Tag Archives: Investment

Don’t panic! A brief message to PM+M Wealth Management clients following the Brexit announcement

Whatever your views on this morning’s result, it has predictably led to some uncertainty and the one thing markets don’t like is uncertainty.  As I write the FTSE is trading at 6,190 having opened the day at 6,350 and having recovered from a low of 5,806 early this morning.  So we can expect some volatility in the short term!

You should bear in mind the following points:

  1. Our investment process involves regular portfolio reviews face to face.  Probably the most important issue we cover at a review meeting is to assess how much cash to hold on deposit and how much to invest.  We encourage our clients to hold sufficient cash on hand to ride out any storms.  It means you can sleep comfortably at times like this because you don’t have to sell when the markets are down.
  2. Not all your portfolio is held on the stock markets and we help you make sure you don’t have all your eggs in one basket.
  3. Sharp falls in markets can happen as a result of economic news or political crises.  The biggest gains can also can be just as unpredictable and often clustered together.  For this reason we recommend sitting tight during times of turbulence.  Missing the best gains can seriously affect your long term returns.

We’ll keep you posted on our views on regular basis over the next few weeks and months.   In the meantime, if you have any concerns please don’t hesitate to contact one of the team.

Tony Brierley – Managing Director, PM+M Wealth Management

PM+M Wealth Management is authorised and regulated by the Financial Conduct Authority.  

Dividend Tax Changes And Trusts

shutterstock_20506853Proposed new tax rates on dividends, due to come into force next week on 6 April will mean trustees of discretionary trusts may have to give some thought to how they hold investments, distribute to beneficiaries and account for the tax due.

Thousands of trusts exist in the UK and many hold investments in equities – either direct shareholdings or via mutual funds.

Currently, dividends paid on investments held within a trust come with a notional 10% tax credit leaving trustees with an effective tax rate of 30.56%.

From April, the non-reclaimable 10% dividend tax credit has been scrapped and, unlike individuals, trusts do not get the new tax free dividend allowance of £5,000 per annum.   For trusts, dividends received within the £1,000 starting band will be taxed at 7.5%; and dividends in excess of this will be taxed at the increased rate of 38.1%. The combined result of these changes is that trustees will be 10.8% worse off on accumulated income.

Previously, when beneficiaries received distributions they have been able to recover the difference between the tax withheld and their marginal rate.  Whilst beneficiaries receiving distributions will be in the same position as before in this regard, they will not be able to use their personal dividend allowance, as they will be receiving trust income and not dividend income.  They will therefore lose out.

So what can be done?

Where there is a need to distribute income on a regular basis, a solution could be to create revocable life interests and mandate income directly to beneficiaries to allow direct receipt of dividends personally and use of personal dividend allowances.

Where income is not required regularly an alternative could be to use investment bonds. They have a number of advantages:

  • they are a non-income producing asset;
  • they allow annual 5% tax-deferred withdrawals;
  • they have the ability to be assigned to a lower tax rate beneficiary;
  • no ongoing tax liability or tax return until a chargeable event occurs; and
  • if the settlor is still alive, any tax is at the settlor’s marginal rate not the trustees.

HMRC have confirmed that dividend income received by life company funds will continue to be exempt from tax.

Trustees do have a fundamental duty of care to act in the best interests of all beneficiaries. The Trustee Act 2000 introduced a number of new duties on trustees to obtain and consider proper advice when making or reviewing investments and that should also include any taxation changes.

For more information on trust tax or trust investments please contact Julie Walsh (Tax) at julie.walsh@pmm.co.uk or Richard Hesketh (Investments) at richard.hesketh@pmm.co.uk or call 01254 679131.

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.


Funding – A Changing Landscape


Many of us are aware that the funding landscape is changing. There are a now a wide number of funding options and providers. However, the landscape related article below demonstrates the propensity to raise funds even when the personal financial return is non-existent.

Click to read the full article

The people who have contributed to the crowdfunding platform will probably see no financial return on their investment, but the required funds were raised in a very short time. So what does this tell us about raising finance in the current economic climate?

