issue 4
SKQ A publication from
WELCOME
to issue 4
We’ve now had a full year of publishing SKQ magazine and the feedback has been fantastic. A big thank you to Jenny and Jason at Grove Park Design who curate the magazine and to the extended team and clients who have all contributed. This issue we put the spotlight on three of Kunle’s clients to discuss their successes as well as some words of wisdom on how to handle disappointment or failure. The Money 101 feature continues. This time around it’s for first time home buyers and tips to help get on the property ladder. Alex Chrysostomou from Alex Associates also highlights the pros and cons of holding buy to let properties within a limited company. From the team at SK, we wish you all a Merry Christmas and a Happy New Year.
Chloe Editor chloe@skfinancial.net We encourage you to share our magazine to those you think may find it useful. If you have any feedback or would like to contribute to our next issue of SKQ, send Chloe an email at chloe@skfinancial.net
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CONTENTS 4
Outlook from Kunle
5
Buy to Let Properties & Limited Companies
6
Client Spotlight with Richard Thompson, Joanna Abeyie & Tesca Bennet
10
Money 101 – Getting on the property ladder
13
The Big Exchange
14
Get to know David
15
Christmas with SK
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OUTLOOK FROM KUNLE I recall sitting at my desk at home on Monday 23rd March, thinking of Marvin Gaye’s words: “What’s going on?”
By looking at this visual it helped to keep me focussed and recognise what I am doing.
I still cannot answer that question.
The business is in decent shape. The whole team have been able to carry out their work duties from home and some of us returned to the office on a hybrid basis prior to the second national restrictions.
I then asked myself another question. “What can I do about it?” In a previous edition I referred to the Eisenhower Decision Matrix. For this edition I’d like to introduce the “The Three Rings”.
CAN I INLUEN AT
? CE
WH
AN’T I CONTR AT C OL H ? W
WHAT CAN I CONTROL?
What can I control? •
• • •
Understanding - asking the right questions to clients and colleagues, listening to their concerns, remembering their wants Delivering - getting the job done well – “hear what they say, watch what they do” Attitude - my behaviour, my emotional intelligence Costs - capping the fees for our investment portfolios
We have received great support from so many of our clients, so thank you. The fact that you have chosen to be a client of SK’s is truly appreciated. We are committed to looking after you and delivering a quality and engaging service to help with your financial planning. Our After Care team have never been busier, preparing annual review documents to be sent out to nearly 450 fee paying clients. During this period, we have increased our investment into the business. The improvement in our marketing documents has left better impressions with our clients based on their comments. The credit for this work must go to Chloe and Grove Park Design. Well done. There is more to come! Square Mile continue to impress and it’s pleasing to have some fresh thoughts coming from our new compliance provider, The Compliance Department. We are also working with our IT firm HWT to complete the cyber essentials programme so that we can help to prevent the growing threat of cybercrime. Based on what we’re doing as a business, we have shown we are adept, adaptable and able to deal with what we can control and influence. I am deeply grateful for the support that I have around me.
What can I influence? • • •
•
Family life - being present Community - how and what am I doing to help others? Clients - helping them with their business challenges, sharing ideas and one on one mentoring sessions with their younger family members Fees - special terms with our platform providers and fee reductions for fund management
Remember we have no control of what we cannot control.
What can’t I control? • • • •
Politics Investment returns The weather Sports results
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Kunle Chief Executive
BUY TO LET PROPERTIES & LIMITED COMPANIES with Alex Chrysostomou Director, Alexander Associates
There are however advantages to owning an investment property through a company, the main one being that the rental profits are taxed at 19%, rather than 40%/45% if you’re a higher /additional rate tax payer. You are also able to get full tax relief on the mortgage interest costs, as well as any other mortgage related costs. From an earnings point of view, with the current dividend rules, you can declare £2k in dividends each tax year from the company, which, if you own the property say with your spouse, can potentially give you £4k of tax free income each year (assuming you have no other dividend income). Given the tax changes on investment properties over the last few years, is it better to buy properties through a limited company from now on? What are the tax implications around the stamp duty and other changes recently introduced? There have always been advantages and disadvantages to owning a property through a company and given the changes in the tax rules around owning investment properties over the last few years, the question on whether to now start owning a property through a limited company requires more thought. As a reminder, the main changes (over the last few years) to buying investment properties are that 1) you now have to pay an additional 3% stamp duty on the purchase of a second (or more) home, 2) the wear and tear allowance of 10% deduction of gross rent has been abolished and 3) from April 2017 onwards, if you’re a higher/additional rate tax payer, the mortgage interest relief is capped to the basic rate of tax. These changes effectively mean that we are paying more tax on our Buy to let investments than ever before. Before deciding on whether to buy a property through a limited company or not, it is important to be aware that the new additional 3% stamp duty includes properties bought through a company, so there’s no getting away from this unfortunately. The 3% stamp duty surcharge is payable on the first property you purchase within a company, even if this is the first ever property you’ve bought.
