Conservative tax policies pay no regard to the best interest of the country and Labour’s policies are horrendous with no awareness of the social consequences

Mr. Hunt has slammed Inheritance Tax as “profoundly anti-Conservative” but despite hopes for the Conservative manifesto to abolish the tax it did not transpire. The Conservatives have been the primary governing party since 2010, and if they wanted to demonstrate inheritance tax was profoundly anti-Conservative, they’ve had more than 20 budgets to do so! The problem with electioneering policies, is that they have little regard to what’s in the best interest of the country. I would welcome a reform of inheritance tax to find an equitable rate of tax, as I recognise the growth in much of our assets like property is not just down to us but also by the economic and infrastructure policies taken by the government to encourage that growth.

The Chancellor has firmly stated that the Conservatives will not raise Capital Gains Tax (CGT), emphasizing their goal to “encourage people to earn and to save. The irony is that the Conservatives have reduced the CGT annual exempt amount from £10,100 in 2010/11 to £3,000 today and have also frozen personal allowance. Private landlords who are already suffering from high interest rates, would be discouraged to sell and forced to push up rent to pay the costlier mortgage. Furthermore, by not being able to sell or transfer to their millennial/Gen Z children during their lifetime, it forces them to hold onto the property until death, at which point they’d suffer the higher 40% inheritance tax on the market value as opposed to the lower maximum 28% CGT rate on only the gain. It appears Mr. Hunt and his colleagues have done exactly the opposite of helping facilitate the transfer of wealth to millennials and Gen Z, who I would argue have a greater chance to benefit the economy by having a larger capital to leverage against as opposed to the limited economic potential of the boomers.

Recently, Mr. Hunt criticised Stamp Duty Land Tax, calling it a tax on “aspiration” and “very distorting.” When asked about the possibility of new taxes on expensive properties, he responded, “If you are talking about Stamp Duty, then I think if anything we should be going in the opposite direction.”

I can’t believe I appear to agree with Mr. Hunt, but Stamp Duty certainly needs a drastic overhaul. On this point I agree with Mr. Hunt, but Stamp Duty needs a drastic overhaul. I cannot see any equitable justification for charging tax on a property purchase. It’s a transaction among private individuals, and I struggle to see why the state should receive a cut especially when it could very well be receiving CGT. The seller has also been responsible for the council tax and any business rates if relevant, which the buyer would be taking on thus ensuring public service costs continue to be met. Stamp Duty should have ended when our war with France ended!

The Conservative manifesto says that first-time buyers purchasing homes up to £425,000 will be exempt from stamp duty. There is also a proposed two-year Capital Gains Tax (CGT) relief for buy-to-let landlords selling to existing tenants starting April 2025.

This is in line with the expectation for high rates of interest to continue for another couple of years and allows landlords easy relief if they sell to their existing tenants. Whether their existing tenants would have a sufficient deposit and the ability to obtain a mortgage is another matter. After all, if a tenant could afford a deposit and obtain a mortgage, they would probably already be a property owner. I don’t think this policy has been thought out.

It would be better if CGT was scrapped if the property was going to pass to a family member, thereby facilitating financial security for the next generation sooner, thus improving the prospects of entrepreneurial risk.

Meanwhile, every single tax policy by Labour is horrendous. I oft wonder what level of due diligence is done on these policies to scenario plan the likely social consequences.

Labour’s plans to levy VAT on private school fees are a disaster. The fact that we have a private school system reduces the burden on state schools which are already overcrowded. We need to make private schooling more affordable, not less affordable. We need an educational policy that works for our future economy. The ideal scenario would be to fund state schools sufficiently to pay for the best educational environment. Right now, the cheapest way to do this would be to maximise the potential of our bright minds, and we should look to help more parents fund private schooling or even private tuition. We would make up this investment in future tax revenue.

Equally heinous are Labour’s plans to abolish the non-dom tax status and close
various tax loopholes, including those related to carried interest. We need to be careful of abolishing non-dom tax status. It feels grossly unfair to tax worldwide wealth that the UK had no part in helping to generate. This could reduce foreign direct investment into the UK not just in terms of financial capital but human capital too – the good immigrants we need.

