• ARCHIVE – Newsletter 2020

Action Fraud continues to warn the public about a National Insurance scam, after it received over 34,000 more calls in February 2021 when compared to February 2020.

Victims have reported receiving an automated telephone call telling them their “National Insurance number has been compromised” and in order to fix this and get a new number, the victim needs to “press 1 on their handset to be connected to the caller”.

Once connected to the “caller”, victims are pressured into giving over their personal details in order to receive a new National Insurance number. In reality, they’ve been connected to a criminal who can now use their personal details to commit fraud.

Pauline Smith, Head of Action Fraud, said:

“We are asking the public to remain vigilant and be cautious of any automated calls they receive mentioning their National Insurance number becoming compromised.

“It’s important to remember if you’re contacted out the blue by someone asking for your personal or financial details, this could be a scam.

“Even confirming personal details, such as your email address, date of birth or mother’s maiden name, can be used by criminals to commit fraud. If you have any doubts about what is being asked of you, hang up the phone. No legitimate organisation will rush or pressure you.”

How to protect yourself

If you receive an unexpected phone call, text message or email that asks for your personal or financial details, remember to:

STOP

Taking a moment to stop and think before parting with your money or information could keep you safe.

CHALLENGE

Could it be fake? It’s ok to reject, refuse or ignore any requests. Only criminals will try to rush or panic you.

PROTECT

If you have provided personal details to someone over the phone and you now believe this to be a scam, contact your bank, building society and credit card company immediately and report it to Action Fraud at www.actionfraud.police.uk or by calling 0300 123 2040.

You can also contact CIFAS to apply for protective registration. This means extra checks will be carried out when a financial service, such as a loan, is applied for using your address and personal details, to verify its you and not a fraudster. 

By clicking on one of these links you are departing from the regulatory site of Polestar. Neither Polestar nor Quilter Financial Planning is responsible for the accuracy of the information contained within the linked site.

With the second lockdown now in place, the Chancellor has been forced to return to Parliament and announce extended job support measures. Two further grants under the SEISS were announced in September and have now been updated.

The government’s new package of support measures laid out in the Chancellor’s Winter Economy Plan have been either put on hold or reworked. Alongside an extended furlough scheme, now running at 80% of employee wages until the end of March 2021, the self-employed income support scheme (SEISS) also saw a substantive increase as the lockdown came into force.

The original SEISS offered two support grants to the self-employed, with applications closing in July and again in October. The new extension covers a six-month period divided into two additional grants. The level of the upcoming third grant has now been increased from the original 40% to 80% of average monthly profits – even higher than the 55% set out at the end of October. Applications for the third grant covering the three months from November 2020 to January 2021 will open on 30 November and will be capped at a maximum of £7,500, paid in a single instalment.

The fourth grant will cover the three months from February to April 2021, however no further details have been released as yet.

Eligibility

To be eligible for the third SEISS grant you must have been eligible for the previous two (even if they were not actually claimed), so this excludes anyone with:

• average annual profits exceeding £50,000; or
• self-employed income that makes up less than 50% of total income.

In addition, you will have to declare that you intend to continue trading and are either currently actively trading, but are impacted by reduced demand due to Covid-19, or were previously trading but are now temporarily unable to do so due to Covid-19. The requirements to be actively trading and to be impacted by reduced demand are new and might indicate that HMRC is tightening up the rules.

The first two grants were based on average profits for the tax years 2016/17, 2017/18 and 2018/19. At this point, there is no indication if HMRC will allow profits for 2019/20 to be taken into consideration.

The Chancellor appears to have heeded the widespread criticism levelled at the drop in support for the self-employed he originally outlined. The uplift to 80% now matches the extension of the furlough scheme, at least for the time being,

If you need help with any support grants, please get in touch. 

A recent report on UK dividend payments suggests the worst of the cuts may be over.

For many, 2020 has not been a year they will want to remember. For investors, the first two quarters were a whiplash experience. For about a month from mid-February, Covid-19 pushed share markets down with a brutal abruptness. By the time March came to an end, there was a consensus that, as often happens, the gloom had gone too far. As a result, the second quarter produced rises across the major markets. In the summer, it looked like the worst of the pandemic could be over and the forecasts of a V-shaped recovery would prove correct.

The third quarter, and in particular September, provided a different story. The threat of a second wave of Covid-19 emerged, while two other longstanding ‘known unknowns’ – the US presidential election and the end of the Brexit transition period – came closer into sight. Central banks’ talk of multi-year zero or sub-zero interest rates did not encourage investors, perhaps suspicious that 12 years after the global financial crisis, the rate setters had finally run out of monetary ammunition.