Before transferring properties into a company there are a couple of other matters to consider. Firstly, if you transfer properties you own into a company, there may be a capital gains tax liability due. Also, if there is an outstanding mortgage on the property you will have to transfer the mortgage to a new product, which could result in early repayment charges. In this instance, it’s always best to consult with a good financial or mortgage adviser. Finally, you will have to pay stamp duty on the value of the property when you transfer it into the company (plus the 3% on top!), which will be due even though you may be transferring the property(ies) into a company without any exchange in money. Alexander Associates are a different kind of accountants. We offer the added value customer service that you don't find at most other firms. Our aim is to be the best accountants in the world by providing an outstanding service. Our clients come from many different backgrounds and industries and are active in all branches of trade and services. Our reputation has been built on quality, delivering added value advice efficiently and cost-effectively.
Call us on 020 8882 9617 or email info@alexassociates.co.uk SKQ issue 4 | 5
CLIENT SPOTLIGHT Here, Kunle catches up with three people who have all, in their own way, had a significant impact on his view of the world. They all work in very different fields, but what unites them is a strong focus on helping others realise their potential….
RICHARD THOMPSON What tips would you have for anyone starting a business? Default into doing the right thing – be honest and easy to do business with. When I started Merlin, I always made a point of looking after the runners in the production companies. These runners are now commissioning the shows with the channels we do business with. I have relationships of over 18 / 20 years with these people. Always treat people how you would like to be treated. I believe that you reap what you sow, and goodwill grows. Try to build relationships, build networks. Jeff Bezos describes a brand as how people talk about you when you are not in the room. Manage your personal brand carefully and always be authentic. “It is what we make out of what we have, not what we are given, that separates one person from another” (Nelson Mandela) In 2017 Richard Thompson (Chairman of M&C Saatchi Merlin, Chairman of Surrey County Cricket Club, Chairman of South Shore Productions) invited me to join the main board at Surrey County Cricket Club. Tell us more about what you do I try and lead by example. I work on the art of possible and I aim to bring out the best in people. You don't know what anyone is capable of until they are pushed; so, pressure and challenge is always important. I admire your time management skills with the many hats that you wear, how do you manage your time? I make lists with two headings, Important and Urgent. I focus on the Urgent items first. I am brutal with my diary. I surround myself with great people, I invest in great people, and I am them. I limit the blame game and create a culture where I would rather people asked for forgiveness than permission. When teams are empowered and have real responsibility and not just the task. it enables you to delegate with genuine confidence. You have a wide range of clients, is it hard to manage so many different personalities? I am no longer anyone’s agent; but I remain closely involved with most clients and focus on strategy and access to key contacts. My ultimate role is to help clients fulfil their potential and enable them to make the most of their talents. SKQ issue 4 | 6
My first emotional connect with you was when we chatted about social mobility. What key changes have you seen? I am great product of social mobility. Playing sport (cricket) helped. It levelled the playing field. So too did hard work. There is a wide gap between the haves and have-nots in Britain. It’s getting wider and that is a crying shame for people with talent and potential not getting the opportunity they should. The internet has created a great opportunity to start a business, research ideas and to market your company. Understand the importance of cognitive diversity. We all have something to offer, it’s a question of working out what that is. Work on your self-awareness. How would you like to be remembered? A great Dad. Successful. Loyal. I hate him for making me drink tequila. What puts a smile on your face? My family. Surrey winning. What's your favourite quote? “What would you do if you felt you couldn't fail?” More people in life haven't achieved due to a lack of confidence. How do you deal with disappointment? Get over it. Write a list of what's important. What would you now like to have known that you didn’t know before? The value of equity. Know your worth.
CLIENT SPOTLIGHT
JOANNA ABEYIE “The need to create environments where people feel like they can thrive, and that they've got equal opportunities. I think companies have woken up to the fact that this isn't a tick box exercise anymore.”
