http://blacktower.shinemarketing.com/index.php/site/index/ en paula.smith@blacktowerfm.com Copyright 2012 2012-01-30T13:29:13+00:00 http://www.blacktowerfm.co.uk/site/the-size-of-the-beast/ http://www.blacktowerfm.co.uk/site/the-size-of-the-beast/#When:12:29:13Z Whilst China has the second-largest economy in the world, it also has 20% of the global population and 25% of the labour force. Nevertheless, the country only accounts for 14% of the world’s gross domestic product, a figure distinctly disproportional to its population. Although the statistics show China is already a global powerhouse, it still has vast potential to expand. If there is to be a rival to the dollar as the world’s reserve currency in the 21st century, it surely could be the Renminbi (RMB) – the currency of the People’s Republic of China. By 2015, half of international trade operations (USD 2 trillion) could possibly pass through Hong Kong.  Over time, it is believed that the final phase of the RMB internationalisation process will mean foreign holders of RMB have the capacity and desire to retain and invest their RMB funds both in and out of mainland China.  To complete the process, Chinese authorities would like to make the currency fully convertible.  To accompany the process initiated by officials, Hong Kong’s strength as an offshore centre lies in its ability to develop a wide range of RMB products and services Time for a breakthrough Meanwhile, Chinese policymakers have already introduced multiple accommodative taxation, trade finance and capital account measures to ease the internationalisation process of the RMB. The primary aims are to reduce costs on foreign exchange transactions and for the RMB to increase in value. Overall, this should encourage investors to switch to the currency in favour of the US dollar. The offshore RMB bond market is growing rapidly and current demand largely exceeds supply. Growth is driven by the restrictions on access by foreign investors to the onshore RMB bond market. Bond issuance is key for the market to continue growing and we believe new issuance should remain strong. Outstanding offshore RMB bond issuance is around RMB200bn (as at end October 2011);  The pipeline suggests another RMB50-100bn for the rest of 2011;  Some European and North American companies may be using the offshore RMB market for ‘instant recognition’ in Asia;  The market is becoming more ‘two way’, and issuance is mainly from high quality issuers    Even if the story of China’s economic might is nothing new, that does not mean to us that investors have missed the opportunity. Quite the contrary, we see at least three forces that should help support local growth and investment opportunities over the coming years, including long-term macroeconomic plans, the coming political transition period and growing RMB-denominated markets. We also believe investors have ample means to get exposure to the China story in portfolios both directly and indirectly. It seems that signs of a breakthrough are already slowly appearing for those investors wishing to enter the Chinese market - how appropriate for the year of the Dragon. Fund Houses to look out for in particular would be those like HSBC who have great experience and knowledge of China and its potential – so take a look at the RMB Fixed Income Fund for example. 2012-01-30T12:29:13+00:00 http://www.blacktowerfm.co.uk/site/Lots-of-Bad-News-in-the-Press/ http://www.blacktowerfm.co.uk/site/Lots-of-Bad-News-in-the-Press/#When:12:24:29Z Speak to any Fund Manager and they will say that valuations matter most of all. To generate long-term returns investors need to buy financial assets when they are cheap, not when they are expensive. So how much bad news is now in the price? A lot of negative news has broken in recent weeks and should now have been absorbed into the asset prices.  Here is a top line summary of the recent bad news: 1. At the end of last week Standard & Poor’s downgraded the credit ratings of nine Eurozone (EZ) countries, including stripping France and Austria of their AAA rating and taking Portugal down below investment grade. This leaves only four EZ countries with triple A ratings and, as a result, the European Financial Stability Fund (EFSF) was also subsequently deprived of its AAA rating. According to the German newspaper Die Welt, on the back of this, plans to leverage the (EFSF) to up to EUR1.5trn from EUR440bn “are practically dead.” 2. Negotiations between Greece and representatives of private sector creditors broke down at the end of last week, raising concern that there will be a ‘disorderly’ default rather than a managed debt swap in March when Greece is due to repay EUR14.5bn in bond redemptions. This will be impossible unless Greece gets the frozen 7th tranche of the support package from the so-called ‘troika’ (EC, IMF and ECB) which is itself conditional on closing the debt swap. Such a disorderly default would trigger credit default swap contracts, likely creating a new wave of uncertainty and potential contagion in an environment where it would be extremely