Firstly, there are clearly funds available for investment. Secondly, the return on investment does not necessarily have to be in financial terms. The simplicity in being able to directly raise funds from a variety of investors, means that any proposition can be put forward, even buying a beach!

Crowdfunding continues to grow in popularity and opportunities like the one above will only add to this. Raising this level of funding for an opportunity that will deliver no obvious financial return to the investors means that those crazy projects with the potential to be profitable should not be dismissed. It may not be possible to raise funds through traditional routes for many opportunities but crowdfunding may provide the initial investment that is required.

Traditional funding options such as the banks and private equity funds will continue to have a large part to play in the finance requirements of businesses and individuals. However, when the opportunity is a bit too quirky or lacking the level of return required by commercial institutions, then why not think out of the box. It can’t do you any harm and it may mean that you end up with a small part of your very own private beach somewhere!

Tim Mills – Corporate Finance Partner

Investing In Uncertain Times – Six Strategies To Help You Sleep At Night

shutterstock_210031072We’ve had a rocky start to the year on the investment front. Following a lacklustre 2015 markets are volatile. Concerns abound from the fall in the oil price to uncertainties over China’s growth rate and the level of public debt. Add to this the political dimension with the US election and a referendum on Britain’s membership of the EU and we have a potent mix.

So what should the investor do? We don’t possess a crystal ball but do believe that the positive economic outlook existing at the beginning of the year hasn’t changed. Markets simply reflect the prevailing sentiment and what we do need is a regular shot of optimism.

Here are 6 strategies to adopt for the next few months.

1. Hold sufficient cash – Work out how much you need for your immediate and foreseeable needs and keep that emergency fund on one side – whatever rate the bank or building society is offering.

2. Remember investing is for the long term – We don’t know when the next fall in the markets will occur or how quickly they will recover again.  We believe Warren Buffett has it right. Pick investments you believe will perform well in the long term and hold them.

3. Make sure your asset allocation is right – We still think that equities will outperform bonds but the current situation perhaps calls for some caution. So hold less risk assets in early 2016 than in 2015.

4. Increase the cash holding within your portfolio a little – This ties in with strategy 3. Returns on cash are still very poor but they will protect you in the event of a fall in riskier assets. Volatile markets create opportunity so holding more cash than normal now may give you the ability to purchase other investments at a low point during the year.

5. Invest in assets that provide an income –  The capital value of your asset is not important in the short term if you are investing for the long haul but at least you can see an income stream. Many equity income funds have stood investors in good stead over the recent past. Commercial property also looks more attractive than in recent years and provides a rental yield.

6. Phase your new investments – Setting out a regular investment programme means that you will buy additional assets at varying prices during the year. If you happen to buy when markets are down you get more for your money! It’s known as £ cost averaging and can significantly improve your overall return.

Our team at PM+M Wealth Management are here to help you achieve your long term financial goals and provide peace of mind. Contact Tony Brierley (tony.brierley@pmm.co.uk), Antony Keen (antony.keen@pmm.co.uk) or Richard Hesketh (richard.hesketh@pmm.co.uk) for further information.

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.

Northern Powerhouse – Good News for Businesses

POWERFollowing on from the Autumn Statement last month, David Cameron and George Osborne have been in Manchester to set out their economic plan for North West England. George Osborne has promised substantial investment of a further £7 billion in the North.

Transport and logistics seem to be the main focus on developing the “northern powerhouse” with the aim to invest in the North’s roads. To reduce traffic jams, there will also be new trains with 20% more capacity, alongside the development of High Speed 3 (high speed rail link between Manchester and Leeds).

For business, there is a lot to gain from this announcement. With the investment in transport, the North will become a more attractive place to live and work. Another long term aim is to raise the employment rate in the region by creating new jobs through supporting the growth of new businesses. With funding available this goal looks to be very achievable.

Tim Mills, Corporate Finance Partner at PM+M said “This is an excellent plan on paper but care must be taken to ensure all parts of the region benefit.”

