Update from Trafford & Houghton – The Coronavirus and it’s impact

It goes without saying that our health is the most important thing.

We really are living in unprecedented times.

Like all people we will follow the advice of the government.

Over the last few weeks, as a company, we have provided  a number of updates.

On the 10th March we first wrote on our blog via it’s various platforms regarding the impact of the Coronavirus. Those words seem such a long time ago in such an ever changing situation.

We followed this on 16th March  with our update on the on the budget.

The following day we took the unprecedented step (that word again) of writing to all our clients with another update.

In the subsequent days we have been contacting the clients we feel likely to be most affected by the financial impact of this virus.

So far, nearly all conversations have been positive and I am pleased to say these meetings have been well received.

We have over this period of time made a number of changes to our working practice.

1 All meetings have been conducted via telephone
2 We have instructed staff to work from home.

The office has remained open, and whilst the circumstances are far from ideal, the efforts made by the staff at Trafford and Houghton have allowed us to continue to offer support to our clients.

The situation is far from ideal but we will (as the leaders tell us) get through this.

Keep safe and follow the guidelines.

Ian, Martin & Will

Budget 2020 – what it means for you

Chancellor Rishi Sunak’s first-ever Budget on 11 March focused on supporting business and the economy, and there was some good news for your savings, pension and taxes.


Tapered annual allowance thresholds raised by £90,000: The ‘adjusted income’ and ‘threshold income’ levels have been increased to £240,000 and £200,000 respectively from the start of next tax year. This is to help reduce the number of high earners affected by the tapered annual allowance, with doctors and GPs particularly in mind.

For those still caught, taper will take effect by reducing the annual allowance by £1 for every £2 of adjusted income over £240,000.

However, the minimum level the annual allowance can be tapered down to is reducing from £10,000 to £4,000. So those with income above £312,000 will only be entitled to a £4,000 annual allowance from next year.

There are no changes to the standard Annual Allowance, which remains at £40,000, or the money purchase Annual Allowance which stays at £4,000 (with no carry forward).

As expected, the lifetime allowance for 2020/21 goes up by CPI.

To address a discrepancy in the level of tax relief that those earning under the personal allowance are entitled to, the Government will be launching a ‘call for evidence’.

The Government is reviewing options to ensure that low earners who are members of pension schemes which give tax relief under the ‘net pay arrangement’ are treated fairly. Under these schemes, the employer deducts an employee’s contribution from gross pay. This means that those with net pay under the personal allowance (after deducting their contribution) currently lose out on tax relief. The aim is to put these individuals on a level playing field with similar employees who are members of a ‘relief at source’ scheme and get basic rate relief on all of their contributions.

Top slicing relief clarification following ‘Silver’ case

The Government has acted to provide additional clarity on the calculation of top slicing relief on investment bonds. HMRC recently updated their guidance on the calculation of this relief and legislation will now be introduced to formally clarify how an individual’s allowances are applied in determining the amount of relief available.

This change comes on the back of the recent ‘Silver’ case. In this first tier tribunal case, the taxpayer successfully argued that when calculating top slicing relief, they were entitled to a full personal allowance because their income plus the average gain was below £100,000 (whereas including the full gain meant their personal allowance would have been tapered to nil).

This position has now been confirmed in legislation and will mean in future the rules are applied fairly and prevent excessive relief from being claimed.

The draft legislation also confirms that, for the purpose of calculating top slicing relief, allowances must be used against all other income before it can be applied to the bond gains.

Income tax

There are no changes to UK income tax rates, bands or allowances, with the personal allowance and higher rate threshold remaining at £12,500 and £50,000 respectively for the 2020/21 tax year.

Capital Gains Tax

The annual capital gains tax allowance will increase to £12,300 for individuals (and personal representatives) and to £6,150 for trustees of settlements, for disposals in the 2020/21 tax year.

Inheritance tax

As expected, the IHT nil rate band will remain frozen at £325,000 until April 2021.

The residence nil rate band will increase from £150,000 to £175,000 from April 2020, delivering on the Government’s commitment to allow some couples to leave an IHT-free inheritance of up to £1,000,000 to future generations.

Good news for family saving: JISA limit increases to £9,000

As expected, the Individual Savings Account (ISA) annual subscription limit remains unchanged at £20,000. However, in a positive move for young savers, the annual subscription limit for Junior ISAs and Child Trust Funds will be increased from £4,368 to £9,000.

The range of ISAs available remains unchanged, with the exception of the Help to Buy ISA, which closed to new investors in November 2019.

National Insurance thresholds increased

Employees and the self-employed will not have to start paying NI contributions until their earnings reach £9,500 (the primary threshold). This change was expected and is in line with the Government’s aim to increase these thresholds to £12,500, the point at which individuals start to pay income tax.

There are no changes to the upper earnings limit of £50,000 (the level at which the rate drops to 2%) or to the contribution rates.

Entrepreneur’s relief limit cut

Entrepreneurs who sell their business could face an increase to the amount of Capital Gains Tax (CGT) they may have to pay. Entrepreneurs relief means that CGT is payable at 10% on gains up to a lifetime limit. This limit is reducing from £10,000,000 to £1,000,000 with immediate effect.

Any capital gains on the sale of businesses which exceed the limit will be taxed at 20% for higher and additional rate taxpayers.

IR35 changes to go ahead

Changes to off payroll working, often referred to as IR35, will be included in the Finance Bill. This will see large and medium sized private companies becoming responsible for making the decision as to whether contractors working for them should be included on their payroll and deduct PAYE and NIC

*Source: Standard Life


Coronavirus and the impacts on investments

Until recently, it seemed markets were ignoring the potential impact of the Coronavirus. In a short space of time, the realisation that the virus has spread to the West has caused markets to correct significantly over the last few days. At times like this it is important to be humble and recognise that whilst we have access to lots of resources to assess the impact of the virus to the global economy and markets, there is large uncertainty with any view.

Our view is that the positive development that new cases of infection in China have been easing over the last week is offset by the slower than expected resumption of activity in China. So, it’s become more likely that activity doesn’t normalise by the end of March and we see a deeper than 10% contraction in the first quarter.

This could lead to some supply chain disruptions. Furthermore, the increasing spread of the disease outside of China is beginning to have a wider impact on activity. For example, school closures, event cancellations and travel restrictions to affected regions. There is great uncertainty around about how severe this outbreak will become and a growing risk of a global recession. However, the virus will eventually either be contained or run its course and we would expect little long-term damage to economic activity beyond the next few months. (Taken in Part from LGIM)


Exam Success

Congratulations to our Office Manager Sophie on passing the AF7 Pension Transfers exam. Sophie sat this exam in October and received the results on Monday.

Well done Sophie!



Our Christmas opening hours are as follows:

Monday 23rd December 2019: 8:30am – 14:00pm

Tuesday 24th December 2019 – Wednesday 1st January 2020: Closed

Thursday 2nd January 2020: 8.00am – 17:00pm (normal office hours)

We would like to wish our clients a Merry Christmas and a Happy New Year.

Thank you for your continued support.