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March is always a challenging month in financial services as the end of the tax year looms and our teams work tirelessly to do everything they can to make sure our clients have maximised their annual allowances before they lose them. March 2021 had some greater challenges than usual, too, with around 90% of the company still working from home as the third lockdown dragged on. [click to continue…]

The start of 2021 brought an optimistic outlook, but the quarter ended up being somewhat disappointing as markets dipped on fears that inflation would increase in the future, as well as renewed lockdown in some places. Inflation could come as a result of increased economic activity as some normality returns to life following the pandemic, but we do not feel that this poses a risk to assets in the near future. We will continue to watch for signs of rising inflation in the future, however.

Coming out of lockdown, we are looking forward to and positioning for better economic times ahead. The forecasts, even based upon quite cautious criteria, show a return to normality that brings with it higher spending, more activity and a return to growth. While we are pleased to see such positive indicators, we also know that the financial support measures that are keeping the economy going must come to an end at some point and this will inevitably come with risks and volatility.

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Late last year, the government announced that a range of documents and consultations on future tax policies would be released after the Budget.

Dubbed “tax day”, these announcements came later than usual this year to allow for greater scrutiny after the significant number of changes Rishi Sunak announced in his Budget.

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GIbbs Denley at Shelford Rugby

Gibbs Denley Financial Services are proud partners of Shelford Rugby Club and we are extremely pleased to be able to support them and all the great work they’ve been doing during these turbulent times. [click to continue…]

Saturday 20 March is the International Day of Happiness.

After the challenges of 2020, we could all use something to make us feel a little more cheerful. Yet, despite doom and gloom dominating the headlines, there are reasons to be optimistic about this year and the future. Here are just five reasons to smile.

1. The vaccine programme is rolling out

It might not seem like it now in a third national lockdown, but there is light at the end of the tunnel and it’s getting nearer.

Almost a year since the first lockdown began, the situation has changed hugely. Several vaccines have been developed and a programme to vaccinate the most vulnerable is being rolled out across the UK. To do this in just a year is a massive achievement and demonstrates what can be done when various organisations and people work together. Over the coming months, more people will be vaccinated, offering us a chance of normality.

It’s expected that most of the adult population, some 21 million people, will have received the vaccine by autumn. Hopefully, it means we can celebrate the 2021 festive period in a very different way to last year when strict social distancing rules were in place. We all hope that soon we will be able to visit family, enjoy days out, and catch up with friends.

2. Covid-19 has brought communities together

While Covid-19 has meant spending time apart physically. It has brought communities together in other ways. Amongst the negative headlines, there have been positive ones too.

From neighbours taking time out of their day to check on each other to networks of people ensuring that the vulnerable receive shopping delivered to their home, it’s served as a reminder that we are part of a wider community, something that’s easy to forget when we’re going about our day-to-day lives.

The pandemic also put a spotlight on those raising money for charity and the creativity of coming up with challenges and events. Of course, when it comes to fundraising, the hero of 2020 was the late Captain Tom Moore who raised a staggering £32 million when celebrating his 100th birthday by doing laps of his garden.

3. We appreciate our green spaces more

There has been a growing focus on the natural world as topics like climate change and biodiversity rise up the agenda. However, the events of 2020 have meant many of us appreciate the environment far more on a personal level too.

With lockdown limiting social contact and how often we could go out, heading outdoors for fresh air and exercise became part of daily routines for millions of people. It means you may have explored your local area far more than you have before. Green spaces close to our homes have become a valuable part of our lives and are appreciated far more. It’s a move that could boost overall wellbeing and support the wider environment.

4. Health and wellbeing are becoming priorities

Covid-19 has been a stark reminder of the importance of health and taking care of ourselves. While the pandemic has led to a tragic loss of life, it can hopefully mean that improvements are made and health is a priority. During the first months of lockdown, families stood on doorsteps to clap for the NHS and the hard work of the staff during the pandemic. With a renewed gratitude for the NHS and all that it does, health could improve across generations.

It’s not just our physical health that’s set to benefit either. Last year led to more open discussions about mental health and overall wellbeing. It’s a step that could remove the stigma of mental health problems, encourage people to share, and lead to better care.

