Contact us: 01799 543222

Technology bringing the generations together

Archive for the ‘Commentary’ Category

Technology bringing the generations together

Wednesday, April 8th, 2020

One positive outcome of the crisis has been the way technology is helping us to stay in touch  with each other, especially across the generations. Various apps are playing a vital role in keeping us entertained in lieu of all the social events and sporting activities being cancelled.   

As staying in becomes the new going out, we’ve highlighted a few ways to keep you connected. .   

Video conferencing – not just for work!         

Zoom, Microsoft Teams and Google Hangouts may be effective for those working from home but it’s the video chat app, Houseparty, that has soared in popularity in recent months. 

It’s thought to be more spontaneous than the other apps as it allows you to mimic an actual house party, with friends chatting in different rooms. Previously popular with millennials and Generation Z teeenagers, adults now want to make use of Houseparty for their own connections.    

It’s getting to the point where people are attending more events in the virtual world than they were in the real one. You know you’ve really made it when you’re double booked for two online drinks parties or AperiTVs!

Inspirational ideas on Instagram 

You’ll find many celebrity chefs have taken to Instagram to offer free cookery classes during lockdown. There are lessons on everything from how to cook the perfect curry to how to bake your own bread.

Likewise, famous musicians are giving free ‘virtual’ concerts or even guitar lessons. And, of course, you can recommend your ‘favourite finds’ to friends and family. Why not challenge each other to mini contests, such as who can decorate the best cupcakes?             

Family time  

Regular video calls over FaceTime or Skype are a great way for all the family to keep in touch. Think of novel ways to make this inclusive. We heard of one family, for example, who deliberately arranged the call for lunchtime, propping the tablet up at the table so that it felt like they were all still sharing the meal together.     

Encourage grandchildren to show their grandparents what they’ve been up to. Get them to share stories, music or their artistic creations. Set up a board game challenge. You’ll no doubt find the youngsters can sort out any technical difficulties!   

Keeping fit – online

If you’re worried about what all those baking tutorials might do to your waistline, there are plenty of online exercise classes to sign up for. Joe Wicks has taken the nation by storm with his  YouTube daily P.E.classes. Originally aimed at children, these have proven equally popular with parents and grandparents. Enterprising local gyms and fitness instructors are also offering their usual classes in strength training, pilates and yoga online, so you can stay fit but keep in touch with fellow members at the same time.  

Technology is helping us to keep in touch in new ways with our friends and family through these strange times. Will the tools, which we are embracing now, represent a lasting shift in how we communicate in the future? 

April Market Commentary

Wednesday, April 8th, 2020

In March, the coronavirus outbreak seemed to steal all the headlines, giving us almost hourly updates as it transformed our lives, and made the word ‘unprecedented’ feel like an understatement. Inevitably, there has been a serious impact on world stock markets, which have suffered their worst quarter since 1987.

The figures that follow will not make for pleasant reading: it is scant consolation that they would have looked much worse in the middle of the month, before governments around the word rushed to put stimulus packages in place to protect their economies and businesses. To give just one example, the US government passed a near $2tn (£1.62tn) aid package, described by one US Senator as a “wartime level of investment in the economy.”

It is worth noting that markets have always recovered over time. They recovered from the crash in 1987 and they recovered from the 2008 financial crisis.

Inevitably, the impact of the pandemic overshadows this Commentary. We have, therefore, added an extra section. Optimistically titled ‘Coronavirus: Fighting Back’, it details the economic and fiscal efforts governments are making in the face of the virus.

Coronavirus: Fighting Back

As we mentioned above, governments around the world have been launching stimulus packages to help their economies withstand the shock of the Covid-19 epidemic.

In the US, the Federal Reserve initially announced a $700bn (£565bn) package of aid, which was subsequently dwarfed by a near $2tn (£1.62tn) intervention. President Trump declared the pandemic a national emergency, opening the way to yet more state aid and direct intervention in the economy. By the end of the month, he was talking of a $2tn programme of infrastructure investment to boost the US economy.

UK Chancellor Rishi Sunak delivered his Budget speech on 11th March – which now feels like several months ago – and initially announced a £30bn package of aid for business. “We will do whatever it takes,” he declared. A week later he was back, announcing a much larger package of aid which now covers small business grants, business interruption loans, help with wages, business rate reliefs and help for the self-employed.

The EU announced a €750bn (£700bn) aid package in the middle of the month and both the World Bank and the IMF pledged money to fight the outbreak and its economic impact.

Will all this be enough? The simple answer is that no one knows: as we have commented below, even with all this intervention some household names will be out of business by the time the dust finally settles. Hopefully the picture will look brighter by the end of April, otherwise we may see another raft of central bankers standing sombrely at lecterns while they deliver another round of aid packages.


In any normal month, Rishi Sunak’s first Budget – and his promise of massive investment in the UK’s infrastructure – would have taken up the bulk of this section of the Commentary. As we have seen, anything the Chancellor announced on 11th March was almost immediately superseded by events and – when this is finally over – another Budget seems inevitable. Like other countries, the UK will, one day, have to pay for the rescue package and the unprecedented increase in Government borrowing.

