Galleon Wealth Management
Tel: 01473 636688 |
Menu

Galleon Wealth Management Blog

The current coronavirus pandemic has had a significant impact on the UK and global economy. If you’re self-employed, you may find that contracts have been paused or that new work has dried up, affecting your finances in the short and long term. However, steps have been taken to provide support to the self-employed that you may be able to take advantage of.

In recent years, self-employment has steadily increased thanks to more opportunities and improved technology. In 2017, official figures suggest over 15% of the UK’s labour force was self-employed, accounting for 4.8 million people. As the pandemic has meant many businesses have been forced to shut or limit operations, as well as individuals tightening their belts, Covid-19 has had an impact on the income of millions of self-employed individuals.

Following calls to provide support, the government unveiled a package of measures designed to support those who own their own business at the end of March. Understanding these measures can help you access financial support if you need it and provide confidence that you can get through the pandemic. 

1. Self-employed tax deferral

If you’re due to make an Income Tax payment under the Self-Assessment system in July, this can be deferred. This measure applies to those that were due to make a ‘payment on account’ by 31st July 2020. These payments now won’t be due until 31st January 2021. This measure will be applied automatically and if you decide to defer payment you won’t face any penalties or interest for late payment.

It’s a step that can provide you with additional savings to use during the pandemic. However, keep in mind that the Income Tax payment will still need to be made early next year and plan for this. You don’t have to wait until January 2021 to make a payment, you can do so in line with the original deadline or later this year if you have the finances to do so.

2. Self-Employed Income Support Scheme

The Chancellor previously announced that employed workers that have been furloughed would receive 80% of their average monthly salary up to £2,500. The Self-Employed Income Support Scheme provides similar help for those running their own business.

This scheme will pay a taxable grant to self-employed people equivalent to 80% of their average monthly profits over the last three years up to £2,500. The scheme will be open for three months, with the possibility that it will be extended depending on how the pandemic situation develops.

The three months’ income will be paid as a lump sum in June at the earliest. Therefore, if your income has been immediately affected by the pandemic you will also need to look at other ways to meet financial commitments in the short term. 

To qualify for the Self-Employed Income Support Scheme, you must:

  • Have trading profits of up to £50,000
  • Make the majority of your income from self-employment
  • Filed a tax return and already be self-employed

If you have been employed for less than three years, the Chancellor said that HM Revenue and Customs will look at ‘what you have’ on a case-by-case basis.

The Self-Employed Income Support Scheme doesn’t mean you’re excluded from measures previously announced. It has been confirmed that self-employed workers can also access the Coronavirus Business Interruption Loans. This measure can help you access loans, overdrafts, invoice finances and asset finances of up to £5 million for up to six years, with the government covering the first 12 months of interest payments and any lender-levied fees. Keep in mind though, the loan will have to be paid back and you will be liable for the interest after the initial 12-month period. 

3. Universal Credit

Claiming Universal Credit if you have faced a significant reduction in earnings is an option, the usual eligibility criteria remain in place. How much you’d receive depends on your financial situation. The benefits calculator provided by national charity Turn2us can help you understand how much you’d receive through Universal Credit. Benefits usually start within five to six weeks, if you need financial support immediately, you may be able to claim an interest-free loan within the first month.

To provide support for those following guidance on self-isolation and social distancing, the requirement of the Minimum Income Floor have been temporarily relaxed. This previously limited payouts to those earning below the minimum wage through self-employment.

4. HMRC Time to Pay service

Those with outstanding tax liabilities that are now struggling to pay may be eligible to receive support through the HMRC’s Time to Pay service. If you have missed a tax payment or may miss the next payment due to the impact of coronavirus, this service may extend the deadline. These arrangements are made on a case-by-case basis and will depend on your circumstances and liabilities. If you’re concerned about missing tax payments, you should contact HMRC through its dedicated helpline 0800 0159 559.

5. Payment holidays on mortgages and loans

If you’re a borrower, repayment holidays are an option.

The government announced that mortgage payment holidays of up to three months are available to all homeowners who are up to date with their mortgage payments. This can provide you with some short-term financial security and relieve some of the pressure if your income has fallen. However, you will still owe the same amount as you do now and interest will continue to accrue on this. This means if you take a mortgage holiday paying it off will take longer and cost more.

This measure has also been extended to Buy to Let landlords whose tenants have been financially impacted by the coronavirus. Landlords that take advantage of this are expected to pass this relief on to their tenants.

If you’d like to discuss a mortgage repayment holiday, you should contact your lender to understand their process.

In addition to mortgages, many lenders are offering holidays on payments for other forms of borrowing, such as credit cards and loans. This is at the discretion of your lender. If you’re worried about making repayments and want to know what your options are, you should contact your provider directly.

If you’re struggling financially, don’t bury your head in the sand. The above five measures can help you meet financial commitments during these uncertain times. Being proactive is key, don’t wait until you’re struggling or missing payments before addressing the issue.

