Money management

Thinking ahead when moving to the UK

Moving to another country can be a big upheaval and planning ahead is vital. Senior wealth planners Adrian Crowe and Yash Naidoo explore the financial aspects of moving to the UK, with a particular focus on tax planning.

Relocating to a different country involves various considerations from deciding where to live and settling into a new job to, perhaps, finding new schools for your children. While these can be daunting tasks, it’s important to consider your financial circumstances well in advance of your move to ensure you take full advantage of all the benefits available to you. In this article, we explore the financial aspects of relocating to the UK, with a particular focus on the tax implications.

In the UK, the way you are taxed by HM Revenue and Customs (HMRC) is based on your residency and domicile status. Your residency status is simply where you live, but your domicile status is a little more complicated. It’s generally based on where you originated – either where you were born or where your father came from – or it can be by choice, if you are over 16 and choose to live indefinitely in another country. A UK resident whose permanent home is outside the UK is known as a non-domiciled individual or ‘non-dom’, which is purely a description of their tax status and indicates they do not intend to live permanently in the UK.

The difference between residence and domicile is important. Individuals who are both UK resident and domiciled must pay UK tax on their worldwide income and gains. However, if you are a non-domiciled individual living in the UK you can choose to register your non-domiciled status, which means you will only be taxed on your income and gains earned in the UK. You will not have to pay UK tax on any income or gains earned overseas unless you bring that money into the UK.

A good understanding of UK tax legislation is essential, and your personal circumstances should be carefully considered with the help of tax professionals. Seeking expert advice will help you make more informed financial decisions when you relocate.

If you are living in the UK but don’t intend the move to be permanent, you can choose to be taxed only on your income and gains earned in the UK and those which you bring into the UK. This is known as the remittance basis of taxation, and it means any foreign income and gains remain outside of the scope of UK taxation, which can be advantageous if you have significant foreign income or assets. The remittance basis is only available for the first 15 years of living in the UK, but during this time it provides the potential to secure wealth and avoid tax erosion. After this period, you will automatically be ‘deemed’ to be domiciled in the UK and will have to pay tax on your worldwide income.

Choosing the remittance basis of taxation has wide implications, specifically for your investment strategies and foreign income management. In particular, separation of onshore and offshore bank accounts and investments plays a pivotal role in ensuring you are able to benefit from this planning opportunity. If your relocation will involve borrowing to buy a new home, or for other purposes, special regard must also be given to where the loan is granted from and how and where it’s serviced, in order to avoid any remittance issues. This is where a private bank with access to both onshore and tax neutral, offshore, capabilities can be very helpful.

At Nedbank Private Wealth, we can work with you and your tax advisers to help structure your banking, investment and borrowing requirements in the most effective way when relocating to the UK. In addition to this, we can assess your current circumstances and put a plan in place to help you achieve your goals and objectives. We use specialist software to model and help you visualise your financial future, exploring different scenarios and options, all to ensure you remain on track with your plan.

To ensure you are fully prepared for your UK move, we have created two guides, A guide for moving to the UK and A guide for South Africans moving to the UK which provide more detail.

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how wealth planning can help them achieve their financial goals and objectives, or call +44 (0)1624 645000 to speak to our client services team. At Nedbank Private Wealth, multi-generational relationships are really important to us. So we work with you and your family to offer the appropriate support at whatever stage you and your family are in life.

If you would like to find out more about how we can help you with wealth planning support, please contact us on the same number as above, or complete the contact us form using the link below.

Any examples of investments and structures used are for illustrative purposes only. The inclusion does not constitute an invitation or inducement to buy any financial investment or service. None of the content constitutes advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

Yash Naidoo

Yash joined the wealth planning division in 2022 and has over 16 years’ experience in wealth management. He works closely with clients and their families, together with their professional advisers, to assist them in structuring their wealth in the most efficient manner to achieve their goals and aspirations. Yash has been with the Nedbank Group since 2010 and was previously head of international for South Africa’s central region. Since his move to Nedbank Private Wealth in the Isle of Man, he also assists South African individuals and families who wish to invest or relocate internationally.