Whether there will be a UK high street to play its part in that recovery is currently looking questionable. There are always winners and losers from crises: currently the supermarkets (reportedly busier in March than at Christmas) and Amazon are the winners, while ‘ordinary’ shops are very much the losers. Pubs and restaurants up and down the land are going to close, irrespective of how much help the Chancellor gives them with business rates. The closure of the Carluccio’s chain – putting 2,000 jobs at risk – will not be the last by any means.

John Lewis has warned that stores could close, shopping centre operator Intu has said it could go bust and even before lockdown was introduced in the UK high street, footfall was down by 8%. Goodness only knows what the figure will be now.

Marks and Spencer, and several other household names in the fashion and retail sector, are warning of closures. As one analyst put it, “You do not buy a new outfit to stay at home”.

The rest of the UK news is, inevitably, dwarfed by the impact of the crisis. You won’t be surprised to hear that both consumer and business confidence fell during March, or that the UK’s credit rating was downgraded as a result of the pandemic. Credit rating agency Fitch dropped the UK from AA to AA- as it said that the country’s economic output would fall by almost 4% this year.

Was there any good news? At the beginning of the month, Nissan announced that it was investing £400m in its Sunderland plant to build the new Qashqai – and two days later the Chinese firm Jingye completed the takeover of British Steel, safeguarding 3,000 jobs. Then, on the morning of the Budget, the Bank of England cut base rates from 0.75% to 0.25%.

None of this, of course, could do anything to stop the stock market’s slide in March. The FTSE 100 index of leading shares fell 14% in the month to close at 5,672 and is down by 25% for the year as a whole. The pound fell 3% in the month to end March at $1.2415, down 6% against the dollar for the year to date.

Brexit Negotiations

March began with the UK saying it would take a ‘hard line’ in trade talks with the US as the Government pursued trade deals around the world in the wake of leaving the EU. The first round of trade talks with the EU was held at the beginning of the month, with the intention of reaching an agreement by the end of the year. That first round of trade talks threw up ‘clear differences’ – but that was always going to be the case.

Then, in the middle of the month, came the news that the EU chief negotiator Michel Barnier had tested positive for the Covid-19 virus. A week later it was Boris Johnson’s turn, swiftly followed by Health Secretary Matt Hancock and the UK’s Chief Medical Officer.

Predictably, talks with the EU are now on hold. Equally predictably, reactions to that news depend on your original viewpoint. The two sides are either saying that a deal by 31st December is now impossible or muttering, “Have they never heard of Zoom?”

Hopefully, the situation will be clearer by the end of April. We will, as always, report back…


March was the month that Europe went into lockdown. It had started with the normal corporate news we have come to expect, with the IFO Business Climate survey saying that the German car industry ‘would face significant challenges’ over the months ahead.

A week later the whole of Europe was facing a very different challenge as Italy went into lockdown and Angela Merkel predicted that up to 70% of Germans could be infected by Covid-19.

Factories rapidly started closing all over Europe, free movement was forgotten as individual countries closed their borders and the ECB raced to implement a rescue package, scrapping its budget rules to fight the virus.  

The impact of Covid-19 on Europe could be severe and long lasting. The blow to Italy’s economy – to take just one country – could be catastrophic, especially with several Italian banks long having been widely seen as vulnerable. If the outbreak is prolonged then the fragile economies of Spain, Greece and Portugal are going to compound the problem. The German taxpayer may ultimately decide that their own country is the only priority.

In keeping with the rest of the world, March was not a happy month for European stock markets. The German DAX index fell 16% to 9,936 while the French market fell 17% to 4,396. For the year as a whole, the two markets are respectively down by 25% and 26%.

Illustrating how vulnerable some of the smaller markets might be, the Greek stock market fell 22% to 558 in March, and is down by 39% since the start of the year.


Total ‘non-farm payroll employment’ in the US rose by 273,000 in February, with the US Bureau of Labor Statistics reporting that the unemployment rate was unchanged at 3.5%.

The difference in March was that the figures were out of date almost as soon as they were announced. As the figures came out, the US Federal Reserve was implementing the first emergency cut to interest rates since the collapse of Lehman Brothers in 2008. As one report put it, ‘the world’s biggest economy is running scared’. Chairman of the Federal Reserve, Jerome Powell, said that the cut would be a ‘meaningful boost’ to the US economy.

A fortnight later, the Fed had to act again – effectively cutting US rates to zero and announcing a stimulus package worth $700bn (£565bn). This was subsequently dwarfed by the near $2tn package which the US administration approved by the end of the month.

But, as the old saying goes, ‘it’s an ill wind that blows no good’. No one will be surprised to hear that Amazon has gone on a hiring spree as the demand for home deliveries rockets.

Away from the economy, it is looking almost certain that the US Presidential Election in November will be between Donald Trump and Joe Biden – formerly Barack Obama’s Vice President. March saw Biden defeat Bernie Sanders in a string of primaries and go a long way to clinching the nomination.

When Donald Trump was inaugurated in January 2017, the Dow Jones index stood at 19,732. To the President’s horror, the Dow slipped below that level at one point in March, falling to 18,917. By the end of the month, it had recovered to 21,917 where it was down 14% for the month and 23% for the year as a whole.

