Category Archives: Client Marketing

The Scottish Draft Budget 2018/19 – a new tax structure?

Scottish money

A “fairer and more progressive” tax system?

The Scottish draft Budget on 14 December 2017 was eagerly awaited following draft proposals from the Scottish Government for reforming the structure of income tax. Derek Mackay, the Scottish Cabinet Secretary for Finance and the Constitution, did not disappoint, revealing a revised income tax framework that he said would “make Scotland’s tax system fairer and more progressive”.

Income tax

Mr Mackay has complicated the tax structure by creating two new rates of tax – a starter rate at 19% and an intermediate rate at 21%. He has added 1% to the current 40% higher and the 45% additional rates. The proposed new income tax bands above any available personal allowance for 2018/19 are as follows:

Taxable Income

£

Band Name Tax Rate

%

0-2,000 Starter 19
2,001-12,150 Basic 20
12,151-32,423 Intermediate 21
32,424-150,000* Higher 41
Over 150,000* Top 46

* Those earning more than £100,000 will see their personal allowance reduced by £1 for every £2 earned over £100,000.

There are various consequences to this new structure.

  • The personal allowance for 2018/19 has been set at £11,850 by Westminster. The Scottish basic rate band will run from this level to £24,000 of income – equating to projected median earnings.
  • The higher rate (41%) threshold for 2018/19 will be £44,273, compared with a figure for the rest of the UK of £46,350 (and a 40% higher rate).
  • Nobody in Scotland earning less than £33,000 will pay more income tax in 2018/19 than in 2017/18, according to Mr Mackay. That covers some 70% of Scottish taxpayers.
  • The basic rate remains at 20%, which should alleviate the concerns of pension providers about the operation of relief at source. However, there will be a band of intermediate rate taxpayers who will be able to reclaim an extra 1% relief on their pension contributions – in theory at least.

Land and Building Transaction Tax

A change to Land and Building Transaction tax (LBTT – the Scottish equivalent of SDLT) was made to help first time buyers, as was widely expected after last month’s Westminster Budget. However, Mr Mackay was less generous than Mr Hammond and only increased the nil rate slice of LBTT by £30,000 to £175,000 for first time buyers – giving them a maximum saving of £600 – starting in 2018/19. There does not appear to be a cap on property value, unlike Mr Hammond’s version.

It is important to bear in mind that because the Scottish National Party does not have a majority, the Budget only represents draft proposals and that these may change before becoming law (which is what happened for 2017/18).

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Time to ‘go green’

iStock_63547811_SMALL.jpgAhead of next week’s US election, Leonardo di Caprio is streaming his new climate change documentary for free. A long time advocate of going green, the star appears to be putting his reputation and money on the line in the hope of getting voters to consider the issues.

We can’t all be di Caprio but sustainability is a growing issue across generations and there are things you can do to help. It seems as though every day there is a new report about the threats our environment is facing and while many may shrug their shoulders and wonder what difference they can make in the grand scheme of things, others are taking steps to reduce their carbon footprints and more and more companies are tapping into sustainable working – whether through recycling or saving electricity.

Some shops are sending receipts by email to reduce paper wastage; banks are inviting their customers to ‘go paperless’ and receive their statements and other paperwork in electronic form rather than through the post; and of course the plastic bag tax which encourages shoppers to reuse their bags.

It is worth noting that these measures have a cost-saving attached to them too. Implementing changes to your company for it to become more environmentally friendly can be extremely beneficial – it can create a healthy and pleasant workplace for staff as well as allowing you to cut back on utility bills.

Smaller businesses

There are a couple of changes you can make as a small business to go green:

  • Office supplies: only order what you really need. It’s amazing how many pens you can find lying around if you have a look! When you do order things, try to make them environmentally friendly – recycled paper for example.
  • Air conditioning and lighting – make sure your air conditioning is on a timer and only set to be in use during working hours. Try to switch lighting systems from fluorescent lights to LEDs which are energy-efficient. You could position desks near to windows to ensure maximum natural light and paint the walls a light colour which will give the illusion of a bright atmosphere.
  • Recycling bins: install a range of bins for employees to use for recycling.
  • Commuting: are you able to limit the travel time of your staff by making use of virtual meeting facilities? Can you offer the option of homeworking from time to time?

When it comes to your marketing, print is still an important tool – but check the paper source. Taxbriefs’ newsletters are printed on paper produced using FSC mixed sources from well-managed forests and other controlled sources, at a mill that is certified to the EMAS environmental management standard.

Educate your staff and colleagues on the importance of an environmentally friendly workplace, and you’ll not only be doing your bit for future generations but you’ll see the benefits in cost savings too!

Client Focus: Petrus Financial Services – adding value to their client offering

petrus-logo

In the second of our client case study series, we’re pleased to showcase Petrus Financial Services which provides independent financial advice to individuals, families, trustees and charities, always tailored to their specific needs.

