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Stamp Duty Land Tax

Stamp Duty is a tax you pay if you buy a residential property or a piece of land in England or Northern Ireland over a certain price. The price is set by the government.

The amount you are due to pay depends on when you bought the property and how much you paid for it. Stamp Duty Land Tax (SDLT) only applies to properties over a certain value.

The Chancellor of the Exchequer, Kwasi Kwarteng, announced a change to Stamp Duty rates on 23rd September 2022. The starting threshold for paying Stamp Duty has been increased from £125,000 to £250,000. Homebuyers will not have to pay stamp duty on the first £250,000 of any property purchase. The new tax tiers for amounts above the threshold will be as follows.

Stamp Duty Rates

Old Stamp Duty Rates

First-Time Buyers

This is a person who is purchasing their only or main residence and has never owned a property in the UK or abroad.

First-time buyers will pay no Stamp Duty on properties up to £425,000. For properties up to £625,000 they will pay a discounted rate. They will pay no stamp duty up to £425,000 and then 5% Stamp Duty on the amount above £425,000 up to £625,000.

For properties over £625,000 the first-time buyer would no longer be classed as a first time buyer and would have to pay the standard rates of Stamp Duty. They will not qualify for first-time buyer’s relief.   

Stamp Duty On Second Home

Those buying an additional property or a second home will pay an extra 3% in Stamp Duty on top of the standard rates. 

Written by: Nwabisa Janda

03 October 2022

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Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.old.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

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How To Achieve Successful Budgeting

To be successful in most things the first step is to create a plan – as the saying goes: failing to plan is just like planning to fail! This holds true for financial wellbeing and a huge factor in your financial security is to budget. We advise everyone starts with a simple and achievable plan and in the world of money management this is known as a budget. For some this comes naturally but for others it can be a very daunting task, however it does create the stepping stones to potential savings and is especially important in the ever changing world we live in. 

1) Use real figures

A place to start when creating a budget is to use real income figures and real expenditure, allowing for deductions (like taxes) and actual spends throughout the month. This might not be quite what you were expecting when you group the spends together in categories, for example you may currently have £65 a week for food in mind when in reality this is more like £70 a week – which would actually increase your real monthly spending by £20! Also, that coffee you occasionally treat yourself to ‘once a week’ might actually amount to another £50 per month that you haven’t considered.

2) Separate ‘wants’ from ‘needs’

This is a really crucial part of your budget, and these categories range for different people. A ‘want’ is something that could make your life better but fundamentally you could live without it; however, a ‘need’ is essential for you to be able to live and work.

For example, my needs would currently include a winter coat to prepare me for the winter and forms an essential, however for others they may have one already in their wardrobe and an update for this season would fall within their ‘wants’ category.

A ‘need’ is usually a recurring expense, and we find that, in most cases needs would account for the majority of your budget.

3) Set yourself goals

Work out your short-term goals and separate those from your long-term aspirations, this can be hard to distinguish but can help in creating various savings and investment pots. It is much easier to reach your goals by identifying them in advance.

4) Allow for surprises

Who knows what unexpected events may occur, having a safety blanket of funds beneath you can really help in relieving financial anxiety. This is called an emergency fund and should only be allocated to expenses that can’t be avoided and would take pray yourself first, create a regular transaction into your savings as soon as possible after you receive your income.

5) Put your plan into action

Now you’ve got to this step, you’ve done most of the hard work and preparation to firstly understand your financial position and make improvements. You can start to implement a further savings plan to reach those goals you’ve set for yourself. If one of your goals was to spend less on food, consider preparing your lunches in advance so you won’t be tempted to spend during the week when you’re out and about. 

5) Put your plan into action

We’re all humans and make impulsive decisions from time to time, however, don’t let this put you off managing your budget. If that one night out you had has consumed the entirety of your entertainment budget for the month then making a plan to cut back on other things may alleviate future strain. The main point in maintaining a budget is to do this over and over again and it’ll eventually become a habit – you may even learn to love it. Time is your friend, and the more consciously you treat your money, the better you’ll get at managing it.

