Bank of England, Brexit, Inheritance Tax and Life Insurance

City traders are speculating about how long Mark Carney will remain as Bank of England governor, after Theresa May attacked the BoE’s loose monetary policy stance yesterday. According to The Guardian, Carney is expected to decide by the end of the year whether to just do five years at the Bank (the original plan), or sign up for an extra three year’s service. He arrived in July 2013. May’s criticism could, perhaps, encourage Carney to exit gracefully in 2018 after all. Or he might decide that London remains the place to be, as the Brexit story plays out. May surprised the City by telling the Conservative Party conference that ultra-low interest rates and quantitative easing had disproportionately helped the rich. Inheritance Tax

Analysis of HM Revenue & Customs’ latest UK Personal Wealth Statistics by financial services company NFU Mutual shows a 27 per cent rise in the number of millionaires between 2008-2010 and 2011-2013 to just over 409,000.

Based on the rate of increase, the UK is scheduled to have almost half a million (495,000) millionaires this year and almost 600,000 (585,000) by 2020. However, this may lead to many more people paying inheritance tax – especially as the nil rate band will remain frozen at £325,000 until 2021. Commenting on the number of UK millionaires, Sean McCann, chartered financial planner at NFU Mutual, said: ‘More millionaires means more inheritance tax for the Treasury. These figures show that the taxman is set to take an ever greater slice of people’s estates over the next few years as house prices and share prices have boosted the wealth of the nation. It is becoming ever more important that people plan ahead for inheritance tax bills.’ Life insurance With Stoptober in full swing, new research from Gocompare.com Life Insurance has found that quitting cigarettes can be just as good for smokers’ wallets as it is for their health. The comparison site found that smokers could significantly cut their life insurance bill and shave thousands off the lifetime cost of their life cover just by ditching cigarettes, providing yet another reason to quit. Due to the health risks associated with smoking, life insurers tend to view smokers as more risky to insure. As such, Gocompare.com found that smokers up to age 40 could expect to pay up to 113 per cent more for their cover, or 83 per cent more on average. Brexit The Scottish economy would suffer a severe shock if the UK has a ‘hard Brexit’, losing up to 80,000 jobs and seeing wages fall by £2,000 a head per year, an economics think tank has warned. According to The Guardian, The Fraser of Allander Institute has told the Scottish parliament that entirely leaving the EU single market – known as a hard Brexit – would see the Scottish economy decline by 5 per cent overall, or by £8 billion within a decade. Investment

Chase de Vere, the national firm of Independent Financial Advisers, is urging investors to rebalance their investment portfolios to lock in profits, following strong stock market gains, and to help manage investment risks. 

Patrick Connolly, certified financial planner, Chase de Vere, said: ‘To ensure that you don’t end up taking too much, or too little, risk, you should look to rebalance regularly. This involves selling some of your investments which have performed well and now represent a larger proportion of your portfolio and reinvesting into those which have performed poorly and are now a smaller amount of your portfolio. This will help to get you back to your starting position.

‘Not only does rebalancing ensure you don’t take too much risk, but by selling investments that have done well in favour of those that have done badly you are effectively selling at the top of the market and buying at the bottom. This is the holy grail of investing and something which very few investors consistently achieve.’