Petrus is based in Berkshire and has a team of four advisers and around £160 million assets under advice. They have been working with Taxbriefs for the last seven years using the Budget and Autumn Statement Summaries and quarterly newsletters to add value to its client offering. We interviewed Petrus director Georgina Warwick about her experiences and thoughts on working with Taxbriefs.

Why do you need professsional content?

Clients expect us to keep them up to date on a regular basis with clear and accurate financial information. For example, if a big tax change is introduced, they want to know about it and they expect to hear about it from us first.

Being able to offer our clients this information is a huge part of the added value we give them. We don’t want our clients to have to make the effort themselves. We want them not to be concerned about ongoing financial issues, but to be secure in the knowledge that we will do the legwork for them.

Why do you use Taxbriefs?

Taxbriefs provides clearly-written, accurate and professional documents that add value to our client offering without requiring increased workload at our end.

We don’t have the resources internally to create the quantity or quality of content we source from Taxbriefs. To do so would require us to hire an internal marketing manager at such a senior level it would cost us 3-4 times the amount we spend on Taxbriefs’ content.

How do your clients react to the Budget and Autumn Statement summaries?

The accuracy, conciseness of information and the way they are worded and presented make the summaries very relatable to clients. We always receive positive feedback about the summaries, and every year clients will go out of their way to tell us how much they appreciate them.

And the newsletters?

The newsletters are a good point of contact between us and our clients. We mail out the hard copies and email out the digital versions every quarter. Our advisers always have copies of the current and most recent back copies with them when they attend client meetings.

The newsletters are great for brand awareness; they remind clients of our logo, of our brand and the fact that we are there for them. They also provide us – and our advisers – with great discussion points to take to meetings. They reassure our clients that if something important is happening we will know about it and raise it with them. Like the summaries, they are professionally written and full of engaging articles that our clients actually read.

Tell us about your relationship with Taxbriefs?

We are very aware of our brand at Petrus and would only ever partner with a brand that’s as professional as we are and as reliable as we are, and that sums up Taxbriefs. They provide added value with no trouble. In fact, we have worked with the team for that long, we don’t have much communication with them anymore, which is great because it just shows there are never any problems.

They are always professional and reliable: we know exactly when new products will arrive and we can juggle our workload to make sure we can get them out to our clients and contacts while the information is still fresh and timely.

Welsh land transaction tax

Wales flag - silk texture

Wales is hankering to raise its own taxes for the first time in nearly 800 years. 

Earlier this week, the second of three assembly bills paving the way for Wales to establish a land transaction tax was published. This tax would replace stamp duty land tax in Wales from April 2018. Scotland have already split from the main UK rates on Stamp Duty and set the precedent on their own Land and Transaction Tax.

Welsh ministers are due to set the rate for the tax, raising around £250 million a year, in the autumn of 2017, and legislation for landfill tax, which is being devolved at the same time, will be published by the end of the year.

In addition, the Welsh government intends the Land Transaction Tax and Anti-avoidance of Devolved Taxes Bill to send a signal that it will be unacceptable to avoid devolved taxes collected by a new Welsh Revenue Authority.

This is big news for Wales and officials have said that the 220 page document is the longest piece of legislation Welsh ministers have produced and it’s expected to receive Royal Assent in spring 2017.

With tax devolution and the Scottish having the right to set their own income tax rates, next year’s tax tables could start to look more complicated…

Harnessing creativity from colleagues

Strength in unity

Have you thought about asking your employees for ideas on how to market your firm? You might be surprised by the results.

While you’re likely to have hired specific people to undertake a certain function in your company, if you foster the creation and sharing of great ideas across the board, you’ll probably see employee engagement flourish. You can do this through regular brainstorming sessions with your staff. Sometimes it just takes a small idea to make big changes. Here are some tips for getting bright ideas out of your team:

  • Stress the importance of creativity – make sure your staff know you’re happy to hear their ideas. Innovating on marketing and business processes can help you give your firm a competitive edge so it’s important to get your team on board.
  • Allocate time for some brainstorming – you could set aside time for new ideas to emerge through brainstorming sessions, group workshops and team days out. Enable your team to bounce ideas off each other.
  • Actively solicit ideas – Appeal for new ideas to market your firm and enhance client retention and to solve particular problems. Some firms incentivise through offering rewards for the best ideas – is this something you could do?
  • Be supportive and tolerate mistakes – it’s important to respond enthusiastically to all ideas presented to you, even if they are a little far-fetched. And don’t just let the louder members of the team get heard – sometimes a quieter, less confident colleague might harbour the best idea yet.
  • Most importantly, act on the ideas you think will work – provide the time and resources to develop and implement ideas you like.

When you’re deeply focussed on a task (marketing, in this case) you may not be able to see the wood for the trees and allowing for the cross-pollination of ideas can help. Think carefully about how you’re going to spend your marketing budget – and how to best get the results you want.

Money doesn’t grow on trees, but it can fall into your lap

iStock_12473339_XLARGE.jpg

When the Duke of Westminster died earlier this week, much attention was focused on his only son, 25 year-old Hugh Grosvenor, who has inherited his vast estate which is worth £9 billion (although most of it is long held property and in trusts which he can’t access). It’s a heavy responsibility.