Joanna featured in our client story video at the end of 2019, you can watch this on Youtube. www.youtube.com/watch?v=unFos7q8ndc She has just been awarded an MBE. What was your aspiration when you decided to run your own business? Building a business that was all about purpose. To create an inclusive working environment for talent and to encourage diversity. I'm still learning about diversity in society. What positive changes are you seeing in the workplace? The business case for diversity and why it is not just morally the right thing to do, but also why commercially, it is a sensible thing to do. The need to create environments where people feel like they can thrive, and that they've got equal opportunities. I think companies have woken up to the fact that this isn't a tick box exercise anymore. When you treat it like a tick box exercise talent leaves you, they see through it and they no longer want to be a part of it. I think that's probably been the biggest wake up call for businesses over the last year to 18 months. They may talk a good tale about diversity inclusion and they'll say that they understand what needs to be done in order to create these environments, but the progress has been slow. I am more encouraged by more of the statements and action plans we're starting to see though. What tips would you suggest to a young professional starting in their career? Grow organically. Don't run before you walk.
How can the financial services profession improve the financial education that students receive? I think it's levelling the playing field in terms of knowledge. I think they need to teach basic things that kids don't know like taxes and legal structures of companies, what profit and loss actually means, what EBITDA is. When you do cash flow projections, are you being realistic? My accountant always says to me, “we're not putting in what we think we have, we're putting in what we actually have.” What do you most enjoy about your role? It doesn’t feel like a job. I love that I wake up every day and I try to make people's lives better by creating opportunities for them, building up their confidence and removing barriers that make their life more difficult. What's the best advice that you have benefited from? Try your best until you know better, then you should do better. Also, to listen more than you talk. How would you like to be remembered? I would like people to think that I make them feel like everything they want is possible. What puts a smile on your face? My nieces, nephews and godchildren. What's your favourite quote? It's a lyric from an Eva Cassidy song, songbird. I've got it engraved on my chain. And it says “for you the sun will be shining.” How do you deal with disappointment? I pray and read books on self-help. What would you now like to have known that you didn’t know before? That I was all I needed, that what I had inside was all I needed to begin with and everything else will come to me.
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CLIENT SPOTLIGHT
TESCA BENNETT “Learning is not a lesson, it's not a subject, learning is what we do every single day in our life” Doctor Tesca Bennett is the School Principal at Haberdashers’ Aske’s Knights Academy. I enjoyed working with Tesca when I was a Governor at Knights and wanted to learn more about her journey. Did you aspire to become a School Principal? I didn't always necessarily want to become a school principal. My passion has always been science. How did it happen? After finishing in research and development and my PhD (I used to work in an area of biological sciences and chemistry), I started my own business. One day a job came up that sort of ticked all the boxes of my skills from my PhD and my previous experiences, it really hit home. Actually, I'm not doing what I love. I'm doing something that I'm good at. I'm doing something that I'm successful at, but I'm not doing something that I love. That had always been my by-line. So I applied to become a teacher through the Fast Track teaching scheme. What tips would you suggest to a young professional starting in their career? This world is full of opportunities. Don't get me wrong, there are challenges but that is life, isn't it? Take every opportunity that is offered to you. Be open minded, be brave to open every door. Be prepared to learn. Learning is not a lesson, it's not a subject, learning is what we do every single day in our life.
How can the financial services profession improve the financial education that students receive? I think the finance profession is quite opaque. There is a lot of hidden language, too many acronyms to understand. For example, with investments, the saying “the value of the investments could go up as well as down”. Actually, what you're saying is that, be prepared that you can lose this money. Simple! It’s fine that experts can come into schools, but I’d like to see these experts be brave and say we’re not going to baffle people, we're going to make financial security more accessible by starting with financially educating children, so that they are learning good habits. What do you most enjoy about your role? Talent spotting and developing people. It's about making sure that we are creating the pipeline for people to come up and to rise to senior levels. It's about giving people opportunities. What's the best advice that you have benefited from? The courtesy to really listen. I think about when a member of staff wants to speak to me, I need to be aware that they are not just speaking to another colleague, they are speaking to their boss. Sometimes they may want something done or something is bothering them. So one of the things that I really try to do is listen. I'm not always successful at this, its something I strive to do better at every day. What puts a smile on your face? Arriving at an airport with my family waiting to experience a new country. What's your favourite quote? It's a Maya Angelou quote “when a person shows you who they are first time believe them”. So seeing somebody for who they are, their characteristics, their traits, their strengths, their weaknesses. An authentic quote from a very influential lady. How do you deal with disappointment? I'm a Christian, my faith helps me to deal with disappointment. The best learning comes from adversity really. Failing that, a large glass of red wine! What would you now like to have known that you didn’t know before? To have been brave and know that it's okay to fail. I spoke about adversity being where you do your best learning. I wish that I knew how brave and how strong I was. Perhaps I might have said yes to more opportunities, that’s why I encourage others to be brave.
