jenkins have been right I wonder – surely not! This was quite a contribution to the total tax haul which HMRC have confirmed was £660 billion for that same period, an increase of £65.1 billion over the previous year. Mind blowing numbers!

Why though, if IHT is a voluntary levy, has it increased so much to these staggering numbers? The answer of course is more complex than the question, but I will try to explain some key factors.

IHT was first introduced in the UK in March 1986 and at that time, the threshold (Nil Rate Band) before IHT would be due was £71,000. This increased each year until it reached £325,000 in 2009 and since that time, it has remained frozen at that level. The Office for National Statistics quote the average nominal house price in the UK as £38,251 in 1986, compared to £149,709 in 2009 and £294,844 in June last year.

If you do the sums, in 1986, the average house price was just 54% of the IHT threshold but now it is nearer 91%. That, combined with the increase in second property ownership is one of the key factors for the increase in the total amount. Not forgetting, these are average house prices and certain areas of the country have seen much higher numbers; the London average for example, is nearer double the national average.

Whilst there have been some minor changes since inception, that improved allowances with the introduction of the Residence Nil Rate Band for example, which adds a further £175,000 per individual, this only applies in certain circumstances. Most other allowances have remained static with other changes like the “Pre-Owned Assets” and “Gifts With Reservation” rulers, all restricting the ability make lifetime gifts without losing control of the assets concerned.

You may start to think that IHT planning is not possible and that it is an inevitable tax after all, but that is not the case. It is worth mentioning here that in the UK, the IHT burden does not fall on the individual during their lifetime, but it is their Estate that is assessed on their death and for this reason, some people take the view that the net value of their Estate after payment of IHT is enough for their beneficiaries to receive. However, many people are alarmed at the levels of IHT that will be payable, and with planning, there are steps that can be taken to help reduce or avoid IHT, which I will touch on shortly.

This differs with some other countries, where it is the financial standing and closeness of relationship of the beneficiary to the deceased, that determines the level of tax to be paid. In that regard, the UK system is much simpler to assess.

Another reason why the IHT tax take has grown, is due to people who have moved overseas, thinking that UK IHT no longer applies to them – sadly, that is not necessarily the case. It is not a question of where the individual is tax resident, but rather where they are domiciled. Changing tax residency is relatively straightforward and is automatic, based on several factors, such as where you spend most of your time, but changing domicile is not easy to do, nor is it automatic. Worldwide assets for UK domiciled individuals are assessable for UK IHT, regardless of where that person is tax resident when they die and can be a nasty shock to the beneficiaries when HMRC hold out their hand for a payment that was unexpected!

As you might expect me to say, with some fairly straightforward planning, much can be done to improve the situation whilst still maintaining control over assets to an acceptable degree.

Maximising annual exemptions, small gift allowances, wedding gifts and regular payments (which have no actual limit) are all simple options that many people do not use. None of these trigger the seven year rule.

Something else to consider; if you have a pension fund and you have savings, many people will say they prefer to use the pension for income in retirement and preserve the savings for the next generation. From an IHT planning perspective, that is the exact opposite from the ideal solution. Not only will the pension income in all probability be taxable during the individual’s lifetime, any savings they leave will all form part of the Estate for IHT purposes, with any amounts above the threshold being taxed at 40%. A double whammy!

Most pensions operate under a Trust and except for some occupational and final salary/defined benefit schemes, any residual fund value not spent during the lifetime, can pass to nominated beneficiaries, outside the Estate for IHT purposes, as the assets belong to the Trust and not the individual.

This is probably starting to sound either complex or just plain boring, but if you have any concerns about your own family situation, this is an area where we would be able to guide you and provide the advice needed to achieve your longer-term goals.

Of course, there is one other perfect solution and that is to spend all the money during your lifetime, but that may have some practical issues to consider!

As always, stay safe!

Best wishes from all at ABC

As we’re approaching the end of January already, it seems a little late to wish you a Happy New Year, but as this is the first News Letter of 2023, I will take the opportunity to do so.

Although this News Letter will focus on ABC and some considerations that UK tax resident clients should be thinking as we approach the tax year end, I did want to make a few comments about investment markets.

As we know, 2022 turned into an extremely challenging year for markets and investment management in general.  There were many factors driving uncertainties in markets, not the least of which being the war in Ukraine and the potential for runaway inflation during the year.  Whilst the former shows no signs of abating as yet, at least we’re seeing inflation numbers starting to reduce.  Of course, that doesn’t mean that costs are going down, but simply they are going up at a slower rate and the expectation is that this decline will continue during the current year and should be significantly lower by the end of the year.

