Your Brunel team update

Autumn has finally arrived, and it’s certainly been a busy few months for us here at Brunel Capital Partners. There’s a lot of exciting news to report, from our 10th anniversary to the important cultural events that we’re sponsoring.

Read on to find out all the important events that have happened to us in recent months.

Sponsoring two major cultural events in Wells

We are delighted to announce that our Wells office are sponsoring two important events in the city this autumn.

The first was the renowned Wells Festival of Literature, which ran from 15 to 23 October, and, as you may know, features a variety of well-known guest speakers.

This year, one of the most highly anticipated guests was the former leader of the Liberal Democrats, Vince Cable. In his talk, he discussed his new book, The Chinese Conundrum, which gives his insight on many different aspects of modern politics and economics.

You can visit the festival’s website to find a recording of the speech, if you want to watch it.

The second event that Pilgrim Financial Planning are sponsoring is the highly anticipated Festival of the Moon, which is running from October to early November. The festival features a guided astronomy tour, an art installation by Luke Jerram, and competitions for children.

Wells Dementia Action Alliance fundraising walk through Wells and Dulcote

On 17 October, Pilgrim took part in a fundraising walk for Wells Dementia Action Alliance. As you may know, this is an annual event which is great fun and aims to raise money for a very good cause.

This year, the route took the team through Wells and Dulcote and was slightly more challenging than in previous years, with a longer distance and a large hill to climb. Of course, that just made it all the more rewarding when the walkers reached the top and got to see the outstanding views of the surrounding countryside.

If you’d like to get involved with any of their fundraising activities in future, visit their Facebook page for more information.

Brunel Capital Partners recently celebrated its 10th anniversary

Brunel Capital Partners recently celebrated its 10th anniversary with a fun-filled afternoon and evening to remember.

The last few years have been a real adventure for us, and we would like to thank all our clients, friends, and associates for being part of it. We are extremely grateful for your loyalty and support, and we are very proud of the business, team, and relationships in the community that we have built along the way.

For many of us, it doesn’t seem like long ago since we first started in September 2011, but as the old saying goes, “time flies when you’re having fun”. While this may be something of a cliché, it’s certainly true for all of us here at Brunel.

The next generation

Finally, here at Brunel, we are delighted to announce the arrival of two happy and healthy babies to members of our staff.

The first is Sebastian William Mayes, who was born last June and weighed 9lbs 9oz. His mother, Harriet Mayes, has been with us for almost four years, working as a paraplanner in our Wells office.

Just two months later, Seren Victoria Hiles was born, weighing 5lb 7oz. As you may know, Seren’s father, Dan, is a Chartered Financial Planner and has been with us since 2014.

As they welcome their new family members, we would all like to give both parents our fondest wishes.

Lucy Cooper, another of our paraplanners, is going on maternity leave in a few weeks’ time to have her baby, which is due later this month. All her friends and co-workers would like to wish her the best of luck and look forward to meeting the new arrival.

Our new “plant a tree” initiative

The Impact team at Brunel have recently been reviewing our processes to understand what we can do better in relation to the environment and the community we work in.

Climate change is a global problem, as illustrated by the COP26 summit, but it’s also important to take action at a grass roots level.

One of our initiatives has been to offset our use of paper but the team also decided that we could go one step further by planting a tree for every new financial planning client. We are doing this as part of The National Trust’s effort to establish 20 million new trees by 2030 and our first donation will be in this quarter.

Get in touch

As always, if you ever need to speak to us for any reason, please don’t hesitate to get in touch. Please email team@brunelcp.com or call us on 0117 214 0870.

5 simple ways to boost your immune system this autumn

As the days start to get colder, it becomes much easier for coughs and colds to spread, even if we try our hardest to avoid them. The coronavirus pandemic has made many people more conscious about their hygiene, but despite the increased use of face masks and hand sanitiser, it isn’t always enough.

