Money Marketing’s Weekly Must-Reads: Top 10 Stories

Stay ahead with our curated list of this week’s top 10 financial news stories.

Gain exclusive insights into pressing topics such as Tony Wickenden’s take on advising pre-emptive action to shield clients from CGT. Also, get the scoop on Sesame Bankhall’s latest hire to lead their adviser network.

Read more below:



Tony Wickenden: Should you advise pre-emptive action to save clients from CGT?

Tony Wickenden discussed the potential impact of rising capital gains tax (CGT) following Budget warnings. He noted the government’s reluctance to increase income tax, National Insurance, or VAT, leading to speculation about CGT increases. Wickenden suggested that if clients are already planning disposals, they should consider completing them sooner. He highlighted concerns that higher CGT rates might prompt wealthy individuals to defer gains. He also mentioned potential mid-year changes and the importance of balancing tax considerations with investment decisions.

Sesame Bankhall hires new director to lead adviser network

Phoenix Group scraps plans to sell protection business

Phoenix Group cancelled plans to sell its SunLife protection business, citing uncertainty in the protection market. Instead, the company will focus on enhancing SunLife’s value, as it remains a key asset serving the UK’s over-50s market. Phoenix had acquired SunLife from AXA in 2016. The decision was announced in Phoenix’s 2024 interim results. CEO Andy Curran highlighted growth in the Workplace business and the expansion of the Group’s retirement offerings, including a fixed-term annuity launched by Standard Life.

Close Brothers sells asset-management business

Steven Cameron: Is it time? What flat-rate pensions tax relief would look like

Steven Cameron explored potential pension tax reforms ahead of the 30 October Budget, speculating that Chancellor Rachel Reeves might introduce a flat-rate tax relief system. Currently, tax relief is given at an individual’s marginal rate, benefiting higher-rate taxpayers. A move to a 30% flat rate would favour basic-rate taxpayers but reduce relief for higher earners. Employer contributions could also face changes, possibly affecting defined benefit schemes. Cameron urged advisers to discuss possible changes with clients and consider making extra pension contributions before the Budget.

Andy Bell: Where will Labour find £22bn?

Andy Bell discussed how Labour might address the UK’s £22bn fiscal deficit without raising VAT, income tax, or National Insurance. He suggested potential reforms to capital gains tax (CGT), pension tax relief, inheritance tax (IHT), and the introduction of a wealth tax. Aligning CGT with income tax rates and introducing a flat-rate pension tax relief could raise revenue but may face backlash. A wealth tax and IHT adjustments also carry challenges, including political risks and administrative complexity. Bell stressed the need for balanced, fair policy design.

Brooks Macdonald to acquire Norwich-based financial advice firm

Brooks Macdonald announced the acquisition of Norwich-based Lucas Fettes Financial Planning, subject to regulatory approval by early 2025. Lucas Fettes manages £890m in assets across 1,600 personal clients and £300m from corporate clients. The acquisition aims to enhance Brooks Macdonald’s financial planning capabilities and expand its presence in East Anglia. Lucas Fettes, one of Brooks’ top introducers since 1996, will integrate into Brooks Macdonald’s direct wealth business, aligning with the group’s strategy to focus on UK investment management and financial planning.

Octopus Investments launches IHT and estate planning helpdesk

Octopus Investments launched ‘Ask Octopus,’ a helpdesk offering technical support on inheritance tax (IHT) and estate planning for financial advisers. The service, accessible via their website, provides answers to advisers’ queries and allows direct meetings with experts. It covers IHT rules, estate planning, wills, and probate. Octopus aims to assist advisers, particularly those without technical team support. This launch comes as IHT receipts have surged, prompting calls for reform ahead of Chancellor Rachel Reeves’ 30 October Budget.

Skerritts buys Harrogate-based advice firm

Skerritts Group acquired Harrogate-based Ellis Bates Financial Advisers, adding over £1bn in assets under management and strengthening its presence in Northern England. The deal, backed by Sovereign Capital Partners, was set to complete in September 2024. Skerritts, aiming for national expansion, has made 11 acquisitions since Sovereign’s £55m investment in 2021. Skerritts CEO Paul Feeney praised the acquisition, while Ellis Bates’ managing director Michael Cope highlighted shared values and ambitions for growth within the partnership.

Advisers tweak processes in light of retirement income review

Following the Financial Conduct Authority’s (FCA) thematic review of retirement income advice, most financial advisers adjusted their processes, according to Wesleyan. The FCA’s March 2024 review highlighted areas for improvement, including income withdrawal strategies and advice suitability. Wesleyan’s poll revealed that 91% of advisers familiar with the review reassessed their practices, with 66% already implementing changes. Common adjustments included advice file record-keeping and client screening. Over three-quarters of advisers agreed the review heightened the focus on providing better retirement advice.

