2024 was a whirlwind year in financial services! From regulatory shifts to market volatility, Money Marketing was there to keep you informed.
Here’s a recap of the 20 most-read articles of the year, covering the topics that mattered most to you.
Stamp duty on second homes rise to 5% from tomorrow
Chancellor Rachel Reeves announced a rise in stamp duty on second homes and investment properties from 3% to 5%, effective tomorrow, as part of the Autumn Budget.
The increase aims to raise revenue while supporting first-time homebuyers. Mortgage industry professionals expressed disappointment over the change, with concerns about its impact on the buy-to-let market. Zoopla noted reduced demand from investors, while ARLA Propertymark highlighted the growing housing supply shortage.
The Budget also proposed higher stamp-duty costs for first-time buyers from April 2025.
Steve Webb: Here’s where to expect pension reform under Labour
Former pensions minister Steve Webb discussed potential pension reforms under a Labour government, focusing on tax-free cash and tax relief.
While radical changes, like abolishing tax-free cash, were unlikely, Webb suggested a reduction in the lifetime limit could have been considered. He speculated on the possibility of reinstating LTA and reversing increases in annual allowances.
Webb predicted changes would primarily target wealthier individuals and be complex enough not to provoke public backlash. He also anticipated scrutiny on pension death benefits and IHT.
UK state pension age to reach 71 by 2050 report
A report from the International Longevity Centre revealed that the UK state pension age could rise to 71 by 2050, sparking concern within the financial services sector.
The current pension age is set to increase to 67 by 2028 and 68 by 2044. Experts warned that further rises could penalise those in need, particularly people with health issues.
Financial advisers urged political parties to clarify their pension plans before the general election, stressing the need for more sustainable solutions.
Carry forward – where do people go wrong?
Fiona Hanrahan of Royal London highlighted common mistakes in carry-forward calculations as clients approached the 2023/24 tax year-end.
Errors included confusing unused annual allowance with tax relief, overlooking the MPAA or tapered annual allowance, and mishandling employer contributions. Missteps also occurred with previous carry forward use, DB pension input amounts and eligibility rules. The unique rules of the 2015/16 tax year further complicated calculations.
Accurate carry forward usage avoided tax charges and ensured clients maximised their pension contributions effectively and within legal limits.
Rate of employer National Insurance contributions raised to 15%
Chancellor Rachel Reeves announced a 1.2 percentage point rise in employer National Insurance contributions (NICs) to 15%, effective April 2025, during her Autumn Budget speech.
The secondary threshold for employer NICs will drop from £9,100 to £5,000, raising £25bn annually by the forecast’s end. To support small businesses, the employment allowance will increase from £5,000 to £10,500.
Evelyn Partners highlighted the significant impact on businesses but noted opportunities for cost mitigation through salary sacrifice schemes and benefit structure reviews.
Rachel Reeves announces 40% relief on business rates
Chancellor Rachel Reeves announced a 40% business rates relief for the retail, hospitality and leisure industries in 2025/26, capped at £110,000 per business.
This follows the current 75% relief, which expires in April 2025. The British Retail Consortium had sought a 20% cut, citing the sector’s disproportionate tax burden. Local councils, reliant on business rates revenue, face funding challenges.
Critics, including Aurum Solutions’ CEO Tiago Veiga, called for broader reforms, highlighting the need to address growth barriers and adopt efficiency-boosting technologies.
Royal London named ‘most-recommended’ pension provider
Royal London was named the most recommended and preferred pension provider in Defaqto’s 2024 review, topping the list for a fourth consecutive year.
It maintained its lead over Aviva Life & Pensions, with both providers supported by over 35% of advisers. Prudential improved to third place. Despite top rankings, adviser satisfaction with pension providers fell by up to 11%, with existing business administration rated poorly.
Defaqto highlighted growing interest in annuities, hybrid solutions and increased adviser pressure from regulatory demands.
Claire Trott: What the Budget means for pensions
SJP’s Claire Trott noted that the Budget avoided feared pension changes like reducing tax-free cash but introduced significant reforms.
Death benefits will now be included in estates for inheritance tax, with spousal exemptions and new reporting rules. A loophole for overseas transfers to the EEA or Gibraltar, enabling tax-free cash access, was closed immediately. The National Living Wage rise to £12.21 will increase auto-enrolment contributions, affecting take-home pay.
Trott emphasised that impacts will vary based on employer generosity and individual circumstances.
Why bond investors should be thinking about duration
Kris Atkinson and Shamil Gohil of the Fidelity Short Dated Corporate Bond Fund highlighted their strategy of locking in high yields through short-dated bonds.
They utilised a disciplined approach, focusing on credit selection and exploiting market mispricings. The fund achieved an 8.1% return in 2023, outperforming its index. They emphasised the current appeal of short-dated corporate bonds due to the yield curve inversion and potential rate cuts.
Their outlook for 2024 prioritised high-quality bonds, leveraging the credit spread for additional returns.
Inherited pensions will be subject to IHT from 2027
Chancellor Reeves confirmed that inherited pensions will be subject to inheritance tax (IHT) from April 2027, citing the previous abolition of the lifetime allowance as a key factor.
Reeves also extended the freeze on IHT thresholds to 2030. Experts, including Standard Life’s Mike Ambery, noted this shift could disrupt retirement and estate planning, as pensions now contribute to taxable estates.