According to a recent report by Public Health England, published in the Guardian, there has been a spike in cold infections, partly due to people’s weakened immune systems after 18 months of social distancing.

If you want to help your body ward off illness, there are a few things that you can do to help. Here are five simple ways to boost your immune system this autumn.

1. Make sure you’re eating a healthy diet

As you may know, having a balanced diet can be an essential part of maintaining a healthy immune system throughout the colder months. That’s why it’s important to ensure that you’re getting all the nutrients that your body needs to effectively fight off infections.

Foods such as fruits, vegetables, nuts, and seeds are all rich in vitamins, minerals, and antioxidants, which can help to boost your wellbeing. It’s also important to ensure that you get enough Vitamin C, as this is essential for a healthy immune system.

Probiotic foods, such as yoghurts, usually contain beneficial bacteria which can help to keep your digestive system healthy. This can help to prevent bacteria and viruses entering your body.

It can also be important to ensure you’re getting enough healthy fats, such as those found in olive oil and fish, to make sure your body can fight off pathogens effectively.

2. Use supplements in moderation

While we’re talking about proper nutrition, it’s worth mentioning the use of health supplements, such as Vitamin C pills and cod liver oil tablets.

Of course, while these are no replacement for a healthy and balanced diet, using them in moderation can help to boost your immune system if you’re lacking any important vitamins or minerals.

One of the most important nutrients for warding off disease is Vitamin C. As you probably know, this plays a major role in the healthy functioning of the immune system.

You may also want to consider Vitamin D supplements, as these can help to support the growth of new immune cells to help your body fight off pathogens. The body produces this vitamin through exposure to sunlight, meaning that many people become deficient in it during the shorter days of autumn and winter.

3. Try to exercise regularly

Another important way that you can support your immune system is by making sure that you’re getting regular exercise. This is because it can boost your cardiovascular health, lower your blood pressure, and control your weight.

The combination of these three factors help to facilitate a healthy and functioning immune system. Exercising regular also helps to promote the growth of new immune cells, making sure that your body is always reading to fight off germs.

According to the NHS, all adults should aim to get at least 150 minutes of moderate exercise each week to stay healthy. This can involve anything from hiking to biking, or even just taking a brisk walk to work each morning.

4. Make sure that you get enough sleep

As surprising as it sounds, one factor that can noticeably affect your immune system is how much sleep you get. That’s why, if you want to be able to fight off coughs and colds this autumn, you need to ensure that you get enough rest.

While aiming for the full seven or eight hours each night is a good start, you may always want to consider the quality of your sleep too. If you want to boost this, here are three simple ways to practice good “sleep hygiene”:

  • Try to fall asleep at the same time each night
  • Limit your caffeine and alcohol consumption in the afternoon and evening
  • Avoid using electronic screens, such as a mobile phone or tablet, before bed.

5. Limit your exposure to stress

As you’re probably aware, too much stress can impact your mental wellbeing, but you may not know that it can also affect your physical health. Persistently high levels of stress can actually lower the number of white blood cells in your body, making it harder to fight off germs.

Furthermore, stress can also impact your body by hindering its ability to properly digest food. This means that you don’t get enough of the essential vitamins and minerals in your diet that allow your immune system to prevent infections.

While it is obviously more easily said than done, reducing the level of stress in your life can be a good way to ensure your immune system is able to combat bacteria and viruses when you need it to. One simple way to lower your stress levels can be with relaxation exercises, such as yoga or deep breathing.

Why protection and financial planning go hand in hand

Since the initial outbreak in Spring 2020, the coronavirus pandemic has changed our lives in a variety of ways. One of the most important lessons that we’ve learned in recent months is that you never know when the unexpected might happen.

If you want to build long-term financial stability, one of the most useful ways you can do so is by finding the right type of financial protection for your needs. This can help you to absorb and overcome financial obstacles.

A recent study, published by FTAdviser, showed that the pandemic has prompted more than half of people to re-evaluate how they protect their financial future. If you want to ensure your long-term stability, read on to found out how protection and planning go hand in hand.

