Covid-19 – Where Are We Now And When Will Governments Start To Get Us Back To Work?
In just a few short weeks, our lives have all changed dramatically. Business owners, freelancers and the self-employed in the creative and media industries have been hit hard as the shutters come down on businesses, and our lives have come to a standstill, during government induced lockdown.
Though our ‘essential’ workers continue to risk their wellbeing every day to help us retain some sort of normality, many of us have been furloughed and others, unfortunately, have been left with no income at all.
Despite the Government’s announcement of extraordinary financial help for those affected by our current situation, this hasn’t gone far enough to help many of those freelancing, or are part of the ‘gig’ economy living on precarious employment contracts.
Whilst some of us will have to rely on universal credit and other state benefits, there are other ways to structure your finances to help you through this difficult time.
We hope to give you an overview of the current pandemic solutions, give you some food for thought where your finances are concerned, and let you know who you can contact to discuss things in more detail.
Section 1: What is the health care industry doing about COVID-19?
Having recently been updated on the industry’s effort to tackle COVID-19, we thought it would be helpful to share this, and provide some information on how long we may be in economic lockdown, the potential solutions and the key data coming out of the pharma-companies over the coming 18 months. This will help international governments make decisions on self-isolation and when to guide certain lower risk groups of the population to go back to work.
The World Health Organisation (WHO) has been very clear that countries need to test more. Dr Tedros Adhanom Ghebreyesus, the Director General, has said he is keen to increase diagnostic testing on as many people as possible to collect more data about the virus to help provide solutions.
There are two types of tests:
Viral test: to determine whether there is an active on-going viral infection. A throat swab.
Antibody test: to establish whether a person has been previously infected or has an on-going infection and has antibodies against the virus. A blood test.
The technology to test this has been around for years, but now the problem is about scaling up and getting the test kits manufactured and distributed to as many people as possible.
Certainly, the antibody test is critical to establish the scale of the disease as many people may have been infected but only have had mild symptoms and have subsequently recovered. Currently, there is no way of knowing how many of the population are in this category. Again, it is the quantity of test kits required and labs available to provide the subsequent results that creates the near-term problems.
Pharmaceutical, biotech companies and academic groups are working 24/7 to find a vaccine for COVID-19. For example, there are currently 202 clinical trial listings, 88 studies actively recruiting people to test of which 44 are focused on vaccines and therapeutic treatments and 22 trials are completing over the next twelve months.
There are three categories of therapeutics for COVID-19 currently being worked on which provide treatment:
Antivirals
These are drugs which will help an individual once they have been diagnosed to reduce the symptoms and stop the replication of the virus. The objective of this treatment is to slow down the impact of symptoms, keeping people out
of hospitals and helping them leave earlier. Many ongoing clinical trials are focused on using existing treatments for Ebola and Malaria towards helping with Coronavirus.
Anti-inflammatory
These drugs are taken by patients who have a serious infection triggering their immune system to attack, which can cause serious lung damage. There are two drugs that are already being used for rheumatoid arthritis and they are currently in trial to see how effective they are against coronavirus. Initial data should be available in the next three months.
Antibody Drugs
They are designed to block the virus and fight off COVID-19 virus but will take time to develop. Some of these drugs have already been used to fight off the Ebola virus. The initial data should be available in respect of these antibody treatments in the next 6-12 months.
Vaccines are the long-term ultimate goal for prevention, but these appear to be at least 12-18 months away. The real problem with vaccines is that pharmaceutical companies are going to have to make hundreds of millions of doses once they have been through clinical trials to prove they are safe, bearing in mind how many people will require them.
Conclusion
The speed at which the pharmaceutical industry develops a vaccine will impact how quickly the worldwide economy recovers. The viral and anti-body test results will start to illustrate trends and data. This, together with the fatality trends will help governments determine when we can return to work over the course of the next 6 months.
Section 2: What effect has coronavirus had on your savings, investments and pensions?