Meanwhile, the economic news continued to worsen, with 3.28m Americans – an unprecedented number – seeking jobless benefits and American Airlines saying that it will need $12bn (£9.7bn) in state aid. The remark of UK Chancellor, Rishi Sunak – “we will not be able to protect every business and every job” – will apply just as much in the US as it will in the UK. By the end of this crisis, it may well be that many household names have ceased to exist.

Far East

The newspapers are already full of demands for there to be ‘a reckoning’ with China when the Coronavirus is over. Everyone reading this will have their own views on whether the Chinese Communist Party lied about and/or covered up the true extent of Covid-19 in the early days of the outbreak.

Whatever the truth, countries will continue to trade with China and so, for the purpose of this Commentary, the country’s economic performance remains important to both the Far East and wider world trade.

The beginning of March brought confirmation that Chinese manufacturing had fallen to a record low in February, with the Purchasing Managers’ Index down to 35.7 from the 50 it had recorded in January. At one point, exports were down by 17% as the virus had a bigger impact on Chinese manufacturing than the economic crisis of 2008.

Fast forward to the end of the month and those figures had been turned on their head, with the PMI soaring to 52 by the end of the month.

Despite this, the World Bank is predicting a year of ‘pain’ for Far Eastern economies. The Bank is now predicting that growth in China this year will be just 2.3% compared to a prediction of 6.1% made last year. This lower growth rate will inevitably impact the smaller Far Eastern economies, with the World Bank now projecting a best case scenario of 2.3% growth for the region this year, and a worst case of just 0.5%. This compares to the 5.8% growth forecast before the Covid-19 outbreak.

In the current circumstances, it is somewhat ironic that China’s Shanghai Composite Index delivered the ‘best’ monthly performance of those markets on which we report. It closed March at 2,750 from an opening level of 2,880, meaning that it was down just 5% in the month and 10% for the year as a whole.

The Hong Kong market fell 10% in the month to 23,603 (down by 16% since 1st January). The Japanese stock market fell 11% in March to close at 18,917 while the South Korean index fell 12% to 1,755. Both those markets are down by 20% for the year as a whole.

Emerging Markets

Back in 2018, Vladimir Putin won another six year term as Russian President and promptly laughed off suggestions that he would run again in 2024, when he will be 72.

But now it appears that Vladimir Vladimirovich has had second thoughts and – like his friend Xi Jinping – rather fancies being President for life. Before Covid-19 brought normal politics to an end, a Russian MP had proposed ‘resetting to zero’ the number of Presidential terms Mr Putin has served. In theory, the move will require the approval of the Russian Constitutional Court: you shouldn’t expect that to be a problem when normal service is resumed.

The Indian Premier, Narendra Modi, appears to be in rather more immediate need of reassurance. He has made a public appeal for forgiveness after making a very rapid decision to put 1.3bn people into lockdown. The situation is fast turning into a human tragedy as millions of the poorest migrant workers face walking hundreds of miles to get home, facing both rising temperatures and closed state borders.

Modi’s finance minister was also under attack after announcing an £18.8bn stimulus package for the economy: critics derided it as ‘not nearly enough.’

The Indian stock market ended the month down 23% (and 29% for the year as a whole) at 29,468. It was not, though, the worst performer in this section, as the Brazilian market fell to 73,020 – down 30% in the month and 37% for the first quarter. In relative terms, the Russian market did ‘well:’ it was down by just 10% in the month and, at 2,509, is down 18% for the year as a whole.

And finally…

We debated long and hard as to whether to include the ‘And finally’ section in the Commentary this month. In the end we decided to keep it for two reasons. First, we’ve long suspected that it is the most widely read section of the Commentary. Secondly, it’s a symbol of normal life – and a reminder, despite the fact that amusing stories were hard to find in March 2020, that we will get back to normal life one day.

And what could be more normal than the British Wife Carrying Championship? Technically we should have reported on it last month as it was held on 29th February, but sometimes even the most interesting stories take a while to make the papers.

We must add our congratulations to David Threlfall and Cassie Yates, the winners of this year’s race. Should you wish to see it, a quick search on Google or YouTube will help your self-isolation or working from home.

The event’s website certainly pulled no punches: wife carrying can be a dangerous activity, which can lead to slipped discs, broken legs and arms, limb dislocation, spinal injuries and hernias.

Nevertheless the event appears to be gaining in popularity. For any clients who may feel like participating next year, please note that ‘wives’ (not necessarily your own) must weigh at least 50kg. There are also generous prizes for anyone who might see wife-carrying as a route to the professional sports career they have long wished for.

The winner this year received a barrel of ale, the oldest ‘carrier’ won a pot of Bovril and a tin of pilchards, while the carrier of the heaviest ‘wife’ was rightly rewarded with a pound of sausages.

On that upbeat note, we’ll leave this month’s Commentary. Let’s hope the world is a more positive place when we report again in May. Until then, take care, stay safe and remember that if you need to contact us we are never more than a phone call or an email away.

Self-employed? Will you fall through the cracks?

Wednesday, April 1st, 2020

The Chancellor’s coronavirus support package for the self-employed and freelancers has been   welcomed. Many in that category were worried that they had been forgotten.

Rishi Sunak reassured them, however, that this was not the case and outlined the details of the new scheme that would treat them in a similar way to employees who had been furloughed and were receiving 80% of their salaries through PAYE under the Job Retention Scheme.    

