Start of the tax year checklist

The new tax year on 6 April 2022 is a great time to review your finances.

The new tax year means annual allowances are reset and ready to be reused – to help you make the most of your money. This year more than ever, with interest rates and inflation on the rise, it’s a great time to review your pensions and investments with your adviser.

Note: The following figures apply to the 2022/2023 tax year, which starts on 6 April 2022 and ends on 5 April 2023.

ISAs
The maximum you can invest across your ISAs is £20,000 (if it’s a cash ISA, stocks and shares ISA or innovative finance ISA). For a lifetime ISA, the annual allowance is £4,000.

Junior ISAs
If you’re looking to put some cash aside for your children, Junior ISAs (JISAs) are a great option and often come with higher interest rates. In the new tax year, you can save or invest up to £9,000 in a cash JISA, a stocks and shares JISA, or a combination of the two.

Pension allowance
Your personal pension contribution allowance is £40,000, although it can be lower for higher earners and where pension savings have been flexibly accessed already. Any contributions you (or your employer) make receive tax relief from the government (based on your income tax band) of 20% or more – and the money in your pension pot will grow tax free.

Child’s pension
A child’s pension can be set up by a parent or guardian, but anyone can contribute. You can pay up to £2,880 in the new tax year into a pension on behalf of a child and the government automatically tops this up with 20% tax relief on the total amount contributed, taking the figure up to £3,600.

Gift allowances
A financial gift is a great way of using tax-free allowances, and your adviser can help explain the options available.

Making a cash gift can help a loved one (and help with your estate planning). Everyone has an annual gifting limit of £3,000 that is exempt from inheritance tax (IHT). This is known as your annual exemption. If you fail to use it one year, you can carry it over to the next tax year.

It’s worth remembering that any gift you give, even to family members, could be subject to capital gains tax (CGT). CGT is the tax you pay on any profit or gain you make when you dispose of an asset, such as a second home or shares. If you gift an asset and it has risen in value compared to what you have paid for it, you could be liable to CGT. The CGT allowance for the new tax year is £12,300. This is the amount of profit you can make before CGT is applied.

Marriage allowance
Married couples or those in civil partnerships may be able to share their personal tax allowances. To be eligible, one partner must earn less than the Personal Allowance threshold of £12,570, and the other must be a basic rate taxpayer. The lower earner can transfer £1,260 of their tax-free allowance to their partner, reducing the tax paid by up to £252 a year. Our financial advisers can help you make the most of your annual allowances now that we are into a new tax year.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

Key Takeaways:

  • A new tax year means annual allowances are back to zero and ready to be filled or topped up, to make the most of your money.
  • The maximum you can invest across your ISAs is £20,000.
  • Your pension contribution allowance for the new tax year is £40,000.
  • The Capital Gains Tax allowance is £12,300 for the 2022/2023 tax year.
  • A financial gift is a great way of using tax-free allowances, and your adviser will be able to help talk you through the options available.
  • Married couples or those in civil partnerships may be able to share their personal tax allowances.

 


 

What does a financial adviser do?

A financial adviser can help with your investment goals, but they can also offer many more ways to understand and make the most of your money.

You might think that people who use financial advisers are just investing in the stock market or need someone to manage their portfolios. But a financial adviser can do a whole lot more.

Different types of financial advice
For an adviser, it’s their aim to help you achieve your financial goals, but that doesn’t just cover building wealth through investment – their expertise can apply to everything from mortgages to life insurance, pensions, saving for retirement or handling an inheritance. Advisers can vary in what they specialise in, and fall under a large umbrella of services including:

Pensions
You may have several workplace pensions that you’d like to consolidate, or you could have questions about drawing an income from your pension. Whatever your circumstances, a financial adviser can examine the details within your pensions to guide you on how to approach them, considering how much you will need to live comfortably when you retire.

Tax
Another area where expert help is needed is tax. From inheritance tax to capital gains tax or working out how much you should be paying (and if there are ways to minimise your tax bill) – is tricky. With the help from an adviser, you can become more tax-efficient and make the most of any tax breaks available to you. An adviser is best placed to help minimise your tax bills and get you the best returns.

Inheritance
An adviser can help you with leaving a legacy – an important part of planning the future of your estate and making sure your wishes are carried out when the time comes, and your wealth is passed tax efficiently. This advice could range from inheritance tax mitigation to making or updating your will.

Mortgages
Mortgages can be a tricky area, whether you’re a first-time buyer, searching for the best remortgage deal or looking for an investment property. A financial adviser can help you navigate the process, find the right type of mortgage and map out how your mortgage will work over the years (and when it could be a good time to review your mortgage). They’ll also be able to let you know your tax obligations if your property is an investment.

Investment
A financial adviser can help you navigate the world of investing safely, helping you take your first steps in investing or reviewing and managing your existing investments, as well as making you aware of any risks along the way and making sure you keep focused on the long-term goals through any market highs and lows. Our advisers have a broad breadth of experience and take an objective approach – offering ongoing advice and expertise – both of which are crucial to seeing your investment and retirement objectives come to fruit.

Our financial advisers are here to help you make sense of your finances, build, and manage your wealth and protect what you have going forward – to the benefit of you and your family.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE

Key takeaways

  • Financial advisers have expertise in areas from mortgages to pensions to saving for retirement or handling an inheritance.
  • With the help from an adviser, you can become more tax-efficient and make the most of any tax breaks available to you.
  • A financial adviser can help you manage your investments and stay focused on your long-term objectives.

 

 

National Insurance Set to Rise in April 2022

National Insurance contributions are set to increase by 1.25% in April this year, as part of the government’s plans to fund the health and social care sector in the UK.

The rise comes after the impact of the Covid-19 pandemic on the health and social care sector which has resulted in a substantial backlog. Therefore, to tackle this, the government has introduced the increase to be able to fund a catch-up programme to get the NHS back on track.

When will the increase in contributions occur?
From 6th April 2022 to 6th April 2023, national insurance will rise by 1.25%. However, from April 2023, the national insurance rate is due to drop back to its current rate with a 1.25% health and social care levy then applied to raise funds for improvements to care services.

Who will this affect and how?

  • Employees
  • Self-employed
  • Employers
  • The increase will apply to individuals who are over the state pension age with employment income or profits from self-employment above £9,568.

National insurance contributions will rise by 1.25% and depending on your current employment status and how much you earn:

Employed
If you are employed, you will pay the Class 1 National Insurance contribution of 12%, which is if you earn more than £184 to £967 a week (£797 to £4,189 a month). This is automatically deducted by your employer.

Self Employed
If you are self-employed earning profits of £6,515 or more a year, you will pay the Class 2 or Class 4 National Insurance contribution. If you’re earning less than this, you can choose to pay voluntary contributions to fill or avoid gaps in your National Insurance record.

Employers
If you are an employer, you will pay the Class 1, 1A and 1B National Insurance contribution of 13.8%.

You can apply to HMRC to check your national insurance record and claim a refund if you think you have been overpaid.

 


 

How to make ISAs work for you

Make the most of your tax allowances by using the different types of ISAs that are available.

Individual Savings Accounts (ISAs) were first introduced in 1999 and are a tax-free way to save into a cash savings or investment account. There lots of different types of ISA available, but the right one for you will depend on your financial goals. We explain how they work so you can choose the one that is best for you.

Cash ISA
A cash ISA works in the same way as traditional savings account but you won’t have to pay tax on any of the interest you earn.

For the 2021-22 tax year each person has an ISA allowance of £20,000. To take out a cash ISA you have to be a UK resident and over the age of 16. If you don’t use the allowance before the end of the tax year you will lose it and you’ll have to start anew on 6 April.

Some cash ISAs are instant access while others have a fixed rate. You can only open one cash ISA per year but you are allowed to transfer to another cash ISA or a stocks and shares ISA with another provider if you want to.

Stocks and shares ISAs

With a stocks and shares ISA you can hold a variety of investments such as shares, bonds and funds. Just like the cash ISA you can save up to £20,000 a year tax free, but you get to choose what investments you put inside it, so it’s worth getting financial advice. You also have to be 18 or over to be eligible.

Stocks and shares ISAs provide an option for people looking to avoid the erosive impact of inflation on returns. Over time there is the potential for better returns with an investment ISA over cash, although the risks are also greater.

If you want to invest in a stocks and shares ISA you need to be comfortable with the possibility of making losses and prepared to invest for the longer term.

Lifetime ISA
The lifetime ISA (LISA) can be used by first-time buyers to fund a deposit for a property or taken tax-free at the age of 60. As well as paying interest, LISAs benefit from a 25% bonus from the government to encourage saving towards a home or retirement.

The maximum you can put in each year is £4,000, which comes out of your £20,000 ISA allowance. The LISA can only be opened by anyone aged 18–39, but you can keep saving in one until you are 50.

With the LISA, you can get a bonus of up to £1,000 a year up until you are 50. If you open one at the age of 18, this means you could end up with a maximum bonus of £32,000.

However, there are some restrictions with a LISA. You have to keep your money in a LISA for a minimum of one year before you can withdraw it and if you take your money out before you are 60 and you don’t use it to buy a home, you will have to pay a 25% penalty.

Junior ISAs
If you're looking to put some cash aside for your kids, Junior ISAs (JISAs) are a great way of doing so. These accounts are available to anyone under 18 and tend to offer much higher rates than adult accounts, but there are some restrictions.

Like the adult accounts, you won’t pay any tax on your interest. In the 2019–20 tax year you can save or invest up to £9,000 in a JISA. You can save for your child either in a cash JISA, a stocks and shares JISA, or a combination of the two. JISAs can be opened by parents with children aged under 16 and then by children themselves when they are aged 16 and 17.

Innovative Finance ISA
If you invest with an innovative finance ISA (IFISA) the company offering the ISA will use the money to lend to borrowers or businesses – known as peer-to-peer lending. You’ll be offered a rate of interest from the borrower when paying back the money you’ve invested.

You can invest up to £20,000 a year in an IFISA and any interest earned will not be taxed. While you can earn higher rates of interests than with a traditional savings account, they are a much riskier option than a cash ISA as the borrower could potentially default on their loan.

Our financial advisers can help you and your family find the right product to suit your needs and financial situation.

An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.

Key takeaways

  • Stocks and shares ISAs and innovative finance ISAs are riskier than cash ISAs and you could lose money, so make sure you get financial advice if you are considering either of these options.
  • You can save up to £20,000 a year tax-free in an ISA, but if you don’t use your full allowance you’ll lose it when the new tax year starts.
  • If you’re a first-time buyer saving for a house you could get a government bonus of up to £1,000 a year to put towards a deposit if you pay in the annual maximum of £4,000.

 


 

Turning ‘generation rent’ into ‘generation buy’ - New 95% mortgage scheme to help first-time buyers

Lenders are now offering a government-backed 95% mortgage scheme to help more first-time buyers onto the property ladder.