Many parents would be concerned about their offspring inheriting such wealth at a young age for fear of them mismanaging assets, taking ill-informed decisions and worse still, going off the rails.

As financial advisers, you will be used to explaining to parents that their children need to know more about money than merely spending it. They’ll hopefully want to ensure that their offspring are financially literate, and aware of how to best invest and manage their money. It’s not just the especially rich who need to be savvy about the responsibilities that come with inheriting wealth, particularly if they are set to take over a family business.

Some financial institutions run seminars a couple of times a year for the children of wealthy parents to help them understand these points. For example, HSBC Private Bank offers a programme aimed at teaching the next generation “financial planning and investing, philanthropy, the dynamics of shared family wealth and longer-term issues including wealth preservation”.

Hambros, on the other hand, offer children the opportunity to come into the office and participate in internships with the institution, which gives them valuable experience in working within an office and sitting with the investment managers.

Financial literacy is a key life skill. When discussing saving for children, estate planning and more complex inheritance arrangements, the recipients of family wealth need to be clear about their position and how to manage their affairs. This could be a good time to consider what your firm could offer their clients by way of extra help.

 

An all time low since 1694 – interest rate highlights

Bank of England

The Bank of England

Yesterday the Bank of England finally cut base rate to 0.25% – an all-time low. That phrase sparked our curiosity, so we’ve had a look at some highlights from the long history of the base rate.

How to pay for a navy – 1694

Established as the Governor and Company of the Bank of England through the Tonnage Act in 1694, the Bank pre-dates the Act of Union of 1707 and is the second oldest central bank after Sweden’s.

Its initial purpose, as a private enterprise, was to raise enough capital to lend to the government to build up the navy after the Nine Years War with France. An initial loan requirement of £1.2 million was raised in 12 days and half was spent on the navy.

The inaugural rate was 6%. This changed twice over the next five years to settle at 4.5% in 1699. In 1716 this dropped to 4%, then rose again 1719 to 5%. Where it remained for over 100 years.

Steady as she goes

South_Sea_Bubble_Cards-Tree

‘The Headlong Fools Plunge into Sout Sea Water’

The 5% rate rode through the 1720 South Sea Bubble, the great economic scandal of the 18th century. Similar to the Wall Street Crash of 1929, businesses were ruined and bankruptcies rife. There were suicides, rioting bankers in Parliament and the expulsion and imprisonment of the Chancellor, among others, for his part in the disaster. Even the King’s mistresses (there were two) had invested and were jeered by crowds of angry Londoners.

The rate held even through the protracted American War of Independence and the Napoleonic Wars – by when the navy was in more than good shape.

Industry, war and crashes – new highs

The industrial revolution increased the need for capital and accelerated rate changes from the 1820s.

During the 1850s and 1860s the interest rate yo-yoed monthly, even within months. During the Crimean War the Bank went back to its roots to raise money to back the conflict, with the result that a peak rate of 10% was reached in November 1857.

This was only matched again in May 1866, a year which saw 15 different interest rate changes, four in May alone. The collapse of the London bank Overend, Gurney and Company owing £11 million led to the only previous run on a British bank until the Northern Rock crisis in 2008.

cartoon_bank_of_England

The Barings debacle.”Same old game” The Old Lady of Threadneedle Street “You’ve got yoursleves into a nice mess with your precious ‘Speculation’! Well – I’ll help you out of it – for this once!!”

In an effort to avoid a similar disaster, in 1890 the Bank bailed out Barings Bank which had suffered heavy losses from its investments in Argentina. The “too big to fail” precedent was set.

In the run up to war in August 1914, the rate once again peaked at 10%, as small investors tried to replace their notes with gold. The rate didn’t last, falling back to 5% for most of the war years.

Twentieth century blues

Much blame for the recession of the 1920s has been placed on a failure to aggressively cut interest rates after the war. By 1933 it was down to 2%, where it remained through the Second World War barring a brief rise again, in August, of 1939.

After the 1945 election, the Bank, along with much else, changed when it passed from private ownership to nationalisation in 1946.

By the 1970s, the minimum lending rate saw a return to the mid-19th century frenzy of rate changes and unheard of highs.

money-graphics-2008_871170a

Cars queuing for petrol 1973

The world oil crisis in 1973 saw the rate finish on 13% after 11 rate changes, but worse was to come: 14 changes in 1976 saw a high of 15% in October. 1977 saw this halved to 7% after 19 changes over the year. The high watermark of interest rates was reached in 1979 at 17% during the early months of the Thatcher government.

The Black Monday, Tuesday and Wednesday of the late 1980s and early 1990s saw Chancellors grappling with stock market crashes and the collapse of sterling. In 1997 Labour Chancellor Gordon Brown handed control of interest rates back to the Bank of England.

It all looks fairly exhausting. But we are now in uncharted waters. We’ve seen the peaks over time: the latest trough is quite a new phenomenon.