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Will I have an inheritance tax bill?

It’s a common misconception that inheritance tax only affects the extremely wealthy. However, if you’ve been looking into inheritance tax you may have read about a threshold of £325,000 before tax applies. Anything you own above that value, could be subject to 40% tax.

To understand how this relates to you and whether you’re going to be liable for inheritance tax, you’ll want to look at a few things. The following information is based on our current understanding of taxation law and practice in the UK which may change. The amount of tax you pay and relief you receive depends on your own personal circumstances which may also change in the future.

Figuring out the size of your estate is the first step

To judge whether inheritance tax is due, the first thing to do is calculate the value of everything you own.

We don’t often tot up the value of everything we own and it’s maybe why people often get caught out with inheritance tax. In fact, according to HMRC statistics, the average inheritance tax bill was a massive £209,000 in 2018/19. So, it’s really important to do this now.

It can also be surprising what is included in your estate for inheritance tax purposes and what’s not. For example, did you know that any gifts to your loved ones you’ve made in the last seven years could be included? Whereas the value of your pension might not be.

To start you should add up the value of your property, savings, investments and cars. Then, imagine you turned your house upside down. Anything that falls out should be included, like your TVs, laptops, furniture, antiques, jewellery and any valuable collections. You can see how quickly it would all add up. But does that mean inheritance tax would apply to all of it?

There are allowances that you need to be aware of

That threshold of £325,000 is an important figure because it’s a tax-free allowance that everyone is entitled to, no matter what your circumstances are or who you plan to leave your money to. You may have heard it being called the nil-rate band – but let’s call it a tax-free allowance just now to keep things simple.

There’s another big allowance, but it has some rules around it. The tax-free property allowance of £175,000 – or residence nil-rate band to give it its technical name – applies if you leave your home to your children or grandchildren.

So, if you add the two allowances together (£325,000 and £175,000) you can potentially leave £500,000 tax-free, as long as you leave your home to your children or grandchildren. The property allowance does reduce if your estate is worth a certain amount, but we won’t go into too much detail just now.

You can double your allowances to leave even more tax-free

Did you know if you’re married or in a civil partnership you can leave everything to your partner completely free from inheritance tax? However, this doesn’t mean you can ignore inheritance tax.

For example if you die first, everything would pass to your partner tax-free. But when they die, there could be inheritance tax due.

The good news is your partner can use your unused allowances. So, if you leave everything to them they can use your tax-free allowances of up to £500,000 plus their own £500,000. This means they can potentially leave £1m tax-free to children or grandchildren.

What if I do have an inheritance tax bill?

Inheritance tax is sometimes referred to as a voluntary tax. This is because there are many planning opportunities to reduce or prevent it.

Of course, with tax it’s never simple. There are a lot of complicated rules about inheritance tax. And there are a lot of potential pitfalls that could cost your loved ones a fortune. The good news is I am here to help and can advise what the best ways are for you to reduce inheritance tax.

Andrew Lloyd DipPFS


Source: Prudential

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Interesting data in volatile times

Following a meeting with Blackfinch Asset Management earlier this week, they provided the following data discussed during our meeting.  I thought it would be useful to share it with you.

Below, we’ve taken a look at the returns of the global stock market (MSCI All Countries World Index) since the start of 2000 up until the close on 18th May 2022. This period includes some of the worst stock market crashes on record including the Dot Com crash, the 9/11 Twin Towers attack, the Iraq Invasion, the Global Financial Crisis, COVID 19 and the ongoing situation with the Russian invasion, inflation fears and interest rate hikes.

Despite these, you will see that if an investor had held their investment for the entire period, they would have returned just over 82%. More importantly though is to see what would have happened if they’d sold out of the market and tried to time their re-entry. It is impossible to predict exactly when the ‘bottom’ of the market is, and history shows us that some of the best, and most pronounced, upside returns have happened in the most challenging economic times. The following table sorts the top 15, single day returns for the global stock market since the start of 2000. Notice how these best returns all happened at a time when investors would have been at their most nervous.


Another way to look at it is by assessing what would have happened if clients had sold out of the market and missed some of these upside days. The following plots what would have happened to an investors returns if they’d missed 1,2,3,4 or 5 of these top performing days (the first bar shows the return if they’d stayed invested over the entire period for reference):

For reference the table below shows the exact return figures plotted on the above chart

Full Period Invested82.5%
Missing Best 1 Day67.0%
Missing Best 2 Days54.1%
Missing Best 3 Days44.1%
Missing Best 4 Days35.2%
Missing Best 5 Days27.3%

As you can see, by missing just 1 or 2 of those best days during the past 22 years would have significantly reduced the client’s overall returns.

Looking at the data also highlights how quickly and dramatically upside moves can come to markets and it is our job as investment managers to ensure your client portfolios are positioned to make the most of those upturns when they arrive and to ensure the overall risk is managed in line with their expectations.


