Opportunity - Issue 19

Budgets

UK Spring Budget 2023: Key Changes

By Simon Prescott, Head of Wealth Planning

UK Chancellor Jeremy Hunt delivered a relatively conservative Spring Budget on 15 March. As expected, there were no significant tax cuts. Although the government remains committed to cutting taxes, the overriding message is it’s still too soon. Instead, it was all about growth and getting more people back to work.

There were few surprises as many of the announcements had already been reported in advance, but there was good news on pensions to encourage older people to remain in work for longer. From April 2023, the annual pension allowance – the most you can pay into a pension each tax year and receive tax relief – will increase to £60,000 and, in the biggest shock, the lifetime allowance, which currently stands at £1.073 million, will be abolished by April 2024. Although the benefits of these reforms for high earners have been tempered by a new limit on tax-free cash. The one-off lump sum you can take tax free remains at 25% but it will now be capped at £268,275.

These are still welcome changes as pensions can play a significant role in your retirement and succession planning, as they are normally exempt from inheritance tax (IHT).

There were no changes to the key personal tax rates and thresholds announced in the autumn statement. These are likely to impact many individuals from the start of the new tax year in April 2023 and include:

• Increased tax for higher earners - The additional rate threshold will be reduced from £150,000 per annum to £125,140 per annum, then frozen until April 2028.

• Dividend allowance reduction - The dividend allowance – above which individuals need to pay tax on their dividend income – will reduce from £2,000 to £1,000 per annum, then reduce further to £500 in April 2024.

• Reduced capital gains tax allowance - The threshold for paying capital gains tax on the sale of eligible assets (such as stocks or property) will be reduced from £12,300 to £6,000 per annum, then reduce again to £3,000 from April 2024.

• Frozen inheritance tax thresholds - The inheritance tax nil-rate band of £325,000 remains frozen until April 2028. The residence nil-rate band, which applies if you leave your home to direct descendants, also remains frozen at £175,000.

The freezing of various tax allowances means many more individuals will find themselves paying more tax on their earned income, pension income and investment income, in addition to a potentially higher level of capital gains tax on any realised investment returns.

If you have any questions on how the above changes may impact you, your investments or your pensions, your private banker will be delighted to discuss them with you.

Nedbank Private Wealth does not provide individual tax advice. You should always contact an independent tax adviser who can discuss your personal tax situation.

Welcome back to Opportunity

A message from Stuart Cummins, Chief Executive

In the UK we’ve now officially moved into spring – the clocks have gone forward, and the days are longer and brighter. The change in seasons was also marked by the UK’s Spring Budget where the government presents its plans for tax and spending policy. On page 2, Simon Prescott outlines some of the key highlights from this year’s budget. If you’d like to discuss how these changes may affect you, please give your private banker a call.

The UK property market took a hit last year with the infamous mini-budget and ever increasing interest rates, but there are signs that the market is beginning to pick up again now mortgage rates are starting to stabilise. If you are considering a house move or are looking to invest in property, Chiraag Patel explains how we can offer a bespoke approach to lending that is tailored specifically to match your personal wealth objectives.

In the UK, reaching your 100th birthday used to be a fairly rare occurrence, marked by a telegram from the Queen, but these days the number of centenarians is on the increase. On page 6, Simon Prescott explains the importance of financial planning to help you achieve a long life well lived.

The month of March marked International Women’s Day and in her article on page 8, wealth planner Anna Slater examines some of the challenges many women face when it comes to saving and investing for their future.

Since our last issue, we’ve made a number of key appointments in the private banking teams across our offices. You may have already met some of our new faces, but we’ve taken the opportunity to introduce them on page 10.

As it’s awards season in Hollywood, we cannot end without a celebration of our most recent award wins on page 12. We really value these independent endorsements of the work we do. Thank you to all of you who voted for us again in this year’s City Of London Wealth Management Awards. It was amazing to pick up the Best Private Bank award for a remarkable ninth consecutive year – so certainly no pressure for next year!

We hope you find this issue of interest. If you have any feedback or there are specific topics you’d like to see us cover in future, please let us know.

Best wishes

Stuart Cummins, Chief Executive

Lending

Not just lending: bespoke lending

By Chiraag Patel, Senior Credit Specialist

For high-net-worth clients with more complex borrowing needs, Chiraag explains how private banks can offer a more tailored lending solution.

The fallout following the UK government’s infamous and unfunded mini-budget in September 2022 revealed the complex mechanics underpinning mortgage lending. The market turmoil that ensued saw banks and building societies scramble to withdraw mortgage offers as sterling plummeted to historic lows and gilt yields soared.

