Since our last newsletter we have again seen plenty of change, most noticeably with the weather! The beast from the East has finally departed and May has treated us to some fantastic days of sunshine, hopefully a sign of good weather to come for the rest of Spring and throughout the Summer.
In our last newsletter we mentioned Adam had joined us, in more recent weeks we were pleased to congratulate Adam on passing his first Financial Services qualification in Regulation and Ethics. As such, he has secured a place on the St. James’s Place Paraplanning Academy, which is another step forward for Adam but also demonstrates our continuing commitment to ensure client service remains central to Quayside’s operation.
In more recent weeks we have also taken the decision to continue our support to Apprenticeships and are happy to take this opportunity to introduce Andrew Jones. We always aim to deliver a ‘triple A’ service and now we should be capable of making it A++++. Andrew will be supporting Adam in the office and with our client events and should you come to see us in the office, you’re likely to meet him.
Changes to Dividend Taxation
When he introduced it in April 2016, it’s doubtful that then-chancellor George Osborne anticipated his new Dividend Allowance would be so short-lived. The allowance was introduced to encourage people to invest by making the first £5,000 of dividend income earned by shareholders each year tax-free.
But in March last year, as part of a wide-ranging attack on the self-employed, his successor, Philip Hammond, announced plans to cut the tax-free dividend allowance to £2,000, as of 6 April this year. Dividends above the £2,000 threshold will be taxed at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers, and 38.1% for top earners.
The biggest losers will be business owners who pay themselves dividends as a more tax-efficient alternative to salary. However, it will also leave some private investors worse off. That includes, perhaps unintentionally, those who are using dividends to help fund their retirement as many could be pensioners who turned to investing in equities because interest rates have been so low.
Assuming a dividend yield of 3.5%, those investors with portfolios worth around £50,000 held outside of tax efficient investment wrappers such as ISAs and pensions should still pay no tax on the income generated. Nevertheless, the dividend allowance cut illustrates the capacity for tax rules to change regularly and making use of other tax allowances and exemptions can make a big difference.
Don't Miss The Best Days
Recent spikes in market volatility highlight our message of not attempting to time the market. When I first heard the phrase ‘time in, not timing’ I gave it little thought but if the past 12 months are anything to go by, it’s evident that ‘guessing’ what markets will do will prove fruitless. That’s why we leave it to the experts to make the investment decisions based on fact.
It’s only natural to be concerned about short-term fluctuations in stock markets. Crucial to long-term investment success though, is the ability to accept and ignore volatility, rather than to try to anticipate it. The only certainty is that it is impossible to be sure how and when markets will move.
We certainly haven’t seen any increase in contact from our clients about global markets, but should you want to ask any questions, please do, it’s part of the reason we’re here.
Cash is King, or is it?
We suggest to all of our clients to ensure they have sufficient cash at hand to access in more difficult times, whether that be a boiler break down when the snow is falling outside or the air conditioning giving up in the car when the temperature gauge peaks in the mid-twenties in early May. We’re all likely to be hit with unexpected costs but when could cash become the problem?
In 2007, £100,000 deposited in an average account with three months’ notice would have generated interest of £6,000 over the calendar year (i.e. from 1 January 2007 to 31 December 2007). In the 12 months to March this year, the same amount held in a similar notice account would have provided interest of just £740 – a fall of over 87%.
On April 18th Consumer Price Inflation (CPI) registered at 2.3% down from 2.5% however, still a percentage point or two greater than what high street banks are offering on their savings rates. Now more than ever it’s important that any cash deposits you do wish to hold in excess of your emergency fund aren’t being eroded by the impact of inflation. Equally, any funds you’ve accumulated which aren’t being saved for a rainy day should be working hard to help you meet your medium to long term objectives.
Gloucestershire Young Carers – 24hr Paddle-boarding
Gloucestershire Young Carers’ mission is to support young carers in reaching their potential, enabling them and their families to access support that minimises the physical and emotional impact of caring, and that promotes health, well being and resilience.
Pale in comparison to the daily challenges Young Carers face, on 23-24 June the Quayside team will be spending 24hrs paddleboarding the River Severn from somewhere near Kidderminster back to Gloucester and beyond along the Gloucester Sharpness Canal if weather conditions allow. We will complete 24hrs without sleep, to raise funds for both the Gloucestershire Young Carers and the St. James’s Place Charitable Foundation. Every pound donated will be match funded by St. James’s Place which means if you were kind enough to make a donation each charity would receive the equivalent of your donation.
We do hope you will support the charities by supporting us and should you want to make a donation a link can be found on all the team email footers, our website and of course here.
Andrina has recently taken part in a community project with St. James’s Place that involved a visit to Gunjur, a fishing village in The Gambia, West Africa.
St. James’s Place is working with the Marlborough Brandt Group (MBG), which was established in 1981 in response to the Brandt Commission Report, ‘A programme for survival’ which looked at key issues facing the world – poverty, diversity and development – and how to improve them. At its heart is a community link between Malborough, a market town in Wiltshire, and Gunjur. The friendship that underpins the link echoes the sentiments of the Brandt Report, which encouraged ‘understanding, commitment and solidarity between people and nations’.
During the week, a team of 10 individuals from the St. James’s Place community assisted with the conversion of an old unused pre-school building to a Community Centre within the village, working alongside skilled Gambian labourers. There was no electricity on site and tasks included painting, mixing cement (with a shovel), plastering and making bricks.
Andrina was really pleased to have had the opportunity to visit and experience the culture and real community spirit in Gunjur, whilst giving something back. St. James’s Place don’t often promote the Charitable work that they do, but it is an important part of our culture, both within the St. James’s Place community and at Quayside.
Following feedback, we no longer enclose quarterly portfolio factsheets with the newsletter, but these can now be found on the Client area of our website please click here to view, under Media Library/Document Library/Portfolio Review. Please contact the office if you would like a hard copy.
Our aim is to continue to deliver a service of the highest possible quality, therefore if you have any recommendations of where we can improve we’d be happy to hear from you and similarly welcome testimonials and introductions - our Practice has been built on word of mouth.
Alex Kell & Andrina Nisbet
Quayside Wealth Management
An investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may therefore fall as well as rise. You may get back less than you invested.
An investment in equities does not provide the security of capital associated with a deposit account with a bank or building society, as the value and income may fall as well as rise.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
Links from this website exist for information only and we accept no responsibility or liability for the information contained on any such sites. The existence of a link to another website does not imply or express endorsement of its provider, products or services by us or St. James's Place. Please note that clicking a link will open the external website in a new window or tab.
1. J.P. Morgan Asset Management, Guide to the Markets, March 2018
2. Office for National Statistics, www.ons.gov.uk/economy/inflationandpriceindices, May 2018