Category: news
Guide: 10 ways to lead a more sustainable life
Sustainability has become a key topic for governments, businesses and communities around the world. If you want to reduce the impact your lifestyle has on the environment, it can be difficult to know where to start. Our latest guide looks at 10 changes you can make to your life to reduce your carbon footprint, limit waste, and support sustainable projects.
Among the steps the guide covers are:
- Making your home more energy-efficient
- Choosing a renewable energy supplier
- Changing your diet
- Investing sustainably
- Offsetting your emissions.
Download 10 ways to lead a more sustainable life to learn more.
If you’d like to discuss making your finances more sustainable, please contact us.
Investment market update: October 2021
The International Monetary Fund (IMF) has warned that the world economy remains “hobbled” by Covid-19 and revised its global growth forecast for this year downwards. The organisation now expects the world economy to grow by 5.9% in 2021.
The IMF also noted that the emergency support provided by central banks and finance ministries during the Covid-19 crisis could leave the world vulnerable to another financial crisis.
UK
As we entered October, the UK continued to face several supply challenges. The impact this has had on fuel and energy continued to make headlines throughout the month.
Chancellor Rishi Sunak delivered his Autumn Budget in October. After previously announcing that National Insurance rates and Dividend Tax rates would both be increasing, he unveiled the new taxation and spending proposals. Promising a “stronger economy for the British people” Sunak announced a raft of changes from a new levy on property developers to the introduction of the new National Savings & Investments (NS&I) Green Savings Bond.
Inflation has also been in the headlines this month. In the 12 months to September, prices rose on average by 3.1%. This figure is above the Bank of England’s 2% annual target. The central bank thinks the figure could go above 4% this year. One of the ways the Bank of England can limit inflation is to increase interest rates. There is speculation that the interest base rate will begin to rise from historic lows later this year or in 2022.
Business secretary Kwasi Kwarteng noted that supply chain disruptions are affecting the economy.
The UK construction sector has been hit by the challenges this presents. The IHS Markit PMI for the sector fell from 55.2 in August to 52.6 in September. This reading shows the sector is still growing, but that the pace is slowing.
As businesses struggle to access the material they need, prices are likely to rise. The PMI for the services sector show prices are rising at their fastest pace on record. In line with this, almost two-thirds of UK firms expect to increase prices during the run-up to Christmas, according to the British Chambers of Commerce. This could mean that inflation will continue to rise as we head into 2022.
It’s not just a materials shortage that’s causing problems, but a staff shortage too. According to a survey conducted by advisory firm BDO, more than a quarter of firms polled said a lack of staff was putting pressure on their ability to operate at normal levels.
The latest industrial trends survey conducted by CBI also supported this. Two in five firms said they were worried about a lack of skilled labour. In addition, two-thirds said material shortages were likely to hit their output next quarter. This is the highest rating since 1975.
As well as the effects of the pandemic, the UK is facing challenges related to Brexit. The Office for Budget Responsibility has estimated that Covid-19 could reduce GDP in the long term by around 2%. In contrast, Brexit is double this figure, and cut GDP by around 4%.
One area where the impact of Brexit, as well as of the pandemic, can be seen is in exports. The UK’s trade deficit widened to £3.7 billion in August compared to £2.9 billion in July.
With these challenges in mind, it’s not surprising that consumer confidence has hit its lowest level since lockdown measures were eased in April, according to data from YouGov.
Europe
Global chip shortages are just one of the supply issues affecting businesses across the eurozone area. According to figures from Eurostat, production figures across the eurozone fell by 1.6% in August. The area’s largest economy, Germany, also posted the largest contraction of 4.1%. This fall was partly due to weak car manufacturing.
Inflation is also an issue, with it reaching a 13-year high.
US
Mirroring the situation in Europe, US inflation reached 5.4% in September, a 13-year high.
US industrial output fell 1.3% in September, data from the US Federal Reserve shows. This impacted output, which also declined by 0.7%. The decline was partly blamed on the production of motor vehicles and parts falling by 7.2% due to shortages within the supply chain.