The North West is a great place to set up a business and with the continuing investment in the area it is an ideal time to re-locate or launch a venture.

If you would like more information on funding options please contact Tim Mills, PM+M Corporate Finance Partner.

VIDEO: Autumn Statement 2014

Chancellor George Osborne delivered his Autumn Statement at 12:30 yesterday to a mixed response.  As always, there will be some winners and some losers from the measures announced.  On some of them, the details will only emerge as consultation processes progress. In the following video, Stephen Anderson (Managing Partner) and Jane Parry (Tax Partner) deliver their key takeaway messages from the Chancellor’s speech.

Our full Autumn Statement summary is available to download here and the full list of key points is detailed below:

Measures affecting business

  • The main rate of corporation tax falls to 20% on 1 April 2015 as planned.
  • The Annual Investment Allowance for investment in plant and machinery remains at £500,000 until 31 December 2015.
  • The R&D tax credit deduction for small and medium sized companies increases from 225% to 230% from April and the large company above the line deduction increases from 10% to11%.
  • Less good R&D news is that the cost of materials incorporated into products that are sold will not be eligible for inclusion in R&D claims after 1 April 2015.
  • The Patent Box, which provides a reduced rate of corporation tax on profits from qualifying patents, is to be phased out starting in 2016 and ending altogether in 2021.  No new claimants will be allowed to join the scheme after June 2016.
  • Entrepreneurs relief, which allows a 10% capital gains tax rate, will no longer be available on the sale of goodwill when incorporating a business.
  • A new 25% “Google tax” is to be introduced to tax multinational businesses diverting profits from the UK.
  • A package of investment in the Northern Powerhouse was announced including transport and connectivity improvements, research facilities and a new Sovereign Wealth Fund to reinvest fracking cash in the North.
  • £500m extra funding for the Funds For Lending/Enterprise Finance Guarantee scheme to support bank lending to businesses and £400m to support venture capital investment in businesses.
  • An increase in export funding of £45m to encourage development of export markets in Africa, Asia and South America.
  • A reform of business rates – results to be announced in 2016.
  • From April there will be no NIC cost of employing people aged under 21, or under 25 if they are apprentices.

Measures affecting individuals and trusts

  • The personal tax allowance increases to £10,600 on 6 April.
  • No changes to income tax rates.
  • The 40% tax threshold increases to £42,385.
  • There is to be a complete overhaul of the employment expenses and benefits rules and a removal of the distinction between employees earning above and below £8,500 from April 2016.
  • Universal credits to be rolled out nationwide.
  • The Annual Tax on Enveloped Dwellings (ATED) charge which taxes residential properties held in companies currently applies to properties worth £2m or more.  That threshold drops to £1m in April 2015 and £500,000 in April 2016.
  • The remittance basis charge applying to non-domiciled individuals living in the UK is to increase.
  • Non-residents owning UK residential property are to be made subject to capital gains tax from April 2015.
  • The major overhaul of trusts and introduction of the Settlement Nil Rate Band has been stopped.  Instead measures targeted at tax avoidance using multiple trusts are to be introduced.
  • New rules affecting 10 year charges for trusts and the treatment of accumulated income are to be introduced as planned.
  • Stamp duty land tax on residential properties is substantially amended with immediate effect so that rates apply in bands, rather than the current rate thresholds which apply one rate to the whole property value.

Pensions and investments

  • The major pension reforms announced earlier this year are to be introduced as planned in April 2015.
  • The current death tax of 55% is to be abolished and pension pots will be able to be passed to family members tax efficiently.
  • The beneficiaries of individuals who die under the age of 75 with a joint life or guaranteed term annuity will be able to receive any future payments under such policies tax free.
  • Pension savers will have much more flexibility in how and when to access their pension funds.
  • ISA income tax beneficial status will be preserved when ISAs pass to a surviving spouse.

If you think you may be affected by any of the above, please give us a call on 01254 679131 and we will be more than happy to assist or email info@pmm.co.uk.