Written by: Claire Calder

16 September 2022

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Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.old.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

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Risk Tolerance – What’s Your style?

Risk

Risk – exposing something to loss – can be applied to many everyday actions that people do. There are different risk profiles which define your attitude towards these risks. These include conservative, moderately conservative, moderately aggressive, aggressive and very aggressive. When it comes to money, people’s tolerances to risk differ greatly; some are more than happy to accept a loss for the potential of large gain (very aggressive), some are willing to risk, but would ideally settle for no less than break-even (moderately aggressive), and some hate the thought of losing anything (conservative), so what is your style?

Michael’s View

Personally, my tolerance to risk changes depending on the scenario; however, generally speaking I am willing to take a risk, with the hope of a beneficial outcome, so I would argue that my risk profile is aggressive. I think of risk being more of a mind-set and for me the positive outcome more so than the negative outcome. This perhaps explains either my aggressive outlook on risk, or my poor decision making in the past when it comes to things involving risk – that is up to you to decide. Attitudes towards risk can vary depending on people’s personal circumstances; monetarily speaking, it could be assumed that someone with more disposable funds would be more willing to risk their money, as they have a larger amount of it ‘spare’, so they may be more aggressive. It could therefore be assumed that someone with less disposable funds would be more risk averse, and would want to avoid any loss of money and would therefore be conservative.

Does One’s Risk Tolerance Change?

One’s attitude to risk can, and quite frequently does, change. For example, bad experiences where someone has risked something, and the result was the undesired one, they may decide to not take risks like that again. As a result, they may go from an aggressive risk taker to a moderately conservative risk taker. Similarly, someone may have positive experiences with more moderate risks, so they may be willing to increase their risk capacity, and look to take more aggressive risks. Examples of risk like this range from investing in start-up companies to sports betting, where it goes right/wrong the first few times, so the individual increases/decreases the risk accordingly.

Risk Insurance

Attitudes to risk also depend on the type of risk in question, as risk doesn’t just apply directly to the loss of money. Despite being unlikely, there is a risk that your property could catch on fire, you could be in a car crash, or a natural disaster could occur. The result of this would be damage to your property which would cost greatly to repair or even replace; people attempt to mitigate this risk by purchasing insurance. Insurance can provide cover to replace or repair an item(s) that is accidentally damaged or damaged for a reason outside of their control. Insurance is a common example of people not wanting to risk the chance of an event not happening, and people being conservative with this specific risk. There are a broad range of insurances out there, including home/contents insurance, life insurance and redundancy insurance, to name a few. Insurance, however, does not guarantee having no risk.

Is Taking A Risk Worth It?

Ultimately, risk is a part of everyday life; applying for a job, doing a certain activity or even extremes such as longer term risks caused by lack of sleep, stress etc. Arguably we can’t mitigate all risks can we? This is why sometimes it is worth it to just take the risk; we unknowingly take risks all the time, so perhaps risk isn’t so bad after all. This being said, it is important to be responsible and don’t fall out of your depth.

Are You Willing To Take A Risk?

If you are looking to make investments, Ascot Wealth Management caters for all different types of investment risk profiles and needs. Products ranging from Portfolio 1, which contains less volatile investments for those who are conservative investors, to Portfolio 5, which holds more volatile investments for those who are willing to invest more aggressively, is an example of what Ascot Wealth Management can provide. Volatility in investments relates to the price fluctuations of said investments; the higher the volatility, the more likely there is to be a change in the price, the lower the volatility, the lower the likelihood of price changes. Higher volatility is commonly associated with higher potential for growth, but on the other hand, it is also therefore more likely to see greater losses. This is the main determining factor for people when they consider investing – do I want aggressive investments that could potentially bring me higher returns, but run the risk of greater loss? Or do I want more cautious investments for more long term, stable growth, with less risk of large losses? That depends on your style.