difficult to compute the impact on individual banks and insurance companies given the integrated nature of financial markets and institutions. Although negotiations have subsequently resumed agreement has still to be reached and, moreover, investors have also come round to the realisation that even a successful conclusion of negotiations on the terms of a swap would still leave open the question of investor participation and the risk that private creditor ‘holdouts’ are subsequently forced into the deal removing any notion that this is a ‘voluntary’ rather than a coercive swap. 3. In the background, global economic growth expectations have been further downgraded recently and now recession in 2012 is the central forecast for the EZ. The World Bank is indicative of the trend: it now believes that the EZ entered recession in Q411 and sees a 0.3% contraction in the bloc’s GDP this year. It has also lowered its US GDP growth forecast to 2.2% in 2012 from 2.9% previously and expects world GDP growth to fall to 2.5% in 2012, down from a forecast for 3.6% growth six months ago. According to the Bank, emerging countries should take steps to plan for a global economic crisis in line with 2008/09 if the EZ Sovereign debt crisis intensifies. 4. Corporate earnings expectations have been downgraded but in spite of this the Q411 US earnings season that began last month has generally been disappointing. According to Bloomberg, in releases thus far fewer S&P 500 companies have beaten analyst earnings expectations than at any time over the last 4 years. 5. China has not been immune from the gloom. GDP growth has decelerated with Q4 growth slowing to 8.9%, the lowest growth rate for ten quarters, increasing concerns about a hard landing in the world’s second largest economy. Property prices in China have also been under downward pressure which continued into December when residential property prices fell more than at any point in the previous 12 months and new home sales fell month-on-month in 52 of 70 cities monitored, adding to concerns that this could have a debilitating effect on the domestic banking system.  But look through the gloom and focus on valuations Clearly, this is a substantial raft of bad news to hit the market in a relatively short period of time. But the limited reaction of markets to these events and data releases suggests that it was largely already factored into asset prices. In fact, global equity markets are up year-to-date and most risk assets and currencies have fared reasonably well so far this year in spite of the negative news flow. Additional evidence that investor expectations have been driven sharply down by negative news is provided by the so-called activity ‘surprise’ indices for the US and the EZ. In both cases the data across a broad range of indicators has generally been coming in better than expected recently, in large measure because expectations have been trashed to such an extent. This is in sharp contrast to the six month period to end September 2011 when the data for the US surprised negatively, a factor that was instrumental in the market selling off over that period. Things could always get worse than currently expected but the negative tone of recent news suggests that there is a lot of angst already factored into asset prices. In fact, the correlated 2011 sell-off in most risk assets has also created long-term value in a range of fundamentally attractive investments, given that it was based more on risk aversion than deterioration in underlying fundamentals. In bond markets there would be a preference for corporate over safe haven developed world government bonds. The latter look expensive on fundamentals while companies generally have strong balance sheets, are in many cases cash rich and offer an attractive spread over treasuries and other safe haven government bonds. For the most part, the corporate spread widening in 2011 is not credit specific but a reflection of an absence of risk appetite. Equity markets are also generally trading cheap to their longer-term valuation averages on a forward PE basis despite, in some cases, big downgrades in earnings forecasts. Not surprisingly, the EZ is the region where there has been the most aggressive downward revisions – by close to 80% on average since June. Most emerging markets earnings growth estimates have also been revised down. For example, earnings estimates for the Indian market have been cut by almost 50% since last June. Moreover, both developed and emerging markets equities look cheap relative to history. For many, emerging and developed markets look appealing and this may be an attractive entry point for exposure to powerful long-term investment themes like emerging consumption and infrastructure spending. So, if you are in it for the long-term, now could be the right time to get back into the market – although, in the right asset classes, of course. It might be an idea to take a look at an Absolute Return Fund – from the likes of Hendersons. 