Rising interest rates and market volatility | March 2022
03/03/22 • 7 min
While the Ukraine crisis has undoubtedly destabilised markets, they were already fragile. Inflation has been the key driver for this uncertainty, with CPI in the US tipping over 7%. For the first time in 40 years, investors need to contend with central banks tackling a sharply rising cost of living by raising interest rates
Food and fuel remain the key areas of rising prices. Labour shortages, rising processing costs and delivery concerns have pushed the UN Food and Agriculture Organisation’s price index up by nearly 50%. At the same time, energy prices have spiked in response to the Ukrainian crisis.
Having initially considered inflation to be transitory, central banks are now starting to act. All eyes are on the Federal Reserve, which may raise rates for the first time since 2018 in its March meeting. This change of mood has delivered higher bond yields and may prompt a significant rotation in markets in the year ahead.
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This episode was recorded on 01/03/2021
Capital at risk. Please remember the value of investments and the income from them can fall as well as rise and investors may not receive back the original amount invested. Past performance is not a guide to future performance.
This S&W The Pulse podcast is of a general nature and is not a substitute for professional advice. No responsibility can be accepted for the consequences of any action taken or refrained from as a result of what is said. The views expressed are not necessarily those of the presenter or of Smith & Williamson or any of its affiliates. No reproduction of this podcast may be made in whole or in part for professional or recreational purposes. No action should be taken based on this podcast and we accept no liability if we change your views on any of the subjects mentioned.
Smith & Williamson Investment Management LLP
Authorised and regulated by the Financial Conduct Authority. Registered No 580531
While the Ukraine crisis has undoubtedly destabilised markets, they were already fragile. Inflation has been the key driver for this uncertainty, with CPI in the US tipping over 7%. For the first time in 40 years, investors need to contend with central banks tackling a sharply rising cost of living by raising interest rates
Food and fuel remain the key areas of rising prices. Labour shortages, rising processing costs and delivery concerns have pushed the UN Food and Agriculture Organisation’s price index up by nearly 50%. At the same time, energy prices have spiked in response to the Ukrainian crisis.
Having initially considered inflation to be transitory, central banks are now starting to act. All eyes are on the Federal Reserve, which may raise rates for the first time since 2018 in its March meeting. This change of mood has delivered higher bond yields and may prompt a significant rotation in markets in the year ahead.
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Stay up to date with our latest insights, subscribe to our mailing list here and choose the topics you’re interested in: https://bit.ly/2SKomDq
GET IN TOUCH:
Have any feedback? We're listening, email us at: [email protected]
FOLLOW US:
Twitter - @SmithWilliamson
LinkedIn - @Smith&Williamson
This episode was recorded on 01/03/2021
Capital at risk. Please remember the value of investments and the income from them can fall as well as rise and investors may not receive back the original amount invested. Past performance is not a guide to future performance.
This S&W The Pulse podcast is of a general nature and is not a substitute for professional advice. No responsibility can be accepted for the consequences of any action taken or refrained from as a result of what is said. The views expressed are not necessarily those of the presenter or of Smith & Williamson or any of its affiliates. No reproduction of this podcast may be made in whole or in part for professional or recreational purposes. No action should be taken based on this podcast and we accept no liability if we change your views on any of the subjects mentioned.
Smith & Williamson Investment Management LLP
Authorised and regulated by the Financial Conduct Authority. Registered No 580531
Previous Episode
The end of tax year, are you ready for 5th April?
The tax year end is approaching on 5th April. In this episode we discuss what you can do ahead of the year end to put you in the best tax and financial position.
Episode overview:
- Consider making tax-free investments through National Savings or ISAs. The annual ISA subscription limit for 2021/22 is £20,000, and this limit cannot be carried forward if not used.
Remember, all investments fluctuate in value and you may not get back the amount invested
- Pension contributions are still a really tax-efficient way of saving for retirement, with tax relief given at your highest marginal rate of income tax. This is quite a complex area as tax relief is restricted in various ways.
- Spouses and civil partners can review who holds any savings that generate taxable income to ensure allowances are used efficiently.
- If you pay tax at the 40% rate or higher, you may be able to claim tax relief on gift aid donations you make to charity.
- As capital gains tax is charged when an asset is sold, you have some control over when to pay it, for example, assets could be sold to use your CGT annual exemption or unrealised losses crystalised to offset gains.
- On IHT, there are various allowances for gifts, which many people are unaware of.
- Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trust (VCT) investments may provide tax relief and the opportunity to defer capital gains, but are higher risk.
These options are relevant to most taxpayers but could be particularly valuable to those subject to an effective rate of tax of 60% on income between £100,000 and £125,140#.
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This episode was recorded on 28/02/22
This S&W The Pulse podcast is of a general nature and is not a substitute for professional advice. No responsibility can be accepted for the consequences of any action taken or refrained from as a result of what is said. The views expressed are not necessarily those of the presenter or of Smith & Williamson or any of its affiliates. No reproduction of this podcast may be made in whole or in part for professional or recreational purposes. No action should be taken based on this podcast and we accept no liability if we change your views on any of the subjects mentioned.
Tax [and Government] legislation is that prevailing at the time, is subject to change without notice and depends on individual circumstances. Clients should always seek appropriate tax advice before making decisions. HMRC Tax Year 2021/22.
Next Episode
HMRC enquiry for businesses
It is important for businesses to have a strong tax risk management framework, as this should lead to a good relationship with HMRC and fewer HMRC enquiries. Before a business receives an enquiry letter, HMRC will probably have conducted a risk assessment and estimated any potential tax lost. Understanding HMRC’s process is therefore a good starting point. HMRC has access to a vast amount of information, both from the UK and overseas, to help identify potential risk areas within a business. These risks are usually identified when discrepancies are found between information from third party sources and details filed as part of a tax return.
Find out more in our published article: HMRC enquiries: 'Why a strong tax risk management framework is critical for businesses'
SUBSCRIBE:
Stay up to date with our latest insights, subscribe to our mailing list here and choose the topics you’re interested in: https://bit.ly/3ArrCoa
GET IN TOUCH:
Have any feedback? We're listening, email us at: [email protected]
FOLLOW US:
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This episode was recorded on 13/04/22
This S&W The Pulse podcast is of a general nature and is not a substitute for professional advice. No responsibility can be accepted for the consequences of any action taken or refrained from as a result of what is said. The views expressed are not necessarily those of the presenter or of Smith & Williamson or any of its affiliates. No reproduction of this podcast may be made in whole or in part for professional or recreational purposes. No action should be taken based on this podcast and we accept no liability if we change your views on any of the subjects mentioned.
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