Protection can help you to absorb short-term financial shocks

As much as we might try to prepare for the future, it can sometimes catch us unaware. The pandemic is one of the best examples of this as, back in January 2020, nobody could have predicted how it would impact life in the UK over the ensuing months.

Likewise, on a personal level, you can never know when an unexpected change might impact your life. While you probably already have an emergency fund in place, this may not always be enough.

For example, consider the possibility that you suffer an injury that leaves you unable to work. While your company may offer sick pay, it may only last for a few months and you may not be well enough to return before it ends.

Additionally, Statutory Sick Pay in 2021/22 is just £96.35 a week, which is unlikely to be enough for you and your family to live on.

This can pose obvious problems, especially if you have ongoing financial commitments like mortgage repayments or education fees for children or grandchildren.

If this happened, you may have to dip into your savings in order to make ends meet. While this can help you in the short term, it can significantly impact your wealth in the long term.

This is where having income protection could help you, as it pays out a portion of your salary after an “excess period” of your choosing. These payments typically continue until you’re well enough to return to work or until the end of the policy period.

Income protection usually covers most illnesses that leave you unable to work but there are some exceptions to this so it’s important to read the terms of your policy thoroughly.

Protection can give you greater confidence in your plans

If you get diagnosed with a serious illness, it can be emotionally devastating. At a time when you should be thinking about recovery, concerns over money are the last thing you need. This is where critical illness cover can help.

Unlike with income protection, critical illness cover will pay you a lump sum, rather than a monthly amount, when you are diagnosed with a serious illness. You can then use this to pay for private medical care, to repay your mortgage, or maintain your current standard of living if you need to take extended leave from work for recovery.

Please bear in mind, though, that the definition of a critical illness often varies between providers, so make sure to read the terms of your policy so that you know what you’re protected against.

Having protection in place can give you greater peace of mind to know that even if you are diagnosed with a serious illness, it wouldn’t disrupt your long-term plans.

It can help to ensure the financial stability of your loved ones

A final way that financial protection can help you is with your estate planning. While nobody likes to think about the prospect of passing away, it’s important to plan ahead.

If you’re the main earner in your household, your death could have a significant impact not only on your partner’s retirement plans but also on your loved ones’ financial futures. This is where seeking protection can help.

Many couples do their financial planning together and an unexpected passing can significantly affect this. Having life insurance in place can help to ensure that your partner won’t have to experience a lower quality of life when you die.

Furthermore, protection can also be invaluable for protecting any inheritance that you want to set aside for your loved ones. A life insurance payment can help your family to cover any Inheritance Tax liabilities when you pass away.

Having protection in place can be invaluable for preserving your family’s financial wellbeing, even if the worst should happen. There are several different types of life insurance that you should consider, so if you want to know more about which is right for you, you may benefit from seeking financial advice.

In life, you never know when the unexpected may happen. If you want to be prepared for when it does, finding the right form of protection for you can be invaluable.

Get in touch

If you want to find out more about which types of cover could benefit you, we can help. Please email team@brunelcp.com or call us on 0117 214 0870.

Your Brunel team update

Now that summer is finally upon us, we hope you’ve been able to find some time to get outside and enjoy the sun! Whether you prefer a hike in the hills or to sunbathe in the comfort of your garden, there’s no better time to be outside in the fresh air.

It’s been a busy few months for us here at Brunel and there’s certainly a lot to talk about, so read on for your latest team update.

Kate’s night trek up Mount Snowdon

Kate Harris, our operations manager, undertook the challenge to climb Mount Snowdon to raise money for a charity very close to her heart. 18 months ago, Kate tragically lost her mother to chronic obstructive pulmonary disease, a serious breathing disorder.