Abrdn’s Alastair Black warned of double taxation risks and increased complexity, highlighting the growing demand for advisers to navigate these changes.
M&G confirmed plans to exit the platform market as part of its simplification strategy, in its half-year results.
The Ascentric platform, acquired in 2020 and rebranded M&G Wealth in 2021, incurred £9m in losses. M&G cited lower costs and intangible asset impairments for the improvement from £19m in losses the previous year. The wealth and life businesses will integrate under Clive Bolton to enhance efficiency.
Despite this, M&G remains committed to the UK retail market, reporting £375m in adjusted operating profit.
DeadHappy shuts doors to new customers after ad campaign fallout
DeadHappy ceased accepting new customers after losing support from its insurance partners following backlash over a controversial advertising campaign.
The campaign featured serial killer Harold Shipman, sparking reprimands from the FCA and ASA. Partners like Shepherds Friendly criticised the ad as “distasteful,” impacting DeadHappy’s business.
Industry experts called the shutdown inevitable, citing the firm’s unpaid debts and poor branding decisions. While existing policies remain unaffected, brokers highlighted the risks of crossing boundaries in sensitive markets like life insurance.
Chancellor halves IHT relief on AIM stocks
Rachel Reeves halved inheritance tax (IHT) relief on Alternative Investment Market (AIM) stocks to 20% in the Autumn Budget.
Previously, AIM shares were fully exempt from IHT if held for two years before death. While the move avoids full abolition, it reduces AIM’s appeal for estate planning, potentially shifting investment focus elsewhere. Critics warned this could harm UK smaller companies by discouraging capital investment.
Despite concerns, AIM valuations rose post-announcement, reflecting investor relief at avoiding harsher measures.
Mark Dampier: Behind the scenes of the Hargreaves/Woodford media frenzy
Mark Dampier reflected on the fallout from the Neil Woodford saga, criticising the media frenzy that targeted him during the 2019 fund collapse.
As head of research at Hargreaves Lansdown, he faced false accusations and invasive reporting, including fabricated details about his lifestyle. Despite losing money himself, Dampier highlighted the media’s failure to fact-check and its prioritisation of sensationalism over truth.
He emphasised the importance of responsible journalism, particularly in areas like energy and climate reporting, where misinformation risks significant societal impact.
Reaction as government hikes capital gains tax rates
Chancellor Rachel Reeves announced capital gains tax (CGT) rate increases, raising the lower rate from 10% to 18% and the higher rate from 20% to 24%.
Rates on residential property sales remain unchanged. Business asset disposal relief stays at 10% this year but will rise to 18% by 2026/27. Carried interest tax will increase to 32% from 2025.
Critics, including finance leaders, warned these changes could deter investment, harm high-net-worth individuals and discourage newcomers from entering the UK’s investment market.
Mark Dampier: Passive smugness could come back to bite investment advisers
Mark Dampier warned that the rise of passive investing could hurt active investment advisers.
As passive funds like ETFs grow due to their lower costs and better performance, they are decimating the active industry. Dampier noted the success of passive funds, particularly in the US, and questioned the need for active portfolio management.
He suggested clients may increasingly opt for simpler, one-off plans based on broad market indices, undermining the traditional advisory model and potentially leading to future challenges for advisers.
FCA announces plan to reduce regulatory burden on financial services firms
The FCA announced plans to streamline financial services regulations to reduce burdens on firms, aiming to lower costs, support innovation and foster growth.
This move coincided with the first anniversary of the Consumer Duty. The regulator sought feedback on simplifying rules, especially in commercial insurance, to enhance competitiveness and reduce regulatory costs.
CEO Nikhil Rathi emphasised the goal of fostering economic growth and improving consumer protection. Additionally, the FCA introduced an independent panel for cost-benefit analyses of regulations with significant industry costs.
Four anti-money laundering changes to watch out for in 2024
The FCA focused on financial crime in 2024, with the Economic Crime and Corporate Transparency Act bringing key changes.
The Act enhanced reporting and information-sharing requirements, such as removing pre-existing suspicious activity reports before issuing an information order. Cryptoassets fell under the Proceeds of Crime Act, requiring service providers to comply with court orders.
Companies House gained stronger investigative powers, and technology, including AI and blockchain, played a greater role in anti-money laundering compliance, though human oversight remained crucial.
Unlocking opportunities and navigating challenges: advising high net worth clients on protection
Royal London’s Jon Fuller discussed the challenges and opportunities in advising high-net-worth clients on protection.
Key opportunities included wealth transfer, asset protection, tax efficiency and business continuity through tailored life-insurance solutions. Challenges involved product complexity, cost, underwriting and policy ownership, requiring careful consideration and collaboration with specialists. Advisers were encouraged to understand clients’ unique needs, educate them about life insurance products and work with legal and tax professionals.
By adopting these strategies, advisers could provide valuable guidance for wealth protection.
FCA chair in hot water for revealing identity of whistleblower
FCA chair Ashley Alder faced criticism for exposing a whistleblower’s identity after forwarding their emails, which raised concerns about hiring practices, to staff without consent.
The whistleblower, calling it an “institutional betrayal”, accused the FCA of incompetence. Georgina Halford-Hall of WhistleblowersUK criticised the FCA’s handling, doubting its regulatory credibility and urging Alder to resign.
The whistleblower, dismissed in 2021 for alleged misconduct, is appealing an employment tribunal loss. The FCA has launched an internal review, but Alder and the regulator remain silent.
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