This understanding and data input from Blackfinch is nothing new.  I’ve been looking at this type of information for over 30 years.  However, in volatile markets, particularly when we have so much going on at the moment, compounded by a media that can take negative and biased views, it’s nice to remind yourself of the historic facts.

Remain invested, be patient and if possible, continue funding your pensions and investments.  Regular monthly funding works well over the long term especially in a volatile market.

Steve Speed


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Is my employer playing tricks with my pension?

Pensions, particularly Workplace Pensions, are quite often considered to be confusing.  Please see Tom Selby of A J Bell’s article below explaining a little about Auto-Enrolment contributions.

A reader wants to know why the sums don’t add up with retirement savings

Thursday 05 May 2022 Author: Tom Selby

I’m being automatically enrolled into a workplace pension scheme and was told this would be 8% of my salary. However, I’ve just done the sums and my contribution works out less than this – can this possibly be right? I also have a friend who hasn’t been auto-enrolled at all. Are we being shafted by our employer?


Tom Selby, AJ Bell Head of Retirement Policy says:

Under auto-enrolment rules, all employers, regardless of size, are required to enrol staff in a pension scheme and pay a minimum level of contributions.

The reason for the reforms was simple – millions of people weren’t saving for retirement. While lots of organisations had a pension scheme, this wasn’t a legal requirement. Even where there was a scheme, plenty of employees simply didn’t join.

Auto-enrolment was first introduced in 2012 for the UK’s largest employers, with medium and smaller employers brought in and contributions scaled up until 2019.


While I cannot rule out the possibility your employer isn’t playing by the rules, the answer is likely a lot simpler.

Under auto-enrolment legislation, employees are required to contribute a minimum of 4% and employers 3%, with a further 1% coming via basic-rate tax relief – taking the total to 8%. Employees have the option to opt out of the scheme if they want to, although they miss out on the employer contribution if they do.

However, the minimum requirement is 8% of ‘band earnings’ rather than 8% of total earnings. For 2022/23, the earnings that qualify for minimum auto-enrolment contributions are those between £6,240 (the lower earnings limit for National Insurance contributions) and £50,270 (the upper earnings limit).

Take, for example, someone earning £20,000 a year. If their 8% contribution was based on their total earnings, they would expect £1,600 in total to go into their pension during the 2022/23 tax year.

But if the contribution is based on band earnings, then it will be 8% of (£20,000 – £6,240), which is £1,100.80.


There are various legitimate reasons your friend might not have been auto-enrolled.

If they are under 22 years old or over state pension age (66) then they will not qualify for auto-enrolment, although they have the option to opt-in.

If they have earnings below £10,000 (the auto-enrolment earnings ‘trigger’) they also will not qualify for auto-enrolment, although again they have the option to opt-in if they want to.

Furthermore, employers have the option of not auto-enrolling new joiners for the first three months of their employment.

As an IFA & Employee Benefit Consultant, and an employer, I understand both the value of pensions and how we need to clearly communicate with staff about pensions and employee benefits.  Pension contribution rates can make a significant difference over time to the value of your total pension funds on retirement.  And whether or not you can afford to retire early!

Communication can be key.  Employees need to know what pension provision they have got, what they might need to retire, forecast how it may grow, and how they can make up any potential pension fund shortfall.

Steve Speed 06/05/2022

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Conflict and Capital Markets: Russian Intimidation of Ukraine

Please see below, an article from Tatton Investment Management detailing how increasing tension on the border of Ukraine has affected global markets – received yesterday afternoon – 16/02/2022.

From our phone calls and conversations we have with adviser firms, we know portfolio investors are concerned that the fear of Russia invading Ukraine is driving, at least in part, the poor start to the year experienced by capital markets. 

As laid out in recent editions of The Tatton Weekly, the cause of the current market volatility is not being caused by fears of Russia’s President Putin starting a European war, but is rooted in concerns that central banks may be moving too rapidly from monetary easing to tightening. Nevertheless, the two are loosely connected. Putin’s actions have left energy prices elevated for longer, which in turn keeps consumer price inflation elevated, which has arguably increased the pressure on central banks to act.

The current situation is undoubtedly worrying, and the political tensions are only exacerbating the most recent market weakness. Therefore, as we always do at a time of market-moving activity, we wanted to share our thoughts in a supplemental investment update. So, let’s begin by looking at what investors can learn from previous episodes of geopolitical stress.  

Recent history has relatively few episodes of war and near-war that might be considered to have been of global significance. Surprise actions such as the Iraq invasion of Kuwait and 9/11 (in 1990 and 2001, respectively) had negative impacts only after the event. However, drawn-out episodes have seen market weakness in the lead-up to but not after the outbreak of conflict. Both US-Iraq wars marked the start of stock market rallies, as did the Cuban Missile Crisis.