The UK stock market’s third quarter was weaker than in other major markets. In global terms, it is arguable that the UK looks cheap – the historic price-earnings ratio for the UK market is around 21 compared with 29 in the US. However, across the Atlantic, the main market index, the S&P 500, rose by 8% in the third quarter against a fall in the FTSE 100 of 5%. Once more, the US market has been driven by the five technology giants – Microsoft, Apple, Amazon, Facebook and Alphabet (aka Google) – which account for 1% of the number of companies in the S&P 500 Index, but almost 23% of the index by value.

The third quarter was generally more rewarding for investors in overseas markets. The fourth quarter’s impending US election and Brexit finale looks set to create a dramatic end to a dramatic year. What 2020 has proved yet again is that market timing is virtually impossible, so if you think now is the time to act – whether buying or selling – make sure to take advice before pulling the trigger.

The value of your investment and the income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

New research shows the majority of the self-employed are not saving for retirement. 

Here’s a quick quiz:

• Are you self-employed?
• If so, have you contributed to a private pension in the last year?

The Institute for Fiscal Studies (IFS) examined the answers to these two questions and found the probability of answering yes to both is much the same. Drawing on government data, the IFS calculated that in 2018:

• 15.1% of the UK workforce – some 4.8 million people – were self-employed.
• Just 16% of the self-employed contributed to a private pension.

As the graph shows, the proportion of pension contributors among the employed and self-employed workforce was on a steady decline from 1998 until 2012. In October 2012, pension automatic enrolment was launched, and by March 2019, over 10 million workers had joined a workplace pension arrangement. The self-employed were left out of auto-enrolment, hence the sharp divergence of the employee and self-employed lines from 2012 onwards.

The IFS research struggled to establish why only one in six of the self-employed were saving in a private pension, two thirds less than 20 years ago. It found that the characteristics of the self-employed workforce have changed over that period – it now consists of more females, an older demographic and an increase in part-time workers – but none of these factors were enough to account for the fall in pension contributions. Given the tax relief which pension contributions attract, one surprising discovery was that the largest decline in self-employed contributions came from the higher-income bracket and the long-term self-employed.

If you answered yes to the first question and no to the second, then you may be expecting the state pension to make up the largest slice of your retirement income, a view shared by more than a quarter of the self-employed. At present, the state pension amounts to £175.20 a week. If that sounds like a less than comfortable retirement plan, perhaps you need to rethink the answer to that second question… 

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice. 

The value of your investment and the income from it can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

The Chinese stock market broke the $10 trillion barrier in October.   

The total value of China’s stock markets in Shanghai and Shenzhen surpassed $10 trillion in October. For comparison, the UK market was worth about $4 trillion at the end of September 2020. However, this was not the first time that Chinese markets had reached the $10 trillion level. In mid-2015, the two markets peaked at $10.05 trillion before dropping precipitously to under $5 trillion in a matter of months as the authorities took action against traders – often individuals – investing with borrowed money.

Much has happened since that whiplash period. The Chinese markets have become less of a gambling for retail players and more like other global markets, with institutional investors taking a leading role. At the same time, a variety of initiatives by the Chinese Government and changes by international index providers, such as FTSE Russell and MSCI, have encouraged investment from outside the Middle Kingdom. Foreign (i.e. non-Chinese) investors now own about 5% of Chinese shares, up from virtually nothing in 2015. Consequently, the weight of foreign and institutional investors has reduced volatility.

As the graph above shows, that does not mean 2020 has been a smooth ride for the Chinese markets. With the Covid-19 pandemic originating in China, it was inevitable that Chinese share prices would suffer. However, their fall in the first three months of 2020 was less than most other large stock markets. That has meant that, perhaps surprisingly, for the year to date, the Chinese market has performed much the same as the US market.

The latest economic figures out of China show economic growth of 4.9% in the third quarter, after 3.2% in the previous three months, suggesting that China could be the only major economy to grow in 2020.

The $10 trillion value of China’s markets and the resilience of its economy mean the country cannot be ignored by investors. For now, it is still classed as an ‘emerging market’, although its size almost makes it the emerging market. To find more information on the choice of China-focused funds available for UK investors, get in touch with us.

The value of your investment and income from it. can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

New HMRC data show the popularity of this traditional perk could be waning.

