Factors driving the evolution of investing

Factors driving the evolution of investing

The environment and climate change has been a hot topic over the last few years. In 2021, more than ever before, environmental and socially responsible issues are at the forefront of the investment landscape. Whilst the practice of ESG Investing has been around since the 1960’s it certainly something that as advisers, we talk about more than ever.

In October and November 2021 Glasgow hosted the UN Climate Change conference better known as “COP26” COP stands for Conference of the Parties, and was attended by countries that signed the United Nations Framework Convention on Climate Change (UNFCCC) – a treaty agreed in 1994. This was the 26th conference hence the title of “COP 26”.

Prior to the conference, the UN released the following goals that COP26 needed to achieve.

 

  1. Secure global net zero by mid-century and keep 1.5 degrees within reach

Countries are being asked to come forward with ambitious 2030 emissions reductions targets that align with reaching net zero by the middle of the century.

To deliver on these stretching targets, countries will need to:

  • accelerate the phase-out of coal
  • curtail deforestation
  • speed up the switch to electric vehicles
  • encourage investment in renewables.

 

  1. Adapt to protect communities and natural habitats

The climate is already changing and it will continue to change even as we reduce emissions, with devastating effects.

At COP26 we need to work together to enable and encourage countries affected by climate change to:

  • protect and restore ecosystems
  • build defences, warning systems and resilient infrastructure and agriculture to avoid loss of homes, livelihoods and even lives

 

  1. Mobilise finance

To deliver on our first two goals, developed countries must make good on their promise to mobilise at least $100bn in climate finance per year by 2020. International financial institutions must play their part and we need to work towards unleashing the trillions in private and public sector finance required to secure global net zero.

 

  1. Work together to deliver

We can only rise to the challenges of the climate crisis by working together. At COP26 we must:

  • finalise the Paris Rulebook (the detailed rules that make the Paris Agreement operational)
  • accelerate action to tackle the climate crisis through collaboration between governments, businesses and civil society.

(ref: https://ukcop26.org/cop26-goals )

 

What is ESG Investing?

ESG stands for Environmental, Social, and Governance investing. ESG evaluates how investments or companies in various categories are related to long-term environmental and societal impact. These include ‘green’ elements such as conservation of natural resources, social factors like inclusivity, and governance considerations regarding how a company is run.

Even prior to COP 26 ESG has been accelerated by the COVID-19 pandemic and increased attention to social and governance issues.

The financial industry is increasingly looking to make it easier to understand how ESG investing is quantified, by using specific measurement criteria to score investments on a consistent scale.

ESG aims to rank investment opportunities with a wide range of sustainability metrics in mind, from green energy initiatives and waste management to fair labour practices, board member diversity, and executive pay.

Over time we are likely to see ESG investing becoming the norm. Companies that meet ESG criteria are now seen as the companies of the future, able to adapt and evolve with the times.

During turbulent markets such as those seen in 2020, ESG funds often performed better than their traditional counterparts. This shows that now and, in the future, we hopefully should not have to sacrifice performance to be socially responsible and environmentally friendly in our investment choices.

If you would like to know more about investing and ESG choices or to review your own investments, please get in contact with one of our Independent financial advisers

More from our wealth management experts

You can find all of our latest wealth management articles and resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Natasha Fathers, Director of HWM

Natasha Fathers

Director of Hawsons Wealth Management Limited, Sheffield

0114 229 6557

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Confidence in care homes almost doubles

Confidence in care homes almost doubles

A survey of just over 2,000 people conducted by Vida Healthcare found that there has been a significant rise in confidence in care homes when compared to 2020. The survey found that UK residents had a more positive view of care homes and 34% of respondents said their perception of care homes has changed since the start of the pandemic and is now more positive. 47% of respondents said that they consider care homes home for the elderly and not just somewhere for care to be delivered.

 

The general public’s knowledge of care homes has increased

67% of respondents have said that they now know more about care homes than they did previously. Furthermore, 54% of people now have or had a family member or close friend living in a care home. This could explain why more people now know more about care homes as more and more people are having experiences with care homes, helping to change the perception of the care home sector.

