Tax & Estate Planning

Insights - Tax Planning

by Graham Bond 25 May, 2017

Capital Gains tax on shares and investments. When you sell shares, you will either make a profit or a loss. Profits made are classed as a capital gain.

There are some exemptions where capital gains tax (CGT) is not liable:

  • Individual savings accounts (Isa’s)
  • Venture Capital Trusts
  • Enterprise Investment schemes
  • Gifts to Charity
  • Government Securities
  • Corporate Bonds of a qualifying status
  • Transfers of shares between spouses or partners in a civil partnership
  • betting, lottery or pools winnings

Apart from the exemptions, sales or disposal of the shares will normally be classed as a potential capital gain.

Each person has an allowance each year they can use to reduce the amount of CGT they might pay. If your total gains for the tax year are below the “annual exempt allowance” you will not have to pay any tax.

If your gains are over the allowance then tax would be due on the balance. It might also be possible to offset any losses from previous tax years. If you do not use your annual exempt allowance for CGT in a tax year, then you lose it and you cannot carry it forward to another year. The CGT tax rate payable will depend on your total income and any gains made for the tax year in question.

The government changed the way Capital Gains were taxed from April 2015. The amount of tax due will depend whether you are a basic or higher rate taxpayer.

by Graham Bond 23 May, 2017

If you sell a property, you might have to pay tax. This tax is called capital gains tax. The amount you might have to pay will depend on the amount of profit you make.

If the property you are considering selling is your main residence then you would normally be entitled to “Principle private residence relief”. This relief normally allows you to you to sell your home without incurring capital gains tax (CGT).

by Graham Bond 05 May, 2017

If you sell an asset that is subject to capital gains tax, you need to advise the Inland Revenue when you make a capital gain or if you wish to claim a loss. To do this you need to complete a self-assessment tax return for the year in question. This is usually completed online or alternatively by using the paper based forms that are available from HMRC.

If you do not normally complete this return each year, you will need contact your tax office and request the return. If you don’t have access to the HMRC online self-assessment username and password, you will need to obtain one.

You do not need to report any gain if it is exempt from CGT. Residential property that is classed as your main home is usually exempt from CGT.  Information about CGT gains on assets can be found on the HMRC website. If the gain is not exempt and below the CGT annual allowance of £11,300 for the tax year 2017/18, you should still complete the self-assessment tax return.

Keep good records

It is important to keep records of the purchases and sale of assets over the years. You should also keep records about any expenditure you may have incurred whilst owning the asset. Some of the expenditure may qualify to reduce the gain, depending on the type of expense.  This will help you to work out potential gains and losses.

The calculations for some clients could be very complex and it is important that the correct figures are returned to the Revenue to ensure you are paying capital gains tax correctly. This link covers more information about capital gains tax rules .  

We would recommend that you seek professional advice on any money matters from an appropriately qualified tax planner.  when you are considering selling or gifting assets. The Government website www.gov.uk  has a lot of useful information about paying capital gains tax.

by Graham Bond 20 Apr, 2017

In 2001 the Trustee Act 2000 came into force for trusts established under English Law. Trustees have a legal requirement to understand and take into account this legislation.

The act requires and imposes a Duty of Care on the trustees to legally ensure the trust arrangement is operated in a suitable way. It is especially important for trustees to ensure that the duties imposed upon them by law or the terms of the trust deed are carried out.

Failure to effectively administer the trust could create a breach of trust. If a breach of trust occurs the beneficiaries could opt to take legal advice against the trusteeship and seek financial compensation.

Typical breaches of Trust include:

  • Poor administration of the trust that results in financial loss to the trust and beneficiaries.
  • Unequal treatment of different classes of beneficiaries.
  • Making unsuitable investment decisions that could be challenged by the beneficiaries.

Responsibility of trustees

Trustee’s responsibilities fall into a number of categories:

1.Duty of Care. Trustees are required to act in the best interests of the beneficiaries and the trust arrangement.