Given her mother’s Welsh heritage and love of hiking, Kate and her sister decided that the best way to honour their mother’s memory was with a sponsored night walk up Mount Snowdon. The proceeds of their incredible effort would be donated to the Lung Foundation charity to help other sufferers of the disease.

While the two were no strangers to long hikes, doing it at night was a new challenge. Setting off in the late evening, the group began their long trek. There was an incredible spirit of teamwork, with everyone helping and encouraging the others, so after only three and a half hours of hard work, they finally reached the summit.

For Kate, one of the most memorable moments of the hike was on the return. As the group were halfway down the mountainside, the sun began to rise over the far hills. The view, and her sense of achievement, was unforgettable.

Not only had her challenge created amazing memories, but it had raised an incredible £1,600 for the Lung Foundation. We are all very proud of her achievement and are sure you’ll join us in congratulating her for her efforts.

Director Peter Hill’s retirement

In May, we said goodbye to Peter Hill, a director and one of the original founders of the business. Having spent his whole career working in financial services, he is now leaving for a well-deserved break.

For the last 10 years, Peter has poured all his energy into developing our business, putting together a first-rate team to deliver high-quality service for all of our clients.

We were lucky enough to give him a proper send-off at his home in Bishop Sutton, with a great afternoon of fun and games in the lovely weather.

Peter’s drive, ambition, and boundless enthusiasm will be greatly missed and we’re sure that everyone who knew him will join us in wishing him a long and happy retirement.

The re-opening of our offices

The coronavirus pandemic has been very challenging for us in recent months and so, like most other businesses, we’ve had to adapt.

In the past few months most of our team have been working remotely, aside from a small presence who remained in our offices. Now that the government has eased the restrictions, we are delighted to tell you that our staff have been able to return to the workplace.

Like many firms, we have given our team the option to work flexibly, depending on their preferences. We are all looking forward to experiencing the buzz of the office again, being able to enjoy each other’s company and bounce ideas off one another to deliver high-quality client service.

If you’re visiting us in Wells, you’ll also get to meet our newest team member, Sally Brooks. She has just joined our client services team and will now be the first point of contact for our clients.

While our offices have reopened, we’d like to assure you that we’re taking appropriate measures to keep both you and our staff as safe as possible while returning to some level of normalcy.

As always, if you ever need to speak to us for any reason, please don’t hesitate to get in touch. Please email team@brunelcp.com or call us on 0117 214 0870.

Our top 7 books about freedom that you should read this summer

The pandemic has been a difficult time for many people but, at long last, some of our freedoms have been returned. After many long months, the UK has taken its first step on the long road out of the pandemic restrictions.

One of the best ways to relax in summer is by sitting down in the sun with a cold drink and a good book, whether on the beach or in your back garden. So, to celebrate the loosening of lockdown restrictions, here are our top seven books about freedom.

1. The Great Escape by Paul Brickhill

Starting off with the classic story of one of the most well-known escapes in history, The Great Escape is the exciting tale of how hundreds of captured British soldiers worked together to organise an incredible breakout from Nazi captivity during the war.

Their task was no easy feat, as the infamous prison camp was supposedly escape-proof. But right under the noses of their guards, they dug tunnels, forged passports, and stitched German uniforms to help them make a break for it.

The escape was well-organised and timed to the second but, of course, sometimes not everything goes according to plan…

This book is an incredible account of ingenuity and courage in the face of danger, proving that real life can be just as exciting as fiction.

2. The Backpacking Housewife by Janice Horton

When ordinary housewife Lorraine Anderson comes home one day to find her husband in bed with her best friend, she decides to put on her coat, set off for Gatwick airport, and never look back.

A heart-warming novel, this book follows Lori’s journey of self-exploration as she slowly discovers who she really is under the titles of wife, mother, and business owner. As she encounters new opportunities, the reader gets to watch her blossom to her full, realised self.

A brilliant book that’s hard to put down, The Backpacking Housewife is an excellent read for anyone craving a bit of summer escapism.