Despite this only 32% of respondents thought that care homes gave residents a sense of community. 40% believe that recreational activities are just as important as medication when it comes to caring for the elderly to help their mental health, particularly those living with dementia. This comes as over half of respondents said they have become worried about their mental health during lockdown because of separation. This demonstrates that the public believes that care homes need to more to create a community atmosphere in care homes to improve the resident’s experience.

Vida Healthcare managing director James Rycroft has said that whilst traditional views of care homes are changing. The care home sector still has a long way to go in terms of completely changing its perception and meeting the demands of a modern population.

 

How can we help?

At Hawsons our dedicated team of specialist accountants and tax advisors offer a wealth of experience in the care sector including residential homes, nursing homes and other specialist care services.

Our in-depth knowledge and understanding of the sector is applied and we work closely with our clients, ensuring that changes in the care sector are recognised promptly and appropriate strategies implemented and actions taken. We recognise that no two homes are the same.

We have extensive experience of providing clients with the required support and advice from the initial acquisition and investment structures, reducing future taxation and enhancing tax relief opportunities.

 

Free initial meeting

Scott Sanderson

Partner, Sheffield

0114 266 7141

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Care workers can now work in multiple care homes

Care workers can now work in multiple care homes

The government has announced that guidance for care homes in England has changed. From now on care workers are allowed to work in more than one care home if there are ‘capacity concerns and to ensure continuity of care.’

 

Pre-pandemic care worker rules

Before the pandemic, care workers often worked in multiple care homes because they were on zero-hour contracts. Furthermore, larger care providers used to frequently move their staff around multiple care homes.

 

March 2021 care worker rule changes

In March 2021, the government made the decision to restrict the routine movement of care workers around multiple care homes to help reduce the spread of infection and Covid-19 in particular. At this time care workers were only allowed to move around care homes in exceptional circumstances.

 

Current care worker guidance

The government has now updated its guidance on the circumstances ‘in which some movement of staff may be cautiously permitted’. In the guidance, it states that ‘this enables providers and local authorities to plan proactively for specific service requirements or capacity concerns and to ensure continuity of care.’ Now care homes will not need to limit the movement of their staff if they are not providing direct nursing or personal care. These roles include:

  • Admin staff
  • Cooks
  • Cleaners
  • Managerial staff

Despite this, the routine movement of care workers providing personal or nursing care is still banned. Unless care homes have periods of unplanned staff absence and capacity becomes a concern then movement is allowed.

Specialist trainers and educators ‘who ensure the continued quality, knowledge, and skills within staff teams are maintained and staff with additional, specialist training to meet a person’s needs that could not be delivered by other staff’ are also allowed to work across multiple care homes.

Care workers can also move if there is a specific risk to an individual’s wellbeing. For example, if individual needs to be cared for by a particular care worker they recognise.

All care workers that move between care homes must be fully vaccinated (unless medically exempt) and have a negative lateral flow test at the beginning of the working day.

 

How can we help?

At Hawsons our dedicated team of specialist accountants and tax advisors offer a wealth of experience in the care sector including residential homes, nursing homes and other specialist care services.

 

Our in-depth knowledge and understanding of the sector is applied and we work closely with our clients, ensuring that changes in the care sector are recognised promptly and appropriate strategies implemented and actions taken. We recognise that no two homes are the same.

 

We have extensive experience of providing clients with the required support and advice from the initial acquisition and investment structures, reducing future taxation and enhancing tax relief opportunities.

Free initial meeting

Scott Sanderson

Partner, Sheffield

0114 266 7141

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Stamp Duty Land Tax: Consultation launched to reduce perceived abuse of the rules

Stamp Duty Land Tax: Consultation launched to reduce perceived abuse of the rules

HMRC has launched a consultation into the methods used to calculate Stamp Duty Land Tax (“SDLT”) on purchases of mixed-use property. A mixed-use property is where a property is considered as both residential and non-residential. In addition, there may also be a reform on multiple dwellings relief when two or more dwellings are purchased. HMRC considers that these two areas can lead to unfair outcomes, incorrect claims, or abuse of the rules.

 

Mixed property type

Currently, properties which include elements of residential and non-residential property are subject to the non-residential SDLT rates, which can give a substantial SDLT saving.