Yash is a member of the Financial Planning Institute of Southern Africa and a Certified Financial Planner and holds an MBA.

Adrian Crowe

Adrian joined the wealth planning division in London in 2023. He has over 20 years’ experience of delivering financial planning advice, having worked for Credit Suisse and chartered accountancy firm Crowe UK LLP prior to joining Nedbank Private Wealth.

Adrian spends time with clients and their families to understand their current situation and future aspirations. Working closely with our private bankers and taking our wider wealth management capabilities into account, he advises them on the strategy and structuring of their assets, formulating bespoke wealth plans to help them meet their needs and objectives.

Adrian holds the diploma in financial planning and is a member of the Chartered Insurance Institute.

The opportunity cost of cash

One upside to the steady stream of central bank rate hikes is that higher interest is now finally being paid on cash savings. After years in which returns on cash were virtually zero, savings accounts paying over 5% may sound appealing, but is cash an answer for your long-term goals?

Cash might be particularly appealing given it comes after three long and difficult years. First, we had Covid-19, which felt like the world as we knew it was coming to an end. Then, just when we thought we were returning to normal times, Russia invaded the Ukraine and almost simultaneously, after years of ultra loose monetary policy, inflation assaulted our economies. Interest rates, which had remained at historically low levels since the financial crisis in 2008-09, suddenly started to rise as central banks increased their base rates to battle rampant inflation. With thirteen base rate rises in the UK alone since December 2021, cash now offers a decent rate of return, so can it be a welcome shelter from the turbulence of financial markets?

There is no straightforward answer that covers all scenarios. Much will depend on your financial circumstances, composure when faced with volatile returns, and time frames, but as a general rule cash is not a suitable long term investment. This is true in general, but particularly now.

Cash – the smiling knife

There is no doubt that cash feels safe. But what is the price demanded for that safe, comfortable feeling? Is it robbing you of opportunity?

Whether you’re invested and tempted to move your money into a savings account, or whether you’re a long-term cash holder who has been waiting for an opportunity to invest but now finds cash looks attractive, there are a few things you should consider:

Cash is returning significantly less than inflation – you will be accepting a real term loss with immediate effect until inflation drops (at which point cash rates are also likely to drop). A gap as low as 3% between your returns and the inflation rate would halve the value of your money over 24 years.
Ah, I hear you say, but I don’t intend to hold cash over 24 years. This is only temporary. OK, I would answer, but when you do decide to jump from cash back into the stock market, it’s likely you’ll pay a lot more for the shares you buy. Why? I’ll cite just two out of a number of reasons:

The maxim of “buy low, sell high”. Aside from a handful of technology stocks (Nvidia being the prime example) equity valuations are either fair value or cheap. This is the time to buy, not to sell. Would you sell in a housing slump? Probably, not. Neither should you sell in a stock market slump.
Markets are rising 80% of the time.* This means that when you can no longer get the current rate on your cash deposit, you might look back at today’s prices and wish you had invested more now.

If you’re currently invested, it’s also worth remembering that while the bottom number on your investment statement may have moved up and down rather uncomfortably recently, any losses are not locked in unless you decide to sell.

It’s also worth remembering that our portfolios are so highly diversified that the likelihood of significant, permanent loss of capital is minimal. In fact, the biggest risk to your capital is the human tendency to sell at the wrong time.

Capturing the opportunity

It’s easy to get caught up on the negative headlines, particularly as there’s a tendency not to publish positive news, but it’s inevitable that threats breed opportunities.

Our focus is on managing the threat and capturing the opportunity. Environmental change, an aging population, a shift in spending patterns, artificial intelligence – all of these are long-term opportunities which we are nurturing within your portfolios and can exploit, along with opportunities the market throws at us to buy cheaply.