The government is hoping to turn ‘generation rent’ into ‘generation buy’ with the help of a 5% mortgage deposit scheme launched on 19 April.

Following the outbreak of the coronavirus pandemic, many lenders withdrew low-deposit mortgages. In just under a year, the number of 95% mortgages available to first-time buyers fell from 391 to just three. It’s hoped the scheme will give lenders the confidence to offer low-deposit mortgages again by taking on some of the risks involved.

What is the 5% deposit scheme?
First announced in this year’s Budget, the programme offers first-time buyers or current homeowners the chance to secure a 95% loan-to-value mortgage on homes worth up to £600,000. It’s available on both new-build and existing properties.

The government hopes the scheme will provide an affordable route to home ownership by helping people who may be renting but are unable to save for a deposit.

Buyers will still only be able to borrow in proportion to their income, typically a multiple of 4.5. As a result, the scheme will particularly benefit buyers in lower-value housing markets such as northern England and Scotland.

There are also a number of lenders offering 95% loan to value mortgages without using the government guarantee. With an ever increasing range of options to consider, speak to your financial adviser about the current range of 95% loan to value mortgages.

What’s the catch?
There are a few conditions that you’ll have to meet under the scheme. You’ll need to:

  • Buy a property to live in – second homes and buy-to-let properties aren’t eligible.
  • Apply for a repayment (not interest-only) mortgage
  • Pass standard affordability checks, including a loan-to-income test and credit score assessment.

It’s worth considering the fact that the higher proportion of the property price you borrow, the higher the amount of interest you’ll repay on your mortgage. So it might be good to take a step back and figure out if you can save for a little longer and borrow less.

Speak to your financial adviser about how the 5% mortgage deposit scheme could help you get on the property ladder.

What does loan to value mean?
Loan to value is the percentage of the property value you’re loaned as a mortgage – in other words, the proportion you're borrowing. For example, if you have a 95% mortgage on a house worth £200,000, you would put down £10,000 (5%) of your own money as a deposit and borrow the rest (£190,000).

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

 


 

The perks of protection

As well as peace of mind, many insurance providers offer additional benefits that you may not know about.

Whether we’re crossing the road or getting on a plane, we encounter risks every day. For many of us, life has felt more uncertain than ever over the past year as we continue to deal with the coronavirus pandemic. Although we can’t always control what’s happening in our lives, we can plan for the unexpected.

By taking out a protection policy, you can safeguard your family’s finances if your situation changes. The main types of protection include:

  • Life cover – pays out a lump sum if you die
  • Health insurance – pays medical costs at a private hospital or private ward
  • Critical illness – pays a tax-free lump sum if you’re diagnosed with a major illness
  • Home contents and buildings – covers your home’s structure (including fixtures and fittings) and contents (furniture)
  • Income – pays out if you can’t work due to illness or injury

As well as peace of mind, protection policies often come with added extras. We’ve highlighted examples of some of the perks you could receive when you take out a policy, even if you don’t make a claim.

Welcome gifts
When you sign up for a protection policy, some providers offer a welcome gift. For example, health insurers sometimes offer gadgets like an Apple Watch to help you track your activity – with some even offering a discount based on the amount of exercise you do each month.

Discounts
Many health insurers offer discounts on gym memberships and weight-loss programmes to help you embrace a healthier lifestyle. Some also offer you the option of taking a health check to reduce the amount you pay each month.

It’s worth noting that when you take out a protection policy, your provider is likely to offer you discounts on other products such as pet or travel insurance.

Additional healthcare options
Some health insurers now cover complementary therapies such as osteopathy and acupuncture, giving you more treatment choices. In addition, counselling services are now included in most health insurance policies and many also give you the option to upgrade your hospital room if you need treatment.

Will writing
Some providers of life insurance give new policyholders the opportunity to draw up a will free of charge.

Cover for children
Many critical illness plans include free cover for dependent children.

What support do insurers offer after the event?
Illness and bereavement help. Many providers give free access to services offering practical and emotional support for those left behind after the death of the policyholder.

Rehabilitation
Insurers usually offer back-to-work support services, including physiotherapy, careers guidance or advice if you choose to go self- employed. If you’re returning to work following a mental health issue, providers will continue to cover counselling sessions for a set period of time.

Whatever type of protection you’re looking for, get in touch and we can help!

Key takeaways

  • Insurance can give you peace of mind that you and your family will be financially secure if the unexpected happens, such as falling ill or being involved in an accident.
  • Many protection policies offer added extras, from smart watches and discounts on gym memberships and weight-loss programmes to access to complementary therapies like acupuncture.
  • After you’ve made a claim, providers usually offer services to help you or your family get back on track, including illness and bereavement help and rehabilitation services, such as physiotherapy.

 


 

Use it or lose it

The current tax year ends on 5 April 2021, so now’s a good time to make sure your finances are in order and book an annual review with your financial adviser. We’ve taken a look at some of the main allowances you’ll need to bear in mind as you prepare for the end of the tax year.

ISAs
An ISA is a tax-free wrapper in which you can hold various types of savings and investments. There are different types and the amount you can place in them without being charged tax (the tax-free allowance) varies. You can spread your money across different types of ISAs, but you can’t exceed the maximum annual allowance of £20,000. It can’t be rolled over to next year, so if you don’t use it, you’ll lose it.

Which ISA is right for you?

Type of ISA

Annual tax-free allowance

Cash – similar to an ordinary savings account but you don’t pay tax on interest you earn.

£20,000

Stocks and shares – offers the possibility of higher returns over the long term if you’re able to take some risks. You can invest in a wide range of securities and funds.

£20,000

Innovative finance ISA – for investing in peer-to-peer loans. The risks can be high and there’s no protection from the Financial Services Compensation Scheme (FSCS).

£20,000

Junior – a way to save or invest for the future of a child under the age of 18. When they turn 18, the account can be converted to an adult ISA.

£9,000

Lifetime – you must be aged between 18 and 40 to open one and the government will pay a 25% bonus if you’re saving for your first property or until you reach the age of 60.

£4,000

Pensions
There’s a maximum amount you can put in your pension tax-free each year. The annual allowance for 2020/21 is £40,000 and includes:

  • the total amount paid in to a defined contribution scheme in a tax year by you or anyone else (such as your employer); and
  • any increase in a defined benefit scheme in a tax year.

You might be able to carry over your annual allowance from the last three years if you’ve not used all of it. Bear in mind that it may be lower than £40,000 if you have flexible access to your pension pot. You’ll also have a reduced (‘tapered’) annual allowance if:

  • your ‘threshold income’ (your net income for the year) is more than £200,000; or
  • your ‘adjusted income’ (which includes the value of all your employer’s pension contributions) is more than £240,000.

Capital gains tax
You’ll have to pay capital gains tax (CGT) on your overall gains if they go above your tax-free allowance – otherwise known as the annual exempt amount. The CGT annual exempt amount is £12,300, or £6,150 for trusts.

You may also be able to reduce your tax bill by deducting losses or claiming reliefs, but this depends on the asset, so make sure you ask your financial adviser for more information.

Inheritance tax
The rules surrounding inheritance tax (IHT) are really complicated and it’s important to seek financial advice before making any decisions. For example, you can give away assets or cash worth up to £3,000 a year and there will be no IHT to pay regardless of the total value of your estate when you die.

You can also give as many gifts of up to £250 to as many people as you want each year – although not to anyone who has already received a gift of your whole £3,000 annual exemption. To make use of this exemption, it’s important to keep accurate records.

To learn more about how to make the most of your money this tax year and for more information about your tax-free allowances, speak to your financial adviser.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

 

 


 

Investment Update March 2021: Great expectations

With hopes rising about the end of lockdowns, could we see a rise in inflation when the economy reopens?

Many people expect there to be a strong rebound once coronavirus restrictions are lifted, but there are fears that the rebound could increase inflationary pressures.

As well as increasing demand, there are concerns that central bank quantitative easing (QE) programmes and increased government spending could combine to push up the rate of inflation. Notably, US President Biden’s $1.9 trillion stimulus package is likely to be introduced in March.

What would higher inflation mean for investors?
Government bond yields have been rising substantially (which means prices have fallen) as investors price in the impact of higher inflation on returns. Inflation is bad news for government bonds because it erodes the real value of the fixed interest rates that they pay.

The concerns have also affected the stock market. Investors are worried that if inflation spirals out of control then banks will have to stop QE and perhaps increase interest rates. That would be bad news for big tech companies in particular, where today’s share prices depend on rates remaining low. While low rates increase the current value of their future cash flows, the present value of future earnings falls if rates rise.

As a result, cyclical stocks that are more sensitive to the economy, such as industrials, are looking more attractive, while growth stocks like tech are becoming less popular.

Could inflation spiral out of control?
While inflation is likely to increase in certain areas of the economy after lockdowns ease, we believe it would just be a short-lived rise. Longer-term deflationary forces including ageing demographics, low productivity growth and efficient global supply chains cast doubt over predications of a new age of higher inflation.

We’re also confident that if inflation does increase slightly then it’s likely to be because economic growth is strong, which is in turn good for company profits and investment returns. With interest rates at record low levels, central banks have plenty of room to increase them to levels that would still be below the long-term average. Conditions in stock markets appear to have steadied already after the recent bond market tantrum.

Earnings season better than expected
Many companies performed better than expected in the fourth quarter of 2020. Tech giants reported strong earnings, with Apple’s revenue reaching $111.4 billion in its best quarter ever. Resilience from companies in more cyclical sectors reinforced shifting sentiment about the economy. For example, Caterpillar, which makes mining and construction equipment, beat expectations for the final three months of 2020 – earnings per share fell 22%, as opposed to the 30% estimated by analysts.

The recovery should benefit UK equities

The economic recovery should favour the more cyclical nature of the UK stock market, which is weighted towards sectors that are more sensitive to the economy, such as energy and financials.

Sterling also strengthened against the US dollar and euro as investors grew more confident about the UK’s prospects for reopening the economy. In February, sterling rose to $1.40 against the dollar for the first time since 2018.

 


 

Get mortgage fit for 2021

Estimates suggest that well over one million borrowers have lapsed onto their lender’s default standard variable rate (SVR). Has this happened to you? If so, now could be the perfect time to consider a remortgage, to get your finances in good shape for the year ahead.

Do you know your mortgage rate?
If your current tracker, fixed rate, or discount mortgage deal has ended, you are likely to be switched onto your lender’s SVR and could be paying way over the odds, perhaps without even realising. It has been found that borrowers on an SVR could save an average of £1,602 a year, that’s over £133 every month!

Sound familiar?
Even with a potentially sizeable saving to be made by remortgaging, it’s surprising how many people just stick with their SVR. Why is that?

“I didn’t realise my mortgage deal had ended” - your lender should have let you know, but always remember to make a note of the end date of a new mortgage deal so you don’t forget.

My lender contacted me, but I didn’t understand”- mortgage jargon can be confusing, but it pays to check out important mortgage correspondence.

