Page 2 - Pension Works_Autumn_2017_Newsletter

AUTUMN EDITION 2017 WINTER IS COMING

– WHAT LIES AHEAD?

hat do the last few
investor appetite. Based on measures
of volatility, investors’ tolerance for risk
Wmonths of the year have
across many different asset classes was at
in store for investors? 2017 has a three year high in the summer.
so far been interesting, to say
the least. We have all become
With a backdrop of modest global growth
much better at expecting the DOMESTIC FOCUS
at home, there are mixed signals of growth
unexpected; experience has for the UK economy. We, of course, have
certainly taught us that. the added complication of ongoing Brexit in your portfolio from different sectors
negotiations to contend with. Weak sterling and global regions is helpful in achieving
Many investors are getting used to a remained the key driver of UK blue chip this. It is important to think about longer-
variety of political, financial and economic companies with high overseas earnings, term timescales instead of focusing too
factors and hopefully learning to look nudging the FTSE100 higher. The FTSE250 intently on short-term events and market
through the ‘noise’ to focus on what really has experienced more modest growth; fluctuations. What is clear is that financial
matters. What we do know is that market its domestic focus benefitting less from advice is essential to help position your
volatility will continue and areas of value the uplift of weaker sterling. The weaker portfolio in line with your objectives and
exist, which makes asset allocation a key currency has particularly benefitted attitude to risk. Remember to get in touch
tool when planning your portfolio. those industries which export goods and if you have any changes in your personal
services. Despite inflation remaining above circumstances which may affect your
A HEALTHY INVESTOR APPETITE target, many economists do not expect UK objectives, risk and capacity for loss.
Investors started the year confidently as interest rates to rise until 2019. The value of investments can go
the ‘Trump reflation rally’ continued from down as well as up and you may
the tail end of 2016. Although fading a WHAT REALLY MATTERS? not get back the full amount you
little more recently, global equity markets As traditional macro concerns return to invested. The past is not a guide
hit all-time highs in the summer with over the fore, portfolio diversity holds the key to future performance and past
$10 trillion added to their value in the first to approaching your investments and performance may not necessarily
half of the year, exemplifying a healthy managing risk. Having different assets be repeated.

INHERITANCE TAX: THE GOVERNMENT RAKES IN £5BN

he amount of revenue that WHY PLANNING MATTERS Every family’s circumstances are different,
Tthe government raises from There are several ways in which you so taking bespoke professional advice is
inheritance tax (IHT) continues can reduce your potential liability to IHT. essential in planning your estate.
to rise year by year. In 2016- Many families consider giving assets away Not all Inheritance Tax Planning
17, the figure rose again to during their lifetime. However, you must solutions are authorised and
outlive the gift by seven years, if not they
over £4.9bn , with experts count as part of your estate, although taper regulated by the Financial
1
Conduct Authority.
expecting it to be even higher relief applies so that if you die, say, within
in this financial year. six years the tax would be less. 1 HMRC, Jul 2017
Controversially, the threshold at which IHT USING YOUR
applies has been stuck at £325,000 since
2009. Over the same time, house prices ANNUAL ALLOWANCES
have mainly continued to rise, meaning Each financial year you can make gifts of
that more families than ever have found up to £3,000 (in total, not per recipient)
themselves drawn into the IHT net. and if you don’t use this in one tax year,
you can carry it over to the next year but
Help has come in the form of the family not beyond, which means you could give
home allowance that reduces the amount away £6,000.
of IHT payable on a main residence
being left to defined direct descendants. Gifts of £250 per recipient per tax year
Referred to as the ‘main residence nil rate to any number of people are exempt.
band’, it is being introduced in stages Each parent of a bride or groom can
over four years, with a limit of £100,000 give up to £5,000; grandparents or other
applying from April 2017, rising each relatives can give up to £2,500 and any
tax year until it reaches £175,000 per well-wisher can give £1,000. Gifts to
person in 2020. This is in addition to the registered charities and political parties
individual allowance for IHT of £325,000. are also exempt.

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