One of the more unwanted consequences of the recent coronavirus pandemic has been a reported rise in the number of scams. Fraudsters are taking advantage of the panic currently surrounding the virus, with Action Fraud reporting that there were 105 reports of fraud relating to Covid-19 since the beginning of February, with total losses reaching £970,000.

The organisation reported a spike in fraud reports after March 13th, with the majority of reports relating to online shopping, ticket fraud, charity fraud and lender loan fraud, as well as coronavirus-themed phishing emails.

The National Fraud Intelligence Bureau, which coordinates the police response to fraud, has also reported a spike in scams. The Bureau says that, since the beginning of February, it had received reports of 104 cases where fraudsters had taken advantage of the outbreak, with losses totalling almost £1 million.

The common coronavirus scams

Action Fraud say that roughly half of their coronavirus scams related to fake face masks, while Tony Neate of anti-fraud group Get Safe Online said he had even seen cases of fake coronavirus cures and treatments.

In one incident reported to police, a member of the public spent £15,000 on face masks which never arrived. The City of London Police have reminded the public to research online sellers if they do not already know and trust them, perhaps by asking a friend or family member for advice. Most shoppers who use a credit card should be protected by the existing laws.

Another example of fraud has seen scammers offering cheap flights to capitalise on the confusion around current international travel arrangements.

While many scams relate to products, there has also been a rise in email scams concerning investment schemes, pensions and trading advice. These include:

  • Investment schemes encouraging people to take advantage of the downturn in stock markets caused by the coronavirus pandemic
  • Emails purporting to be from HM Revenue and Customers offering a tax refund
  • Emails from the government, saying that a tax refund has been made available in partnership with the NHS to help deal with the outbreak.

According to Action Fraud, one known tactic is that emails claim to come from official organisations such as the World Health Organisation (WHO) and offer fake health advice or claim to be able to provide a list of infected people in your area. If you click on a link you are taken to a malicious website or asked to make a payment in Bitcoin.

Detective Superintendent Estelle Mathieson, of Greater Manchester Police, says: “There is currently a lot of publicity surrounding coronavirus and it has come to our attention that fraudsters are using what is a time of uncertainty for many and exploiting innocent people out of their hard-earned money.

“It is likely that nationally, scams of this type will rise as the virus situation continues.”

How to avoid pension scams

In recent weeks, consumers have been warned that scammers could turn their sights to consumer’s pensions, particularly as clients approaching retirement have been seeking professional advice following the short-term pension losses caused by stock market falls.

Between 24 February and 23 March 2020, the FTSE 100 index fell by around 30%. Even though clients are typically invested in a balanced portfolio, many have seen the value of their pension pot fall significantly over the past couple of months.

Analyst Tom Selby said: “While the country hunkers down in the hope of slowing the spread of the coronavirus, the economic fallout will inevitably lead to an increase in the number of vulnerable or potentially vulnerable people in the UK.

“In such an environment, unscrupulous scammers will already be plotting ways to take advantage during what for many will be a time of serious financial strain.”

Email scams often claim that they can allow savers early access to their retirement savings – and this may be particularly enticing if household incomes fall due to uncertainty and unemployment caused by the coronavirus pandemic.

Any consumer taking advantage of such an offer could see them hit with a 55% unauthorised payment charge from HM Revenue and Customs, as well as fees charged by the scammers.

Mr Selby added: “Scammers’ tactics are evolving all the time and increasingly we see complex schemes promoted online through social media.  This virtual wild west is a natural home for fraudsters, with governments around the world struggling to create meaningful protections for consumers.”

Common signs of pensions scams include:

  • Claims that a provider can generate higher returns on pension savings, often using the term ‘guarantee’
  • Phrases including ‘free pension review, ‘savings advance’ and ‘loophole’
  • Time-limited offers
  • Unusual and high-risk investments which are often overseas and therefore unregulated with no protection.

4 steps to keeping yourself safe from pension and investment scams

  1. Ignore any unsolicited offers, either by email or ‘cold calling’
  2. Check the Financial Services Register to establish anyone you are thinking of dealing with is FCA registered and that they can provide the services they say.
  3. Take your time to consider an offer. Don’t be rushed into making a decision.
  4. Seek impartial and professional advice. A financial adviser will help you make the best decision for your own personal circumstances. If you do decide to speak to an adviser, make sure they are regulated by the FCA and never take investment advice from the company that contacted you, as this may be part of the scam.

If you are considering a pension or investment offer you have seen, speak to us first. Get in touch to find out more.

As the coronavirus pandemic continues to dominate world headlines, here’s what it might mean for your pension and retirement plans.

The pandemic has created uncertainty in economies around the globe. As a result, stock markets have experienced shocks and over the last few weeks have seen significant falls. Fears of a recession following the pandemic have sparked even more concern. It’s natural to be worried about what the impact on financial markets means for your future. Understanding what the change means, and where adjustments may need to be made, can help you plan for retirement with confidence.

