Informed financial planning is essential when it comes to investments. Investment managers should be well informed of tax rules so that no errors are made. Michael Pagliari explains further in this business TV show.

Informed financial planning and investments

There are different categories of planning, so for resident domicile UK clients the principles are pretty well-established, there are certain types of securities that should and can sit perfectly well in portfolios and there are other types of securities that shouldn’t. So, to give an example, there are some tax efficiencies through using fixed income securities which trade at which trade at discounts, there’s advantages in using OECs but there are some other instruments which effectively take a capital gains tax charge and transform it into an income tax charge at, you know, a much higher rate. And then if you move on to the sort of res non-dom world, that’s a very sort of … a much more complicated area with much more potential for error. So for example it’s very important that income and capital are separated, managed in separate buckets; if those are mixed there can be very severe tax consequences. So it’s really basic housekeeping-type issues but extremely important that the investment manager has a good handle on them. Investment does involve risk. The value of investments can go down as well as up. This video contains information believed to be reliable but no guarantee is given. See Video for full disclaimer.

Interested in informed financial planning? Why not explore more TV shows on Inside Finance?

Attitude to risk may depend on the age of the client or the business. Younger people lean more towards risk, as Michael Pagliari explains in this TV show.

The young person's attitude to risk

I think that goes back to sort of life cycle questions.  As clients are younger and are looking to build assets they may well have a higher disposition towards risk and that might lead them towards more growth-type portfolios.  As clients advance through that life cycle and perhaps sell a business or begin to retire then it’s really a question about draw-downs and inheritance tax planning and so on, and portfolios tend to de-risk to some extent.  So as you grow through that life cycle portfolios do tend to sort of de-risk over time.

Inside Finance will continue to follow discussion on attitudes to risk and we have plenty more videos featuring experts from our channel partner Smith & Williamson.

There are many business benefits of the UK environment as Stephen Drew of Smith & Williamson discusses in this TV show.

UK's business benefits

I think there are a variety of reasons as to why people would choose the UK as a good place to invest. Certainly we have some interesting sectors that appeal to a large number of investors from outside of the UK, and in particular we’re seeing a lot of activity in life sciences, the creative industries around professional practices and professional services and in the technology space. So they’re sectors that are seen as high growth and there are foreign investors that want a piece of that action and therefore they have a certain amount of appeal to see how they can get involved with those sectors. When combined with a business environment that’s reasonably friendly and it’s quite easy to get involved with those businesses, to make the investment programmes, and to start fresh businesses and that makes it an easier investment decision compared to other territories. The UK government has been very helpful in trying to make the taxation environment business-friendly and therefore there are attractions again for encouraging foreign investors to actually put cash into the UK economy, which will help the general improvement in what we’re looking for within the UK as well.

If you are interested in discussion around UK business benefits and investment in different environment, please browse more TV shows on Inside Finance.

Government legislation is dealing with tax leakage between corporate partners according to Pamela Sayers, who explains further in this TV show.

Government legislation: Limited liability partnerships

It’s particularly important for professional partnerships and limited liability partnerships because probably for the first time really since the introduction of LLPs in 2000 we’ve seen more changes in partnership taxation in the last 16 years and the Revenue are concerned on two main areas: one being whether there is any disguising of remuneration and avoidance of employers’ national insurance on partners’ salary, so to speak; and also the allocation of profits to corporate partners, because some LLPs and indeed partnerships have a mix of both individual partners and corporate partners. And really on the latter, where there is a corporate partner which is perhaps, in owned, that corporate partner is owned by one of the individual partners, there is a risk that some profits will be diverted through to the corporate partner for corporate partners will be taxed at lower rates than individuals, say 20% as opposed to 47% and the Revenue have been very concerned that there is a tax leakage there.

If you are interested in finding out more about the effects of changing government legislation, browse more TV show on Inside Finance.

 

Government legislation goes through a feedback process before it is put into action. In this TV show Pamela Sayers of Smith & Williamson discusses the consultation process and timelines for the 2014 Finance Bill.

Government legislation consultation: Finance Bill

There was the announcement in the budget last March that the Revenue were going to issue this consultation document, which they duly did two months later in May 2013, and that consultation received many representations from over 100 people, from professions, like ourselves, law firms, other organisations, and then those representations were made by the beginning of August and then we heard nothing more until the Autumn Statement on 5th December. And what we have now is some draft legislation for the 2014 Finance Bill, together with some guidance, some final consultation document, which is so significantly different to the original consultation. So the position we’re in now is there has been very little time, in fact just less than three months, for partnerships to put their affairs in a way so that they’re not going to be affected significantly by the new, quite strict proposals effective from 6th April 2014.