Proponents of the latest changes are betting that easing the hurdles for companies, even in ways investors dislike, will pay off

Team GB should be proud of its haul of 65 medals at the 2024 Paris Olympics – more than any country besides China and the US.

However, with 14 of those 65 medals being gold, GB may well feel like it took the runner-up prizes a few more times than it would have liked.

Unfortunately, there are parallels here with the British capital markets, currently lamenting a dearth of new and exciting IPOs – a field in which we’re also trailing the US.

It is widely agreed radical changes are needed. That’s just what is happening. Yet still not everyone is excited.

New proposals in July to amend rules governing disclosures and investor access to capital raisings were announced as part of the government’s ongoing plans to rehydrate the country’s capital markets.

The key proposal, if enacted, would eliminate the need for companies to issue a new prospectus in most circumstances other than for initial listings on public markets. The proposals also outline measures to increase retail participation in both public and private market investments.

These proposals are intended to complement the recently introduced UK Listing Rules, which came into effect last month. The rules aim to remove the barriers on the road to UK investment recovery by relaxing restrictions on dual class share structures, which allow managers and founders to exercise control over companies in which they may only hold a minority stake.

They also remove requirements to seek shareholder approval for a number of significant corporate transactions, or those with related parties.

Pedalling ahead

Although measures to encourage a broader base of investment are a largely welcome boost to UK companies in need of an edge, several of these moves are perceived to come at the expense of investor protections valued by UK shareholders.

On balance, this proposed regulation looks like a bold gamble, which hinges on the idea the UK can build a more competitive capital market by streamlining the requirements for listed companies, even if that means introducing features their investors largely dislike.

Pushing forward market features that many of the largest investors oppose will require a careful eye on the detail if we are to attain the leading capital market everyone seeks.

Whether reducing investor protections and required disclosures is the right route to go down will depend on the UK’s ability to attract high-performing and well-governed companies. Any perception that the new rules represent a race to the bottom – in which investors place their capital in lower quality businesses, subject to weaker transparency and greater management control – will need to be fought against.

Overall, while not everyone is happy with the changes, investors and companies appear to have accepted the current regulatory direction of travel is not about to alter, having just been confirmed as one of the first acts of the new Labour government.

So, the strategy has been set and the big call has been made. Let’s hope that when the figurative tyres are changed, it turns out to be a stroke of genius which puts UK companies on a winning streak rather than setting up investors for a fall.

Lindsey Stewart is director of stewardship research and policy for Morningstar Sustainalytics

The Treasury collected £3.5bn in inheritance tax receipts between April to August, latest figures from HMRC published this morning (20 September).

This is £300m higher than the same period last year.

Another record-breaking year for IHT receipts is being predicted and experts believe this upward trajectory will continue year on year and hit £9.7bn in 2028/29.

However, there are rumours that IHT will be increased next month when the new Labour government unveils its first Budget.

The current £325,000 nil rate band has been at that level since 2009.

The residential nil rate band was introduced on a phased basis between 2017 and 2020 and potentially gives an additional £175,000 nil rate band (making a total of £500,000) subject to certain rules.

Nucleus technical services director Andrew Tully, said: “The ever-increasing IHT tax take may give the government food for thought as we approach next month’s Budget.

“Changes could be made such as scrapping or updating the rules on agricultural land and business relief.

“Currently, a person can claim up to 100% relief on the inheritance of agricultural land if it is being actively farmed.

“This could be reduced, or certain limitations placed on the maximum value of the relief.

“There could be a tightening of qualifying criteria for business relief, perhaps relating to unlisted shares and AIM portfolios.

“Although that could be difficult to implement and may not tie in with the desire to increase investment in the UK.”

Shaun Moore, tax and financial planning expert at Quilter, is calling for the IHT system to be simplified to make it easier for people to gift during their lifetime.

He said: “The complexity of the current system often leads to confusion and inequities.

“A simpler system could help reduce the administrative burden for both taxpayers and HMRC, while also making it fairer.

“Similarly, increasing the gifting threshold would encourage earlier wealth transfer, reducing future IHT liabilities, and could boost consumer spending.”

The number of families being caught out by tax bills after death on gifts made in lifetime has been surging, according to figures from HMRC obtained recently by wealth management firm Evelyn Partners show.

Tax Partner at professional services and wealth management firm Evelyn, Laura Hayward, said: “The number of estates that paid IHT on gifts made less than seven years before death more than doubled from 590 in 2011/12 to 1,300 in 2020/21, according to the data.

“Meanwhile, the total sum of IHT paid on gifts also more than doubled from £101m in 2011/12 to £256m in 2020/21 – an increase of 153% in monetary terms and 119% in real terms.

“The data suggests the average tax charge payable by beneficiaries on lifetime gifts was £171,186 in 2011/12 and £196,923 in 2020/21.