Below are four key areas of change where we currently see investment opportunities:

Everyone’s circumstances are different and there might be good reasons to hold some of your assets in cash. But you should always consider this as part of a professionally thought-out financial plan, often in conjunction with your wealth planners, tax advisers and legal specialists.

If turbulent markets are causing you concern, or if you feel now might finally be the time you have been waiting for to invest, speak to your private banker. They can explore your options, including cash, and ensure they still match your appetite for risk and your long-term financial goals.

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand more about how we manage money on their behalf, or call +44 (0)1624 645000 to speak to our client services team.

If you would like to find out more about how we manage clients’ investments, please contact us on the same number as above. Or you can get in touch using the forms linked towards the end of this page.

Sources: Fidelity – Here’s how to defeat inflation, Nedbank Private Wealth: MSCI World, 12 month periods – March 1990 – December 2018

Investments can go down, as well as up, to the extent that you might get back less than the total you originally invested. Exchange rates also impact the value of your investments. Past performance is no guide to future returns. Any individual investment or security mentioned may be included in clients’ portfolios. They are referred to for information only and are not intended as a recommendation, not least as they may not be suitable. You should always seek professional advice before making any investment decisions.

Rebecca Cretney

Rebecca joined Nedbank Private Wealth in May 2004 having moved to the Isle of Man from Barcelona to pursue a course in Business Studies with the Isle of Man Business School. She worked as a private banker until 2019, when she was appointed to the role of investment counsellor. Rebecca now focuses exclusively on supporting private bankers in conversations with their clients, providing technical investment expertise where more complex portfolio requirements exist. She also provides coaching and training for the private banking teams on a wide range of subjects surrounding investment and advice. In addition, Rebecca chairs the bank’s Investment Committee.

Rebecca is a Chartered Fellow of the Chartered Institute for Securities & Investment and a Chartered Wealth Manager.

Has it been a damp spring for the UK property market?

Met office figures revealed that spring 2023 was one of the dullest in history, with the UK seeing only 70% of the season’s average sunshine and more than its average rainfall. Although the weather picked up in June, can the same be said for the UK property market? UK inflation finally fell below 10% in April, but it has proved stickier than expected and investor concerns over further rate increases from the Bank of England have caused more upset in mortgage markets.

When I was first asked to write this article, I was hoping for signs of cautious optimism as spring is traditionally the season when the property market starts to pick up. Markets had appeared to settle following the upheaval of Liz Truss’s ill-fated mini-budget last autumn. Some stability and competition had even started to return on expectations that bank rates would begin to fall as soon as inflation started coming down later in the year.

However, the property market was thrown into turmoil again over recent weeks following the announcement of higher-than-expected inflation figures in May and then a stronger labour market, as both low unemployment and buoyant wage growth defied the forecasts for a loosening in monetary policy. The latest data just released for May shows that headline inflation has stuck at 8.7%, despite 12 consecutive interest rate rises since December 2021. As a result, the market outlook has changed dramatically, and mortgage lenders have pulled products at short notice and increased their rates leaving buyers and homeowners facing higher borrowing costs. With stubborn core inflation and renewed uncertainty over when rate increase will slow, the housing market now faces the challenge of mortgage affordability.

Part of the problem is that despite a 13^th rate increase this June, only a third of borrowers have actually been affected by the higher mortgage costs, as the rest are still protected on existing fixed rate deals. For many it could be another two or three years before they need to remortgage, reflecting a considerable lag in the impact of high interest rates and their effect on the economy. Especially, when you also consider that only around 38% of the UK population have a mortgage or loan, and almost 28% of the population are mortgage free, so will not be affected by rising rates.

To many who are trying to get a foot on the UK property ladder or who bought a home for the first time after the 2008 crisis, the last six months or so have been quite a shock. Against a backdrop of rising interest rates, the cost of living crisis and growing fears of recession, the cost of servicing a mortgage has increased substantially.

