“Life is like riding a bicycle. To keep your balance, you must keep moving.” – Albert Einstein, who needs no further introduction.
Welcome to the Supplement everyone. This week has flown by after coming back to the real world (and the weather changing, I couldn’t be a proud Brit without passing comment about the weather this week!) following our Property Business Retreat the week before.
With that all in mind things are a little punchier than normal today – which you may breathe a sigh of relief to hear, as it can get a little wordy sometimes, I know!
I had, first of all, to repeat a warning I put out on social media this week. Stamp Duty “reclaims”. I’m going to repeat my post in its entirety:
All the chatter is about schemes at the moment – but there’s one scheme that isn’t in the chatter, but really, really should be.
I’m becoming more and more aware of a variety of Stamp Duty spurious and unreasonable reclaims being undertaken, and there are some very pushy sales people out there that are making claims that are simply not rooted in fact.
The system is being fairly openly defrauded by some property traders who are (as an example) getting desperate vendors to sign paperwork confirming there has been a break in the chain, which they are “saving”.
HMRC are not stupid. They will come after this, because the fraud is now likely to be in the tens if not hundreds of millions of ££££ of tax unpaid.
I saw a message from one contact to another just this week which said “Did you know you can get the stamp back for any property you had to do a refurb on?”
That is the lie that is being propagated.
Please be careful. If you decide to go ahead with these reclaims, make sure to set that money to one side, and remember there can be interest and penalties as well. And other investigations that spark up on the back of one investigation. My personal feeling would be to seek the price of a proper tax professional (qualified CTA or equivalent) before going ahead with these schemes.
PLEASE make sure you spread the word. I got told I was “wrong” this week, but I’m afraid I’m not wrong. I’ve read the manual on the stamp, more than once, and I’m not a qualified tax advisor of course but that’s EXACTLY why I’ve directed people to one in my advice! I’ve read and re-read the test case which most of this “uninhabitable” relief comes from and using it as precedent in a lot of these cases is downright fraudulent – it is as simple as that.
The link to the most relevant part of the manual is here, if you fancy some further reading – for property TRADERS, note: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm21000
This bit about LLPs will no doubt create some interest too – breathtakingly simple, really: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm24500
If you haven’t given me a subscribe on Youtube or the podcast platforms yet, I’d really appreciate it if you do – links are here to Youtube: https://www.youtube.com/channel/UCpNyNRdTJF87K3rUXEV3s-Q and here to the Propenomix website: https://propenomix.com/ – thanks for supporting me spreading the word, more subscribers will lead to more and better content, and that’s the aim for everyone!
Wealth warnings out of the way, let’s get on with it. A macro roundup with a tiny dose of politics too:
The biggest week of the month, really. We have to start with inflation. The print came out on Wednesday, and it was the same as last month. This was 0.1% above the consensus, although some had gone on record suggesting it (CPI) could fall below 6% this month. Rishi’s pledge on this front looks relatively unattainable at this point (depending on when you start the measure, of course). Remember the pledge was to halve inflation this year. December 2022’s print was 10.5%, and so 5.2% would need to be hit for December, with 3 months to go. Can’t say I fancy his chances.
Core was 6.1% against a consensus of 6%, and against a 6.2% last month. Slower than hoped, slower than (almost) anyone expected, no, it isn’t time for another “I told you so”. Average earnings held up at 7.8%, another 0.1% drop from last month, and whilst this wasn’t unexpected, it shows resilience is the name of the game for the economy.
The month-on-months which I prefer to watch were disappointingly up – 0.5% for both CPI and core, showing again that there is a sting in the tail with inflation here. We are running at a realistic 4-5% for the next 12 months, on these sorts of numbers – that’s also relatively in line with the US, who are ahead of us in the hiking cycle and inflation is seriously stalling around 4%.
That’s all a bit glum, but it is worth just highlighting how the Federal Reserve is handling this at the moment. I’ve criticised the Central Bank for seeming very reactive at the moment, and almost reacting to the news on the economy as it comes in. I’ve been guilty of it myself. There IS a role they have in managing the bond markets, but that cannot be the major role. We do need to remember that until rates have held steady for at least 6 months, and more realistically 12 or even 18, that the tightening cycle will still bite yet further – especially with so much debt fixed just before the cycle really started, or just after it started.
Patience is a virtue, although the conventional wisdom is that base has not yet seen its top in the UK or the US. I’m inclined to agree, certainly on the UK situation. The bond yields also had another bad week, with another 0.25% going on (at one point), although the Fed Chair’s comments brought them back down in the US and also in the UK, a bit. The 5-year swap stayed about 0.2% above the bond, which is good news, although the pressure on rates is definitely still upwards.
That leads me to one more soapbox – another rant to get off my chest. There’s really two messages I have been trying to get across when it comes to interest rates and this whole hiking cycle.
- Waiting is a dangerous strategy. I don’t mean waiting a couple of weeks, or similar – I’ve said as much myself in recent months – I mean waiting “until rates come back down”. I’ll say it one more time – THE RISKS REMAIN TO THE UPSIDE. Risks are not JUST the rates going up even more – even though I still feel that we won’t top 5% on the 5-year UK gilt, we are getting closer by the week at the moment! Risks are more than that. Risks include credit crunches, credit withdrawals, and generally itchy lenders – and more than that.
- Don’t just look at the property itself in isolation. Do you need to re-gear? Do you need the money to put somewhere else? We raised some money in my group this year at a relatively high rate, but it was going straight into another investment that was attractive, safe and already cashflowing at a far higher rate. The individual loan may not have made “sense” against some of those properties, BUT the overall strategic decision DID make sense.
Enough ranting. The punches keep on coming this week – consumer confidence was also through the floor, well under forecast – and retail sales were negative year on year (-1%). The cost of living crisis is still biting, as there’s a fair few percent above inflation that wages need to proceed at before coming back to parity. However, wages staying high will keep inflation high – and many businesses see less volume, but higher prices and thus stable profits (which are actually being eroded, in real terms, of course). The spiral……
One little plug – if you missed last week’s chat on the Sunday live we had a fantastic guest who talked with personal experience and expertise about menopause (and not just menopause, but also andropause) – we had so much positive feedback that it is worth catching up with on my YouTube if you didn’t see it. It’s impossible for the subject not to touch you now, or in the future.
I’m going to close there for the week – next week, round 2, with unemployment and productivity figures. I’d love to get some comments and feedback as always. Be sure to tune into the 9am live on YouTube if you can (or watch on repeat) – if you don’t already know about it, just search up “Propenomix” – please subscribe to the channel, and like and comment on the videos if you enjoy the weekly content (or even if you don’t, but if you don’t, how have you got this far!) – and Keep Calm and Carry On, of course.