HMRC has said that some purchasers of property are taking advantage of the rules for mixed-use property, despite the property not having any relevant non-residential features. This enables purchasers to unfairly reduce the amount of SDLT paid. Therefore, the aim of this consultation is to amend the rules to ensure that they are fairer and reduce attempts to abuse the provisions of the relief.

In the consultation, HMRC is currently looking at introducing a new apportionment method for calculating SDLT on mixed-use property cases. This new method would mean that the residential portion of the mixed-use property would be taxed as a residential property with the remaining being taxed as non-residential property. An alternative option would be to introduce a threshold where a property can only be treated as a mixed-use property if the non-residential element of the property is more than a certain proportion, for example, more than 50%. HMRC is currently looking for views on this new method.

HMRC has said that if they were to use this method, they would need to ensure that the threshold would be high enough. This is to prevent purchasers from adding small amounts of non-residential land to class the purchase as a mixed-use property type and reduce their SDLT bill.

 

Multiple dwellings relief

Currently, if a property contains more than one dwelling there is an averaging method which can reduce the overall SDLT liability. There have been a number of cases on this recently where the tax-payer has tried to argue that an annexe is a separate dwelling and therefore the relief can be claimed. However, HMRC have been successful in many of these cases.

In order to reform multiple dwellings relief, HMRC has put forward a number of options.

  • Only allow multiple dwellings relief where all dwellings are purchased for a ‘qualifying business use’
  • Only allow multiple dwellings relief in respect of the dwellings purchased for a ‘qualifying business use’
  • Restrict multiple dwellings relief by introducing a ‘subsidiary dwelling’ rule
  • Only allow multiple dwellings relief for purchases of three or more dwellings

It will be interesting to see the outcome of these consultations.

 

How can we help?

At Hawsons we have a dedicated team of property & construction accountants at our offices in Sheffield, Doncaster, and Northampton.

Having an accountant who understands the challenges of this dynamic sector and is able to help you plan for the future is an advantage in a competitive environment. At Hawsons we have a great deal of experience in advising and helping businesses in property and construction and we can assist you as your business grows.

Free initial meeting

Stephen Charles

Tax Partner, Sheffield

0114 266 7141

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The SRA proposes to end indemnity cover for retired solicitors

The SRA has proposed to end the provision of post-six-year run-off cover because they judge the protection as disproportionately expensive. Run-off cover is insurance for claims made against a law firm after it has stopped doing business. This change would mean that the Solicitors Indemnity Fund would effectively close. Indemnity insurance protects solicitors against claims of possible negligence or failure to perform. However, if the Solicitors Indemnity Fund were to close the remaining funds would be handed to the Law Society.

If this were to happen and run-off insurance was to end, the profession would be left with two choices. The first would be to ask solicitors to pay for cover to reduce the expense. The second would be to leave retired practitioners to deal with any and all claims themselves.

Based upon the last ten tears, the SRA’s forecasts show that an average of 31 clients are likely to gain from the Solicitors Indemnity Fund each year. This results in an average of £34,600 being paid out which includes defense costs. Up to £2.4m a year will be required from the profession to continue the ongoing funding to the Solicitors Indemnity Fund each year. This expense would most likely be passed onto clients.

The SRA feels that they cannot keep extending the Solicitors Indemnity Fund as they have done in recent years. There will be a 12-week consultation where a discussion will be had about what will happen with the remaining reserves of the Solicitors Indemnity Fund if the six-year run-off cover is no longer provided. Transferring the remaining funds to the Law Society would at least enable them to use the funds to benefit the profession.

 

How can we help?

At Hawsons we have a dedicated team of solicitor accountants at our offices in Sheffield, Doncaster, and Northampton.

We act for a large number of law firms across all three of our offices and offer a wide range of services which are tailored to meet their individual needs. Our legal client base consists of a multitude of firms of varying structure and size, from sole traders to limited companies and LLPs with corporate members.

Our understanding of the unique issues that many in the sector are facing, combined with our technical experience, allows our solicitor specialists to provide you with proactive, commercial and informed accountancy and tax advice.

Free initial meeting

Simon Bladen

Partner, Sheffield

0114 266 7141

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