Autumn Statement: What it means for you?

December 19th, 2016

Prices-Rising
In the Autumn Statement, the Chancellor announced that the government will move to a single major fiscal event each year. Following the spring 2017 Budget and Finance Bill, Budgets will be delivered in the Autumn, with the first one taking place in autumn 2017.

So what could this Autumn’s statement mean for you?

Pensions:

The Money Purchase Annual Allowance (MPAA) will be reduced to £4,000 from April 2017. The government does not consider that earners aged 55 and over should be able to enjoy double pension tax relief, such as relief on recycled pension savings, but does wish to offer some scope for those who have needed to access their pension savings to subsequently rebuild them.

The triple lock protecting the state pension will be maintained until 2020 and then reviewed at the next Parliament. The triple lock ensures the state pension rises by the highest of inflation, earnings or 2.5%.

From April 2017, employees who utilise salary sacrifice schemes to receive various non-cash benefits in kind (BIK) will pay the same tax as if the BIK had been received as cash. However, salary sacrifice in lieu of employer pension contributions are excluded from this change (along with ultra-low emission cars, childcare and the cycle-to-work scheme).

Savings and investments:

A new savings bond will be available through National Savings & Investment (NS&I) in spring 2017. The detail will be announced in March but the bond is expected to have an interest rate of around 2.2% gross and a term of 3 years. The return might be adjusted to reflect market conditions when the product is launched. Savers over the age of 16 will be able to deposit up to £3,000, with a minimum investment of £100. The government expects around 2 million people to benefit from the new bond, which will be available for a year.

The annual subscription limit for junior ISAs will be uprated in line with the Consumers Price Index (CPI) to £4,128, alongside the ISA subscription limit increase from £15,240 to £20,000 which was previously announced at Budget 2016. This will be effective from 6 April 2017.

Business issues:

The main rate of corporation tax was cut from 28% to 20% back in 2010. This will be cut again to 17% by 2020. For those looking to offset corporation now at the higher rate, they may wish to consider pension contributions through their company by utilising carry forward of unused annual allowances from the previous 3 tax years.

What we already knew…

The personal allowance is currently £11,000 for this tax year and will rise to £11,500 in 2017/18. Once the personal allowance reaches £12,500, it will increase in line with inflation.

The point at which higher rate income tax kicks in will increase from £43,000 this year, to £45,000 in 2017/18. Although for Scots, this figure will be £43,387 following the devolution of a swathe of new powers to the Scottish Government agreed after the independence referendum.

The launch of a new Lifetime Individual Savings Account (LISA) for those aged between 18 and 40 is to open from April 2017. They can save up to £4,000 a year and the government will add a 25% bonus if the money is used to buy a home or as a pension from the age of 60.

Finally, from 6 April 2017 an additional ‘residence nil-rate band’ of £100,000 per person will be introduced – which will effectively take the threshold at which inheritance tax (IHT) becomes payable to £850,000 for family beneficiaries.

However, it is important to note that this allowance will only apply to wealth tied up in your main residence and it can only be left to direct descendants – children, grandchildren and step, adopted or foster children.
If you wish advice on, or to discuss, any of the topics in this article, please contact any of the James & George Collie Financial Management team by email at FSDepartment@jgcollie.co.uk

Voluntary Registration – Jen Davidson, trainee solicitor, asks what’s in it for you?

December 19th, 2016

The Land Register for Scotland is a digital map-based system of land registration established by the Land Registration (Scotland) Act 1979.

The Scottish Government have asked the Keeper of the Registers of Scotland to complete the Land Register by 2024 with all public land being registered by 2019.  The most recent data shows that around 30% of land in Scotland is currently registered. This means that a great deal of land in Scotland is still registered in the old deeds-based General Register of Sasines which is less user-friendly and arguably offers less transparency as to who owns what.

The Land Registration etc. (Scotland) Act 2012 came into force in 2014 with the aim of accelerating the process of land registration. From April 2016, the list of deeds that trigger compulsory registration in the Land Register was extended to include standard securities.

However, with a view to achieving the targets set out by the Government, the Keeper wishes to encourage voluntary registration (i.e. registration without a deed) by owners of land in Scotland, particularly in rural areas.