5. There are signs of an economic recovery

Much like the end of lockdown, a recovered economy can seem a long way off. But there are signs there that provide some hope. While things do remain uncertain, predictions suggest that the recovery will come. During a speech in November 2020, chancellor Rishi Sunak revealed the Office for Budget Responsibility predicted that GDP would grow 5.5% in 2021 and 6.6% in 2022, when it will reach pre-pandemic levels. It’s a long road to recovery, but we are on the right track.

The volatility and uncertainty of 2020 aren’t completely behind us. Remember that your financial plan was built with short-term volatility in mind and with your goals driving decisions. Historically, markets do recover.

We’d love to hear your reasons for being optimistic too.

 

Are you looking to improve your health in 2021? After a year where health was one of the most talked-about topics due to the pandemic, it’s set to be a movement this year. While you might have a set routine, mixing it up with some of the new trends emerging can help you get the most out of your efforts and keep it fresh.

When we think of improving health, it’s usually physical health and fitness that springs to mind. But mental health is moving to the forefront too. Creating a routine that balances all aspects of health can improve your overall wellbeing.

So, which trends should you give a try over the next few months?

1. Personalised home workouts

With gyms closed, it should come as no surprise that working out at home is becoming more popular. While you may have tried following a fitness class online during lockdown or created your own routine, it’s set to become more personalised. Think of it as having a personal trainer in your home. It could be a one-on-one online session with an expert, allowing them to tailor a class to you, or a fitness plan that’s created with you in mind for you to stick to alone. It’s a process that can help you get more out of every workout you do.

2. Mindfulness breathing exercises

Mindfulness has been a growing concept in recent years. It’s a type of meditation that focuses on being aware of what you’re feeling and sensing in the moment. It can help both your mind and body to relax and release tension. After a stressful year, breathing exercises are set to become part of a daily routine for many. The practice can help you unwind, and it only takes a few minutes out of your day, perfect for when you want to relax and forget troubles.

3. Embracing the outdoors

Again, this is being driven by gyms closing and Covid-19. The current circumstances present a great opportunity for exercising outdoors, whether that’s a brisk walk through the local park or an endurance run. Getting fresh air and being around nature can deliver a mental health boost too. As social distancing restrictions are relaxed, expect to see groups exercising outdoors, including fitness classes, as people try to balance getting back to normal with being safe.

4. Digital detoxes

While detoxes to rejuvenate your body are a health fad, this year it’s set to have a more mindful and mental approach; doing away with digital distractions. For some, this will mean cutting out digital technology when not working, from checking social media to streaming the latest show, allowing them to focus on other areas of their life. For those who aren’t ready to throw away their smartphone, monitoring how they use their time and cutting back is an alternative way to embrace the trend.

5. Short, intense exercise

If you want to get the most out of your exercise without spending hours working out, this could appeal to you. Short bursts of intense exercise, sometimes called HIIT, are set to grow in popularity. You may see classes or other activities cut down to just 30 minutes, but you’ll get a whole lot out of them. It can help fit getting healthier into busy schedules.

6. Learning more about biology

While we all know the basics of getting healthier, one tendency this year will be to dig deeper. Looking at the impact of biology and what it can teach us about improving health, from what we eat to how we exercise, can mean you get more out of the steps you take, as well as allowing you to personalise wellness activities to suit your goals. If you enjoy delving into research and statistics, this is for you in 2021.

7. Getting more from wearables

Wearable technology has become a normal part of monitoring exercise. However, some big names are upping their game. The latest Apple Watch, for example, will have a pulse oximeter, which could be the first alert that you have asthma or are even coming down with something. With more data at your fingertips, new wearable technology can support the above goal of looking deeper into why and how things work.

When the pandemic struck last year, thousands of workers began working from home for the first time. It’s changed the world of work and this situation could be here to stay.

According to data from the Office for National Statistics, around a quarter of workers are currently working exclusively from home. Many more are mixing work from home with heading to the office. While the shift is in response to the Covid-19 pandemic, businesses globally have announced their intention to make it permanent. Workers at the likes of Adobe, Facebook, and Yahoo may never set foot in the traditional office again. Others, including Nationwide Insurance, have revealed they plan to maintain a blended model in the long term.

Research from Deloitte predicts that homeworking will quintuple by 2025. The prediction was made after 98% of financial directors from Britain’s largest companies said they expect the rise in home working to continue in the coming years.

Working from home could become the norm within some industries, but is that a positive thing?

Employees enjoy the benefits of working from home

Working from home comes with many benefits. From having more free time without the commute to saving money by eating at home, employees are often enjoying the benefits it brings. Some even argue that without the office distractions, they’re far more productive than they are in a traditional place of work.