“It’s too much hard work to find a new deal”- it’s true that the mortgage market can be bewildering as there are so many deals to choose from. That’s where we can get involved – to help find you a suitable deal. You can then choose what to do with any savings made!

Time to remortgage?
It’s important to regularly review your mortgage. Particularly now, when mortgage rates are at record low levels, it makes sense to consider your options to see if you can get a more cost-effective mortgage deal.

Are you still covered?
If you’re thinking of changing your mortgage, remember to review your protection policies at the same time - especially if you don’t already have cover in place, or your circumstances have changed since you last reviewed your cover.

To discuss your remortgaging options and to see if you could save money, please get in touch. Rest assured we are here to help if you have any questions about your mortgage or your protection requirements.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE


 

How do I prove my income for a mortgage?

With Covid-19 rules changing almost daily, extensions to furloughs and local and national lockdowns many are facing money worries this winter. If you’re trying to get a mortgage and want to push your property transaction through before the Stamp Duty holiday ends, how do you prove your income – especially if it has temporarily been reduced due to furlough or short-time work?

For those who remain on furlough or have otherwise seen their income temporarily reduce, providing proof of income to mortgage lenders now presents a serious challenge. Many mortgage providers have tightened their lending criteria, especially for furloughed workers, amid concerns of future job losses.

CASE STUDIES

An employed restaurant manager
Sally works as a restaurant manager and is looking to buy a house with her partner, Nathan. Since July, Sally’s employer has brought her back to work on part-time hours and furloughed her for the remainder. Nathan is employed at a marketing agency and is working remotely on full pay. As a result, their prospective lender has asked for the following as proof of income:

— Three months’ payslips and two years’ P60s (these are standard requirements, although some lenders may accept less)
— Three months’ bank account statements
— For Sally, the lender has also asked for a reference from her employer to confirm the date she will be returning to full-time work.

Sally does have three months’ worth of payslips to give to her lender, although these show her reduced furloughed salary, rather than her full salary. As a result, it is likely the lender will use this figure to calculate affordability for her.

A self-employed graphic designer
Dan works for himself as a graphic designer. He has seen his income dip significantly since the onset of the pandemic, with clients delaying or cancelling many projects. After confirming to HMRC that his business had been adversely affected by the crisis, he applied for and received a grant under the Self-Employed Income Support Scheme (SEISS).

Just before the pandemic began, Dan had been looking to buy a flat, but getting a mortgage has since become a lot more difficult. His prospective lender is now asking for:

— Three years’ full business accounts, signed off by a Chartered accountant
— Three years’ SA302 year-end tax calculations and corresponding tax year overview from HMRC
— Most recent three months’ bank statements.

In order to make it more likely that his mortgage application will be accepted, Dan is also hoping to approach some of his clients to ask them for references, stating the work they are likely to have for him over the next 12 months.

Assessing your options
Without a doubt, it is more challenging for some people to get a mortgage at present, given the increasingly stringent affordability requirements that many lenders are introducing – so it’s likely you’ll be wanting a little extra help! Whether you are buying your first home, taking a step up the property ladder or looking to downsize, don’t worry, we’re here for you.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

Key takeaways

  • The pandemic has led mortgage lenders to tighten affordability criteria and demand more evidence of proof of income
  • This is especially true of furloughed workers and those on a reduced income
  • For Sally, an employed worker who has been on part-time furlough since July, her lender is likely to want three months’ payslips, along with bank statements for the same period
  • They may also want a reference from her employer stating the date she will return to full-time work
  • For Dan, who works as a freelance graphic designer, getting a mortgage may be more difficult
  • His lender will require three years’ business accounts signed off by a Chartered accountant, as well as three years’ SA302 year-end tax calculations and tax year overviews from HMRC
  • Dan will also provide letters of reference from clients confirming work prospects for next year
  • If you need a little extra help in these challenging times, we will be on hand to evaluate your circumstances and help you assess all the available options.

 


 

Mortgage Payment Update November 2020

On 17 November the FCA confirmed guidance for homeowners struggling financially due to coronavirus. The mortgage payment holidays scheme, first announced in March and then extended in May, has been further extended until 31 March 2021.

How does it work?

  • Those who have not yet had a payment holiday will be eligible for payment holidays of 6 months in total.
  • Those who currently have a payment holiday will be eligible to top up to 6 months in total.
  • Those who have previously had payment deferrals of less than 6 months will be able to top up, as long as total deferrals don’t exceed 6 monthsThis includes those receiving tailored support and those who are behind on payments.
  • Borrowers who have already had 6 months of payment holiday will not be eligible for a further payment holiday. Firms will provide tailored support appropriate to their circumstances. This may include the option to defer further payments.

 The FCA has also confirmed that no one should have their home repossessed without their agreement until after 31 January 2021.

 Interest only

Borrowers with an interest-only (or part-and-part mortgages) that matures between 20 March 2020 and 31 October 2021 can delay the repayment of capital until 31 October 2021, providing they continue to make interest payments.

 

Tailored Support
Some lenders have offered tailored support to lenders. Lenders will discuss your individual circumstances to support to customers in a way that reflects the uncertainties and challenges many customers will be experiencing due to coronavirus.

 

Who to talk to
You should try to maintain your mortgage payments if you can afford to do so. If you want to apply for or extend an existing payment holiday, it is crucial that you speak to your lender. You must not stop making mortgage payments without speaking to your lender first as this could adversely affect your credit.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAG

 

 


 

The Bank of Granny and Grandad?

For many younger people struggling to get a foot on the property ladder, the Bank of Mum and Dad is the only option. With rent taking a huge chunk out of their income and the requirement for increasingly onerous deposits, two in five renters do not believe they will ever be in a position to buy a property, despite a desire to own a place of their own. That’s where Bank of Mum and Dad come in, as well as ever more frequently, the Bank of Granny and Grandad.

Among the UK’s largest lenders
If the Bank of Mum and Dad was a high street lender, it would have been the UK’s 10th largest in 2019. Collectively, parents paid out £6.3bn to give their children the final push towards homeownership. What’s more, the average amount lent per transaction shot up by £6,000 to hit a generous £24,1002.

Knock-on effect on retirement prospects
The Bank of Mum and Dad phenomenon is not without its consequences however. With prospective retirees facing spiralling living costs and potential care fees, their generosity is directly impacting their future. According to a report from Legal & General, 15% of over-55s are accepting a lower standard of living after funding their child’s property purchase. While many are hitting their pensions savings to scrape the cash together.

Granny and Grandad lend a hand
In 2019, nearly a third of 18 to 34-year-olds received financial help from their grandparents to get a foot on the ladder. Coming as they do from a generation where homeownership was much easier to achieve and pensions easier to save for, they are more likely to have spare money available than their own children, who are already feeling the strain of saving enough to fund their later life. On average, grandparents lend £7,400 to their grandchildren (roughly a third of the average 10% deposit). And 23% of lucky homeowners on the receiving end of this assistance don’t ever expect to repay it!

Don’t compromise your future
We all want the best for our children, but there are ways of helping them out that don’t involve putting your financial security at risk. While the Bank of Granny and Grandad is certainly alleviating the pressure on parents, it’s not wise to rely solely on their support.

There are a range of government schemes available to prospective homebuyers which can help them buy a property without a significant cash boost from family members. The Help to Buy: Equity Loan, the Help to Buy: Shared Ownership scheme and the Lifetime ISA (LISA) can all help boost your child’s ability to buy their first home.

Other investment options
There are more ways to assist your children financially than just helping them buy a property – especially if you get started early. There are a wide variety of savings and investment options that allow you to start providing for your child’s future at an early age, putting them in a better financial situation in adulthood.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

 


 

Mortgage Payment Holidays Ending Soon

In March this year, it was agreed with the Government that banks, building societies and other mortgage lenders should offer all existing mortgage customers the option of a three month mortgage payment holiday. This was subsequently extended to six months.

If your finances have been affected by Coronavirus and you would like to request a mortgage holiday from your lender, you have until the 31 of October 2020 to apply. If you’ve already had a payment holiday of three months, you can request an extension for a further three months.

Mortgage lenders may continue to offer mortgage payment holidays to some financially vulnerable customers after the Government scheme ends, so if you feel that you need short term support you should talk to your bank or building society.

Mortgage payment holidays offer flexibility in reducing or stopping your mortgage payments. However, you may have to pay more over the long-term in interest. For this reason, if you can afford to make full or partial payments to your mortgage, you should attempt to do so. Taking a mortgage holiday could also affect your ability to secure any further finance in the future.

Next steps

Your mortgage should be your priority debt. This means the consequences of not paying it are more serious than other debts. If your income drops and you are unlikely to be able to meet payments, it’s important that you talk to your lender as soon as you possibly can.

If you are having trouble paying for your mortgage, your first step should always be to contact your lender. They want to help you to meet your repayments. Your lender can discuss your options with you and offer suggestions, including:

• temporary payment arrangements

• lengthening the term of your mortgage, or

• switching temporarily to interest-only repayments.

You’ll need to deal directly with your lender if you wish to apply for a mortgage payment holiday or extend an existing one. But, there may be other options. So please speak to us first if you can, particularly if you are considering a mortgage holiday and are nearing the end of your mortgage term.

If you have any questions or want to discuss your situation further please don’t hesitate to get in touch, we’ll be more than happy to help. 

 

 


 

COVID-19 affects retirement plans for over three million

Thurs 17 Sept

Recent research shows 1 in 10 UK adults with a pension (and not yet retired) have reduced or stopped pension contributions because of Covid-19.

  • 1 in 10 UK adults have reduced or stopped pension contributions
  • 1 in 4 workers are worried about paying for every day essentials
  • 1 in 5 workers are worried about keeping up with mortgage or rent payments

The economic fallout resulted in a drop in income for many people meaning them having to decide between their short-term financial needs and long-term savings. The research revealed that almost a quarter of workers (24%) are worried about paying for essentials such as food or energy and a fifth (20%) are concerned about paying mortgage or rent.

Greater impact for those already struggling to save
Research has shown that the groups most affected financially by COVID-19 are those groups who may already be struggling to save for retirement: self-employed, younger workers (18—24 – year olds), women and part-time workers.

2 in 5 self-employed workers (43%) have seen their income drop and as a result almost one in five have needed to pause or reduce their pension contributions. This compounds an already existing problem with the self-employed being unable to save adequately for retirement – figures from 2019 show that 41% of the self-employed workforce were not saving anything for retirement.

The nation’s youngest workers are also likely to reduce their pension savings and of this age group, 7% were found to have moved their pension into lower-risk funds, despite being years away from retiring.

Another group already struggling to save are women, who are generally more likely to be in part-time employment or lower-paid jobs. Part-time workers also tend to be less well prepared for retirement and have been harder hit through job losses and furloughing than full-time workers, resulting in them being more likely to change their long-term savings habits than full-time workers (15% versus 6%).