If you found this video on government legislation interesting, then why not watch more TV shows on Inside Finance TV?

There are business benefits to doing evaluations before making purchases, and there are also times when evaluations are necessary. In this TV show John Rugman explains why and when businesses need to be evaluated.

Business benefits from proper assessment

Evaluation is required for a number of different circumstances, it might be that you’re selling a business and you want to know what the value of that business is in advance of the process. It might be that you’re wanting to grant some share options or some shares to employees in that business, in which case you’re going to need evaluation for tax purposes. Or it could be that you need to report some fair values in your accounts and need some input into what those might be. So there can be substantial amounts of money at stake. I’m conscious of one client where we assisted them in relation to a potential purchase of that business and we managed to raise the initial offer for that business by 50%, so they achieved a price 50% higher than they would otherwise have achieved.

If you enjoyed this video about the business benefits of evaluations, why not browse more TV Shows on Inside Finance.

Informed financial planning can help people maximise residence tax reliefs, as Chris Springett discusses in this TV show.

Informed financial planning is a team effort

As you would expect most of our clients own and have one if not numerous properties.  As such we get involved very regularly in dealing with property issues that can arise for them, tax on property, given the property market, is obviously a key figure for a lot of clients, and property prices rise and so the tax charge on them also arises.  So it’s again making sure that reliefs are available and claimed as appropriate.  I’ve also co-written a book on the main relief that’s available on capital gains tax, this main residence relief. So again I get involved quite a lot, even if the client isn’t directly mine, in assisting other members of the team and making sure the claims are maximised.

Browse Inside Finance TV for more videos about informed financial planning and property ownership.

Informed financial planning comes from awareness of tax requirements and potential pitfalls of any decisions. In this TV show Michael Pagliari explains why investment managers need to be tax savvy.

Informed financial planning

Taxes are a difficult area and we don’t give, as investment managers we don’t give tax advice, however I think it’s really important that investment managers are tax-aware and understand most of the pitfalls. And that means that if you see you know, being able to spot potential issues and making sure that portfolios are properly structured so that you don’t pay any more tax than is necessary and this is not some sophisticated type of tax planning but it means picking the right types of securities, picking the right types of funds. In my sort of experience doing this job I’ve come across so many incidences where basic errors have been made which have been very expensive to clients in terms of inappropriately-structured tax investments. Investment does involve risk. The value of investments can go down as well as up. This video contains information believed to be reliable but no guarantee is given. See Video for full disclaimer. If you are interested in discussions around informed financial planning, keep watching Inside Finance TV for more great free content.  

Smith & Williamson offer person centred planning advice. In this TV show Chris Springett explains how obtaining residential tax advice could save you millions.

Person centred planning: Property

It’s a fantastic relief that’s available, this main residence relief. It exempts the gain, to the extent that the property was your main residence. So for a London property gains could be millions on it. And we’ve seen this where properties have been sold for, you know, tens, fifteen million more than they were acquired for If you can claim this main residence relief and exempt that gain, then you’re talking, you know, millions of pounds in tax savings and just for making sure that your records are in place, that things are done correctly and you get contemporaneous advice on it really. It’s aimed at individuals, it’s a relief that individuals claim for their residence. So it’s really focusing on that person, what they do and how they go about doing it. So very much geared at anyone who’s got either one or more … more than one properties, so aimed at anyone who’s got more than one properties and/or aimed at someone who is perhaps not using their property that they own for a particular purpose. So for example, they go away to work, if they go travelling for a year, again it’s making sure that the extensions that are available under the legislation are properly claimed.   There are more TV shows about residence and person centred planning on Inside Finance TV.  

Legislation changes can follow events and scandals that highlight certain issues. In this video Chris Springett discusses the impact on residential relief.

Legislation changes - Act early

You might have heard a few years ago, the MPs as part of the expenses scandal, there was various parts about them flipping properties. Now, that was to make use and maximise this main residence relief. So those thought at the time that there might be an attack on the relief or some kind of restriction as to how it applies, there is an Office of Tax Simplification that looks at all the reliefs and tries to come up with some conclusions about how they should apply. Is there any changes required? They’ve looked at main residence relief, they say they like it as a general relief, what it actually does, but whether it’s going to stay exactly the same is a very different question. There’s some very advantageous parts of the legislation, including an ability to elect for a property. So whether they do decide to make changes on that, it will be interesting to see. That being said, because of that it’s probably worth taking some advice now because it’s very unusual for them to make any retrospective changes to legislation. So, if you’ve got your elections in place already, or if you’ve maximised the relief that’s available and you can evidence that, then you may put yourself in a much better position.

Inside Finance will continue to bring you expert discussion on legislation changes in business and finance.