2.Standard Investment Criteria. This places a responsibility on the trustees to ensure that the assets held within the trust are invested in a suitable and appropriate manner.

3.Delegation of duties. This power allows trustees to delegate certain tasks in relation to trusts. It does not absolve the trustees for their responsibilities, but might help with the operation of the trust.

Specific Trustees Duties

Under the Trustee Act 2000 the trustees have specific duties that they should ensure are carried out. These include:

  • Keeping records, Accounts and completing any required tax returns
  • Acting impartially and treating the beneficiaries fairly
  • Investing the assets of the trust in a prudent manner
  • Distributing the trust assets when required
  • Abiding by the terms of the trust
  • Paying tax on time
  • Ensuring assets within the trust are held in the name of the trust

The act replaced existing powers set out under the Trustee investment Act 1961 with a wider general power of investment. For trusts that do not have wide powers of investment the Trustee Act 2000 provided wider powers.

There are a number of exceptions from the Trustee Act 2000. These exceptions include trusts that are set up under Occupational Pension legislation, Authorised Unit Trusts and some trusts set up under the Charities Act 1993.

The requirements placed on trustees can be onerous and time consuming. We can help guide you through the complexities of the trustee act and help you comply with your trustee responsibilities.

by Graham Bond 18 Apr, 2017

April 2016 – changes to the taxation of dividends

From April 2016 the Dividend Tax Credit will be replaced by a new tax-free Dividend Allowance. This means that help with taxation on dividends might be necessary for some people.

The Dividend Allowance means that you won’t have to pay tax on the first £5,000 of your dividend income, regardless of what non-dividend income you have. The new allowance is available to anyone who has dividend income.

This means that in future, you’ll pay tax on any dividends you receive over £5,000 at the following rates:

  • 7.5% on dividend income within the basic rate band
  • 32.5% on dividend income within the higher rate band
  • 38.1% on dividend income within the additional rate band

This simpler system will mean that only those with significant dividend income will pay more tax. If you’re an investor with a modest income from shares, you’ll see either a tax cut or no change in the amount of tax you owe.

Generally, this means no change in tax for basic rate taxpayers with dividends below £5,000. Higher rate and additional rate taxpayers stand to gain though, as they will pay £1,250 and £1,530 less tax respectively on dividends up to the allowance.  Trustees of discretionary trusts  will be worse off. However, for many small business owners, who paid themselves largely in dividends, there could be an additional 7.5% to pay on a substantial portion of their income unless they alter the structure of their business.We would advise anyone affected to seek help with tax issues on dividends.

Without question, the new dividend taxation rules are simpler, but Investors who will be subject to the higher tax charge will need to plan carefully to avoid tax rises under the new rules. Doing nothing may not be the best course of action. Taxation of shares held in Pensions   and Isa's are unaffected.

The following tables give examples of the changes:

2015/2016 tax year

  Net dividend Tax credit Additional tax Dividends after all tax
Non-taxpayer £1,000 £111 £- £1,000
Basic rate taxpayer £1,000 £111 £- £1,000
Higher rate taxpayer £1,000 £111 £250 £750
Additional rate taxpayer £1,000 £111 £306 £694

*The additional tax payable is based on a nominal gross dividend, which is the net dividend plus the notional tax credit.

2016/2017 tax year

Every investor will have an annual tax-free dividend allowance of £5,000. The table below shows the amount of tax payable  on dividends in excess of the dividend allowance .

  Net dividend Tax credit Additional tax Dividends after all tax
Non-taxpayer £1,000 £- £- £1,000
Basic rate taxpayer £1,000 £- £75 £925
Higher rate taxpayer £1,000 £- £325 £675
Additional rate taxpayer £1,000 £- £381 £619

Help with Tax

The Government website gives  more information about  taxation on dividends .

