Predictable income in an uncertain world

01344 851250

enquiries@old.ascotwm.com

Sunningdale Office

Predictable income in an uncertain world

Savers and Investors are currently facing double headwinds. With inflation running at a 30 year high, deposit accounts are a complete non-starter if looking for real returns after inflation. However, current market volatility may make some investors nervous about investing in the financial markets at the current time. So, is there a way to generate real returns in the current climate with relative security? The simple answer, is yes. Asset backed lending.

What is Asset Backed Lending?

The concept of asset backed lending is simple. Traditional lending involves you depositing capital at a bank, the bank finding opportunities that earn THEM money and then lending it out to them. Ascot Wealth Management are able to advise on opportunities where you lend directly to the lender, cutting out the bank and generating you far greater potential returns than is possible from bank bonds. What makes these particularly great for a large variety of clients, is the degree of asset backing. We have loans that clients currently hold that earn 9.52% per annum and the amount lent is equal to 50% of the security backing the loan (Loan to Value, LTV). In basic terms, this would mean that the value of the underlying security (often property) to halve before capital is at risk.

Who Will Benefit?

Lending principally appeals to 3 main client types; those in or near retirement, Higher Net Worth (HNW) clients & clients with Inheritance Tax (IHT) considerations. Retirement age clients particularly value the contracted interest payments while retaining the capital value of their portfolios, unlike annuities & defined benefit pensions. HNW clients benefit from the diversification of their portfolio beyond traditional, more volatile asset classes. Finally, those concerned about taxation at later life may be able to benefit from removal of IHT concerns through possible lending through a Business Relief (BR) qualifying entity.

What Are My Options?

At Ascot Wealth Management, we advise asset backed lending via 3 methods.

1 – We work via our sourcing partners to discover lending opportunities, backed by either property and/or a charge on business assets, which pass our lending criteria.

The opportunities then pass through our due diligence process, which typically involves analysis of the valuation report(s), report on title, analysis of borrower accounts, site visits and comparison with similar assets in order to check the validity of provided analysis.

If we are then happy to recommend the opportunity, we recommend each one individually to you, whereby we outline:

The total loan amount
Interest Rate offered
Loan Term
Value of the asset backing
Reason for lending
Exit Plan

2 – If the first option feels too administration intense, Ascot Wealth Management are able to offer a discretionary management service whereby we allocate your capital in to loans that have passed our due diligence processes.

The loans that we allocate your capital in to are the same as those advised in option one, we just remove the need to respond quickly to first-come-first-served opportunities so that we ensure that you are allocated to these opportunities.

3 – We manage a client-owned limited company that is dedicated to lending to asset backed opportunities and Small & Medium Businesses. This company is able the operate across many more sources simultaneously; this reduces the time spent in between lending opportunities whereby returned capital is spent idle. Furthermore, all of the administration is handled by the company management, thereby minimising your administrative burden. Through the dedicated management of this approach, last year the portfolio generated a return of over 7%.

Summary

In summary, no matter what your situation, Ascot Wealth Management could have a solution for your needs that can involve asset backed lending and help you reduce or eliminate the headwinds of inflation and market volatility.

Written by: Sam Hallet

25 February 2022

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.

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.

February 15, 2022February 22, 2022

Positive returns in negative markets. Is it possible?

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Sunningdale Office

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Positive returns in negative markets, is it possible?

The current market climate is volatile. Equity market returns over the past year are close to zero, with any gains in 2021 lost over December and January. So, how are we able to generate returns of over 7% for our clients when faced with high market volatility?

Structured Products

AWM are well versed in the research and advice of Structured Products. At the most basic level, these contracts derive their returns from prescribed conditions on an underlying asset or index (such as the FTSE 100). At present, plans are available with up to 13.25% return per annum and products that generate a return even if the underlying falls by up to 40%. This can all be attained while having complete capital protection (up to £85,000 per counterparty) if investing in a deposit plan.

Who Will Benefit?

2 popular types of clients who would benefit from Structured Products are those in retirement (or nearing retirement) and high-net worth clients. A large reason for this is the degree of market protection offered in the plans. There are currently plans on offer that require the market to fall by more than 40% at the end of the contract before your capital is at risk due to market movements. As a result, clients can be more certain about the value of their portfolio in this volatile environment.

What Are The Different options?

