Inheritance Tax (IHT) receipts have been consistently rising, with new data from HM Revenue & Customs (HMRC) showing takings for the 2022–23 tax year totalled £7.1bn, up

a massive £1bn from the previous tax year (£6.1bn 2021–22). According to HMRC, this huge uplift can be attributed in part to ‘a combination of the recent rises in asset values and the government’s decision to maintain the IHT nil rate band thresholds at their

2020 to 2021 levels up to and including 2025 to 2026.’

Reported estimates from the Spring Budget detail that over the next five years, IHT is expected to bring in £38bn for the Treasury, meaning annual receipts will exceed £8bn by 2027–28, with 6.7% of deaths expected to trigger an IHT charge. This compares with 3.76% of UK deaths in 2019–20.

Record receipts have prompted suggestions that the tax has now become mainstream. Previously dubbed a tax on the wealthy, this is certainly no longer the case, as frozen thresholds and elevated house prices impact.

The good news is that through expert planning you can legitimately mitigate this tax, so you can pass on assets to your family as you’d intended. There are various different strategies depending on your unique circumstances, including making gifts during your lifetime, considering placing assets into trust, making use of exemptions, and thinking about leaving something to charity, to name but a few.

Don’t go it alone

IHT is a complex tax, with reliefs and exemptions on gifts to consider and the interaction with other taxes. These days, with many more estates likely to be subject to IHT, taking expert advice could save your beneficiaries substantial amounts of tax. Get in touch.

*The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation. Inheritance Tax Planning is not regulated by the Financial Conduct Authority.

Although the global economy continues to face significant headwinds, statistics released during the first few months of this year have revealed unexpected signs of resilience. This has led economists to begin upgrading growth forecasts, while the World Economic Forum’s latest Chief Economists Outlook reported signs of ‘nascent optimism.’

Growth stronger than expected Uncertainty undoubtedly continues to be a key feature of the world economy with pressure being exerted from a number of issues. First quarter data, though, has shown that the global economy performed better than most economists had previously feared, with growth recorded across all regions amid signs of the green shoots of recovery.

Inflationary pressures set to fall 

Persistent inflationary pressures and tighter financial conditions, however, do remain key challenges for policymakers around the globe. Inflation has so far stayed stubbornly high and, while economists do expect it to continue falling over the rest of the year, this decline is predicted to be at a slower pace than previously thought.

Resilient economic growth

A key theme at the World Economic Forum’s recent Growth Summit was ‘enabling resilient economic growth’ with discussions focusing on inclusive and sustainable growth, and equitable globalisation. The organisation’s updated forecast showed a notable strengthening in growth expectations, although it also highlighted sharp variations by region. The most buoyant activity is predicted to be in Asia, with China’s reopening expected to drive a significant rebound, while growth prospects are thought to be noticeably weaker in Europe.

Diversification is key

An improving outlook should clearly create opportunities for shrewd investors. However, the relatively uncertain backdrop, along with divergent regional dynamics, inevitably means diversification will remain a vital component in any investor’s armoury. Spreading money in a globally diversified portfolio across a range of sectors and different size businesses should, as ever, prove an effective way to mitigate risk in the quest to build wealth.

*The value of investments and income from them may go down. You may not get back the original amount invested.

Although the global economy continues to face significant headwinds, statistics released during the first few months of this year have revealed unexpected signs of resilience. This has led economists to begin upgrading growth forecasts, while the World Economic Forum’s latest Chief Economists Outlook reported signs of ‘nascent optimism.’

Growth stronger than expected Uncertainty undoubtedly continues to be a key feature of the world economy with pressure being exerted from a number of issues. First quarter data, though, has shown that the global economy performed better than most economists had previously feared, with growth recorded across all regions amid signs of the green shoots of recovery.

Inflationary pressures set to fall 

Persistent inflationary pressures and tighter financial conditions, however, do remain key challenges for policymakers around the globe. Inflation has so far stayed stubbornly high and, while economists do expect it to continue falling over the rest of the year, this decline is predicted to be at a slower pace than previously thought.

Resilient economic growth

A key theme at the World Economic Forum’s recent Growth Summit was ‘enabling resilient economic growth’ with discussions focusing on inclusive and sustainable growth, and equitable globalisation. The organisation’s updated forecast showed a notable strengthening in growth expectations, although it also highlighted sharp variations by region. The most buoyant activity is predicted to be in Asia, with China’s reopening expected to drive a significant rebound, while growth prospects are thought to be noticeably weaker in Europe.