3. Brave New World by Aldous Huxley

In New London, everyone is happy. A perfect society has been achieved through mind-altering drugs, hypnotic conditioning, and the destruction of family bonds. Happiness itself has been distilled down into a pill that can make you forget about anything bad that ever happens.

But there is one person who is unhappy, a scientist called Bernard Marx, whose job in hypnotic conditioning gives him some perspective on how flawed their society really is. His journey to find meaning in this world leads him to explore what it really means to be happy.

Huxley’s classic dystopian novel is a thrilling read and sits at number five on the Modern Library’s 100 best English-language novels of the 20th century. Even though it was written in 1932, its vision of the future is both terrifying and believable.

4. Persuasion by Jane Austen

One of the great Victorian novels, Persuasion was Jane Austen’s last novel and is generally thought of as her most mature.

The heroine of this book is the 27-year-old Anne, who, as an unmarried young woman, is effectively a prisoner of her overbearing father and is trapped in the gilded cage of her family mansion. Worse still, she has no true companions and is surrounded by some of the worst people that high society has to offer.

But when Anne reconnects with an ex-fiancé, whom her family pressured her to leave, this gives her the opportunity for a second chance at love and the possibility of escape from her family.

A beautifully written novel, Persuasion is full of humour and is sure to warm the heart of any reader.

5. The Thing Around Your Neck by Chimamanda Ngozi Adichie

Number five on our list is The Thing Around Your Neck by Nigerian author Chimamanda Ngozi Adichie. This collection of short stories explores a variety of topics, from romantic heartbreak to the difficulty of immigrants to adapt to life in their new country.

A compelling book that addresses many difficult topics, such as religious tolerance, sexual freedom, and economic exploitation in modern Africa, it is as engaging as it is thought-provoking.

6. Freedom by Daniel Suarez

In the much-talked-about sequel to the 2006 novel Daemon, Detective Pete Sebeck returns to help lead a small band of enlightened humans fight against the odds in this terrifying techno-thriller.

Leading on from the prequel, the malicious computer program known as the Daemon is firmly in control, silently using a network of spies to tear down society and rebuild it according to its own wishes.

As civil war breaks out in the American Midwest, Sebeck is forced to lead a populist uprising and fight against the powers that be. In a world of conflicted loyalties and rapidly crumbling authority, humanity’s freedom itself is at stake.

An excellent read for any fans of the cyberpunk genre, Freedom is definitely worth a read this summer.

7. The Long Walk by Slavomir Rawicz

Slavomir Rawicz was a young cavalry officer in the Polish army, but when the Soviets occupied eastern Poland in 1939, he was arrested by the communist secret police. After they beat a confession out of him for things that he had never done, he was sent to a work camp in the farthest reaches of Siberia.

Camp life was brutal for the prisoners and so he and several others formulated an escape plan. They trekked over four thousand miles through Siberian forests, Mongolian deserts, and even the Himalayan mountains to reach freedom in British India.

Rawicz’s incredible journey is a breathtaking true story of survival against the odds and resourcefulness in the face of danger.

3 useful financial lessons to teach your children and grandchildren

Learning how to manage your money effectively is a key life skill. If you want to build your wealth, it’s important to start from a solid foundation of financial sense.

While you will already have these necessary skills, you may have loved ones who don’t. According to the National Student Money Survey, 71% of respondents said they wish that they’d received better financial education when they were younger.

If you want your loved ones to know how to manage money once they’re old enough to fly the nest, there are a few things you can do to help them. Here are three useful financial lessons to teach them.

1. The importance of developing good saving habits

If you want to instil good financial habits, one of the most important lessons that you can teach your younger relatives is the importance of saving money for a rainy day.

While something as simple as a piggy bank can be a great way to introduce young children to the concept, when they get a bit older, you may also want to consider something a bit more sophisticated.