Gilt yields are important as they reflect the cost of government borrowing and are used by lenders to set mortgage interest rates. The rapid rise in gilt yields following the chancellor’s fiscal announcement meant lenders were faced with mortgage offers and products that were no longer viable. The events of September 2022 were extreme, resulting in the political downfall of a chancellor and prime minister, but they highlighted the complexities of mortgage lending and the potential difficulties in finding a product that suits your needs.

This is where a private bank, such as Nedbank Private Wealth, can often help. We have the flexibility to offer lending solutions that can be tailored to your individual circumstances, not just how well you fit a prescribed set of criteria. The benefits we offer can include:

A personal approach

• Access to a dedicated private banker means a deeper understanding of your financial situation and goals.

• Each lending application is judged on its individual merits.

• Consideration is given to your wealth as a whole, rather than purely income.

Flexibility

• Experience of working with those who may not fit the criteria of many high street lenders, such as those who have less traditional income streams.

• Rates decided on an individual basis depending on the size of the loan relative to the value of the property, and the loan term.

• For clients who are asset-rich but cash-poor, borrowing can be secured against a range of investments as well as UK property.

Expertise

• Experience in providing lending solutions to clients around the world, often with complex financial affairs.

• International expertise that can help expat and foreign national clients who are choosing to move to or invest in the UK.

• Options for wider wealth planning opportunities alongside your lending arrangements.

Quick decision making

• The autonomy to make quick decisions, allowing you to move quickly.

• By taking a charge on existing assets to free-up cash, you can secure your new asset at the right price and remortgaging can be arranged at a later point.

Competitive pricing

• Competitive interest rates and fee structures that can meet your immediate needs as well as supporting your longer-term wealth goals.

• Cost effective, as your investments need only be transferred to us if the loan is secured against them.

Ultimately, we have the time and experience to understand you as an individual, which means we can provide a bespoke lending solution that will meet your financial needs in the most appropriate way.

Whether you are about to borrow for a specific purpose in the near future or are planning for something further down the line, it pays to discuss lending options in advance. Get in touch today and we can discuss your options.

We have the flexibility to offer lending solutions tailored to your individual circumstances.

Wealth planning

Planning for a century

By Simon Prescott, Head of Wealth Planning

Celebrating your 100th birthday used to be a rarity, but it’s becoming more commonplace.

Reaching the grand old age of 100 may seem a rather fanciful prospect but if you were born in 1974 in the UK, as I was, your chances of becoming a centenarian are 20.4% if you’re a woman and 13.9% if you’re a man. Based on the latest estimates from the United Nations, there were 593,000 centenarians around the world in 2021 and it’s a fast-growing age group. Studies estimate there could be 3.7 million centenarians alive by 2050.

Better healthcare and lifestyles around the world, along with luck in the genetic lottery, play a big part in increasing longevity. Yet there is still no way to accurately predict how long any of us will live and this is a crucial factor when it comes to planning your finances. How do you ensure you have enough money to fund your lifestyle through a potential 30-40 year retirement?

Here are six things to consider when preparing your wealth for a long life well lived:

1. Define your long-term financial goals

Talking about money and your aspirations with loved ones is key to understanding what you want from life – for yourself and your legacy. Defining this will help build a framework for managing your wealth to achieve these goals.

2. Make your pension a priority

Pensions can be one of the most efficient ways to save for your retirement, so it may be worth ensuring you make the most of your pension allowances. In the UK, the benefits include tax relief on your contributions and tax free growth of the investments within the pension. In addition, pension funds do not form part of your estate when you die and are therefore free from UK inheritance tax. If you have a number of pensions, it may be worth consolidating them, although the associated risks and charges should be considered. Taking advantage of ISAs is another tax-efficient strategy for long-term financial planning in the UK.

3. Invest for the long-term

The power of compounding and diversification make investing for the long-term one of the best ways to grow your wealth. Make sure you are comfortable with the investment risk in your personal portfolio, and it is suitably diversified to meet your needs.

4. Contingencies

If you live to age 100, there are likely to be a few unexpected events along the way. However, the financial impact of these can be considered and

options such as life insurance, income protection and critical illness cover can help to protect your wealth and provide peace of mind for you and your family. Life expectancy may be improving but it is no guarantee of good health, so the possibility of long-term care should also be considered.

5. Estate planning and gifting

As well as managing your wealth during your lifetime, it’s important to consider how it will be managed after you’ve gone. The first step is to ensure you have an up-to-date will or wills (if you have assets in more than one jurisdiction). Whether you plan to pass your wealth on to your family or have philanthropic ambitions, considering your options and putting the right structures in place is vital to ensure a smooth, efficient transfer. Structures such as trusts, family investment companies and donor advised funds may be appropriate.