Here to help
If you are considering reducing or stopping your pension contributions, contact us for help in reviewing your options. If you have already taken this step, it is important to review your retirement savings as soon as your situation improves. We are here to help and give you sound financial advice tailored to your individual needs.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

 

KEY TAKEAWAYS

  • One in 10 UK adults, with a pension and not yet retired, have reduced or stopped pension contributions because of the pandemic
  • Savers are having to decide between their short-term financial needs and long-term savings
  • Almost a quarter of workers (24%) are worried about paying for essentials such as food and energy and a fifth (20%) are concerned about paying their mortgage or rent
  • Those groups already struggling to save for retirement including the self-employed, younger workers (18 to 24-year-olds), women and part-time workers have been found to be most affected financially
  • Two in five self-employed workers (43%) have seen their income drop, almost three times the proportion of employees (16%)
  • The self-employed are unable to be included in auto enrolment
  • 18 to 24-year-olds are likely to reduce pensions savings and 7% have moved into lower-risk funds
  • Women and part-time workers have also seen a greater impact on their ability to save
  • Contact us to review your options if you are thinking of changing your pension in any way
  • If you have already done so, as soon as your situation improves, we can help you review your retirement planning.

 

Keep your Pension Planning on Track- Thurs 6th August

The coronavirus outbreak is having a widespread impact across all aspects of our financial life, with many people finding their income reduced. At times like this it can be challenging to stay focused. No matter what age you are, now is not the time to neglect your pension. Try your very best to keep your pension planning and contributions on track – don’t allow the pandemic to cast a cloud over your long-term plans.

It’s never too early to start saving into a pension…
You should start saving for retirement as soon as possible, as the sooner you begin, the longer your savings have to grow. Other financial challenges can make this difficult but investing regular amounts in a pension throughout your working life gives you the best chance of enjoying a prosperous retirement.

…but better late than never
Don’t think it’s too late to start saving for your retirement. The favourable tax treatment pensions enjoy and their potential for investment growth, means any contributions you make later in life can still make a huge difference to your standard of living in retirement.

Take control of your retirement
When you reach 55, it’s important to carefully consider what you can do with your pension pot. For instance, you could keep your savings invested, take a cash lump sum, draw a flexible income (drawdown), buy a fixed income (an annuity), or a combination of these. While this flexibility may enable you to retire earlier or semi-retire, it’s vital you take full control of your retirement options at this stage. This should include seeking advice to discuss the pros and cons of the different avenues available to you.

Know your numbers
You can contribute as much as you like into your pension, but there is a limit on the amount of tax relief you will receive each year. The Annual Allowance is currently £40,000, or 100% of your earnings, whichever is lower. You can, however, carry forward unused allowances from the past three years, provided you were a pension scheme member during those years.

For the 2020-21 tax year the Tapered Annual Allowance limits altered. The Threshold Adjusted Income limit is £200,000 and the Adjusted Income Limit is £240,000. If your income plus pension contributions exceeds the Adjusted Income Limit, your Annual Allowance is reduced by £1 of every £2 you are over the Adjusted Income Limit. A Lifetime Allowance also places a limit on the amount you can hold across all your pension funds without having to pay extra tax when you withdraw money. This limit is currently £1,073,100.

Get good advice
Retirement planning is never a case of ‘one size fits all’. It is vital you obtain sound financial advice tailored to your individual needs. We offer advice and help with all aspects of pensions and retirement planning, whether you’re just starting out and want help choosing the most appropriate pension products, or you’re approaching the stage of life when you need to utilise your pension pot and want to know the most efficient way to access your funds. We are here to help.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

 


 

Give your children a head start with financial education

Financial literacy isn’t a skill that we are born with. Learning how to manage money effectively means acquiring a few important life lessons that parents can pass on to their children from a relatively young age. With home schooling on the agenda for many families at the moment, one perfect way to engage your children, a skill vital for everyday life, is financial education.

Money does not grow on trees
Encourage children to handle cash as soon as possible to help them recognise its value and to plan how to save some of their pocket money, so that they can save up to buy a new toy or book with their own money.

After all, good things come to those who wait, teaching delayed gratification is a great lesson. Children need to realise that you work to earn money and that it simply does not pop out of the wall at the cashpoint.

Lead by example
Talk to your children about how much things cost and set a good example; your financial behaviour will lead the way. It’s important for children to understand what budgeting means, to teach responsibility with money.

If you demonstrate responsible buying by creating a budget before you go shopping, comparing prices, using money saving vouchers and curbing impulse purchases, you can lead by example.

Dividing money into different pots is a useful way to demonstrate only spending the money you have, as it helps your child to visualise where their money is going. When it’s gone, it’s gone.

Saving for the future
Junior Individual Savings Accounts (JISAs) are a good way for children to learn about the benefits of saving money for the future. Once the person who has parental responsibility for a child has opened the account, anyone can contribute to it, up to an annual limit (£9,000 this tax year). This means that the child can learn more about money management by saving some of their pocket money and watching it grow, before gaining control of it at age 16.

The money cannot be withdrawn until the child is 18, at which point, the account is automatically rolled over into an adult ISA, a valuable facility for those who want to continue saving or investing tax-efficiently.

Teach a life skill
Due to limited curriculum time, only four in 10 children and young adults currently receive financial education lessons. According to The Financial Capability Strategy, children’s attitudes to money are well-developed by the age of seven. Research confirms that children who receive a formal financial education are more likely to be money confident and have a bank account, understand debt, be capable of saving and generally have the skills needed to make the most of their money in the future.

Simple things like playing family board games together that promote financial literacy; games such as ‘Cashflow 101’ and the ever-popular ‘Monopoly’, which now has junior versions, are a good starting point.

The value of investments can go down as well as up and you may not get back the full amount you invested. This information is based on our current understanding of the rules for the 2020/21 tax year.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

 


 

Investing for Children – The Junior ISA - Monday 29th June 

There was welcome news for young savers in the March Budget with the government announcing the Junior ISA (JISA) allowance was to be more than doubled, from £4,368 to £9,000 from 6 April 2020.

JISA and CTFs both benefit
JISAs replaced Child Trust Funds (CTF) in 2011, but those who still
hold CTF will continue to benefit from the increased allowance. Both JISA and CTF are a tax efficient way to build up savings for a child. It is not possible to have both a JISA and a CTF.

Savings for children
A junior ISA can be opened for any child under 18 living in the UK and the money can be held in cash and/or invested in stocks and shares. Once the person who has parental responsibility for a child has opened the account, anyone can contribute to it. The child can manage the account from age 16 and at age 18 they can withdraw the money if they want, when the account otherwise becomes a normal cash or stocks and shares Individual Savings Account (ISA). Alternatively, they can keep saving into it as a standard ISA.

The tax benefits for JISAs and CTFs are the same as for an adult ISA. So, there is no Capital Gains Tax and no tax on income.

Investing for their future
Following the Budget, it was reported: ‘By saving towards their future, families can give children a significant financial asset when they reach adulthood – helping them into further education, training, or work.

Junior ISAs and Child Trust Funds are tax-advantaged accounts for children, designed to encourage a long-term savings habit.’ Two principles which apply to many aspects of financial planning are particularly relevant when planning for your child’s financial future:

  • The longer the timescale, the more scope there is for your investments to grow
  • Taking expert advice can help you avoid potential pitfalls

The potential of a JISA
It is estimated that if £9,000 was invested every year from birth and assuming a 2% annual return, which is obviously by no means guaranteed, the JISA would be worth around £194,000 at age 18. Saving such a large amount is obviously out of the question for most people, but whatever amount you can afford to save for your child’s future, a JISA is an ideal choice.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

Key takeaways:

  • The JISA allowance has more than doubled, from £4,368 to £9,000 per tax year form 6 April
  • JISAs replaced Child Trust Funds (CTFs) in 2011
  • Both benefit from the increased allowance of £9,000 per tax year
  • JISAs can be opened for any child under 18 living in the UK
  • Once the person who has parental responsibility for a child has opened the account, anyone can contribute to it
  • The child can manage the account from age 16 and at age 18 they can withdraw the money
  • There is no Capital Gains Tax and no tax on income.
  • The ISA allowance will remain at £20,000 for 2020-21

 


 

How Secure is your Business - Friday 5th June 2020

Business protection is a crucial element in a company's financial future, but how many have cover in place?

You may have covered the tangible assets in your business, but have you protected the most important asset; the people who contribute directly to your bottom line?

If the answer is no, you could be putting your business at risk. After all, if you lost a key employee, this could impact the day-to-day running of the business, it could hit profits and create problems repaying an outstanding business loan.

Research by Legal & General in their State of the Nation’s Small and Medium Enterprises (SMEs) report has found:

52% of businesses would cease trading in under a year if a key person became critically ill or died

47% of shareholders have no arrangements for their shares if they became critically ill or died

51% of businesses have some form of business debt of an average of £175,000

Safeguarding your business
Business protection insurance can help mitigate some of the risks. There are three main types of business protection:

  • Key Person Insurance
    provides a lump sum to the business on the death of an important member of the business.
  • Shareholder Protection Insurance
    provides a lump sum that will allow remaining shareholders to buy the shares of a deceased shareholder.
  • Business Loan Protection
    provides a lump sum to help a business pay any outstanding business loans.

Business Protection Insurance is designed to keep you trading. That's why making sure you have the right protection in place should be considered a vital part of running a business.

If you are one of the 54% of SME that doesn’t have a relationship with a financial adviser talk to us! As professional financial advisers we can help you realise any risks you may and provide protection for the future of your business.

 


 

Our expert advice can help reduce your Mortgage stress - Friday 29/05/2020

Moving home is known to be one of life’s most stressful events. In fact, a survey earlier this year, found the process can cause us more stress than other major life events such as having a baby, getting married, starting a new job or getting divorced.

Sorting out your finances
The biggest cause of worry for many is arranging finance for the move. First-time buyers need to save up funds for a deposit, as well as finding the right mortgage and an affordable property. Low- deposit mortgages and saving schemes, like the Help to Buy ISA (which closed to new accounts on 30th November 2019), appear to have helped with the challenge of saving a deposit to some extent. It pays to save a large deposit as in most cases, the bigger the deposit you can put down, the lower your interest rate is likely to be.

As well as saving for a deposit and budgeting for costs like legal fees and surveys, you should review your income and outgoings; any lender considering your mortgage application will expect you to be on top of your bills and to be able to afford your monthly mortgage payments.

A challenging process?
Research from Aldermore’s First Time Buyer Index reveals prospective first-time buyers view buying a home as challenging, with over a quarter (29%) saying getting on the property ladder is ‘very difficult’. This research also showed nearly two thirds (61%) of recent first-time buyers found the house buying process ‘confusing’ and two in five (39%) say the stress of it actually made them feel ill.

Understanding the mortgage process
With such a vast number of mortgage deals available, it can be difficult to know which one is right for you.

