Image courtesy of Flickr_Sheila Sund

Increase in subsidence claims following driest and hottest months on record in summer 2018

We might be going through a really cold spell in most parts of the UK, but we should be reminded of last summer with some of the driest and hottest months on record.

A particularly prevalent region, which is well-known for subsidence-prone clay soil, was the South East. The Association of British Insurers (ABI) has reported report that the number of subsidence related claims jumped from 2,500 in Q2 to 10,000 in Q3 – with subsequent pay-outs rising in value from £14 million to £64 million.

Subsidence is the downward movement of ground beneath a property which leads to abnormal stress on the structure and foundations, which can result in cracking and property damage, and typically arises following the removal of underground water. Property is at an increased risk following extended hot weather and dry spells.

The first sign of subsidence is the appearance of cracks in a properties brick or plasterwork. In general, subsidence cracks develop abruptly and exhibit different characterises to other cracks.

There are simple steps property owners can take to avoid potential subsidence. To determine whether your property is subsiding, the ABI’s advice is that subsidence cracks are typically:

- diagonal, and wider at the top than at the bottom

- thicker than a 10 pence coin

- found around doors and windows

Subsidence may also cause doors and windows to stick as the building’s structure becomes distorted.

It is important to note that cracking can occur in a property for reasons unrelated to subsidence. These include the natural settlement of soil under new homes or extensions, thermal and humidity expansions or the drying and shrinkage of building materials (including freshly plastered walls).

Ways to avoid subsidence

- Plant new trees and shrubs at a ‘safe distance’ from your property – review safe distance and tree hazard guidance

- For trees older than the property and within a safe distance, conduct regular pruning to control amount of water used in foliage growth

- Do not remove tress older than the property and within a safe distance, this may cause heave or uplift

- Drains and pipes should be checked regularly to ensure there are no blockages or leaks

- Conduct regular general maintenance including fixing leaking drains, clearing debris from gutters and pruning trees and shrubs

Costs associated with subsidence can be categorised into prevention, investigation, mitigation and repair. Over the last decade, there has been vast improvements in the management and effectiveness of each category. This has largely been enabled by technology advancements and engineering innovations.

Prevention – tracking soil conditions, level monitoring readings and long-term weather forecasts that provide a suite of predictive analytics

Investigation – identifying the cause of the problem, analysing soil conditions, establishing depth of foundations, reviewing historical and geological maps

Mitigation – live remote crack monitoring, video streaming, geo-mapping and data analytics

Repair – modern techniques including screw piling, injection grouting and rehydrating

This is in addition to more traditional repairs such as targeted lifting (jacking) and tree removal. Of course, there is no substitute for skilled adjuster surveyors with a detailed knowledge of subsidence claims. This is particularly important in the interpretation of data pertaining to soil plasticity etc.

Quickly identifying  the cause of the subsidence movement is critical as each movement is unique.

Talk to our private client division on 020 8681 4994 to arrange specialist insurance cover.

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Taking Preventative Action

Reducing your beneficiaries’ potential Inheritance Tax bill – or mitigating it out altogether.

With careful planning and professional financial advice, it is possible to take preventative action to either reduce your beneficiaries’ potential Inheritance Tax bill or mitigate it out altogether.


A vital element of effective estate planning is to make a Will – unfortunately, a significant number of adults with children under 18 fail to do so. This is mainly due to apathy, but also a result of the fact that many of us are uncomfortable talking about issues surrounding our death.

Making a Will ensures your assets are distributed in accordance with your wishes.

This is particularly important if you have a spouse or partner, as there is no IHT payable between the two of you, but there could be tax payable if you die intestate – without a Will – and assets end up going to other relatives.


You can give cash or gifts worth up to £3,000 in total each tax year, and these will be exempt from Inheritance Tax when you die. You can carry forward any unused part of the £3,000 exemption to the following year, but then you must use it or lose it.

Parents can give cash or gifts worth up to £5,000 when a child gets married, grandparents up to £2,500 and anyone else up to £1,000. Small gifts of up to £250 a year can also be made to as many people as you like.


Parents are increasingly providing children with funds to help them buy their own home. This can be done through a gift, and, provided the parents survive for seven years after making it, the money automatically ends up outside their estate for IHT calculations – irrespective of size.


Assets can be put in trust, thereby no longer forming part of the estate. There are many types of trust available, and they usually involve parents (called ‘settlors’) investing a sum of money into a trust. The trust has to be set up with trustees – a suggested minimum of two – whose role is to ensure that on the death of the settlors, the investment is paid out according to the settlors’ wishes. In most cases, this will be to children or grandchildren.