Written by: Michael Morris

25 August 2022

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Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.old.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

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Financial Planning Using Cash Flow Modelling

For the first half of the year, investors have experienced volatile markets. While it may be easy to look at the short term and see negative returns, it is important to bear in mind the recovery and long term growth which we would expect from the markets. This can be difficult to see and assess the impact of, however an insightful tool to allow investors to see the bigger picture is cash flow modelling, especially when investors are looking at their pensions and retirement aims.

My Parents Situation

Recently I have spoken to my parents about their retirement income. While they are aware of the size of their pensions, and the income they would get from any defined benefit policies, they found it difficult to fully understand how much they could afford to spend each year during retirement, how much longer they needed to work for to ensure comfortable retirement funds, and how much they could rely on their savings as income when we are experiencing such high levels of inflation.

How Does Cash Flow Modelling Work?

Cash flow modelling accounts for all aspects of a client’s funds. It includes bank accounts, income, ISAs and pensions, while also accounting for growth of any investments which they hold. This is particularly important in the years when a client is building up to retirement, to stress test their savings and allows clients to regulate and understand whether they will meet their retirement targets. We are able to create clients an in depth model of their finances, not only to show them any excess funds or shortfall they may encounter in retirement, but this cash flow would also allow them to see whether they can afford larger ad hoc purchases, how much market volatility they can withstand, and how soon they would need to start drawing down on pensions and investments.

Managing Risk

Within these cash flow models, we look at capacity for loss calculations. The current markets are still uncertain, and while we would suggest most investors look to the long term market growth, for some investors their capacity for loss will have substantial impacts on their risk tolerance, and cash flow modelling can help to illustrate whether keeping all funds invested has the potential to lead to a shortfall. This would tend to be prevalent when an investor is looking to drawdown on their funds in the shorter term, and therefore it is important to see how much longer their funds can withstand the market volatility before having an impact on their standard of living. Even in stable markets, cash flow analysis can be an insightful tool to understand how much growth an investor would be aiming for in order to sustain their financial targets. 

How Cash Flow Modelling Can Help You

At AWM we offer cash flow analysis as part of our ongoing financial advice to clients. It allows clients to visualise the bigger picture during the accumulation phases of their financial journey with us, and how it ties into their retirement aims and life goals. We are able to create the model specific to you, including any ad hoc purchases you intend to make, and we can change the model to show how your investments may differ with varying retirement ages. 

Written by: Alice Frost

11 August 2022

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Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.old.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

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Cash Savings

Information accurate as of 21/07/2022

With the Bank of England base rate at 1.25% and UK inflation hitting 9.4%, it is important to ensure you’re reviewing cash savings to get the best rate possible. To mitigate the risk of losing the buying power of your savings this blog will introduce some of the market leading, Financial Services Compensation Scheme (FSCS) protected accounts available to savers. 

The context of interest rates rising is in response to roaring inflation. The snippet below from the Bank of England illustrates how rates have changed in the last ten years.

Source: Bank of England

We have another rate review from the Monetary Policy Committee (MPC) on the 4th August, with analysts suggesting we could see rates hike to 1.75%. Whilst this isn’t certain, financial markets have set a 94% probability we’ll see the 50bps rise. 

Given we have frequent rate reviews ahead, it may be sensible for savings to consider a range of fixed and variable term savings accounts to hedge rates going even further. Some analysts predict we could hit close to 3% in the next 18 months, dictating a flexible savings vehicle would suit a cautious saver.

NS&I

Premium Bonds from National Savings & Investments have long been a popular choice for savings. The possibility of winning big motivates savers, so it feels like a safe ‘chance’ for large prize winnings. Importantly, money with NS&I is 100% protected from the Treasury, meaning you can ignore the FSCS rules and safely house savings of £85,000+ in value. 