So, what are the benefits of voluntary registration?

-          By registering title to your property in the Land Register, you firmly establish and define what you own. You enjoy certainty as to the boundaries of your property and the rights and obligations affecting it. This also provides a secure legacy for the next generation.

-          Should someone challenge your title, you can quickly and easily identify what you own by exhibiting the title sheet. This is simple and accessible and saves lengthy title examination and avoids disputes that may arise where old deeds are unclear.

-          In larger rural properties, plots of land or estates, voluntary registration avoids piecemeal registration where, for example, a transaction takes place over only one part of the land triggering registration that results in only that part being registered.

-          Once you have registered your title, the process of any transfer or re-finance in the future is much simpler and smoother.

-          Voluntary registration allows you take control over the registering of your title with more emphasis being given to your own understanding of the land you own and what it is you actually possess. You also control the timing. The 2012 Act makes provision for the keeper to exercise Keeper-induced registration whereby land would be registered without any action on the part of the owner. This process remains fairly uncertain so voluntary registration avoids the risks that it may present.

-          And finally, Registers of Scotland will offer you a 25% discount on registration dues should you undertake the process.

Given the pressure from the Government, some landowners feel there is a “Race to the Register” and are keen to reap the benefits of voluntary registration. A degree of Solicitor involvement will always be required when undertaking voluntary registration and with more complex titles, such as rural property or farms, the cost to the land owner could escalate.

It is important that you measure the benefits against the potential costs and this is something your Solicitor will be happy to advise you on.

Should you wish to consider voluntary registration or require any other advice along these lines, please get in touch with your usual contact at James & George Collie.

Residential property review of the year

December 19th, 2016

2016 has, to put it mildly, been a challenging year for property sales in Aberdeen and Aberdeenshire.  The well publicised downturn in the local economy, as a direct result of the decrease in the price of oil from mid 2014, has led to numerous job losses and a consequent negative impact on the property market.

Figures from Aberdeen Solicitors’ Property Centre show the volume of sales down by almost a third compared with the year before (up to the end of the third quarter).  Average prices are also down by 10% in the city and suburbs over the same period.  However, over a 5 year period prices are still up by an average of 2%.

Closing dates are few and far between and most sales are being negotiated at percentages under the Home Report valuation.  This should not discourage property sellers as when they come to buy, they should be able to negotiate a similar discount on their purchase.

There are some positive signs, however.  The volume of sales in the third quarter of 2016 showed a slight increase over the second quarter.  A recent oil and gas survey showed that two thirds of businesses believed that the sector had reached the bottom of the current cycle or will do in the next year.  The oil price has also bounced back from under $30 per barrel in January to over $50 per barrel this month.  Property purchasers are benefiting from historically low interest rates and new home builders are offering generous incentives.

James & George Collie’s dedicated sales office at 450 Union Street, Aberdeen, located between Rose Street and Chapel Street, in the heart of the city centre, enjoys a prominent position on Aberdeen’s main street and provides ideal exposure for properties on the market for sale.  Located directly opposite the new Capitol and Silver Fin office developments, it is ideally placed for advertising properties for sale and to benefit from the inevitable bounce back in the property market.

For further information or advice please contact our property sales office on 01224 572777 or our estate agency partner Brian Sutton on 01224 563340 or by email at b.sutton@jgcollie.co.uk

Succession (Scotland) Act 2016

September 20th, 2016

A WillThe Succession (Scotland) Act 2016 will come fully into force on 1st November 2016.  This is the first significant reform in this area of law for over 50 years.

The 2016 Act implements a number of technical legal changes and addresses a number of anomalies within the current legal framework.  This Act is likely to be the first stage in what is anticipated to be a two-stage reform of the law of Succession in Scotland.  The second stage of the proposed reforms on which the Government consulted towards the end of last year could result in a far more radical and controversial overhaul of the law on Succession as we know it, including changing how an estate is distributed if an individual dies intestate, without making a Will.

