The MAM Blog – Extra care against scammers in these times

Lisa Hamer – Compliance Director

As if it’s not enough that the Coronavirus has had a sweeping impact on us all in one form or another, there are always disreputable people (scammers, fraudsters) looking in such periods of uncertainty to prey on our fears and insecurities to make money.

Whether this is by setting up fake websites to sell face masks, hand sanitiser or gloves or pretending to be in one ‘trustworthy’ guise or another to steal from us.

Nowadays, scammers are increasingly sophisticated, opportunistic and will try to get personal details or money from us in many ways. In the current climate, with many more people being at home and wishing to protect themselves or their assets, the opportunity for scammers has increased significantly.

What should we look out for?
The Financial Conduct Authority has published to following examples of current scams on its website:

• Exploiting short-term financial concerns, scammers may ask you pay an upfront fee when applying for a loan or credit that you never get. This is known as loan fee fraud or advance fee fraud.
• ‘Good cause’ scams. This is where investment is sought for good causes such as the production of sanitiser, manufacture of personal protection equipment (PPE) or new drugs to treat coronavirus – with scammers using the promise of high returns to entice consumers.
• Using the uncertainty around stockmarkets, scammers may advise you to invest or transfer existing investments into high return (and high risk) investments.
• Clone firms – firms must be authorised by the PRA and/or FCA to sell, promote, or advise on the sale of financial products. Some scammers will claim to represent authorised firms to appear genuine. In particular, be aware of life insurance firms that may be cloned.
• Scammers may contact you claiming to be from a Claims Management Company (CMC), insurance company or your credit card provider. They may say they can help you recuperate losses by submitting a claim, for the cost of a holiday or event such as a wedding cancelled due to coronavirus. They will ask you to send them some money or your bank details.
• Cold calls, emails, texts or WhatsApp messages stating that your bank is in trouble due to the coronavirus crisis, and pushing you to transfer your money to a new bank with alternative banking details.

All of the above prey upon our normal fears or disappointments during these unprecedented times and we should all be very aware of that.

How to protect yourself
• Use the Financial Services Register and Warning List on the FCAs website to check who you are dealing with.
• Reject offers that come out of the blue, where you have never contacted the person calling you.
• Beware of adverts on social media channels and paid for/sponsored adverts online.
• Do not click links or open emails from senders you don’t already know.
• Avoid being rushed or pressured into making a decision.
• If a firm calls you unexpectedly, use the contact details on the Register to check that you’re dealing with the genuine firm. Call them back on the number detailed in the register, not on any number the caller has provided.
• Do not give out personal details (bank details, address, existing insurance/pensions/investment details).
• Look carefully at the full email address of the sender and consider whether it looks ‘right’

You can report the firm or scam to the FCA by contacting its Consumer Helpline on 0800 111 6768 or using the reporting form on the FCA website.

It is shameful that individuals will prey on our fears and losses at any time; by being extra vigilant and ending any contact if we are at all unsure, we can cut these scams off before they succeed.

The MAM Blog – A Dearth of Dividends

Murray Asset Management – Investment Management Team

For many investors, an important part of investing in the stock market is the generation of income. That’s usually available in two forms: the investment manager can sell some of your investments and send the proceeds to your bank. Alternatively, they can choose investments for you that generate an income by way of interest or dividends. The difference between the two is that a share, once sold, won’t give you that income stream anymore; while dividends usually continue to be paid over time.

Until now.

In the past few weeks, many companies in the stock market have announced that they are cancelling or suspending payment of dividends. That’s mostly for one of two reasons – either the Board are simply being prudent, husbanding their resources in the face of some short-term unquantifiable challenges; or it may be political. If a company has to accept government support in furloughing staff or taking emergency loans, they’re unlikely to want to be seen handing over cash to shareholders, no matter how badly the shareholders need it. This is causing problems for some investors.

Different shares, trusts and funds are reacting in different ways – some are continuing to pay, others aren’t. Some investors may be able to withstand these pressures, at least in the short term. Where the regular income stream from a portfolio is important, though, some changes might need to be made to the investments in order to achieve that goal.