The most widely used trust is a ‘discretionary’ trust, which can be set up in a way that the settlors (parents) still have access to income or parts of the capital.

It can seem daunting to put money away in a trust, but they can be unwound in the event of a family crisis and monies returned to the settlors via the beneficiaries.


As well as putting lump sums into a trust, you can also make monthly contributions into certain savings or insurance policies (not Individual Savings Accounts) and put them in trust. The monthly contributions are potentially subject to IHT, but if you can prove that these payments are not compromising your standard of living, they are exempt.


If you are not in a position to take avoiding action, an alternative approach is to make provision for paying IHT when it is due. The tax has to be paid within six months of death (interest is added after this time). Because probate must be granted before any money can be released from an estate, the executor – usually a son or daughter – may have to borrow money or use their own funds to pay the IHT bill.

This is where life assurance policies written into an appropriate trust come into their own. A life assurance policy is taken out on both a husband’s and wife’s life, with the proceeds payable only on second death. The amount of cover should be equal to the expected IHT liability.

By putting the policy into an appropriate trust, it means it does not form part of the estate. The proceeds can then be used to pay any IHT bill without the need for the executors to borrow.


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Keeping it in the family

Careful planning can reduce or even eliminate the Inheritance Tax payable.

Intergenerational planning helps you put financial measures in place to benefit your children later in life, and possibly even your future grandchildren, so it’s important to start planning early.

You may want to keep an element of control when passing on your assets. You may want your money to be used for a particular reason, such as paying for school or university fees or for a first property deposit. Or you may just want to make sure your money stays within the family.

Without appropriate provision, Inheritance Tax could become payable on your taxable estate that you leave behind when you pass away. Your taxable estate is made up of all the assets that you owned, the share of any assets that are jointly owned, and the share of any assets that pass automatically by survivorship. Careful planning can reduce or even eliminate the Inheritance Tax payable.

Inheritance Tax is not payable on the first part of the value of your estate – the ‘nil-rate band’.

The nil-rate band is currently £325,000. If the total value of your estate does not exceed the nil-rate band, no Inheritance Tax is payable. Outstanding debts and funeral expenses can be deducted from the value of your estate.


Commencing 6 April 2017, an additional ‘residence nil-rate band’ (RNRB) allowance was introduced if you leave your interest in the family home to direct descendants (such as children, step-children and/or grandchildren). This only applies to your main home but can be available even if that home had been sold after July 2016.

The RNRB is being phased in gradually. For the 2018/19 tax year, the maximum additional allowance is £125,000, increasing your total Inheritance Tax allowance to £450,000 (£900,000 for a married couple). The maximum allowance will rise by £25,000 each tax year until it reaches £175,000 in 2020.

This will give you a potential total Inheritance Tax allowance of £500,000 or £1 million for a married couple. For estates worth more than £2 million, the tax relief is tapered away.

There are legitimate ways to plan to reduce the amount of Inheritance Tax you may have to pay. We can advise you on the ways that you may mitigate any exposure, including these:


Dying intestate, or dying without a Will, means that you may not be making the most of the Inheritance Tax exemption that exists if you wish your estate to pass to your spouse or registered civil partner. For example, if you don’t make a Will, then relatives other than your spouse or registered civil partner may be entitled to a share of your estate, and this might trigger an Inheritance Tax liability.


Gifts made more than seven years before the donor dies, to an individual or to a bare trust, are free of Inheritance Tax. So, it might be appropriate to pass on some of your wealth while you are still alive. This will reduce the value of your estate when it is assessed for Inheritance Tax purposes, and there is no limit on the sums you can pass on.

You can gift as much as you wish, and this is known as a ‘Potentially Exempt Transfer’ (PET). If you live for seven years after making such a gift, then it will be exempt from Inheritance Tax, but should you be unfortunate enough to die within seven years, then it will still be counted as part of your estate if it is above the annual gift allowance.

However, the longer you survive after making the gift (subject to surviving at least three years), the lower the Inheritance Tax charge:

• If you survive between three to four years from the date of the gift, the Inheritance Tax charge on the gift is reduced by 20%

• If you survive between four to five years from the date of the gift, the Inheritance Tax charge on the gift is reduced by 40%

• If you survive between five to six years from the date of the gift, the Inheritance Tax charge on the gift is reduced by 60%

• If you survive between six to seven years from the date of the gift, the Inheritance Tax charge on the gift is reduced by 80% You need to be careful if you are giving away your home to your children with conditions attached to it, or if you give it away but continue to benefit from it. This is known as a ‘Gift with Reservation of Benefit’.


