Abbey International has launched a new limited-offer 18-month fixed-rate deposit contract paying 3.60% gross/3.57% AER. The new sterling-only account complements Abbey's 12- and nine-month fixed-rate sterling contract options. As it is a limited offer, the 18-month fixed-rate contract can be withdrawn at any time, so Abbey is urging savers to act quickly if they wish to take advantage of this rate.

The minimum opening balance is £100,000, with the account designed exclusively for funds that are new to Abbey International. Interest is paid upon maturity, at the end of the 18-month term.

Jane Matthews, head of Client Experience at Abbey International, said, "We are sensing a gradual return of confidence to the markets and an appetite for slightly longer-term commitments. With an attractive rate of return, together with the backing that comes from being a part of the Santander Group, we believe the account will offer a popular combination."

For further information, go to www.abbeyinternational.com

Global information services company Experian has released its latest mergers and acquisitions (M&A) and equity capital market (ECM – flotation, rights issue and placement) data for the UK, covering Q4 and year-end 2009. According to Experian's Corpfin business, which specialises in the provision of corporate and financial information, the figures reflect the trend of a traditionally slow Q4 and show the following:

UK

• The UK saw a 24.5% decrease in UK M&A and ECM transactions announced during 2009. There were 4,269 deals announced, compared with 5,656 in 2008
• £272.6bn worth of transactions were announced in the UK in the year, up by 0.22% on 2008
• There were 8.4% fewer deals announced during Q4 2009 compared with Q3 2009. Deal volumes decreased from 1,098 transactions in Q3 to 1,006 in Q4
• JP Morgan Chase & Co announced the most UK deals in 2009, advising on 82 transactions
• Credit Suisse was the best-performing financial adviser by value of deals (£100.5bn)
• Eversheds was the leading legal adviser by volume of deals (90), with Linklaters the leading adviser by value (£111.8bn)

The European picture

• Europe saw a 23.5% decrease in UK M&A and ECM transactions announced during 2009. There were only 10,905 deals announced, compared with 14,250 in 2008
• €811.4bn worth of transactions were announced in Europe in 2009, down by 30% on the €1.159bn recorded in 2008

Brian Rarity, strategic consultant for Experian's Corpfin business, commented, "The UK, like the overall European picture, has seen deal volumes continue to decline. Deal values in the UK have remained largely constant year-on-year, with some encouraging signs in Q4. The UK large-cap scene is relatively buoyant, and there are good signs in the mid-cap market."

For more information, visit www.experianplc.com

The following employee tax issues from the Pre Budget report are highlighted by CMS Cameron McKenna, who were quick off the mark to share this information with Re:locate readers.

Bankers’ Bonuses The Government will impose a temporary levy of 50% on any discretionary bonus paid by a bank or building society (including branches of foreign banks) in excess of £25,000 between now and April 2010. The £25,000 cap would appear to include all loans and share awards, other than those made under an approved Share Incentive Plan or options granted under an approved SAYE scheme.
In addition, any affected bonus will not be corporation tax deductible and will be subject to income tax and NICs in the normal way – in effect creating treble taxation.
Although draft legislation has been published, this will inevitably be supplemented by further anti-avoidance legislation.

National Insurance Contributions (NICs) Rates
Having previously announced at PBR 2008 that the NICs rate for the tax year 2011/12 was due to rise by 0.5%, the Chancellor has now announced that there will be a further 0.5% increase to those rates, making a 1% increase in total from 6 April 2011. The new rates will therefore be:

• 12% for employees' NICs up to approximately £44,000 with the additional rate for earnings above that amount increasing from 1% to 2%
• 13.8% for employers' NICs

Tax Bands For the tax year 2010/11, all tax allowances and thresholds will be the same as for the current year.


Pensions Contributions
The special rules which were introduced in the 2009 Budget, preventing people from making large additional contributions to their pensions before 6 April 2011 (the date from which the Governement is planning to restrict higher rate relief for payments into pensions) have been extended to those with incomes of £130,000 or over.

Employee Share Plans Despite the recent increase in employee share plans designed to produce capital gains in order to benefit from the current capital gains tax rate of 18% rather than an income tax rate of potentially 50%, no measures have been introduced to clamp down on such plans. Nor have there been any announcements or indications that the Government is considering alig ning the capital gains tax rate with the income tax rate. So for the next few months at least, it would at least appear to be full steam ahead with capital gains schemes.

This first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information, go to www.law-now.com

Liam Bailey, head of residential research at Knight Frank, shares his insights into the Pre Budget report, and how it may affect the housing market, with Re:locate readers.

Stamp Duty

The ending of the Stamp Duty holiday from 31 December will weaken demand at the entry level of the market.

Knight Frank calculates that approximately 25,000 house purchases in 2010 will be delayed or postponed as a direct result of the ending of the Stamp Duty holiday.

Bonus Tax

The impact of the new one-off Bonus Tax will be negligible in terms of the wider housing market. Prices are unlikely to fall – even in London – as current price levels have not been bid higher in recent months in anticipation of bonus money which is now not going to be paid out.