If you would like help with tax issues and to discuss your own personal situation, please contact us on 01454 521311 or use our contact form.

by Graham Bond 08 Apr, 2017

A recent report commissioned by Royal London estimates that millions of workers who retire before their State Pension Age could give a significant boost to their state pension.

If a worker misses out on a number of years National Insurance contributions, for example early retirement, career break or working abroad, they can make voluntary payments for the missed years. Royal London estimate this can give a return of around 30%.

Employees of schemes that were contracted out might also be able to catch up on the missed years.

The new Flat Rate State Pension was introduced earlier this year. For people retiring after 6 April 2016 the full flat rate pension is £155.65 per week. This is based on someone making 35 years of full flat rate national Insurance contributions. However, people that paid reduced contributions will not receive the new rate at the start of the scheme.

Former Lib Dem MP Steve Webb, is now director of policy at pensions firm Royal London. Mr Webb said that “paying voluntary or ‘Class 3’ contributions were attractive because the rate paid on these contributions is heavily subsidised by the Government.”

He confirmed that one year of Class 3 National Insurance Contributions can be purchased for £733. This will potentially boost someone’s state pension entitlement by £230 per year for the rest of their lives.

Assuming someone lives for twenty years in retirement then an additional £4600 of extra State Pension would be generated. Someone who filled five ‘missing’ years in their national insurance contributions could receive an extra £23,000 in pension by paying £4,000, according to Webb.

Royal London have recently issued a publication called ‘ good with your money'.   It provides useful information about the state pension.

Webb said: ‘Large numbers of workers could gain a substantial boost to their   retirement planning   for the payment of a relatively modest lump sum. But the rules around topping up State Pensions are complex so we hope that our new guide will help people to navigate the system.

‘It is rare for the Government to offer something on such generous financial terms and we want to make sure that everyone knows how to take advantage of this opportunity’.

Many public sector workers are entitled to take their workplace pension at the age of 60, but will not get a state pension until they are 65 or 66.

This means that no national insurance contributions are paid between their retirement date and State Pension Age. Buying additional years using class 3 contributions can be a very effective way of boosting your State Pension.

Royal London estimates around 210,000 NHS workers, 150,000 teachers and 130,000 civil service workers could make gains from voluntary contributions payments.

More on the State Pension

If you are interested in finding out more about your State Pension entitlement, then the best thing to do is to obtain a pensions forecast. This is very simple to do. All you need to do is call the Future Pensions Centre on 0345 3000 168. You will need your personal details to hand including your National Insurance number.

by Graham Bond 07 Apr, 2017

The new tax year has commenced and whilst many people are aware of the tax breaks available to them, its worth pointing our a few areas of  change for this  tax year.  There are major changes to the ways dividends are to be taxed. Changes to the rates of Capital gains tax will also come into effect from the 6th April 2016.  Here's a brief outline:

ISA Allowance 2017/18

The ISA allowance for this tax year has increased to £20,000, it is still important to use your allowance if possible. Unfortunately, the interest on cash Isa is at an all-time low. However, for many long term investors a low risk stock and shares Isa might be an alternative option.

New Personal Savings Allowance

The Chancellor has introduced a new personal savings allowance from 6th April 2016. The first £1,000 of savings interest will be tax-free if you are a basic rate taxpayer, whilst the first £500 will be tax-free if you are a higher rate taxpayer.

Changes to Dividend Tax

From the 6th April there will still be the £5,000 tax-free dividend allowance for investors. If you hold investments that are not in tax efficient, such as Individual Savings Accounts or pension savings and are subject to the new dividend tax then it is important that you seek financial advice . We would recommend investors should review the impact of the dividend tax changes might have on them.

Capital Gains Tax Rates

The rates of Capital Gains Tax – which is a tax on the profits made from the sale of assets – will be reduced for some people from 6th April 2016. The CGT rate will be reduced to 10% for basic rate taxpayers, while the rate for higher rate taxpayers will fall from 28% to 18%.

