Monthly Archives: February 2010

Ellen Kelleher

Even a god cannot change the past,  Agathon said (in 445b.c.).  Hopefully, the Athenian poet’s musings on the future would have been more optimistic.

But since Agathon is no longer around and not up for fielding questions about his country’s problems, we turn to market strategists.

This afternoon, a note crossed our desks from David Karsbol, Saxo Bank’s chief economist. Is all the panic in the Greek markets creating opportunities?

Karsbol’s thoughts:

The Greek stock market has dropped 36% from the peak in October 2009, while MSCI World is only down by around 5%. In other words, it looks like a country-specific slow-motion panic that might threaten to evolve into a full-blown panic. And where there is panic, there are usually lots of opportunities. We have therefore screened the Greek stock market for long-term value stocks that might be getting even cheaper if more rumors or even real political action appear.

Lucy Warwick-Ching

It’s not often that a press release offering discount vouchers causes a stir in the FT Money office but this morning’s note about the launch of Groupola was interesting enough to command a second look.

Claiming to use “the power of group-buying to save consumers up to 90 per cent off the best things to do, see, eat and buy”, this site is introducing a new angle to the discount voucher website. 

Alice Ross

Alliance Trust has become the latest investment company to bring forward its annual dividend payout, to avoid investors having to pay more tax.

The company just put out an announcement – after 5pm today – that it’s paying its fourth interim dividend to shareholders on 1 April. Last year it paid this on 30 April.

This follows a number of other investment companies – and other companies in general – bringing forward their dividend payouts before the rise in income tax.

From 6 April a new higher rate of 50 per cent will apply to those earning over £150,000, while the top rate of dividend tax will go up to 42.5 per cent, from 32.5 per cent currently.

Other investment trusts to have brought forward their dividend this year include Murray Income, Caledonia and HgCapital Trust – but the list is pretty small so far. Others are likely to follow though – watch this space.

Lucy Warwick-Ching

There’s a glimmer of light for consumers who have seen their account balances diminish due to repeated bank charges. New figures suggest there is up to £480m of unfair bank charges to be paid back by the banks.

The research comes from consumer website MoneySavingExpert.com which has had over 6 million template letters downloaded from it and is launching its new bank charges reclaiming guide on Wednesday – which includes new legal arguments developed since the court case.

Ellen Kelleher

Frustrated by the new 50 per cent income tax rate slapped on high-earners, accountants are encouraging clients to avoid paying it.

Here are two suggestions for ways to duck it from advisers at Baker Tilly:

Make full use of non-pension reliefs
In the last Weekly Tax Brief, we looked at pensions. Investing in other tax-efficient vehicles such as Enterprise Investment Scheme or Venture Capital Trust shares or Individual Savings Accounts should also be considered.
 
Each year, up to £200,000 could be invested into a VCT gaining tax relief at 30%.  EIS investment of up to £500,000 gives relief at 20% and, additionally, with capital gains tax deferral there is the prospect of 38% relief or 60% relief where the gain arose before 6 April 2008.
 
Remember that while those investments may bring tax advantages, they also carry inherent investment risks and independent financial advice is always needed.

Consider when to claim losses
Losses on subscriber shares in EIS-qualified companies can be claimed against income tax but qualifying shareholders should not always rush to claim their losses. If a loss has arisen but not been claimed yet, there is no requirement that the loss must be claimed now: the claim may be made in 2010/11, so providing relief at the top rate of tax, including the 50% additional rate where that applies.

Lucy Warwick-Ching

I wrote a piece in Saturday’s FT on investing in farmland based on the latest Savills agricultural land survey which showed that farmland values have increased by 134 per cent in the past ten years.

In the piece I mentioned a couple of schemes that were currently available to people interested in getting involved, but from the number of emails I had this morning about new ways investors can get on board, it seems investing in farmland could become theme of the month.

One of the new investments I heard about today, is the Matrix UK Farming LLP which is seeking to raise £10m, which will be used by the partnership to acquire agricultural land in the UK and to establish its farming business. This partnership will be set up in such a way as to qualify for agricultural property relief from UK inheritance tax.

But a different way to get involved in this sector is through a new Enterprise Investment Scheme, launching this week, called the Countrywide Farm Shops PLC, backed by Cairneagle Associates, which aims to raise up to £2m this year to start a chain of branded farm shops. 

Gordon Leatherdale, who is setting up this EIS says:

The market for farm shop retail and food service is growing unabated, with recent research indicating that 37 per cent of shoppers want to buy more local food by 2012 and 20 per cent of shoppers want a farm shop established nearby.

 I expect we will see more of these schemes popping up in the coming months as people look for ways to shelter their capital from rising taxes. Watch this space.