Similarly with CGT, CT, and IHT there’s nothing that I find encouraging to improve our lives.

Read more:
Tax Policies: the good, the bad and the ugly…

Inheritance is a hot topic as Baby Boomers ponder how best to pass on the proceeds of their life’s work to their business colleagues and family members.

Whatever the source of your wealth you’re entitled to protect it and ensure it will make a difference to the lives of your beneficiaries.

In this article we’ll give you an expert view on how to plan for final financial matters, and ensure that your wealth – and the benefits it brings – lives on.

Passing on your business assets

You may already be considering a succession plan for your business when the time comes for you to retire, or to ensure there are plans in place in case of sudden illness or death.

But you’d be in the minority: surveys suggest that only around a third (34%) of UK-based business directors already have such a plan in place.

Business owners face a specific set of challenges in this area – subject to the stage of their business – which must ensure business succession issues are carefully taken into account.

The earlier you begin business succession planning, the better. If you leave it to chance there may be devastating consequences not just for your fellow directors as well as for your family beneficiaries.

Your options include:

Trusts: One of the most regular oversights by company directors is not writing a business trust into their will. To qualify for 100% business property relief, shares of a business intended to be a going concern after a director’s death must pass via the ‘legacy’ clause in the will to a specific beneficiary, as per S39A Inheritance Tax Act 1984. That specific beneficiary should be a trust.

Gifts: Consider gifting strategies to share wealth while reducing tax burdens. If you are starting out as a property developer/investor, this would be complemented with a smart company structure involving different share classes where necessary.

Cross-option – How will the deceased shareholder’s family and the company’s other shareholders be fairly compensated for their relative stake in the business? This is a complex area, but has a relatively simple, satisfactory and water-tight solution – a cross-option agreement – if you get the right advice.

It’s no secret that business succession planning is a minefield. That’s why the earlier you can start to make provisions for the future, the better the outcome will be.

Whatever the stage of your business, it’s crucial to take a step back and consider the requirements of the company going forward, should the worst happen.

Legacy planning for your family

Of course, you’re also likely to want to seek advice about passing your wealth to family members – potentially several generations of them.

Strategic intergenerational wealth planning takes into account your financial assets, including land and property, businesses, stocks and shares, and any beneficial interest you may have in inherited wealth or lifetime settlements made by family members.

Effective planning helps to protect and secure the transfer of economic resources and their benefits from one generation to the next, giving them firm financial ground to make the most of their lives.

Unless wealth is managed carefully and strategically, it can be eroded remarkably quickly – for example by burdensome inheritance tax – leaving your loved ones to struggle.

Property plays a crucial role in intergenerational wealth. According to data, over-50s in the UK hold 78% of privately held housing wealth – and it must eventually find a home somewhere else.

That’s why effective wealth management involves assessing each property’s value, potential for growth and income-generating capabilities. Regular property evaluations and understanding market trends are essential to make informed decisions around property, as part of your overall wealth strategy.

Wealth managers can collaborate with families to ensure smooth property transfers to the next generation. Experts address legal aspects, minimise taxes and resolve potential disputes. It’s worth establishing structures like family trusts to facilitate the management and control of property assets.

No matter your situation, successful legacy planning – from successful business succession planning to intergenerational wealth management – requires a blend of expertise. There’s much to gain from talking to a trusted adviser who can join all the dots, managing diverse elements of your wealth and resources to sustainably maximise your wealth.

Read more:
Leave a legacy that benefits your business and your family

We’re all familiar with get rich quick opportunities: a promise of making a fast fortune that often seems too good to be true, but many people buy into anyway.

Ponzi schemes, pyramid schemes; whatever the description, these investment programmes carry huge risk, even if it isn’t readily apparent.

The term ‘get rich quick’ dates back more than 130 years according to the Oxford English Dictionary. Slightly more recent is the century-old Ponzi scheme, peddled for its supposed high rate of return based on a so-called low-risk investment.