The last six weeks have seen sharp market falls of up to 35% in the value of investments across the world. We expect daily news flow in the short term to continue to create negative sentiment.
Behaviour of the world markets in the short and long term.
Market | Index | Previous Day | 2020 YTD | Since Market High | 5 year cumulative performance (in GBP) |
US stock market | S&P 500 | -1.79% | -12.62% | -16.63% | 72.70% |
UK market | FTSE All Share | +0.31% | -25.16% | -26.15% | 1.67% |
Euro market | EuroStoxx 50 | +0.72% | -26.47% | -23.46% | 17.34% |
Hong Kong market | Hang Seng | -2.20% | -15.52% | -18.11% | 27.27% |
This table represents the percentage change on the main stockmarkets across the globe, ie US, UK, Europe and Hong Kong. They show the previous day’s performance, the change so far this year (from 1st January 2020), and the total movement since the highest point of each index in 2020. These numbers show the return you would have received had you invested into those specific indexes either on 1st January 2020, or the peak of the market.
The 5 year cumulative performance shows the return on investment with dividends re-invested, not just the index. This return is in GBP, so also takes into account currency movements. The value of your investment may go down due to negative investment performance, charges, withdrawals or currency fluctuation.
5 year Stock Market Behaviour to 20th April 2020.
5 Year Stock Market Behaviour to 20th February 2020.
When viewing past performance data, please remember that this is not an indication of future performance. Together the Coronavirus and OPEC oil production negotiations have caused stock markets to tumble. However, positive news from the pharmaceutical industry, as to how they are progressing toward a medical solution, could result in a stock market recovery. The worldwide stock market tends to price in today, the potential value of a company in twelve months time. For those who have have stockmarket invested savings, now may not be the best time to draw on those investments if at all possible. Should this be something that you are considering then we would urge you to seek professional advice – there may be ways to restructure these savings to leave the money invested. Furthermore, if you have National Savings, Premium Bonds, or Savings Plans or cash set aside and can afford to do so, now could be the time to seriously consider investing – this is, as they say, a buyer’s market. Though we are in ‘bear market’ territory and the world economy is heading for a recession, we expect stock market based investments to recover in time and the long term investor can use this to their advantage.
Now is an important time to consider your finances, to review your position and to take stock. Independent financial advice is paramount to ensuring your finances are well thought out and arranged to provide the best possible outcome. Timothy James & Partners are directly authorised by the Financial Conduct Authority (FCA) and qualified to provide independent financial Planning and investment advice. Please give us a call if you have any questions.
We specialise in helping self-employed T.V, Film, Music and related individuals with advice. Here are some coronavirus ‘lockdown’ tips:
Section 3: Financial Planning Areas To Consider:
Perhaps now is a good time to review your pensions, mortgages, savings and family protection to make sure they are as cost efficient as possible, and suitable for Lockdown and tomorrow’s goals.
Review your current pension plan arrangements
Lots of freelancers and contractors have a number of small pension pots from contracts and previous employers. We can help to consolidate these and bring them up to date if necessary.
For limited company directors, there are Pension arrangements, if you have sufficient funds, where your limited company can borrow up to 50% of your pension fund value, on commercial terms, that can be invested back into the business.
This is a tax efficient way of using the pension to provide short- or long-term much needed cashflow today.
It is also about ensuring your monies are invested in the right place, to take advantage of stock markets when we do start to see a recovery. Actively reviewing and managing your pension pot is essential in choppy waters.
- Are you aware that if you currently make regular pension contributions, these can be suspended, typically with no charge? Take a premium holiday until your incomepicks up.
- This will help with cash flow and help your short term monthly spending requirements but can reduce the overall pension benefits in future.
- If you are over the age of 55, are you aware that you can draw on your pension, taking some or all of the tax-free cash entitlement?
- This will provide immediate cash and help with short term cash flow but will reduce the amount available for retirement.
ISA’s and other investments:
- Stop investing in the short term to help cashflow.