Whether you are a first-time buyer, moving home, re-mortgaging or looking to release equity from your property we can help. Our qualified mortgage advisers have access to a wide range of mortgage deals and can help you understand all aspects of the home buying process.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

 


 

It's Good To Talk - Tuesday 04/05/2020

While, for many, discussions about money can be extremely uncomfortable, experts have long stressed the best approach to financial issues is invariably to talk about them. Indeed, perceived wisdom suggests the more open and honest people are about money, the better their life and relationships tend to be.

Finance: the last taboo
There’s a wide variety of reasons why people don’t like to discuss their finances. In some cases, money is simply viewed as a vulgar subject to talk about, while many individuals lack financial confidence and therefore feel foolish discussing their finances; for others it’s easy to just ignore the issue altogether or simply leave it to someone else to sort out. As a result, many of us don’t like to talk about money, which means finance stands out as one of the last taboo topics in our society.

Importance of financial conversations
A failure to communicate about money though can lead to serious problems especially for other family members. This particularly relates to the younger generation and the importance of nurturing a sense of financial responsibility that will ensure they are ready to take control of their finances. It’s also critical in relation to older people as, if discussions have not taken place, there is no way of knowing their wishes when important issues relating to their financial future inevitably emerge.

Elephants in the room
While it is therefore vital to talk, discussing some financial topics can prove extremely challenging for many people. For example, parents often find it difficult to discuss issues surrounding inheritance and the transfer of wealth which means conversations with their children on this topic can be awkward or stilted. It is imperative, however, that parents do include their offspring when making financial planning decisions in order to ensure they are ready to assume responsibility for family assets when the time arises.

Finance paralysis
An inability to talk about money can also lead to personal finance paralysis, which is basically the fear of making a bad decision. This can result in people either delaying important financial decisions or not making any decisions at all. Talking issues through with a trusted confidante though is a particularly good way to help alleviate such anxieties as it equips people with both the knowledge and conviction to make appropriate decisions.

Talk to us
As with most things in life, it’s usually easier to figure out financial problems if you talk them through with someone you trust. Discussing issues with those people that matter to you can help get things into perspective and thereby aid the decision-making process. And remember, we’re always here to help too, so feel free to get in touch and start a financial conversation with us.

Key Takeaways

  • Experts have long stressed the best approach to financial issues is to talk about them
  • A failure to communicate about money can lead to serious problems
  • This particularly relates to the younger generation and the importance of nurturing a sense of financial responsibility
  • It’s also to older people as there is no way of knowing their wishes when important issues relating to their financial future inevitably emerge
  • Parents often find it difficult to discuss issues surrounding inheritance and the transfer of wealth
  • It is imperative that parents include their offspring when making financial planning decisions
  • This will ensure they are ready to assume responsibility for family assets when the time arises
  • An inability to talk about money can lead to personal finance paralysis, a fear of making bad decisions
  • This can result in people delaying important financial decisions or not making any decisions at all
  • As with most things in life, it’s usually easier to figure out financial problems if you talk them through

We’re here to help, so feel free to get in touch and start a financial conversation with us.

 


 

Pension Planning for the Self-employed - Wednesday 29/04/2020

There are 4.8 million self-employed people in the UK and only a third have any kind of pension arrangement. A shocking statistic when you consider that State support is shrinking and we’re all living longer. Saving for a pension when you’re self-employed is not as straightforward as it is for an employed person, who   might   automatically   benefit from a workplace scheme and employer contributions. We’ve outlined some key points for you to consider.

Don’t rely on the State Pension

Whether you’re employed or self-employed you’re entitled to the full basic State Pension (currently £168.60 a week) if you’ve paid in 30 years of National Insurance Contributions. If you’re self-employed you can only claim the additional State Pension if you’ve had periods of employment. On its own State support is unlikely to enable you to continue your current standard of living into retirement. That’s why it’s imperative for the self-employed to find other ways to provide the additional income needed in retirement.

Start saving early

It’s stating the obvious, but the sooner you start saving into a pension the bigger your potential retirement fund. You’ll also have more time to benefit from the tax relief that’s available.

To highlight the importance of saving early, a 25-year-old male looking to retire at 68 would need to contribute £236.25 per month in order to achieve a retirement income of £17,500 a year. If the same man had waited until he was 45 before he started saving, he would need to contribute £495.83 to achieve the same level of income, an additional £259.58 per month.

Minimise the amount of tax you pay

One of the main benefits of paying into a pension is the tax relief the savings attract. For example, if you’re a basic rate taxpayer and pay £80 into your pension you effectively end up with £100 to invest. The maximum amount you can save each year that attracts tax relief (otherwise known as the annual allowance) is £40,000. Importantly, if your income is low and you’re not able to save the full £40,000 in one tax year, you can carry forward any unused allowance, and use it towards contributions in the next tax year.

Please note:

•             You must have been a member of a registered pension scheme during the years you want to carry forward

•             Your tax relief is limited by your annual earnings in the year you want to carry forward

•             You can only carry forward unused allowance from the three previous tax years

What type of pension is right?

The self-employed can choose from a range of different pension products, including stakeholder pensions, personal pensions and Self Invested

Personal Pensions (SIPPs). Each has its advantages and disadvantages – we can advise on which is best for you.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes, which cannot be foreseen.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

 

 


 

Coming to terms with market turbulence - FRIDAY 20/3/2020


As a direct consequence of the COVID-19 outbreak, global stock markets are suffering a period of turbulence. When markets move significantly it can prove very challenging to hear through the noise and focus on the bigger picture.

Lessons from history
Over recent years many investors have become used to a variety of political, financial and economic factors impacting markets, from the Brexit Referendum and subsequent prolonged uncertainty, to the global financial crisis and even further back to the dotcom bust in the early noughties. Although markets do not respond well to periods of uncertainty, fluctuations go hand in hand with stock market investment; and while market movements can be concerning, experience has taught us to expect the unexpected.

It is important to remember that some market turbulence is inevitable; markets will always move up and down. As an investor, putting any short-term fluctuations into historical context is useful. Investors with diversified portfolios, who stay in the market, have typically been rewarded over time.

Plan and focus, be strategic
Instead of being too worried by turbulence, the best strategy is to be prepared. It is best to stick to your well-defined plan and diversify your holdings, as well as expecting and accepting market movements. Your plan will be tailored to your objectives, in line with your attitude to risk and will take into account your financial situation, which will stand you in good stead to weather short-term market fluctuations.

In it for the long haul
Even though it can be difficult to ignore daily market movements, it is vital to focus on the long term, and remember that turbulence also presents investment opportunities. Investment requires a disciplined approach and a degree of holding your nerve if markets descend. Investment professionals know that markets can fluctuate and will inevitably go down as well as up from time to time. The worst investment strategy you can adopt is to jump in and out of the stock market, panic when prices fall and sell investments at the bottom of the market.

Keep calm and carry on
On the day of the Budget, the outgoing Chairman of the Bank of England, Mark Carney and the Chancellor, Rishi Sunak, were keen to highlight the temporary nature of the downturn, that is worth bearing in mind. Both the BoE and the Chancellor have taken steps to support the UK economy, which should also help to calm the markets. The BoE has cut interest rates on two occasions and expanded its bond buying programme, known as quantitative easing. Meanwhile, Mr Sunak announced a package of emergency measures for UK businesses worth £350 billion.

As Rudyard Kipling wrote, it is important to “keep your head when all about you are losing theirs” – a clear head will certainly stand you in good stead through these challenging times.

Market turbulence is a timely reminder to keep your investments under regular review – that is what we do best. Please rest assured we are working hard to manage the fluctuations, so your money has the best chance of growing for the future.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

 


 

Spring Budget 2020

Newly appointed Chancellor of the Exchequer, Rishi Sunak, delivered his first Budget on 11 March, against a backdrop of uncertainty following the COVID-19 outbreak and subsequent financial losses. It was the first of two Budgets to be delivered in 2020, with the second to follow in the autumn.

COVID-19 and the NHS
The Chancellor wasted no time in diving into the heart of the issue on the minds of so many across the nation: the COVID-19 crisis. Taking an empathetic tone, he reassured the British public that “we will get through this together”, emphasising the temporary nature of the crisis and his firm belief in the ability of the British economy to weather the storm.

Mr Sunak then called on all parties across the House to support his £30bn fiscal stimulus, including welfare and business support, to “keep this country and our people healthy and financially secure”.

He pledged:

  • £5bn emergency response fund to support the NHS and other public services
  • Statutory Sick Pay (SSP) will be paid to all those advised to self-isolate even if they don’t have symptoms
  • To support businesses employing fewer than 250, the government would refund up to 14 days’ SSP
  • A Coronavirus Business Interruption Loan Scheme will support businesses experiencing increased costs or cashflow disruptions, providing access to £1bn of government-backed loans
  • Business rates in England will be suspended for 2020-21 for firms in the retail, leisure and hospitality sectors with a rateable value below £51,000
  • Any company eligible for small business rates relief will be allowed a £3,000 cash grant.

Mr Sunak promised an extra £6bn in NHS funding over the course of this Parliament, which would go towards hiring 50,000 more nurses and building 40 new hospitals.

The economy and business
On the morning of Budget day, the Bank of England (BoE) had announced an emergency cut in interest rates to bolster the economy amid the COVID-19 outbreak. BoE base rate was reduced from 0.75% to 0.25%, returning it to its lowest level in history. The BoE said it would also free up billions of pounds of extra lending to help banks support firms. Mark Carney, the Governor of the BoE, was keen to emphasise that COVID-19 was a temporary economic shock, stating: “The Bank of England’s role is to help UK businesses and households manage through an economic shock that could prove sharp and large, but should be temporary.”

Mr Sunak also revealed that, not taking into account the impact of COVID-19, the British economy is forecast to grow 1.1% this year, then 1.8% in 2021-22, 1.5% in 2022-23 and 1.3% in 2023-24, while inflation is forecast to be 1.4% this year, increasing to 1.8% in 2021-2022. Borrowing as a percentage of GDP will be 2.1% this year, rising to 2.4% in 2020-21 and 2.8% in 2021-22.

Personal taxation and wages
The Conservative manifesto promised that during the course of this five-year Parliament, there will be no rise in the rates of Income Tax, VAT or National Insurance. From April, the Personal Allowance will be frozen at £12,500 before we start paying 20% Income Tax. Also frozen is the £50,000 threshold at which people start to pay the higher 40% rate of Income Tax. (Rates and thresholds may differ for taxpayers in parts of the UK where Income Tax is devolved.) The National Insurance threshold will rise to £9,500 from April, saving some 30 million workers around £100 a year.

As previously pledged, the new single-tier State Pension will increase from £168.60 a week to £175.20 in April. For pensioners receiving the older basic State Pension, this will increase from £129.20 to £134.25 per week (3.9% increase). The rise is the result of the triple-lock system, which means that the State Pension rises in line with inflation, earnings or 2.5%, whichever is the highest. The Conservatives have vowed to keep this in place for this term of Parliament.

