The Decline of the Bank Branch
The Financial Conduct Authority have released figures showing access to bank branches is decreasing – with 1 in 20 bank branches having closed in the last 3 months.
The impact on consumers as a whole means that 60.1% of the population is now within 2km of a bank branch, down from 61.8% last year. Access to no free to withdraw cash within a 2km radius, which includes branches, ATMs, mobile banks, and post offices, has increased 0.1% to 95.5%, however, in rural areas this figure sits at just 77.3%.
With bank branch closures showing no signs of slowing, the risk to the most vulnerable people in need of cash or in-branch support of course increases. For those with no access to transport this presents further risk. The FCA report itself also didn’t take into account access to the actual account holding branch, for which the figures for the 2km distance would likely show more dramatic decrease.
The Cost of a Comfortable Retirement Rises
The Pensions and Lifetime Savings Association (PLSA) has warned that the cost of retirement has risen – seeing an increase in the cost of 4.9% since 2019.
The PLSA industry report predicts an extra £40,000 will be needed to fund a comfortable 20-year retirement. The PLSA breakdown their calculations into three tiers: minimum, moderate, and comfortable. At the top end, for a comfortable retirement, single people’s annual budget has increased by £600 to £33,600, while a couple’s budget rose by £2,000 to £49,700, roughly 4.9% more expensive than in 2019. The ‘comfortable’ tier would include luxuries such as routine beauty treatments, theatre trips, and three weeks per year of European holidays.
A large proportion of the increase relates to rising transport costs, which have seen a sector increase of 10% since 2019.
Nigel Peaple, the PLSA’s Director of Policy and Advocacy commented:
“It is important that the retirement living standards remain relevant by reflecting real-world price changes and real-world expectations about lifestyles in retirement. We hope the updated standards will encourage people to think about whether they are saving enough for the retirement lifestyle they want and, in particular, whether they are making the most of the employer contributions on offer in their workplace pension.
“The lockdowns caused by the pandemic have given many workers a foretaste of being retired and made people think about the activities and experiences they truly value. The pandemic has emphasised the importance of economic security as well as social and cultural participation in retirement.”
Shop Safe Online
As well as being the season of goodwill, unfortunately, it is the time of year that fraudsters seek to exploit. One of the most prevalent methods to financially defraud is via a cyber-attack, of which the most common, affecting both individuals and organisations, is Phishing.
Phishing attacks can take many forms, but they all share a common goal – getting you to share sensitive information such as login credentials, credit card information, or bank account details.
There are a few phishing attacks to be aware of:
In this type of attack, hackers impersonate a real company to obtain your login credentials. You may receive an e-mail asking you to verify your account details with a link that takes you to an imposter login screen that delivers your information directly to the attackers.
Spear phishing is a more sophisticated phishing attack that includes customised information that makes the attacker seem like a legitimate source. They may use your name and phone number in the e-mail to trick you into thinking they have a connection to you, making you more likely to click a link or attachment that they provide.
Whaling is a popular ploy aimed at getting you to transfer money or send sensitive information to an attacker via email by impersonating a real company executive. Using a fake domain that appears similar to a legitimate domain, they look like normal emails from a company and ask you for sensitive information (including usernames and passwords).
Shared Document Phishing
You may receive an e-mail that appears to come from a file-sharing site like SharePoint alerting you that a document has been shared with you. The link provided in these e-mails will take you to a fake login page that mimics the real login page and will steal your account credentials.
What You Can Do
To best avoid these phishing schemes, you can observe the following email best practices:
- Do not click on links or attachments from senders that you do not recognise. Be especially wary of .zip or other compressed or executable file types.
- Do not provide sensitive personal information (like usernames and passwords) over email.
- Watch for email senders that use suspicious or misleading domain names.
- Inspect URLs carefully to make sure they’re legitimate and not imposter sites.
- Do not try to open any shared document that you’re not expecting to receive.
- Be especially cautious when opening attachments or clicking links if you receive an email containing a warning banner indicating that it originated from an external source.
Being mindful of the above should stand you in good stead.
New HMRC reporting requirement for Trusts
From April 2022, HMRC are changing their reporting requirement for trusts. Previously, only trusts with a tax event required registration, however, the new rules require more types of trusts to be registered online using the new HMRC Trust Registration Service (TRS). All named trustees are equally legally responsible for the trust, but you must nominate one person to act as ‘Lead trustee’ for trust registration. The person nominated as Lead trustee will be the point of contact for HMRC.
Registration is the responsibility of the Lead trustee and is carried out yourself via HMRC’s TRS. There will be a requirement to keep the information updated annually. Further information on what type of trusts need to be registered and the registration process can be obtained here: https://www.gov.uk/guidance/trust-registration-extension-an-overview
Perhaps unsurprisingly, it isn’t an easy read, but you do not need to register any trusts that we have set up through Solidus or The Will Company unless we contact you directly. If you have an investment which is written into trust, we strongly suggest that you complete your own investigations or contact us to determine if your trust needs to be registered.