On those occasions, there were several other factors – aside from geopolitical tensions – which had contributed to weakness beforehand. Moreover, we also cannot attribute market strength to a sense of resolution. Nonetheless, it demonstrates that markets are reasonably efficient around such events; they go through a gradual process of discounting risk ahead of the event, rather than having a sudden unexpected dislocation as war starts. Unless they seriously impact global growth, we should expect the impacts caused by the negative surprise to pass quite quickly. Using this fairly limited history as a guide, from the current position, there is potential market upside as well as a downside.

In other words, we think the past tells us that – on balance and in market terms – we should not be too worried about market returns if the worst happens. Nonetheless, it is important to try to assess whether the current situation is markedly different. 

At this point, various markets have already priced in quite high levels of risk and consequence. This is particularly true of energy. Natural gas prices have been squeezed much higher this winter. Speculative buying has been a factor, but Russia’s actions in suppressing supply have almost certainly been the biggest driver. As we have noted before, Europe’s weak spot is its reliance on Russian energy, especially natural gas. The chart below shows that the gas supplies have been cut repeatedly, and do not seem to be related to the pandemic. 

Russia still needs to sell its oil and gas and Europe remains its major customer. According to Russia’s central bank, total exports (not just energy) reached $489.8 billion in 2021. Of that, crude oil accounted for $110.2 billion, oil products for $68.7 billion, pipeline natural gas for $54.2 billion, while liquefied natural gas accounted for $7.6 billion (In sum 49% of all exports). While the rise in prices will be welcome in Moscow, it will gain little if Russia cannot sell the volumes needed.

Growth in Russia is forecast to slow down to 2.3% for this year, having reached 4.3% in 2021. These growth numbers may sound healthy enough but, given the rise in energy prices, they are in fact mediocre. The Russian Ruble would usually benefit substantially from rising energy prices but has already declined 5% since peaking against the US Dollar in October. Russian foreign currency debt credit spreads have widened, and local interest rates have risen sharply. Russia’s financing costs face an even worse outcome if war breaks out. Russia’s citizens are unhappy, and the prospect of a war that threatens to kill or injure many young Russians is likely to make them even less so. Given this economic backdrop, we suspect Putin’s posturing will remain just that. Should there be an actual armed conflict, Russia needs to be as short-lived and containable as possible.

Events can change dramatically from one day to the next, however, we believe that current markets have already priced in the risk of a worsening of the Ukraine conflict within the confines described above.

As we mentioned at the beginning,  markets face a more substantial  threat from policy tightening by central banks and governments.  It may seem odd but if the Ukraine tension drags on or worsens, policymakers will feel less obliged to depress economic sentiment further.

Regular readers of our blogs will understand that markets are particularly volatile now and have been for a few months, mainly due to the policy changes from Central Banks and Governments.

In the circumstances we just need to remain invested, think about your long-term objectives and look through this short-term volatility.

If you are regularly monthly funding Pensions and Investments the volatility could help over the long-term too, ‘Pound Cost Averaging’ (see previous blogs).

Finally, Fund Managers use this volatility to buy good quality assets at the right price – ‘Active’ Fund Management.

Please continue to check our Blog content for advice and planning issues and the latest investment, markets and economic updates from ourselves and leading investment houses.

Alex Kitteringham


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Welcome 2022 – Happy New Year! Some less strenuous New Year’s resolutions..

Make your money work harder:

  1. Maximise tax reliefs and allowances.  This will help you get more for your money when investing and planning.  The obvious options are pension funding and using your ISA allowances.  But we have plenty more to use if appropriate.
  2. Have you any lazy capital sitting in cash?  If you have a medium or long term investment horizon, consider investing some of it for real capital growth over time.  Cash buying power is eroded by inflation over the long term.
  3. Do you have any legacy pension and investment assets that have not been reviewed recently?  Are they invested in line with your risk profile, capacity for loss and objectives?  If not, you could be missing out on potential investment returns and/or taking too much risk.
  4. Do you have any spare monthly income?  If you have, you could invest it in either your pension or a Stocks & Shares ISA.  Other investments are also available.

Get your ‘legal’ house in order:

  1. Do you have up to date Wills in place?  If not, please take legal advice.
  2. Have you got both Power of Attorney in place?  One for Finance and Property and the other for Health and Welfare:
  3. Are your pension nomination forms up to date on your current Workplace Pension and on any legacy pension assets?  As these are potentially some of your biggest assets, it’s important that your nominations/Expression of Wishes reflect your current situation.  They can drift out of date and legislation can and does change.

Please take independent financial advice and legal advice as appropriate.

Whilst any of the above won’t help you lose weight or get a (better?) beach body they could help you straighten out your finances for your financial good health.

All the best for 2022, have a happy, healthy and prosperous year.

Steve Speed


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Goodbye 2021 and Happy New Year!

Goodbye 2021 and Happy New Year!

Thank you for taking the time out to read our blogs this year.  Our focus since the pandemic started is to keep everyone abreast of market news as we have been through this roller coaster ride for economies and markets.