The latest research from Moneyfacts showed that the average rate on a two-year fixed deal rose to 5.92%, and the average rate on a five-year fixed stood at 5.56% by 15 June. Significantly more than in May last year, when two-year and five-year fixed rates stood at 3.03% and 3.17% respectively.

The buy-to-let market is particularly challenging as most have interest only mortgages so someone paying 1.5% a couple of years ago is now looking at an average rate of over 6%. With monthly repayments up so significantly, the eroding of tax allowances and increased regulation in the pipeline, the economics of buying to let is a lot less appealing and could lead to more landlords pulling out of the rental market, putting more pressure on renters.

With so much volatility and uncertainty over the direction of interest rates, is it all doom and gloom for the UK property market? Maybe not. There are signs of the market cooling, as the value of gross mortgage advances in Q1 2023 was £58.8 billion, £22.9 billion lower than the previous quarter, and 23.6% lower than in Q1 2022. This was the lowest observed since Q2 2020. Most of the indices are also reporting an easing of average house prices, but these belie differences across property type and geographical regions.

It’s certainly increasingly difficult for first-time buyers with small deposits, but there are still cash buyers, international investors and those with support from the bank of mum and dad. Many experts believe the drop in the market is unlikely to be as dramatic as during the financial crisis, when house prices fell by 17.5% between November 2007 and April 2009.

Ultimately, house prices are likely to be buoyed by a number of factors, not least the robust labour market, historically low housing supply, and an improving economic outlook (the UK economy returned to growth, up 0.2% in April). With falling energy prices the economy is expected to avoid a recession but so much will depend on the Bank of England’s next move. Current inflation at 8.7% is over four times higher than the central bank’s 2% target, but the policymakers walk a thin line between driving down inflation and tipping the economy into recession. Current forecasts are for base interest rates to peak at around 5.75% by the start of 2024 and then come down. All eyes will be on the next round of economic data.

Clients can borrow against a UK, Isle of Man or Channel Island-based residence, be it a home or an investment property. We also lend against investment portfolios and loans can be denominated in Sterling, Euros or US Dollars. With clients in 160 countries, we often help clients based outside the UK, and have lent using the same approach across market cycles since 1987.

To find out more about Nedbank Private Wealth’s bespoke lending services, please visit our ‘Borrowing’ page or email [email protected]. You can also contact your private banker directly or call our client services team on +44 (0)1624 645000. Or you can get in touch using the links to the forms towards the end of this page.

Sources: BBC News, The Times, Bank of England, Financial Times, Reuters

If you fail to keep up loan repayments, your assets used to secure the loan may be at risk and/or your home may be repossessed. Any examples are for illustrative purposes only. The webinars and Q&A do not constitute an invitation or inducement to buy any financial product or service. None of the content constitutes advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

Chiraag Patel

Chiraag joined the team in 2021 with responsibility for Nedbank Private Wealth’s lending proposition in the UK. His primary role is to support clients’ borrowing requirements, as well as help clients who have been introduced by mortgage brokers and other property intermediaries.

With 18 years’ experience as an adviser in the property teams of financial services firms, with an emphasis on serving the high net worth market, Chiraag’s previous roles include time as a credit specialist at Santander Private Banking and Barclays.

He holds a Certificate in Mortgage Advice and Practice (CeMAP) and graduated from the Queen Mary University of London with a BSc (Hons).

The 19th issue of our client magazine is out now

The latest issue of Opportunity focuses on the flexibility of bespoke lending, wealth planning for a long life well lived, and how women can plan for financial independence, plus all our recent company news.

Our client magazine is published three times a year and provides articles and insights to help you make the most of your wealth. We also report on recent company updates.

Read the magazine here.

If you would like to subscribe, please visit our subscription centre.

If you would like to find out more about how we can help you with wealth planning support, please contact us on the same number as above, or complete the contact us form using the link below.

Can the bank of Mum and Dad work long term?

