News

Could UK interest rates head into negative figures?

Source: Bank of England

The imminent payment on account does not have to be paid.

The last Friday in July is the due date for the second 2019/20 self assessment payment on account. At least, in theory it is…

One of the many measures introduced by the government as part of its Covid-19 programme was the option to defer that second payment. In mid-May HMRC issued guidance on how deferral would operate:

The fall in world stock markets has cut the value of many pension pots.

Which would you choose as investment performance, assuming a £10,000 investment that would be untouched for 10 years?

1. A steady return of 5% a year throughout the period; or
2. Two years of 20% annual losses followed by eight years of 12.39% a year growth.

The outcome in both instances would be the same: both would produce an overall gain of £6,289. Compound interest can produce many surprises if you are not accustomed to its effects.

Global equity markets have responded positively to a plateauing of Covid-19 cases across the developed world, and continuing fiscal and monetary action from cental banks and governments.  Our investment partners, RSM Research, once again take a look at the current situation and the importance of this ongoing support to help businesses to get through 2020, and hopefully return to profitability in 2021.

Download our market update here:

The pace of change in financial markets over the last couple of months has been such that our usual quarterly updates don't seem quite enough.  As cases of Covid-19 across the developed world appear to be showing signs of slowing, the stock market has rallied from the lows seen in March.  Our investment partners, RSM Research, take a look at what is driving this and where we go from here.

Download our market update here:

As the year turned, we might have imagined that the decisive general election result might bring some stability to 2020 after the turbulence of 2019. Some may have hoped we could turn our attention to pressing global issues such as climate change. But a new and even more immediate worry has eclipsed everything else: the Covid-19 pandemic.

The government is reducing two valuable tax reliefs from April, and these changes could increase the capital gains tax (CGT) bills of landlords who sell their property.

Only owners who previously lived in the property can claim these reliefs. The change is to Principal Private Residence relief (PPR) which generally exempts main homes from CGT. Up to now, the last 18 months of property ownership have been free of CGT for most people, but this period will now be cut to just nine months from this April.

High street lenders, including HSBC, Santander, Nationwide and Lloyds, are pushing up overdraft interest rates to 39.9%.

In many cases, these rates have doubled, meaning that customers face significantly higher borrowing charges, even if they only dip into the red occasionally.

Banks have increased these rates after new rules will ban them from charging higher rates on unauthorised borrowing with effect from April 2020. So rates are rising on agreed overdrafts to make up for this lost revenue.

One is growing much faster than the other…

The new State Pension has failed to keep up with the National Living Wage in the years since they were both set up in April 2016.

The National Living Wage (NLW) and the new State Pension (NSP) both began in April 2016. Each aims to set an income floor – the NLW during working life and the NSP from State pension age. You might therefore expect their values to be closely related, but that has not turned out to be the case.

Women are saving more than ever into pensions, but still lag behind men.

The good news is that more women are saving for retirement, and the size of the pension contributions they are making has increased, according to Scottish Widows. However, men are still saving more, benefiting generally from an additional £78,000 in their pension pot at retirement.