At present the interest rate on premium bonds equates to a 1.40% annual prize fund rate, with all prizes being completely tax free. The maximum winnings are £1million with over 1.4mn winners in June 2022. 

Outside of Premium Bonds NS&I aren’t very market competitive, offering a low 0.5% for their direct saver and 0.35% for their direct ISA. For fixed term, they offer an income bond for two years at 2.2%.

Easy Access Savings

As noted, many savers are opting for instant access to give flexibility for rate rises and access for the impending hikes in their cost of living. Interest rates are usually therefore lower than on fixed savings periods, but the flexibility benefits can outweigh this disadvantage. At present we’d advise on the following easy access savings accounts from the open market:

1. Chase Bank – an app based bank offering 1.5% AER on savings with a minimum of £1 deployed. They also offer 1% cash bank on debit card spends and a 5% interest on purchase round ups, making them our top choice for flexible, tech savvy savers.
2. Shawbrook Bank – Shawbrook are offering a higher interest rate at 1.52% but with a minimum of £1,000. Here access is flexible, but you can only withdraw in chunks of £500
3. Al Rayan – A sharia account, offers 1.6% interest with flexible access for balances over £5,000. They allow instant access with no limits attached.

Fixed Term Savings

Instead of saving in variable rate accounts, savers have the option to fix for between 1 and 5 years plus. For a 1 year fixed we’ve found the best rate to be with My Community Bank, coming in at 2.76% per annum, with a minimum balance of £1,000. Second to this is the Woodland Saver from Gatehouse Bank at 2.75% or Kent Reliance at 2.71%. 

For a two year fixed we have 3.1% at Gatehouse Bank, with five years rising to 3.45% from PCF Bank Limited. Given the difference between these shorter term and longer term accounts, we would advise on shorter term fixing to price in the probability rates will continue to rise for savers until the Bank of England is closer to its inflationary targets.

Cash ISAs

Cash ISAs have long been seen as lower yielding than savings, meaning advisers encourage investors to use their ISA allowance for stocks & shares, and keep emergency cash in savings accounts. We continue to see this theme today, with the top immediate access cash ISA coming in at 1.5% interest from Newcastle Building Society, lower than that of Shawbrook instant access. 

Alternatively fixed rate ISAs for three years will offer 2.75% at Aldermore, or 2.56% from Virgin Money for two years fixed. The two year fixed offerings sit over 0.5% lower than the fixed term non-ISA savings. 

Of course cash ISAs benefit from all interest being tax free, but savers should bear in mind their personal savings allowance. For basic rate tax payers this is £1,000 per annum, higher rate £500 and additional rate £0. This means a basic rate tax payer with a Chase Bank Account would have to have over £66,500 saved to breach the threshold. In the instance a zero risk, higher or additional rate taxpayer who wants this liquid, the NS&I options of Premium Bonds (capped at £50,000) or growth bonds become more plausible.

Concluding Points

Given the central banking intention towards decreasing inflation we expect to continue to see rate rises until we have signs headline inflation is falling. The Governor of the Bank of England isn’t ruling anything out; therefore we’d expect markets to be pricing in a certain level of rate rise from central banks over the coming years. 

Below is a visual from the OIS forwards data sourced by JP Morgan. Here we can see the UK figures at the 3-4% point in the next twelve months, stabilising down to nearly 2% in ten years.

This is coupled with the view inflation will peak in Q3 of 2022, seeing a forecast fall from the fourth quarter of the year.

Given these challenges we would encourage savers to split savings between flexible and fixed rates, with Chase Bank and Gatehouse Bank offering strong product ranges. We’d also suggest maximising the premium bond threshold of £50,000 for zero risk investors or those concerned with FSCS thresholds for savings. 

Please note that these types of products are not suitable for all clients and that this should not be taken as personal advice. All investments can go up and down in value and therefore you could get back less than you invest. Past performance is not a guide to the future.

Written by: Catriona McCarron

21 July 2022

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Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.old.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used.