What impact has coronavirus had on pensions?

For most people, pensions will be invested. This gives your pension an opportunity to grow over the several decades you’re likely to be paying into a pension. However, it does mean your retirement savings are exposed to market volatility. In the last few weeks, this will mean pension values are likely to have fallen.

The full impact will depend on where your pension is invested. It’s important to keep in mind that a pension doesn’t just hold stocks and shares, other assets are used to create balanced portfolios. So, whilst news updates may say the stock market has fallen 20%, it’s unlikely your pension will have suffered a fall on the same scale.

If you’re worried about your pension, it’s worth checking the value. However, keep in mind that short-term volatility is to be expected at the best of times. Keep the bigger picture in mind and look at the value of your pension with your retirement plans in mind.

The impact coronavirus will have on retirement plans will depend on what stage you’re at.

1. Your retirement is still several years away

If retirement is still some way off, the current market activity shouldn’t affect your retirement plans.

You should always invest with a long-term goal in mind, this provides an opportunity for peaks and troughs to smooth out to deliver gradual investment gains when you look at the bigger picture. Whilst past performance isn’t a reliable indicator of the future, previous market corrections and crashes have always been followed by a period of recovery.

So, whilst it’s natural to worry if your pension value has fallen, stick with your long-term plan.

2. You hope to retire soon

If retirement is nearing, it’s natural to worry about your pension in any circumstances. It’s a life milestone that means we often have to change the way we view income and finances. As a result, a stock market crash just before the date can be worrisome.

The first thing to do here is to put the stock market falls into perspective. You’ve likely been saving into a pension for many decades. No one likes investment values to fall, but when you look at it in comparison to the gains made, you’ve probably done well financially.

You also need to look at your pension value in the context of your retirement plans: Will the current value of your pension provide you with the income needed throughout retirement? If not, what is the shortfall?

This can be difficult to weigh up, as there are numerous factors to take into consideration. Working with a financial planner can help you understand how the pension figure translates to a retirement lifestyle. If there is a shortfall, there are often steps you can take to bridge the gap, from delaying retirement to using other assets.

It’s also worth noting that, depending on your goals and desired retirement lifestyle, your adviser may have ‘lifestyled’ your pension already. This is where your savings are switched to a lower risk profile that aims to preserve the savings you already have as you near retirement. If this is the case, it’s likely the impact on your pension is lower as you’ll be less exposed.  

3. You’re already retired

If you’re already retired and choose to access your pension flexibly using Flexi-Access Drawdown, the current activity may have an impact. This is because your pension savings remain invested with the goal of delivering returns whilst you’re retired. However, the flip side of this is that you’re exposed to market volatility.

The important thing to recognise here is how your withdrawals will have an impact in the long term. Making withdrawals whilst the market is low means you must sell more units to secure the same income. This can deplete your retirement savings quicker than expected. As a result, it’s worth reviewing how much you’re withdrawing.

If you’re able to reduce withdrawals or temporarily pause them, this can help to minimise the impact on your pension savings in the long term. You may have other assets, such as cash savings, that can be used to tide you over until the markets begin to recover. If you find yourself in this situation, please contact us. There are often solutions that will enable you to maintain your lifestyle and future.

Having confidence in your retirement aspirations

Whether you’re already retired or you’re still working towards that goal, it’s important to have confidence in your plans. This includes understanding the lifestyle your pension will provide and how market shocks would have an impact over the short and long term. This is where financial planning can help. If the recent volatility means you have concerns about pension investments, we’re here to help you. In some cases, it may simply be understanding how pensions will grow over the next ten years, in others, adjustments may be necessary, such as reassessing your risk profile or increasing contributions. Please contact us to discuss your pension and retirement goals.

Please note: A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.

The 2020 Budget made some significant changes to the Tapered Annual Allowance that could affect your retirement plans. With the announcements coming into effect for the 2020/21 tax year, it could impact how much you can save tax-efficiently into a pension.

The changes to the Tapered Annual Allowance follows senior NHS consultants and clinicians facing tax penalties if they took on overtime work or additional duties, placing stress on the healthcare system. It’s an issue that caught the attention of headlines and emergency measures for NHS staff were introduced several months ago.

Now, the Chancellor has changed the Tapered Annual Allowance rules, which will affect pension savers outside of the NHS. He didn’t go as far as scrapping the Tapered Annual Allowance, which some had called for, but the changes do mean many high earners will be able to save more efficiently in their pensions.

There are two key changes to the Tapered Annual Allowance to be aware of:

1. Tapered Annual Allowance thresholds

The maximum Annual Allowance available to pension savers is £40,000. However, several factors may mean your Annual Allowance is lower, this includes being affected by the Tapered Annual Allowance.

