Pension experts have dismissed a solution to raise the tapered annual allowance threshold income, calling it a sticking plaster which would not solve the underlying problem. Treasury officials have discussed raising the tapered annual allowance threshold income from the current from £110,000 to £150,000, a level at which pension contributions are counted as earnings and lower tax-free allowances start to kick in. It was argued such a solution would solve the problem for most doctors who have been turning down additional work for fear of large tax bills, since consultants’ median earnings are £112,000 and it is estimated that 90 per cent would fall below the new limit. This solution would not be exclusive for NHS pension scheme members and would be applied to all taxpayers.

Introduced in 2016, the taper gradually reduces the annual allowance for those on high incomes, meaning they are more likely to suffer an annual tax charge on contributions and a lifetime allowance tax charge on their benefits. It means that for every £2 of adjusted income above £150,000 a year, £1 of annual allowance will be lost. The British Medical Association, which has been campaigning for the tapered annual allowance to be scrapped, has already criticised the proposed solution. But experts believe that simply raising the threshold income would not remove any of the complexity of the taper, nor the threat of doctors facing a ‘tax cliff’ when their income increases through promotion or taking on additional work.

Funds and trusts invested in the UK have seen a significant bounce since December’s General Election saw Boris Johnson’s Conservative party win a decisive majority. After years of stunted flows amid uncertainty over the UK’s political backdrop, the average UK All Companies fund climbed 5.1% between 12 December 2019 and 10 January 2020, according to AJ Bell. But UK smaller companies funds performed even better, up 7.8% on average, with the top performer, VT Teviot UK Smaller Companies, up more than 11%.

Investment trusts focussed on British firms have been the real winners since the election, however, with UK All Companies trusts delivering 8.2% on average, UK Smaller Companies 8%, and UK Equity Income 5.1%. The more than 5% gain for UK All Companies funds compares with a loss of 0.08% during the previous 30-day period and a return of only 1.74% during the same period the previous year. The UK Equity Income sector has also risen 5.1% since the election. Sentiment towards UK stocks has dramatically improved since the December general election, as evidenced by widespread gains among UK focused funds and investment trusts. The large majority gained by the Conservatives fuelled a Boris Bounce as investors hurried back into domestically focused companies that had been out of favour for so long.

If you’re one of the millions of people who’ve shared in the £34billion of PPI repaid (so far), you may have paid tax unnecessarily. If so, and your payout happened in the last four tax years, you are due money back. The money you get paid back for PPI can have up to three main elements:

1. A refund of the PPI you paid.
2. If the bank (outrageously) added an extra loan to your original loan just to pay for the PPI you get back any interest you were charged on this extra loan.
3. You get Statutory Interest (at eight per cent a year) on the total of both those sums, for each year since you got the PPI.

Only the third element is taxable. Any tax taken is usually shown on your payout statement. Tax is due because this Statutory Interest is designed to return you to the position you’d have been in if you hadn’t had PPI. If tax is due on PPI payouts, most firms deduct it automatically, at 20 per cent, before you get the money. That has always been an issue for non-taxpayers. However, since April 6, 2016, far more people have been owed tax back, as that’s when the personal savings allowance launched. It allows most taxpayers to earn £1,000 a year of savings interest, tax-free. Since then, while most savings interest has been paid without any tax taken off, PPI still has 20 per cent automatically deducted. Therefore, oversimplifying somewhat, it counts as savings interest, as if you’d earned it on that saved cash.

A series of government moves over the past few decades have reduced their tax advantages and made trusts much less attractive to wealthy families. They are likely to become less popular still from March, when a new requirement will force thousands more trustees to list on a government register that is partially open to the public, or risk penalties. Since 2017, certain types of trusts have had to report information to a government online register called the Trusts Registration Service (TRS). This came into being as result of an EU-wide directive to tackle money laundering. To comply with the rules, all UK trusts that have to pay a tax liability such as capital gains tax (CGT), income tax, inheritance tax or stamp duty must report information to the register.

Trusts that are outside the UK but trigger UK tax must also do so, as must all trusts that are required to fill out a self-assessment tax return anyway. Currently the register is not publicly available, with access limited to law enforcement authorities. But from March, the next phase of the EU directive (the fifth Anti Money-Laundering Directive) is set to increase the number of trusts that must submit reports. It will also partially open up the register to the public, including journalists, leading some to worry about an erosion of privacy. Despite the UK’s imminent departure from the EU, the government is committed to implementing the directive and passing it into domestic law before Christmas. tax experts warn that hundreds of thousands of trustees and beneficiaries could be affected and need to understand better the possible impact of the changes.

The chancellor Sajid Javid has announced the date of next UK budget, with a pledge to tackle the cost of living and tear up strict budget rules to hike borrowing for infrastructure spending. The 2020 budget will take place on 11 March after a planned budget last November was cancelled in the run-up to the election, HM Treasury confirmed in a press release on Tuesday. Business leaders said it was the new administration’s “first opportunity” to show it understood firms’ concerns amid continued political uncertainty over Brexit. Javid said the British public had “told us they want change,” in a signal of the government’s changing priorities since the Conservatives’ landslide election victory last month. Officials said Javid would use the budget to:

• Fulfil government pledges on tax to “help tackle the cost of living for hard-working people.”
• “Level up” across the country through “billions” in investment, rewriting previous https://techlink.co.uk/user/knowledge/browse/investments/63703_INDIVIDUAL_SAVINGS_ACCOUNT/120379_LISA_comes_to_the_fore/administration’s spending rules and taking advantage of low interest rates to increase borrowing.
• “Build on” recent announcements to boost spending on public services and tackle the cost of living, including hospital investment, vocational training and a significant hike in the minimum wage.

