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Autumn Statement 2015

Archive for November, 2015

Autumn Statement 2015

Thursday, November 26th, 2015

Our guide the Chancellor’s Autumn Statement has been published and can be found here

What is a Self-Invested Personal Pension (SIPP)?

Wednesday, November 25th, 2015

Self-Invested Personal Pensions (SIPPs) are designed to give you greater control over your retirement savings. With a SIPP you can choose from a wide range of high quality investments, manage them for yourself and consolidate your existing pensions in one place. A SIPP is different to other pension saving forms and can give you more control over your pension through a provider with a wide range of funds and the flexibility to manage your own investments.

SIPPs are not suitable for everyone. If you don’t want to invest across different asset classes or don’t think you will make use of the investment choices that SIPPs give you then a SIPP might not be right for you. Self-directed investors should regularly review their SIPP portfolio, or seek professional advice from an independent financial adviser, to ensure that the underlying investments remain in line with their pension objectives. Prevailing tax rates and the availability of tax reliefs are dependent on your individual circumstances and are subject to change.

While SIPPs are definitely suited to investors keen to look after their own money, you don’t have to be confident with or interested in investing. You can still benefit from financial planning and investment management services, so you can usually have as much or as little involvement as you like with your SIPP.

Self-Invested Personal Pensions are described by providers as right for people who want the freedom to choose and manage their own retirement investments. SIPPs are often thought of as pensions specifically for people with a lot of money or investing experience and whilst this might have been true in the past, competition between SIPP providers means costs have generally decreased and some SIPPs are now promoted by providers to be amongst the best value pensions around. You should investigate costs carefully before choosing, however, and always seek independent financial advice if you are unsure.

The value of your investment can go down as well as up and you may not get back the full amount you invested. The value of tax reliefs depends on your individual circumstances. Tax laws can change.

Teaching your children about money in family life

Thursday, November 19th, 2015

Before your children are off to primary school, they may be with you for much of your weekday life, and go with you wherever you go. So when you go shopping, to the bank or cash machine, they may well be there with you but are probably a bit young to be learning much about handling money, savings and being careful with their cash.

However, when they start to be off your hands at school, this is a perfect time for teaching them about money since they are learning addition, subtraction and other mathematical concepts. We know that it may be easier to do the shopping or order the groceries online without their involvement, but such activities are golden opportunities to establish some important fiscal skills, such as budgeting and saving, even with five to seven year olds.

As children get older, they can begin to make some decisions about money, such as deciding how to spend pocket money, save for a desirable gadget or even helping you decide how to spend while on holiday. Rather like changing the assumption that milk comes from cows rather than supermarkets, there is a need for children to learn that money isn’t freely ‘on tap’ at cash machines.

Here are seven tips on using family experiences to teach your children about money:

1. Play games that have to do with teaching children about money. Board games such as Monopoly and playing at ‘shops’ can be fun ways. The Monopoly child can learn quickly and, of course, revels in making the adults bankrupt!

2. Regularly take your children shopping. Tell them what your budget is and make a game of buying what you need under that set amount, including spotting good value deals.

3. Organise pocket money so that children manage their own money. It can also be a much better lesson if they have to earn it first!

4. Encourage children to save. This can be easier if they know what they are saving for and why. Saving for something they want or to give to a charity, will work better than just telling them they should save for the future. Although it is helpful for them to open and own their own bank or savings account.

5. Children are often keen to work on their own Christmas present list, but this could be better if they have an idea what the likely cash limits are. If Auntie Ethel only ever spends £10 on a present, the christmas list should reflect that, and even Santa usually has budgetary constraints!

6. Teach your children how to talk about money – simple things like not boasting about money or possessions. At some point they will need to learn not to ask too many questions about what money adults have or have not got.

7. Explain credit and debit cards (and possibly even the difference) and that they might be convenient, but come at a cost. Try not to lend or advance money to children, unless they fully understand what this means and if you expect them to repay it, make sure they understand the ‘terms and conditions’.


The Impact of Means Testing for the Cost of Care

Wednesday, November 11th, 2015

The cost to you of care delivered by a local authority or trust is determined by a Care Assessment, which takes into account what your needs are and the services required and then Means Testing, which looks at how much capital and income you have that can be taken into account to offset the cost to the provider.

In the capital and assets component of the Means Testing element, the upper capital limit for 2015/2016 is £23,250. This means that if you have capital over this amount, you will pay the full cost for any services you receive. The lower capital limit for 2015/2016 is £14,250. This means that if you have capital below this amount, it should be ignored for the financial assessment. If the person’s capital is between £14,250 and £23,250, £1 a week for every £250 is taken into account as income. So, if the person has capital of £4,000 above the lower capital limit, £16 will be taken into account as income a week.

For residential care, the value of the person’s home may be taken into account as capital. However, there are exceptions to this rule such as when certain people will remain in the home. For non-residential services, the value of the person’s home should not be taken into account as capital.

