Considerations when looking at property as an investment

Historically, property alongside pensions has been one of the most common ways to invest in the UK. As many know, property is an asset class, just like cash, bonds and shares and can serve as a form of diversification when building an investment portfolio. In the UK, there have traditionally been many tax incentives for property investing. However, these are slowly being tapered back making other avenues of investing potentially more attractive.

Look to have a tax overlay to your saving plan to help save more money

Clearly defining your personal wealth goals and objectives is the first step towards determining an appropriate investment strategy and asset allocation to suit your needs. The additional value add comes with giving proper consideration as to how to meet your goals in the most tax-efficient and optimal manner. As a US person living in the UK, you want to make sure that you avoid the tax traps that are littered within the investment world to mitigate any overall costs of investing.

The importance of financial planning

Financial planning is often an area that takes a back seat in busy lives. When there is no specific deadline to make a financial decision, it is very easy to say that you will address it in the future when life becomes less hectic. Taking the time to review your financial position, your personal wealth goals and objectives and consider the implications of whether your strategy will appropriately meet those goals can be an important exercise. Ensuring that you have an effective and appropriate strategy will likely afford you future flexibility and peace of mind. Below we discuss the areas that are beneficial to consider and review. A few easy steps can ensure optimal wealth planning strategies.

Arising Basis Taxation and your Investment Portfolio

Upon arriving in the UK, most Americans are non-domicile for income tax purposes. Usually you can elect to pay tax on the remittance basis so that UK tax is only paid on foreign income or gains when they are brought into the UK. Once you have been resident in the UK for more than 7 out of the last 9 tax years you are taxed on the arising, or worldwide, basis unless an election is made to pay an annual Remittance Basis Charge (otherwise known as the RBC). Under rules that come into effect for the new UK tax year, this RBC can only elect to be paid for the tax years prior to meeting a UK long-term residency of more than 15 out of the last 20 years. For many Americans, paying the annual charge often does not make financial sense due to being subject to US tax on a worldwide basis. As a result, it is usually in your 8th UK tax year that you often find yourself dealing with worldwide taxation in two jurisdictions. Knowing what is tax-efficient from both a US and UK perspective becomes of utmost importance.

What is the Reconstitution Effect and How Does it Impact my Portfolio?

Exchange Traded Funds or ETFs, came into existence in the early 1990’s. They have grown tremendously in popularity by institutional and retail investors alike. As a refresher, ETFs are marketable securities that typically track an index, a commodity, bonds or a basket of assets. One of the major differences between mutual funds and ETFs is that the latter trades like a stock, meaning you can use limit orders, use margins, short positions, and trade throughout the trading session. In addition, like stocks, one of the most likable characteristics of an ETF is that it’s usually very inexpensive. ETFs offer a diverse range of options for investors seeking investments with low fees. From the days of Benjamin Graham to the present, value investors have always touted investments that are broad-based and low cost; ETFs fit the bill.  However, the benefits of ETFs do not come without trade-offs. In order to replicate the index, an ETF fund manager must sacrifice trading flexibility.

It’s that time of year again – A reminder of the US tax filing deadlines

It’s that time of the year again. That time where US individuals are beginning to think about their 2016 tax year filings. Many people have received their relevant W2’s (or equivalent pay statements reflecting their employment earnings and withholdings), their 1099s related to investment income and their 1099s related to taxable pension distributions and reportable rollovers. So, let’s take a moment and review some of the most relevant filing deadlines for US individuals.

Josh Matthews invited to be a panellist at the Private Wealth UK Forum

On Tuesday 21st March, Managing Partner Josh Matthews was invited to be a panellist at the Markets Group Private Wealth UK Forum in London, a meeting of Regional HNW Wealth Managers, Private Banks, and Family offices.

The day covered a broad range of topics, with Josh on the panel called ‘Opportunistic Approaches to Alternatives’.  He discussed the high yielding opportunities in alternative credit, and how in a low interest rate environment alternative credit is a good option for clients who can withstand some illiquidity.

If you are interested in hearing more about MASECO’s views on alternative credit, please contact your wealth manager.

Is Lifetime Allowance Protection appropriate?

The standard lifetime allowance (LTA) is a limit on the amount of pension benefit that can be drawn from pension schemes – whether lump sums or retirement income – and can be paid without triggering an extra tax charge. As of 6 April 2016, the LTA reduced from £1.25 million to £1 million. Provided nothing changes, the LTA is set to stay at £1 million until April 2018 when it is scheduled to increase each year in line with CPI.

With the lower LTA threshold, there is a segment of individuals who, if not already addressed, should give consideration as to whether or not a form of LTA protection might be appropriate in their situation. Lifetime allowance protection locks in the level of your lifetime allowance. There are three protection programmes that remain available to individuals who do not currently hold protection or have not previously applied for protection in the past. Special attention should be paid to those who think they qualify under the IP2014 programme, noted below as an application for this is only available until 5 April 2017. These are: