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Cheers
Shane
You will probably have been innundated with emails containing the details of the emergency budget, but here is a brief summary of the announcements:
CGT - Capital gains tax (CGT) will rise to 28% for high earners from midnight last night, but the rate for basic rate income tax payers will remain the same. CGT for most people would remain unchanged at 18%.
VAT - Osborne has raised VAT from 17.5% to 20% and will come in to effect on 4 January 2011, with exemptions for items such as food, kids clothes, and books. This change will generate an extra £13 billion in revenues for the year.
Corporation tax - British business has been given a boost by the introduction of four annual reductions in the rate of corporation tax which will eventually take the rate down to 24% from its current level of 28
Annuities - The Government has announced it will scrap the rule which creates an effective obligation to purchase an annuity by age 75 from April 2011. A consultation on the detail of this change would be launched shortly.
The UK economy - During the announcements, Chancellor George Osborne lowered the UK’s economic growth forecast for the next five years. He unveiled what he referred to as an unavoidable Budget. He said that economic growth this year would be 1.2%, in line with Darling’s previous forecasts of between 1% and 1.25%. However, in 2011, Osborne said growth would be 2.3%, which is much lower than Darling’s estimate of between 3% and 3.5%.
Bank Tax - The Chancellor has clamped down on the UK banking sector with a new tax on profits. This will raise £2 billion a year in the form of a tax on banks proportionate to the size of their balance sheets.
Other points:
I hope this summary proves useful, and if you think any of these areas affect your financial planning and would like to speak to me, then please do not hesitate to contact me 01482 658989, or email me on shane@kirkellainvestments.co.uk
Shane Beardsley
Managing Director / Independent Financial Adviser
Not many people seem to know, but the government will increase the minimum retirement age from 50 to 55 for certain types of pension scheme including Personal and Stakeholder Pensions with effect from 6th April 2010.
As it stands now, should you have any qualifying pension schemes then you are able to access your tax free lump sum and / or pension income from aged 50, but from the 5th April 2010 you will have to be aged 55.
What impact will this have? Well, for example Mr Smith has just turned 50 and could in theory access his pension, but if he doesn’t do this before 5th April 2010 he will have to wait until he is 55, a potential delay of around 4 years.
Clearly there is a small window between now and the 5th April 2010 for people aged between just under 50 and 55 to take action, so if you would like a review of this or any other matter then please contact us.
I think it is safe to say that it has been a turbulent year! in fact one of the most turbulent years in modern history! there is hardly an industry that hasn’t been affected in one way or another by the stock market and currency fluctuations, inflation, interest rate changes, credit crunch, recession…. and I certainly don’t believe we have seen the end of it.
All I can say is that although it all seems like bad news, (and I cant even remember the last “good news story” I read in the papers, or heard on the evening news), I can assure you that THERE ARE good things still happening.
In fact, can I ask that people email me on shane@kirkellainvestments.co.uk with “good news” stories, or “success stories” from the past year, in particular business related. Any particularly good ones received will be published in the New Year! Let’s spread some good cheer!
Personally I am looking forward to the New Year; there are several exciting opportunities for me and my colleagues, as well as the various companies I am involved in. For example the New Year sees a new member of staff starting at Kirk Ella Investments, her role is to assist me in particular to enable me to spend more time with businesses and business owners, looking at the complicated area of Pensions, Key Person and Shareholder Protection.
So before I finish I would like to wish everyone a Merry Christmas, and a PROSPEROUS New Year…… see you next year!
Shane
Managing Director / Independent Financial Adviser
As highlighted in an earlier post; I mentioned whether or not mortgage borrowers were going to be affected by the “collars” in certain mortgage lenders terms and conditions. Earlier today Nationwide has confirmed it will not enforce their collar, previously set at 2.75%. This is good news as it will mean that borrowers on tracker mortgages will benefit from the full 1% rate drop. This news follows yesterdays decision by the Halifax not to enforce their controversial collar also.
Shane
The Bank of England is working on plans to inject cash into the economy in the hope that it can reverse the slide into recession, the report in the Daily Telegraph came after yesterdays interest rates were slashed to the lowest level in over 50 years.
Source: LONDON (Reuters)
Shane.
The Bank of England has today voted to reduce the Bank Base Rate 1.0 percentage points to 2.0%.
The Council of Mortgage Lenders has welcomed today’s rate cut, and believe “it will help the wider economy, even if it cannot be reflected universally in lower mortgage rates.”
The impact this will have on borrowers, new and existing is yet to be seen, although many lenders have pledged to pass on the full extent of the saving. There is still the issue of collars…. more to follow.
Shane
Following last weeks 1.5% base rate cut by the Bank of England, the cost of inter-bank lending also decreased quite dramatically by falling over 1% to 4.49% on Friday of last week.
The LIBOR, the rate at which the banks lend to each other, is related to the cost of mortgages to customers, and we are hoping that this latest fall may result in cheaper borrowing for customers, especially since the recent reduction in the Bank of England base rate had a lesser impact on borrowing costs as some would have hoped.
Those customers on Base Rate Trackers will be very pleased with the rate reductions, and those customers coming out of 2 and 3 year fixed rate mortgages should also be more relieved that the payment shock they were all expecting “should” have been reduced by this action. Fixed rate mortgages currently in place will of course be unaffected, the main obvious reason for a fixed rate mortgage of course!
The Council of Mortgage Lenders have been quoted as saying that that the “Libor was more important in determining the cost of mortgages than the Bank of England’s rate”, so lets see how these rate changes effect the product ranges of mortgage lenders.
Only time will tell!
Shane Beardsley
Managing Director / Independent Financial Adviser
Well as the week draws to a close it has seen more slumps and rallies in a single week since 1987, and at close the FTSE 100 had gained 3.3% in the week, while the Dax rose 5.5% and the Cac 40 gained 4.8%.
The FTSE seems to be toying to and fro with the 4000 mark, but one thing is for certain the last two weeks have seen a number of investors come forward and invest reasonable amounts of money back into equities.
There is no certainty that the volatility will end any time soon, but for those looking to invest over the medium to long term surely buying when the market is at 4000 appeals to certain individuals more than when it is at 6000.
As they say though, past performance isnt a guide to the future, but if you want to arrange a financial review of your existing investments, or want to look at new investments then please give is a call on 01482 658989, or email me on shane@kirkellainvestments.co.uk
Shane Beardsley
Managing Director / Independent Financial Adviser
I will be posting quite a lot on this subject over the coming weeks; as a business we have seen recent examples where the lack of this type of cover has brought companies to the brink of failure, and all due to events completely out of their control.
As business people, we often spend hours and hours in meetings discussing strategies and business progression, but one aspect often overlooked by company directors isnt the insurance on their cars, or public liability, but on the people themselves.
I read an article recently that suggested that less than 5% of companies in this country have any form of Key Person Insurance (previously referred to as Key Man Insurance) versus 25% in the USA.
If this causes you concern, or you think a review of your companies position would be beneficial, then please contact us on 01482 658989.
Shane Beardsley
Managing Director / Independent Financial Adviser