Previously, the Tapered Annual Allowance would come into effect if your threshold income exceeded £110,000 or your adjusted income exceeded £150,000. For every £2 earned above these thresholds, the amount you can efficiently save into a pension would reduce by £1 to a minimum level, which we’ll look at in the next point.

Both the above thresholds have increased by £90,000. This means individuals can now have a threshold income of £200,000 or an adjusted income of £240,000 before the Tapered Annual Allowance has any impact.

2. Minimum Annual Allowance lowered

In 2019/20, the Tapered Annual Allowance could reduce by a maximum of £30,000, taking it to £10,000 for some savers. However, this has now been lowered even further. Some pension savers could find they have an Annual Allowance of just £4,000 if their income exceeds £312,000.   

Exceeding this allowance can result in significant tax bills, so it’s important to be aware of what your Annual Allowance is.

Who are the winners and losers?

With any changes to pension savings, there are always ‘winners’ and ‘losers’.

For many high earners, the increased thresholds for the Tapered Annual Allowance will mean they’re able to save more into their pension without worrying about additional tax charges. For those that are still affected, some will find their Annual Allowance is higher as a result. These are the clear ‘winners’ in the policy. If you fall into this category, you should look at whether increasing pension contributions is right for your financial plans and goals. For the majority of people, saving into a pension is the most efficient way to save for retirement.

The ‘losers’ in this instance are those savers that will see their Annual Allowance fall from £10,000, potentially down as far as £4,000. With a lower allowance, you may find current contribution levels are no longer efficient and alternatives may need to be considered.

What can you do if the amount you can save into a pension is reduced?

If you find that your Annual Allowance has reduced, don’t panic. There are different ways you can save for your retirement, which may include investing or increasing investments outside of your pension.

What’s key here is that your goals and risk profile are considered. If you hope to retire in just a few years, your plan for making up the difference in Annual Allowance will be very different if retirement is still several decades away. This is where we can provide support. We’ll help you understand how much you need for retirement aspirations and what your options are for achieving this. We aim to provide you with confidence in your pension planning, even if the recent Budget means some changes are necessary. Please get in touch if you have any concerns.

A rise in the Lifetime Allowance

It’s also worth noting that the Lifetime Allowance, the threshold for tax-efficient pension saving over your lifetime, also increased. This allowance increased by 1.5% in line with inflation. As a result, the Lifetime Allowance is now £1,073,100. Crossing this threshold can lead to hefty financial penalties when you access your pension.

If you’d like to discuss pension contributions and retirement plans in light of these changes, please contact us. We’re here to help you get the most out of your pension and find alternatives for retirement savings if necessary.

Please note: A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.

We’ve now entered a new tax year. Whilst some changes were made during the 2020 Budget, other allowances and exemptions have stayed the same. Planning can help you make the most out of your finances over the next 12 months. So, which allowance should you keep in mind?

1. Personal allowance and National Insurance

The personal allowance for the new tax year remains the same at £12,500. This is the amount you can earn before Income Tax is due. Existing tax rates and thresholds are also unchanged. However, the National Insurance threshold has been increased, from £8,632 to £9,500, meaning 500,000 people will no longer pay the tax.

2. Savings allowance

Depending on how much you earn, your annual savings allowance could be up to £6,000, allowing you to save and receive interest tax-free.

This is made up of two parts. The first is the personal savings allowance. If you’re a basic rate taxpayer you can earn up to £1,000 in interest per year with no tax. For higher-rate taxpayers, the allowance falls to £500, whilst additional rate taxpayers don’t have an allowance. As a result, around 95% of savers shouldn’t pay tax on their savings.

For low-income individuals, the starter savings rate can be as high as £5,000. However, for every £1 you earn over the personal allowance (£12,500) the allowance will reduce by £1. As a result, it’s only suitable for those with an income of less than £17,500.

3. ISA allowance

In addition to the above savings allowances, your ISA allowance should play an important role in financial plans for most people. For the current tax year, you can save £20,000 into ISAs as there were no changes made in the Budget. Any interest or returns made in an ISA are free from tax. You can choose to deposit the full amount into a single ISA or spread the allowance over several. As you can save cash or invest through an ISA, these accounts provide you with the flexibility to choose an option that suits your goals.

The Chancellor did make a change to Junior ISAs though. In the previous tax year, you could place up to £4,368 into a JISA per child. This has now been increased to £9,000, perfect if you’re building a nest egg for children or grandchildren. Like adult counterparts, any interest or returns earned are tax-free.

4. Pension Annual Allowance

There was no change to the maximum pension Annual Allowance, which remains at £40,000. However, there was a significant change in the Tapered Annual Allowance that may limit how much you can tax-efficiently save into a pension each tax year.