Structured products either pay out their returns based on the value of the contract at certain dates (capital growth) or as income throughout the plan. Income plans are particularly popular with retirees. Unlike annuities, income plans allow retirees the possibility to receive an income while retaining the benefit of maintaining the capital value of their accumulated pension. While capital growth plans tend to have higher return potential and are therefore popular with clients who have utilised all of their annual allowances due to the differences in taxation.

Plans can either pay out returns at the end of the contract or mature early (Kick-Out). Kick out plans tend to be the most popular type of plan as they are the most likely product to generate a return. This is because they have opportunities during the plan length to mature early with positive returns, rather than risk market conditions at a later point. The increased likelihood of positive growth makes these particularly popular with clients.

Is Now A Good Time For Structured Products?

So, why is now a particularly good time to invest in structured products? Volatility feeds in to how Structured Product is “priced” by the counter parties. When volatility increases, so does the potential returns written in to the contracts. Furthermore, as central bank interest rates are increasing, this tends to feed in to the interest charged between banks (and therefore the capital at risk structured products). As both of these factors are high or increasing in the immediate future, Structured Products are proving to be a popular method of defined returns with a degree of capital protection.

How Can We Help?

Portfolio diversification and a degree of certainty can help investors gain positive returns in flat or negative markets. There are certain ways in which investors should aim to diversify their structured product portfolio. This is done by looking at features of the plans:

Have structured products linked to different indexes. For example, the FTSE 100, Euro Stoxx or the S&P 500.
Use different counter parties. By doing this, if the counter-party does default, then you don’t lose the money held in all your plans. While it is important for a counter-party to have a good credit rating, this is not regularly updated. Therefore we also look at credit default swap pricing which gives a real time indication of the reliability of the counter-party.
Vary the type of plan. This can be done through choosing between deposit, income or kick out plans. It can also be done through choosing between types of kick out plans.

At Ascot Wealth Management we can look at your risk appetite and financial aims to choose the Structured Products best suited to you. We will do the research to find the best return rates in the market for the products we would recommend and help you fully understand your investments.

Written by: Alice Frost

14 February 2022

September 16, 2020January 26, 2022

Your child turned 18 – What happens to their Child Trust Fund now?

This month will see the first Child Trust Funds (CTFs) turn 18 and thus reaching maturity. This means that many 18-year olds, some of whom will be heading off to university, others potentially embarking on a gap year, are about to receive full, legal entitlement over their plans.

For those lucky enough to be born between 1 September 2002 and 2 January 2011 they were enrolled in a CTF, which has since been replaced with a Junior ISA (JISA). The CTF was set up by the government to kickstart good saving habits, with every account credited with up to £500. Around 25% of these were automatically set up by HMRC if parents did not set up the account before the child’s first birthday. This has meant that there are currently 6 million young people across the UK with a CTF, however, research suggests that at least 1 million of them have either lost track or are not aware that they have one registered to their name. This means that you/your child could have a pot worth £1,000, or potentially even more if parents added additional contributions. If you think your child was entitled to a CTF they can track it here

What happens now?

If the legal owner does nothing then;

If it’s in a stocks & shares (investment) CTF, it’ll be converted to an adult stocks & shares ISA.
If it’s in a cash CTF, it’ll be converted to an adult cash ISA.

What can I do with the cash?

As stated above, if the legal owner leaves the CTF as is, it will convert in to one of two ISAs. Ultimately the proceeds of the CTF are up to the decision of the legal owner. Here we suggest some options.

Put it towards a first home

Consider opening a Lifetime ISA account. This is a special tax-free savings account which gives you a 25% bonus on up to £4,000 saved a year (so a max £1,000/year bonus). You can then use this towards buying your first home.

Invest it for a future need.

As the CTF will automatically transfer into an ISA, consider making this a Stocks and Shares ISA and investing it

Move it to a savings account.

If you wish to access the funds within two years, place the funds into an instant access cash savings account.

If you wish to discuss the best option regarding the proceeds of a Child Trust Fund, please contact your adviser.

For expert advice book your free, no-obligation meeting today.

Did you miss out on the Child Trust Fund? Why not open a Junior ISA for a loved one? You can start with as little as £10 a month. Junior ISAs attract no tax on the earnings up and you are now eligible to save up to £9,000 per year they are a great vehicle to start your young one’s savings journey. Contact your adviser today.