Diversification is key

An improving outlook should clearly create opportunities for shrewd investors. However, the relatively uncertain backdrop, along with divergent regional dynamics, inevitably means diversification will remain a vital component in any investor’s armoury. Spreading money in a globally diversified portfolio across a range of sectors and different size businesses should, as ever, prove an effective way to mitigate risk in the quest to build wealth.

*The value of investments and income from them may go down. You may not get back the original amount invested.

Commercial property currently for sale in the UK

• South West England has the highest number of commercial properties for sale
• Scotland currently has 1,156 commercial properties for sale with an average asking price of £1,229,250
• There are currently 1,778 commercial properties for sale in London, the average asking price is £1,229,250.

Source: Zoopla, data extracted 19 June 2023

Investment enquiries – broken down by sector

• The headline net balance for investment enquiries was -14%, less downcast that the previous quarter’s reading of -30%
• Investment demand for offices and retail assets came in at -26% and -27% respectively
• Industrial buyer demand appeared to stabilise, returning a net balance reading of +4% (compared to -9% last quarter).

Capital value expectations – broken down by sector

• Expectations turned from negative in Q4 2022 to slightly positive in both the prime and secondary portions of the industrial market in Q1 2023
• Across the prime office sector, values are now seen holding steady over the year ahead (net balance +6% vs -31% in Q4)
• Respondents still foresee further falls in retail values, both prime and secondary, posting net balances of -19% and -50% respectively.

All details are correct at the time of writing (21 June 2023)

Source: RICS, UK Commercial Property Market Survey, Q1 2023

*It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

Rebounding investor confidence

A recent survey (EToro, 2023) suggests investors are becoming more confident despite ongoing challenges on the economic front. While this is certainly encouraging, maintaining a long-term outlook and retaining a strong sense of discipline in investment positioning remains a prerequisite for any successful investor.

An air of optimism 

It’s fair to say 2022 was a turbulent year for global markets with the war in Ukraine, soaring inflation and rising interest rates weighing heavily on a difficult 12-month period. Towards the end of the year, however, markets did stage a cautious recovery despite ongoing fears of a looming recession.

Inflation expected to fall

The final quarter of last year also witnessed a rebound in investor sentiment, with the same survey reporting a seven-percentage point rise in confidence in the global economy, although this was before the recent woes in the banking sector. This optimism was driven by hopes that inflation has now peaked and is set to continue falling in the months ahead; a view reflected in the International Monetary Fund’s latest economic musings (IMF, 2023) which predict global inflation will drop from 8.8% in 2022 to 6.6% this year and 4.3% in 2024.

Young guns

Data from the survey also revealed a majority of investors were either positive or ambivalent about last year’s market volatility and its impact on their investing mindset. This was particularly true for younger investors with three-quarters of 18 to 34-year-olds either positive or indifferent compared to six in ten over-55s. This variation will partly reflect differing retirement time horizons, with younger investors more able to adopt a longer-term view.

Investor discipline is key

This is clearly encouraging as maintaining a long-term philosophy based on prudent risk management principles and avoiding panicked decisions has always been a key element for successful investing, maintaining discipline in investment positioning. In practice, this means achieving an appropriate level of diversification and understanding how to blend investments – that’s what we do.

The value of investments and income from them may go down. You may not get back the original amount invested.

HMRC has set up a new specialist team to target estates of wealthy deceased individuals in order to check whether a greater Inheritance Tax (IHT) liability may have been due than originally calculated by estate executors. This clampdown has seen record amounts of unpaid tax being clawed back by HMRC with levels

expected to rise further in the coming years.

Record sums recovered 

Data obtained through a Freedom of Information request has revealed that a total of £326m was collected by HMRC as a result of targeted IHT investigations in the year to March 2022. This was the largest amount ever recovered and represents a 28% increase on the amount raised by investigators in the previous 12-month period.

Threshold freeze 

The standard IHT rate is currently 40%, paid on the value of any estate above £325,000; in addition, homeowners benefit from an extra £175,000 allowance if they pass on their primary residence to a child or grandchild. These thresholds, however, have been frozen until 2028, which inevitably means more people are likely to be dragged into the IHT net. In 2021–22, families collectively paid £6.1bn in death duties, up from £5.4bn the previous year, and monthly data up to December suggests the figure for 2022–23 will be even higher.