Both the threshold income and adjusted income thresholds for the Tapered Annual Allowance were increased by £90,000, taking them to £200,000 and £240,000 respectively. For many pension savers affected by the Tapered Annual Allowance last year, this change will allow them to save more tax-efficiently for their retirement in 2020/21. But the minimum reduced Annual Allowance has fallen from £10,000 to £4,000. As a result, some high earners will find their allowance has been cut. Please contact us to discuss your circumstances.

5. Capital Gains Tax allowance

Capital Gains Tax (CGT) is the tax you pay when you sell certain assets and make a profit. This could include investments that are not held in an ISA or a second property. The rate of CGT depends on the type of asset you sell and Income Tax rate, but it can be as high as 28%. As a result, making use of your annual allowance is important.

The CGT allowance for 2020/21 has increased slightly from the last tax year to £12,300. If you plan to dispose of assets over the next 12 months, it’s worth keeping this figure in mind. If you plan to sell property, you should also note that you now have to pay CGT on property sales within 30 days.

6. Dividend allowance

If you own shares in a company that makes dividend payments, your dividend allowance remains the same for 2020/21. You can receive up to £2,000 in dividends before any tax is due on them. This includes paying yourself £2,000 in dividends if you’re a company director too. Dividends above the allowance will be taxed according to your marginal tax rate.

7. Entrepreneurs’ relief

For the current tax year, there have been significant changes made to entrepreneurs’ relief. If you have plans to sell or give away your company these are important.

Entrepreneurs’ relief means you can pay less CGT when selling your business under certain circumstances. Previously, you would have been charged 10% on the first £10 million of gains, with gains above this limit being taxed at the usual 20%. However, entrepreneurs’ relief for 2020/21 has been cut to a far less generous £1 million. As a result, some business owners planning to sell will now face far higher CGT.

The entrepreneurs’ relief applies to an individual level, so that a £1 million allowance is the maximum you can claim per person, rather than for each business you sell.

8. Gifting annual exemption

If you’re worried about the impact of Inheritance Tax on your legacy, gifting during your lifetime can help you reduce the bill.

Each year individuals can make use of the annual exception that allows you to gift up to £3,000 a year tax-free. This gift is considered immediately outside of your estate for Inheritance Tax purposes. Other gifts are also immediately exempt from Inheritance Tax, including those up to £250 per person and those made from your income.

Gifts given outside of these allowances are known as Potentially Exempt Transfers. If you live for seven years after giving the gift, these are considered outside of your estate. However, if you die within seven years, they may be considered part of your estate for Inheritance Tax purposes.

Setting out your plans for the year ahead

Whilst the end of the tax year is often characterised by people making the most of their allowances, there are benefits to planning how you’ll use them at the beginning of the year. If you plan to use your ISA allowance by investing in a Stocks and Shares ISA, for example, it allows you to drip feed regular amounts in over the next 12 months. Reviewing your financial plan for the year ahead now can help you feel more confident in the steps you’re taking. Get in touch with us to discuss your financial plan for 2020/21.

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

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.

After delays and resignation, the Budget was finally delivered on March 11th. The announcements made could have an impact on your personal finances and businesses, as well as affecting where public spending goes. The Budget 2020 document is over 100 pages long, so we’ve put together a summary of the key points from this year’s Budget.

Coronavirus response

At the time of making the Budget speech, the UK was being affected by the coronavirus pandemic, but the country wasn’t yet on lockdown. Chancellor Rishi Sunak unveiled a £30 billion package to help support the economy and public service during the time of uncertainty, adding that extra measures would be announced in the coming weeks and months as the situation developed.

Included in this initial support package announced in the Budget were:

  • £5 billion emergency response fund to support the NHS
  • Statutory Sick Pay (SSP) for all those advised to self-isolate, even if individuals are not presenting symptoms
  • Firms with fewer than 250 employees will be refunded SSP for two weeks
  • Self-employed workers not able to claim SSP able to claim contributory Employment Support Allowance
  • £500 million hardship fund for councils in England to help the most vulnerable in their areas
  • Firms eligible for small business rate relief will receive a £3,000 cash grant
  • Small firms will be able to access business interruption loans of up to £1.2 million
  • Business rates in England will be abolished in the retail, leisure and hospitality sectors with a rateable value below £51,000

Since the Budget was delivered, several other announcements about coronavirus emergency measures have been announced, including support for workers that have been furloughed and the self-employed.

Personal finance

There were several measures announced that could affect personal finances.

To start with, the tax threshold for National Insurance Contributions will rise to £9,500 in 2020/21, up from £8,632. It’s estimated that 500,000 employees will be moved out of the tax threshold as a result.

The Tapered Annual Allowance affecting pensions has also been updated. The thresholds for the Tapered Annual Allowance, which may reduce how much you can tax-efficiently save into a pension, has increased. You can now earn up to £200,000 without being affected. However, the minimum reduction through the Tapered Annual Allowance has gone from £10,000 to £4,000, which may mean your Annual Allowance has fallen significantly.

Many other taxes will remain the same for the year ahead, this includes VAT and Income Tax bands.