What is also important, though, is for the manager to be aware of any change to the investor’s personal circumstances. We are all living very different lives compared to only a few weeks ago; for some people, that has meant that earned income has fallen or disappeared altogether, while for others the income streams are largely unchanged and it is outgoings such as travel costs which have come to a halt. Where portfolio income has become a greater priority, it is important to make sure that the manager is aware so that options can be reviewed and changes made, where possible.

The communication may need to be made at a suitable social distance, but it is well worth getting in touch.

The MAM Blog – The New Annual Allowance Taper

Jamie McLaren – Financial Planner

The Chancellor’s Budget of 11 March 2020 contained a few notable changes to personal taxation in a budget where additional spending to deal with the COVID-19 pandemic dominated the headlines.

This post will focus on the changes made to the Annual Allowance taper which were made to curtail tax charges applied to NHS staff based on their pension accrual. The change will, however, benefit many other high earners, while restricting the highest earners even further.

What is the Annual Allowance?

The Annual Allowance (AA) restricts the amount that can be contributed to a pension in a given tax year, while still receiving tax relief. This is currently set at £40,000 p.a. but there are a number of other factors to consider:

• It is possible to carry forward any unused AA from the previous three tax years. The AA in the current tax year is used first, then any AA from the earliest year.
• The AA can be tapered down for high earners and this is explained in greater detail in the next section.
• An individual is entitled to make personal pension contributions up to the level of ‘relevant earnings’ – being profits or salary, but even where there is none, it is possible to make contributions of £3,600, as this is the de minimis set in legislation.
• Pension contributions cannot be made beyond the age of 75.
• Once taxable income is drawn from any pension the Money Purchase Annual Allowance (MPAA) is triggered restricting the future contributions to £4,000 p.a.

Tapering of the Annual Allowance

Previously, the AA was reduced from £40,000 (down to a minimum of £10,000) by £1 for every £2 of income above £150,000 (i.e. anyone with income in excess of £210,000 will have a tapered AA of £10,000). A situation may also arise where individuals earning between £110,000 and £150,000 may also see their AA tapered.

This resulted in many higher earning NHS staff being penalised via an AA tax charge for working normal contractual hours, leading to some staff reducing hours while others retired early, putting added pressure on NHS staff resources.

The New Annual Allowance Taper

As of 6 April 2020 (i.e. for the 2020/21 tax year) the taper threshold was increased by £90,000. This means only those with incomes over £240,000 (or £200,000 for certain individuals) would be subject to the AA taper.

Following the change, approximately 250,000 UK individuals will no longer be impacted by the AA taper – many of those being NHS staff, as intended.

The change to the AA taper was not, however, positive news for all higher earners. While the taper threshold was increased, the minimum tapered AA of £10,000 was decreased to a new minimum of £4,000. Anyone with income in excess of £312,000 (or £272,000 for certain individuals) will, therefore, have an AA of only £4,000.

The HMRC policy paper on the change can be found here.

The MAM Blog – Where now

Stuart Ralph – Investment Manager

The votes were counted, MPs sworn in, Queen’s speech delivered and following the Christmas recess, MPs have returned from their constituencies – so what now for investors and the wider electorate?

The caution expressed by investors ahead of the election has given way to a general improvement of sentiment, where domestically focused areas have performed well, driven by an immediate and potentially longer term refocus on UK domestic policy. Aided by a significant majority, the new Government will take the UK out of the EU by the 31st of January 2020, whereupon the country will find itself in a transition period while the more important and longer term future relationship between the UK and EU will be negotiated.

With the UK very firmly placed at the “end of the beginning”, from a fundamental and political perspective the Treasury and Chancellor will have welcomed news that the UK economy narrowly avoided entering a technical recession in the third quarter, with GDP growth of 0.4% q-o-q. The tentative improvement will underpin a narrative that the UK economy is coping with Brexit uncertainty.

For investors, despite the recent improvement, the PE ratio of the UK remains relatively low against many of its equity market peers. The extent to which the UK equity market can make further progress will, in part, be determined by wider global economic developments, including US / China relations and domestic issues surrounding future UK / EU trade negotiations and currency strength.

