News Updates - March
13th March 2019
Asset manager fees still misleading
The UK regulator has rebuffed calls from asset managers to push for changes to new EU cost disclosure rules, saying that the extreme results thrown up by the regulation are a result of poor compliance. The Financial Conduct Authority said last week that it had uncovered problems with the way asset managers calculate and present transaction costs under the Priips (packaged retail and insurance-based investment products) regulation. Priips obliges investment groups to disclose the transaction costs incurred by their funds for the first time. The requirement has been heavily criticised by the sector, which argues that the calculation methodology stipulated in the regulation produces confusing results, including negative transaction costs. However, following a recent review of the application of the new rules, the FCA said that it had not found “credible evidence to support claims that the methodology is not working as intended”.
ISA investors defy Brexit gloom
ISA investors are defying Brexit uncertainty by buying British in January, according to data. With the Isa season now underway, UK assets featured strongly in the best-selling funds and sectors on platforms in January. The HSBC FTSE All Share Index C was the best-selling fund on one online investment platform, while UK Equity Income topped the sectors table, followed by UK All Companies and Sterling Strategic Bond. Investors are clearly happy to buy the UK despite Brexit uncertainty. They continue to demand income though, which shouldn't come as too much of a surprise as most investors are getting closer to retirement and income remains elusive. The interest in Asian equities is also notable given the region suffered in the second half of 2018. Investors have responded to the recent sell-off by seeing it as an opportunity to invest. Not all investors are so adventurous, however, and we are still seeing demand for the more cautious asset classes in sterling strategic bonds and mixed assets."
End of tax year tips
For most people, the end of the tax year isn’t a big occasion. Yet when the 2019/20 year tax year starts on the 6 April, it’ll bring several important changes for your money. Many of them are automatic: your income could be boosted, whether by the increasing minimum wage or rising tax brackets. However, the end of the tax year also means the end of several allowances that could reduce the tax you pay – and therefore, save you money. Many don’t roll over, and so not using these allowances by 6 April means you lose them forever. To make sure you don’t miss out, we’ve put together a five-part checklist for the coming month:
- Start with ISAs
- Pay into your pension
- Clear out your investments
- Give £3,000 to your kids
- Top up your National Insurance contributions
Further HMRC offshore crackdown
Almost a third of British billionaires have moved to tax havens or are in the process of relocating, research has found. Those living offshore must obey local tax laws but avoid paying HMRC 38.1% on dividends or 20% on the sale of shares. HMRC said it did not have official figures on how much this costs, but previous estimates have suggested the UK misses out on £1billion of tax a year from those living in Monaco alone. The principality was the most popular destination for British billionaires, followed by the Channel Islands, Switzerland and the Isle of Man. But HMRC has now escalated its crackdown on individuals with undeclared offshore assets, sending a request for information to thousands of taxpayers with possible liabilities or their advisers.HM Revenue & Customs said it was following up on information shared by more than 100 countries. This includes data obtained from banks and other financial institutions, including those based in countries previously considered tax havens.
What will Brexit mean for house process?
The EU has confirmed that there have been no breakthroughs so far in its negotiations with the UK over the Irish border. The statement comes ahead of a ‘meaningful vote’, scheduled for Tuesday 12 March, on Theresa May’s Brexit deal. If, as many predict, the deal is rejected next week, the prime minister has offered two further votes: one allowing MPs to rule out leaving the EU without a deal, and another allowing her to push back the Brexit date. Many are now predicting that Brexit will be delayed until the end of June at the earliest. There has undeniably been a stagnation in the market over the last year in areas such as London, the South and East (which had all overheated) and this slowdown has spread to other areas over the last few months. Buyers are holding back in the hope that prices will fall. But it’s not only demand that’s dropping – supply is, too, with many people battening down the hatches until we have a clearer picture of what’s going to happen. This can limit the likelihood of decreasing house prices, but also mean that few move, as there’s little choice on the market for would-be sellers. While views vary, the overall consensus is that buyers should not be put off by fears of a house price crash as long as they mitigate the risks.