Research reported in Forbes suggests that while there are challenges to working from home, employees are keen to adopt it long term:

  • Eight in ten employees said they agree they enjoy working from home
  • 60% said they felt less stressed when working from home
  • 66% thought they were more productive.

Employee engagement with their workplace hasn’t declined significantly either. In a survey that questioned more than 500,000 workers, employees scored 79% on an engagement index when in the office. While you may think being physically away from management, colleagues and the office would have a negative impact, it only declined marginally to 77%. The findings suggest that it is possible to maintain company culture and a sense of team spirit even when getting together in the office isn’t possible.

From a business point of view, working from home could provide opportunities to cut costs by getting rid of costly city centre offices or downsizing.

Young workers could be left behind

One of the challenges of remote working is creating a team atmosphere and passing on knowledge and skills effectively.

If the trend for exclusively home working continued, it could harm the development of young workers. A quarter (24%) of young workers agreed that working from home made them feel less connected when questioned as part of an Aviva survey. Even those that are enjoying working from home could find that it harms their professional development, with far fewer opportunities to connect with more experienced colleagues or engage with other stakeholders.

Introverted personalities were also found to be negatively affected by the move to home working. A third (36%) said they were concerned they weren’t having enough face-to-face contact with colleagues. They were also more likely to be concerned about their firm being an enjoyable place to work in the future and worry about job security.

Debbie Bullock, wellbeing lead at Aviva, commented: “A third of employee wellbeing and satisfaction levels are determined by personality types. Personality is fixed but resilience can be developed in employees, and managers are in a great position to ensure their colleagues have the right skills and confidence to grow in their careers during this continued uncertainty.

“A little insight, the right conversations and skill-building can go a long way to help identify when people may need more support.”

Striking the right balance

While homeworking provides plenty of opportunities, businesses and teams must be mindful of the downsides too. Making efforts to ensure that teams stay connected and communicate effectively, as well as facilitating professional development opportunities, are crucial for not only employee wellbeing but for business success. Firms that plan to truly embrace working from home will need to find processes that suit them and their employees to strike the right balance.

The Office of Tax Simplification (OTS) is reviewing Capital Gains Tax (CGT) after being ordered to by chancellor Rishi Sunak. Changes that are made following the review could affect tax liability and how you make use of allowances. Changes have yet to be announced, but there are two key areas that are being considered for modification: the CGT allowance and rates.

What is Capital Gains Tax?

CGT is a type of tax you pay when you dispose of certain types of assets. Disposing of assets could include selling or gifting them. You may then be taxed on the profit you make.

Assets that may be liable for CGT include:

  • Most personal possessions worth £6,000 or more, apart from your car
  • Property that is not your main home
  • Shares that are not held in a tax-efficient wrapper such as an ISA
  • Business assets

The chancellor has asked the OTS to: “Identify opportunities relating to administrative and technical issues as well as areas where the present rules can distort behaviour or do not meet their policy intent.”

While the main aim of the review is to make CGT simpler and fairer, there is also a need to raise revenue. The cost of supporting the economy during the Covid-19 pandemic means the Treasury is left with a deficit. Updates to CGT could go some way to plugging the gap.

The government raises a relatively low amount from CGT; around £8.3 billion a year. Under the current rules, only 265,000 people pay CGT each year, with effective use of allowances and tax breaks meaning many can avoid paying it. However, changes implemented following the review could change that.

The 2 Capital Gains Tax rules that could change

1. The Capital Gains Tax allowance

Under current rules, every individual receives an annual CGT allowance of £12,300. If the profit you make when disposing of assets falls under this threshold, no CGT is due. Reducing this allowance is one focus of the review.

A small reduction is unlikely to affect many people. In 2017/18, around 50,000 people reported net gains just below the threshold. However, the reduction could be more significant. There are suggestions that it could be scaled back to as little as £2,000 – £4,000. For many people, this allowance is an important part of their tax planning and could lead to a higher tax bill than expected.

If you’d be affected by a reduction in the CGT allowance, making use of other allowances will be even more important. For example, selling shares that are held in an ISA, rather than those that aren’t, could help reduce the amount of tax due. Effectively managing the disposal of assets each tax year to make full use of the allowance could also play a role in effective tax management.