Latterly, you may be aware of the proliferation of schemes proclaiming that anyone can build a property portfolio, and gain certification for doing so in double-quick time.

It’s understandable that eager investors can fall into this trap. Younger clients in particular often take a short-term view. This is driven by the idea of retirement seeming so far away; a general lack of financial education; a boom in cryptocurrency attracting this audience by delivering substantial, albeit volatile, returns; and the need to access capital quickly when it’s harder than ever to get on the property ladder.

Against this backdrop, getting advice from a wealth management expert who will align a long-term financial plan to your personal goals is vital. And experts will almost always tell you that slow and steady wins the race.

If advice is inaccessible, then building financial literacy skills – one of our key missions – will help people manage their finances more effectively.

Aligning goals with long-term investment

In most conversations I have with investors it’s clear they understand the volatility and potentially big losses associated with a short-term wealth management strategy.

There’s also widespread grasp of the counterpoint that when wealth grows carefully and steadily over a longer period, the returns are worth waiting for.

Recognising an investor’s unique goals from the outset is imperative. If that includes a desire to get rich quick we’ll educate them on what good investing looks like. It sounds boring – but it will stop them having to experience the rollercoaster ride of a short-term investment strategy.

All of this takes a great deal of patience and a long-term mindset.

Any wealth management plan will likely last for several decades. Putting this in place means firstly focussing on end goals, then working backwards, to ensure your finances perform well over time.

Getting your wealth management plan right

Sensible investment is vital to successful wealth management. This involves closely considering how to spread risk. Whereas a get rich quick scheme might concentrate on a single investment opportunity, which could go badly wrong and lead to heavy losses, long-term wealth management flourishes through diversification.

By that, I mean a financial plan that allocates the individual’s funds into a global portfolio, spanning a range of sectors, geographies and asset classes. Unlike investing in a single stock or instrument, if one element of the diversified portfolio came under pressure losses would be minimised – rather than the entire investment being wiped out in one go.

There are plenty of tax wrappers allowing someone to hold a variety of investment funds on the market, which provide an opportunity to gain a steady stream of income over time:

• ISAs
• Pension (55-plus)
• Investment bonds
• General investment accounts

The underlying investment can be predominantly equities; or fixed income; or a mix of both. It largely depends on the individual’s attitude to risk and when they intend to withdraw funds – something else a well-crafted financial plan will indicate.

Putting your finances on a firm footing

Starting at the end also means paying great attention to the wealth you are expected to hold when you die.

In building cashflow models we assume someone will die aged 100 (currently 12 years higher than average life expectancy). We also factor in 5%pa growth on investments, 2%pa interest rates and 2.5%pa inflation for the purposes of modelling. This helps to identify whether the person would run out of money and exhaust all liquid assets before hitting 100, or die with assets remaining.

Ideally, when someone dies they’ll leave a legacy. This brings inheritance tax considerations into the equation; but the client’s needs are the first priority and tax planning can follow.

Of course, personal needs and goals always change over time. The plan therefore needs to offer a level of flexibility, with regular financial reviews taking place.

Follow all of the steps I’ve outlined above and you’ll stay on a firm financial footing for the long term, rather than risking your wealth in pursuit of short-term gains that might never materialise.

Just as a keen gardener would plant seeds and wait patiently for them to flourish, you can stand back and see your long-term wealth management plan begin to reap rewards.

Read more:
The long game: Avoid risky get rich schemes with wealth management planning

For several decades received wisdom has told us that property investment is the best way to watch your wealth grow.

There’s something powerful about investing in a tangible asset you can touch, see and control. Contrast this with purchasing shares in a conglomerate that is intangible, but can – entrusted to a financial expert – earn an exciting return for you.

If you decided to fund a property portfolio 25 or so years ago, you’re probably mortgage-free by now. In addition, Schroders has calculated your investment might have more than “quadrupled”.