Means Testing, when deciding how much income you have, takes into account only some income. Certain types of income are always ignored, including:

  • earnings (employed or self-employed)
  • the mobility component of Disability Living Allowance (DLA) or Personal Independence Payment (PIP)
  • Child Benefit and Child Tax Credit

The local council can treat disability related benefits, such as the care component of DLA, the daily living component of PIP, or Attendance Allowance – as income. If they do, they should deduct any disability related expenditure before they take it into account as income. Examples of disability related expenditure could include:

  • laundry and specialist washing powders
  • special dietary requirements
  • special clothing or footwear
  • extra bedding, for example, because of incontinence
  • extra heating or water costs
  • garden maintenance, private cleaning, or domestic help, if needed because of disability and not provided by social services
  • privately arranged care services, including respite care
  • the purchase, maintenance and repair of disability related equipment
  • transport costs needed because of disability, over and above the mobility component of DLA or PIP

This list is not exhaustive. Other items can be included as long as they are reasonably needed for the person to live at home. Most other benefits will be taken into account as income in full. If not going into residential care, you can be charged for home care services, however the value of your home is not taken into account when working out how much you have to pay.


November Market Commentary

Wednesday, November 4th, 2015


Well, what a splendid month October was, with all the major world stock markets that we cover in this bulletin skipping merrily upwards. Germany and China led the way with gains of 12% and 11% respectively, and if you only looked at the figures you’d be quite justified in thinking that everything in the world economic garden was rosy.

Sadly, that’s very far from the case. The worries about the slowdown in China continue, the third quarter of the year saw a dramatic downturn in US economic activity, and the International Monetary Fund was busy cutting forecasts for global growth and issuing warnings on future stability.

The IMF downgraded its forecast for global economic growth for this year to 3.1% – down from the 3.3% it had predicted in July. The 2016 forecast was also reduced, from 3.8% to 3.6%. “A return to robust and synchronised global expansion remains elusive,” the bean counters added.

The following day they were equally pessimistic on global financial stability – particularly in emerging economies. “Global financial stability is not yet assured,” said senior official Jose Vinals.

It certainly won’t be assured if the US and China continue with their spats – and the consequent increasing tension – in the South China Sea. China was swift to summon the US ambassador after the USS Lassen ‘illegally’ entered waters near a Chinese man-made reef. Washington was urged to ‘immediately correct its mistake.’ We shall see…

Closer to home it was a disastrous month for the UK steel industry, as cheap imports from China led to the loss of thousands of jobs. The local economies in Redcar and Scunthorpe were hit by blows from which they might never recover.


October saw Chinese Premier Xi Jinping pay a state visit to the UK, where he was greeted with all the pomp and circumstance the country could muster. Even Labour leader Jeremy Corbyn was persuaded into white tie and tails, before describing the evening as “the most boring I have ever had.”

Sadly, President Xi and his entourage weren’t the only things to arrive from China, with the continuing flood of cheap steel prompting Tata to cut 1,200 jobs at its plants in Scunthorpe and Lanarkshire. This followed last month’s closure of SSI’s plant on Teesside with the loss of 1,700 jobs. But bad news always comes in threes, and administrators were duly appointed to parts of Caparo’s steel operations in the West Midlands, with further job losses – both direct and in the supply chain – seemingly inevitable.

David Cameron said that he would raise the matter with President Xi, presumably once the Chinese Premier had signed the deal confirming Chinese investment in the Hinkley Point nuclear reactor – a move widely condemned by UK environmentalists.

Meanwhile, the Prime Minister’s next door neighbour was having a month to forget: George Osborne’s plans for reform of the tax credits system were roundly trounced in the House of Lords – a reverse he will address in November’s Autumn Statement.

There was no such bad luck for Facebook, who managed to get away with only paying £4,327 in UK corporation tax. BP was faced with a rather heftier bill of $20bn, as compensation for the Deepwater oil spill was finally agreed.

The month’s numbers saw UK unemployment fall to a 7 year low of 5.4% – but that was obviously before the job losses in the steel industry. UK inflation once again turned negative, with the figures for September confirming it at -0.1%.

The month ended with confirmation that the UK economy had grown by 0.5% in the third quarter of the year. That was down from 0.7% in the previous quarter but, as many commentators pointed out, it wasn’t a bad performance in the context of the wider global economy. Perhaps more worryingly, the growth was once again generated by the service sector, as manufacturing and construction continued to slip back.

There was no slipping back on the stock market, with the FTSE-100 index of leading shares rising by 5% in November to end the month at 6,361 – although that is still 3% below the level at which it started the year.


The month started with Angela Merkel firmly asserting that the VW emissions scandal wouldn’t harm Germany. The month ended with it very definitely having harmed VW, as the company reported its first quarterly loss for 15 years. After setting aside €6.7bn to cover the inevitable compensation payments, VW reported a quarterly loss of €2.52bn for the third quarter of 2015.

Matters may get worse, with the European Investment Bank apparently considering recalling loans made to the company. VW said it would ‘now re-position itself for the future’ – which in the short term probably means cutting investment.

Deutsche Bank was also suffering as it reported a third quarter loss of €6bn: it now plans to shed 15,000 jobs around the world.

