Business & The General Election

Business owners were probably as surprised as everyone else when Theresa May called a general election three years ahead of schedule. With such a short timetable, there’s a relatively short window of opportunity for businesses to set out their “wish list” for what they would like from an incoming government. It is, however, possible to speculate what the general election may mean for businesses large and small and, of course, the self-employed.

The Right to Remain Question

This is arguably the pre-Brexit question in that it is a matter which the EU has stated must be settled before Brexit negotiations proper can proceed. In very simple terms, assuming the EU means what it says, giving permanent right to remain to EU citizens who have been resident in the UK for five years or more is a necessary condition for any further negotiations to take place. Given that this only impacts a relatively small number of people (albeit to a great degree), and would presumably be reciprocal (in that the EU would grant the same rights to UK nationals resident abroad), this is likely to be a fairly easy agreement to make and would give the people concerned (and their employers and employees) reassurance about their future.

The Brexit Question

There can be little doubt that the result of this election will have a significant impact on the course of Brexit. If pollsters are correct and Theresa May returns to power with an increased majority, then it could be a strong sign that Brexit could be as soft as the city would like. May herself was a Remainer, but up until now she has had to deal with the reality of a small majority and some hardline Brexit-supporting backbenchers. If local party branches are encouraged to field pro-European candidates and enough of them are elected, then Theresa May could find her hand substantially strengthened in navigating her way through the Brexit negotiations which are sure to define this parliament and her leadership.

The Currency Question

The Pound Sterling has been on something of a wild ride over recent times. While it’s a fact of life that some businesses benefit from a weak pound just as some businesses benefit from a strong pound, pretty much all businesses benefit from at least a reasonable degree of stability so that they and their customers can plan ahead to a reasonable degree. If the general election achieves nothing more than to bring stability to the Pound, then it’s probably fair to assume that most businesses will could that as a positive, even if they would have preferred the Pound to be stronger or weaker.

The National Insurance Question

In all the sound bites and fury about Brexit, it’s easy to forget the NI debacle in which Philip Hammond’s (widely-anticipated) readjustment of the NI system to make it “fairer”, was swiftly reversed after a (presumably unanticipated) backlash. Unsurprisingly, questions about what was in store for NI in the next parliament were high on the agenda for political journalists. It was widely noticed that Theresa May failed to rule out raising NI if she were to win the election. In fairness, there’s a difference between refusing to rule out something and saying that you will do it, but it also has to be remembered that the stated reason why the increase was reversed was because it was against the spirit of the manifesto commitment, rather than because the government thought it was a bad idea in and of itself. May also refused to rule out raising income tax or capital gains tax. She did, however, commit to keeping the maximum VAT rate at 20%.

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5 Ways to Invest £50,000

It’s been a long time since savings offered any sort of meaningful return, which means that those who wish to grow their cash need to look at alternatives. With that in mind, here’s a look at where you could put a £50K investment.

The Stock Market

The stock market is a big place and the companies in it perform very differently, which is understandable given that the term “the stock market” includes everything from high-tech start ups to established blue-chip companies with little in the way of growth in their share prices but great dividends. This is why there is generally at least one stock-market investment to suit anyone of any age, appetite for risk or preference for capital growth versus income yield. The stock market can provide good returns, investors just have to place their money with care and accept the fact that both individual companies and the market in general can go down as well as up.

The Property Market

The property market has long been popular with investors seeking good returns on their money with minimal risk. There are some places where £50K could buy you a feasible buy-to-let property although you might need to budget a little extra on top for sales costs, e.g. surveys, but realistically in most parts of the country and for most properties, £50K is a deposit, albeit a very substantial one in some locations. On the other hand, buy to let has become something of a contentious topic over recent years and landlords have become an easy target for government revenue collecting, with changes to stamp duty and mortgage tax relief both benefiting the exchequer at the expense of landlords. Little wonder, then, that even though BTL remains popular, some investors are looking at alternative options.

For example that same £50K could be invested in a property development thereby benefiting from property without the hassle of managing tenants and properties within the law. Obviously this is an area in which we may seem to be biased but the ROI specks for itself and with a UK investment you can literally see your investment developing..