The key reforms in the 2016 Act are as follows:

  1. If your Will contains a mistake, the Act makes it possible to apply to the court within a certain period of time to have the Will rectified, but this will only be possible if the Will was prepared by someone other than you and there is evidence that the Will does not reflect what you instructed.
  2. If you die on or after 1st November 2016 and your ex-spouse or ex-civil partner is named as a beneficiary and/or appointed as executor in your Will, then that bequest will no longer be valid unless you make it clear in your Will that this bequest is to stand.
  3. If there is a survivorship destination, also commonly known as a special destination, in title to property held by you and your spouse or civil partner, which provides that on the death of one of the spouses or civil partners, their title automatically passes to the survivor, this will not take effect if you get divorced, your civil partnership is dissolved or your marriage is annulled.
  4. Currently, if you have a Will and then make a new Will and then change your mind and cancel the new Will, the previous Will would revive and dictate how your estate would be distributed.  The Act changes this so that the previous Will would not automatically be revived.
  5. If you leave a legacy to a direct descendant, ie a child, grandchild or great-grandchild only, and that beneficiary predeceases you, then that beneficiary’s descendants would automatically inherit in place of the predeceasing beneficiary unless you clearly state otherwise in  your Will.
  6. If you set out a time period in your Will by which a beneficiary must survive you in order to inherit, and if it there is any uncertainty as to whether the beneficiary survives for that period, the Act introduces a new presumption that the beneficiary has not survived for the specified period.
  7. Where a person dies without a Will, and an executor requires to be appointed by the court, an insurance policy known as Bond of Caution is normally required (although this is not always required where the executor is the surviving spouse).  The Act abolishes the requirement to find Caution where the estate is classified as a “Small Estate” which is currently an estate valued at less than £36,000.
  8. The Act gives Trustees and Executors protection where they have incorrectly distributed assets provided they have done so after making reasonable enquiries and in good faith, or in accordance with an order of the court.

Should you have any queries about how the Act may affect you, or should you wish to discuss any matter in relation to Succession or the making or updating of your Will, please contact our Philip Dawson (p.dawson@jgcollie.co.uk) or Vivienne Bruce (v.bruce@jgcollie.co.uk).

JAMES AND GEORGE COLLIE CHARITY FUND RAISING

September 20th, 2016

James and George Collie are proud to be raising funds for both Maggie’s House and Mrs Murray’s Cat and Dog Home throughout 2016. Both charities were selected by staff at the Firm and signify causes close to their hearts. We are pleased to report that we are on course to eclipse the total funds raised for charities in 2015, and will be presenting cheques to both these charities at the end of the year. The staff currently fundraise through dress down days every month, as well as holding charity lunches and raffles, and raising funds at our annual BBQ.

In addition to the two selected charities, the Firm will be supporting the Macmillan Cancer Support “World’s Biggest Coffee Morning” on 30th September by holding the “Great Collies Bake Off”. Two of our partners will take on the role of judges as 1 East Craibstone Street’s most skilled bakers contend for the title. On 21st October, all staff will be encouraged to wear pink in support of Wear It Pink Day and standing up to Breast Cancer. We are also supporting Inspire’s ongoing used stamp appeal to raise funds for people of all ages with learning difficulties throughout the North-east of Scotland.

We will be continuing our fundraising next year when two new charities will be selected by staff. If you have any comments or wish to support the charitable fundraising at James and George Collie, please feel free to get in touch with your usual contact at the Firm.

Residential Tenancies – an update on future developments

September 20th, 2016

The Private Housing (Tenancies) (Scotland) Bill was recently passed by the Scottish Parliament and is expected to come into effect perhaps as early as 2017.

The aim of the legislation is to create simpler tenancies, offer stability and security for private tenants and ensure predictability over rent increases. It also fundamentally changes the nature of the relationship between landlords and tenants from contractual to statutory. A single new tenancy type called a ‘Private Rented Tenancy’ will replace the current Assured and Short Assured regime, though exceptions will apply to purpose-built student accommodation and holiday lets.

The main measures contained in the Private Housing Tenancies Scotland Bill include:

  • Enhanced security for tenants, with the loss of the “no fault” ground, which allows landlords to seek possession of a property on the basis that the agreed period of let has come to an end;
  • No defined term of a lease and no minimum period of let;
  • New grounds for recovery of possession, some mandatory and some discretionary;
  • Rent increases limited to once every 12 months and with a right for tenants to refer matters to a rent officer;
  • The opportunity for local authorities to implement restrictions on rent increases in areas where there are excessive rent increases by the creation of Rent Pressure Zones;
  • Simplification of notice requirements with the replacement of Notices To Quit, Section 33 notices and Section 19 notices (AT6) by a new Notice to Leave with two notice periods for landlords and one for tenants and no need for pre-tenancy notices;
  • Introduction of a model tenancy agreement with mandatory clauses.