Complex rules

More than 13,000 individuals have been embroiled in IHT investigations since 2019. While some of these bereaved families may have acted deliberately, others are likely to have made innocent mistakes and simply fallen foul of IHT rule complexities. Two areas where mistakes commonly occur relate to the provision of lifetime gifts and the valuation of personal possessions. 

We’re here to help 

If you have any concerns or need advice on any aspect relating to IHT then do get in touch; we’re always happy to help.

The value of investments and income from them may go down. You may not get back the original amount invested. Inheritance Tax Planning is not regulated by the Financial Conduct Authority.

It can be difficult to understand what funds you’ll need to finance the retirement you dream about and how this compares to your projected pensions income. It’s even harder to keep track when the cost of living is spiralling.

Setting standards

The Pensions and Lifetime Savings Association (PLSA, 2023) developed its Retirement Living Standards to help us to picture what kind of lifestyle we could have in retirement at different levels and what a range of common goods and services would cost for each level. The cost of a Minimum lifestyle for a single person has increased from £10,900 in 2021 to £12,800 in 2022, a rise of 18%. For a couple, an income of £16,700 required in 2021 rose to £19,900 (19% increase). Costs factored into this lifestyle include – £96 for a couple’s weekly food shop, eating out about once a month, a week’s annual holiday in the UK and some affordable leisure activities about twice a week. But there is no budget to run a car. 

Want more than the minimum? 

At the Comfortable Retirement Living Standard, retirees can expect more luxuries like regular beauty treatments, three weeks’ holiday in Europe each year and theatre trips. The weekly food shop for a couple in this lifestyle amounts to £238 per week. At this level, the cost of living increased 11% to £37,300 for one person and 10% to £54,500 for a two- person household.

How much do I need to save?

For a comfortable retirement PLSA estimate that a couple who are both in receipt of the full new State Pension would need to accumulate a retirement pot of £328,000 each, based on an annuity rate of £6,200 per £100,000. 

Your lifestyle, your choice 

If you’re concerned about your retirement planning we can help you prepare for the

lifestyle you want to enjoy. Retirement planning involves visualising your key goals for your retirement years and setting up a plan to help you achieve those goals through financial planning.

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates, and tax legislation.

An increasing number of older homeowners are choosing to release equity, latest figures (Equity Release Council, 2023) reveal, with cost-of-living pressures still the main reason for tapping into the value of their home.

Equity release allows over-55s to access some of the value of their home as tax-free cash. In total, homeowners used equity release to borrow £6.2bn in 2022, a 29% yearly rise. Since 2017, the market has more than doubled. It’s not only higher amounts being borrowed; there are now more individual equity release plans too. In 2022, 93,421 people chose to release wealth from their property, up 23% from a year earlier. The number of new equity release plans taken out also rose by a fifth.

Everyday spending
Cost-of-living pressures continue to be the main prompt for people choosing to release equity. With household budgets stretched, equity release is a convenient choice for many older homeowners trying to meet rising bills.
Last year, more than half of new customers opted for lump sum plans, up from 43% in 2021. The average lump sum received was £128,382 in the final quarter.

Greater flexibility
The popularity of equity release reflects recent improvements for consumers. For example, in March 2022, new regulation was introduced to guarantee that all new plans with Equity Release Council approval give customers the right to make voluntary, penalty-free partial repayments to reduce interest costs.

The best for you

When considering equity release, it is important to weigh up your options and make sure it is suitable for your unique needs. Get in touch today to see how we can help.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments. Equity release may require a lifetime mortgage or a home reversion plan. To understand the features and risks, ask for a personalised illustration.

Spring Budget – Investment Zones announced

On 15 March, Jeremy Hunt delivered his “Budget for Growth” focusing on four pillars ‘Everywhere, Enterprise, Employment and Education.’ Encompassed within the ‘Everywhere’ pillar, Mr Hunt spoke about the government’s plans for ‘Levelling Up,’ including the launch of 12 new Investment Zones or “potential Canary Wharfs”. For each of the eight zones in England, £80m of support over five years will be available for skills, infrastructure and tax reliefs. The locations identified in England are East Midlands, Greater Manchester, Liverpool City Region, the North East, South Yorkshire, Tees Valley, West Midlands, and West Yorkshire.