2012-01-30T12:24:29+00:00 http://www.blacktowerfm.co.uk/site/confident-about-the-future-of-guernseys-qrops-industry/ http://www.blacktowerfm.co.uk/site/confident-about-the-future-of-guernseys-qrops-industry/#When:12:23:41Z A number of people are assisting Guernsey's pensions industry to respond to the proposed changes from Her Majesty´s Revenue and Customs (HMRC) to Qualifying Recognised Overseas Pension Schemes (QROPS) and they are confident that Guernsey will continue to be an attractive jurisdiction for the establishment of QROPS. Since 2006 UK legislation permits non-UK pension schemes to attain the status of a QROPS which enables such schemes to accept pension transfers from UK registered pensions. QROPS offer the ability to UK pension savers now living, or planning to live, out their retirement outside the UK to transfer their pension funds out of the UK without suffering adverse UK tax consequences. Guernsey rapidly became the jurisdiction of choice for many QROPS schemes and is believed to account for approximately one third of all QROPS schemes. Although HMRC has raised no Guernsey-specific concerns, it is well known that concerns have arisen regarding alleged abusive practices in other jurisdictions; this appears to be what has motivated HMRC's proposed changes which will however apply to all QROPS jurisdictions. Among other changes, the proposed new regulations will impose greater reporting requirements on administrators of QROPS.HMRC intends to impose a new "Condition 4" which will require all jurisdictions, in which QROPS are administered, to grant the same exemption from tax in respect of benefits to all members of the QROPS schemes, irrespective of where the member is resident. Jurisdictions that do not comply with Condition 4 will no longer be accepted by HMRC for establishing QROPS.Guernsey resident members of QROPS are currently taxed in Guernsey on benefits received whereas non-Guernsey members are not. If the proposed changes take effect, Guernsey's existing schemes would no longer comply unless changes are made to the way Guernsey taxes benefits under Guernsey-based QROPS. The Guernsey Association of Pension Providers is in the process of formulating a detailed response to HMRC. Industry's principal concern centres on Condition 4 and its ramifications. A leading pensions’ expert in Guernsey has stated, “Condition 4 remains subject to consultation and may yet be revisited or even be withdrawn.“However, as we see it, if Condition 4 is imposed, Guernsey has two options. The first is to tax both Guernsey and non-Guernsey residents in the same way on their Guernsey source pensions’ income. Such a move may however cause non-Guernsey members to be taxed on their pension income both in Guernsey as well as in their home jurisdiction and would immediately place Guernsey at a competitive disadvantage when compared with other QROPS jurisdictions that may not impose such a tax.” “The second option would be for Guernsey’s existing system of taxation of personal income to provide that no Guernsey tax would be payable on pension distributions received irrespective of where the member resides. Such a pension arrangement would have to be open to Guernsey and non-Guernsey residents alike.” "The second option is clearly the more desirable provided it can be established in a way that would protect Guernsey's income tax base,”.“A lot of time and effort has been spent over the last weeks by various people in Guernsey pensions and tax sectors as to how best to achieve a positive outcome for Guernsey and the pension savers it serves.“It has been, and continues to be, a real team effort involving the co-operation of industry, professional advisers, public servants and politicians in a way that promises a positive outcome.They also added, “We are cautiously confident that Guernsey will be able to respond effectively, and within the limited time available, to meet the challenges presented by the proposed regulations and that we should be able not only to preserve but even enhance the island's standing as the leading international QROPS jurisdiction,". What is clear is that now, more than ever, it is imperative that you seek professional independent financial advice not just about whether to transfer pension benefits to QROPS, but also about which jurisdiction will be best for that pension in light of proposed changes. 2012-01-30T12:23:41+00:00 http://www.blacktowerfm.co.uk/site/the-spanish-tax-advantage-part-2/ http://www.blacktowerfm.co.uk/site/the-spanish-tax-advantage-part-2/#When:12:16:55Z  Tax efficient pensions Many individuals find pensions confusing and the global recession and so called “credit crunch” has created a great deal of concern over pension invested funds. This is only compounded when you move overseas as you may also be affected by exchange rate fluctuations. Well the overseas part shouldn’t worry you, in fact as a result of living overseas there are significant advantages open to you with regard to your UK pension arrangements. In April 2006 and 2011, UK pension legislation changed allowing persons living outside the UK to transfer their pension assets to