However, the capital gains tax rates due on disposal of residential property will remain 18% for basic rate taxpayers and 28% for higher rate taxpayers. The Annual CGT tax-free allowance will remain unchanged at £11,100.

Investors with assets subject to CGT, for example large share portfolios it might be worth reviewing these based on the new CGT rates and the impact of the dividend tax changes.

Pension contributions

Making a contribution into a pension is still one of the most tax efficient investments you can make. As well as growing in a tax efficient way, pension contributions can be used to reduce your current income tax liability. If you own and run a limited company, then your company could make an employer contribution to reduce its corporation tax bill.

At retirement you will be entitled to up to 25% as a tax free lump sum and the remaining   funds are used to generate a taxable income. The rules relating to pensions and retirement planning can be complicated and not suitable for everyone. We recommend you seek advice on this subject.

These are just a few of the financial advice tips for 2017/18. If you want to talk in more depth please feel free to contact us.


by Graham Bond 07 Apr, 2017

A tax planning clampdown on aggressive tax schemes have been announced by Theresa May’s new Government. It is estimated that each year Billions of pounds of tax revenue that should be paid is lost due to complicated and aggressive tax planning schemes.

The Government has tightened up on tax evasion over the last few years and a number of “Celebrity Tax evasion” cases have received a lot of press coverage.

The Treasury has invested £1 Billion over the last few years addressing tax evasion, however they felt that this needed to go further.

In an announcement yesterday, the Financial Secretary to the Treasury, Jane Ellison confirmed that:

“People who peddle tax avoidance schemes deny the country of vital tax revenue and this government is determined to make sure they pay. The vast majority of their schemes don’t work and can land their users in court facing large tax bills and other costs. These tough new sanctions will make would-be enablers think twice and in turn reduce the number of schemes on the market.”

Making Accountants, Tax Planners an Advisers accountable

Up until now businesses promoting this advice have not received any recourse or comeback in relation to this type of tax evasion. High fees and commission were normal on this type of arrangement with the client bearing the cost. The aim of the consultation is to deter Tax advisers, accountants and financial advisers from encouraging clients to invest into complicated and risky schemes that are specifically designed to avoid tax.

Part of the plan is to levy penalties on advisers that recommend such schemes. The penalty could be up to 100% of the tax that should have been paid.

The Government has confirmed that the majority of advisers do not recommend these types of arrangements, but a minority still operate in this area. After the 2015 budget the Government recommended that the regulatory bodies responsible for tax and accountancy should raise standards in this area. Since then the industry has been working hard by strengthening their professional conduct standards in relation to taxation. In addition, a code of practice on taxation for banks was introduced in 2009.

Traditional tax planning still acceptable

The government has confirmed that traditional and proven tax planning methods such as Pensions, Individual savings accounts and trust planning will still be acceptable. This is good news for clients and reassuring, as it gives advisers an outline of the types of planning that is not classed as tax evasion.

Our view and Stance

We have been aware of the HMRC’s concerns over these types of schemes for a number of years. The Revenues disclosure of tax avoidance schemes legislation (DOTAS) has highlighted the issue and an impending tax planning clampdown in the area. We have always believed in the long run that ultimately it would be the clients of these schemes that would suffer financial loss and penalties.

As a consequence, we have never recommended these type of arrangements to our clients.

More information

The government has produced a consultation paper on the proposed penalties for accountants and tax advisers. A copy of the paper can be accessed under the   www.gov.uk   website under   strengthens tax avoidance measures

by Graham Bond 03 Apr, 2017

It is sometimes possible to sometimes have too much of a good thing. This is certainly true for any capital gains that may have accumulated, but have not been crystallised in your investment portfolio.

Although it’s generally good news that your investments and wealth are increasing in value. The flip side of the argument is that the taxman will at some point have any tax that is due. If your taxable investment  gains   are left to simply accumulate, so too is the likelihood that under the capital gains tax rules, a day will come when you need to encash a sizeable portion of your taxable portfolio.

