Investment review

Jonathan Ruffer from Ruffer LLP shares his thoughts on investment markets.

Barclays Bank Plc buys Standard Life Bank

After 11 years Standard Life sell their banking arm to Barclays.

Non-resident? HMRC 6

HMRC 6 is the replacement to the IR20 booklet and sets out the criteria for determining whether or not an individual is UK resident for tax purposes. The main innovation is the removal of day counting and the introduction of the "Factors ". The only time when only day counting will be used is the 183 day rule. HMRC is attempting to take away the perceived certainty of the day counting and replace it with a vague set of Factors which need to be considered before it is accepted that someone is non resident. This means that it is no longer good enough for individuals to simply, for example, avoid spending 90 days per annum in the UK to avoid being UK resident. HMRC will look at other Factors (such as available accommodation). This is clearly unsatisfactory for taxpayers as it is difficult to predict what the outcome will be in each case. Follow the links for more information Thomas Eggar HMRC (page 15).

High earners and pension contributions

The 2009 Budget introduced changes which will affect high earners (earning £100,000 or more) and the pension contributions that they might make. The reduction in the personal allowance and increase in income tax rate make pension contributions an attractive planning option. However, contributions may need to be carefully planned to avoid tax charges under so-called "anti-forestalling" measures.

AEGON Scottish Equitable have produced one of the clearest and most user-friendly explanations of the changes and its implications we have found.

Permanent Interest Bearing Shares (PIBS)

PERMANENT interest bearing shares or PIBS are special shares issued by building societies that pay a fixed rate of interest. They cannot be sold back to the society but can be bought and sold on the stock exchange, which means the price varies. A few years back, Permanent Interest Bearing Shares or Pibs were considered to be as good as gold, and were considered to be a safe home for income seekers. The problem with PIBS is that in the event of a building society being wound up, PIBS owners will find themselves some way down the queue and may not get back all of their capital as they are not protected by the FSCS. In the past, this was an acceptable risk where the possibility of a UK building society being wound up would have been almost zero, but as we have seen this is all changed now.
Some building societies, such as Bradford & Bingley, have decided not to pay the interest payments, which is catastrophic news for those who rely on this to supplement their income, such as pensioners. Trying to sell them on can prove difficult, as PIBS are an illiquid investment and now, with the danger of suspended interest payments looming, no one wants to buy them.

Banks finally forced to make charges more transparent

Look at this article from yesterday's Financial Times - how banks and building societies have finally bowed to the pressure from the public and the Office of Fair Trading. Not all good news though, unauthorised overdraft charges still lack the clarity required...

Disclosure of undeclared offshore income

HMRC has given individuals with undisclosed offshore income and gains a chance to disclose with a fixed penalty of 10%.

Law Society notes on gifting assets

An interesting guide to gifting and care provision.

QROPS in The Sunday Times

OVERSEAS pension funds have seen demand soar over the summer, as a growing number of Britons plan to retire or move abroad to avoid the new 50% tax.

Handling benficiary designations

A useful summary of designating beneficiaries for life and pension plans.