an alternate overseas pension scheme. These have been formally named Qualified Recognized Overseas Pension Schemes or QROPS for short. Although not for everyone, these schemes offer significant flexibility and tax advantages over that as offered by UK sited schemes. By transferring your existing pension assets to a QROPS you could save up to 55% in tax charges on 1st death succession and further 55% on 2nd death succession. In short this means that your heirs will truly benefit from your life time’s work rather than your adopted child the UK chancellor. In the majority of cases a transfer to an overseas scheme proves to be in the policy holder’s best interest as advantages of transferring to a QROPS include: · No need to make life long decision now that are locked in· No requirements to purchase an annuity· No requirements to pay UK tax charge upon death· Tax efficiency on Income Drawdown· Currency hedging (as you could receive your income in the currency of your resident country)· Better inheritance provisions· Far greater freedom of investment choices However, it’s not for everyone and in certain circumstances a transfer could prove to be a disadvantage, such as certain defined benefit schemes. Also be aware that some companies and individuals claim that you can 100% commute your pension by transferring to such jurisdictions as New Zealand. Whilst this is possible you need to be aware of the possible implications of such transfers. For example some claim that this can be done “tax free”.  If by “tax free” they mean there are no taxes to pay in New Zealand, then they are correct. However the tax position in either the UK or Spain may differ considerably. Indeed the legislation that allowed this is set to change with reforms to the UK Financial Act planned for April 2012. These changes will put a stop to this practice which will in turn provide greater consumer protection. In short before embarking on an overseas pension transfer ensure that you are talking to a trusted and regulated company and that you are made “fully” aware of the implications should you return to the UK and as such your tax liabilities. To find out more please contact me on 0034 952 816 443  or 0034 622 345 558 or simply email me at david.rogers@blacktowerfm.com 2012-01-30T12:16:55+00:00 http://www.blacktowerfm.co.uk/site/the-spanish-tax-advantage-part-1/ http://www.blacktowerfm.co.uk/site/the-spanish-tax-advantage-part-1/#When:12:15:07Z Tax efficient investing There are a substantial number of Expats living in Spain that may not be aware of certain advantages open to them purely as a result of the fact that they live here. For example did you know that you can be protected from the European Savings Directives rules on Withholding Tax, which is a tax levied on growth from savings or investments? To avoid paying witholding tax you can take advantage of the favorable way in which Spain looks at collective investments. In this regard it is possible for a person who lives in Spain to open what are generally known as Spanish Compliant Bonds or Wrappers, these are extremely tax efficient vehicles for holding invested funds and cash. For example: If you held funds on deposit in the general banking system or you have funds invested in non-compliant products, under the European Savings Directive, any growth obtained is subject to withholding tax. The current rate of withholding tax is 19%. (This is tax law and is always charged on growth, although not readily explained by the banking system or many off-shore providers. What does that mean? Well as an example if you had €100,000 either on deposit or in certain non-compliant off-shore structures and you obtained growth of say 10%, giving you €110,000 then there would be a 19% tax charge applied to the (€10,000) growth element only. This would result in withholding tax charge of €1900. This applies no matter whether you touch the original amount or the growth element or not. In other words tax on the growth is unavoidable. Unless you take advantage of a Spanish Compliant Portfolio Bond/Wrapper, in which case, the tax treatment is far more favorable. In this case if the €100,000 had grown to €110,000 and the policy owner decided NOT to touch the investment at all, then there would be NO tax to pay. This is known as tax free role up, because the policy owner can now get growth on the tax that they would have paid if it had been in the banking system and/or in non-complaint off-shore structures. Furthermore, should the policy owner wish to drawdown from the policy a Spanish Compliant Portfolio Bond/Wrapper also provides an extremely favorable tax position for the policy holder. In this case for example, if the policy holder wished to take the whole growth (€10,000) then this would be treated as follows: Of the €10,000 withdrawn, €9,000 would be treated as Return of Capital, and be exempt from tax (zero tax to pay) and the remaining €1,000 would be taxed as investment income which is levied at 19% for the first €6000 and 21% thereafter. So in the case it is possible for the policy holder to get