Source: Refinitive Datastream – 14/01/2020

Elsewhere, in the real world, the electorate will be expecting change and a Government willing and able to make different choices from those of the past. The Chancellor’s first budget will be critical in signalling and assessing the commitment of the Government to deliver on its manifesto, and turn promises to “level up” the economy into credible policy choices and tangible projects. The current imbalance between UK regions shines a light on previous Governments’ inaction to develop a fully thought out industrial strategy.

Critical to a successful rebalancing of the economy will be the Government’s ability to think differently; set aside sacred-cows and demonstrate a clear and unambiguous commitment to the UK regions, the electorate, employers and private sector. The budget could provide the first real evidence of this commitment, specifically in relation to the choices made and the balance between investment and current spending.

In this post credit crisis era, the UK’s already loose macroeconomic policy has been driven by accommodative monetary policy and over the months and years ahead, fiscal policy will play a more important part of the overall macroeconomic policy employed by Government to address the output gap of the economy.

The chart below is sourced from Refinitiv Datastream / Fathom Consulting. The Macroeconomic Policy Indicator weights together fiscal and monetary policy to give an overall indicator of the macroeconomic policy stance.

A positive score (below the zero line) implies loose macroeconomic policy and a negative score (above the line) implies that it is tight.

A value of one (below the zero line), implies that macroeconomic policy is sufficiently loose to stimulate growth in demand by 1% point relative to the growth in supply.

With Manifesto commitments, investors and the wider electorate will look towards the budget for the first signs of exactly how supportive the macroeconomic policy stance will be over 2020 and beyond, as both Monetary and Fiscal policy pull in the same direction.

Source: Refinitive Datastream / Fathom Consulting – 14/01/2020

The MAM Blog – Preparing for Uncertainty

Murray Asset Management – Investment Management Team

Preparing for Uncertainty
We ought to be getting quite good at uncertainty these days, as investors. In recent memory, we have had crises in the credit markets; the Year 2000 software quandary; wars both military and trade; rather more General Elections than are usual; and of course, the question of whether, and how, the UK will leave the European Union.
Against this background, we are regularly asked by clients whether they should be doing something differently to prepare for a forthcoming shock.
The answer is usually ‘probably not’ – but the reasons for saying so are worth rehearsing, because it’s important to make sure – regularly – that your investments are appropriately positioned for your needs.

As an illustration, the chart below gives just one historical example of market uncertainty.

(Source: Thomson Reuters Eikon)

An investor entering the market towards the left of the chart would have had to wait some time for the money they had invested to recoup the ground lost in this particular market shock.
Context, though, is important.

(Source: Thomson Reuters Eikon)

This is the same chart with the dates added, showing that this was the reaction of the FT All-Share Index to the global stock market collapse known as ‘Black Monday’ – a systemic collapse of hitherto unseen proportions.

Now look at Black Monday in today’s terms.

(Source: Thomson Reuters Eikon)

What messages should we take from this experience?

1. Stock market investment is necessarily a medium- to long-term proposition
It is rare for an entire market’s fortunes to turn around permanently, overnight. A single company’s shares can of course experience sudden shocks, from which they may or may not recover. An entire market does not perform in the same way, and a diversified portfolio should therefore be insulated, to a degree, against short term corrections – as long as it is allowed time to recover.

2. Investors’ investments must match, as closely as possible, their specific aims
A short term investment, against a specific outcome, is unlikely to have a role in a portfolio intended to cover a specific funding need – whether it is school fees or retirement savings, the finite nature of the need should be matched with a similarly-risked (or rather, de-risked) investment.

3. Short-term shocks should not be a factor for stock market investors
The best preparation, therefore, for a possible short-term correction is to reassess the time frame for which the funds in question are invested. If the investor’s priorities can no longer withstand the vagaries of the market, they should be sheltered from stock market risk. If there is time to allow for recovery, short term actions may not be required.
In summary, investors should remain aware of the way in which their own needs change over time. If those needs have become more immediate, a conversation with their financial adviser is important.