This in turn, should take the pressure off Central Banks and we’re likely to see some easing of the interest rate policy, with some commentators forecasting that rates will start to fall in the US by the end of the year and probably elsewhere shortly thereafter.

As we know, markets tend to look ahead 6 – 9 months and therefore, during January, we’ve already seen positive movements across all major markets and whilst it’s too soon to say that we are out of the woods, it is nonetheless encouraging to see some positive regaining of values and we will continue to watch this going forwards.

News from ABC

As you may recall from earlier correspondence, rather than sending Christmas cards again in 2022, we chose to make charitable donations of £200 each to Demelza House and Chestnut Tree House and we’ve had rather a nice acknowledgement from both organisations to thank us for our small contributions.

Chris (Alexander) as some of you will know, used to work for the Kent, Surrey and Sussex Air Ambulance and was closely involved with their fund raising and other activities.  From her experience, although she knows that funding is one of the most important factors for any charity, what is less known is that giving time to a charity is almost as valuable to them.

With the staff at ABC, we aim to have two main social functions a year, one being a Christmas party and the other being a mid-summer celebration, which is an opportunity for all the staff to get together.  In the intervening months, we are also aiming to have some other group activities and Chris suggested to the staff earlier this month that we might think about offering our time for 1 day each to the two charities we have supported, and the suggestion was almost unanimously taken up and we are now liaising with those charities to see how we could dedicate some time to them.  We understand this might range from helping in the garden through managing some events or coordinating collections, which is a good opportunity for us to have a team event whilst helping others – I will let you know what involvement we have and how that goes in later News Letters.

I also thought it might be useful to introduce you to the team by including our organisation chart, so that you can see who everybody is and where they fit in to the organisation.  Some people you will already know and going forwards, there are other people that you may well have contact with in due course.

We are trying to fully integrate the teams across the various groups of clients within the firm, so that we maintain continuity and personal contact.  If you phone the office now, you will be greeted with a short menu of options, but there are only 3 to direct you to either the private client team, the corporate client team or for any other enquiries.  You will not be faced with a whole menu of options thereafter and you will get straight through to a person to speak to.

We are always mindful of looking for new ideas or ways that we might improve the services that we provide or the relationship that we enjoy with clients and therefore, if you have any suggestions, we’d be very pleased to hear from you.

Similarly, as the integration of the business is now well underway, we find that we have some capacity and whilst we’re not looking to go ‘empire building’, we have room to take on some additional clients.  We are very fortunate that the majority of our clients come to us by way of referral and hopefully, this reflects the services that we are providing and going forwards, we would be very pleased to receive any further introductions.

UK Tax Year End 5th April 2023 – Considerations

Some of the recipients of this News Letter are overseas clients and therefore, I’m sorry to say the next section will not be relevant to you, but it might raise some questions that we could help with anyway as they relate to you.

As we know, the political scene in the UK turned into somewhat of a pantomime last autumn, with changes of Prime Minister and Chancellor of the Exchequer happening in quick succession.  Having rocked the markets, things seem to have stabilised, with Jeremy Hunt, as the latest Chancellor, who has taken a much more rigorous approach to balancing the books and we know that there are a number of tax changes that were announced in the Autumn Statement, which will have an impact going forwards and could affect future financial planning strategies.

It's not my intention to turn this into a boring review of all the tax changes, but I am highlighting in bullet points key changes and things to consider as a consequence and with the tax year end approaching, which I hope that you will find useful.

I appreciate that some of these changes will not affect you, but these are the key points and probably the Capital Gains Tax and dividend allowances are the ones most noteworthy.

If you would like further information on any of these subjects or how they might affect you, then do get in touch to let us know.

As always, if you have any questions or if there are areas where we can assist, we would be pleased to hear from you and going forwards, I’m going to try to encourage other members of the team to make contributions to the News Letter, so you may well be hearing some different views and seeing some different styles included.

As always, stay safe!

Best wishes from all at ABC

Alexander Bates Campbell Financial Planning Limited is entered on the FCA Register under reference 817090. Alexander Bates Campbell Limited is an Appointed Representative of Alexander Bates Campbell Financial Planning Limited and is entered on the FCA Register under reference 522399
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Alexander Bates Campbell Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. The FCA does not regulate taxation advice.

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A summary of our internal complaints handling procedures for the reasonable and prompt handling of complaints is available on request and if you cannot settle your complaint with us, you may be entitled to refer it to the Financial Ombudsman Service at www.financial-ombudsman.org.uk or by contacting them on 0800 0234 567
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