hold of €10,000 with all taxes paid for only €190 or 1.9% in tax. Or put another way he/she would have saved €1,710 in tax charges alone. There is not a more favorable (legal) way of dealing with invested funds and as such this should be, at least, considered as an option for anyone living in Spain or anyone that has funds invested in either the banking system or in non-complaint investment portfolios. In this regard many Expats living in Spain have been sold and/or invested in non-complaint “off-shore” products, so if you have funds invested in this manner its worth establishing of they are Spanish Compliant or not as you may be paying taxes that could be avoided. In part of the Spanish Tax Advantage we will cover tax efficient pension planning for expats. To find out more about the Spanish Tax Advantage, please contact me on 0034 952 816 443  or 0034 622 345 558 or simply email me at david.rogers@blacktowerfm.com 2012-01-30T12:15:07+00:00 http://www.blacktowerfm.co.uk/site/changes-to-personal-income-tax-in-spain/ http://www.blacktowerfm.co.uk/site/changes-to-personal-income-tax-in-spain/#When:15:11:46Z Do you hold an Investment Bond product issued by a non-eu jurisdiction like the Isle of Man, for example Friends Provident International or Scottish Widows International or still sit on investments arranged whilst resident in the UK? If the answer is yes you would be advised to make a cup of tea and get a plate of Digestives and continue reading. The previous PSOE Government, made a temporary amendment to the personal income tax law in Spain, before the recent General Elections, that could leave investors in non-tax-compliant offshore bonds facing a higher tax bill in 2014. Whilst many though that the newly elected PP Government would reverse this, this has not been the case. On 1 January, the Spanish personal income tax regime was temporarily modified resulting in a rise in income tax for 2012 and 2013. While the changes will have “little or no impact” on those who hold tax-compliant offshore bond policies until at least 2014, normally issued out of jurisdictions like Dublin, those using non-compliant tax-compliant products will pay up to 3% more each year in tax both this year and next. So what does this mean? Well Skandia have said that from the 1 January this year to the end of 2013, gains on tax-compliant offshore bonds will be taxed at a rate of 21% (as opposed to the normal rate of 19%) which is then withheld by tax-compliant providers. There will be no further personal income tax liability for the policyholder if the gains amount to less than €6,000 (£4,981, $7,661) savings income in a tax year – including interest earned on savings accounts and dividends received in the same tax year. A further 4% personal income tax liability will need to be accounted for by the policyholder on the next €18,000 savings income and a further 6% if the overall savings income for that tax year is above €24,000.  If the policy suffers a loss over the tax period, the loss can be offset against other income tax liabilities. In contrast, non-tax-compliant policies are required to withhold tax every year and so will be further affected by the increase during the next two years. Skandia also went on to advise that, in instances where the provider of a non-compliant policy fails to withhold tax correctly, and in a timely manner, policyholders may become subject to penalties for non-reporting, and these can range from 50% to 150%. However, Skandia conceded that non tax-compliant policies have their merits as such policies can offer other features which can make them attractive to certain types of investors – for example, by providing access to a wider investment universe of assets and the ability offset losses on an annual basis. What is clear is that in today’s world, the choices available to investors can be overwhelming. It is crucial investors understand the implications of choosing the right product in order to utilise the available tax advantages to the full. For example, tax-compliant bonds reduce the burden of reporting on individuals classed as tax-resident in Spain and can be affected by changes in tax regimes to a lesser degree than non tax-complaint alternatives. The recent changes introduced on 1st January 2012 illustrate these advantages perfectly. But please don’t make a ‘hasty’ decision without first reviewing what you have and the tax implications with a qualified financial adviser. 2012-01-19T15:11:46+00:00 http://www.blacktowerfm.co.uk/site/uk-autumn-2011-statement/ http://www.blacktowerfm.co.uk/site/uk-autumn-2011-statement/#When:15:32:56Z The Chancellor's 2011 Autumn Statement has made a wide range of announcements (and re-announcements) on everything from nursery care for disadvantaged two-year-olds to 100% capital alowances for the Black Country enterprise zone. Please see the pdf version for the full statement and if you have any queries or would like further information, please email info@blacktowerfm.com  http://www.blacktowerfm.co.uk/images/uploads/Autumn2011statement.pdf   2011-12-02T15:32:56+00:00 http://www.blacktowerfm.co.uk/site/business-health-check-questionnaire/ http://www.blacktowerfm.co.uk/site/business-health-check-questionnaire/#When:13:32:07Z Most businesses have key individuals that are essential to it's survival.  