Source: BBC

August 31, 2020January 26, 2022

Stamp Duty Holiday – Not just an under £500k thing!

As you may have already heard, the government has temporarily increased the stamp duty threshold to £500,000 for property purchases in England and Northern Ireland, until 31 March 2021. In other words, there will be no stamp duty charged on properties costing up to £500,000.

Some good news – statistics show that the average stamp duty bill will fall by £4,500 and nearly 90% of people will benefit by paying no stamp duty at all as a result of the stamp duty holiday. This holiday is not just applicable for purchases under £500,000. If you, for example, purchase a property for £600,000 you will only pay stamp duty on the portion above £500,000, so in this scenario £100,000.

Not only that, but those looking to purchase a buy-to-let or second home/investment property will also benefit from this payment holiday. Only 3% stamp duty is due for properties up to £500,000 (previously £125,000). So with depressed price levels vs last year, record-low borrowing costs, ability to use retirement income and a stamp duty holiday, has there been a better time for a long term property investment with a mortgage?

We have 2 in-house brokers who together with your financial adviser will help you decide if this is a good option for you. Contact us today for an obligation-free quote.

This is only for purchases that complete before 31st March 2021.

The full table is shown below.

Explore your options

August 31, 2020January 26, 2022

Have you claimed for the second self-employed support grant?

For those whose trade has been affected by the Coronavirus can now apply for the second wave of support from the government. The new Self-Employment Income Support Scheme (SEISS) will pay up to £6,750 and will be the final hand-out for those whose business has been affected due to the Coronavirus.

Businesses that have traded for all three years with profits no more than £50,000 are eligible for the scheme.

The claims window is initially open for a four-day period but anyone who thinks they may be eligible and hasn’t been contacted by HMRC has until October to make a claim.
The first grant in May saw £7.8billion in taxable grants claimed by 2.7million people.

To apply, this time around you will need to confirm your business has been affected by the virus since July 14. If you think you are eligible and have not been contacted by the HMRC, you can go online which will tell you if you are eligible. Click the button below to be redirected to the website.

Am I Eligible?

July 15, 2020January 26, 2022

The Importance of a Will

Lets Address the elephant in the room, Wills. Its never an easy topic but an important one to have. Having a conversation with your partner and family about these difficult topics is important because losing someone, especially a spouse or partner, can have a huge impact on your finances for months or even years to come if you’re not prepared for it.

Throughout your life, you accumulate assets, things, savings, pensions and you may want to pass them down to your loved ones or charities close to your heart. So many people don’t know the importance of a Will before it’s too late and how factors such as Inheritance Tax make this process even more difficult to grasp. Here are a few points to help with getting your head around the importance of having your Will.these difficultIts never an easy

Making sure you have the correct Executors and Guardians:

Executors are the people you choose to be responsible for making sure the wishes in your will are carried out. If you have children under the age of 18 (16 in Scotland), you can use your will to appoint guardians for them.

Pass on Property you own

If you own a home or a buy to let property, you can leave it in your will to whoever you like.

Leave gifts to people

Many people like to pass on items they own of sentimental value. If you have a will, you can leave specific items you own to people you’d like to inherit them. You can also say who should inherit if any of the people you leave money or gifts to die before you.

Provide for stepchildren and unmarried partners

Unmarried partners and stepchildren won’t automatically inherit from you. Instead, they would have to go to court to make a claim, which can be both emotionally and financially costly. So, if you would like to pass anything on to them, it’s important you put this in your will.

What should happen to your pets?

You can leave your pet to someone under your will and you can include instructions on how they should be cared for in a letter of wishes. You may also want to leave the person you choose some money to help cover the costs of caring for your pet. Alternatively, there are animal charities that will care for and try to re-home your pet.

Leave instructions about your online accounts

In this day and age, everything is done online. It’s important to think about what should happen to your online accounts, from emails and photographs to online bank accounts. This information should definitely be passed on to avoid your loved ones from not being able to access your documents or any required information. However, this should be a side note in your will as a will could potentially become a public document when you pass on.

Leave money to charity

You can leave a cash sum, particular item or a share of everything you own to a charity. This has potential IHT benefits and should certainly be looked at when creating/editing your Will.

Pass on your business and any foreign assets

This can get complicated and it’s important to get legal or professional assistance when adding this type of information into a Will. We can certainly assist with this.