There will be an impact on housing transactions, which are likely to drop slightly, as some purchases in 2010 would have followed the receipt of a hefty bonus.

The real impact will be felt in the longer term. There is a risk in terms of the impact on the economy and the housing market of another seemingly ad hoc, politically-driven tax change. We have seen several in the past few years, and cumulatively they risk weakening the attractiveness of the UK and London as places to do business.

House-building sector

There was some interesting recognition of the negative impact caused by the increasing range of development costs (which have resulted from legislation formulated during the boom) are having on the house-building sector, at a time when the market is struggling into recovery mode. The list includes the Zero Carbon Homes policy, Lifetime Homes Standards, a scaled-back Section 106 regime to be phased in after the introduction of the Community Infrastructure Levy. Nothing has been spelt out yet, but there appears to be a willingness to concede that not all of these costs are sustainable.

In the Winter issue of Re:locate, Susan Bevan analyses the current state of the property market and the effect mortgage availability is having on relocating families.

Lloyds TSB has revised its International Bonus Saver Account, which caters for the needs of international savers who want instant access to their money without sacrificing interest.

The new International Bonus Saver Account can be opened in sterling or euros with a £5,000/€5,000 minimum balance and is available to savers with up to £1 million/€1 million to invest. For sterling accounts, an introductory bonus of 0.5% is paid on balances of £5,000 plus and applies for the first 12 months. Savers with euro accounts will receive a 1% introductory bonus for the first 6 months on balances of €5,000 or above.

Mark Spagnoli, product manager, Lloyds TSB International, comments, "In today's challenging economic environment, when our personal circumstances can change unexpectedly, we all want the peace of mind offered by instant access to our savings, but we don't want to sacrifice interest on our hard-earned cash.

"The International Bonus Saver Account offers those looking to find a new home for their euro and sterling savings the best of both worlds – an attractive rate of interest, paid monthly so that they won't lose out if they need to dip into their account."        

Further information is available from www.lloydstsb-offshore.com/international/savings/bonus-saver/ 

The last year has seen what currency broker FC Exchange describes as 'an exodus of expats' leaving their Eurozone homes to return to the UK – but, since January 2009, the company has seen a 60% increase on the previous six months of clients repatriating their funds from selling their property abroad.

FC Exchange says that the well-documented rollercoaster ride sterling has taken over the last year has forced people to lose out on thousands of pounds through exchange rates, particularly with the euro. As the value of their pensions and savings dwindles, many Brits have put their properties on the market, as they are unable to afford to live abroad. However, it is only recently that people offloading their overseas properties have started to sell them, as global property markets have started to rise.

Daniel Wray, senior currency broker at FC Exchange, comments, "While the exchange rate remained at shocking levels and the recession bit deeply, no one was really able to sell their properties overseas, or if they did, they made significant losses. As the property markets start to pick up, more people are selling their overseas homes and moving back to the UK. However, with sterling making gains on the euro – albeit small ones – we're also finding that people in the UK are looking once again to buy property overseas.

"Now sterling is improving against a raft of currencies, I think we'll see a break from the Eurozone as the traditional expat zone, as it'll still be some time before it returns to what it once was. Other countries, such as Bulgaria, Croatia and Canada, are proving to offer far more against sterling, so we may well see some breakout countries becoming the new favourites."

New research by the Halifax shows that the cost of owning and running a home in the UK has fallen by nearly a fifth over the past year. Between April 2008 and April 2009, the average annual cost of housing fell from £8,766 to £7,298, a decline of 17% (£1,468). 

According to the Halifax, housing costs currently account for 23% of average UK full-time earnings, down from 28% in 2008, which means that the expense of owning and running a home is at its lowest since 2006. The significant fall in housing expenses over the past year, it says, was driven by a 47% decline in mortgage interest payments. The average mortgage rate fell to 3.62% in April 2009, from 5.8% a year earlier. 

The research finds that mortgage interest payments were the only housing expense category to experience a fall between April 2008 and April 2009. The largest upward pressure on housing costs came from electricity and gas charges, which have risen by 13% (£159) over the past year, from £1,249 in April 2008 to £1,409 in April 2009. Routine maintenance saw the next largest increase (7%). 

Suren Thiru, economist at the Halifax, commented, "Such a sizeable drop in the costs of running a home will help to ease the pressure on household disposable income, providing some welcome relief to homeowners. Those living in London saw the biggest fall in housing costs over the past year, although the average annual expense of owning and running a home in the capital remains somewhat higher than elsewhere in the UK." 

In an effort to cut costs, the British arm of the insurance broker Aon will cap the standard employer contribution it makes at 6% at all age levels. The standard employee contribution, currently 2%, will remain the same for the 5,000 staff the firm employs in the UK.

Last week's slight resurgence of sterling is likely to be short-lived, according to currency specialist FC Exchange, as more shock data can force currencies to turn the tables in an instant.

In a step similar to that of the UK, the US announced quantitative easing (QE) measures which have rocked the dollar, causing it to suffer its biggest one-day loss since 1995. The euro also fell off amid rumours that the European Central Bank may adopt similar QE measures.