Being generous to your favourite charity can reduce your tax bill. If you leave at least 10% of your estate to a charity or number of charities, then your IHT liability on the taxable portion of the estate is reduced to 36% rather than 40%.


As part of your Inheritance Tax planning, you may want to consider putting assets in trust – either during your lifetime or under the terms of your Will.

Putting assets in trust – rather than making a direct gift to a beneficiary – can be a more flexible way of achieving your objectives.

Family trusts can be useful as a way of reducing Inheritance Tax, making provision for your children and spouse, and potentially protecting family businesses. Trusts enable the donor to control who benefits (the beneficiaries) and under what circumstances, sometimes long after the donor’s death.

Compare this with making a direct gift (for example, to a child), which offers no control to the donor once given. When you set up a trust, it is a legal arrangement and you will need to appoint ‘trustees’ who are responsible for holding and managing the assets.

Trustees have a responsibility to manage the trust on behalf of and in the best interest of the beneficiaries, in accordance with the trust terms. The terms will be set out in a legal document called ‘the trust deed’.


Being wealthy can have its benefits, and its challenges too. When we die, we like to imagine that we can pass on our assets to our loved ones so that they can benefit from them. In order for them to benefit fully from our assets, it is important to consider the impact of Inheritance Tax.

If you would like to review the potential impact on your estate, please contact us.




Image Courtesy of Patrícia Almeida on Flickr

Paying Inheritance Tax

Estimating how much liability you could leave behind for your loved ones Usually the ‘executor’ of a Will or the ‘administrator’ of the estate pays Inheritance Tax (IHT) using funds from the estate.

An executor is a person named in the Will to deal with the estate – there can be more than one. An administrator is the person who deals with the estate if there’s no Will. Trustees are responsible for paying IHT on trusts.


To estimate how much IHT you could have to pay, add up the value of all your wealth, subtract your liabilities and the £325,000 nil rate band allowance, and then multiply the remainder by 40%.

If you are married or in a registered civil partnership, add up your combined estates and reduce these by two nil rate band allowances of £325,000 each (£650,000) before applying the 40% rate to estimate your potential liability to IHT. Married couples and registered civil partners are allowed to pass their possessions and assets to each other tax-free, and, since October 2007, the surviving partner is now allowed to use both tax-free allowances (providing one wasn’t used at the first death). Gifts made within the last seven years are not included in the calculations but may be liable to IHT on a sliding scale.

The calculation for valuation of your estate is for your general information and use only and is not intended to address your particular requirements. It should not be relied upon in its entirety and shall not be deemed to be, or constitute, advice. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation.

If IHT is due on the estate, you would need to complete HM Revenue & Customs (HMRC) form IHT400. You may also need to send other forms at the same time. If no IHT is due, you’ll need to complete form IHT205 to tell HMRC that no IHT is due on the estate. You or your solicitor will need to send the forms with your application for probate (‘grant of representation’). This is called ‘confirmation’ in Scotland. The grant of representation (confirmation) gives you the right to deal with the estate as the executor or administrator.


The executor of a Will or administrator of an estate usually has to pay IHT by the end of the sixth month after the person died. After this, the estate has to pay interest. You can make early payments before you know what the estate owes. Interest isn’t due on this amount. You can pay IHT in instalments over 10 years on things that may take time to sell, for example, property and some types of shares. There are different deadlines for paying IHT on a trust.


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Pensions: Annuity options for long-life planning

Life expectancy has stopped increasing, according to a report from the Office for National Statistics (ONS) issued in September, but we are still living longer than ever before.

Between 2000 and 2010, average life expectancy at age 65 rose by 2.4 years for men and by 1.8 years for women. However, since 2010 improvements have slowed markedly and the latest figures from the ONS show almost no change from those issued a year ago. On average, a man aged 65 in 2015- 2017 could expect to live for another 18.6 years, while a woman aged 65 could survive for a further 20.9 years. The important word here is ‘average’. Other calculations by the ONS suggest that a man aged 65 now has a one-in-four chance of living for another 29 years, to 94, while a woman has the same chance of living another 31 years, to 96. There is a 7% chance that a man aged 65 now could survive to 100, and an 11% chance for a woman.

Such long terms are challenging if you are considering how to invest your pension fund to provide an income throughout your retirement.


For those with a pension fund to invest, taking out an annuity is the only way to guarantee income for however long you live. However, since the introduction of pension flexibility, annuities have fallen out of favour. The latest FCA figures suggest over five times as much money is placed in income drawdown as annuities, despite the investment risks and ongoing management involved in drawdown.

While drawdown does have major benefits in many circumstances, the important role of annuities in providing secure income is in danger of being ignored. Annuity income can be structured in a variety of ways to incorporate automatic increases – for instance in line with inflation – minimum payment terms and/or continuing until the second death of you and your partner.