While parents and grandparents have been property lenders for many years, the recent rise in mortgage rates and the cost of living crisis have led to far more help for the next generation. But does this support have long-term, unforeseen ramifications?

Over the last few years, house prices have continued to rise much faster than income and the bank of Mum and Dad remains one of the UK’s top property lenders. According to analysis by property firm Savills, the bank of Mum and Dad paid out almost £8.8 billion in gifts and loans during 2022. An estimated 170,000 first-time buyers had family help in getting a mortgage, which amounted to almost half of all mortgaged first-time buyers. With increasing interest rates, stricter mortgage criteria and a cost of living crisis, it’s expected this number will jump to 61% in 2023. The desire to help your children onto the property ladder is strong, but could this support leave you with longer term and unforeseen ramifications?

The long-term impact will depend on how you choose to fund the gift or loan. While the use of cash savings or withdrawing money from your investments or pensions are all possibilities, they have the potential to cause problems for your future financial and retirement plans, not least because we are all living longer and annuities are no longer the automatic choice.

Taking money from your investment portfolio means you run the risk of losing out on any growth and the compounding benefits that investments typically carry, as well as any future benefits from bond coupons or equity dividend payments. The potential rates of return on investments are generally higher than the return on cash over the longer term, but it is always worth remembering that markets can go down as well as up and you may not get back the original amount invested.

Meanwhile, accessing your private pension pot may mean you don’t achieve all your retirement goals. The money taken out of your pension will not be there to grow and compound but, perhaps more importantly, if you access your pension, your annual allowance – the amount you can pay in while enjoying the government’s tax incentives – has reduced from up to £60,000 a year to just £10,000. This lower tax support may mean you need to defer your retirement date.

The good news is that there is another possibility. If you have investable assets over £1 million, you can access the bespoke lending options available through private banks. Not only can loans be secured against your property or investment holdings, but the support you receive will ensure you understand the full implications of any decision and the impact it will have on your long-term financial goals. As a result, you can retain your capital and continue to benefit from your wealth while helping your loved ones with their more immediate needs.

What are the benefits?

As private banks operate on a more personal case-by-case basis, they can offer a more flexible approach for larger loan amounts, usually over £250,000. The benefits include:

A more tailored service with a dedicated relationship manager, who will take time to understand your current financial position and any long-term plans before providing the most efficient outcome for you.
Less rigid criteria and a wider range of options:
- Facilities in sterling, euro or US dollars
- Interest only loans
- Shorterrepayment terms
- Scheduled repayments linked to a specific date.
Borrowing against your UK, Isle of Man or Channel Island-based residential property.
Borrowing against your investment portfolios, provided they are held with the bank.
Quick, yet carefully considered, decisions to meet an immediate need for cash, without having to sell any of your investments.

A win for you and your family – in the short term and the longer term.

To find out more about Nedbank Private Wealth’s bespoke lending services, please visit our ‘Borrowing’ page or email [email protected]. You can also contact your private banker directly or call our client services team on +44 (0)1624 645000. Or you can get in touch using the links to the forms towards the end of this page.

Andrew Halsall

Andrew heads up the Isle of Man private banking team. He joined the bank in 2005 and has over 30 years’ banking experience. He looks after a portfolio of domestic and internationally-based clients, working closely with them, and their professional advisers, to meet their wealth management, succession planning, pension and lending needs.

Andrew is a Chartered Wealth Manager and a Fellow of the Chartered Institute for Securities & Investment.

This is not just lending. This is bespoke lending.

For high-net-worth clients with more complex borrowing needs, Chiraag Patel explains how private banks can offer a more tailored lending solution.

The fallout following the UK government’s infamous and unfunded mini-budget in September 2022 revealed the complex mechanics underpinning mortgage lending. The market turmoil that ensued saw banks and building societies scramble to withdraw mortgage offers as sterling plummeted to historic lows and gilt yields soared.