There was a time when the company car was the fringe benefit that every employee wanted. You had ‘made it’ once you had the keys to a car with no worries about servicing, insuring or, sometimes, even fuel costs. It could also make plenty of tax sense, as the cost of the car was not fully reflected in the amount on which tax was charged. Go back far enough and two company cars were not uncommon for some senior executives.

Unsurprisingly, the days of company cars as tax-efficient remuneration have largely passed, other than for electric vehicles. The government approach to company cars brings to mind the comment of Jean-Batiste Colbert, a 17th century French Minister of Finance, who said “the art of taxation consists in so plucking the goose as to procure the largest quantity of feathers with the least possible amount of hissing”.

Some 400 years later, successive UK chancellors have steadily notched up the company car benefit scales to raise additional revenue from a stable to shrinking number of company car drivers. For example, the latest HMRC data show that between 2010/11 and 2018/19, the average company car taxable value has risen by 57% against a 19% increase in inflation over the same period.

Similarly, the taxable value of ‘free’ fuel (i.e. employer-funded fuel) has risen by 44%. As the graph shows, the popularity of ‘free’ fuel has steadily fallen – only about one in eight company car drivers now pays nothing to fill up their tank. If you are one of that minority, do make sure you have enough private mileage to justify the tax you pay. The main reason for the drop in ‘free’ fuel numbers is that for many employees, the tax bill would be greater than their personal refuelling cost.

The gradual demise of the company car is a lesson in how the tax system can subtly alter over time. A major revamp in the treatment of salary sacrifice schemes introduced in 2017 changed the tax landscape for other fringe benefits, too. The one that has survived and remains attractive – at least for now – is salary sacrifice to fund pension contributions. 

The value of your investment and income from it can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance.

Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

Action Fraud is warning people selling items online to be on the lookout for criminals sending fake PayPal emails.

Criminals have been targeting people selling items online, by sending them emails purporting to be from PayPal. The emails trick victims into believing they have received payment for the items they’re selling on the platform.

Typically, after receiving these emails, victims will then send the item to the criminal. This leaves them at a further disadvantage having not received any payment for the item and also no longer being in possession of it.

Action Fraud issued a similar warning earlier this year, after it received 3,059 crime reports about fake PayPal emails between October 2019 and December 2019. Victims reported losing a total of £1,121,446 during this time. Reports of fake PayPal emails to Action Fraud made up almost 18% of all reports of online shopping and auction fraud during this period.

In one instance, a victim received a fake email purporting to be from PayPal claiming the buyer accidently paid more than they should have. The buyer then asked the victim to pay the difference by sending a gift card to them with the difference loaded which they dutifully did.

In another case, the fake email from PayPal claimed the buyer had accidently paid for the item twice. The buyer then asked the seller to wire the overpayment to a bank account in a different country.

What you need to do?

• Sellers beware: If you’re selling items on an online marketplace, be aware of the warning signs that your buyer is a scammer. Scammers may have negative feedback history, or may have recently set up a new account to avoid getting poor feedback. Don’t be persuaded into sending anything until you can verify you’ve received the payment.
• Scam messages: Don’t click on the links or attachments in suspicious emails, and never respond to messages that ask for your personal or financial details.

If you think you’ve been a victim of fraud or cyber crime, report it to Action Fraud online at www.actionfraud.police.uk or by calling 0300 123 2040.

A spokesperson for PayPal, said:

“At PayPal we go to great lengths to protect our customers in the UK, but there are still a few simple precautions we should all take to avoid falling victim to scams.

“All communications from PayPal to account holders would be sent to the secure message centre within their PayPal account. You will have a secure message waiting if PayPal does need you to take any action.

“A genuine PayPal email will only ever address you by your full name – anything that starts differently should immediately raise your suspicions. Look out for spelling mistakes, which are a common tell-tale sign of a fraudulent message.”

By clicking on one of these links you are departing from the regulatory site of Polestar. Neither Polestar nor Quilter Financial Planning is responsible for the accuracy of the information contained within the linked site.

The third quarter of 2020 saw share markets calmer than in the previous two.

For many, 2020 has not been a year they will want to remember. For investors, the first two quarters were a whiplash experience. For about a month from mid-February, Covid-19 pushed share markets down with a brutal abruptness. By the time March came to an end, there was a consensus that, as often happens, the gloom had gone too far. As a result, the second quarter produced rises across the major markets. In the summer, it looked like the worst of the pandemic could be over and the forecasts of a V-shaped recovery would prove correct.