We have used a variety of market commentary and input from economists, fund managers and stockbrokers from a wide range of businesses.  I think it’s important for you to read a variety of views to understand the consensus view.

In addition, we pop in the occasional planning article on topical issues or things that we think we need to bring to your attention.  Hopefully these are useful too?

Given the last c 22 months that we have experienced we are changing the way we think as a business here too and once again we have not mailed out Christmas cards but decided to make charitable donations and sponsor good causes throughout the year.

We have supported the following this year:

Reach Family Project (Bolton)

Queenscourt Hospice (Southport)

Macmillan Cancer Support

Armed Forces Charity

Alzheimer’s Society

The Candice Colley Foundation (aims to help leukemia and other blood cancer patients and their families)

The Bloom Appeal (Merseyside against blood cancers – provides support to patients and medical staff)

We aim to continue this into 2022.

With regards to the business, we are managing in the current environment, but I really do look forward to when we can all work in the office together again.  Personally, I think this is the best option for the mental health and wellbeing of us all and for the development of our staff.  We also benefit from the teamwork, the banter and the social aspects of work being back in the office.

We wish you all a happy, healthy, and prosperous New Year!  Hopefully 2022 will be much better for all of us.  Take care of yourselves.


Steve Speed and all the team at P and B.


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What lights up your Christmas tree?

Please see the below article from Invesco and our own input following the article:

It’s Christmas. You’re sitting at home, marvelling at your lit up Christmas tree.

Have you ever wondered where the electricity that adds a magical sparkle to a simple pine tree comes from?

For the best part of the 20th century, electricity was generated by burning fossil fuels such as coal or gas.

The UK was the first country that burned coal to supply energy. And in the late 1980s, coal accounted for 60% of electricity production in the country.

But this has changed.

By 2020, this number had fallen to less than 2%. And much of this change was due to an increased awareness of the environmental impact of fossil fuel consumption.

With climate change high on the political agenda, countries all around the globe have set their eyes on renewable energy to supply people’s homes with electricity.

In a few years’ time, it may power those sparkling lights on your Christmas tree. 

Our Comment

The conversations about Climate Change are not new, but over the past few years, they are more serious.

One of the key areas of ESG investing looks at the environment. What are we doing to reduce our carbon footprint?

There are five major renewable energy sources which are as follows:

  • Solar energy (from the sun)
  • Geothermal energy (from heat inside the earth)
  • Wind energy
  • Biomass (from plants)
  • Hydropower (from flowing water)

They are called renewable energy sources because they are naturally replenished. The sun shines, plants grow, wind blows, and rivers flow.

People are also looking at new and innovative sources of energy, also known as ‘alternative energy’ sources.

Energy supplier EDF list the following ‘alternative energy sources’ which scientists are currently researching:

  • Solar wind
  • Algal biofuels
  • Body heat
  • Bioalcohols
  • Dancefloors
  • Jellyfish
  • Confiscated alcohol

The possibilities could be endless, and it’s this research and visibility from articles such as this that may help change the attitudes and practices of how we source and use energy.

Andrew Lloyd DipPFS


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What President Biden could do to dampen oil prices (but probably won’t)

Please find below, an article regarding the global energy market and the options for the Biden administration. Received from AJ Bell, yesterday morning – 05/11/2021.

It is a case of so far, so bad for US President Joe Biden’s plan to force the oil price lower by releasing 50 million barrels of oil from America’s Strategic Petroleum Reserve (SPR). Fifty million barrels a day may sound a lot. But in global terms it is half a day’s demand and America’s entire SPR would meet worldwide oil demand for barely a week.

The Biden plan’s failure to make a dent in oil prices seems less surprising in this context. By contrast, the OPEC+ cartel can move oil markets, as its 2020 production cut and then gradual subsequent increases in supply can testify. OPEC and Russia are still producing less than they were before the pandemic, even as the global economy and energy demand recover, and the latest OPEC+ meeting (2 December) will be the next test of the cartel’s influence.

“Fifty million barrels of oil may sound a lot but in global terms it is half a day’s demand and America’s entire Strategic Petroleum Reserve would meet worldwide oil demand for barely a week.”

COP26 made quite clear the political and public will to move away from hydrocarbon as our prime source of fuel. You can therefore hardly blame Saudi Arabia, Russia and other leading producers for looking to monetise their oil assets while they can still do so.

“Demand for energy could therefore outstrip supply, with the result that hydrocarbon prices could remain firm, or even keep rising – at least unless COVID-19 rears its head again and depresses economic activity and oil demand in the process.”

In addition, alternative, renewable sources are not yet ready to take up all of the slack from oil and gas. Demand for energy could therefore outstrip supply, with the result that hydrocarbon prices could remain firm, or even keep rising – at least unless COVID-19 rears its head again and depresses economic activity and oil demand in the process.