Gilt yields are important as they reflect the cost of government borrowing and are used by lenders to set mortgage interest rates. The rapid rise in gilt yields following the chancellor’s fiscal announcement meant lenders were faced with mortgage offers and products that were no longer viable. The events of September 2022 were extreme, resulting in the political downfall of a chancellor and prime minister, but they highlighted the complexities of mortgage lending and the potential difficulties in finding a product that suits your needs.

This is where a private bank, such as Nedbank Private Wealth, can often help. We have the flexibility to offer lending solutions that can be tailored to your individual circumstances, not just how well you fit a prescribed set of criteria. The benefits we offer can include:

A personal approach

Access to a dedicated private banker means a deeper understanding of your financial situation and goals.
Each lending application is judged on its individual merits.
Consideration is given to your wealth as a whole, rather than purely income.

Flexibility

Experience of working with those who may not fit the criteria of many high street lenders, such as those who have less traditional income streams.
Rates decided on an individual basis depending on the size of the loan relative to the value of the property, and the loan term.
For clients who are asset-rich but cash-poor, borrowing can be secured against a range of investments as well as UK property.

Expertise

Experience in providing lending solutions to clients around the world, often with complex financial affairs.
International expertise that can help expat and foreign national clients who are choosing to move to or invest in the UK.
Options for wider wealth planning opportunities alongside your lending arrangements.

Quick decision making

The autonomy to make quick decisions, allowing you to move quickly.
By taking a charge on existing assets to free-up cash, you can secure your new asset at the right price and remortgaging can be arranged at a later point.

Competitive pricing

Competitive interest rates and fee structures that can meet your immediate needs as well as supporting your longer-term wealth goals.
Cost effective, as your investments need only be transferred to us if the loan is secured against them.

Ultimately, we have the time and experience to understand you as an individual, which means we can provide a bespoke lending solution that will meet your financial needs in the most appropriate way.

Whether you are about to borrow for a specific purpose in the near future or are planning for something further down the line, it pays to discuss your needs in advance. Get in touch today and we can discuss your options.

Clients can borrow against a UK, Isle of Man or Channel Island-based residence, be it a home or an investment property. We also lend against investment portfolios, and loans can be denominated in sterling, euros or US dollars. With clients in 160 countries, we often help clients based outside the UK, and have lent using the same approach across market cycles since 1987.

If you fail to keep up loan repayments, your home or property used to secure the loan may be repossessed. Any examples of products and services are for illustrative purposes only and do not constitute an invitation inducement, advice or a personal recommendation. Nedbank Private Wealth does not provide tax advice, and instead works with tax advisers to ensure clients receive the appropriate advice. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

Chiraag Patel

He holds a Certificate in Mortgage Advice and Practice (CeMAP) and graduated from the Queen Mary University of London with a BSc (Hons).

Is cash really a solution for your long-term goals?

As we look towards another year of inflation and market turmoil, rising interest rates and the predictability of returns from cash in the bank may appeal. But is cash really a solution for your long-term goals?

If you follow economic news or data closely, recent headlines might well have made you want to run as far as possible from investment markets. You’ll no doubt have witnessed conflicting economic data and been concerned about the impact of rising interest rates and, most recently, turmoil in the banking sector. If you’re already invested, you may have been tempted to pull the plug and move into cash. If you aren’t invested but were planning to, it may seem wise to delay.

In the following article, we answer some of the tough questions that may be going through your mind.

Are we heading towards another global financial crisis?

In our opinion, no. The recent banking upheaval is not the same scenario as 2008 because:

Banks have more capital and are now better regulated – especially large systemically important banks.
Regulators are more aware of the importance of acting fast to maintain confidence and avoid panic selling and withdrawals.As seen in their timely response to the recent issues at Silicon Valley Bank and Credit Suisse.
There are no widespread credit issues as there were in the 2008 crisis, which stemmed from a housing market crash in the US. The unrealised losses we’ve seen in some banks at the moment are due to higher interest rates and the effect these can have on government bonds. As long as banks have access to liquidity and they can borrow against these bonds, there should not be the material losses we saw in 2008 with mortgage-related debt.