The quotation marks matter. Property investors often fail to consider the ‘cost of liquidity’. This wouldn’t be a problem if your bricks and mortar were legal tender; you could buy your weekly shopping with a brick.

Sadly, you can’t. Rather you must sell your property, and the gain could be subject to Capital Gains Tax (CGT) up to a whopping 28%. You’ll also need to pay brokerage and legal fees before you receive the cash in your bank account ready to be spent.

Property investment now comes with a warning

Property investors do so not just for growth but also consistent monthly rental income with the expectation it will continue into retirement. Due to the low cost of borrowing for the past 20 years, which has given strong net yields, it has been a reasonable expectation – until now.
Many people are becoming saddled with bigger mortgages – and unhappy tenants – alongside the current dip in property prices. Analysis by The Telegraph stated an average landlord paying the higher rate of tax face losses when the bank rate reached 2.75%. In an uncertain economy the dream of property ownership can fast become a nightmare.

Alongside the low-interest rate era coming to a crashing end, we are in an environment of high inflation and low wage growth, with the cost-of-living crisis resulting in a 98% increase in rental evictions according to Property Reporter.

Meanwhile, the buy-to-let industry continues to plagued by government intervention – most recently the policy paper A fairer private rented sector. Ministers are often perceived as being ‘anti-landlord’; whether restricting the amount of mortgage interest deductible as a business expense; the 3% stamp duty surcharge; meeting new energy-efficiency standards; or other areas of governance and compliance.

In a nutshell, landlords must professionalise and see their property investments more as a business than an investment. Which begs the question, have they got time to manage a business alongside their day job? Probably not.

It’s fair to say those once-popular property investment weekend diplomas may be suffering from a dearth of delegates today.

Spread risk to cement financial growth without property

Highly successful families who have built generational wealth do not merely invest in physical property. It’s among the worst asset classes you can pick, if it’s the only thing you invest in.

There are better solutions – and they require sensible investment. That means keeping pace with inflation at the very least, and maximising your returns relative to your risk appetite, while also ensuring tax efficiency.

It’s fundamentally important to diversify your wealth across asset classes, sectors, geography, and even company size. Globalised investment funds spread risk in such a way that your wealth wouldn’t be totally undermined by economic shockwaves, as it might be with a single asset class approach – which could happen in a property price crash.

It’s just as important to make use of the plethora of tax wrappers to hold your investments: see my earlier comment about the ‘cost of liquidity’. 

Consider this: you invested £500,000 into mainstream securities – stocks, bonds, commodities – then markets dropped 35% in a single year; your investment is now worth £325,000. Should you panic and decide to cash in, attracted by high 5% interest rates, you would have materialised the 35% paper loss. It’s only a loss if you sell.

Some time later, the markets recover. The number of shares you originally owned are now worth £500,000, but you only have £325,000 plus some interest to buy back in.

The key lesson to long-term investment is, “Don’t panic”; acknowledging that’s easier said than done, especially if you’re reaching a point when you need to extract capital.

Wealth management changes to suit the modern world

The longer you invest the greater the chance you have to ride economic volatility and maximise your investment. Ongoing private client advice matters greatly as it can prevent rash decisions, such as selling your investments during a downturn.

The traditional model of financial advice, revolving solely around financial instruments and overlook legal issues, is changing. The market is also being successfully automated: we’re working on assisting in this space with the My Finances app.

Yet with greater levels of wealth comes more financial complexity, so private client advice continues to matter. It will be some time before AI and other technology obsoletes it.

Sound financial and legal planning is key, focused not on returns but instead optimising the preservation of wealth, while maximising opportunities for tax-efficient liquidity.

In an environment increasingly devoid of face-to-face human interaction, many wealthy people and their potential beneficiaries still need help with their financial affairs, and empathetic, technically robust, tailored solutions matter more than ever.

To paraphrase a popular school song it’s always wise to build your personal fortune on rock, but using that firm foundation to then spread your risk is how you’ll reap the greatest rewards.

Read more:
Building Blocks: Which asset class can secure your financial future?