Alcohol, tobacco and fuel

It’s good news for drivers, fuel duty has been frozen for the 10th consecutive year. Duties on spirits, beer, cider and wine will also be frozen for the coming year. Pubs will also benefit, as business rate discounts for pubs will rise to £5,000 from £1,000.

Tobacco will rise by 2% above the rate of retail price inflation, as has been previously set out.

Business and research

Many of the emergency measures for businesses in response to coronavirus, are listed above under ‘coronavirus response’. However, some announcements fall outside of this area.

First, VAT on digital publications, including newspapers, e-books and academic journals will be scrapped from December.

Another significant announcement was the change to Entrepreneurs’ Relief. Despite calls for it to be scrapped, the relief will remain in place but will be reduced. The relief reduces the amount of Capital Gains Tax business owners pay when selling or giving away their business. The relief will now apply to just the first £1 million gains, compared to the previous threshold of £10 million.

Sunak also stated that following calls, the system of High Street business rates will be reviewed later this year. However, there are no immediate changes for 2020/21.

In terms of research, the Chancellor unveiled some significant investments, this includes £5 billion to be spent on improving broadband to remote areas, a £1.4 billion funding boost to the Science Institute in Weybridge, Surrey, and an extra £900 million for research into nuclear fusion, space and electric vehicles.

Transport and infrastructure

Roads are one of the infrastructure areas that will be seeing investment over the next few years. Sunak revealed £27 billion has been allocated to motorways and other arterial roads, this included the new tunnel for the A303 near Stonehenge, as well as £2.5 billion to fix potholes and resurface roads over the next five years.

Focusing on housing, a £650 million package was unveiled to tackle homelessness. This will provide an extra 6,000 places for rough sleepers. Following the Grenfell disaster, a new £1 billion fund has been created to remove all unsafe combustible cladding for public and private housing higher than 18 metres.

For UK residents, Stamp Duty Land Tax remains the same. However, foreign buyers of properties in England and Northern Ireland will have an additional 2% charge from April 2021.

In total, more than £600 billion is set to be spent on roads, rail, broadband and housing by the middle of 2025.

NHS and education

In addition to the measure covered within the coronavirus response, Sunak also revealed an additional £6 billion in NHS funding over the next five years. This is intended to pay for staff recruitment and pay for the beginning of planned hospital upgrades.

Moving on to education, further education colleges will receive £1.5 billion to update their buildings.

Please note: A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income is also affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.  

While the coronavirus pandemic has affected the health of hundreds of thousands of people worldwide, it has also had a devastating effect on small and medium-sized businesses in the UK and beyond.

The Chancellor has previously announced a substantial package of support for businesses, including paying 80% of the wages of furloughed workers, VAT deferrals and business interruption loans.

Following calls to help freelancers and the self-employed, the government has now unveiled a package of measures designed to support those who own their own business. Here’s a summary of the assistance that Rishi Sunak has announced.

Self-employed tax deferral

Income Tax payments due in July 2020 under the Self-Assessment system may be deferred until January 2021.

You are eligible if your self-assessment ‘payment on account’ is due to be paid on 31 July. It’s an automatic offer and so you don’t have to apply for a deferral. You won’t pay any penalties or interest for late payment if you decide to defer your payment until 31 January 2021.

Note that the deferment is optional. If you are still able to pay your second payment on account on 31 July 2020 you should do so.

Self-Employed Income Support Scheme

After announcing a support package for employed people, the Chancellor was keen to assure self-employed workers that they had not been ‘forgotten’.

The Self-Employment Income Support Scheme will pay a taxable grant to self-employed people equivalent to 80% of their average monthly profits over the last three years, up to £2,500 a month.

Rishi Sunak confirmed that the scheme would be open for at least three months, with the possibility that it will be extended.

The grant will apply to any self-employed workers across the UK who:

  • Have trading profits of up to £50,000
  • Make the majority of their income from self-employment
  • Filed a tax return in 2019 and are already self-employed. To help more people access the scheme, the government confirmed that HMRC has extended the tax return deadline for another four weeks to enable self-employed workers to submit a tax return.

The three months’ income will be paid as one lump sum in June.

The Chancellor said that 95% of people who are ‘majority’ self-employed will benefit and that the 5% the scheme doesn’t cover have an average income of £200,000. These are the steps, he said, to “make this scheme deliverable and fair.”

The scheme essentially covers the same amount of income as for furloughed employees, although has been more difficult to implement because the self-employed are a ‘diverse population’.

If you have less than three years trading accounts, then HMRC will look at ‘what you have’. If you are ‘very recently self-employed’ you will not be eligible for the scheme.

The government hopes that the scheme will be available at the start of June. Workers will have to complete an online form in order to access the grant, which will be paid straight into your bank account.

The Chancellor also confirmed that self-employed workers can also access business interruption loans, for which there have already been 30,000 enquiries.