2. Capital Gains Tax rates

When CGT is due, how much you pay depends on your Income Tax band and the assets you’re disposing of:

  • Standard CGT rate: 18% on residential property, 10% on other assets
  • Higher CGT rate: 28% on residential property, 20% on other assets.

If you’re not sure what rate of CGT tax you’re liable for, please get in touch.

There are suggestions that the above CGT rates will be brought in line with Income Tax bands. This could mean that higher and additional rate taxpayers face far higher tax bills. It could mean disposing of some assets no longer makes financial sense or that profits would be significantly reduced.

Bill Dodwell, tax director at the OTS, said: “If the government considers the simplification priority is to reduce distortions to behaviour, it should consider either more closely aligning Capital Gains Tax rates with Income Tax rates, or addressing boundary issues as between Capital Gains Tax and Income Tax.”

As with the first point, if this change were brought in, careful management of allowances would become even more important in tax planning. This should be incorporated into your financial plan to reduce tax liability and help you get the most out of your assets.

Reflecting changes in your financial plan

The CGT review highlights why it’s crucial that you regularly review your financial plan. For some people, potential changes to CGT could mean adjustments need to be made in how they hold and dispose of assets to keep goals on track. Continuing with a financial plan that hasn’t considered changes means tax liability could unexpectedly be higher, potentially harming your income or asset growth.

We know that keeping up to date with changes to allowances, tax rates and other areas of finance can be complicated and time-consuming. We work with all our clients to ensure their financial plans consider allowances and more to get the most out of their finances, with frequent reviews to reflect changes.

Please get in touch if you have any questions and to discuss your financial plan.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Following a year of uncertainty, you may be worried about your finances. Covid-19 has had an impact in many ways, from reducing income to affecting investments. Some financial firms have also been affected and this may mean you’re concerned about how secure your assets are. The good news is that there are protective measures in place.

More than 4,000 financial firms are at heightened risk due to the Covid-19 crisis, according to the Financial Conduct Authority (FCA). The regulator said insurance intermediaries and brokers, payments and electronic money firms, and investment management companies experienced the largest drop in cash and assets. The good news is that Gibbs Denley Financial Services have come through this difficult period well. However, it is still important to understand the protections that are in place, and what it does and does not cover, for your peace of mind.

What is the Financial Services Compensation Scheme?

The government set up the FSCS in 2001 to protect consumers if a financial firm fails. In 2018/19 the FSCS paid out £473 million to over 425,000 customers who had been affected by a firm collapsing.

How much compensation you’re entitled to is dependent on the financial product you have.

Cash accounts

If you hold money in cash, for example, your current account or a savings account, the FSCS covers up to £85,000 per eligible person, and up to £170,000 for joint accounts. To be eligible, the money must be saved with a UK-authorised bank, building society or credit union.

If you hold more than £85,000 in cash, it’s worth spreading it across several different providers to ensure all of it is protected. It’s important to note that some firms operate under different brand names that use the same banking licence. For instance, Nationwide also operate under the names Derbyshire Building Society and Cheshire Building Society, among others. In the unlikely event of Nationwide collapsing, only £85,000 would be protected, even if it were spread between these different brand names.

As a result, it’s important to check how firms are linked if your assets exceed the £85,000 threshold. The easiest way to do this is by checking the FCA’s financial services register.

In some cases, the threshold is temporarily increased to £1 million for 12 months. This provides you with increased protection if a significant amount is deposited in an account following certain life events, such as selling a property or receiving an inheritance, and means you don’t need to make immediate decisions to ensure your assets are protected.

Pensions

Pensions are likely to be among the largest assets you have and are crucial for security in your later life. The good news is pensions are covered by the FSCS:

  • If a pension provider fails, you’d receive 100% compensation, with no upper limit. This will include defined contribution pensions, such as your workplace pension.
  • Up to £85,000 per eligible person, per firm if your self-invested personal pension (SIPP) operator fails.

It’s important to note that the FSCS does not provide compensation based on investment performance. It provides cover if your pension provider were to collapse, not if your investments perform poorly. As a result, it’s still important that investment decisions reflect your risk profile and long-term goals.

If you have a defined benefit pension, you’re not covered by the FSCS. Instead, these are covered by the Pension Protection Fund.

Investments

Your investments may also be protected. Some investments come under the FSCS if a firm has failed, with an £85,000 limit per eligible person, per firm.

Again, the FSCS only covers you if a firm fails, not if your investment values fall. You should ensure your investment portfolio aligns with your risk profile and wider financial plan.