That leaves advisers and clients with a quandary about what to do with oil stocks – and whether they should put profit over principle should oil and gas prices stay stronger for longer – and what to think about the global economy. High energy prices are a tax on consumers and a source of margin pressure for many corporations. If oil and gas rocket, there remains the chance that the indebted global economy could wobble under the strain, virus or no virus, just as it did when oil reached $147 a barrel in 2007.

Deep water

“The combined capital investment budgets of the seven Western oil majors – BP, Chevron, ConocoPhilips, ENI, ExxonMobil, Shell and TotalEnergies – looks set to drop to its lowest mark since 2005, as a percentage of sales.”

Unlikely as it may seem, oil and gas companies are listening to the political and public call for a shift to a greener, less carbon-intensive world. The combined capital investment budgets of the seven Western oil majors – BP, Chevron, ConocoPhilips, ENI, ExxonMobil, Shell and TotalEnergies – looks set to drop to its lowest mark since 2005, as a percentage of sales. In many cases, those budgets include renewable projects, too, so spending on oil production and exploration is by implication lower still.

Global oil majors continue to shy away from new investment in oil and gas fields

Source: Company accounts for BP, Chevron, ConocoPhillips, ENI, ExxonMobil, Shell and TotalEnergies, Marketscreener, consensus analysts’ forecasts

This can also be seen in the global rig count data provided by Baker Hughes (BHI:NYSE). On the previous occasions when oil traded above $80 a barrel, over 3,000 rigs were active. The current figure is barely half that.

Global oil rig activity is subdued relative to prior periods of $80-plus oil

Source: Baker Hughes, Refinitiv data

In the absence of a COVID-inspired setback, that again points to a possible supply/demand squeeze, especially as banks, insurers and many pension funds and managers continue to publicly declare their unwillingness to finance new oil and gas exploration projects.

Action points

“This is not to say President Biden has no options at all, as he seeks to manage the energy transition in the world’s largest economy and keep hard-pressed consumers on board as he and the Democratic Party prepare for the mid-term elections in 2022.”

This is not to say President Biden has no options at all, as he seeks to manage the energy transition in the world’s largest economy and keep hard-pressed consumers on board as he and the Democratic Party prepare for the mid-term elections in 2022.

  • The President could encourage oil and gas exploration with tax breaks or at least grant permission to pipelines that his administration has previously blocked, such as the $8 billion Keystone XL project. This does not seem likely, given his and his party’s commitment to the Paris Agreement and COP26.
  • President Biden could look to thaw relations with Venezuela and Iran, both of whom are currently locked out of global markets by US sanctions. Granted, it is hard to get a handle on potential Venezuelan output given the chaos that prevails there, but Caracas has produced two to three million barrels a day in the past. It is thought that Iran could double output fairly quickly from two to four million barrels a day if given the chance. Hey presto – an extra four to five million barrels a day in total. But geopolitics may rule out this option, as those sanctions are in place for a reason and the President will not want to look dovish on foreign policy ahead of those mid-term polls either.

If the President wants to curry favour, as he may well, who is to say he does not offer consumers some sort of subsidy or hand-out, so they can meet their fuel and heating bills? In a world where money printing and negative interest rates are accepted as normal, and austerity is political poison, anything is possible. But it might not be wise to expect oil consumption, or prices, to fall if such a vote-buying scheme is cooked up.

Please continue to check back for a range of blog content from us and from some of the world’s leading fund management houses.

Alex Kitteringham

6th December 2021.

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Budget notes from Brewin Dolphin

Received last night, 27/10/2021.  Our thoughts added.

Chancellor Rishi Sunak has delivered his autumn budget, in which he announced a series of measures that aim to strike a balance between “preparing for a new economy post-Covid” and ensuring household wallets are not unduly squeezed by rising prices.

The budget came against a backdrop of unprecedented government borrowing, supply chain disruption, rising energy prices, and surging inflation that is forecast to reach 4.4%1 next year. Yet with economic growth forecasts more optimistic than six months ago, Sunak moved away from the March budget’s focus on protecting people’s jobs and livelihoods to one of investing in public services and infrastructure. 

After already freezing tax thresholds and increasing national insurance and dividend tax rates, the chancellor spared investors and pensioners from further tax hikes. At the same time, he proposed new fiscal rules that would commit the government to balance the books and reduce national debt. 

Here, we look at the main announcements and what they might mean for investors and the economy.

The economy 

The lifting of lockdown restrictions over the summer provided a much-needed boost to activity, with the latest figures from the Office for Budget Responsibility (OBR) providing a somewhat rosier picture of the economy. 

The OBR expects the economy to return to its pre-pandemic level by the turn of the year, six months earlier than previously thought, with gross domestic product (GDP) growing by 6.5% this year compared with the March forecast of around 4% growth. The OBR also revised down its estimate of long-term scarring to the economy from the pandemic to 2% from 3% previously. Meanwhile, unemployment is expected to peak at 5.25%, compared with the March forecast of 6.5%, suggesting the end of furlough will have a smaller impact than previously thought. 