Setting up a junior savings account on behalf of your child can be a great way to encourage good habits and build their financial knowledge. You could also help them to pick an account, which would give you an opportunity to explain aspects of saving such as what the interest rate is. Junior savings accounts tend to attract a better rate than those for adults and they could monitor the rate and let you know if it changes.

Once it’s set up, it can be a good idea to talk to them about how much of their pocket money they’d like to save each month and how much is available to spend.

Once they get a bit older and get their own phone, you may want to introduce them to apps such as RoosterMoney, which can teach them more about managing their money. This allows them to transfer pocket money and set savings goals so they can see the benefits and rewards of saving.

2. How to budget effectively

Another useful skill to teach younger family members is how to budget effectively, as this is one of the cornerstones of sensible financial planning.

This can also be particularly useful if your loved ones may one day go to university. According to the National Student Money Survey, 1 in 10 of the respondents said they had never budgeted before leaving home.

Many of us have experienced how growing children (and especially teenagers) are never full, which is why food can be one of the easiest ways to teach lessons about budgeting.

One example is to make a snack list for your weekly shop and letting your younger relatives pick which items they want within a budget. You can also use this method to encourage healthy eating by making a piece of fruit cheaper and junk food more expensive.

When they get a bit older, you can also get them involved in meal planning and preparation. Not only is knowing how to cook a useful skill for any child to learn, but it can also teach them important lessons about budgeting and substitution.

3. How overdrafts and credit work

As your loved ones get a bit older, you may want to start teaching them more complicated lessons about managing their money. Explaining to them about overdrafts and credit can be useful, as it may prevent them making costly mistakes.

It can be easy, especially for younger people, to view the overdraft as essentially free money. This is particularly true for students, who often benefit from 0% interest on their overdrafts.

Of course, this isn’t the case and that’s why it’s important to teach your loved ones that an overdraft should only be relied upon as a last resort. If they fall too deep into their overdrafts, they may rack up hefty charges.

Another important lesson can be how to use credit effectively. While many young adults don’t feel the need to get a credit card as soon as they are eligible, it can still be helpful for them to know more about how they work.

Credit can be useful, such as when making large purchases, it can also have potential downsides too. Getting too deep into debt is an obvious one but relying on credit can also leave them open to one major problem – the risk of missing payments.

If they do, it could harm their credit score. This would seriously impact their financial wellbeing and could make it more difficult to purchase a home later in life.

Sitting down with your loved ones and explaining to them the risks of relying on credit can help them avoid running into problems later on.

Get in touch

No matter what stage of life you’re at, there are always financial lessons that you can learn. If you have questions about your or your family’s financial affairs, get in touch. Please email team@brunelcp.com or call us on 0117 214 0870.

Perfecting your game

17.05.2021

The investment adviser Charles Ellis famously pointed out in 1975 — investing is like tennis. For professionals, it is a winner’s game. But for amateurs, it is a loser’s game.

“Professionals win points, amateurs lose points. Professional tennis players stroke the ball with strong, well-aimed shots, through long and often exciting rallies, until one player is able to drive the ball just beyond the reach of his opponent,” wrote Ellis.

“Amateur tennis is almost entirely different… the ball is fairly often hit into the net or out of bounds, and double faults at service are not uncommon. The amateur duffer seldom beats his opponent, but he beats himself all the time. The victor… gets a higher score because his opponent is losing even more points.”

I do not think I like the term “loser”, but I get his point, which is that is that if you do not have a structured, repeatable approach to portfolio management, which you implement year in year out, your portfolio can fall apart.

The analogy echoes many studies completed over the years that have found that the investors worst enemy is often themselves. At IronBright we review the Dalbar Report every year which continues to re-enforce that individual investors regularly underperform relevant benchmarks due to poor behaviours and lack of discipline, which is summarised in the well renowned ‘The Behaviour of Individual Investors’ paper Barber & Odean – “The behaviours deleteriously affect the financial wellbeing of individual investors”.

Deleteriously – what a word!