The MAM Blog – Proposed Changes to Inheritance Tax

Jamie McLaren - Financial Planner, Murray Asset Management
Jamie McLaren – Financial Planner

The Office of Tax Simplification (OTS) was tasked to review Inheritance Tax (IHT) by former Chancellor, Philip Hammond, in January 2018. The OTS have now released their second report, ‘Simplifying the design of IHT’, in which eleven recommendations have been made to the Government. This month’s blog post briefly covers the main proposals, which focus on three key areas:

  1. Lifetime gifts

The OTS have proposed replacing the annual gift exemption and marriage/civil partnership gift exemption with an overall personal gifts allowance (although a figure has not been proposed at this stage).

Under current IHT rules, a lifetime gift will remain in an individual’s estate for seven years with a taper applying to a proportion of some gifts after three years. The OTS consider this to be too long a period (which can extend up to fourteen years when a gift into trust has been made) with a complicated taper rule. A shorter period of five years, with the taper being abolished, has been proposed.

  1. Interaction with Capital Gains Tax (CGT)

Currently, there is no CGT payable on death and the individual inheriting assets is treated as acquiring them with a market value as of the date of death. This concept is known as the ‘capital gains uplift’. This allows for certain assets which are exempt or relieved from IHT to be sold shortly after death without any CGT or IHT payable, discouraging people from passing on assets to the next generation during their lifetime.

The OTS have proposed that where a relief, or exemption, from IHT would apply (the classic example being where a spouse inherits), the that CGT uplift be removed with the recipient instead being treated as receiving the assets at the historical base cost of the person who has died.

  1. Businesses and Farms

Trading businesses and farming assets have the potential to qualify for 100% relief from IHT under current rules via business property relief (BPR) and agricultural property relief. BPR can also apply to certain companies traded on the Alternative Investment Market. These exemptions are in place to prevent the break-up of businesses and farms to cover any IHT bill.

The OTS consider these reliefs are generally still appropriate, but that the definitions of the rules should be made clearer due the opaqueness of certain rules e.g. rules impacting non-controlling share in trading companies, LLPs, furnished holiday lets and valuations of assets.

These proposals will likely be considered in Sajid Javid’s Autumn budget.

The full OTS report can be found here.

The MAM Blog – Five Million Pensioners – How Many Scammers?

Murray Asset Management – Investment Management Team

A recent headline from an FCA press release caught my attention and it was: –

‘5 million pension savers could put their retirement savings at risk to scammers’

Even if it is the life savings of only a small number of pensioners that in the end fall victim to fraudsters, the sum involved could be very significant and the consequences are obviously devastating. The average sum involved in a pension scam is £91,000. Some other numbers for 2018 are worth highlighting: –

• Fraudulent ‘Cold calls’ relating to pensions exceeded £10 million.
• There were approximately 60,000 phone scams relating to HMRC.
• Investment scams cost their victims £197 million.

The fastest growing crime is ‘cybercrime’ and it seems likely that frauds and scams relating to savings and investments are going to become more common and complex. It is worrying that only half of all adults are confident about protecting themselves online. Generally, people are not interested in learning about the practical steps that can be taken in order to reduce the risk of fraud and being scammed and the fraudsters and scammers continue to take advantage of this ignorance.

The FCA through its ScamSmart campaign together with many banks and financial institutions are taking steps to raise awareness and to educate people. The FCA guidance can be found at:-

Click here for FCA guidance

However, the basic advice is: –

• Treat all unexpected calls, emails and text messages with caution. Don’t assume they are genuine, even if the person seems to know some basic information about you.
• Don’t be pressured into acting quickly. A genuine bank or financial services firm will give you time to think.
• Be careful before providing personal information. Scammers will be keen to get their hands on your personal details. Be wary of any emails or calls asking you for this information and, if in doubt, call the company the contact claims to be from. Generally, companies do not ask for personal details and passwords via email. This is particularly applicable to bank details like sort codes and account numbers.

If in any doubt just contact us to discuss your concerns. It is a sad fact that people become very interested in the steps that they could have taken to protect themselves online after the event.

