Exam Success

Congratulations to our Apprentice Josh on passing the RO2 Investment Principles & Risk exam last week. Josh has now passed three exams towards his Diploma in Financial Planning and has three to go!

Well done Josh!

Pension Awareness Day

Today is Pension Awareness Day and it’s no secret the average person knows little about their pension.

Recent research from Royal London revealed 66% of pension customers admit to having little or no knowledge about pensions and more than a quarter of workplace pension customers have no idea what happens to their pension money, or think it’s saved in a bank account. It’s good to plan for your future. Whether you’re years from retirement, nearing retirement or about to retire, it’s important to have all the information available to make the right decisions.

At T&H we are fairly optimistic that our clients (in the main) fall into the 34% who do have at least a reasonable knowledge of pensions.  We strongly believe in the ongoing connections with our clients, not just advising but educating in the journey to and through retirement.


Make Hay While The Sun Shines

AKA   Is this the end for pension tax relief.

Well, probably not.

However, the subject is in the news again.

Back in 2016 The rumour mill went into overdrive that the end was nigh for higher rate tax relief on pension contributions. So much so, that record amounts were being put into pensions to grab the generous tax breaks before they disappeared.

Such was the hysteria that George Osbourne announced on a Saturday morning (interrupting my holiday!) that pension tax relief was here to stay.

So will history repeat itself?

Will this be much ado about nothing (again)?

Who knows? I suspect tax relief will stay in some form, but we are in unprecedented times.

The cost of the Coronavirus dwarfs anything we’ve seen before and  is likely to be felt for generations. Therefore it does make sense that something may have to give.

We have a phrase at T&H that nobody will march in the street against that.. I do think that the removal of pension tax relief, particularly higher rate relief, could be seen as an easy target.

When you also consider that the current government doesn’t have to call another election for another four years, then some tough unpopular choices look easier now than a year or two down the line.

So, whilst I would never advocate acting in haste when it comes to investing or (as some might say) allowing the tail to wag the dog……

Make Hay while the sun shines .

Exam Success

Congratulations to our Office Manager Sophie on passing the AF1 Personal Tax & Trust Planning exam. Sophie sat this exam in July and received the results last week.

Well done Sophie!

Summer Newsletter

Please find below a copy of our annual newsletter, which we hope you will find of interest:


Should you have any queries or require more information on any of the articles or any other financial matter, please do not hesitate to contact us on 01772 825755.

Where are we now? Continued…

Our focus remains with our existing clients’ investments and our thoughts are with those most affected by the pandemic.

How is the economy responding?

Private consumption, private trade and private investment have been hit hard by the virus. All are down by over 30%. This was to be expected during a time of lockdown. The public purse has been called upon to provide a counterbalance, and it is digging deep. At least 14 new government actions have been introduced since lockdown in a bid to support the economy. This has not come cheap. Government borrowing is expected to rise from £40bn in 2019/20 to beyond £300bn in 2020/21. This means that the equivalent of about half of all central government spending in 2020/21 will be funded by borrowing. And this borrowing will have to repaid over time, reducing expenditure elsewhere. Despite government action, the economy is still shrinking. It fell by a record 5.8% in March 2020, and the Bank of England’s central scenario projects a fall of 14% in 2020. This is greater than anything we saw during the financial crisis of 2008. Unemployment is projected to rise from 4% to 10% (c3 million people); and wages are expected to fall. An common outlook sees the deep drop in 2020 being followed by a strong rebound in 2021, and resolution of longer-term economic trends from 2022. This may be optimistic.

How are businesses responding?

Government intervention is helping business to keep the lights on. 80% of businesses are trading and 20% have paused trading. Very few have ceased trading permanently, so far. Regardless, trading conditions are tough. 80% of businesses are using furlough, and 1-in-4 jobs are in furlough. Sales have, on average, fallen by 45%. The hardest hit sectors have been accommodation, food services, textiles and education. The Finance/Insurance sector is down, but by only 0.5% compared to the wider economy’s 5.8%. Curiously, investment markets have seen some rebound since mid-March, despite the very challenging economic arena. It would be wrong interpret this as the markets putting coronavirus behind them. To a large extent, this reversal has been driven by the recent largesse of governments and central banks. Many will be asking what happens if this largesse stops before the economy starts.

How are households responding?

Households do not share the confidence of the investment markets. 80% are worried about the impact coronavirus is having on society, the economy and households. Consumer confidence has fallen to -33. There is evidence of households preparing for a coming storm. Spending is down, use of debt is down, and saving is up.

How are savings and retirement customers responding?

There is encouraging evidence that the call to customers to “keep calm and remember the long term” has been heard. There has been no systemic withdrawal of savings; no systemic reduction in contributions; no systemic switching of investments (beyond the most engaged customer cohort). There is, however, no room for complacency. A negative shock to household finances will inevitably have a negative impact on their ability to save for retirement. And, as the government looks to balance its books, there will inevitably be speculation about what this could mean for areas of expenditure such as the state pension triple lock, pensions tax relief and automatic enrolment.

Covid-19 pandemic boosts intergenerational planning

The coronavirus pandemic could see a rise in intergenerational planning as investors look to leave money for their family and friends, Quilter Financial Planning has found. The financial planning giant asked more than 1,000 adults in the UK whether coronavirus had encouraged them to think about supporting other relatives financially now or in the future. Nearly a fifth (17%) said they were more likely to look at leaving money to help their loved ones in the future and this figure rose to one quarter of people among those who had received financial advice. The survey also found one-in-five people have been prompted to try and help family and friends with short-term financial pressures, such as paying bills or making up income shortfalls and 15% of those surveyed were already supporting friends and family before the crisis.”

As always, we will continue to use this time to review plans and advice with our clients.

(Taken in part from Aviva and professional adviser)

Where are we now regarding investments?

Once again we try to make sense of the current pandemic and the impact on investment markets.

Our focus remains with our existing clients’ investments and our thoughts are with those most affected by the pandemic.

We have taken views from some of our investment funds and interspersed this with some of our own views.

After weeks of unprecedented turmoil in markets, things have been calmer over the past two weeks. Effectively, many assets have retraced some parts of their losses from their lows around the 23rd March and in some cases showing a remarkable bounce. It once again reminds us of the impossible (and frankly dangerous) task of trying to think you can time markets.

Major equity indices year-to-date in Europe are still down around 25%, and US indices are down around 15%, though the technology sector is much nearer to flat now. Markets are generally more orderly now. It appears that distressed selling has abated. It appears the market has become more understanding of the epidemiological data and its path, and the fact that lockdown measures are slowing and, in some areas, now clearly reversing the flow of new cases.

There was also the massive government and central bank support, which has now largely been promised, even if not yet delivered. Many of you will be familiar with the UK’s support schemes for employment and businesses and these are widespread in other geographies. Helicopter money – in the US a cheque with Mr Trump’s large signature on it – is now fluttering to the ground. 

Also, positively, capital markets do appear to be doing what they should do; i.e. providing capital, at a price, to those that need it.

What is the future?

We need to be aware that it’s not just the virus that can wrong-foot markets, US presidential elections, China tensions, the Gulf are all still live and impactful issues. 

We are cautiously optimistic. Medical science has learned fast about both treatment and containment of the virus, and massive government support should limit defaults, especially in larger companies. Against this, there are still investments that can have long term value.

At Trafford and Houghton we remain focussed on providing support for our clients. This has been possible thanks to the ongoing dedication of our advisers and support staff. We continue to conduct regular reviews with clients (via telephone) and have (on the whole) had very positive meetings.

Ian, Martin and Will.

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)