Having said this, investor sentiment is something to watch out for. If investors start panic selling, this could lead to further market sell offs. But if you’re anything like me, you may well see this as a buying opportunity.

So what is the outlook now?

In our view markets will continue to be buffered by headwinds over the next 12 months, but there will be tailwinds too, which don’t tend to feature in the news headlines.

Market volatility is likely to remain elevated and economic growth is expected to slow. We anticipate this will be particularly pronounced in developed economies, but especially in Europe where energy restrictions impact output, high inflation reduces real wages, and tightening monetary policy slows aggregate demand. While still low, the risk of significant global disruption from the Russia-Ukraine crisis remains real.

Inflation will peak but remain high. Improving energy and food prices should help headline inflation fall, however, the relatively tight labour markets and higher wage increases may mean core inflation (which excludes energy and food) remains relatively high. The supply and demand issues that have beset markets since the pandemic and the start of the Ukraine war are expected to ease. Labour markets are also likely to settle, with unemployment to rise albeit slowly.

Central bank policy rates are expected to peak in 2023, but with tight labour markets risking second-round effects from higher wage increases, they are likely to remain higher for longer than initially anticipated. However, it is important to note that a significant number of interest rate hikes are already priced into bond markets. And we expect markets will start pricing in future rate cuts towards the end of 2023 and into 2024 as inflation and growth slow.

With cash now paying meaningful returns, would it not be better to invest in cash?

Although cash rates are currently high, it is unlikely they’ll remain so over the long term. Our current expectation, which is in line with many market participants, is that cash will average 3.5% a year over the next five years. This might sound high after years of ultra-low interest rates, but will this level of return be sufficient to meet your financial goals and outpace inflation? The answer to that question is particular to you but in most cases, cash is not a suitable vehicle for a large proportion of your wealth. In addition, if interest rates remain below inflation, your cash investment will be losing value over time.

If you’re already invested, markets are broadly down so you would need to sell your assets at a discount to move into cash. You probably wouldn’t choose to sell your house in a housing downturn unless you really needed to. The same applies to market investing.

If you’re not invested, from a buyer’s standpoint many markets are attractively priced (with some notable exceptions) so you could forgo the opportunity to buy into the market at a discount. Think back to the Covid downturn – wouldn’t we all want to buy equities at those prices?

The current uncertainty in markets may be a distraction, but if your investment time frames are over three years it should not be a deterrent. Volatility is a normal part of investing and trying to time the markets is pretty much impossible. Best trading days typically follow the worst – you blink, you’ve missed it.

Am I taking a big risk by investing now?

It depends on what you define as risk. If you mean volatility then yes, you should be prepared for a bumpy ride. But if you mean “do I run the risk of losing all or a great proportion of my money?” then no. Or at least not with our portfolios. All of our client portfolios are hugely diversified. We hold thousands of positions across different sectors, styles and markets.

In addition, it is our job to tread the fine line between reducing volatility and maximising opportunity. We have been cautiously positioned for some time in the expectation that the rising central bank interest rates will result in slower economic activity, which in turn will create a more challenging environment, so our investment portfolios are well positioned for this.

Ultimately, when weighing up cash against markets, it is the opportunity cost you should consider and how this plays out with your wider financial goals. The right decision for you requires professional advice and our team of wealth planners can provide you with a bespoke plan to help you achieve those goals.

If you would like to find out more about how we can help you with wealth planning support, please contact us on the same number as above, or complete the contact us form using the link below.

Investment values can go down, as well as up, to the extent that you might get back less than you originally invested. The value of your investments may also be affected by exchange rates. The inclusion of any investment structures and wrappers is for information only and should not be taken as advice or a recommendation. You should seek the necessary advice, specific to your circumstances, before making any financial decision.