Matthew Vincent

Yesterday, three events made me realise why music has been a good investment for venture capital trusts (VCTs), but not for private-equity funds.

In the morning, I edited a column by Kevin Goldstein-Jackson, citing the fate of music label EMI. Kevin recalled his prescience in asking, back in 2007, whether EMI would be bought by a private equity firm that would “overpay, borrow too much – and cut the artist roster [and therefore sales] even further”. Terra Firma now appears to have done all three – halving EMI’s value to £2bn.

In the afternoon, I visited Ingenious Media, which manages a VCT investing in music festivals. This requires a fraction of what it costs to buy a music label – it raised £85m for all its trusts – but achieves margins of up to 30 or 40 per cent by charging people to listen to music in muddy fields, and then camp out in them.

In the evening, I attended the Brit Awards, at which thousands of people in more hospitable surroundings enthusiastically toasted popular artists by the names of Lady Gaga, Jay-Z and Dizzy Rascal. So hospitable were the organisers, and the sommeliers, that my hosts were dancing on the table by 9.30pm, and last seen heading for the bar – via the indoor dodgem cars, post ironic bingo hall, giant inflatable octopus and crazy golf course – at the after-show party.

It was then that, in the words of Best British female artist Lily Allen, “it all became clear”…

Lucy Warwick-Ching

Yesterday’s Court of Appeal ruling in the Gaines-Cooper case has sent expats into a panic over the potential hidden tax liabilities that many of them might now have. 

The Court ruled that Mr Gaines-Cooper along with two other businessmen were all still liable to tax in the UK, despite living abroad in Mr Gaines-Cooper’s case for over 30 years and not coming back for more than 90 days a year.

The argument was that he hadn’t shown ‘a distinct break’ from the UK and that the ’centre of gravity of his life and interests’ remained here. Worryingly, there is no limit to the amount of tax that can be claimed back and in his case it could be as high as £30m.

Lucy Warwick-Ching

I know people have short memories but I’m still surprised to hear that despite only just coming out of a recession motorists are already clambering over each other to buy the new 2010 car plate.

But perhaps more surprising is the news that nearly half of these individuals won’t bother to do any research into the different types of finance or credit deals available before purchasing their new car.

Lucy Warwick-Ching

With just a couple of months to go until April 6, when income tax will rise for higher rate taxpayers, experts are urging people to review their pension provisions.

Some of the factors that need to be considered include:

* How to use up your allowances

* Changes to retirement ages

* Uncertainty over annuity rate directions

* Retirement options, drawdown, temporary annuities

* Government auto-enrolment plans

To help you with those difficult issues Tom McPhail, pensions specialist at Hargreaves Lansdown, will answer readers’ queries on end of year tax planning for pensions on Thursday 18 February at 3pm.

For more information about this Q&A and to read the answers to your questions go to the indepth Q&A page or mailto:ask@ft.com?subject=mcphail.



The FT’s Money blog is a forum for the latest news and insights from the UK’s personal finance scene. Matthew Vincent, the editor of FT Money and his team of reporters will upload their views and insights on what’s happening in the industry and how this affects people’s finances.

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About our bloggers

Lucy Warwick-Ching is the FT’s new Money Online Editor and has been a UK Companies reporter covering tobacco, pubs and leisure companies as well as the deputy editor on House and Home.

Matthew Vincent is the FT’s Personal Finance Editor and was previously the editor of Investors Chronicle, where he also devised the award-winning online video The Market Programme, and produced the BBC-FT standalone magazine ‘How to be Better Off’. He presents the weekly FT Money Show audio podcast, and previously worked on the BBC TV programmes Short Change and Pound for Pound.

Alice Ross is deputy personal finance editor of FT Money. She specialises in pensions, investments and investment trusts. Alice joined FT Money in April 2008 - prior to that she was deputy editor at Money Management magazine.

Ellen Kelleher has been a personal finance reporter in the UK for close to four years. Before arriving in London, she worked in the FT's New York bureau where she covered the insurance sector.

Steve Lodge is a personal finance reporter on FT Money specialising in savings.


Josephine Cumbo has written about all aspects of personal finance but currently specialises in insurance. She also covered company news for FT.com. Prior to working at the FT she was a news reporter for the ABC.

Tanya Powley is a personal finance reporter on FT Money specialising in mortgages and the housing market. Tanya joined FT Money in November 2009 after working in Australia covering personal finance for the Australian Financial Review and its sister magazine Asset. Prior to that, Tanya wrote about mortgages for UK trade newspaper Money Marketing.

Jonathan Eley is editor of Investors Chronicle, and has been with the title for ten years. Before that he worked for newswires and trade journals in London, New York and Hong Kong.

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