Other financial services may be covered by the FSCS too, including debt management, mortgages, and insurance policies. Before you take out a product, open an account, or use a service, it’s worth checking if you’ll be covered by the FSCS. It can provide confidence and peace of mind.

3 things to do to ensure you’re covered by the FSCS

  1. Always check firms are regulated. Not all services and financial products offered are FCA regulated and if you took out one of these, you won’t be covered by the FSCS. This may be a bank that isn’t authorised in the UK or unregulated investments. You can use the FCA register to check.
  2. Check your existing products. In most cases, your assets will be covered by the FSCS but it’s always worth checking, and ensuring you have not exceeded compensation limits.
  3. Get in touch with us. We want you to have confidence in the products and services used as much as you do in your plans. If you have any questions about whether you’re covered and the risk to your assets, you can contact our team.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

 

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.

 

The current 2020/21 tax year will end on 5 April 2021. As a new year starts, many allowances reset. For some, it will be your last opportunity to use them. Using these six allowances before the deadline can help you get the most out of your money.

1. ISA allowance

ISAs are a popular way to save and invest. They are tax-efficient, you don’t need to pay Income Tax or Capital Gains Tax on the interest or returns earned. Maximising your ISA contributions to make use of the annual allowance can reduce your tax bill. The current ISA allowance is £20,000 per tax year.

Remember, you can also use a Junior ISA (JISA) to save or invest for a child. Similar to an adult ISA, they are tax-efficient. You can contribute £9,000 per tax year. Money contributed to a JISA is locked away until the child turns 18.

2. Pension annual allowance

The annual allowance is the amount you can pay into a pension each tax year while still benefitting from tax relief. Tax relief provides an instant boost to your pension savings and is given at the highest rate of Income Tax you pay. As a result, it makes paying into a pension an effective way to save for retirement.

If you’re in a position to do so, increasing pension contributions to take advantage of this can significantly increase your pension and income when you retire. Usually, you can invest up to 100% of your annual earnings, up to £40,000, into your pension and still benefit from tax relief. However, if you’ve already accessed your pension or are a high-earner, your allowance may be lower. Please contact us if you’re not sure what your annual allowance is.

3. Gifting allowance

If your estate may be liable for Inheritance Tax, gifting money or other assets during your lifetime can reduce the bill, as well as allowing you to see the benefits gifts bring to loved ones. However, some assets are still considered part of your estate for Inheritance Tax purposes for up to seven years after they are gifted.

Making use of gifts that are immediately outside of your estate provides one solution. One of these is the annual gifting allowance, which means you can pass up to £3,000 on to a loved one tax-free. This is per individual, so as a couple you can gift £6,000 without worrying about Inheritance Tax each year.

4. Capital Gains Tax allowance

When you sell or dispose of certain assets, you may be liable for Capital Gains Tax (CGT) on the profit made. The current CGT allowance of £12,300 means that most people will not have to pay this tax. However, if you’re likely to exceed the limit, spreading out the sale of assets across several tax years can make sense.

5. Dividends allowance

If you’re invested in dividend-paying companies, the dividend allowance can be a useful way to boost your income without increasing tax liability. For 2020/21, the dividend allowance is £2,000. If you’re a company director and are a shareholder, you may be able to pay yourself in dividends to make use of this allowance.

6. Marriage Allowance

Finally, if you’re married or in a civil partnership, make use of the Marriage Allowance if one of you doesn’t fully use their Personal Allowance.

The Personal Allowance is the amount you can earn in total each tax year before paying Income Tax. Your total income may include your salary, pension benefits, investment returns and more. For the 2020/21 tax year, this is £12,500. If you or your partner don’t exceed the Personal Allowance, you can usually pass on a portion to the other. This can mean reducing your tax bill by up to £250 as a couple.

Get in touch to discuss your allowances and financial plan

The above list isn’t exhaustive, other allowances may be valuable to you. If you’d like to discuss your financial plan and the allowances, tax reliefs and incentives that could help you get the most out of your money, please get in touch.

While allowances are often discussed as the end of the tax year approaches, putting a medium-term plan in place that considers these can be beneficial. For instance, if you’re investing through an ISA, spreading contributions across the 2021/22 tax year to fully use your allowance over 12 months can make sense. Likewise, spreading pension contributions across a year is preferable to a lump sum for many people.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.