Minimise the inheritance tax bill

This is where we can really help you. If your estate is large enough to worry about IHT. There are many things to factor in so contact us for advice.

Your pension and your will

You cannot leave someone your pension in your will. Instead, you need to make sure you’ve taken the right steps to ensure your pension(s) go to the people you want them to. There are many things to consider when it comes to passing on your pension. We can provide you with the best possible outcome for your individual circumstance.

Adding a letter of wishes

This document is not legally binding and does not have to be formally written by an expert. Essentially, it’s a note that sits alongside your will and provides guidance to your executors. One of the benefits of writing one is that you can update and change it without affecting your will.

April 23, 2020January 26, 2022

Tapered pension annual allowance: what changed after the 2020 Budget?

Firstly: What is tapered annual allowance?

Let’s begin by understanding the annual allowance. This is the maximum you can save in your pension schemes each year. For the 2020/21 tax year the annual allowance is £40,000, but if you have a high income your annual allowance may be lower than £40,000. This is called a tapered annual allowance.

Tapered annual allowance rules are applied when your level of income within the tax year exceeds the Threshold income limit and the Adjusted income limit

What is ‘threshold income’?

Threshold income is all of your earnings (not just your salary) and includes gains on investments. Foreign earnings do not count towards threshold income as they are not taxed in the UK.

What is ‘adjusted income’?

Adjusted income is all of your earnings which are subject to UK Income Tax, including all pension contributions paid by you and by your employer. The difference between ‘threshold income’ and ‘adjusted income’ is that the former excludes pension contributions but the latter includes all pension contributions.

So, what are the recent changes?

The Government has announced a significant increase to the threshold income and adjusted income limits that are used to work out the tapered annual allowance.

From 6 April 2020, you will have a reduced (‘tapered’) annual allowance if:

your threshold income is over £200,000 (this was previously £110,000) and
your adjusted income is over £240,000 (this was previously £150,000)

How does the tapered annual allowance affect my pension savings?

If you are subject to the tapered annual allowance, for every £2 your adjusted income goes over £240,000, your annual allowance for that year reduces by £1. From 6 April 2020 this reduces all the way to a £4,000 annual allowance (which has recently been lowered from £10,000).

What’s the Next Step?

If you have concerns about your pension annual allowances or would like to speak to someone about your pensions or other investments, we’re here to help you. You can either phone us directly or click below to book a meeting with one of our professional advisers.

April 23, 2020January 26, 2022

Government doubles Junior ISA limit to £9k

These current circumstances will have many families focused upon the immediate future, the next few months, how to adjust to homeschooling and spending significantly more time together. However, life must go on and although our futures may be different, saving for our children’s futures are still a high priority. Junior ISAs provide an excellent way to invest in their future, and the doubling of the tax-free annual allowance allows those who can to contribute more than ever before.

What is a Junior ISA?

It is a tax-free savings account which is only available for children below the age of 18.

There are two types:

Cash Junior ISA: deposit based account available in banks and building societies.
Stocks and shares Junior ISA: invest your child’s savings in a stock market investment.

Each eligible child can only have one cash and one stocks and shares Junior ISA.

What are the recent changes?

Before the recent changes, £4,368 could be paid into a Junior ISA in the 2019 to 2020 tax year. However, following the 2020 Budget, the allowance has more than doubled.

In the 2020 to 2021 tax year, up to £9,000 can be paid into a Junior ISA.

How much can you save?

Up to the maximum Junior ISA allowance, which is £9,000 in the 2020/21 tax year.

The allowance resets every tax year and you can add a new allowance to your Junior ISA each tax year until your child turns 18.

If you open a cash Junior ISA and a stocks and shares Junior ISA you have to make sure you do not collectively exceed the Junior ISA allowance each tax year, as the allowance is shared over both types.

Who Can Open a Junior ISA?

This depends on the age of your child:

If they are under 16 years old: a parent or guardian needs to open the Junior ISA on their behalf.
If they are 16 or 17 years old: they can open a cash Junior ISA themselves, but not a stocks and shares Junior ISA.

If you open a cash Junior ISA on behalf of your child it will automatically switch into their name when they turn 16, but they will not be able to access the money until they turn 18.

What’s the next step?

If you wish to top up or open up a Junior ISA or would like to speak to someone about your other investments, we’re here to help you. You can either phone us directly or click below to book a meeting with one of our professional advisers.