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“Be Strong, Let’s look out for one another”
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Money 101 - getting on the property ladder By Neil Bower, Client Director Buying your first home can seem daunting, after all it may be the biggest purchase you ever make.
Start saving as soon as you can The bigger the deposit you can save, the easier it will be to get on the property ladder and by maximising your deposit you will have access to both a wider range of mortgage options and more competitive rates.
the whole of the mortgage market
Small things like taking your own packed lunch to work rather than buying it every day can generate big savings over the course of a year and is a great way of topping up that savings account.
so we can work with you to achieve
Check your credit
At SK Financial we have access to
the best solution for you. Here are a few tips and things to consider when you are looking to buy your first home.
You can check your credit score and obtain a full report free of charge. It is worth doing this to see what your credit report looks like and to ensure there are no factual errors. The report will show all credit agreements you have including credit cards, loans and mobile phone plans and looks at whether you make repayments on time and in full. Student Loans are not factored into your credit report but could have an impact on affordability if you’re still paying this off. Your credit score may be lower if you have never borrowed any money, as it marks an absence of proof that you are a reliable borrower. It is important to be registered to vote at your current residential address as it can be harder to obtain credit if you are not listed on the electoral roll. It is also an easy way to improve your score. There are multiple providers you can use to check your credit score, Experian (www.experian.co.uk) is one commonly used as well as Equifax (www.equifax.co.uk). Both of these providers are also used by most mortgage lenders so it is important that you see what they can see before an application is submitted.
Consider Government Schemes Help to Buy Equity Loan This is available to first time buyers and those moving up the property ladder, purchasing new-build properties costing up to £600,000. You need to put down a 5% deposit, but the government will lend you a further 20% of the property price interest-free, or 40% if you’re buying in London, for the first five years. After the five-year interest-free period finishes, you’ll be charged interest on your loan from the government at 1.75%. The interest rate will increase every year by the rate of inflation, as measured by the Retail Prices Index (RPI) plus another 1%.
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The current equity loan scheme is due to finish in March 2021. It will be replaced by a new equity loan scheme which will run until March 2023. The new scheme will only be available to first time buyers, who will be able to purchase properties up to the value of new regional price caps, using a 5% deposit.
Help to Buy ISA The Help to Buy Individual Savings Account (ISA) was designed to help first time buyers save up a deposit. Savers can initially pay in up to ÂŁ1,200, followed by up to ÂŁ200 a month, and the government will add another 25% to any contributions you make. The maximum bonus you can claim is ÂŁ3,000. Help to Buy ISA accounts closed to new savers on 30th November 2019. If you already have an account, you can keep saving into it until 30th November 2029, after which additional contributions will no longer be allowed. The government bonus must be claimed by 1st December 2030.
Know your Budget Find out how much you can borrow before you start house hunting. We can determine how much can be borrowed based on your current earnings and any outstanding financial commitments you still have to pay. As part of that process we would give you a sense of which lender/s were coming back as the most suitable and the monthly costs involved. We can then also run an agreement in principle (AIP) to check that one of the mortgage providers identified would consider lending you the required amount.
Any full application that follows will then still need to go through a full underwriting process, but it does show a provisional agreement is available and is what prospective sellers/estate agents will be looking for, when deciding whether or not to accept your offer. As well as the deposit and monthly mortgage payment, other costs to consider are mortgage arrangement fees, valuation fees, legal fees and stamp duty (if applicable), all of which we would discuss with you.
What happens when you find a property? Once you have found a property and have had an offered accepted we will then reconfirm the mortgage numbers and either proceed with the lender we have the agreement in principle with or progress with an alternative, if there is a more suitable option available. A full application is then submitted to be fully underwritten and a valuation of the property will be instructed. You will at this stage need to provide documents such as evidence of your income, bank statements and identification. Having all of these documents ready can ensure a smooth process from beginning to end. Once your mortgage offer has been issued, you will then work with your chosen solicitor to exchange contracts (this is when you pay the deposit) and to arrange a completion date.