Universal Credit

Self-employed workers who have seen a significant reduction in earnings are able to claim Universal Credit, providing you meet the usual eligibility criteria.

To support you with the economic impact of the pandemic and allow you to follow government guidance on self-isolation and social distancing, the requirements of the Minimum Income Floor will be temporarily relaxed.

Mortgage payment holidays

The government has announced that mortgage payment holidays of up to three months are available to all homeowners who are up to date on their mortgage payments.

They’re also available to Buy to Let landlords whose tenants have been financially affected by the coronavirus. Landlords who take payment holidays are expected to pass on this relief to their tenants.

Payment holidays are available to any homeowners who are concerned about their ability to meet their mortgage repayments, for example due to a loss of work or other changes in their circumstances.

Note that you will still owe the bank the same amount as you do now, but interest will continue to accrue on this. This means it will take you longer and cost you a little more to clear your mortgage.

Your lender will not require you to provide any documentation or undergo any affordability tests.

HMRC Time to Pay service

If you’re self-employed, struggling with your finances, and have outstanding tax liabilities, you may be eligible to receive tax support through HMRC’s Time to Pay service.

These arrangements are agreed on a case-by-case basis and are tailored to your individual circumstances and liabilities.

If you have missed a tax payment or you might miss your next payment due to Covid-19, please call HMRC’s dedicated helpline on 0800 0159 559.

Changes to Income Tax and National Insurance could follow

In this speech, the Chancellor was at pains to point out that the support for self-employed individuals was comparable to employed workers. Taking this into account, Rishi Sunak hinted that self-employed people may, therefore, pay more tax in future.

The Chancellor said: “If we all want to benefit equally from state support, we must all pay in equally in future. It is just an observation that there is currently an inconsistency in the tax treatment of the employed and self-employed”.

Watch this space!

In recent weeks, the coronavirus has never been far from the headlines. At the start of March, there were more than 87,000 confirmed cases of Covid-19 with almost 3,000 deaths. While the vast majority of the cases and fatalities have been in mainland China, the virus has now spread to more than 60 countries.

One of the most immediate consequences of the coronavirus outbreak has been the impact on global stock markets.

Last week saw a fall of 11% in the value of shares in London, and a fall of 8% in New York. Other markets around the world have also seen sharp falls. While you may be concerned about the short-term volatility of the markets, it’s important to remain calm and focused on your goals.

Why are the markets reacting in this way?

– The closure of Chinese factories has led to concerns about production in the rest of the world. Apple has already warned over the impact of shutdowns in China, while carmaker Jaguar Land Rover has been flying parts out of the country in suitcases. Shortages of components will almost certainly have a knock-on impact in the West.

– A reduction in travel. A travel ban means Chinese tourists are staying at home, while many major carriers have warned of a severe reduction in demand. EasyJet and the owner of British Airways have announced emergency measures, including cancelling flights, changing the size of planes used on routes and freezing pay.

– A reduction in global demand. Dozens of companies, from mining firm Rio Tinto to software giant Microsoft have reported that they will not hit sales targets in 2020.

Lessons from previous epidemics

Earlier this year, Charles Schwab research looked at the impact of previous epidemics on world markets.

Considering outbreaks including SARS, H1N1 Swine Flu and Ebola, the conclusion was simple:

“The global economy and markets have been relatively immune to the effects of past viral epidemics — even when the global economy was especially vulnerable to a shock. A short-term dip in stocks tended to be followed by the continuation of the upward trend… investors may have little need to take action if their portfolios are diversified and aligned with their long-term plan.”

Keep calm and carry on

Whenever you invest in equities, short-term volatility is something that you have to expect. Everything from inflation figures to Donald Trump’s social media updates can affect what happens to markets, and so on any given day or week, there is a chance that prices will fluctuate in the short term.

However, over time, stock markets tend to provide growth. The chart below shows the value of the FTSE100 over the last five years. You’ll see that the closing level at the end of February is still significantly higher than the value of the index just four years ago.

Source: London Stock Exchange

It is always worth remembering that saving is a long-term objective.

As Mark Fawcett, the Chief Investment Officer of auto-enrolment pension provider Nest says: “Pension saving is a long game – people can be saving for up to 40 or even 50 years, so it’s important to keep looking at the bigger picture, rather than short-term events.

“Younger savers should comfortably ride out short-term fluctuations and at Nest we take steps to protect members’ pots as they get closer to retirement and are more likely to need their money sooner.”

  • Your goals are likely to be the same as they were a week or a month ago. Our investment strategies are designed with the long term in mind, and this naturally considers periods of both positive and negative returns.
  • You have a diversified portfolio. The fall in the value of the FTSE 100 is not the same as the fall in the value of your portfolio. Our clients have diverse portfolios that include exposure to other asset classes, for precisely this type of situation.
  • Now is the worst time to panic. While our emotions might take over at this time, reacting to a fall in the markets can be a disaster. You potentially turn a paper loss into a real loss, and a range of studies have found that this is one of the main reasons why investors lose money.