“That suggests some very significant tax bills are being delivered to unprepared beneficiaries after their generous relative has died, and this might be another reason for those contemplating making big lifetime gifts to start the seven-year clock ticking sooner rather than later.

“Even if the gifter were to pass away within seven years, there is a chance the IHT bill could be reduced by taper relief.”

Good morning and welcome to your Morning Briefing for Friday 20 September 2024. To get this in your inbox every morning click here.

IHT receipts continue to rise as speculation mounts ahead of Budget

The Treasury collected £3.5bn in inheritance tax receipts between April to August, latest figures from HMRC published this morning (20 September).

This is £300m higher than the same period last year.

Another record-breaking year for IHT receipts is being predicted and experts believe this upward trajectory will continue year on year and hit £9.7bn in 2028/29.

However, there are rumours that IHT will be increased next month when the new Labour government unveils its first Budget.

How to enter the international advice market

The ebb and flow of the global economy means that, as some people migrate to the UK, others leave it, creating opportunities for international financial advice.

The new Labour government has confirmed that the current tax regime for non-UK domiciled individuals will be replaced with a residence-based test from 6 April 2025, so international advice firms can expect more enquiries.

If UK advice firms want to develop a global presence, how should they go about it?

Quote Of The Day

The complexity of the current system often leads to confusion and inequities.

-Shaun Moore, tax and financial planning expert at Quilter, comments on latest IHT receipts which hit £3.5bn as rumours of tax changes build ahead of October budget.

In Other News

FE Fundinfo has announced the release of its enhanced Factsheet Production solution. This automated system will streamline factsheet production and distribution to FE fundinfo’s network within a single workflow. It offers a user-friendly interface with a progress dashboard, supports approve/reject workflows, provides a comprehensive audit trail, and includes a 10-year archive.

With the capacity to produce up to 150,000 documents per hour and support for translations into 30 languages, it is scalable and compliant, enabling asset managers to efficiently manage their global operations.

Integrated into FE fundinfo’s comprehensive end-to-end platform, the Factsheet Production solution provides asset managers with a single, trusted source of data. This golden source enables connections with distribution networks, regulators and investors, ensuring the automatic dissemination of factsheets.

“Asset managers today are facing unprecedented challenges, from regulatory pressures to the need for process optimisation in a rapidly changing market,” said Joerg Grossmann, chief product officer at FE fundinfo. “Our enhanced Factsheet Production solution is designed to help meet these head-on.”

SimplyBiz has announced over 1,000 Defaqto Engage licences have been adopted by its member firms since an enhanced version of the financial planning system was added to its core membership package five months ago.

Forming part of SimplyBiz’s suite of market-leading technology solutions and designed to help advisers manage regulatory risk, increase efficiencies, and deliver better services to clients, Engage brings together a range of previously standalone modules, from risk profiling and cashflow modelling to pension, product, and platform switching, into a single comprehensive package.

Used by around 30% of UK advisers, Engage is powered by Defaqto’s data which covers more than 21,000 funds, platforms, DFM MPS, and products, with recommendations of £43bn going through the system annually.

Legal & General Group Protection has partnered with Vocational Rehabilitation specialist Ergocom to provide employees with the support they need following a Group Income Protection (GIP) claim.

It’s designed to help both the employer, and their employee understand what job roles the individual can do, and what is needed for them to continue working in a new role.

This service will be made available following a GIP claim, where the employee is ready to work, but due to personal circumstances, they can no longer fulfil their previous role and, as a result, will be supported to seek alternative options. This new service has the potential to include everything from individual assessment and detailed reporting, to coaching which helps the employee develop additional skills and confidence.

Ergocom’s Vocational Redirection Assessment will examine the employee’s vocational strengths, needs and career potential, considering any barriers or functional limitations to identify suitable, alternative roles.

Government borrowing in August highest since Covid (BBC)

Ministers and union leaders to hold crunch talks over workers’ rights plans (The Guardian)

Nike chief executive John Donahoe to step down (Financial Times)

Did You See?

The Financial Conduct Authority has launched an investigation into pure protection and it’s safe to say it’s pretty damning, writes Andrew Gething, managing director at MorganAsh.

Not only is the regulator ordering insurers and intermediaries to remove products that do not offer fair value, it’s weighing up action to address these issues, as well as not demonstrating good customer outcomes.

It’s a stark reminder of the regulator’s intent to enforce the Consumer Duty, which is now in full force. In fact, the FCA highlighted its commitment to engage with both GI and protection, as well as relevant trade bodies, to ensure its expectations are recognised and acted upon urgently.

A key shortcoming identified by the regulator was an inability by firms to demonstrate how they assess whether a product delivers fair value to all customers, including vulnerable or outlier groups.

Read the full article here.