But then this begs the question: ‘Is your professional investment adviser sufficiently, and smugly, equipped to deliver better returns”? Uncomfortable question, which I bravely put to the test looking at our portfolios against their respective benchmarks over the last 5 years, which has been a challenging period to both amateur and professional alike.

 

Benchmarks can be completely misleading, but we have ours about right. They offer the same asset allocation as the respective portfolio with the projected asset class returns as those prescribed by the FCA, which are reviewed on a regular basis by PWC e.g., UK equities 7.00% p.a. and UK Corporate Bonds 3.00% p.a.

The chart above shows a selection of IronBright portfolios, which hold the majority of our clients’ assets -very relieved to report that we are ahead of the game. “15 – love the Professional”.

Pleased, relieved and certainly not smug….honest.

Steve Brady

Steve Brady
Director

The beginning of the end or just the end of the beginning?

16.04.2021

As you read this, we have just passed the third of the five dates in the Government’s tortuous pathway to normality.

I haven’t yet ventured out for my “Alfresco” pint. It’s just not the same in a hat, scarf and gloves! Nor have I been for a haircut as I don’t have any hair, as many of you will know.

Outdoor sports is back which is very welcome in the Rylett household. Things have moved quickly from being virtually housebound every evening to out every evening. I shouldn’t complain.

I have seen my parents for the first time in a long while which was wonderful and very emotional after an extremely tough time as my father suffered a stroke in January and has been recovering slowly. The care and support he has received from the health services despite the pressure it is under has been second to none.

I have a summer break in Cornwall to look forward to although the one in Greece remains doubtful.

I had my first jab today so it is great that the rollout programme continues to thunder on and reaches us youngsters!

This is all good news and the mood has definitely been lifted. I hope that you are enjoying the relaxations too and we would be interested to hear what you are doing for the first time in a while.

Who knows what kind of world we will be re-emerging into?

It won’t be until the furlough scheme(s) end and the economy fully resumes that we will know the true state of things.

I wish with every fibre in my body for the good health of small businesses, the backbone of this country in many ways.

Time will tell. I don’t pretend to be optimistic but then I don’t know what the future holds – and nor does anyone else, for the record.

Spring is a time of renewal, of promise. Let’s put the rubbish year and a bit behind us and move on.

Now that we have some of our freedoms back, I sincerely hope that you won’t be waiting for our weekly update to land in your inboxes on a Friday afternoon. Hopefully, you will be out doing something much more fun. We will be continuing with these but moving them to monthly. I do hope that our little updates have helped in some way to get you through one of the most challenging periods some of us have ever or will ever face.

Onwards and upwards.

Best wishes

Damien Rylett

Damien Rylett CEO

Mind the tax trap!

09.04.2021

How to kill two taxes with one stone (ok, maybe not kill exactly)

I am under no illusions that an article on tax is going to capture the imagination but please bear with me!

Now that we are at the start of a new tax year, there is one particular area I wanted to bring to your attention. Don’t worry I have no intention of staring into a tax crystal ball and predicting what may change in the future.

There are however two well-established tax traps that are all too easily missed but, in many cases, can be equally easily avoided if you know where to look. It is also possible to help a child or other family member avoid them which creates a win-win against both Income Tax and Inheritance Tax.

The first is the snazzily titled ‘High Income Child Benefit Tax Charge’. Imagine, if you will, someone a bit like me but only in so far as they are married and have 2 young children. If either my wife or I earned over £50,000 then not only would we start paying higher rate tax but we would also have to start paying back child benefit.

Now, imagine my wife earns £60,000. If she did then not only would she have paid 40% income tax on the income between £50,000 and £60,000 but she would have to repay the child benefit in full which is another £1,820 giving a total effective tax rate of 58.2% and leaving her walking away with just £4,180 in her pocket from £10,000.