At the same time, higher tax receipts mean government borrowing in 2021/22 is expected to be £183bn, some £51bn lower than the previous forecast of £234bn. However, with interest payments on borrowing revised up by £15bn, and the GDP growth forecast for 2022 lowered from 7.3% to 6%, the challenge of balancing the public finances is far from simple. Sunak proposed new fiscal rules whereby net debt as a percentage of GDP should be falling, and the government should only borrow to fund investment, with everyday spending funded by taxation. 

P and B comment:

This is a really difficult balancing act, with a lot to be taken into consideration.  For example, if interest rates increase too quickly the impact on the economy could be dramatic. Consumers are spending less, and the State is having to pay a lot more to service the interest on the covid debt in addition to other debt. Total debt in the UK c £2.2 trillion.

Investment in services and the economy 

A key area of focus was the announcement of additional investment in public services and infrastructure. This will include an extra £5.9bn to help the NHS tackle the backlog of non-emergency procedures and modernise digital technology; £5.7bn to transform transport networks outside London; £4.7bn for schools; £1.8bn for new housing; a £1.4bn fund to attract overseas investment into the UK; and increased spending on sports and youth clubs, support for families and children, and crime prevention. The government will also increase its investment into research and development to £20bn by 2024/25 as part of its goal to “drive economic growth and create the jobs of the future”.

P and B comment:

A very welcome investment into research and development for economic growth and future jobs.  Unfortunately the NHS and social care will need a lot more funding.

National living wage 

In an effort to help families who are struggling with rising prices, Sunak confirmed the national living wage would rise from £8.91 to £9.50 per hour for workers aged 23 and over from April 2022. This represents an increase of 6.6%, which is double the September inflation rate of 3.1%. 

Sunak also ended the public sector pay freeze introduced last November, cancelled the planned rise in fuel duty, and reduced the universal credit earnings taper rate from 63p to 55p in the pound.

P and B comment:

All of the above points are welcome but lower earners will need every penny as they combat inflation generally and in particular energy prices this winter.

Business rates 

The chancellor froze the business rates multiplier for a further year, which he said would be equivalent to a tax cut worth £4.6bn over the next five years, with bills 3% lower than without the freeze. He also announced plans to temporarily halve business rates for the retail, hospitality and leisure sectors, overhaul alcohol duties and reduce taxes on draught beer and cider.

P and B comment:

The business rates system in the UK is now out of date and doesn’t take into account the move to online shopping.  This system needs a complete overhaul but the problem is it’s worth c £25 billion a year to the Treasury.

Personal allowances

The chancellor previously announced in March that the personal tax allowance and higher-rate tax threshold would be frozen for five years from April 2021. The personal allowance, which is the amount you can earn each year before you start paying income tax, therefore remains at £12,570, while the higher-rate tax threshold remains at £50,270. By freezing these thresholds, more people could drift into higher and additional-rate income tax bands, and potentially see their personal allowance tapered once adjusted net income exceeds £100,000. 

The national insurance (NI) threshold was also frozen at £9,568. However, as announced in September, the rate of NI for employees and the self-employed will increase by 1.25 percentage points from April 2022 to help fund health and social care costs. Working pensioners will pay 1.25% on their earned income for the first time from April 2023.

P and B comment:

Effectively no real change from previous announcements.  As we get squeezed for more tax in all areas, it makes tax planning more important.

Dividend tax

As announced in September, the rate of dividend tax will also rise by 1.25 percentage points from April 2022 to 8.75% for basic-rate taxpayers, 33.7% for higher-rate taxpayers, and 39.35% for additional-rate taxpayers. The annual dividend allowance – the amount of dividend income you do not have to pay tax on – will remain at £2,000. The changes are expected to raise around £600m for the Treasury. 

Looking for ways to mitigate dividend tax, including investing through ISAs and pensions and taking a ‘total return’ approach to investments, could therefore become even more important when the tax hike comes into effect.

P and B comment:

As above.  Tax planning is more important.  Use the right products and allowances, plan ahead.

ISA allowance

Fortunately, for savers and investors, there were no changes to ISA allowances. The main ISA limit for 2022/23 will remain at £20,000, meaning a couple could invest up to £40,000 a year into ISAs to benefit from tax-free income and growth. The limit for Junior ISAs remains at £9,000. 

P and B comment:

ISAs still remain a very useful planning product alongside other assets.

Capital gains tax

There was some speculation that the chancellor would scrap existing rates of capital gains tax (CGT) and align them more closely with income tax rates. This was recommended by the Office of Tax Simplification in November 2020 and, if implemented, would have resulted in higher-rate taxpayers paying CGT at 40% on profits or gains exceeding the annual CGT exemption. 

Fortunately for investors, this did not come to fruition. CGT rates remain at 10% and 20%, or 18% and 28% on properties that are not a main home. The annual CGT exemption remains at £12,300 after being frozen in the March budget until 2026. 

P and B comment:

This is good news.  Any ‘simplification’ would have been penal.