Rebecca Cretney

Rebecca is a Chartered Fellow of the Chartered Institute for Securities & Investment and a Chartered Wealth Manager.

Is it time to spring clean your finances?

As the seasons change, many of us feel a sense of regeneration and a pull to make changes in our lives. Can you extend the urge for spring cleaning and freshening up your home into other aspects of life, such as your finances?

Signs of spring often spark an urge for change and reinvention as we start cleaning and decluttering our homes. In the UK, it’s also a perfect time to spring clean your finances as it coincides with the start of a new tax year and the Spring Budget, in which the UK chancellor sets out his taxation and spending plans for the coming year.

So, what should you be considering to freshen up your finances this spring? We outline the best places to start.

Set your goals

Do you have overarching financial goals and, if not, should you think about setting some? What do you want most from life – for yourself and your family? Maybe to help your children or grandchildren through education, or to buy their own homes. Or you have plans to travel or relocate. Perhaps you’d like to build philanthropy into your goals? If you’re unsure where to start, map out some short, medium, and long-term goals. Then you need to take stock of your savings, investments and pensions to make sure they reflect these goals.

Get your paperwork in order

First things first, are all your official documents – wills, lasting powers of attorney and certificates – together where they can be easily found when necessary? If you don’t have a will, or it’s not up to date with your current situation, this should be a top priority. Important digital assets may also need a review.

Use this as an opportunity to sit down and evaluate your incomings and outgoings. Are you paying for services or subscriptions you don’t use? Are there areas that you could cut back on? Could you free up more cash to put towards your financial goals?

Pensions

Now is a good time to review your pension savings – are they in line with your plans for retirement? The most unexpected changes in the chancellor’s Spring Budget were pension reforms. The pension lifetime allowance, which currently stands at £1.073 million, will be abolished by April 2024 and the annual pension allowance – the most you can pay into a pension each tax year and receive tax relief – will increase from £40,000 to £60,000. Although these benefits will be tempered as the tax-free lump sum you can take will be capped at £268,275 (unless you have protections already in place).

Tax matters

Tax changes announced in last year’s autumn statement will come into effect this tax year. These include the freezing of the annual personal allowance at £12,570 and the higher rate tax threshold at £50,270. Plus the reduction of the additional rate 45% band from £150,000 to £125,140. This means you could be tipped into a higher or additional rate tax band if your earnings have increased, so it’s worth exploring options, such as increasing your pension contributions.

It’s also important to take advantage of any tax allowances you’re entitled to. Are you using your annual ISA allowance in full? Are you claiming tax relief against charitable donations and professional subscriptions? As always, you should seek independent tax advice based on your own situation before making any financial decisions.

Plan for life

The lifting of the lifetime allowance on pensions might have additional benefits when it comes to inheritance planning, but are you making the most of your wealth while you’re still around to enjoy it? Have you, for example, dreamt of living somewhere else – escaping the city or moving closer to family? Or gifting from your assets or surplus income to benefit your loved ones – when they need it most? Or supporting a favourite cause? Why not revisit these ideas and consider your work-life balance. Are you happy, or could you be doing more?

Examining many areas of your life – from finances to family matters – can feel daunting, but sitting down and talking about it will almost always pay dividends in the long run.

If you’d like to start a conversation, please get in touch. Our experienced team can work with you to create a personal wealth plan that can help you achieve your financial goals now and for the future.

If you would like to find out more about how we can help you with wealth planning support, please contact us on the same number as above, or complete the contact us form using the link below.

Allie Kirk

Allie manages a select portfolio of high-net-worth clients, working closely with their professional advisers, such as lawyers and accountants, to provide services tailored to their specific financial needs. These include wealth management, succession planning, pensions, lending and banking services. She also works closely with fund managers, trusts and corporate service providers, financial advisers and legal firms. In addition, she acts as an investment adviser to various pension schemes and trusts.

Allie is a Fellow of the Chartered Institute for Securities & Investment.

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