Importantly, once the framework is chosen, there are normally no future changes. That gives security but makes the initial choice of annuity design all the more important.

If you would like more information on annuities, perhaps to provide a core level of retirement income alongside drawdown, please talk to us.

We can supply guidance based on your health and lifestyle circumstances. The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.


Image courtesy of Flickr_Pink Sherbert Photography

Headline increases and frozen thresholds in the 2018 Budget

The last Budget before Brexit proved to be more interesting than expected. The 2018 Budget was delivered five months before the Brexit deadline and the start of the 2019/20 tax year. It threatened to be an interim affair, as decisions announced in October risk appearing seriously out of date by the time April arrives. In the event, Mr Hammond chose to be more radical than expected, declaring that, “austerity is coming to an end, but discipline will remain”.

The main points of interest to emerge were:

- On 6 April 2019, the personal allowance will rise by £650 to £12,500, reaching the target originally set for 2020/21 in the 2017 Conservative manifesto.

- The basic rate band will increase by £3,000 to £37,500, making the higher rate threshold (personal allowance + basic rate band)

- £50,000. This also matches the 2020/21 target.

- Both the personal allowance and higher rate threshold will be frozen for 2020/21. They will rise in line with CPI inflation from 2021/22 onwards.

- Despite rumours, there were no changes to inheritance tax (IHT), which means the residence nil rate band rises to £150,000 on 6 April 2019. However, an overhaul of IHT could still emerge when Mr Hammond presents his Spring Statement.

- The pension lifetime allowance will increase to £1,055,000 for 2019/20, in line with CPI annual inflation to September 2018. There were no other adjustments to pension allowances. The capital gains tax annual exempt amount will increase to £12,000, in line with inflation, for 2019/20.

- There were minor technical changes to EIS funds, after the many changes to venture capital trusts and enterprise investment schemes in the 2017 Budget.

The adult ISA contribution limit for 2019/20 was left unchanged at £20,000, although the limit for Junior ISAs did increase £108 to £4,368.


Many tax rates and thresholds were frozen, which offers a subtle way of raising additional revenue to Chancellors. This will be necessary as an examination of the spending commitments given in the Budget reveals that over £27.6 billion of a total £30.6 billion will be spent on the NHS by 2023/24.

For example, the main IHT nil rate band stays at £325,000, the threshold set back in 2009. The starting points for additional rate tax (£150,000) and the phasing out of the personal allowance (£100,000) also haven’t increased since their introduction in April 2010.

Combined with the increase in the personal allowance, these frozen thresholds mean that from April the band of income potentially subject to 60% marginal tax (currently 61.5% in Scotland) covers half of the income between the £100,000 taper starting point and the £150,000 threshold for additional rate tax (45% or 46% in Scotland).


The increase to the higher rate threshold for 2019/20 has three knock-on effects:

- The upper earnings/profits limit for full rate national insurance contributions rises to £50,000, effectively clawing back nearly 40% of your income tax saving if you are an employee with earnings above £50,000.

- The income ceiling for pension automatic enrolment contributions could increase to £50,000, £3,650 above the current limit. Such a rise would coincide with the increase in minimum total contributions from 5% to 8% of ‘band earnings’ – £6,032–£46,350 in 2018/19.

- The £50,000 income threshold for the high income child benefit charge is unchanged for 2019/20, meaning it will apply once higher rate tax starts to be paid.

If you would like to discuss how the Budget affects you, please get in touch.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.


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Make your Will the right way…

Like all legal documents, your will must meet certain requirements.

Firstly, a will must be signed and witnessed to be valid. You must have two witnesses who can’t be beneficiaries or be married to a beneficiary.

If your circumstances change – perhaps selling a business or having a child – you will need to update your will. These changes also need to be signed and witnessed.

If you marry, any previous will you have made will usually be invalid, so you must make a new one. Remember, unmarried partners don’t automatically inherit, and stepchildren won’t automatically be included in provisions for ‘children’.

If you are excluding a close family member, make it clear why you are doing this and what you want done with the money. If your reasons aren’t clear the individual could contest your will in the courts.

You should name at least two executors to sort out your financial affairs after you die. Executors can be beneficiaries, such as relatives or friends, or you could appoint a solicitor instead. If you don’t do this the probate court will appoint an executor on your behalf.

The Financial Conduct Authority does not regulate will writing, trusts and some forms of estate planning. This article is for general information purposes only. Please speak to a will writing professional for advice.