6. Make a wealth plan

Having considered your goals and values, creating a wealth plan will allow you to visualise the financial route you need to take – right up to age 100. Using specialist cashflow software, a wealth planner will work with you to define your current and future financial circumstances and align them to your goals and values, enabling more informed financial decisions. We call it ‘investing with purpose’. The future is never certain, and your wealth plan can explore various scenarios to stress test situations. This means you can be as prepared as possible for the unexpected. Your wealth plan should be flexible and with regular reviews it can be adapted as markets, fiscal regimes and your personal goals and circumstances evolve.

At Nedbank Private Wealth, we can partner with you to understand your financial goals and create the most appropriate wealth plan. We work with clients and their families around the world, in tandem with their professional advisers, to help them achieve a life well lived – all the way to 100 or more!

Never mind the gaps: plan for financial independence

By Anna Slater, Paraplanner

Women are still under-represented when it comes to investing.

To mark International Women’s Day 2023, Anna considered some of the challenges women face in meeting their financial goals.

The theme for this year’s International Women’s Day is #EmbraceEquity. But what does that actually mean? We’re all familiar with equality and ensuring everyone is given the same resources and opportunities in life. Equity, however, goes a little deeper and recognises that individuals have different circumstances and needs, and then allocates resources and opportunities accordingly to ensure an equal outcome.

Embracing equity in the finance profession offers the opportunity to make real systemic change – addressing the causes rather than the symptoms of financial gender parity. Currently, women are still under-represented, particularly when it comes to investing, with men holding far more and far larger investment portfolios and pensions.

Recent UK research revealed that the average pension pot for a 65-year-old woman is £35,800 – a fifth of the average 65-year-old man’s. Data on individual savings accounts (ISAs) tell another version of a similar story – women hold over half of cash ISAs but only 43% of stocks and shares ISAs. So, while many women are trying to save for the future, far fewer are taking the opportunity to invest their money for substantial longer term growth.

What are some of the challenges facing women?

• The gender pay gap: Despite women’s wealth growing around the world, they still tend to earn less than men. The pay gap remains around 15% in the UK and the pension and investment gaps mentioned earlier are an inevitable result. Coupled with this, women tend to bear the lion’s share of family responsibilities – with career breaks, part-time working and the punitive cost of childcare reducing their earning power and ability to save.

• Longevity: In most developed countries, women are now living longer than men so will need to fund a longer time in retirement. The average UK life expectancy at birth is 83 years for women and 80 years for men.

• Attitudes to risk: While women investors may still be a minority, research suggests that when they do invest, they achieve better performance than men. A study by Warwick Business School revealed women outperformed men by an average of 1.8% over a three-year period. Yet a lack of confidence and a fear of putting their savings at risk is holding many women back.

Our job as a wealth manager is to address these complexities and empower women to explore their financial options. Returning to our theme of embracing equity, it is clear many women are starting with a very different set of circumstances to men.

Studies have shown women place more importance on values and meeting personal goals than investment performance. This subtle difference is one we acknowledge with our purpose-led approach to wealth planning. Taking the time to understand each client’s values and aspirations individually can help us find the most appropriate financial solutions to achieve their overall wealth objectives.

Beckie Williams, Head of Client Proposition at Nedbank Private Wealth, explains: “It might be a generalisation, but in my experience, women place a lot of value on building relationships with their adviser, needing to feel they can trust them. Women pay close attention to the detail. The holistic experience is important, not just the numbers, and if we as an industry can provide that, then we will see many more women taking on risk and investing on their own terms.”

To find out how we can help you explore your financial options, please give your private banker a call.

New faces Meet the team

Since our last issue, there have been a number of key appointments as we continue to build and strengthen our private banking teams. We’ve taken the opportunity to introduce a few of the new faces here with a whistle-stop tour around the offices.

London

Mark Hassett and Maria-Eleni Ampatzi (not photographed) are the most recent appointments to our London team. Mark joins as head of corporate executives and Maria-Eleni is a senior private banker in the corporate executives team. Mark and Maria are a seasoned relationship management team who will focus on building and growing our corporate executive services, particularly for those with a UK or Channel Islands connection.

Isle of Man

Priscilla Lau joined the London team as a credit officer in February having relocated from Hong Kong. She provides support for the UK credit specialist team to meet clients’ borrowing requirements.

Priscilla has worked in credit support in the private banking sector since 2017.

