Spike Milligan was always an entertaining character and anyone who has not read his work has missed a treat. However, on this occasion I am not referring to Spike’s autobiography but rather the Bank of England’s Quantitative Easing Programme.

Since 2009, the BoE has fired £325bn into the British Economy by means of its Quantitative Easing programme. Last week they announced a further £50bn bringing the total to £375bn. To put this into perspective, this is equivalent to just under £6,000 for every person in the country. Rather a lot.

The question is – having fired this barrage of bullets at the problem, where has it all gone and what has it achieved? The answer it seems is that the banks now hold something like £500bn on their balance sheets – about 30% more than the authorities require them to hold but, it would seem, still less than they are comfortable with! In the meantime, lending is down and Sterling is up – exactly the opposite of what is desired.

When recently questioned the BoE admitted that their efforts to date have not had much effect – but that things would have been much worse had they not!

As Spike put on his epitaph; “I told you I was ill!”

The FSA Retail Distribution Review (RDR) is now almost upon us. From January 1st 2013 new titles will come into being and advisers will become independent or restricted depending on their offering.

So much has been written on the subject of independence but for me, it has pretty much all missed the point.

If I were a client looking for a financial adviser I would want the answer to one basic question: “Who do you work for?” A tied agent works for a product provider and is their agent in their dealings with the client. An independent adviser works for the client and is the client’s agent in their dealings with a product provider.

Case closed – vodka martini on the rocks, shaken not stirred!

Am I the only person who thinks that Super Mario hung up his carting boots and started making spaghetti sauce a few years ago? Either that or he took up the role of chairman of the ECB.

One week after telling the world that the ECB would do “whatever it takes” to save the Euro, we were all expecting a little more substance from “Super” Mario Draghi today.

Sadly what we got was more words and not much more action – it’s been all pasta and no sauce and the markets don’t like it. The recipe for the Euro’s survival remains as closely guarded secret as ever.

Source: flickr Tim Goodill

Whether you favour the round or oval ball, a pair of whites or indeed a whip, a professional sports career is an exciting one where dreams can come true and fortunes made. You may already be on your way to being the next Wayne, Jonny, Freddie or Frankie, but more realistically you are likely to enjoy a 10-15 year career in or around the top flight of your sport.

Either route will realise some financial truths;

1)      You will be earning significant sums of money, in excess of your daily living needs

2)      Your extreme earning potential will last for a relatively short period of time

3)      Unless you develop other skills, you will be retired for 50 years!

In simple terms, how much should you save now to secure your financial future once you stop playing? Do you have a financial plan? Many of your predecessors did not, and frittered away money in the good days and/or over-estimated their ability to earn decent money in their second career.

The term “break a leg” may be a good luck message for aspiring actors, but for professional sportsmen it can be a nightmare scenario. Forget even being a journeyman professional, a bad injury can easily end your career prematurely – next week, next year, in 5 years’ time? Of course no one wants to contemplate such a scenario, but it is our job to help you plan for every eventuality.

Let’s be frank; it need not be a career threatening injury. You may be invincible at the moment but a loss of form, a new manager, an influx of foreign talent, or just the next generation of whiz kids, can mean you no longer making the 1^st team or not getting the top rides. Such a scenario happens all the time unfortunately, and will also have an adverse impact on your earning potential.

Good quality financial advice is not about ‘selling’ you high risk investments for big commissions. We believe you take enough risk in your day job. We wish to develop long term relationships to help you secure your financial future – imagine the peace of mind knowing that you have a plan that will provide sufficient income for you and your family for life.

Please contact us for a ‘no cost, no obligation’ initial meeting.

Source: flickr – desdeaqui

The cause of the extinction? Well, current evidence suggests that a huge asteroid - so large that the top of it was still in outer space when the bottom struck the earth - was responsible. It was travelling at roughly 20 times the speed of a rifle bullet and released more than 1 billion times the energy of the bombs that destroyed Hiroshima and Nagasaki. Enough to ruin your whole day.

Since then our tiny ancestors have evolved into every type of mammal we see today from the dormouse to the blue whale (and of course, us) to fill once again, every biological niche.

And the relevance of all this? Well, two things:

1. The UK Financial Services Industry may well come to look upon 31^st December 2012 as its own K-T Boundary Extinction Level Event. A good number of highly specialised firms (large and small) are not going to survive the impact of the FSA’s Retail Distribution Review. They have evolved to thrive in the sales/commission driven world of the past 30 years and they lack the adaptability to survive in the new environment that is coming.
2. Initially this will have a negative impact - first on the number of people qualified and authorised to give financial advice to the public and second on that very public who are faced with a more bewildering than ever array of financial decisions to make. The need for good quality advice has never been greater.

However, the K-T extinction event shows that where nature creates a vacuum something new will evolve to fill the gap. In this case, the FSA seems intent to wipe the slate clean. Many are taking this personally but it does begin to look and feel like an act of nature! There are already a number of great firms out there ready to take on the challenge. For those firms, their current and future clients, the future seems brighter than ever. For the rest? Maybe a footnote in the financial palaeontologist’s yearbook?