Figures for August confirmed that Germany had suffered the usual slowdown in imports and exports caused by the school holidays. Worryingly, though, exports fell by their largest amount since the height of the global financial crisis in 2009. Germany still recorded a healthy trade surplus for the month, but Holger Sandte, chief European economist at Nordea said, “This is a strong fall, the kind you don’t see every day. Weakness in China, Brazil, Russia and other markets is having an impact.”

None of these worries, though, were reflected on the stock market, with the German DAX index bounding up 12% in October to close at 10,850. There was a similar ode to joy across the border in France, with the market there up 10% to 4,898. Even the Greek stock market moved in the right direction, enjoying a 7% rise in the month.


A Space-Age start to the month, with Facebook announcing that by next year it would have a satellite in orbit to bring the internet to the whole of Africa. Cynics might suggest it will be funded by the tax the company didn’t pay in the UK…

In an echo of VW’s ‘re-positioning for the future,’ perennial social media disappointment Twitter decided to re-position 336 of its staff for the future by making them redundant. This amounts to 8% of the company’s workforce and presaged another disappointing quarter, with user numbers continue to fall below expectations. There were no such disappointments for Apple, whose revenues for the three months to September soared to $51.5bn – up 22% on the same period in 2014.

There were also large numbers at work in the brewing industry, with the two biggest beer makers set for a merger after SAB Miller accepted a takeover offer from rival Anheuser-Busch InBev. The deal is worth around $110bn (so six months’ revenues for Apple) and will see the new company make 30% of the world’s beer.

We’re now just 12 months away from the 2016 US Presidential election, with Hillary Clinton continuing to be the firm favourite. In October she came out against the Trans Pacific Trade Partnership agreement championed by Barack Obama. The trade deal involves 12 countries around the Pacific rim and would cover 40% of the global economy – but Mrs Clinton says it doesn’t meet her ‘high standards.’

The Federal Reserve Bank once again decided to leave interest rates at their record low levels of 0% to 0.25% (where they’ve been since December 2008) as a report from the Fed suggested that the strong dollar was holding back the US economy. This looked to have been confirmed when figures for the third quarter showed the US economy slowing sharply. Growth for Q3 was down to 1.5%, compared to 3.9% for the second quarter.

These didn’t seem to bother Wall Street, however, with the Dow Jones index up 8% in the month to close October at 17,664.

Far East

“It’s not all doom and gloom in China,” said head of the IMF Christine Lagarde. And, of course she’s partly right. Double-digit growth cannot go on for ever, and whilst the pace of growth is slowing, it still outstrips the western economies by some distance. Figures for the third quarter confirmed growth in the Chinese economy had ‘slowed’ to 6.9% – below the government’s target of 7% but ahead of analysts’ expectations of 6.8%.

The Bank of China reacted by cutting its key interest rate to 4.35%, a move which sent European stock markets sharply upwards.

Inevitably the slowdown led to both imports and exports falling when the official figures for September were released. Imports were down by 20% to $145.2bn whilst exports also fell to $205.6bn. Keen mathematicians will spot that this still leaves China with a rather healthy trade surplus of $60.4bn.

Unlike Hillary Clinton, China gave a cautious welcome to the Trans-Pacific Trade Partnership.

Across the China Sea there was mixed news for the Japanese economy: job availability climbed to a 23 year high, but there was an unexpected rise in the jobless rate to 3.4%. Consumer spending also rose, up 2.9% on the same period a year ago. The Bank of Japan decided to continue with its monetary easing policy, and this sent shares in Japan to a two month high.

On the stock markets, the Chinese Shanghai Composite index rose by 11% to 3,383: Hong Kong naturally followed suit as the Hang Seng rose 9% to 22,640. Japan’s Nikkei Dow index was up by 10% to 19,083 but the market in South Korea fared less well, finishing October up just 3% at 2,029.

Emerging Markets

As you’ll have gathered from the introduction, all three of the major emerging markets on which we report saw their stock markets move upwards in October. Russia led the way with a 4% rise to 1,712 whilst both the Brazilian and Indian markets rose by 2%, to 45,869 and 26,657 respectively.

Welcome as these rises are, they’re towards the lower end of the scale for this month, and perhaps confirm that growth in the emerging economies is once again slowing down. The IMF is now forecasting that the world’s emerging economies will see a slowdown in growth for the 5th consecutive year, with a suggested figure of 4% for this year, compared to 7.5% growth in 2010. Inevitably, the blame for this is being laid at China’s door, with China accounting for 30% of the economic activity of emerging and developing economies. As growth in China slows so, inevitably, does growth around the world.

And finally

October saw the introduction of the 5p charge for carrier bags in the UK. I hope you’re remembering to take a bag to the corner shop: just to encourage you, here are some numbers:

8.5bn (yes, that’s billion) – the number of plastic bags supermarkets gave away last year, including 7.64bn in England alone

11 – the number of bags used by the average British shopper every month

£10m – the current estimated cost of cleaning up plastic bags

71% – the drop in carrier bag usage since the 5p charge was introduced in Wales in 2011

About 20 – the number of ‘bags for life’ currently in my front hall

About 2 – the number of times I’ve remembered to take one with me since October 5th

I’ll try and improve next month…

Click here to view sources.

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. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.