The remaining four Investment Zones will be located across Wales, Northern Ireland and Scotland (at least one zone in each nation) with the incentives for these to be agreed with the relevant Devolved Administrations. 

The tax incentives correspond to those currently offered to Freeports, including:

• Stamp Duty Land Tax relief for commercial property
• Business rates relief
• Enhanced capital allowances – deduction for certain qualifying expenditure on plant and machinery
• Enhanced structures and buildings allowance
• Relief against the cost of Employer’s National Insurance contributions for new employees.

Capital values decline in February

UK commercial property performance measured by the latest CBRE Monthly Index for February 2023, highlights that capital values fell by 0.5% in the month, with rental growth registering a very small gain of 0.2% and total returns flat at 0.0%. 

All three sectors registered declines in capital values throughout the month, with industrial, office and retail falling 0.6%, 0.6% and 0.3% respectively. Focusing on the industrial sector, South East located industrials experienced a higher decline than those in the rest of the UK. Capital value falls in the office sector were primarily driven by offices located outside of the capital, with values in central London falling 0.1% and those in the rest of the UK and outer London/M25 falling 1.2% and 1.4% respectively.

Industrial and logistics sector – a ‘significant amount of investment capital is sitting on the fence’

Take up of industrial and logistics space in 2023, according to Colliers recent UK Market Pulse, is predicted to fall to around 30m sq. ft, down from 36.9m sq. ft. in 2022. Colliers are attributing this predicted contraction to occupier cost pressures and depressed retail spending. Other key findings from the report highlight an expectation that online spending will remain elevated when compared with pre-pandemic levels, positive news for the sector. With supply for industrial and logistics remaining low, predictions suggest an increase during the year, with a ’healthy pipeline under construction and some more space being returned to the market.’ A ‘significant amount of investment capital is sitting on the fence,’

according to the report. It is a possibility that values will be pushed higher in H2 2023 as commercial tension increases.

Commercial property currently for sale in the UK

• London has the highest number of commercial properties for sale
• Scotland currently has 1,129 commercial properties for sale with an average asking price of £310,863
• There are currently 1,711 commercial properties for sale in London, the average asking price is £1,290,721.

*Source: Zoopla, data extracted 22 March 2023

Commercial property outlook

Investment enquiries – broken down by sector

• The headline net balance for investment enquiries fell to -30 in Q4 2022
• Declines in investor interest were reported across all sectors during the quarter
• Overseas investment demand was down within each sector compared to Q3 2022.

Source: RICS, UK Commercial Property Market Survey, Q4 2022

Capital value expectations – broken down by sector

• For the industrial sector, the Q4 net balance reading of -18% marks the weakest figure for this metric going back to 2011
• Capital value expectations fell across the office and retail sectors, posting net balances of -54% and -65% respectively in Q4
• For the next 12 months, capital value projections are in negative territory across all three mainstream sectors.

All details are correct at the time of writing (22 March 2023)

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individually tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applied or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

Even in times of economic turbulence, the fundamentals of house buying remain mostly the same. For those looking to make a purchase in 2023, it’s never too early to start planning.

Why buy now? 

House prices have stayed high over the past year thanks to sustained buyer demand and restricted supply. Trying to predict future price movements is close to impossible; if you are in a position to do so, now could be the right time for you to take a step onto (or up) the housing ladder.

Preparation is key

It’s important to think about the whole timeline of house buying as soon as possible. Before applying for a mortgage, for example, it’s a good idea to check your credit score. Likewise, securing a mortgage in principle early in the process can give you a good idea of how much you’ll be able to borrow.

Know your price range

Using all this information can help you set your budget. When you start searching for properties in your chosen location, it’s useful to have a realistic estimate of what you can afford. Remember that the true cost of buying includes Stamp Duty, surveys, solicitors’ fees, removal costs and any extra furnishings you’ll need, as well as the headline house price.

Start saving

One of the most important steps towards homeownership is to save enough money for a deposit. Generally, you’ll need to have saved at least 5% of the property’s value in order to secure a mortgage. Start early and make the most of any help available, such as the 25% government bonus that first-time buyers can get with a Lifetime Individual Savings Account (LISA). 

To find out more about how you can make your home ownership dreams become a reality, get in touch with our team – https://audleywealth.com/contact-us

*As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.