Image courtesy of Flickr_Pink Sherbert Photography

Lessons from a record bull run

The US stock market recorded its longest ever bull run in August 2018.

A new record was set for the Standard & Poor’s 500 (S&P 500) index on 22 August 2018, when the market reached the 3,453rd day of a run that started on 9 March 2009.

The index has also achieved numerous all-time highs as part of this run.

Bull markets are typically defined as periods starting with a market low point and ending when the relevant index falls by more than 20% – and they rarely last as long as this.

The S&P 500’s current bull market started when the index hit the memorable low of 666 during March 2009. By 22 August 2018 the Index was at 2,871, a 331% increase from the depths of the

financial crisis and an annual growth rate of 16.6%, before any dividends are considered.

Although the Dow Jones Industrial Average (DJIA) is often quoted as the performance measure of the US stock market, investment professionals prefer the S&P 500 as a benchmark. As its name suggests, the S&P 500 has 500 constituent companies, whereas the DJIA has just 30.

Over the same period, the UK benchmark the FTSE 100 roughly doubled in value. However, for UK-based investors, returns from the US could be marginally greater than those implied by the S&P 500 because the pound was at $1.376 on 9 March 2009, whereas it was trading at only $1.291 by 22 August 2018.


The nine years of a US bull market offer investors some lessons:

- International diversification of investment can deliver rewards. UK-based investors can pay the price of favouring funds investing in their home country. While many of the UK leading companies are multinational, no UK-listed companies have matched the performance of the likes of Apple or Facebook.

- Currency can play a part in adding to returns – or reducing them. Changes in currency valuations impact on both foreign-listed shares and UK-listed shares of companies with overseas earnings.

- Timing entry and exits to a market can be difficult. As the graph shows, US markets have seen a few small dips since 2009.

Exploiting them successfully by selling at the high and buying back after the dip may appear easy – but only with hindsight.

Staying invested and ignoring the market ‘noise’ has proved to be a sensible strategy.

Despite the success, the long-term rise in US shares has been labelled the ‘most hated bull market’ in history. Almost since its start in 2009, many market watchers have predicted its demise. So far, they have all been proven wrong.

If you want to review the global spread of your investments, why not ask us to calculate a geographical breakdown of your portfolio, drilling down into each fund’s holdings?

The value of your investments and the income from them can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.


Image courtesy of Flickr_Sheila Sund

HMRC Focus on Inheritance Tax Returns

HMRC investigated almost one in four inheritance tax (IHT) returns in 2017/18, according to research published in September by UHY Hacker Young.

HMRC can impose penalties of up to 100% of the tax due on UK estates that underpay. These penalties apply even though it is often a family member who acts as executor after a relative has died.

Executors have a legal duty to ensure all information is correct when applying for probate or filing an IHT return.

Particular care should be taken to ensure property values reflect current market conditions, and that assets are not omitted from the return. Not all estates will be liable for IHT. The rules can be complex, so seek advice if necessary.


Image courtesy of John&Fish, Flickr

Getting married – doing the right thing

There are many misconceptions around the rights of the 3.3 million unmarried couple families in the UK. The government has recently announced that heterosexual couples will be able to enter into civil partnerships in England and Wales, but there will still be many unmarried couples who see no advantage in a marriage or civil partnership. However, it is worth understanding some of the laws relating to co-habitation.

First, there is no such thing as a ‘common-law’ marriage. The nearest legal status, ‘irregular marriage’, only applied under Scottish law, and it was mostly abolished in 2006.

This means that transfers of investments between unmarried partners could be subject to capital gains tax, which would not apply to transfers between spouses living together. Yet, at the same time, the government can treat unmarried couples as if they were married for some tax and benefit rules such as the high income child benefit charge.


Some severe consequences of not marrying are revealed at the most difficult times. If an unmarried couple splits up, an ex-partner has no right to claim spousal maintenance or share of the other’s pension(s). They can only make a claim in respect of solely owned property if they can show they have made a financial contribution or have carried out repairs or improvements, which may not be the case if the non-owner stayed at home to care for children during the time they were together.

If an unmarried partner dies without leaving a will, the survivor will only automatically inherit property the couple owned as joint tenants. If the surviving partner does inherit under their partner’s will – including automatic transfers of jointly owned property – they could incur inheritance tax, even if it is their home. Married couples can use the spousal exemption to transfer any unused nil rate band and residence nil rate band to reduce IHT.

Surviving unmarried partners also won’t receive the state bereavement support payment, normally paid to widow(ers). A recent Supreme Court judgement questioned this practice, but as yet the rules have not changed.

A different approach to financial planning may be needed if you have not married your partner. To understand what that means for you and your partner, please get in touch.



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