Budget Highlights

Individuals

• Personal Allowance: The basic personal allowance for individuals, where available, will increase to £8,105 for the 2012/13 tax year (already set at £7,475 for the forthcoming 2011/12 tax year).
• Capital Gains Tax (CGT): The annual CGT exemption will increase by £500 to £10,600 for 2011/12.
• Enterprise Investment Schemes (EIS): Income tax relief for investment in EIS companies is to be increased from 20% to 30% from 6 April 2011.  Furthermore, the maximum amount that may be invested in one tax year is to be increased to £1,000,000 with effect from 6 April 2012 (currently £500,000).
• Charitable giving will be further encouraged by simplifications to the Gift Aid scheme and, from 6 April 2012, by a reduction in the inheritance tax payable by estates where 10% or more is left to charity.
• The inheritance tax nil rate band will be frozen at its current rate of £325,000 until April 2015.
• The Approved (car) Mileage Allowance Payments (AMAPs) will increase by 5p to 45p per mile from 6 April 2011, for mileage up to 10,000 per year.  The rate will remain at 25p per mile for annual mileage over that level.
• Continuing a regular theme from recent Budgets, further targeted reviews of tax avoidance are to be undertaken, and specific legislation introduced.  The Government’s views have been summarised in an important document published today entitled “Tackling Tax Avoidance”.

Non-Domiciles

• The Remittance Basis Charge (RBC), for resident, non-domiciled individuals who wish to be taxed on only foreign income and gains brought to the UK, will be increased to £50,000 for those resident here for twelve years or more.  The RBC will remain at £30,000 for those resident for at least seven years, but less than twelve.   This is expected to take effect from 6 April 2012, but will be confirmed following a consultation period to begin in June 2011.
• A tax charge will no longer arise where a non-domiciled individual remits overseas income or gains for the purposes of commercial investment in a UK business.  This is again likely to take effect from 6 April 2012.
• A consultation exercise is to be undertaken to consider the introduction of a statutory residence test for tax purposes, with a view to providing clarity for taxpayers.

Corporate

• Entrepreneurs Relief: The lifetime CGT Entrepreneurs’ Relief limit will be increased from £5,000,000 to £10,000,000 with effect from 6 April 2011.
• Corporation Tax: The main rate of corporation tax, currently 28%, will reduce to 26% with effect from April 2011, and then by 1% each year thereafter, down to 23% by 2014.  As previously announced, the small profits rate will reduce by 1% to 20% from April 2011.
• Amalgamation of Tax and National Insurance: A further, and more detailed consultation is to be undertaken on the amalgamation of the tax and national insurance regimes.
• To encourage businesses to use ultra low carbon cars, company car tax will be frozen from April 2013 for cars emitting less than 95g/km. Tax charges for vehicles emitting in excess of this will continue to rise by 1 percentage point from the same date.
• Twenty-one new Enterprise Zones, with specific, detailed tax breaks available, are to be created.

The above lists are of course, far from exhaustive and based on the information so far available.  As ever, further details will only emerge over the coming weeks as the Finance Bill passes through Parliament, but we hope this is a useful starting point.  Please get in touch if you have any queries or would like additional information.

Source: flickr – M W Pinsent

So what is the honest investor to do? The truth is that there is no single investment strategy that is correct for all circumstances. Investors should be flexible and ready to embrace ‘active’ as well as ‘passive’ investment strategies, mix ‘buy and hold’ strategic positions with short-term ‘opportunistic’ investments. Most importantly, investors need to ensure diversification amongst asset classes in order to reduce risk. An investment portfolio requires continual review, analysis and adjustment and above all else, a calm approach. Understanding and mitigating tax is essential; HMRC offers reliefs and allowances that can significantly enhance investment returns, however careful planning is needed. You should also remember to “never let the tax tail wag the investment dog”.

If you would like a free review of your investment strategy, why not talk to Fish Financial today?

Note: the Financial Services Authority does not regulate trust or taxation advice.

The headline change is that tax relief at your highest marginal rate will be allowed up to £50,000 p.a. from April 6^th however if you’re a higher-rate tax payer and take appropriate action before tax year-end, you can benefit even more.

The complications of the current year ‘anti-forestalling’ £20,000 contribution limitation, as well as the removal of the personal allowance above £100,000 and a 50% tax rate above £150,000 mean that it would be wise to find out what you can do sooner rather than later. Obtaining 50% tax relief is akin to receiving a 50% discount on your investments!

To explain the changes and what they mean for you, we’re hosting two tax and investment seminars at The Gherkin on Tuesday 15^th March and Thursday 17^th March. At each event we will share a number of planning opportunities for higher rate tax payers, as well as investment ideas and a superior insurance proposition for your properties.

Places are strictly limited. Please RSVP to a.roberts@abusinessinnovation.com at your earliest to secure your place.

Below is a copy of the invite:

Our last event about the budget changes and implications for your tax bill was a hit. The feedback from attendees was really positive:

“Increase the frequency of your events…”

“Great venue!”

“Perfectly timed and informative…”

Abbie, our Head of Marketing, snapped a couple of shots of the event and the view from The Gherkin.

We hope to see you there!

From an investment perspective, it is always important to look beyond the hyperbole, and of course making sure we are not making knee-jerk reactions that are in any case one day too late! Our assessment this morning draws on one telling piece on the news last night; four Greek citizens were interviewed and asked if they were in agreement with last week’s debt deal and they were all vehemently against it, and the austerity measures, and would definitely vote against them in a referendum. When the same people were then asked if they wanted to leave the Euro, they all equally strongly stated ‘no’.

Whether the referendum goes ahead or not, we do not know, but if it does we suspect by then the question will be whether the people wish to remain in the Euro or not. This being the case, we think the Greeks on the street understand which side their (pita) bread is buttered.

It is a slow day in a damp little Irish town. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit. On this particular day a rich German tourist is driving through the town, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night. The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher. The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel. The guy at the Farmers’ Co-op takes the €100 note and runs to pay his drinks bill at the pub. The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him “services” on credit. The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note. The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything. At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town. No one produced anything. No one earned anything. However, the whole town is now out of debt and looking to the future with a lot more optimism.

And that, Ladies and Gentlemen, is how the bailout package works.

Source: flickr- Randall Smith