UK House Prices Continue to Rise
The last three months have seen a continuation in the rise of UK house prices, with the growth pace hitting a 15-year high.
The rise has been driven primarily by a shortage of housing stock combined with low lending rates. Figures reported by Halifax in November 2021, put the average price of a UK property at a record high of £273,000, with a rise in the average value of homes up 1% October-November now sitting 8.2% higher than the same period in 2020.
Whilst the London market lags behind, nationally average property prices rose sharply as homebuyers continue to look for larger, less crowded locations to set up home. With October marking the end of the stamp duty holiday, many expected the trend to slow; however, to date, that has not been the case.
Whilst the Omicron coronavirus variant brings uncertainty, if previous months any indication, the rises might just continue.
IHT Reform Ruled-out by Treasury
In late November the government held its ‘Tax Administration and Maintenance Day’. A day in which they considered plans to create a more simple and effective tax system. However, upon consideration, Inheritance Tax reforms were rejected.
The plans discussed are part of the Treasury’s 10-year plan, part of the Tax policies and consultation update launched in March this year. The plan centres around establishing a real-time and third-party tax administration system designed to make the taxpayer experience for individuals and businesses more straightforward.
HMRC’s Chief executive, Jium Harra said:
“As we continue our work to improve the tax system for UK taxpayers and clamp down on avoidance and evasion, we know that an open dialogue with our stakeholders is vital.
“With thanks to the tax profession for their views, we can now announce the next steps for how we will simplify the legislative framework and raise standards in the tax advice market. We are also announcing new areas on which we are inviting views, including reforming Income Tax Self-Assessment registration for the self-employed. These announcements will contribute to creating a modern, trusted tax administration system.”
The Office of Tax Simplifications (OTS) had previously made a recommendation that the lifetime gift exemptions and scope of IHT relief be simplified as part of the HMRC review; however, these recommendations were mostly ruled out by the treasury during their Tax Administration and Maintenance Day.
The 11 OTS recommendations included increasing the £3000 annual gifting allowance exemption which has been frozen since 1980, if it would have risen with inflation it would now sit at over £13,000. Wedding gift exemptions have not changed since 1975 either. Furthermore, they recommended the reduction in the length of time it takes for gifts to leave the estate from seven to five years to improve record-keeping and forward planning.
Of all the recommendations the OTS made, just one related to IHT will be implemented – from January 1st 2022. 90% of non-taxpaying estates will not have to fill out IHT forms for deaths when probate or confirmation is required.
The Future of Our Efficient Wealth Update
As many readers of our Efficient Wealth Update will now be aware, 2021 saw Efficient Portfolio review the platforms and technologies that we utilise to service our clients. Due to these changes, many of clients have now moved over to the True Potential Platform.
True Potential have an extensive marketing team with much better economies of scale and one of the areas where they have really impressed us is with their weekly e-newsletter, their monthly portfolio update as well as their quarterly magazine. Given the high quality of these publications, and the fact that most of our clients will now receive these updates, we have decided to stop producing our own Efficient Wealth Update so that you are not swamped with financial news, which would likely repeat itself.
This means that this December edition of our Efficient Wealth Update will be our last, but we will still be sending out more personal and relevant news, as and when we believe it will be useful to you and Charlie’s Friday Footnotes will also continue.
If you have not yet received the True Potential newsletter, and would like to, please get in touch with your Client Relationship Manager and they will organise this for you.
Charlie’s Mini Blog
We have been sending out The Efficient Wealth Update for over 15 years and whilst it has generally been well received by clients, time moves on. One of the best non-financial newsletters I receive is called Futureloop, a newsletter created by artificial intelligence that aggregates news from around the world.
Over the years we have had lots of great feedback from clients that they preferred the more blog like articles, the book recommendations and the health and wellbeing pieces from us so a few years ago we created the Friday Footnotes email, which is a much better way of delivering this type of information - if you don’t already receive this and would like to, you can subscribe here. For financial updates that also specifically relate to how you invest your money, the True Potential communications far exceed what we’ve ever been able to deliver, so drop your Client Relationship Manager a line if you don’t already get them.
I hope over the time you have received The Efficient Wealth Update it has proved thought provoking, enlightening and useful and that you’ll continue to enjoy the Friday Footnotes as an entertaining and interesting continuation of our non-financial updates.
I hope you have a wonderful Christmas, and that none of your plans are curtailed by positive tests, Boris or cancellations. The most important thing about Christmas is how you spend it with the people you care most about, so with any luck you’ll get to do significantly more of that than you did last year.
Wishing you a very merry Christmas and a healthy, wealthy and happy New Year!
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For 40 days, the determined mother of three pushed herself on and on for more than 2,000 miles across the vast continent, despite the onset of severe pain, until she was forced to make a crushing decision: carry on and risk never being able to run again or give up on her all-time goal. What happened next set Mimi on a new, unexpected journey. She learned to face her fears and bounce back from defeat by taking up the new challenge of becoming a triathlete. Don’t limit your challenges. Challenge your limits!