Fortunately, there is a tax planning process we can use to your advantage as part of your annual financial planning. By taking profits on an annual basis we can improve the financial position of your investment portfolio by using your annual CGT allowance to take capital gains (CGT) out of your portfolio.

How do we do this?

 Each tax year, you and if you are married, your spouse have the option to crystallise an amount of any gains you might make without incurring any liability to capital gains tax. For the tax year 2016/2017 the annual allowance is a maximum of £11,100. This amount is per person so you and your spouse can transfer assets between both of you to obtain the total taxable allowances of £22,200 of gains each year, per couple.

This means depending on your financial situation that it could be in your interest to take any gain each year up to and including maximum allowable amount. Doing this is called bed and breakfasting. There is a 3-step process to do this. The steps are:

  1. Sell some or all your investment holdings in your portfolio when they are worth more than you paid for them. This will crystallise the gain (with no tax liability).
  2. Hold the investment proceeds in cash for at least 30 days. This is an HMRC requirement.
  3. Reinvest the cash proceeds into the original investment(s) no earlier than 31 days later.

As you might expect, there are certain things you should consider when using the capital gains tax rules. If you do crystallise any capital gains, it’s important that you consider your long-term investment objectives and stick to your financial plan.  Rather than continually buying and selling assets it is better to stay in the market for as long as possible to achieve growth on your investments.

It is not sensible to sell down all capital gains proportionally across your various investment holdings (within the allowance threshold) as this method is often inefficient. This method may remove far too much cash from your portfolio that will be held in cash for more than 30 days, whilst increasing trading and stamp duty costs within the portfolio. We would normally recommend that you sell as few holdings in your portfolio as possible.

Our Solution

Our aim is to achieve an appropriate balance between the available tax benefits and staying on course as far as your financial plan is concerned. It’s usually a good idea to prioritise selling down the investment holdings that have the greatest percentage of gains. This will enable us to place the fewest trades, resulting in lower overall trading costs and thus holding less cash.

There are also other ways to minimise the amount of time any gains sit in cash and remain out of the market. One way is to buy similar but not identical assets and to hold them instead of the original investments.

If you are married, there might be the possibility to sell investment funds held in one partner’s name, then to gift without tax implications the proceeds of the sale to the other spouse. Your spouse could then repurchase the same assets in his or her name. After a reasonable period, i.e. more than 30 days you could then transfer the assets back to the original partner’s name.

We usually hold off on capital gains tax planning towards the end of the tax year so we can combine the planning into the rest of your tax – and financial-planning tasks (e.g. funding your Pensions and ISAs).

The benefits of using CGT allowances

Over the long term, gains or growth that has accumulated in your taxable accounts is an integral part of your financial journey towards accumulating wealth. As gains occur, we can often soften the tax-burden blow by making use of the annual tax allowance on crystallised gains. This is just one aspect of the ongoing service we can offer you. We do not offer  aggressive tax planning  strategies and the Inland Revenue now have the ability to challenge such schemes

Deciding when and how to put into place appropriate tax planning strategies is one way we can add value and improve the overall return you get from your investments. If you have any questions of just want to discuss your own personal situation, then please feel free to contact us.

by Graham Bond 13 Sep, 2017

August is traditionally a quiet month as people go on holiday, factories close and parliament takes a break. Sadly, this year was dominated by terrorist atrocities in Barcelona, and by an increasingly combative rhetoric from North Korea that culminated in the firing of a missile over Japan. This brought about a heightened demand for perceived “safe-haven” assets, whilst the price of gold surged to an eleven-month high and reached its highest level since President Trump’s election in November 2016.

Weather has dominated the headlines, with Tropical Storm Harvey hammering Texas and the US Gulf Coast. This was followed by Hurricane Irma, bringing devastation to the Caribbean, Florida and beyond. Jose and Katia are the latest to bring havoc of what is still the beginning of the tropical season.