Under the new scheme, the self-employed will be eligible to receive 80% of their average monthly profits for the last three years up to a maximum of £2,500 per month. This is subject to them having an overall trading profit of less than £50,000. Initially, the scheme will last for three months but this may be extended. 

Although the scheme is thought to cover 95% of those who make their income from self- employment, it is feared there will be a few people who could fall through the gaps.     

Who won’t qualify? 

The first issue is that the support won’t be available until June. Individuals will need to apply through an online portal which has not yet been launched although they have been assured that payments will be backdated to 1 March.    

Secondly, in order to qualify for the scheme, a self employed person has to have submitted a 2018/19 self assessment tax return. This condition has been included to mitigate against fraud but it means that if someone has been freelance for less than a complete tax year, they will not be eligible.

The Chancellor indicated that anyone who only started trading in 2019/20 would need to look to the welfare system for extra support by applying for a business interruption loan or for universal credit.    

This would also apply to those who have dissolved a limited company recently and become a sole trader in response to the impending changes to the IR35 rules.    

Where one-director companies sit 

It’s believed that people who are self-employed but who provide their services through a limited company are likely to fall through the cracks. The HMRC self-employed guidance does say that, “If you’re a director of your own company and paid through PAYE you may be able to get support using the Job Retention Scheme (JRS).” 

It’s unlikely, however, that people with personal services companies (PSCs) will be able to benefit from the self-employed package. Directors often pay themselves a low salary but top up their income with dividends. So even if they qualified under the Coronavirus Job Retention Scheme, they would be unlikely to receive a significant payment as they would be eligible for up to 80% of their salary and dividends would not count for support.

As Heather Self from the accountancy firm Blick Rothenberg explained, “If you’re an employee of your PSC, it’s going to be difficult (impossible?) to be furloughed and qualify for the Jobs Retention Scheme.” 

Mr Sunak has admitted the rules have had to be devised in haste and will not be perfect for everyone straightaway. On the positive side, a group of fintech entrepreneurs are developing a prototype to help self-employed workers use historic banking information to prove previous income and predict any future loss of income.   

If you have any queries about where you stand, do not hesitate to get in touch with us.

How long does it take to beat a bear market?

Wednesday, April 1st, 2020

The current COVID-19 crisis has wiped billions from the world’s financial markets. In the world of investing, such markets where share prices are falling are known as bear markets. 

Beating a bear isn’t easy, but you’ll be pleased to read that in all 10 prior occasions, the FTSE All-Share has completely made up the ground in the next bull market, a market where share prices are rising. Unfortunately, it usually takes longer for markets to rise than it does for them to fall. 

Bear markets are typically nasty, brutish and short, like recessions rather than economic upturns. Again using the All-Share as a guide, the average time it has taken to recover a bear market loss is 648 days, compared to the 385-day average market downturn.

Staying invested even when markets are falling can be wise because if you sell, you own less shares that can potentially gain value when the market starts to rise again. Stock market investing is best conceived as a long term game played over years rather than months.

Watch out for the bear traps

Bear markets are littered with sharp advances which often turn out to be nothing more than small peaks before the downward turn resumes. These are perilous to investors who opt for a ‘buy on the dip’ investment strategy.

For example, during the 2000-03 bear market that followed the dot-com bubble, there were six major rallies in the All-Share that generated a combined gain of 2,030 points, even as the index actually declined by 1,649 points overall during this period. Those who piled into these market rallies would have lost out in the long run.

Nine of the ten largest single day surges on America’s S&P 500 index have been during bear markets. Beating a bear is a slow game, and those who are over-eager can suffer larger losses. 

Trying to see the bottom

Bear markets are like a murky pond – it’s impossible to see the bottom or the trough until after it has passed.

For those of us who don’t have a crystal ball, it’s impossible to foresee exactly how low markets will fall. Taking a slow and steady approach is probably your best bet to conserve your portfolio’s value. This might mean a lower return than a brash approach, but you’re not putting too much money at risk. Additional pain is suffered by those who plough lots of capital into ‘bear trap’ short term rallies.

How to get your child on the property ladder

Wednesday, March 11th, 2020

It’s a tough environment for first time buyers. Rising house prices and stagnant wage growth have pushed up the average age of buying a first property to 33. What’s more, first time buyers need to borrow 18 times more than those in the 1970s.

Given this context, it’s unsurprising that more and more parents and grandparents are giving their loved ones a helping hand to get on the property ladder. However, because there are several ways of doing this – all with their distinct advantages and disadvantages – it can be hard to find the right way to help out. Here is a breakdown of a few common ways of giving the next generation some extra support:

Gifting a deposit

Gifting a deposit might seem like the most straightforward way of helping your child, but there could be unexpected tax implications. For instance, cash gifts of over £3,000 in one year may be subject to inheritance tax, if you die within seven years of making the gift. 

If you do think gifting a deposit could be a good option, you might want to act sooner rather than later. A cross-party group of MPs is currently proposing an overhaul of the IHT system where all gifts over £30,000 will be subject to a flat 10% tax rate.

Guarantor mortgages

A common alternative to directly gifting cash is to use a guarantor mortgage. These mortgages are sometimes referred to as 100% mortgages because they don’t require the borrower to put down a deposit. Rather, a parent will lock up cash in a savings account with a lender or agree to use their property as collateral if the buyer defaults on repayments.