The third quarter, and in particular September, provided a different story. The threat of a second wave of Covid-19 emerged, while two other longstanding ‘known unknowns’ – the US presidential election and the end of the Brexit transition period – came closer into sight. Central banks’ talk of multi-year zero or sub-zero interest rates did not encourage investors, perhaps suspicious that 12 years after the global financial crisis, the rate setters had finally run out of monetary ammunition.

The UK stock market’s third quarter was weaker than in other major markets. In global terms, it is arguable that the UK looks cheap – the historic price-earnings ratio for the UK market is around 21 compared with 29 in the US. However, across the Atlantic, the main market index, the S&P 500, rose by 8% in the third quarter against a fall in the FTSE 100 of 5%. Once more, the US market has been driven by the five technology giants – Microsoft, Apple, Amazon, Facebook and Alphabet (aka Google) – which account for 1% of the number of companies in the S&P 500 Index, but almost 23% of the index by value.

The third quarter was generally more rewarding for investors in overseas markets. The fourth quarter’s impending US election and Brexit finale looks set to create a dramatic end to a dramatic year. What 2020 has proved yet again is that market timing is virtually impossible, so if you think now is the time to act – whether buying or selling – make sure to take advice before pulling the trigger.

The latest pandemic support measures are much less generous than before.

As the country braced for dealing with further localized outbreaks of Covid-19, the Chancellor made an early autumn appearance before the House of Commons to announce his ‘Winter Economy Plan’. He announced new employment support and amendments to existing schemes.

Job Support Scheme (JSS)

The JSS is the next stage of the furlough scheme (strictly the Coronavirus Job Retention Scheme (CJRS)), which comes to an end on 31 October. The JSS, which will run until 30 April 2021, is aimed primarily at small and medium-sized employers and will only apply to employees who work at least one third of their normal hours. For the hours that are not worked, the government and the employer will each pay one third of lost pay. The net results in terms of employee income and employer cost are shown in the table below.

Payments under the JSS will not affect an employer’s entitlement to the £1,000 Job Retention Bonus.

Self-Employed Income Support Scheme (SEISS)

The existing scheme has been restructured and extended to April 2021. Only those already eligible will be entitled to claim. The first grant, covering the three months to 31 January 2021, will cover 20% of average monthly trading profits and is capped at £1,875. The terms of the grant for the next three months will be set ‘in due course’.

Both the JSS and revised SEISS are considerably less generous than the existing CJRS and SEISS, which have so far (to 20 September) cost the Treasury over £52 billion. This cut to support is understandable from the government’s financial viewpoint, but it is also a reminder of the importance that your personal financial planning makes provision for an adequate cash reserve. 

After heavy hinting from the Treasury for some weeks, the expected Autumn Budget has been pushed into spring 2021.

Since the March Budget and through to August, the expectation was that the Chancellor, Rishi Sunak, would introduce his second Budget this autumn. Such timing would have restored the cycle of a Spring Statement followed by an Autumn Budget after it broke down last year in the lead up to the general election.

With intense speculation around tax rises to pay for the raft of Covid-19 support measures, the first serious clue to a possible Autumn Budget delay emerged on 8 September, when the Office of Tax Simplification (OTS) slipped out a statement about its review of capital gains tax (CGT), which had been commissioned by the Chancellor in July. The statement announced the response deadline on the technical part of the OTS consultation would be deferred by four weeks, to 9 November. This was a surprising move as the OTS CGT report was expected to feed into the Autumn Budget.

Soon after, the Chancellor himself issued a brief written statement saying he had asked the Office for Budget Responsibility (OBR) to prepare an economic and fiscal forecast “to be published in mid-to-late November”. The vagueness surrounding the timing was evident, as the OBR report is produced alongside the Budget and incorporates costings for Budget measures.

What had started to look inevitable was confirmed on 24 September when the Treasury cancelled the Autumn Budget. The Chancellor will still have a set piece event towards the end of the year; not only is there the OBR report to present, but Mr Sunak must also publish a Spending Review. The latter was also a victim of the general election and ought to have been produced a year ago to cover the three years from April 2020. Instead, the then Chancellor published a one-year Spending Round. Given the pandemic uncertainties, it is likely that Mr Sunak will take a similar short-term view, rather than introduce a multi-year plan.

The postponement of the Autumn Budget does not mean the spectre of tax increases has also evaporated. The level of government borrowing (£174 billion in the first five months of 2020/21) makes tax rises virtually inevitable. However, the Chancellor has afforded you more time to plan and take action in areas such as CGT and pension contributions.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.