UK

The FTSE 100 Index rose by 0.8% during August. The only real change we may see to the pound over the coming months, is the removal of the old circular coin in mid-October! it continues to struggle again the EURO and USD.

UK equity markets rose over July, although the overall performance of large companies was eclipsed by that of mid-caps. While the blue-chip FTSE 100 Index rose by 0.8%, the FTSE 250 Index rebounded from a poor June to end July 2.3% higher.

Royal Bank of Scotland (RBS) reached an agreement with the US Federal Housing Finance Agency over the mis-selling in the US of high-risk mortgage products before the financial crisis. RBS will pay US$4.75 billion to settle the case. Elsewhere, payment processor and fellow FTSE 100 constituent Worldpay confirmed that it was to be taken over by US payment processor Vantiv.

The UK economy posted quarterly growth of 0.3% for the second quarter of the year, compared with first-quarter growth of 0.2%. Growth in the services sector was boosted by a strong contribution from the UK retailing and film industries. The International Monetary Fund (IMF) downgraded its forecast for UK economic growth in 2017 from 2% to 1.7%, citing “weaker-than-expected activity” in the first quarter.

Having fallen by 1.2% in May, retail sales volumes rebounded in June, rising at a monthly rate of 0.6%. Sports retailer Sports Direct revealed a drop of almost 59% in full-year profits, which were weighed down by a period of bad publicity and the effects of the pound’s weakness. Sterling rallied to its highest level against the US dollar since September 2016 during July.

Supermarket retailers Sainsbury’s reported a stronger-than-expected sales increase during its first quarter, but sounded a warning note over the impact of mounting inflationary pressures. The UK’s annualised rate of consumer price inflation eased unexpectedly in June, falling from 2.9% in May – its highest level since June 2013 – to 2.6%, and posting its first drop since October 2016. The decline was primarily caused by a fall in motor fuel prices, and the news went some way towards alleviating pressure on the Bank of England (BoE) to consider tightening monetary policy.

The rate of unemployment in the UK fell to its lowest level since 1975 in the three months to May, declining to 4.5%. However, wage growth continued to lag inflation: average earnings (excluding bonuses) rose at an annualised rate of 2%. Moreover, once inflation was stripped out, real weekly wages fell at an annualised rate of 0.5%, stoking concerns about the possible impact on economic growth.

UK equity indices generally rose during July, although medium-sized companies generally performed better than their larger counterparts. Over the month, the FTSE 250 Index rose by 2.3%, while the blue-chip FTSE 100 Index climbed by 0.8%. Meanwhile, the FTSE 250 Index’s yield fell from 2.71% to 2.65% during July, and the yield on the FTSE 100 Index eased from 3.84% to 3.80%. In comparison, the yield on the ten-year gilt edged down from 1.33% to 1.29% over the month.

Support services and construction firm Carillion issued a profit warning and announced the suspension of its dividend pay-out. Elsewhere, HSBC Holdings announced a new share buyback of up to US$2 billion, taking its buyback total to US$5.5 billion. According to HSBC’s CEO, Stuart Gulliver, the company has paid “more in dividends than any other European or American bank” over the past 12 months.

UK Investment dividend pay-outs hit a new second-quarter record in 2017, according to Capita Asset Services’ quarterly UK Dividend Monitor, reaching a total of £33.3 billion. Dividends were boosted by a strong contribution from companies in a “resurgent” mining sector, where second-quarter pay-outs rose at an annualised rate of 73%. During July, miner Anglo American revealed stronger-than-expected half-year results and a sharp decline in debt, and announced the early reinstatement of its dividend pay-out. Its dividend policy will target a pay-out of 40% of underlying earnings. Anglo American announced the cancellation of its dividend pay-out in December 2015 as part of a restructuring programme designed to address a downturn in commodity prices.