To strengthen our wealth management presence on the Isle of Man, James Simpson has joined as a senior private banker. James has over 25 years’ experience working in the financial services industry. He joined at the start of this year after an 11-year career with a major retail bank, where he was area director of its Isle of Man wealth management business. James manages a portfolio of international, institutional and private clients whom he assists with their wealth management, financial planning and lending goals.

Jersey

As part of the planned expansion of our Jersey office, we’ve made four recent appointments (photographed in order of mention).

Richard Tribe joins as a senior private banker and brings more than 35 years’ experience in the offshore financial industry. Having worked with clients in Jersey and around the world, Richard has helped high-net-worth individuals and families manage, protect and grow their wealth, by acting as a senior, trusted adviser.

Supporting Richard will be Matt Gollop, who has joined the team as a private banking officer. Matt is experienced in working with private clients and intermediaries both locally and internationally.

Paul Treacy has been appointed as a corporate trustee relationship manager. Paul has more than 30 years’ experience working for major financial institutions in Jersey and will be focusing on managing and growing the business’s trust and corporate book.

Laura Love has joined the Jersey team as a senior private banking officer. Laura has 25 years’ experience in financial services, having worked previously as a relationship manager and private banker. Laura will be supporting the private banking team by ensuring excellent client service.

Dubai

Last but not least, Darren Hooker has joined the Dubai team as a private banker. Darren has over three decades of experience working in the banking and financial services sector. He spent 29 years working in the City of London before moving to Dubai in 2015. He joined us in January this year and brings with him 11 years of expertise in advising and managing clients in the Middle East region.

Honours and awards

The red carpet awards season may be coming to a close, but we couldn’t let it pass without celebrating our own recent honours.

We are proud to announce that Stuart Cummins was named as one of the PAM 50 Most Influential in the definitive list of those at the forefront of shaping private client wealth management in the UK and Crown Dependencies. While in Jersey, Cameron Walker was awarded Private Banker of the Year – Channel Islands & Isle of Man at the Citywealth International Financial Centre (IFC) Awards 2023.

In March, we were delighted to be voted Best Private Bank for an incredible ninth year running at the City of London Wealth Management Awards 2023. Thank you to all of you who took time to vote for us again this year.

At the end of 2022, the Dubai team also picked up awards for Best Boutique Private Bank and Best Private Bank – Overall Client Service at the WealthBriefing MENA Awards for Excellence in the Middle East and North Africa region.

This independent recognition of individuals and our teams is always valued. Thank you to all our clients for your continued support.

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This publication does not constitute an invitation or inducement to buy or sell any investments, nor does it constitute any advice or personal recommendation. The value of investments and the income from them can fall, as well as rise and you might not get back the original amount invested. Exchange rates may affect the value of investments. Past performance is not necessarily a guide to future performance. Nedbank Private Wealth does not provide tax advice. We always recommend that you seek specialist tax advice to suit your individual circumstances. The opinions in Opportunity are those held by the authors at the time of writing. All data herein is sourced from local exchanges via Reuters, Bloomberg, and other vendors. The information herein has been obtained from public sources believed to be reliable. Nedbank Private Wealth makes no representation as to the accuracy or completeness of such information. If you no longer wish to receive this publication or any information about Nedbank Private Wealth’s products and services, please advise us in writing.

Nedbank Private Wealth is a registered trade name of Nedbank Private Wealth Limited. The parent of Nedbank Private Wealth Limited is Nedbank Group Limited, which is incorporated in South Africa and is regulated by the South African Reserve Bank. The latest audited report and accounts, and details of the credit rating are available at www.nedbankprivatewealth.com. Nedbank Private Wealth Limited is licensed by the Isle of Man Financial Services Authority and is a participant in the Isle of Man Depositors’ Compensation Scheme as set out in the Compensation of Depositors Regulations 2010. For full details, please see www.iomfsa.im. Registered office: St Mary’s Court 20 Hill Street Douglas Isle of Man. The Jersey branch is regulated by the Jersey Financial Services Commission and is a participant in the Jersey Banking Depositor Compensation Scheme. See www.gov.je/dcs for full details of the Scheme and banking groups covered. The London branch is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registration No: 313189. Your eligible deposits with Nedbank Private Wealth Limited, London branch, are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK’s deposit guarantee scheme. Any deposits you hold above the £85,000 limit are unlikely to be covered. Please ask for further information or visit www.fscs.org.uk. UAE representative office in Dubai licensed by Central Bank of UAE. Representation in South Africa is through Nedbank Limited. Registered in South Africa with Registration No 1951/000009/06, an authorised financial services and registered credit provider (NCRCP16).

Nedbank Private Wealth Limited is licensed by the Financial Conduct Authority to provide regulated mortgages in the UK.