The MAM Blog – Decline of Government Bond Yields

Stuart Ralph Investment Manager, Murray Asset Management
Stuart Ralph – Investment Manager

From the interest rate lows of 0.25% under Ben Bernanke and Janet Yellen, the benchmark rate of the US Federal Reserve[“the Fed”] began to rise from December 2015 as historically low levels of unemployment and tight labour markets prompted fears that inflation would spike higher. Following President Trump’s appointment of Jerome Powell as Fed Chair, the rhetoric continued to point towards further rate rises, such that by December 2018, the rate had increased to 2.5% – where it currently stands today. In addition to further rate rises, the Fed also signalled its intent to reduce the $4 trillion of Quantitative Easing (QE) debt held on its books, a legacy of the Financial Crisis. In effect, to begin a slow reversal of the stimulative monetary policy put in place following the financial crisis.

While cautionary tales of fighting the Fed are plentiful, the market became increasingly rattled with their intent, citing policy mistake and highlighting associated economic risks. These and other concerns prompted a deterioration of investor confidence and the sharp decline of equity markets over the 4th Quarter 2018. Combined with President Trump’s criticism of its monetary policy, the Fed has since moderated its language and tone. US-Chinese trade tensions, benign wage growth and contained inflationary pressures have allowed the Fed to signal that it will keep rates at 2.5% until 2021 and hint that it may lower the rate if economic conditions deteriorate.

Since the start of the year, yields have steadily fallen, resulting in a lower and flatter yield curve. In the illustration below, we can see that in the past few days, the yield on the 10 year US Treasury Benchmark Bond has fallen markedly below the Fed Funds rate of 2.5%.

A similar dynamic has been played out in the UK, with the UK 10 Year Gilt having fallen below the Bank of England Base Rate of 0.75%

The graphs above indicate renewed concern and suggest that financial markets anticipate a Fed forced to cut interest rates as growth disappoints and inflationary forces fail to materialise. In the UK, the market believes further rate rises unlikely.

There is little doubt that global Central Banks have recently re-appraised economic conditions and tempered plans to reverse the monetary policy of the QE era and there are times the Fed (and others) have been behind the curve, and eventually moved towards the market view. However, there is clearly a risk that markets are putting too much store in a weak US growth scenario, by expecting an aggressive rate cut to 2.0% (a reduction of 0.5% points). In other words, Government Bond Yields may have overshot the mark, particularly given tentative signs of a fragile de-escalation in trade tensions between the US and China.

With the recent reassessment of monetary policy, investors should gain some comfort that Central Banks are positioned to support growth if and when required, and such action should help underpin financial markets over the medium term.

The MAM Blog – The Discontented Consumer

Murray Asset Management – Investment Management Team

The most recent data from the Office for National Statistics shows the unemployment in the UK continues to hit new lows – only 3.8% of the workforce is, we are to understand, without a job.


Why, then, is the story from the high street so markedly different? Thanks to comparisons with the period when the Beast from the East kept shoppers away, the month of March saw a sharp year-on-year rise in retail sales; but the underlying picture is less rosy, with 23,000 stores expected to close during the course of 2019. The high-profile collapse of Debenhams has been accompanied by a litany of other retailers announcing that they are calling in administrators – fashion chains like Pretty Green and LK Bennett, the bathroom suite distributor Better Bathrooms and Patisserie Valerie are all on the list of failures in the first quarter.

Nor is the blame entirely to be laid at the door of the online onslaught. Online retailers Wine Direct and Miss Shoes also suspended trading, the latter citing intense competition among their reasons for failure.


There is certainly a fierce battle for the attention of the UK consumer, but one would have thought that with so many in work, there should be enough retail spend to go around. The devil, though, is in some of the detail of the unemployment data. The growth in zero-hours contracts means that a worker can be regarded as employed, while still failing to secure any earnings; and the result of that has been a fall in productivity and consumer confidence.

The challenge, therefore, is to overlay on the rosy employment picture a realistic assessment of the shopper’s wallet, and both high street and online retailers must work hard to retain a share of that slim purse.