The Financial Times kicks off a difficult weekend – for Theresa May, anyway – with an examination of the issues facing any resident Briton who currently dreams of joining the 900,000 UK passport holders who are living in the European Union. Time is running out for a lifetime of cheap Sangria and almost-unending sunshine, the FT’s feature suggests. Because, once the Brexit transition period kicks in on 29th March 2019, the viability of achieving a smooth offshore experience is likely to reduce.
As things stand, the FT says, the transitional agreement already standing between Britain and the 27 other EU states says that – until 31st December 2020 – new applicants will have guarantees on legal residency, healthcare and the UK state pension. That will be especially important to expats who want to join the 204,074 over-65 Britons (early 2017) who are currently resident abroad in the EU. (The retired account for 41% of UK expats in Spain and 39% in Portugal, the report says.)
But the FT’s expert commentators warn that not everything will be sweet and easy. Although getting a legal residency should be straightforward, it says, securing entitlement to health and welfare benefits may not be so straightforward – France, Portugal and Spain are all listed as countri3es where some qualifications apply.
The converse seems initially straightforward for UK pensioners, who should be entitled to the full triple lock on pensions if they move to the European Economic Area (EU plus Switzerland and Gibraltar). But watch for HMRC, who may still consider you as liable for UK taxes if you continue to own a property, or if you seriously intend to return.
There’s also the fact that sterling/euro currency rates are likely to prove volatile as the time for separation approaches, the FT says. And although housing is still cheap in the Mediterranean south, some countries are getting more expensive.
There’s plenty more, but we’d recommend that you read the feature in full. Recommended.
Money Mail features a story about a group of small investors who claim that they have been short-changed by a shareholder pressure group which won a £200 million settlement from Royal Bank of Scotland in June 2017, but which they say has yet to pay the money out to them. The Mail’s report says that five Conservative MPs have now written to Justice Secretary David Gauke, urging him to initiate an urgent inquiry into the matter.
The compensation in question was awarded to investors who had ill-advisedly agreed to buy RBS shares in 2008, just before the company tanked and their bailout hit the rocks; the £200 million settlement of last year had been won by the RBoS Shareholders Action Group, under the original leadership of Irish co-founder Gerard Walsh, but the payout had been largely stalled after the Manx Capital group had fought to take over the running of the matter and to get Walsh ejected from the deal.
Manx Capital is owned by Trevor Hemmings, the Blackpool Tower owner (and Center Parcs UK founder, and also a Grand National winning owner) who once claimed to have lost £700 million in the 2008 crash, and who says he’s making good progress on recouping the money. Manx has claimed in court that Walsh’s team are milking the RBoS payout for their own benefit, and that Walsh personally has engaged in fraudulent conduct on several occasions.
It is, in short, a huge mess in which the smaller investors have come off worst. Watch this space.
Is your financial adviser charging too much? That’s the question Ruth Emery is asking readers in the Sunday Times Money section. It’s based on research from VouchedFor which the ST comments “has uncovered a wide disparity in costs: the initial one-off fee for seeking advice ranges from 0.5% to 5% of a client’s invested assets, while the annual fee could be zero – or as much as 2%.” VouchedFor’s research of over 400 advisers featured on its site found that the average initial fee charged was 1.72% and the average annual charge was 0.69%. Whilst the article’s headline is a little alarming, the article itself is pretty straightforward in content, pointing out that charges vary and can be levied in different ways – percentage of assets, hourly fees etc.
Sunday Times also reports some positive news for those Equitable Life policyholders who have kept faith with the beleaguered firm are expected to benefit from a payment of £6,900. This is after a deal was struck to transfer the remaining business of Equitable to Reliance Life. Full details are yet to emerge, and customers will have to vote on the decision in mid-2019. Any payout will likely occur before the end of next year.
The Financial Mail on Sunday talks to Richard Titherington and Ayaz Ebrahim, joint managers of the JP Morgan Asian Investment Trust, in this week’s fund focus column. With Titherington based in London and Ebrahim in Hong Kong, it’s an unusual situation. Jeff Prestridge reports that the trust draws upon the company’s vast pool of analysts, economists and strategists who all have an input over the stocks that get bought and sold – and the trust’s exposure to individual markets. The result is a 64-stock portfolio with holdings in ten countries – the trust does not invest in either Australia or Japan as some rivals do.
He explains that it is the economists and strategists that influence the trust’s country exposure, grading each stock market between one to five, one being most attractive. This is done according to factors including company valuations, currency weakness or strength and the performance of the underlying economy.
Ebrahim is reported as being optimistic about the economic outlook for the Asian region. He also thinks the agreement struck between President Trump and Kim Jong Un, on denuclearisation is ‘good news’ – although he is not confident North Korea will stick to its side of the bargain.
Yet he also has some concerns, namely the debt overhang in China (nevertheless, the trust’s largest country position at 34 per cent) and the negative impact of rising oil prices on the Indian economy.
While he believes both issues should not become serious ones, they have the potential to unsettle stock markets.
Also in the MoS, from setting up a home reversion plan to booking a lifetime mortgage, Laura Shannon is reviewing different ways that readers could unlock cash from their homes as they try to balance the books. Her article quotes research compiled for the MoS which shows that one fifth of over-50s – around 3.9 million people – are planning to solve a cash crisis in retirement by downsizing, making use of buy-to-let property or borrowing against the value of the family home. It looks at home reversion plans, lifetime mortgages and retirement interest-only mortgages. As you’d imagine, there are the usual risk warnings included. Interestingly, it also suggests that readers should start saving hard now to bolser the value of their savings to prepare for retirement or later life.
Meanwhile in the Sunday Telegraph Money section, James Connington is looking at the gifting rules. Inheritance Tax’s gifting system is a perverse gain of Russian roulette” that doesn’t help people with smaller estates, the article quotes experts as saying, as the Office of Tax Simplification considers the rules as part of its review into IHT.
Specifically the article is looking at gifts made in the seven years before death where tax payable depends on how much time has passed.
In practice, Connington writes, the seven year taper applying to gifts helps only the hugely wealthy. This is because these gifts are included in the value of the estate and are counted first, ahead of assets given away at death, such as property or investments. That means that benefiting from the taper requires someone to give away more than the “nil-rate” band of £325,000 in the seven years before death. Otherwise, their gifts simply use up the nil-rate band and don’t benefit from the taper. So those who have huge sums to give away can do so in the knowledge that if they die three or more years later they won’t incur the full weight of IHT, whereas those who don’t are left to gamble on whether they’ll live for seven more years.