Looking at Inheritance Tax (IHT), the main residence nil rate band will increase from £150,000 to £175,000 in 2020-21, as previously scheduled.

To support the delivery of public services, particularly in the NHS, the two tapered Annual Allowance thresholds for pensions will each be raised by £90,000. So, from 2020-21 the threshold income will be £200,000, meaning individuals with income below this will not be affected by the tapered Annual Allowance and the Annual Allowance will only begin to taper down for individuals who also have an adjusted income above £240,000.

For very high earners the minimum level to which the Annual Allowance can taper down will reduce from £10,000 to £4,000 from April 2020. This reduction will only affect individuals with total income over £300,000.

The 2020-21 tax year ISA (Individual Savings Account) allowance will remain at £20,000.

The JISA (Junior Individual Savings Account) allowance and Child Trust Fund annual subscription limit will be significantly increased from £4,368 to £9,000 in 2020-21.

The Lifetime Allowance for pensions will increase in line with the Consumer Prices Index (CPI) for 2020-21, rising to £1,073,100.

From 11 March the lifetime limit on gains eligible for Entrepreneurs’ Relief is reduced from £10m to £1m, in response to evidence that the costly concession has not been a major incentive to entrepreneurial activity.

Infrastructure and the environment
Mr Sunak announced a huge £600bn package, claimed to be the biggest investment in transport and infrastructure since 1955. Outlining the proposed spending on roads, rail including HS2, gigabit-capable broadband and housing by mid-2025, he said, in short: “if the country needs it, we will build it.” The package includes:

  • £2.5bn available to fix potholes and resurface roads over five years
  • £27bn to build or improve motorways and other arterial roads
  • Up to £510 million in shared rural network to improve 4G coverage
  • Allocation of £1bn from the Transforming Cities Fund
  • Flooding - £5.2bn over five years investment programme for flood defences and £120m in emergency relief for communities affected, £200m for flood resilience.

Environmental measures announced include:

  • Nature for Climate Fund – investing £640m in tree planting and peatland restoration
  • New plastic packaging tax from April 2022
  • Fuel subsidies for red diesel users will be abolished in two years, apart from agriculture, rail, fishing and domestic heating sectors.

Other key points

  • Priority to ensure people have affordable and safe housing – extending the affordable homes programme with £12.2bn funding
  • Supporting local authorities to invest in their communities by cutting interest rates on lending for social housing by 1%
  • £1.1bn allocation from the Housing Infrastructure Fund to build 70,000 new homes in high-demand areas
  • From April 2020, minimum wages will rise; for example, the National Living Wage for those aged 25 and above, will increase 6.2% to £8.72 per hour, and to a projected £10.50 by 2024
  • The 5% VAT on sanitary products will be abolished from 2021
  • Corporation Tax will remain at 19%
  • Fuel duty frozen for tenth consecutive year
  • Duties on all spirits, beer and wine frozen
  • The government will introduce a 2% Stamp Duty Land Tax surcharge on non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021
  • R&D investment of £22bn a year by 2024-25.

 

Closing comments
The Chancellor signed off his first Budget with these words: “We’re at the beginning of a new era in this country. We have the freedom and the resources to decide our own future. A future where we unleash the energy, inventiveness and creativity of all the British people. And a future where we look outwards and are confident on the world stage. That starts right now with our world-leading response to the coronavirus. This is a Budget delivered in challenging times. We will rise to this moment. We will get through this together.

 


 

*** MONDAY 23rd SEPT 2019 ***

The factors influencing your pension choices

 

Planning the best way to draw your pension savings is not straightforward, after all, there’s no ‘one size fits all’ when it comes to retirement.

 

Life expectancy, the impact of inflation and the choices available at retirement (thanks to the 2015 Pension Freedoms) are all influencing factors in your decision making. You’ll also need to take into account not just your pension savings but any other investments or assets you might have.

 

Your pension choices
If you’re aged 55 or over and in a defined contribution pension plan from 6 April 2015, you may be able to access your pension savings in a number of different ways:

Buy an annuity

Flexi Access Drawdown

Uncrystallised Funds Pension Lump Sum (UFPLS)

 

If you decide not to purchase (or defer the purchase of) an annuity and instead take income using Flexi-access drawdown or UFPLS, adopting the right investment approach and keeping it regularly under review will be all important.

 

A question of balance
Balancing the potentially conflicting needs of income production and capital preservation is vital. Equally important is an understanding that personal circumstances will change throughout your retirement.

 

The three 'stages' of retirement
The early years
You’re more active and therefore might want flexibility over how you draw your income.

 

The middle years
You’re getting slightly less active and your lifestyle has settled into a more stable routine, so you’ll need a more stable income level.

 

The later years
You may need to increase your income to cover, for example, the cost of care.

 

In all cases, investing and withdrawing in a way that aims to maximise the available tax benefits and minimise tax 'leakage ‘could help make your objectives easier to achieve. If you have some decisions to make about accessing your savings and, whether and how to continue to invest, it might help to consider:

The extent to which you would like to leave an inheritance for your family and dependants

Gifts - either now or in the future.

Your current essential income needs such as your day-to- day living expenses and other "known/planned” expenditure.

Your lifestyle and other "non- essential" expenditure such as holidays, new cars, sports and hobbies, entertainment etc.

Unexpected items such as car repairs, home maintenance and health problems.

Your current health status

Future possible anticipated living expenses incorporating, possibly, a budget for care.

 

If you’d like advice on how you can make more of your investments and pension savings in retirement, or you’d like to find out more about pension death benefits, please get in touch.

 

The value of investments and any income from them can fall as well as rise. You may not get back the amount originally invested. HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

 

 


 

*** WENESDAY 21st AUGUST 2019 ***

Investing for the next generation

In the early years this might translate into a surplus of toys or days out, but this stage eventually passes, and thoughts turn towards the future transition from child to adulthood and beyond.

This longer-term perspective raises the question of how best to provide financial support through, what could be an expensive transition and inevitably this leads to a variety of issues:

Are there particular needs which should be targeted or is it more important to have money available as and when your child needs it?

• Which investments would be appropriate?

Is it possible to put some parental or other controls in place for when children can access the investment?

Which are the most tax-efficient investments?

Investing for life’s key events
For today’s children, the path through the early years of adulthood might cost rather more than that of their parents - and grandparents:

Higher education may be seen to be more important for gaining a reasonable job, but it also comes at a much higher cost. Taking into account tuition fees, accommodation and living expenses, a three-year degree is likely to cost the poorest students more than £50,000 according to a 2017 Institute of Fiscal Studies report. Before 1998, there were only grants and loans for tuition fees did not begin until 2006. Your generation may have left university with a bank overdraft, but the sum owing probably pales into insignificance compared to the five figure debts faced by today’s graduates.

Marriage is an increasingly costly staging post for those who choose it. According to the annual wedding survey by Bridebook.co.uk the average cost of a wedding in 2018 was just over £30,000! Despite the cost, two thirds of couples questioned in the survey admitted to either going over budget or having no budget at all.

Getting on the first rung of the property ladder is another growing cost for the next generation. According to research by Halifax, first time buyers are having to find record deposits, with the national average exceeding £33,000. It's no surprise people are having to leave it until later to buy their first home.

Once they have the degree, the job and the home (and the mountain of debt), there’s another long-term financing requirement which today’s children will encounter: retirement provision.

Take expert advice
Two principles that apply to many aspects of financial planning are particularly relevant when thinking about children:

1. The sooner you start the better, and the more scope there is for investments to grow (although there's still no guarantee that they will).

2.Take expert advice before making any decisions. The right investment set up in the wrong way can be worse than the wrong investment set up in the right way. DIY planning is not to be recommended, given the potential pitfalls.

 If you want to help your child progress through this financial landscape, please get in touch.

The value of your investments and any income from them can fall as well as rise and you may not get back the original amount invested.

 


 

*** WEDNESDAY 31st JULY 2019 ***

IS JOINT LIFE COVER BEST FOR COUPLES ?

 

If you want to help make sure your loved ones will have financial security if you pass away, life insurance cover is the answer. But, if you’re part of a couple and you both need cover, should you take out single policies, or a joint policy that covers both of you?

 

With a single life policy, the insurer would pay out on the death of the policyholder and the policy would then lapse. With joint life insurance, however, the cover will apply to both policyholders and would pay-out either on the first or second death, depending on how the policy is set up.

 

Before you decide whether to take out single or joint life insurance policies, you'll need to decide what type of cover you need, and this will depend on your circumstances:

 

• Term Assurance: pays out a lump sum if you die within the agreed ‘term’ (ie. the amount of time you’ve chosen to be covered for). Term Assurance is typically taken out to protect a mortgage and, as such, can come with a level, or decreasing, sum assured - the latter reducing as you pay off your mortgage.

 

• Whole of Life Insurance: pays out a lump sum when you die, whenever that is - as long as you’re still paying the premiums.

 

• Family Income Benefit Insurance: pays out a regular income, instead of a lump sum, to provide ongoing financial support for those who depend on you.

 

You could also add critical illness cover to your life insurance policy, which means you’ll get a pay-out if you’re diagnosed with a serious illness and your claim is accepted. The type of conditions covered can include cancer, heart attack and stroke and will depend on the insurance provider.

 

Weighing up the benefits
Once you’ve agreed on the right type of cover, there are a number of other factors to consider to determine whether single, or joint life cover is best for you and your other half, including:

 

• Cost: a joint life policy may be less expensive than two single life policies. Level of cover - if your partner earns more than you might want them to have a higher level of cover, since the financial impact of their death would be greater than yours. In this respect two policies may be better as they will have different sums assured.

 

• Existing cover: either, or both of you may have existing life cover through your employer, or an existing plan. It's important to check what's already in place so that you have a true picture of your protection shortfall. You don’t want to pay for something that’s already covered.

 

• Your relationship: It's not necessarily something you want to think about, but some insurers include a separation benefit. This means if your relationship breaks down during the policy term, you could cancel it and start two individual policies without having to provide additional medical information.

 

If you're not sure whether single or joint life cover is best for you, or you'd like to review your existing cover, please get in touch. T: 01744 612 388 or E: info@ahal.biz

 


 

*** Wednesday 15th May 2019 ***

 

COST OF RAISING A CHILD

We all know raising a child can be expensive. Research has shown, the cost of raising a child to age 18 in the UK varies dependant on whether it’s a girl or boy, with boys coming in at £79,176 and girls a staggering £108,884.

As a parent you are committed to doing all you can for your children – now and for their future but it’s estimated half of parents don’t have a financial protection plan in place­.

Nobody wants to think about the possibility of getting ill or being made redundant but having a contingency plan, such as life insurance or income protection in place offers you peace of mind should something unexpected happen.

