Good morning and welcome to your Morning Briefing for Friday 21 July 2023. To get this in your inbox every morning click here.
Inheritance tax (IHT) receipts in June hit record high as rising prices for houses and other assets take more people above the threshold for paying the 40% tax.
New data published today (21 July) by HMRC shows in June the Treasury collected £795 million of inheritance tax, making it the highest monthly total on record
IHT receipts for April to June 2023 were £2 billion, which is £0.2 billion higher than the same period a year earlier. And industry experts have predicted a record-breaking year.
The OBR’s latest forecasts suggest IHT will raise £7.2 billion this financial year and as much as £8.4 billion by 2027/28.
Succession planning
Succession planning for advisers tends to focus on the exit options available. Will they sell to an external buyer or will the baton be passed to the owner’s children or a younger adviser?
Will the adviser want to phase their retirement by reducing their hours or do they want a clean break?
These are not things people tend to think about when starting out or busy growing a business, but they will need to be addressed at some point. The question is, when?
Quote Of The Day
Advisers are already highlighting concerns with life company systems, and we expect providers to find the noise will only increase and become intolerable.Much of these service woes are caused by outdated technology many insurers still use, some of which is decades old.
–Paul Yates, iPipeline’s Product Strategy Director, commenting on the growing adviser backlash against pensions and annuities service levels.
Stat Attack
Government plans to replace the pensions lifetime allowance could create a new ‘death tax’ for savers, AJ Bell warns.
The government on 18 July set out for consultation proposed new rules to replace the pensions lifetime allowance from 6 April 2024
Two new lifetime limits would be created under the plans:
£268,275
A ‘Lump Sum Allowance’ set at £268,275 – a quarter of the current £1,073,100 lifetime allowance
£1,073,100
A ‘Lump Sum and Death Benefit Allowance’ set at £1,073,100 – incorporating both tax-free lump sums someone takes while alive and lump sums paid on death.
Before age 75
However, in the policy paper published this week and Pensions Scheme Newsletter 152, the government confirms it is considering adding further legislation to that already published to tackle how income should be taxed if taken from uncrystallised funds on death before age 75.
Under the current regime, if someone dies before age 75, their pension can be inherited completely tax-free if taken as income
However, the government is considering new rules, where someone dies before age 75 and they choose to access as yet untouched inherited pension as income, the entire amount would be subject to income tax.
By contrast, if the same person took the inherited pension as a lump sum and it was within the £1,073,100 lump sum limit, it would remain tax-free.
Source: AJ Bell
In Other News
Channel Capital Advisors LLP (Channel) has hired Nate Hartley as head of origination for the Americas.
Established in 2007, Channel is an FCA-regulated alternative investment fund manager (AIFM). It is a recognised funding partner of choice in the working capital and fintech lending sector, having facilitated over $10bn of transactions since 2014.
Headquartered in London, the company works with partners across Europe and the US. Hartley, who will be based in California, will help drive the company’s growth in the Americas.
Hartley has more than 20 years’ experience in financial services and capital markets. His career began with Credit Suisse First Boston in 2001. After graduating from the University of Chicago’s Booth School of Business, he later rose to the position of Director, Emerging Markets Trading at Barclays.
Between 2015 and 2022, Hartley was the CEO of Advance Global Capital, a global impact investment management company based in the UK which specialises in SME financing. Most recently, he worked as CFO at Crowdz, a fintech company focused on helping SMEs improve their cash flow.
Hartley will source new funding partnerships for Channel in the Americas, ensuring more fintechs and SME lenders are able to leverage Channel’s funding, technology, and expertise to fast-track their own growth.
Liontrust Asset Management has issued an update in relation to its recommended public exchange offer for all publicly held registered shares of GAM Holding, which was announced on 4 May.
Liontrust has confirmed that, following engagement with the shareholders of GAM, Liontrust’s proposed acquisition of GAM is a full and final offer and will not be increased.
Liontrust said it has conducted extensive and co-operative due diligence in relation to GAM, over many months, which validates its view that this is a good and fair offer to GAM shareholders.
Liontrust’s offer takes account of the current financial run rate losses of GAM (including its regulatory capital position, its lack of free cash and its need for external financing) and its future contractual liabilities, as well as the significant restructuring costs required to bring GAM to break even as quickly as possible.
The due diligence also confirmed the two businesses are “highly complementary” and the “significant opportunities” offered by combining the two groups.
In an update, Liontrust said: “It is imperative that the future of GAM is resolved as quickly as possible to provide immediate financial and corporate stability for GAM to preserve value for shareholders and give certainty to clients.
“There is no other offer for the entire issued share capital of GAM and the proposed acquisition provides a corporate resolution without further uncertainty and instability.”
From Elsewhere
Retail sales jumped 0.7% last month with sunshine boost helping beat expectations (Sky News)
Government borrows less than expected in June (BBC)
U.S. leading indicators point to recession starting soon (Reuters)
Did You See?
Mark Dampier: Opportunities aplenty for low-risk investors
He writes: “Those of us retired and who don’t have defined benefit schemes (like me) are probably at our most nervous, not only because retirement is truly a huge lifestyle change but because suddenly we don’t have a monthly wage coming into our account.
“Instead, we have to draw down lifetime savings – a shock to the system for those used to investing and saving. The realisation you are unlikely to be able to replace it is always at the forefront of your mind.”
Read the full article here.