If you use savings as security, you’d normally need to place either 5% or 10% of the cost of a new property into a savings account with the lender for several years (three or five years are the standard). The interest returned varies from lender to lender, with some not paying any at all.

Joint mortgages

These mortgages allow you to buy a property together with your child. Notably, this option increases your child’s chance of getting a mortgage in the first place as your income will be taken into account. 

However, it can be expensive and risky. As your name will be on the deeds of your child’s home, you’ll need to pay the stamp duty surcharge if you already own a property. What’s more, you’ll be jointly responsible for repayments. 

Are we heading towards a cashless society?

Wednesday, March 11th, 2020

A new polymer ‘‘Turner’’ £20 note entered circulation at the end of February which the Bank of England claims is its most secure banknote ever. The new note replaces the ‘’Adam Smith’’ £20 note that has been in circulation since 2007.

Artist JMW Turner is the new face of the £20 note. He is considered one of the finest British artists of all time and painted The Fighting Temeraire which was voted the nation’s favourite painting in a BBC Radio 4 poll.

Security on the new note is tight – £20 notes are the most commonly forged banknote, accounting for 88% of detected forgeries in the first half of last year.

Enhanced security features include a large see-through window with a depiction of the Margate Lighthouse and the Turner Contemporary, Turner’s self-portrait and a metallic hologram which changes between the words “pounds” and “twenty” depending on how the note is tilted. The notes also have a purple foil patch containing the letter “T”, a nod to the Tate Britain where many of Turner’s paintings are displayed.

Sarah John, the Bank of England’s chief cashier, said: “Moving the £20 note to polymer marks a major step forward in our fight against counterfeiting.” There are currently two billion £20 notes in circulation so replacing them all is no mean feat. The Bank estimated, however, that half of all ATMs across the UK would be distributing the new notes within just two weeks of the launch.  Old notes, however, will remain valid legal tender for six months.

The new banknote was produced in association with the Royal National Institute of Blind People, to make money more accessible for people with sight loss. There are three separate clusters of dots along the short side of the note to make handling cash easier. 

The new plastic £20 notes are longer lasting than the paper notes they are replacing. However, there are doubts about exactly how long these “long-lasting” notes will be used for as we move towards a cashless society. Contactless cards and quick online payments have revolutionised how we spend over the last decade.

The Financial Inclusion Commission estimates that cash payments will account for fewer than one in 10 payments by 2028. Campaigners warn that the UK is moving rapidly towards becoming a cashless society with little research into how this will affect the country.

In the last year alone, 13% of free-to-use UK cashpoints have closed and a quarter of all machines now charge people to withdraw their cash. Campaign groups are calling for legislation that will force banks to provide cash access to curb this trend.

IR35 – ready, steady…not ready?

Wednesday, March 4th, 2020

The big issue which has been dominating the accounting world in recent months is IR35. Will businesses be ready when the reforms come in on 6th April? 

The overwhelming view expressed by representatives from various accountancy bodies is that they will most certainly not be, not least because legislation is still not finalised.         

IR35 was introduced in 2000 as an anti-tax avoidance rule, aimed at freelancers or contractors who were deemed by HMRC to be, in effect, working as employees. Under the new rules, every medium and large private sector business in the UK will be responsible for determining the tax status of any contractor they use. This has already been the case in the public sector since 2017.

HMRC is adamant that the reforms should go ahead in order to tackle the ‘fundamental unfairness’ surrounding the current non-compliance with the rules, which it believes could cost the Exchequer more than £1.3bn by 2023-24.   

However, the investigation by the House of Lords finance sub committee has revealed that there are still many uncertainties and unanswered questions. Despite the impending start date, the actual implementation rules are still being set out by HMRC. There is also concern that the CEST tool, which checks someone’s employment status, is still not up to the job.

Julia Kermode, chief executive of the Freelancer & Contractor Services Association, commented that there was mounting evidence that clients had been unable to fully prepare in advance of the April 2020 changes. She explained that a number of businesses were only just finding out about their new liabilities as HMRC’s education programme was delayed to do the general election. 

While large employers, who have in-house tax teams, may have been able to make some preparations, smaller businesses are thought to be less ready as they don’t have the expertise to understand the intricacies of the off-payroll reforms. And even if larger companies are in better shape, the view is that no one is truly prepared.

Businesses are disappointed that their calls for the reforms to be postponed have been ignored and feel that the review by the Treasury didn’t go far enough. They feel that the issues experienced by the public sector since 2017, with many contractors simply leaving and working elsewhere, have not been heeded. This has caused major problems with resourcing and recruitment in organisations like the NHS. There is also concern that some large companies will react by simply issuing a blanket ban and not hiring contractors at all. 

Although experts have welcomed the fact that the Treasury has promised a ‘soft landing’ in the first year of the reforms, they have warned that businesses in the private sector shouldn’t be complacent. The ‘light touch’ will still mean that HMRC will impose penalties if there is thought to have been deliberate non-compliance.   