Supporters of the legislation argue that this creates a more streamlined and modernised system.  Pre-tenancy notices which can set out specific, tailored grounds for landlord repossession of that property will become a thing of the past and it is envisaged that tenancy agreements will be easier for all parties to understand.

Rent predictability is another policy aspiration of the legislation.  Landlords will be unable to increase rents any more than once per year and will have to provide three months’ notice when doing so. The tenant will also have the option to challenge what they deem to be an unreasonable rent increase by referring the matter to a Rent Officer who can then determine a ‘fair’ rent.  The Rent Officer’s decision can also be subject to appeal to the Private Rented Sector Tribunal.

Finally, a local authority will also have the ability to create designated ‘rent pressure zones’.  This will enable councils to apply rent caps in areas they determine have been subject of excessive rent increases in recent times.

Should you wish to discuss any aspect of this article, or indeed require advice on renting a private dwelling, please contact Senior Solicitor, Mary Birse, in our Stonehaven Office on 01569 763555 or by email at m.birse@jgcollie.co.uk

Brexit Decision Made: The Divorce, the Fallout and the Reaction

September 20th, 2016


Now that the United Kingdom has chosen to head for the EU exit door, the ramifications for investors, savers and borrowers have been quick to be felt. Falling interest rates, Sterling weakness and market volatility are already with us and once ‘Article 50’ is invoked things will really start to happen.

The initial market reaction was a significant fall in both sterling and UK equities as fear and uncertainty reigned for investors. However, this was shortly followed by a significant recovery in equity markets which has resulted in strong performance for many assets over the period.

Overseas assets have been boosted in Sterling terms by the currency devaluation, whilst UK equities recovered on hopes that the Bank of England will provide further stimulus as a consequence of the Brexit vote. During the reporting period the FTSE 100 increased in value by 6.54% and the FTSE World Index by 8.71%. Fixed interest investments were also boosted in value as the expectation of future interest rate rises lessened dramatically, leading the FTSE Gilts All Stocks Index to increase in value by 6.18%.

In the meantime, Standard & Poor’s and other ratings agencies have reduced their view of the creditworthiness of the UK, warning of further downgrades due to lower economic growth expectations. Despite this the effect to date for investors has been generally positive and some investors will be surprised that their portfolios have risen sharply as a result of Brexit.

In fact, there may be more positives than investors perceive right now. The almost overnight devaluation in our currency is something which other Western economies have being trying to achieve for many years, as the benefit of a weak currency is that exports become cheaper and imports more expensive, boosting demand for domestic goods and services. The Brexit effect has created a 10% price cut for UK exporters.

From an investment perspective, the referendum result was a shock to global markets and initial thoughts were of a disorderly and rushed exit from the EU. As the initial shock subsided, it became clear that this exit will be over a number of phases and on a glacial time scale rather than a ‘quickie’ divorce. The uncertainty will continue and lead to market volatility.

Prior to Brexit we believed that economic progress was likely to exceed expectation with signs that the second half of 2016 could experience accelerating growth. This indication is no longer valid as the effects of the referendum are unknown as we await further Post Brexit data to come through.

Initially, signs of falls in confidence have been observed with downgrades to UK, European and Global growth being reported by many agencies. This reflects apprehension, which is understandable, and if indicators improve in the short term this will be positive; however sustained falls will cause concern and could reverse the recent upward momentum in markets.

In the meantime, we continue to believe that investors should accept the volatility of equity markets for modest medium and long term returns, rather than leaning towards the near-zero return of cash and bonds. We further believe if you are not already doing so that you seek independent financial and tax planning advice to check and ensure that your financial arrangements are fit for purpose now and for your future. If they are not, then appropriate changes will require to be made to put you on track and move forward accordingly.