- Take a tax-free income or capital payment if you need some money. There is generally no penalty on encashment. Advice should be taken before you do this.
Insurances - Family and Business Protection
- Review your personal and family protection, and your business keyman insurance – do you know what you are insured for?
- Is your current cover providing what is required at this time? Does it cover your mortgage liability and does the lump sum payable adequately cover your family’s financial needs? Is it too much? Is it too little?
- Are you paying the lowest possible premium for the cover you require?
- A new protection contract for directors of Limited Companies called a Relevant Life Plan means companies can pay the premium, qualify for tax relief and the benefit on death is tax free. You don’t have to pay tax on the money you take out of the company to pay the premium.
- We are working with some life policy providers on a scheme which will enable you to maintain your cover but have a premium ‘holiday’ for 6 months.
Mortgages
- This is a changing market at the moment, and one that Timothy James & Partners are keeping on top of every day.
- We are helping clients with the following immediate actions:
- All lenders are offering a 3-month payment holiday. This is only temporary at present. Please remember this is a payment holiday, so the payments will have to be made in the future. They are not ‘written off’.
- Another option some lenders are offering clients who are currently on Repayment (Capital & Interest) mortgages is to switch to Interest Only for a period of time (typically 12 months) to bring their monthly payments down. This might be a better option for some.
- Term extensions can also be considered. This will bring the monthly repayments lower as you extend the length of the time to repay the capital.
- You may not have reviewed your mortgage product for a while. Give us a call and we will let you know if you qualify for a new, lower interest rate, currently at around 1.5% - 2.25% per annum. The aim is to reduce your monthly mortgage payments.
Timothy James & Partners, an Independent Financial Adviser, regulated in the UK, would be delighted to help and assist with any of these areas if required. Specialising in dealing with clients who are in the media industry, business owners and the self-employed, we are very well placed to advise on your business and personal financial planning needs. Please give us a call if you have any questions.
Section 4: Government measures designed to help small business and the self employed:
Self Employed – Self Employment Income Support Scheme
- The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).
- This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.
Your self-employed trading profits must be less than £50,000 and more than half of your income come from self-employment.
Income tax
- Self-employed individuals - Income Tax payments due in July 2020 under the Self-Assessment system deferred to January 2021. No penalties or late payment interest will be charged in the period.
A small business grant of £10,000 for all business in receipt of small business rate relief or rural rate relief
If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority – you do not need to apply.
The Coronavirus Business Interruption Loan Scheme
- The Scheme will support loans of up to £5 million. The loan will be interest free for the first 12 months, as the government will cover the first 12 months of interest payments.
- Finance terms are from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.
- The borrower always remains 100% liable for the debt.
Link to the BBB website:
Accredited lenders (updated regularly):
Remember: Investing with a long-term outlook and with long-term goals is the best way to reduce the impact of stock market fluctuations and to see out periods of volatility.
The value of your investment may go down due to negative investment performance, charges, withdrawals or currency fluctuation.
This document serves to give you information on; investment markets, going back to work, and what the pharmaceutical industry is doing to find a remedy to COVID-19. It is the opinion of Timothy James and Partners that has been compiled from multiple sources and it shouldn’t be considered factual.
If you have any questions, or would like to discuss this document. Please give us a call to discuss.
Talk to us
Tim Whiting TimW@tjpltd.co.uk 020 7436 6446 |  |
Caroline Boyd caroline@tjpltd.co.uk 020 7436 6446 |  |
Roger Roberts roger@tjpltd.co.uk 020 7436 6446 |  |
INDEPENDENT FINANCIAL ADVISERS
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Email: info@tjpltd.co.uk • Website: tjpltd.co.uk • Founding Director: T.J. Whiting •
Directors: C.R. Bryans, D.L. Buckland, I.G. Gibson, C.D.O. Jillings, N.G. Tucker, D.G.Welch • Company Secretary: S.L. Christopher
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