April 1, 2020January 26, 2022

Kickstart your 20/21Tax Savings

Given the current state of affairs, most of us have a lot more time on our hands. There are so many little chores which we have in the back of our minds but we seem to never have the time to get these done. Being it tidying up your home office, fixing up those unattended spreadsheets or attending to your tax allowances to maximise your tax savings. Now is the time GET THINGS DONE. This is a reminder to maximise your allowances as early as possible in the new upcoming tax year starting 6th April 2020.

ISA Allowance

The maximum you can contribute to an ISA for next tax year is £20,000. This is a very tax-efficient investment vehicle set up a goal for Monthly Contributions to reach the maximum you can afford.

Pension Contributions

Another way to reduce tax and at the same time boost your retirement pot is to make sure you use up your entire annual pension allowance, which is £40,000 for 20/21. Additional rate taxpayers enjoy tax relief of 45%. If your total pension savings exceed the lifetime allowance of £1.073 million in 2019/20, you may be liable to tax when you draw benefits. Once you earn more than £200,000, your annual allowance starts to fall, known as the ‘tapered annual allowance’. The tapered allowance applies if your ‘adjusted income’ is more than £200,000

Gifting

Everyone is able to gift £3,000 to someone and it will be immediately outside of your estate for inheritance tax. You can top this up to £6,000 if you didn’t use the allowance in the previous tax year too.

Kickstart your 20/21Tax Savings

April 1, 2020January 26, 2022

Government Support For Individuals and Businesses

Government-backed loans to businesses

Information about the Business Interruption Loan Scheme

Business Rates reliefs

Business Rates Relief has been updated removing exclusions for this relief so that retail, leisure, and hospitality properties that have been forced to close will now be eligible for the relief

Direct business grants

Guidance for businesses including information on Small Business Grant Scheme and the Retail and Hospitality Grant Scheme

Supporting the self-employed

Measures to support self-employed people are now available. Further information on the Self-employment Income Support Scheme has been published along with a frequently asked questions page.

VAT Deferral

Further guidance on the deferral of VAT payments due to coronavirus has been published.

Tax – Improved Time To Pay arrangements

An HMRC helpline has been launched to help businesses concerned about paying their tax due to coronavirus (COVID-19). The helpline allows any business or self-employed individual who is concerned about paying their tax due to coronavirus to get practical help and advice. The new number is 0800 024 1222

International Business Operations

Updates to the Guidance for UK businesses trading internationally, including a business support helpline

General Guidance for employees/employers and Businesses

Guidance for employees, employers and businesses including information on healthcare advice for employers and support for businesses

Predictable income in an uncertain world

What is Asset Backed Lending?

Who Will Benefit?

What Are My Options?

Summary

Positive returns in negative markets, is it possible?

Structured Products

Who Will Benefit?

What Are The Different options?

Is Now A Good Time For Structured Products?

How Can We Help?

Your child turned 18 – What happens to their Child Trust Fund now?

Stamp Duty Holiday – Not just an under £500k thing!

Have you claimed for the second self-employed support grant?

The Importance of a Will

Making sure you have the correct Executors and Guardians:

Pass on Property you own

Leave gifts to people

Provide for stepchildren and unmarried partners

What should happen to your pets?

Leave instructions about your online accounts

Leave money to charity

Pass on your business and any foreign assets

Minimise the inheritance tax bill

Your pension and your will

Adding a letter of wishes

Tapered pension annual allowance: what changed after the 2020 Budget?

What is ‘threshold income’?

What is ‘adjusted income’?

So, what are the recent changes?

How does the tapered annual allowance affect my pension savings?

What’s the Next Step?

Government doubles Junior ISA limit to £9k

What is a Junior ISA?

What are the recent changes?

How much can you save?

Who Can Open a Junior ISA?

What’s the next step?

Kickstart your 20/21Tax Savings​

ISA Allowance

Pension Contributions

Gifting

Kickstart your 20/21Tax Savings

Government Support For Individuals and Businesses

Government-backed loans to businesses

Business Rates reliefs

Direct business grants

Supporting the self-employed

VAT Deferral

Tax – Improved Time To Pay arrangements

International Business Operations

General Guidance for employees/employers and Businesses

Kickstart your 20/21Tax Savings