Research shows that 95% of businesses had at least one key individual.  43% of businesses had unprotected corporate debt.  39% of businesses could not survive more than 18 months following the death or critical illness of a key person. A third of businesses had no Share Protection in place.  58% of businesses had no formal agreement to establish what would happen in the event of the death or critical illness of a business owner and 70% of businesses had not reviewed their company agreements in the last year.  Key Person Protection (Profit Protection) is life assurance or life assurance and critical illness cover written on the life of the key person but owned by the business.  This means that any money due becomes payable to the employer.  The business can then use the money to, for example, replace lost profit or to cover the cost of finding and hiring a replacement for the key person. In the event of a business owner dying or becoming terminally or critically ill, Share Protection can provide a sum of money to the remaining business owners.  This means that this lump sum can help enable the surviving shareholders to buy the shares from the deceased shareholder's estate, thereby maining control of the business.    To find out if your business should be considering Business Protection, please complete our Business Health Check Questionnaire and email to info@blacktowerfm.com  or call 01372 844344 for further information.  Business Health Check Questionnaire. 2011-11-01T13:32:07+00:00 http://www.blacktowerfm.co.uk/site/retirement-freedom/ http://www.blacktowerfm.co.uk/site/retirement-freedom/#When:12:43:18Z Retirement Freedom   Equity Release to Assist Retirement Planning  Home Benefits There is a considerable amount of “unmortgaged equity” sitting in the properties of those that are retired, or nearing retirement due to property price rises over the last couple of decades. Also, this age group may be getting (or may get) less than they hoped for from their savings, or pension, and with increasing longevity, along with the Government making it clear that the State will not be able to provide all-encompassing retirement funding, other options may need to be considered. Where Equity Release Could Help If you fall into this age group, then releasing equity from your home may deliver the additional income you need to meet bills, pay off debts, maintain your home, or simply achieve your retirement goals. Even if you do have enough in savings or a sizeable pension, it may deliver a way to provide financial support to your children and grandchildren, whilst you are still around to see them benefit from it. With loans from around £10,000 and upwards, Equity Release may well offer options for those that may be keen to turn some (or all) of the equity in their property into cash.  Consider the Alternatives However, opting for an Equity Release plan is a major undertaking – and may require the input of other family members, as it can affect their future inheritance. You should also consider if other financial routes are better for you.  For example, if you want to extract the full value of your property, you may need to sell up and consider moving to a cheaper home and release equity that way. Options for You There are a multitude of reasons why people will opt for Equity Release, such as to maintain their standard of living; home improvements; pay bills/clear debts; and mortgage repayment.  On top of this, there’s sure to be those that will also want money for the luxury items, such as a “once in a lifetime” holiday, or to help out their family. There are two main types of Equity Release scheme: Lifetime Mortgages & Home Reversion Plans  To fully understand the benefits and pitfalls of Equity Release, you need to take advice from your financial adviser, your solicitor, possibly your accountant, and quite likely, involve members of your family too.  It's a pretty complex area, but one that we're familiar with so do get in touch to find out more.  So why not on + 44 1372 844344 or email:  info@blacktowerfm.com For Equity Release, we can be paid by commission or if you elect to pay us a fee for arranging finance, our fee will be 1% of the advance with a minimum of £750.00.  We only recommend home reversion schemes from members of Safe Home Income Plans (SHIP) and their code of practice includes the valuation “no negative equity” guarantee.  To understand the features and risks of a home reversion plan, ask for a personalised illustration.             2011-10-18T12:43:18+00:00 http://www.blacktowerfm.co.uk/site/top-ten-worst-mistakes-made-by-ex-pats/ http://www.blacktowerfm.co.uk/site/top-ten-worst-mistakes-made-by-ex-pats/#When:11:28:56Z Follow the link to find out more http://www.international-adviser.com/article/the-top-ten-worst-mistakes-made-by-expats 2011-08-09T11:28:56+00:00