Job figures were also disappointing. Economists had been expecting around 500,000 new jobs to be added, but the figure was far below this forecast at 194,000.
Despite worries about inflation, the US Conference Board’s consumer confidence index shows optimism is improving. After three months of decline, consumer confidence increased in October. It’s a sign that consumer spending will continue to support economic growth.
Asia
As with other countries around the world, China also faces the challenge of high inflation and stock shortages.
Factory gate inflation reached a 26-year high. Again, this was attributed to global supply chain issues. According to the National Bureau of Statistics, Chinese manufacturers increased their prices by 10.7% in September as they passed on rises in commodity and energy prices to their customers.
These challenges also had an impact on the economy. China’s GDP grew by just 0.2% between July and September, the weakest growth on record. It dragged growth over the last year down from 7.9% to 4.9%.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
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.
How a life insurance policy could help you preserve an inheritance for loved ones
If Inheritance Tax (IHT) is a concern for you, taking out a life insurance policy could mean your estate passes to loved ones intact. With some careful planning, a life insurance payout can cover your IHT liability and ensure assets are passed on to your loved ones.
Planning what will happen after your death isn’t easy, but being proactive is important and can help ensure your assets are passed on effectively.
£2.7 billion paid in IHT between April and August 2021
According to figures from HMRC, between April and August 2021, £2.7 billion was collected in IHT. The figure is around £0.7 billion higher than the same period in 2020. Most families don’t need to worry about IHT, but with a standard rate of 40%, it’s important to understand if your estate could be liable.
For the 2021/22 tax year, the threshold for paying IHT is £325,000. If the total value of all your assets is under this threshold, known as the “nil-rate band”, no IHT will be due. If you’re leaving your main home to children or grandchildren, you can also make use of the residence nil-rate band. For the 2021/22 tax year, this is £175,000. In effect, this means most people can pass on £500,000 before IHT is due.
It’s important to note you can pass on assets free from IHT to your spouse or civil partner. You can also pass on unused nil-rate band or residence nil-rate band allowances. So, if you’re planning as a couple, you could pass on up to £1 million of assets to loved ones jointly without worrying about IHT.
The nil-rate band and residence nil-rate band are now frozen until 2026. During this time, it’s likely that the value of assets, from your home to investments, will rise. As a result, more families will need to consider the impact of IHT on their estate. When estate planning, you need to consider how the value of your assets could change over the long term.
How does life insurance protect your estate?
A life insurance policy doesn’t reduce the amount of IHT due. Instead, it provides your loved ones with a way to pay the bill.
If you pass away during the term of a life insurance policy, it will pay out a lump sum to your loved ones. This sum can then be used to pay an IHT bill, ensuring your assets are passed on intact. It can provide you with peace of mind and ensure loved ones aren’t worrying about an IHT bill while grieving.
When using a life insurance policy to pay for an IHT bill, there are some things to keep in mind:
- The policy must be written in trust. Otherwise, the payout could form part of your estate and increase an IHT bill. By placing the policy in a trust, you can remove it from your estate.
- As you want the policy to pay out on your death, you should choose a whole-of-life life insurance policy.
- You can choose how much you want the policy to pay out. You should take some time to understand the value of your estate and how much IHT will be due. Keep in mind that the value of assets can change over time.
There are other steps you can take to manage an IHT bill, but a life insurance policy could be right for you.
With this option, you’ll retain control of your assets. You can keep and enjoy your assets to use during your lifetime. This means you don’t have to gift certain assets or place them in a trust. It’s an option that can provide you with more flexibility to use your wealth as your wish during your lifetime while still knowing you can pass it on to loved ones.
If a life insurance policy could help you, keep in mind that you will need to pay the policy premiums for the rest of your life. How much the premiums are will depend on a range of factors, including your health and lifestyle, as well as the level of cover you need. You should shop around to find a deal that is right for you and offers a competitive rate.
Building an estate plan that matches your goals
Whether a life insurance policy is right for you, or if other steps could help you pass on your estate efficiently, we’re here to help. Please contact us to discuss your estate plan and the impact Inheritance Tax could have.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate planning or tax planning.