Total underlying dividend payments of £28.6 billion were augmented in the second quarter by special dividends totalling £4.6 billion. Sterling’s weakness continued to flatter pay-outs from UK companies: underlying growth in the second quarter was 12.6%; however, when the currency effects were stripped out, underlying growth was a slightly more modest 7.8%. Looking ahead, although the second half of the year is expected to be quieter than the first half in terms of dividends, Capita still expects 2017 to be a record year.

EUROPE

Uncertainties surrounding Brexit continue. The UK will "soon regret" leaving the EU, European Commission President Jean-Claude Juncker has said. Inflation hit 2.9%, ahead of the Bank of England’s target of 2%....ongoing concerns of a rise in interest rates continue.

The euro rose to its highest level against the US dollar since January 2015 during August, driven up by concerns over the impact of Tropical Storm Harvey in the US, and by the strengthening European economy. The eurozone’s economy expanded at an annualised rate of 2.2% during the second quarter.

 The euro’s appreciation generated some apprehension about the impact on corporate earnings in the region. Over August, the Dax Index fell by 0.5%, while the CAC 40 Index edged 0.2% lower.

European Central Bank (ECB) President Mario Draghi played down speculation that the central bank intends to start winding down its programme of economic stimulus measures soon. Mr Draghi said: “The last thing that the Governing Council may want is actually an unwanted tightening of the financing conditions that either slows down this process or may even jeopardise it”. Mr Draghi hailed the measures as successful, citing “all the economic sentiment indicators (and) survey indicators (which) are either at all-time highs or close to that”. The euro rose to its highest level against the US dollar since the beginning of 2015; meanwhile, the Dax Index fell by 1.7% and the CAC 40 Index dropped by 0.5% over the month.

Mr Draghi issued a cautionary note, however, warning that underlying inflation remains subdued and has not yet demonstrated “convincing signs of a pick-up”. The annualised rate of inflation in the euro area remained unchanged at 1.3% during June, remaining below the ECB’s 2% target. A survey undertaken by the ECB found that expectations for inflation in the euro area have deteriorated, highlighting the problems faced by the central bank. The survey found that the rate of inflation expected to remain below target in 2017, 2018 and 2019.

Economic sentiment in the eurozone rose in July to its highest level for ten years. Sentiment was boosted by stronger confidence in the services sector. The eurozone’s rate of unemployment fell to 9.1% during June, reaching its lowest level since February 2009. The International Monetary Fund (IMF) expects economic expansion in the eurozone to be stronger than previously predicted, and upgraded its forecast for 2017 from 1.7% to 1.9%, citing better-than-expected momentum in domestic demand. The IMF also upgraded its economic forecasts for several major European countries, including Spain – which is expected to expand this year by 3.1% - and Italy, which is forecast to grow by 1.3%.

Following a surge in demand for European equity funds in April and May, investors ’ appetite for funds in the Europe excluding UK sector declined during June, according to the Investment Association (IA). Nevertheless, in absolute terms, demand remained relatively robust and the sector experienced net inflows of £188 million during the month. Similarly, although demand for funds in the European Smaller Companies sector waned in June, net retail sales remained in positive territory.

USA

The US economy expanded at an annualised rate of 3% during the second quarter of 2017, compared with an earlier growth estimate of 2.6%. The Dow Jones Industrial Average Index edged 0.3% higher over August.

The hurricane season is still playing havoc with the production of oil, refining activity, demand and distribution. Prices rocketed in August, early September and it is very unstable.

Credit ratings agency Moody’s reported that, of the US$1.84 billion cash pile held by US non-financial companies, 87% of the pile is held by investment-grade companies, and the top-five cash hoarders can all be found in the technology sector, led by Apple.

Despite a backdrop of persistently low inflation, speculation over the likelihood of tighter monetary policy continued to put pressure on global bond and currency markets during July. The US Federal Reserve is expected to begin cutting back its balance sheet soon; meanwhile, the European Central Bank is trying to curb speculation that it intends to wind down its programme of economic stimulus measures.