Should you wish to discuss any aspect of this article or indeed arrange to meet with one of our financial advisers, please contact Doug Blanchard of James & George Collie Financial Management in the first instance by email at FSDepartment@jgcollie.co.uk

Pre-nuptial Agreements – for one and all!

September 20th, 2016

The popularity of the pre-nuptial agreement in Scotland is continuing to grow and we are regularly asked to prepare and advise on such agreements.  These are not just for international celebrities with vast fortunes, but can be equally as important for the man and woman in the street.

A pre- nuptial agreement is a contract between two parties who intend to marry.  It is a popular way to protect assets in the event the subsequent marriage breaks down.  A properly drawn up pre-nuptial agreement is likely to be binding upon both parties.   Scots Law has acknowledged the effectiveness of the pre-nuptial agreement for many years.  In England, high profile cases have illustrated the increased weight and importance of such agreements.

Typically, pre-nuptial agreements are used where one or both parties have existing assets, such as a property or savings or have inherited funds.  Individuals will seek to “ring-fence” those assets with the intention of excluding them from division in the event of separation or divorce.  In addition, the pre-nuptial agreement may stipulate that anything bought with the proceeds of a particular asset will be excluded from division between the parties upon separation. It can generally be tailored to suit individual needs.    It is important to give consideration to future aspirations, plans and likely events.  The pre-nuptial agreement may also provide for the agreement to be reviewed, for example, if children are born or there is a major change in circumstances of one or both parties.

Pre-nuptial  agreements can be set aside by court if they are deemed to be unfair or unreasonable at the time they were signed.   The classic case where one party has been strongly encouraged by the other party to sign an unfavourable agreement on the eve of the wedding, may be construed as being unfair.  It is important that both parties are given the opportunity of obtaining independent legal advice prior to signing the agreement and that it is discussed well in advance of the wedding to avoid such a scenario.

Should you require advice on Pre-nuptial Agreements or indeed any other family law or matrimonial matter, please contact Senior Solicitor, Susan Waters, in the first instance on 01224 581581 or by email at s.waters@jgcollie.co.uk

Japanese Knotweed – in your “Beechgrove” garden?

June 20th, 2016

A Will
Japanese Knotweed is an invasive plant with incredibly strong roots that could cause serious and significant damage to your property.  The plant was introduced by the Victorians for ornamental purposes and it grows rapidly, by as much as 1.5 metres a month in the growing season from May to October.

Japanese Knotweed is not particularly widespread in and around Aberdeen but it does occur.  Fortunately even where it is found there is no need to panic as the issue can be resolved, particularly if caught quickly and treated properly.  You should not try to deal with the plant yourself but rather it should be excavated from the ground and disposed of under license. It is so invasively dangerous to buildings that Japanese Knotweed is a controlled waste that requires controlled disposal under the Environmental Protection Act, 1990. Any excavation will require extensive digging as leaving just a small section could allow it to grow back.  It can also be treated chemically, although any chemical treatment would require to be applied over the course of several years to be effective.  You will see from the methods involved that the treatment is likely to be time consuming and therefore relatively expensive.

Some surveyors make a note on Home Reports that they have not carried out an inspection for Japanese Knotweed as they are not obliged to look for this as part of the Home Report.  However where the issue is evident to the surveyor they will comment on this.  Whilst some mortgage lenders are reluctant to provide a mortgage on properties affected by Japanese Knotweed many in fact will still be happy to lend.  Where they do lend they will look at the particular circumstances of the case and will wish to look for assurance that treatment works have been carried out/will continue to be treated as necessary and that a specialist guarantee has been issued.

If Japanese Knotweed affects your property another issue to check is the availability of buildings insurance for the property.  The insurance company may attach a higher than normal premium to account for the higher than normal risk of damage that could potentially be caused by the invasive plant.

If you are aware of this issue affecting your property I would suggest that you deal with the matter as quickly as possible not only to prevent any significant damage to your property but also to avoid any impact on the value of your property or any potential difficulty in selling your property in the future.  A further caution against ignoring the presence of the weed in your garden would be that allowing the spread of the weed into the wild could be an offence under the Wildlife and Countryside Act 1981 as amended by the Wildlife and Natural Environment (Scotland) Act 2011.

If Japanese Knotweed affects both you and your neighbours then, as with most neighbour issues, you would be best to discuss the matter amicably to reach a practical solution.