Imagine, instead that you could turn that £4,180 back into £10,000 and the only catch is that it was in a pension to help fund her retirement. That’s a pretty attractive 239% return!*

The detail of how this works is below but I think it is important to make people aware of this. From experience, if that were indeed my wife, cashflow can be tight with 2 children but there is no reason why a parent couldn’t make this contribution on behalf of an adult child. If this were treated as a gift either out of income or by using the £3,000 annual Inheritance Tax (IHT) exemption then it is win-win as it also helps pass money to the next generation efficiently as far as IHT is concerned.

The second trap I want to cover is the loss of Personal Allowance for income exceeding £100,000. The ‘trap’ in this case exists for people earning between £100,000 and £125,140. For every £2 of income above £100,000 then £1 of personal allowance is lost.

This creates a punitive tax rate of 60% for this section of income. This comes from 40% income tax and an 20% extra tax for the amount of lost personal allowance.

I’m sure you get the idea now with pension contributions, but this can be another point at which pension contributions become incredibly tax efficient.

I will leave it there for now. If you think this could affect you, a family member or someone you know why not get in touch with your Planner and see if we can help.

*In practice the individual would make an £8,000 initial outlay into the pension. The scheme would reclaim £2,000 within the scheme giving a total of £10,000 in the pension. Higher rate tax (a further £2,000) would be reclaimed via a tax return taking the net cost to £6,000 and the Child Benefit of £1,820 can be kept making the net cost £4,180.

Dan Hiles
Financial Planning Director & Chartered Financial Planner

 

There is time for everything – even emotion

01.04.2021

I must confess to having had a bit of a dilemma last Friday evening. France hosted Scotland in the final game of the Six Nations and who to support as an Englishman? The first emotion of “get behind the Sweaty Socks” was then swiftly followed up with a stronger emotion “Allez les Blues” because a France win by a certain margin meant Wales would come second overall and there would be much crying and gnashing of teeth down in the valleys.

Growing up in the 70s on the back of countless Welsh hidings has instilled in me such an unwholesome knee jerk reaction of ‘anyone but Wales’, which I am the first to agree with is not to my credit. But there you go – you get emotional about matters and you invariably make the wrong decision. Having had a stern word with myself I painted my face blue, sang Flower of Scotland like a warrior from Brave Heart, and watched an epic game to crown an epic tournament. Well done Wales (yes really) and well done Scotland who won the game at the death in dramatic style and came of age.

Many get emotional over investments both on the upside and on the downside, and indeed if they drift for too long. Emotion and investments become a heady cocktail, which leads to poor decision making. We have begun planning for the May rebalance when all portfolios are realigned back to their original asset allocation, an exercise that happens twice a year. Having zero emotion about such an important decision means that there is no soul searching about market timing or navel gazing about how much to sell and how much to buy. We have etched the investment process into tablets of stone and implement it at specific dates in the year. We complete comprehensive ongoing research and due diligence on the portfolios but will not be sucked into short term tactical decisions.

True to our word though when we stated earlier this year that any changes in our portfolios would have to favour a sustainable mandate, we will be adding the Liontrust Sustainable UK Growth fund to the IronBright Core Satellite range and introducing the Stewart Investors Asia Pacific Sustainability fund to the IronBright Sustainable range at the rebalance. We like both Liontrust’s and Stewart Investors basic belief that those companies that will survive and thrive are those which improve people’s quality of life, be it through medical, technological, or educational advances.

Most clients who I have spoken with over the past year have accumulated surplus cash, partly I would like to think down to our investment prowess, but probably more so because there has been very little to spend it on. With the Easter break only a few days away, the prospect of Summer on the horizon and the joyful promise of further relaxing of ‘The Rules’ even I am, on reflection, becoming a bit emotional …. nearly time to go face down in an enormous chocolate egg and spend a bit of accumulated cash planning a family holiday…. what could possibly go wrong!

From me and all of my colleagues may I wish you a very happy Easter.

Steve Brady

Steve Brady
Director

Brunel Capital Partners is a sister company of Pilgrim Financial Planning