Gold had a good year in 2019. In dollar terms, it was up in price 19%. Priced in pounds, it rose by 15%, finishing the year at a tad over £1,157 an ounce. It’s the fourth consecutive year that gold prices in sterling terms have risen. Yet, according to investors and some financial experts, gold has further to go – much further, even. They believe 2020 should be another excellent year for an asset that many consider a safe haven – in both calm and stormy times.

An asset that most experts insist should always be considered by investors looking to build a broadly diversified investment portfolio, sitting alongside other long-term investments such as equities, bonds and property. This is despite the fact that, unlike other assets, gold is non-income producing. It’s all about the price with gold – it rises and you win, it falls and you lose. The latest poll conducted by precious metals dealer BullionVault suggests that confidence to deliver strong price gains this year remains sky high.

Nearly four in five of BullionVault’s clients believe that gold prices will rise by more than 10% in 2020. Of course, you would expect precious metals investors to talk up an asset they have a financial interest in. But BullionVault’s clients are not exclusively gold investment fans. Indeed, they typically hold no more than 10% of their investments in gold. The consensus among commentators is that fear will drive the gold price even higher – resulting from potential geo-political and global economic risks such as rising tensions between the US and Iran.

Renewable energy from sources like wind, waves and geothermal heat, has been the topic of great discussion over recent years. There has been an increase in pressure to reach 100% renewable energy as soon as possible. Some countries are targeting 2030, while many skeptics think it will take much longer than that. One thing is for sure, there is a lot of money going into climate change. That should excite those looking to invest in renewable energy. In recent years, there has been an uptick in renewable energy investments from manufactures and installers, which many think may spur the industry’s growth rate. The potential for expansion or contraction only increases the reward opportunity as well.

While investments in renewable energy continue to grow, there is still plenty of money poring into fossil fuel projects. In a recent article, Fessler noted that the European Union has funneled 13.4 billion pounds into fossil fuel projects over the last 5 years. JP Morgan Chase & Co. was also listed as the world’s biggest funder of fossil fuels. the decline in unsubsidized costs to generate wind and solar power creates a significant impact. The reduction puts renewables on track to become cheaper than all but the most efficient gas plants by 2023.

The NHS and the issues relating to pensions tapering featured prominently throughout last year.  The impact of the annual allowance charges caused by tapering lead to many senior clinicians refusing to take additional work, reducing hours or even choosing to retire early.

Initially, potential solutions looked at making adjustments within the scheme to try and resolve the issue, firstly with the idea of introducing a 50:50 option, followed swiftly by more flexible options to allow senior clinicians to try and manage their accrual. However, these options all involved a reduction in pension benefits and any changes weren’t planned until April 2020.

It became clear that more immediate action was required to try and resolve the issue in the current year and in September 2019 the NHS issued guidance for employers to offer local solutions. These options were complex and most had significant drawbacks and so showed little sign of solving the problem.

With the election looming and the NHS becoming a key issue, NHS England took drastic action at the end of November 2019 to try and temporarily resolve the issue and announced that they would cover clinicians’ annual allowance charges for the 2019/20 tax year.  There was initial scepticism amongst clinicians and the British Medical Association (BMA) and other representatives sought clarification around the process and that the offer was watertight.

On the 7 December Matt Hancock the Secretary of State for Health and Care issued a statement confirming agreement to support the proposal and outlining that the process will involve a binding contractual commitment. The agreement will involve the clinician making a Scheme Pays election in relation to the excess accrual within the NHS scheme in the normal way. When the member takes benefits the Scheme Pays deduction will be made. The contractual commitment will then provide a payment equivalent to the annual allowance deduction. Where an NHS trust or foundation ceases to exist the liabilities would be transferred to another NHS body or the Secretary of State.

The measure applies to all pension inputs to the NHS schemes in the 2019/20 tax year excluding additional voluntary contributions. The additional statement and clarification provides reassurance that clinicians can take on additional work in this tax year without the concern of annual allowance charges arising in the NHS scheme. However, due to the potentially very long-term nature of the commitment not all clinicians will be convinced. More importantly, this is a temporary solution and will only resolve the issue for 2019/20.

Whilst the Conservative Party included a commitment to review the impact of tapering on the NHS in their manifestos there was no specific reference to the removal of the tapered annual allowance. Although the solution appears to be good news for affected clinicians in the current tax year, tapering has caused wider issues in the public sector and beyond. It appears that the only real cure would be to remove tapering entirely. Whether the Government will be willing to make this more drastic move we will have to wait and see.

It’s also important to note that the proposals above only apply to NHS England. We understand NHS Wales have made a similar commitment but have not yet seen official confirmation. We also understand that for the Scottish scheme they have offered to pay the employer contributions as additional salary if the members choose to opt out to avoid annual allowance charges.