Pensions tax relief

It was rumoured that the chancellor would look at overhauling pensions tax relief by, for example, moving to a flat rate of 25%. In the end, Sunak chose to leave current rates untouched, meaning higher-rate and additional-rate taxpayers can continue to benefit from tax relief of up to 40% and 45%, respectively. The pension annual allowance also remains at up to 100% of taxable earnings or £40,000, whichever is lower (this may be tapered for those with high incomes). 

As more people drift into higher tax bands due to the personal allowance and higher-rate tax threshold being frozen, these tax reliefs could make pensions an even more valuable financial planning tool.

P and B comment:

Pension tax relief rumours of change have been around for years.  Thankfully, no change here.  We need to maximise our pension funding whilst we have this tax relief available to us.

Pension lifetime allowance

The chancellor announced in March that the pension lifetime allowance, which is the total amount you can save into your pension before incurring tax charges, would be frozen until 2026. The allowance will therefore remain at £1,073,100 in the 2022/23 tax year. Any money withdrawn as a lump sum above this level will incur a 55% tax charge, while money withdrawn as income will incur a 25% charge, with the remainder then subject to income tax at the individual’s marginal rate. 

While the lifetime allowance might seem generous, pension contributions, tax relief and investment growth over several decades could mean those with seemingly modest pension portfolios could be at risk of exceeding the threshold. It is therefore crucial that savers seek expert advice on the best course of action for their individual circumstances. 

P and B comment:

As more people breach the Lifetime Allowance, I think it’s perceived as a target by some, an achievement. Having more pension than the Lifetime Allowance is not necessarily an issue, it means you have good pension assets and should be able to sustain a reasonable level of retirement income over the long-term.

Other tax planning vehicles are also available if you have good levels of pension provision in place.

Inheritance tax

The inheritance tax (IHT) thresholds remain the same and will be frozen until April 2026. Everyone is entitled to pass on assets of up to £325,000 on their death, free from IHT. This may be boosted by the residence nil-rate band, for passing on a property to a direct descendant – which remains at £175,000 per person. 

This means a married couple with children will be able to pass on a maximum of £1m in total without having to pay IHT – two lots of £325,000 (£650,000) and two lots of £175,000 (£350,000).

Although IHT thresholds have been frozen, there is still uncertainty around how the tax could be treated in the future following several reports from the Office of Tax Simplification and an All-Party Parliamentary Group. Seeking advice on IHT as early as possible, when there are more potential options to mitigate the tax, could therefore prove especially important in the years ahead.

P and B comment:

If you have an inheritance tax problem, start your planning now. This type of planning is a journey and can take many years to do. 

Budget – general comment from P and B:

An interesting Budget from Rishi Sunak as he tries to balance increasing tax receipts to pay for the NHS, social care, investment in the economy and servicing the massive debt we have in the UK, whilst getting the economy back to full growth following Covid and the impact of Brexit.

It’s a very delicate balance. We need the consumer to continue spending as c 60% of the UK economy is based on consumption, and too many tax rises and increases in the cost of living could reduce consumption as we become more cautious.

The last c 19 months has been difficult but this transition phase as we try to exit the pandemic and return to normal is very tricky too. Central Banks need to maintain the status quo and not raise interest rates too quickly and governments globally need to remain supportive.

Hopefully our government and the Bank of England will make the right decisions – we will see.

Steve Speed


1 Source: CPI inflation. Office for Budget Responsibility: ‘Economic and fiscal outlook – October 2021’

Team No Comments

What do the UN Global Compact Principles mean for investors?

Please see the below article that we received from fund managers Quilter Investors yesterday afternoon:

With climate-related risks and environmental challenges seemingly at the forefront of investors’ minds, it’s important that all those involved in the investment industry adopt a broad approach when assessing the major risks facing corporate sustainability today. This should include human rights abuses and forced labour and corruption, as risks to corporate sustainability affect not only shareholders and bondholders but also other stakeholder groups including customers, suppliers and employees.

The UN Global Compact is one of the many tools that can help investors assess threats to sustainable business across the companies in which they invest.

The UN Global Compact – what is it?

Launched in 2000, the UN Global Compact is the world’s largest corporate sustainability initiative aimed at promoting corporate sustainability and encouraging innovative solutions and partnerships through 10 guiding principles.

The UN Global Compact supports companies in responsibly aligning their strategies and operations, in addition to helping them to advance broader societal change, through initiatives such as the UN Sustainable Development Goals.

It also sits alongside the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, which is another voluntary initiative to support sustainable business.

The UN Global Compact’s principle-based framework is broadly split into four key areas – human rights, labour, environment and anti-corruption – to help guide businesses in their activities in these areas. The framework is derived from numerous international declarations for companies and countries, such as the Universal Declaration of Human Rights and the Rio Declaration on Environment and Development.

The 10 Principles

Human Rights

  • Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights.
  • Principle 2: Businesses should make sure that they are not complicit in human rights abuses.