Short-term stock market volatility is normal. While it may feel difficult now – we certainly feel this too – it is part of a long-term investing strategy.

The final word goes to Charles Schwab who, earlier this year, undertook research into previous disease pandemics and their impact on the global economy. Their conclusion was:

“The global economy and markets have been relatively immune to the effects of past viral epidemics – even when the global economy was especially vulnerable to a shock. A short-term dip in stocks tended to be followed by the continuation of the upward trend.”

If you have any queries about the impact of Covid-19 on investments and pensions, please get in touch.

Last month saw the launch of the latest new polymer banknote in the UK. The new £20 note was released in late February and becomes the third new banknote to enter circulation in the last four years.

Considering that the £20 note is the most common note in this country, the introduction of a new banknote is a big deal. So, here are five important facts you should know about the new £20 in your pocket.

1. Who is on it

Following in the footsteps of William Shakespeare, Michael Faraday and Edward Elgar, the £20 note featuring economist Adam Smith was the most recent paper note introduced, back in 2007.

Now, the new polymer note will feature the acclaimed English artist JMW Turner, alongside a blue and gold design which depicts the Margate lighthouse and Turner Contemporary gallery, also located in Margate, where the artist grew up. 

Mark Carney, governor of the Bank of England, said: “Turner’s contribution to art extends well beyond his favourite stretch of shoreline.

“Turner’s painting was transformative, his influence spanned lifetimes, and his legacy endures today. The new £20 note celebrates Turner, his art and his legacy in all their radiant, colourful, evocative glory.”

2. Bring the note to life with Snapchat

The brand-new polymer £20 notes feature a self-portrait of Turner and one of his most celebrated paintings, The Fighting Temeraire.

However, in a first for a British banknote, these images can also be brought to life using augmented reality.

If you have a new £20 note and the Snapchat app, you can hover the camera in your smartphone over a Snapcode (like a QR code) on the banknote. By using Snapchat’s search function to find the £20 note lens, the paintings on the note will come to life.

The feature works by overlaying interactive images onto the banknote, in a similar way to how facial filters can be placed over a user’s face when using lenses in the Snapchat app.

“The launch of the new £20 will result in Turner’s paintings being amongst the most widely distributed artworks in the UK, maybe even the world,” said Ed Couchman, Snapchat’s UK general manager.

“We want to make sure that Snapchatters are encouraged to take note, look at the cash in their wallet and appreciate these great paintings. Hopefully, this partnership will help introduce a whole new generation to one of Britain’s greatest ever painters.”

3. Security features

As you would expect, the new £20 note has a range of security features which will help you to determine that your note is genuine:

  • The hologram – If you tilt the front of the note, the word on the hologram will change from ‘Twenty’ to ‘Pounds’
  • The window – If you look at the metallic image over the main window, the foil should be blue and gold on the front of the note and silver on the back. There is also a smaller window in the bottom corner of the note
  • The Queen’s portrait – You should see a portrait of the Queen on the window with ‘£20 Bank of England’ printed twice around the edge
  • Silver foil patch – A silver foil patch above the see-through window on the front of the note contains a 3D image of a crown
  • Purple foil patch – On the back of the note, directly behind the raised silver crown on the front of the note, you will find a round, purple foil patch containing the letter ‘T’
  • Raised print – On the front of the note, you can feel raised print on the words ‘Bank of England’ and in the bottom right corner, over the smaller window.
  • Ultraviolet number – Under a good-quality ultraviolet light, the number ’20’ appears in bright red and green on the front of the note, against a duller background.

4. Serial numbers that could make the note worth more than face value

In the past, new £5 and £10 notes have sold for big sums if the serial number is of particular interest.

As the first new £20 notes enter circulation, it can pay to take a close look at the serial number on your note as it could be worth more than its £20 face value.

Every banknote is printed with a unique number. When the new £5 and £10 notes were released, the earliest ones to be printed had serial codes that began with AA01 followed by an eight-digit number, starting at 00000001.

These notes can be worth more than their face value. This may especially be true in this case if the serial codes also contain something of interest to collectors – perhaps JMW Turner’s year of birth (001775) or year of death (001851). 

5. What to do with old £20 notes

There is sometimes confusion when a new banknote is introduced, with many believing that the ‘old’ notes are immediately out of date.

However, the Bank of England is at pains to point out that the paper £20 notes remain legal tender.

You will still be able to use the paper £20 note until the Bank withdraws it from circulation. The Bank of England has confirmed that they will give six months’ notice of the withdrawal date of the existing £20 note.

Many banks will accept withdrawn notes as deposits from customers, while the Post Office may also accept withdrawn notes as a deposit into any bank account you can access at the Post Office. You can also exchange withdrawn notes with the Bank of England.