Should you have any concerns about Japanese Knotweed at your property or if you are aware of its presence on neighbouring property it is important to act fast before it spreads (and it will definitely spread further if left untreated!) and our Mark Allan (contactable on 01224 563342 or by email at m.allan@jgcollie.co.uk) will be happy to discuss this with you and assist in any way he can.

2016 Starts to Look a Bit More Rosy – Despite the Brexit!

June 20th, 2016

A Will
By Scott Middleton, Chartered Financial Planner

In our last market commentary in February we were coping with the increased anxiety caused by falling equity markets both in the UK and abroad. This has been replaced by general feeling of wellbeing as the reversal in fortunes of equities has seen an almost total rebound in the UK and an even greater rally in Asia and the emerging markets. The FTSE World Index rose 4.96% and the FTSE 100 rose 4.08% over the period whilst the IA Asia Pacific Excluding Japan Index returned 7.51% and the IA Emerging Markets Index 11.62%.

Why has this happened? Well, in recent times the price of oil has become regarded by many as a barometer for the health of the global economy, if not the local Aberdeen one. Whilst this is not necessarily a valid economic thesis, the sliding price was unnerving to investors and the recent recovery has been the main catalyst for the positive returns across many indices.

One thing that these current market conditions vividly demonstrates is that investors are now more prone to anxiety than prior to the credit crisis. In 2007 investors barely blinked when a run on Northern Rock bank ended in its failure, which with hindsight, was a perfect dry run of the credit crisis that later engulfed nearly all major Western banks. This warning occurred one year before the failure of Lehman Brothers, yet few investors took notice because the confidence in banks and their regulators was so high that a failure beyond an isolated event was unimaginable.

However, as a consequence of this experience investors are now acutely aware of possible unidentified risks and relatively small quantities of bad news can create a significant market reaction. This means that, from an investment perspective, positive news-flow is being received calmly, whilst negative news-flow is echoing around the financial media, reflecting the underlying anxiety of investors.

This anxiety has mostly manifested itself in the high valuations of sovereign bonds. It was once believed, on reasonable grounds, that the lowest possible yield would be zero as it would not make sense for an investor to pay for the benefit of lending their money. However investors are now paying borrowers to lend them money with the default risk transferring from the lender to the borrower in terms of interest payments. The Financial Times now estimates that there is over $10 trillion of sovereign debt worldwide, which is yielding less than zero for investors.

Historians look back with disbelief at some of the investment decisions which led to market instability. The ‘tulip bulb bubble’ reached a peak in 1637 when a single tulip bulb sold for 10 times the average salary of a craftsman. In the 1840’s, railway mania created a speculative frenzy with money pouring in creating opulent stations but little return. Japanese equities peaked in 1991 with dizzying valuations as over-confidence created a greed based cycle of over-investment. It is difficult to imagine negative yielding bonds not joining this list in the future, such is the difficulty in understanding the rationale for buying at these prices.

There are signs that the underlying global economy is continuing to recover. Unemployment has continued to fall in the UK and the USA, inflation has ticked up a little in Europe and global economic growth generally remains positive. There have been a few downward revisions, but not particularly significant.

We expect that the low unemployment level will drive wage inflation higher increasing demand and pushing core inflation higher. The bounce in the commodity cycle will also influence prices adding further upward pressure to inflation. Whilst many market commentators are expecting inflation to remain subdued, we perceive this to be a more temporary situation.

The short term risk facing investors is the Brexit vote on 23rd June. This is a binary event which is likely to lead to a small relief rally in the event of an ‘in’ vote and significant volatility in the event of an ‘out’ vote. The result is too close to call at the moment.

In summary, we expect periods of anxiety to reoccur frequently, but ultimately equity markets will continue to provide attractive returns supported by low levels of global economic growth. Fixed interest markets remain at unsustainably high levels with yields too low to justify the capital risk. US equities are the least attractive market on the basis of valuations whilst Asia & Emerging Markets are relatively more attractive and are further supported by the recovering commodity cycle.

Remember, however, that the value of investments can go up as well as down and past performance is not necessarily a guide to the future.

Should you wish to discuss this market summary, please contact Scott Middleton of James & George Collie Financial Management