The impact of coronavirus on stock markets

Wednesday, March 4th, 2020

Stock markets across the world have fallen sharply because of fears over the economic impact of the coronavirus as the number of cases continues to rise. The situation is changing rapidly all the time but at the time of writing the virus that started in China has spread to more than 50 countries, including the UK.

The Dow Jones was hit by its biggest ever daily points drop of 4.4% on 27th February and the main European markets also fell dramatically, with London’s FTSE 100 index down more than 3%. Shares lost almost 13% of their value, wiping £200bn from the value of companies on the index. This made it one of the worst weeks for the global markets since the financial crisis in 2008. There has been some limited recovery in the last few days but significant volatility remains likely.

Investors are concerned the situation could spark a global recession, while Mark Carney, Governor of the Bank of England, has already warned that the outbreak could result in the UK’s economic growth prospects being downgraded. 

Sectors most affected 

Not surprisingly, shares in airlines and travel companies have dropped significantly. EasyJet fell by 16.7% in the FTSE 100, while Tui and British Airways owner IAG both dropped by more than 9%. Oil prices have plummeted, with the price of Brent crude being at its lowest since 2016.    

Firms that rely on goods from China, like the car manufacturer, Jaguar Land Rover, have highlighted that they could soon run out of parts. Companies such as Nike, Apple and Walt Disney have been badly hit, with shares down more than 4%.

The prognosis

Although stock markets may be reliving the financial crisis of 2008, there is no way of knowing how the situation will play out. Previous epidemics such as SARS and MERS had a significant impact on the economy but the effect was transient. Even the worst-hit stock recovered within a year.        

Sonja Laud, chief investment officer at Legal & General Investment Management, explains that,

“What markets are trying to digest is how long this is going to go on and what the economic damage will be.” The situation may look as if it is going to go wider and deeper than investors  originally assumed but acting in panic will not help.

On the plus side, these sudden falls have come after a very strong period for shares in 2019.  So while they may appear dramatic in the short term, the starting point for quite a few markets was an all-time high.  

The best course of action?  

With sensationalist headlines in the media, panic can quickly spread. There are undoubtedly going to be mixed messages. You’ll hear some people saying it’s a good time to buy shares while they are dipping, while others will recommend you sell your shares quickly and buy government bonds instead.

It may sound like a cliché but it is a case of weathering the storm. Rather than make any sudden decisions, try and stick to your long-term investment plan. As the saying goes, it’s about time in the markets rather than timing the market. So while the dips may seem acute now, the picture could look very different over a ten or fifteen year timeframe.

If you do have any particular concerns about your investment strategy at the current time, do not hesitate to get in touch.   

Proposed changes to IHT for siblings?

Thursday, February 6th, 2020

At the moment, only those who are married or who are registered civil partners are exempt from paying inheritance tax (IHT) on money or property left to them by their spouse. This was expanded to include heterosexual civil partnerships at the end of 2019.

But the law does not cover siblings who are cohabiting.They are liable to pay the standard IHT rate of 40% of anything over the £325,000 threshold.

The injustice this poses for some households was highlighted by the recent case of Catherine and Virigina Utley. They have lived together for over 30 years in the house in Clapham which they both bought. Despite being co-owners, when one of them dies the surviving sister will be forced to sell the property to be able to pay the IHT, estimated at about £140,000. 

Shocked by the unfairness of this situation, Lord Lexden has brought a new Bill to the House of Lords. Under the new proposals, siblings would be exempt from paying IHT on property left to each other, provided they had lived together for at least seven years and that the surviving sibling was over 30. As well as brothers and sisters, the law would also apply to half brothers and sisters and be valid in England, Wales, Scotland and Northern Ireland.

While this would be good news for cohabiting siblings, some people feel the proposed changes do not go far enough. The new law still wouldn’t provide any protection for those who are cohabiting but who are not married or in a civil partnership. Cohabiting couples do not have any rights to their home on the death of their partner. In this respect, the UK is way behind other countries.  

A change to the law for cohabiting siblings in terms of IHT will raise questions as to where the line is drawn. Other platonic couples, such as parents and children, or friends who own a property together, may also want to be considered. The rules will have to be sufficiently tightly defined so as not to be open to abuse.      

If you would like to review your IHT liability, do not hesitate to get in touch with us.

February Market Commentary

Thursday, February 6th, 2020

China grabbed the headlines again in January, but this time not for trade. On 31st December, the Chinese authorities had notified the World Health Organisation of an outbreak of pneumonia in Wuhan City, Hubei Province. Today the country is in lockdown, the death toll is rising fast, the number of infected is rising faster. 

The trade war with the US has been pushed off the front pages and the disease’s inevitable shock to the economy is starting to kick in amid praise for how China has reacted to the outbreak compared to SARS earlier this century. 

The run-up to Brexit – and even the murmurings of the great and the good at the World Economic Forum in Davos became mere sideshows. 

As always, here are the details.


With only a few isolated bright spots – Tesco’s Christmas sales were up for the fifth year in a row: Aldi and Lidl did well – it was hard to find any good news for the UK high street over the holiday period. 

As the reports filtered through in January, they were almost all equally gloomy, with Morrisons reporting a fall in like-for-like sales, Sainsbury’s saying its sales had ‘slipped’ and John Lewis admitting it may not be able to pay a staff bonus. 