EMERGING MARKETS

China’s economy posted annualised growth of 6.9% during the second quarter of 2017, having alsoexpanded by 6.9% during the first three months of the year. This growth exceeded the Chinese government’s official annual economic growth target of around 6.5%. Although the news was generally well received, it did not manage to allay broader concerns over the impact of China’s mounting debt burden, excess capacity in the manufacturing sector, and worries over a bubble in the property sector. The Shanghai Composite Index rose by 2.6% during July.

The International Monetary Fund (IMF) upgraded its forecast for China’s economic growth in 2017 from 6.6% to 6.7%, and in 2018 from 6.2% to 6.4%, citing the country’s “policy easing and supply-side reforms”. China’s industrial output rebounded in June, rising at an annualised rate of 7.6%; meanwhile, imports grew at an annualised rate of 18.9% during June, while exports rose by 8.5%. Elsewhere, retail sales increased to their highest level for more than a year during June, rising at an annualised rate of 11%. During July, China’s authorities launched a new programme – Bond Connect – which is designed to open the country’s bond market and make it easier for foreign investors to buy and sell Chinese bonds.

In India, pressure on central bank policymakers continued to intensify amid calls to cut interest rates. The Reserve Bank of India’s (RBI’s) key interest rate currently stands at 6.25%. Disappointing inflation figures were compounded by lacklustre industrial production data in July. Annualised consumer price inflation fell from 2.18% in May to 1.54% during June, while the rate of wholesale price inflation dropped from 2.17% to 0.9%. The CNX Nifty Index rose by 5.8% during July.

Brazil’s economic growth is likely to remain weak for a prolonged period, according to a report by the World Trade Organisation (WTO), although the WTO expects the country to begin a gradual recovery over 2017. The WTO believes that, although Brazil’s fundamentals are generally solid, the economy remains vulnerable to fresh political uncertainties and delays in tackling fiscal imbalances and structural reforms. Meanwhile, the International Monetary Fund (IMF) believes that Brazil’s economy is reaching a “turning point”; nevertheless, like the WTO, the IMF remains concerned about the impact of political instability. Over July, the benchmark Bovespa Index posted a rise of 4.8%.


A PDF version of the commentary is available here

by Graham Bond 05 Jul, 2017

Time and time again forecaster try to predict what will happen in the future to Stock Markets. In reality, nobody knows what Markets will do next.

The Wall Street Journal in the US recently published an article about the performance of Global Stocks and Shares. The article was called, “ Global Stocks Post Strongest First Half in Years, Worrying Investors .”

“The question for stocks and shares investors is whether the strong first six months of 2017 heralds a choppier second half or the start of a multiyear upswing. The data on global rallies offers a mixed record.”

In plain English, this means:

 “It’s impossible to predict whether markets will go up or down for the latter half of the year. Markets could go up or down or even trade sideways.”

The newspaper article also reported that: “Most of the major stock Market Indexes, 26 in total have risen in value so far in 2017. The last time this happened was in 2009.

by Graham Bond 29 Jun, 2017
Here's an update on Personal Finance Portal. From the 4th July our client portal will have a new look and feel about it. 
The software provider we work in conjuction with have revised the format to make it easier to use for our financial planning clients.

The Personal Finance Portal is a quick and secure way to obtain up to date valuations on your pensions and investments. It also offers you a way to communicate safely with us as the service is encrypted. The same cannot be said about email, which is not secure. 

The aim is to make the navigation easier to use and to provide more information to you on your finances. 

The video below shows some of the improvements that will be made. We hope you find it useful and informative. 

To access our portal please click this link

If you would like to find out more about the Personal Finance Portal please feel free to contact  us on 01454 321511. Consilium Asset Management offer Independent Financial Advice to private and business owners in the Bristol area. 
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