Invest in Companies Which Qualify for Business Property Relief

This is an option which may have particular appeal to older investors, since these investments are excluded from inheritance tax calculations after two years of ownership, whereas gifts need to be given at least 7 years prior to the individual’s death to qualify for full IHT exemption. In addition to this, the holder can continue to benefit from their interest in the company up to the point of their death, whereas they must give up any and all beneficial interest in any gift they give for it to be exempt from IHT. At the same time, however, it is usually best if the investment in question actually makes sense as an investment rather than simply, or even, primarily being a means to reduce IHT liability.

Given that companies which qualify for BPR are, by definition, small and are particularly likely to be family-run firms or start-ups, finding the right vehicle for your money can be complex. You also have to remember that as firms grow, they can stop qualifying for BPR although in this case, you may seal in a profit by selling your investment (or indeed choose to hold on to it anyway).

The State Pension Top Up Scheme

If you have already reached state pension age, you have until 5th April 2017 to make a lump-sum contribution to get as much state pension as you possibly can for the rest of your life. How much this will costs depends on various factors, particularly your age and the amount of extra pension you want to receive. The clock is now ticking on this one, so you’ll need to make a quick decision as to whether this option is for you.

As with all investments it’s best to seek financial advice and always bear in mind the caveat that investments can go down as well as up!

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Is It Time To Give The Markets A Break And Change Your Portfolio?

Over recent times, market-watching has been an educational activity for those with a strong stomach. World affairs (Brexit, the U.S. election…) have sent them plunging down only to start working their way back up again. With that in mind, here are 5 alternative investment options for those looking to give their portfolio a new year refresh, listed from the most sensible to those which are really more about having a bit of fun.

Property

Property is generally a stable investment in every sense of the phrase. This is particularly true in countries such as the UK where there is not only a high population density and an acknowledge lack of housing in general, but also a need to replace existing low-grade and/or dated housing with housing which is suitable for modern requirements. There are various ways to invest in the property market, of which buy-to-let is probably the most visible, but alternatives such as investing in property development can give your portfolio the benefit of exposure to the housing market without taxes, landlord involvement or a property to sell should you want a shorter term investment.

Peer-to-Peer Lending

Banks essentially take deposits from savers and lend them to borrowers taking a percentage for themselves along the way. Thanks to technology, peer-to-peer lending allows individuals to cut out the middle-man (or at least change their nature) so that lenders and borrowers can both get better rates. Of course, if you put money in a bank then, in principle it should be absolutely safe (although only deposits of up to £75K per bank benefit from an FSCS guarantee), whereas, as a lender, you accept the risk of default. Having said that, the role of the P2P platform is to screen borrowers and assign them risk categories, so lenders can make informed decisions.

Crowdfunding

Probably the most famous crowdfunding site of them all, at the moment, is Kickstarter, but this is unlikely to be of any great interest to investors since at this time Kickstarter explicitly forbids funders being given shares with financial value, instead they are given gifts to show appreciation. There are, however, other sites which do allow investors to receive shares. The key point to remember with this type of investment is that it tends to be high-risk/high-reward. These companies often have a serious risk of failure, in which case, there is a strong chance you will lose your money. If they succeed, however, you could be hugely rewarded.

Gold and silver coins

This is a hybrid of investing in collectables and investing in precious metals. Investing in collectables can be both fun and profitable, especially if you’re collecting something which really interests you. Precious metals have an obvious, long-term appeal. If you go for collectable coins in silver and gold then you will have the physical quantity of the precious metal, plus the chance that the coin itself will acquire collectable value or that its collectable value will increase.

Premium Bonds

If interest rates were higher, premium bonds would be a horrendous place to park your money, but at current time, savings accounts and ISAs are offering pitiful returns and current accounts are places to hold your money for easy access rather than to grow it. So even though premium bonds have the same disadvantages they have always had, namely they pay zero interest and your chances of winning anything at all, let alone any significant amount of money, put them into the category of having a flutter rather than serious savings or investment, today’s low-interest-rate environment makes these points much less significant than they used to be. So if you need somewhere to park your cash over the short term they could be a reasonable option and, you never know, somebody has to win.

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