It has been estimated that the UK retail sector lost 57,000 jobs in 2019: more worryingly, there are early forecasts that the sector shed another 10,000 jobs in the first three weeks of this year. Department store chain Beales is now in administration, threatening the closure of 22 stores and 1,000 more jobs. 

Chancellor Sajid Javid will deliver his first Budget on 11th March. It will undoubtedly contain measures designed to help the high street – the recently announced £1,000 a year rate relief for small pubs is an early indication of that – but with Amazon yet again having a record Christmas, you fear it may be too little too late. 

The Eurozone had a poor end to 2019, which was the same story in the UK as factory output in December fell at its fastest rate for eight years. Slowing global demand was blamed – and that was before Coronavirus had been identified. 

UK car manufacturing was similarly down: production fell to its lowest level for ten years and is forecast to continue falling this year. We mention Tesla’s success below and the simple truth is that our car manufacturers are facing ever more threats from companies they had never heard of ten or even five years ago. It is hard to see the trend being reversed. 

There was, however, some good news as the IMF forecast that the British economy will grow faster than the Eurozone. The IMF sees growth going from 1.3% last year to 1.4% this year and 1.5% in 2021. Of the G7 countries, it is forecasting that only the US and Canada will grow faster than the UK, while Italy, France, Germany and Japan will ‘struggle to keep up’.

Big projects were much in the news in January. Crossrail is now likely to be delayed until Autumn 2021 and – despite claims that its costs are ‘out of control’ – it looks like the Government may well press ahead with HS2. They have already made one controversial decision in allowing Chinese company Huawei to be involved in the UK’s 5G infrastructure: they now look set to ignore economic and environmental objections to HS2. 

The Chancellor’s upcoming Budget is promised to be the start of a ‘decade of renewal’. Investment in the UK’s transport infrastructure will be at the top of his list and not just HS2: there will be money available to reverse some of the Beeching cuts to the rail network and – hopefully – re-invigorate local communities. 

He will certainly have some healthy tax revenues to play with, as a rise in full-time female workers pushed the UK’s employment rate to a new high of 76.3%. There are now a record 32.9m people in employment in the UK. 

The FTSE 100 index of leading shares did not, though, have a record month. Like almost all of the world’s leading stock markets it drifted lower in January as the potential implications of the Coronavirus became clear. It eventually ended down 3% at 7,286. The pound was virtually unchanged in percentage terms, ending the month trading at $1.3184. 

Brexit and the UK’s Future Trade Negotiations 

The UK voted to leave the European Union on 23rd June 2016. As everyone will now know, we finally left on Friday 31st January, just 1,317 days after the Referendum. 

There is now a ‘transition period’ with the EU lasting until the end of this year, during which time the terms of a trade agreement will – in theory – be sorted out. So for the current year, this section of the Commentary will keep you updated on the progress of those negotiations, which are currently due to start in earnest. 

Foreign Secretary Dominic Raab has said that the UK “will not be aligning” with EU rules on trade, while Boris Johnson has said there is “no need” to follow the EU’s rules to do a trade deal. Meanwhile, Irish Premier Leo Varadkar has warned against “rigid red lines” and former European Council President, Donald Tusk, has teasingly said there is “plenty of time” to get a trade deal in place before Christmas. Whilst at the same time, hinted at “empathy” for an independent Scotland joining the EU. 

As you can see, the war of words has already started. To misquote Macbeth: there will be a lot of sound and fury in the months ahead, much of it signifying nothing. We’ll do our best to sort the wheat from the chaff. 

At the same time as negotiating with the EU, the UK will also be pursuing trade deals with countries like the US and Australia. We will also keep you up to date on all those developments in this section of the Commentary. 


The year opened with more calls for strikes in France: the CGT union called for more action after President Macron used his New Year’s address to promise to push through his planned overhaul of the country’s pension system. The protests continued throughout the month – eventually leading to clashes between French police and the country’s firemen. February began with no resolution in sight. 

Away from French unrest, it was a poor end to 2019 for Eurozone manufacturing, which contracted for the 11th consecutive month. The Purchasing Managers’ Index fell from 46.9 to 46.3 in December, with any figure below 50 indicating a contraction. Figures from the PMI showed that both orders and output were down in December. 

One thing that certainly was down was the number of Swedish people taking to the air. The number of people who travelled through the country’s airports was 4% lower in 2019 than in 2018 as ‘flight shaming’’ impacted Swedes’ travel habits. So far no other European country has reported similar figures but it is, perhaps, a sign of what we might see in the coming years.

The year also ended badly for Volkswagen: not only was it overtaken in value by Tesla (as we report below) but Canadian prosecutors were proposing to levy a £110m fine on the company. VW had imported 128,000 vehicles into Canada which violated the country’s emissions standards. 

Both the major European stock markets were down in the first month of the year: the German DAX index fell 2% to 12,982 while the French stock market fell by 3% to end the month at 5,806. 


January was the month when the impeachment of Donald Trump reached the Senate and – to no one’s surprise – the Republican majority there duly looked after its President. With senators blocking impeachment witnesses, the President is all but acquitted. There appears to be nothing to prevent Donald Trump running for re-election in November, with the bookmakers expecting him to win a second term in the White House. 