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“Small acts,
when multiplied by millions of people can transform the world” HOWARD ZINN
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THE BIG EXCHANGE Square Mile are a mission aligned supporter of The Big Exchange, a new and exciting platform promoting an inclusive financial system in the UK and socially responsible investing. The Big Exchange seek to create a global movement to help promote and engender change, which we are delighted to support as the initiative seeks to widen the distribution of funds that have a positive impact on society and the environment. We think this is an exciting goal and one we are proud to be part of. We work with The Big Exchange in two ways. John Fleetwood, founder of 3D Investing and Director of Responsible and Sustainable Investing at Square Mile, helped to develop the impact methodology used by The Big Exchange and is a member of their impact committee. The team help The Big Exchange to analyse funds against the UN’s 17 Sustainable Development Goals which are designed to achieve a better, more sustainable future by 2030, as well as making recommendations for Gold, Silver and Bronze medal ratings, determined by the Big Exchange. Additionally, Square Mile are advisers to the Investment Committee at The Big Exchange. We contribute to the governance of the fund platform, including financial performance assessments of all of the funds on the platform. We also work with The Big Exchange’s Investment Committee on their fund “Bundles”, a group of funds from the wider range that might be appealing for investors looking to invest in a selection of funds at differing risk levels. While it is early days for The Big Exchange given it has only recently publicly launched, we are hugely optimistic for its future success. We know there is rapidly growing interest from investors to make their money matter, to influence change and to invest for a more positive future for society and the planet. Sophie Martin Business Development Consultant www.bigexchange.com
GET TO KNOW DAVID
I co-founded SK Financial (SKF) in 2004. What started out as a lifestyle choice from a small office in Crouch End has today evolved into a robust and successful business passing all my expectations. My personal life has been just as rewarding as my professional life. I’ve been with my partner, Annette since the age of 17 and we have two wonderful grown up girls, Yazmin and Jade. As a family, we love travelling and we have been fortunate enough to have visited and experienced some wonderful places and cultures together. On the weekend you will often find me in the “green gym”. Being a keen gardener, I find it a very relaxing place to be.
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I’m very much into health and fitness, whether that be down at the gym or riding my bike. I love all sports, in particular football and Spurs and I’m a passionate music lover. Ultimate dinner guest: Barack Obama Bucket List: I would love to visit the original seven wonders of the world. Success is: Leaving a positive legacy in this world. Favourite Series: Only Fools and Horses Hidden talent: DJ
CHRISTMAS WITH SK
Chloe: What is Christmas to you? Pavlova, barbeques and Christmas stockings ‘Outside the Box’ Gift recommendation: Handmade finds from etsy.com
Lesley: What is Christmas to you? Bacon sandwiches, all the family with me and opening presents in that order ‘Outside the Box’ Gift recommendation: Handmade or personalised items with photos
David: What is Christmas to you? Family coming together, opening Christmas stockings in the morning, Christmas songs, Only Fools and Horses Christmas specials re run ‘Outside the Box’ Gift recommendation: A truly snowy Christmas
Kunle: What is Christmas to you? Spending good times with loved ones. It has to start with a carol service, followed by being in the pub on Christmas Eve and then midnight mass. (Obviously not all on the same day…that would just be greedy) ‘Outside the Box’ Gift recommendation: A photo frame that can fit 12 pictures which the recipient can fill with their most memorable pictures of the year. Emma: What is Christmas to you? Excited children, school plays and concerts, traditional Christmas dinner ‘Outside the Box’ Gift recommendation: Animal adoption
and drinking with family and friends, watching the girls’ excitement on Christmas Eve as they wonder what presents they are getting ‘Outside the Box’ Gift recommendation: A magazine subscription so they get the present every month of the year
Tracey: What is Christmas to you? Christmas morning present opening, Christmas dinner and a flaming Christmas pudding with all my family, followed by Secret Santa, fun and games ‘Outside the Box’ Gift recommendation: Cookery school session or masterclass. Or in ‘Covid times’ a restaurant delivery, for example, from the Hawksmoor - although they would have to cook it themselves. If someone buys you the cookery session and you were feeling very generous, you could turn up to cook it for them. www.thehawksmoor.com/hawksmoor-at-home
Michael: What is Christmas to you? Mum’s (Italian) side of the
Richard: What is Christmas to you? Christmas lunch with family,
family on Christmas Day, Dad’s on Boxing Day, opening one present on Christmas Eve, Harry Potter marathon ‘Outside the Box’ Gift recommendation: Cooking Course
watching the children opening their presents, Greg Lake singing I Believe in Father Christmas ‘Outside the Box’ Gift Recommendation: Adopt an Animal though WWF. https://support.wwf.org.uk/adopt-an-animal
Neil: What is Christmas to you? enjoying nativity plays, eating
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Registered FCA Office Address: 6 Snow Hill, London EC1A 2AY Switchboard Number 0208 340 4644 SKF Trading Ltd trading as SK Financial. SK Financial is directly authorised and regulated by The Financial Conduct Authority. Registered FCA Number 572691 Designed by www.groveparkdesign.co.uk
SKQ issue 4