• INTERVENTION & REGULATION
ENGLAND
MY ADVICE...
Tax, assets,
Plan: preserving wealth should take account of your day-to-day needs, the
efficiently. Some assets may be held in tax wrappers (ISA’s, Pensions, Offshore bonds), others may be held in more personalised structures such as trusts and family investment companies. The structuring will bring tax efficiency to the plan.
bonds are becoming popular again too, particularly for UK resident non- domiciled taxpayers. Beyond the investment wrappers and structures, the ongoing difference between tax rates on income and gains in the UK encourages wealth managers and their clients to actively allocate assets to produce returns taxed at the lowest rate of taxation. If the gap between income and capital gains tax rates is closed in the forthcoming Budget (30 October 2024) the emphasis on asset allocation in terms of producing income or gains should reduce, at least in part. Q3 Is wealth management becoming more complex as a result of political or economic drivers?
type of return your require (monthly, annual, lifetime), and your attitude to risk. Investments often produce the best returns when they are held for the long term without frictional transaction costs. Structure: when you know the plan you can select the investments and the structures to deliver the cashflows tax
and politics
Review: needs and circumstances change, so the plan and the structuring
should be kept in constant review (at least triennially) and updated where necessary.
The outlook for UK wealth management
optimise tax efficiency. Geopolitical Risks – events such as conflicts, sanctions, and political instability in key supply and trade regions can create uncertainty for markets and investors. We have recently seen the conflicts in Ukraine and the Middle East move markets and asset allocations significantly. Regulatory Changes – the UK financial services industry is heavily regulated, and changes in regulations can impact wealth management products. Regulatory changes, such as increased or reduced levels of permitted gearing within structured products can dramatically alter returns and investment performance Environmental, Social, and Governance (ESG) Considerations — political policies advocating for sustainability and social responsibility have led to a rise in ESG investing.
Wealth managers are increasingly tasked with incorporating ESG factors into their investment strategies, which can complicate portfolio management and require more sophisticated analysis Monetary Policy and Interest Rates — political decisions related to fiscal stimulus, government spending, and monetary policy can influence interest rates and inflation. The Liz Truss / Kwasi Kwarteng mini budget in the UK highlighted dramatically how these decisions can move the market very quickly. In summary, the interplay between wealth management and political factors is becoming increasingly intricate. Wealth managers must stay informed about political developments and their potential implications for investment strategies, client relationships, and overall market conditions.
Justin Moore Partner Arnold Hill
Q1 Is your jurisdiction maintaining high taxes as a means of arresting inflation? What effect is this having on private clients? Whilst higher taxes may form part of a broader government strategy to curb inflation, the primary responsibility for managing inflation in the UK rests with the Bank of England which adjusts interest rates and controls the money supply to maintain inflation in the target range. However high taxes could support curbing inflation the following ways impacting private clients: • Reducing Disposable Income – higher general taxes can reduce the disposable income of consumers, leading to reduced spending and investment. • Targeted Tax Increases – since taking power in July this year the UK Labour government has introduced targeted tax increases in respect of private school tuition fees (through the removal of the VAT exemption on those education fees and related costs) Whilst essentially a direct revenue-raising measure for the government, the disposable income of those private school families will be reduced. • It is widely anticipated that the
run out of funds through smaller future funding rounds. All of this will act as a drag on economic growth. • Increased tax revenues can be used to fund government programs
forthcoming budget will see increases in capital gains tax rates and inheritance tax rates. This is likely to lead clients to hold assets for longer periods, but also to demand higher returns when making business investments, particularly in early-stage businesses. Some businesses will simply fail to be funded, others may
Yes, without doubt, both in the UK and globally. Examples in the UK include:
Tax Policies and Regulations – changes in tax laws, such as increases to capital gains taxes, estate taxes, and income tax rates, or the withdrawal of tax exemptions can significantly impact wealth management strategies. For instance, proposed tax reforms may lead wealth managers to rethink asset allocation and investment vehicles to
or investments that improve productivity and supply-side
capacity in the economy. Although not able to invest as much as they had previously hoped, the new UK Labour government has committed significant investments in clean UK energy which should increase the competitiveness of the UK manufacturing sector and provide opportunities for investing alongside the government. Q2 Is your jurisdiction looking to reduce the potential for tax- efficient asset management? No, quite the reverse we think. In the current environment of relatively high taxation, it is incredibly important to look at all aspects of tax-efficient investing. We would encourage clients to look at ISAs, pensions, venture schemes etc., but also to look at tax-efficient structures like trusts and family investment companies. Offshore
About us...
www.arnoldhill.co.uk
Arnold Hill & Co LLP have been proudly delivering tailored accountancy services for over a century. Based in the heart of London, we combine tradition with a forward-thinking approach to meet the evolving needs of our clients, both across the UK and internationally. With 5 partners and over 70 employees, we advise corporate, personal and not-for-profit clients on tax and business issues. Over the years we have transitioned from accountants to advisers and more recently we are becoming an extension of our clients’ finance teams through strategic partnerships. We currently serve a large number of clients, who range from entrepreneurial or high-net-worth individuals to multinational corporations who appreciate efficient tax planning to enhance their wealth. Our services include tax compliance, tax planning and international structuring in addition to the traditional audit, accounting and business advisory services. Our personal clients are predominantly individuals seeking help with personal taxation whilst our corporate
Justin has been with the firm for more than 30 years and has a broad range of experience. His clients tend to be entrepreneurial or regulated clients (often both!) and enjoy his proactive and commercial approach. In terms of regulated sectors, Justin acts for private equity managers, investment managers, hedge funds, insurance businesses and solicitors.
clients tend to be international groups of companies requiring business consultancy. Our clients also range from family trusts and charitable foundations to small businesses outsourcing their bookkeeping and payroll work. From family trusts and entrepreneurs to growing businesses and multinational groups, our clients all value the peace of mind that comes from partnering with a trusted, resourceful firm of chartered accountants. The size of the firm is small enough to provide an unusual degree of personal service, yet large enough to provide every type of professional support required by our clientele. At Arnold Hill & Co LLP, your financial prosperity is our priority.
+44 (0) 207 306 9100 Justin.Moore@Arnoldhill.co.uk irglobal.com/advisor/justin-moore
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