Away from the trial, economic data showed that both wage growth and jobs had slowed in December. The US added 145,000 jobs in the month, well down on the 256,000 created in November. This capped a year of solid – but slowing – jobs growth as the US labour market expanded for the 10th consecutive year. 

The average hourly rate of pay rose at an annual rate of 2.9%, down from the 3.1% recorded in November. 

There was, however, no slowing down at Tesla, which saw its shares reach a record high – in the process, giving it a bigger market capitalisation than Volkswagen – as the company beat Wall Street estimates of how many vehicles it would deliver in the fourth quarter. The Silicon Valley carmaker delivered 112,000 vehicles in the last three months of the year, and 367,500 for the year as a whole. 

Much less surprising was the news that Amazon had enjoyed a record Christmas, shipping ‘billions of items’, with 5m people around the world signing up for a trial of Amazon Prime or for one of the company’s other subscription services.

Apple also claimed record sales and profits over Christmas, thanks to a surge in demand for the new iPhone 11, but by the end of the month the effects of China’s Coronavirus were being felt. 

Starbucks (coffee seems to be the barometer of an economy these days) made the decision to close 2,000 outlets in China due to the virus and the Dow Jones index – which had broken through the 29,000 barrier in the middle of the month when the US/China trade agreement was signed – eventually ended January down 1% at 28,256. 

Far East 

The news in the Far East was, of course, dominated by Coronavirus. But even without the face masks, there were plenty of worries for the Chinese economy. 

Figures released in the middle of the month showed that the economy grew by ‘only’ 6.1% in 2019. While that figure is beyond the dreams of Western economies, it represented China’s slowest rate of growth for 29 years. The Government was already rolling out measures to boost the economy before the Coronavirus hit, beginning the year by cutting banks’ reserve ratios and releasing $100bn (£75bn) into the economy. The longer the virus lasts, the more the Chinese government is likely to pump money into the economy.  

Chinese investment in Europe also fell to a nine year low as the Government in Beijing increasingly focused on stimulating domestic demand. As the US/China trade dispute continued through 2019, Chinese investment in Europe fell by 40% and was down by 27% in North America. Investment in the US and Canada fell from $7.5bn (£5.68bn) in 2018 to $5.5bn (£4.17bn) in 2019, the lowest level since 2009. 

Unsurprisingly, stock markets in the Far East had risen in the middle of January as the US/China trade deal was signed, but the impact of the Coronavirus wiped out those gains and more, meaning that the four main Far Eastern markets were all down by the end of the month. 

The biggest fall was in Hong Kong, where the Hang Seng index dropped 7% to 26,313. The South Korean stock market was down 4% to 2,119 while China’s Shanghai Composite index and Japan’s Nikkei Dow were both down by 2% to 2,977 and 23,205 respectively. 

It’s worth noting that as of 3rd February, the Chinese stock market had fallen by 8% and stood at 2,746, no doubt a consequence of the Coronavirus.

Emerging Markets 

In January, Amazon boss Jeff Bezos announced an investment of $1bn (£770m) in India, to help digitise small and medium businesses so they can sell online. Announcing the investment, Bezos said the 21st Century is “going to be the Indian century.” But not everyone was pleased at the news, as retailers across the country demonstrated at what they see as a growing threat to local retail markets. 

Russian President Vladimir Putin also appeared to be making plans for the next century. He was last elected President in 2018, winning a six year term which would have seen him in power until 2024. However, he now seems to have wearied of the tiresome business of getting re-elected and January found him busy re-arranging the structure of Russian government in a move widely seen as paving the way for him to remain President for life, much as Xi Jinping has done in China. 

Despite Jeff Bezos’ investment plans, the Indian stock market fell 1% in the month to close January at 40,723. Brazil’s market was down by 2% to 113,761 but there was – at last – a market which went up in January as the Russian stock market managed a gain of 1% in the month, closing January at 3,077. 

And finally…

Last January we brought you the news of Greggs and their vegan sausage roll. This year, the company celebrated Veganuary by releasing the vegan steak bake to an expectant world – a move that proved hugely popular. The company has now announced that its workers will share in a £7m one-off payment as a special ‘thank you.’ Helped by the success of the vegan sausage roll, Greggs CEO Roger Whiteside said 2019 had been an “exceptional year”.

Clearly, though, not everyone is eating vegan sausage rolls and walking five miles a day. The BBC reported that ‘M&S sales squeezed as men shun skinny trousers’ as the mainstay of the British high street was forced to concede that it had overestimated the demand for tight-fitting men’s clothes in the run-up to Christmas. As a result, it was rushing to order more ‘regular’ and ‘relaxed-fit’ clothes. 

You can only conclude that people eat more over Christmas… who would have thought?

Let us leave this Commentary with a tale of true love, or at least what Japanese billionaire Yusaku Maezawa hopes will be a tale of true love…

Mr Maezawa – who made his money in fashion – is seeking a ‘life partner’ to accompany him on a trip to the Moon. He will be the first civilian passenger on Space X’s lunar trip, planned for 2023. He wants to share the experience with a “special woman.” 

One doubts that he will be short of potential candidates. To paraphrase Mrs Merton’s famous remark to Debbie McGee, ‘What was it that first attracted you to the billionaire Yusaku Maezawa…’

Have a great month, we’ll be back with more updates in March.