If you need advice on protection, please do get in touch.

 


 

*** Friday 12th April 2019 ***

Relevant Life Plan

 

Do you want to provide valuable life cover and financial security for your employees and your family in a tax efficient manner? A Relevant Life Plan could be the answer.

 

What is a Relevant Life Plan?

 

A Relevant Life Plan is an individual ‘death in service’ life policy that is affected by an employer on the life of an employee and is funded by the employer. It is a term assurance plan designed to pay a lump sum benefit if the employee covered dies or is diagnosed with a terminal illness during their employment, within the term of the plan.

 

Relevant Life Plans are similar to most other types of life cover but can be a very useful tax efficient alternative providing valuable death in service benefits.

 

Added peace of mind

The unique way in which Relevant Life Plans work mean you can effectively have the taxman help pay for the cover. While the cover is personal to your employees, the policy counts as an allowable business expense for tax purposes and employers payments do not count towards the employees annual or lifetime pension allowances.

 

In most cases Relevant Life Plan premiums and paid benefits qualify for full Income Tax relief, National Insurance relief and Corporation Tax relief.

 

What can you save?

 

A Relevant Life Plan could result in savings for a business when compared with a typical life policy. Premiums could be reduced by up to 50% if you’re a higher rate taxpayer and up to 40% for a basic rate taxpayer.

 

 

 

Mr A paying personally for life assurance

ABC Ltd paying for a Relevant Life Policy

Monthly premium from income after tax = £200

Monthly premium paid by LBD Ltd = £200

Pre-tax income needed to fund £200 at Income Tax rate of 40% and employee National Insurance at extra 2% rate = £344.83

No Income Tax, employee’s or employer’s National Insurance payable = £200

Employer’s National Insurance contributions at 13.8% on salary paid by LBD Ltd = £47.59

Total cost to = £392.41

No employer’s National Insurance contribution

Less Corporation Tax at 19% as an allowable deduction. Salary, Income Tax and National Insurance are allowable expenses against Corporation Tax Total cost = £317.85

Less Corporation Tax at 19%, as the plan is an allowable deduction Total cost to LBD Ltd = £162

 

 

 

Personally, paying for life cover costs Mr A £317.85 a month. ABC Ltd paying through a Relevant Life Policy costs £162 a month. That’s a saving of £155.85 a month – over 50% less than paying for cover individually.

 

This information is based on our understanding of current legislation, taxation law and practice, which may change. The value of any tax relief depends on the individual circumstances of the investor.

 

 

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen

 

 


 

Key dates for 2019

1st April

National Living Wage (for age 25+) rises to £8.21.

National Minimum Wage rises to £7.70 (21 - 24-year olds), £6.15 (18 -  20-year olds), £4.35 (16 - 17-year olds), and £3.90 (apprentices under 19 or in the first year of their apprenticeship).

Council tax bills rise up to 4.99%

Universal Credit for households with children and those with disabilities will to go up £1,000.

5th April

End of the 2018/19 tax year. Have you used all your allowances?

6th April

Start of the 2019/20 tax year

ISA allowance remains at £20,000

Junior ISA allowance goes up to £4,368

Minimum auto-enrolment contributions go up to 8% (at least 3% from the employer and 5% from the employee).

State Pension rises by 2.6%. Recipients of the old State Pension will get an extra £3.25 a week, those with the new State Pension will get an extra £4.25.

Lifetime allowance for tax free pension saving rises to £1,055,000

Personal allowance rises to £12,500

Higher rate tax threshold goes up to £50,000

Mortgage interest relief for landlords goes down to 25% Call us if this impacts you!

 

1st May

National Savings and Investments index-linked savings to CPI

 

21st June

Go Home on Time Day: part of a national campaign to highlight the importance of having a good work-life balance. Leave on time and do something you love!

 

1st July

New rules mean mobile phone providers must make switching easier


31st July

Tax credit renewal deadline for anyone who claims Working Tax Credit or Child Tax Credit


29th August

Payment Protection Insurance (PPI) Deadline day - you have until 11.59pm to claim for mis-sold PPI


31st October

Paper self-assessment deadline for your return to be with HMRC.

 

30th November

Help to Buy ISA closes to new savers.

 

Your financial plan could be impacted by these key dates. Talk to us for advice.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

 


 

Changes To The 2019/2020 Tax Year

ANNUAL ALLOWANCE - The annual allowance for pension contributions remains at £40,000 in the 2019/20 tax year. The annual allowance reduces by £1 for every £2 of income over £150,000 to a minimum of £10,000, and to £4,000 maximum if certain pension drawings are made 
 
ANNUAL EXEMPTION FOR INDIVIDUALS - Annual exemption for capital gains tax, for individuals, is up to £12,000 in the 2019/20 tax year from £11,700 in the 2018/19 tax year
 
ANNUAL EXEMPTION FOR TRUSTS - Annual exemption for capital gains tax, for trusts, has increased to £6,000 in the 2019/20 tax year from £5,850 in the 2018/2019 tax year 
 
BASIC PERSONAL ALLOWNCE - Personal allowance is up to £12,500 in the 2019/20 tax year from £11,850 in the 2018/19 tax year. This is reduced by £1 for every £2 of income over £100,000. In certain circumstances, non-residents may not be entitled to personal allowances 
 
BLIND PERSONS ALLOWANCE - Blind persons allowance has increased from £2,390 in the 2018/19 tax year to £2,450 in the 2019/20 tax year
 
CORPORATION TAX AND DIVERTED PROFITS TAX - Corporation tax and diverted profits tax remains the same in the 2019/20 tax year. Corporation tax remains at 19%, loans to participators remains at 32.5%, restitution interest payments corporation tax rate remains at 45% (withheld at source) and diverted profits tax remains at 25%. This applies to profits of large entities diverted from the UK as a result of an avoided permanent establishment or transactions which lack economic substance 
 
JUNIOR ISA - The amount you can save in a junior ISA is up from £4,260 in the 2018/19 tax year to £4,368 in the 2019/20 tax year 
 
LIFETIME ALLOWANCE - The pension contributions for lifetime allowance has increased to £1,055,000 in the 2019/20 tax year from £1,030,000 in the 2018/19 tax year 
 
LIFETIME ISA - The amount you can save in a lifetime ISA remains the same at £4,000 in the 2019/20 tax year 
 
NATIONAL INSURANCE (EMPLOYEES) - National insurance contributions for Class 1 employees earning less than £166.00 a week is Nil and for employees earning between £166.01 - £962.00 per week the national insurance contributions is 12%. For those earning over £962.00 per week contribute an additional 2% #nationalinsurance
 
NATIONAL INSURANCE (EMPLOYERS) - National insurance contributions for Class 1 employers earning over £166.00 a week is 13.8% and for employers earning below £166 a week the contribution is nil  
 
PROPERTY STAMP TAXES - 2019/20 Land Transaction Tax for properties in Wales. There is a 3% supplement to the above rates for second properties and all purchases above £40,000 by corporates, certain partnerships, discretionary and certain other trustees 
 
PROPERTY STAMP TAXES - 2019/20 Stamp Duty land tax for properties in England. There is a 3% supplement to the above rates for second properties and all purchases above £40,000 by corporates, certain partnerships, discretionary and certain other trustees. Residential properties in England and Northern Ireland purchased by non-natural persons (enveloped properties) for more than £500,000 incur a flat 15% SDLT rate unless a relief is available. First time buyers are exempt from SDLT for purchases up to £300,000 and for the first £300,000 of purchases up to £500,000 
 
PROPERTY STAMP TAXES - 2019/20 Land and Buildings Transaction Tax for properties in Scotland.  There is a 4% supplement to the above rates for second properties and all purchases above £40,000 by corporates, certain partnerships, discretionary and certain other trustees. First time buyers are exempt from LBTT for the first £175,000 of relevant property purchases 
 
SAVINGS ALLOWANCE - The savings allowance stays at £1,000 in the 2019/20 tax year. For higher rates the allowance is £500 and is £nil for additional rate taxpayers.
 
VALUE ADDED TAX - VAT remains at 20% in the 2019/20 tax year. Reduced rate remains at 5%.
 
INCOME TAX ALLOWANCES - The allowance for married/civil partners is up to £8,915 in the 2019/20 tax year from £8,695 in the 2018/19 tax year. This is available to individuals who are born before the 6 of April 1935 and relief is limited to 10%.  The minimum allowance is reduced by £1 for every £2 of income for those earning over £100,000 after applying personal allowance reduction. In certain circumstances, non-residents may not be entitled to personal allowances.
 
INCOME TAX ALLOWANCES - The transferable allowance for married/civil partners has increased to £1,250 in the 2019/20 tax year from £1,190 in the 2018/19 tax year. In certain circumstances, non-residents may not be entitled to personal allowance.
 
INCOME TAX ALLOWANCES - The minimum allowance for married/civil partners has increased to £3,450 in the 2019/20 tax year, from £3,360 in the 2018/19 tax year. This is available to individuals who are born before the 6 of April 1935. Relief limited to 10%. In certain circumstances, non-residents may not be entitled to personal allowances.  The minimum allowance is reduced by £1 for every £2 of income for those earning over £100,000 after applying personal allowance reduction.
 
INCOME TAX ALLOWANCES - The income limit for married/civil partners allowance is up to £29,600 in the 2019/20 tax year from £28,900 in the 2018/19 tax year.

 

 

 


 

*** TUESDAY 12th MARCH 2019 ***

 

If you became critically ill and unable to work, could you cope financially?

Some things are more reliable than others - monthly bills, for example. Young or old, single or married, we all have financial obligations to meet each month; be it luxuries, like a satellite TV subscription or mobile phone contract, or the real essentials – like keeping a roof over your/your family’s head.

But some things - like our long-term health - can be less reliable. For instance, one in two people born after 1960 in the UK will be diagnosed with some form of cancer during their lifetime.

If you became critically ill and unable to work, those monthly expenses would still need to be covered if you wanted to maintain your lifestyle. Ask yourself: could you cope financially?

To ensure you and your family are financially protected, we strongly recommend you review your protection needs at the earliest opportunity.

 


 

*** FRIDAY 1st MARCH 2019 ***

 

Fed Up With Renting? 

If you rent your home, it can be frustrating to know your hard-earned cash is going into someone else’s pocket each month.

If you’ve ever thought about owning your own place, the mortgage market may appear daunting. How do you choose the right deal? Which lenders should you talk to? And what on earth is a Standard Variable Rate?!

 

Specialist mortgage advice for first time buyers

We know choice is important, so we have access to over 50 of the UK’s best-known lenders, thousands of products, and some exclusive deals that you won’t find anywhere else.

But we also know that choice is no good without guidance and advice. We spend time getting to know you and your specific circumstances, and we will help you understand:

  • How much you can borrow
  • The extra costs you need to consider
  • How to protect your investment
  • Which mortgage deal is most suitable

Most importantly, we’ll support you throughout the purchase process. That way, you can be sure someone is there to guide you every step of the way.