Labour Standards

  • Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.
  • Principle 4: Businesses should uphold the elimination of all forms of forced and compulsory labour.
  • Principle 5: Businesses should support the effective abolition of child labour.
  • Principle 6: Businesses should uphold the elimination of discrimination in respect of employment and occupation.


  • Principle 7: Businesses should support a precautionary approach to environmental challenges.
  • Principle 8: Businesses should undertake initiatives to promote greater environmental responsibility.
  • Principle 9: Businesses should encourage the development and diffusion of environmentally-friendly technologies.


  • Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

Protection of human rights

Principles one and two relate to the importance of businesses to both support the protection of human rights and ensure that they are not complicit in human rights abuses.

A company that may be deemed to be in violation of the human rights principles could have revenue exposure to jurisdictions or authoritarian governments where human rights abuses are prevalent.

These companies are frequently flagged across emerging markets. For instance, an Indian port infrastructure company was flagged for being in violation of the principles given its financial ties to the Myanmar military.

However, a violation of the principles can be more explicit than this. For example, an Asian engineering and construction company was recently deemed to be non-compliant following a collapsed dam in Laos resulting in fatalities and the displacement of local communities.

Human rights is one of the main areas where investors can see which companies violate the UN Global Compact. It poses a higher risk across sectors such as aerospace and defence where businesses may be involved in the manufacture of controversial weapons.

The UN Global Compact is one of the many tools that can help investors assess threats to sustainable business across the companies in which they invest.

Labour best practice

Principles three, four, five and six are concerned with how sustainable businesses should uphold the effective recognition of the right to collective bargaining, eradicate all forms of forced (including child) labour and eliminate occupational discrimination.

Companies tend to fall foul of these principles less commonly. Following an investigation by Norway’s Council on Ethics, the forced labour risk has been particularly high in the Middle East over recent years. Migrant workers coming from India, Pakistan and Nepal face little hope of paying off the debt they owe to ‘recruitment agencies’ who have charged workers a fee for access to jobs in countries such as Qatar and the UAE.

As a result, there has recently been significant reputational damage to companies allegedly practicing forced labour in the Middle East.

Environmental responsibility

Principles seven, eight and nine provide guidance on how businesses should consider the negative impact of environmental damage, as well as the cost to a company’s reputation should a negative environmental event occur.

The principles also encourage investment in research and development around the long-term benefits of environmentally-friendly technologies.

Companies that are commonly deemed to be in violation of the environmental principles operate across the materials and utilities sectors.

For instance, an Indonesian aluminium business was found to be non-compliant given its interests in a mine that uses riverine tailings disposal (using rivers for mine waste disposal), a practice banned in many countries due to its severe environmental impacts.

Only four mines in the world engage in riverine tailings disposal, and in the case of this business, the mine in question has impacted one of the world’s most bio-diverse regions, Lorentz National Park, a UNESCO World Heritage Site.

Anti-corruption guidance

Principle 10 targets corruption in all forms, including extortion and bribery. The financial services sector is a particularly high-risk area of the market for exposure to corruption, specifically in relation to failings in anti-money laundering procedures.

Money laundering scandals have thrown the spotlight on the major Nordic banks in recent years, particularly those with exposure to the Baltic region, which has been beset by allegations of financial crime.

Our Comments

We have written about these UN Global Compact Principles in the past.

This is one of the key ESG processes that investment managers use to form their ESG screening process in relation to sustainable investments.

These principles are the foundation for investment firms who wish to bring ESG on board within their investments.

The main 2 methods of screening that investment managers use to assess whether or not the companies they choose to invest in are considered compatible with the 10 principles are positive and negative screening. Some firms go above and beyond this and look deeper, some use a combination of both.

Positive Screening is Investment in sectors, companies or projects selected for positive ESG performance in comparison to industry peers. This involves selecting firms that show examples of environmentally friendly and socially responsible business practices. This also includes avoiding companies that do not meet certain ESG performance thresholds.

Negative Screening is the exclusion from a fund or certain sectors or companies involved in activities deemed unacceptable or controversial (e.g. tobacco, arms, gambling etc). This involves avoiding companies that create negative impacts considered incompatible with the UN Global Compact Principles.

Just using these screening methods isn’t enough to ‘change the world’ so to say. It’s important that fund managers engage with the firms they are investing in, to challenge their practices to move them further along the ESG journey and ensure they are adhering to the UN principles.

ESG investing is still a new world, however, since we first started talking about it over a year ago, the ESG landscape has already moved forward, and fast.

We have more of our clients now engaging and starting the discussions around ESG and sustainable investing.

Interestingly, we listened to a compliance update earlier this week from our compliance partners, Paradigm. In this update there was a comment made that the view from MSCI is that they believe that clients will have to opt out of ESG investing in the future, rather than opt in, as they do now.

This supports the view we have had for a while now, that ESG investing will become the new normal.

Andrew Lloyd DipPFS

24th September 2021