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

 


 

 

*** THURSDAY 29th NOVEMBER 2018 ***

 

The search for a reliable retirement income

It’s been over three years since the April 2015 pensions changes which scrapped compulsory annuities and gave pensioners greater choice over how to take their retirement income.

This historic change to UK pension legislation opened up a range of investment opportunities for pensioners. With increased control of their pension, investors can seek to position their portfolios to deliver the income required, while retaining – and perhaps even growing – their invested capital.

 

Generating income in a low interest rate environment

While the changes offer many opportunities, generating investment income remains difficult – particularly in view of low interest rates.

As the chart shows, the Bank of England’s target interest rate had been stuck at 0.5% for more than eight years. It was cut to 0.25% in August 2016, then increased to 0.5% in November 2017, then 0.75% in August 2018. Meanwhile, the income that can be earned through holding UK government bonds – a traditional staple instrument of low-risk, income-focused investment portfolios – has shrunk from over 5% before the 2008 financial crisis, to 1.3% in August 2018.

 

Equity markets risk income stability

The chart also shows that the dividend income available on UK equities has risen somewhat, making them an attractive proposition for many investors.

However, income-seekers should be wary of rushing headlong into equities in search of the returns that have been eroded in other asset classes. Investing in equities comes with a degree of risk, particularly for those relying on their investment portfolio for their means of living.

Should equity markets suffer a setback, retirees may find their pension fund reduced in size and incapable of generating the necessary income.

 

Taking a diversified approach

A robust income strategy should not be overly reliant on a single asset class. But making a decision on which asset class to hold is tricky – the top performer changes regularly and the returns can be volatile.

Investors who are over-committed to one asset class run the risk of disproportionate losses should that asset class underperform.

An alternative approach is to take a much wider view and consider other potential sources of income from a broader range of asset classes and capital structures, across many different countries and regions.

Taking a more diversified approach means that a drop in the value of one asset may then be offset by increases in other asset classes, leading to smoother overall performance – and a potentially more stable source of retirement income.

 

To find out more about the investment and income solutions we can offer, please get in touch.

 

You should not use past performance as a reliable indicator of future performance. It should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise. You may not get back the amount you originally invested.

 

 


 

 

*** TUESDAY 13th MARCH 2018 ***

 

Risk Vs Reward

While homeowners can still benefit from low mortgage rates, savers will be struggling to enjoy any kind of growth on money they have on deposit, leading some to consider a riskier investment.

If you're considering investing in the stock market, one crucial and very personal issue is, quite simply, how you feel about the prospect of putting money at risk and your ability to accommodate any loss in value.

 

What's your appetite for risk?

It's a fact that risk and the potential for reward go hand in hand: Investments that are low in risk are low in potential reward, whereas the more risk you're willing to take with your money the greater the potential for reward.

 

Factors in determining risk

As investment advisers, we will consider a range of factors  when assessing your attitude to investment risk:

Age - how old you are may affect how you would like to invest, particularly the closer you get to retirement.

The need for emergency cash - you should always keep a certain amount readily accessible (for example, in a deposit account) in the event of an emergency or as a foundation for your longer-term savings and investment.

Can you afford to take a risk? - if your investments dropped in the short term, do you have the time to wait for them to recover?

Can you afford not to take a risk? - leaving all your money on deposit may carry minimal risk, but you may miss out on higher potential returns and possibly see the spending power of that money fall due to inflation.

Are there tax-efficient opportunities available - such as pensions or ISAs?

 

Devising an appropriate investment strategy

Once you are clear about the risk you need to take to reach your goals and you feel entirely comfortable with your risk profile, you'll need an investment strategy that is finely calibrated to deliver the results you’re looking for.

This is where a number of other key aspects of investment come into play:

 

  1. How to avoid the ‘eggs-in-basket’ principle. We can make sure your portfolio is invested across a range of assets in order that the positive performance of some neutralises the negative performance of others.
  2. Making sure that your money is in the hands of some of the best and most consistent investment managers in the business.
  3. Making sure you can give your investments time - the longer you can leave your investments in place, the more likely you are to cope with any short-term changes in market value.

 

Talk to us

As members of Openwork, one of the UK’s largest networks of financial advice businesses, we follow a clear and thorough process designed to clarify exactly what you need from your investments. We also have access to a meticulously researched and managed range of investments specifically designed to meet clients’ different needs.

 

Taken together, you will know not only that your money is in good hands, but also that given time, there is an increased level of probability that it will perform in line with your expectations.

 

Need advice?

Good investment advice involves building a clear picture of the results you're looking for, taking into account your current financial position, your future goals and your personal attitude towards the subject of investment risk.

 

Talk to us for expert advice.

 

The value of investments and any income from them can fall as well as rise. You may not get back the amount originally invested.

 


 

*** TUESDAY 13TH FEBRUARY 2018 ***

 

Could your status update affect your claim?

 

Given the nature of social media and the millions of us who use it every day, you probably weren’t alone in posting pictures, videos and status updates showing off your recent Christmas presents and festive celebrations.

But did you stop to think that posting information like this on Instagram, Facebook, Twitter or Snapchat could be advertising your property, your whereabouts and your latest expensive Christmas gadget to criminals, and potentially void your home insurance?

 

Counting the cost of burglary
There were 650,000 domestic burglaries in the 12 months to March 2017, costing, on average, £2,267 in stolen valuables and £566 worth of damage.

Figures also show that the number of claims relating to domestic burglary increases by a whopping 36% from November to March. This could be down to the longer nights providing more opportunities for criminal activity, and the likelihood of burglars finding expensive purchases and presents following the Christmas period.

 

Take a break from social media

If you suffer a break-in shortly after publishing your latest holiday snaps on social media, it could lead to your home insurance provider deciding you are partly at fault for advertising an empty property and this could affect your claim.

 

Are you vulnerable?
When assessing an application for home insurance, insurers are reportedly considering asking homeowners if they use social media, as the risk of over-sharing becomes more and more common. If you use social media and think it could affect your home insurance, consider taking the following steps to reduce your risk:

 1. Turn off location-based services on the social media accounts you use

 2. Never share your home address on social media

 3. Make your posts private so that only your friends and connections can see them

It also makes sense to review your home insurance cover, especially after Christmas or birthdays when you may have bought or received expensive items.

If you’re concerned you may not have the right type of cover, or you think you might be underinsured, please talk to us.

 

 


 

*** MONDAY 15TH JANUARY 20018 ***

 

The ABC of Junior ISAs

The Junior Individual Savings Account (ISA) was introduced in 2011, 12 years after the launch of the original ISA in 1999, which recently celebrated its 18th birthday

In a nutshell, the Junior ISA is a long-term, tax-free savings account for children. It effectively replaced the Child Trust Fund and aims to enable parents to save a tax-efficient nest egg for their children.

There are two types of Junior ISA and your child can have one or both types:

• A cash Junior ISA, where you won’t pay tax on interest on the cash you save.

• A stocks and shares Junior ISA, where your cash is invested and you won’t pay tax on any capital growth or dividends you receive.

Managing the money
Only parents, or guardians with parental responsibility, can open a Junior ISA for under 16s, but the money belongs to the child. Until the child turns 16, the parent can manage the account if they want to make changes. For example, they could change the account from a cash to a stocks and shares Junior ISA or change the account provider.

The child takes over control of the account when they turn 16 and they can access their money from age 18 (when the ISA automatically loses its 'Junior' status).

Children aged 16 or older can open their own Junior ISA, as well as an adult cash ISA (with maximum contribution limits of £4,128 and £20,000 respectively, for the 2017-18 tax year).

Paying into a Junior ISA
Anyone can pay into a Junior ISA, but the total amount paid in can’t exceed £4,128 in the 2017/18 tax year and £4,260 for 2018/19. If you go over this limit, the excess is held in a savings account in trust for the child and cannot be returned.

During the 2017/18 tax if you have paid £2,000 into a child’s Cash Junior ISA you can only pay £2,128 into their stocks and shares Junior ISA. You can make contributions into a Junior ISA until the child’s 18th birthday.

Contains public sector information licensed under the Open Government Licence v3.0.

The tax efficiency of ISAs is based on current rules.
The current tax situation may not be maintained. The benefit of the tax treatment depends on the individual circumstances. The value of your stocks and shares ISA and any income from it may fall as well as rise. You may not get back the amount you originally invested.

If you'd like more information on Junior ISAs, please get in touch.

 


 

*** THURSDAY 5th OCTOBER 2017 ***

 

Are you retiring soon?

 

If you are planning on retiring soon there are a few things you may like to consider before you make any important decisions.

 

Gather all the information - You need to gather information on all your assets, including pensions as well as savings and investments. Don’t forget to include your State Pension. There are ways to boost your State Pension; such as buying top ups - which apply for women born before April 6, 1953 and men before April 6, 1951. These can increase your state pension by up to £25 a week - so is well worth investigating. You can also get a higher monthly pension by delaying when you take the first payments.

 

Once you have the paperwork together you will need to consider what you expect to live off. Work out your current living expenses and what you expect to spend more or less on as you leave work as well as your long-term plans for the future.

 

The Bank of England Base Rate has been below 1% for over eight years causing interest rates to be low which in turn makes retirement saving more difficult. If you find the numbers don’t add up, you could consider increasing the amount you pay in to your pension and/or staying in full-time or part-time work longer than you originally planned until you close the gap.

 

Consider tax - Usually 25% of your pension can be taken tax free and the other 75% is taxed as earned income.

 

Getting the right tax advice could help you withdraw your cash in the most tax efficient way. For example, you may be able to take a smaller amount of money from your pension and more from your ISA (which can be tax free).

 

Get advice - With many different types of options available for your retirement it can be an overwhelming decision to make the right choice for your needs. We can help you understand all the options open to you and help you avoid risks such as the impact of poor investment market performance both in the run-up and early in retirement or potentially running out of money in retirement.

If you’d like advice on your retirement options or pension income, please get in touch.

 

 


 

*** FRIDAY 25th AUGUST 2017 ***

 

Is your pension tax efficient?

Since April 2015, pensioners have had greater freedom over how they manage their retirement savings. No longer forced to buy an annuity, they can now leave their money invested and draw an income from it (known as flexi-access drawdown).

Whether you’ve already stopped working, or you’re planning to retire soon, you should be familiar with the various allowances and tax-efficient accounts which may reduce your tax liability. Here’s a brief summary:

 

Tax-free lump sum

You can take a tax-free lump sum of 25% of your total pension pot. With the rest, you can either buy an annuity or reinvest it and draw an income. Alternatively, you can withdraw the full pot as cash and pay tax on the other 75%, or delay taking it so it remains invested.

Another option is to take smaller amounts on a more regular basis and leave the rest untouched. Each time the first 25% is tax-free, but you pay tax on the balance. In this case, your pot isn’t reinvested.

 

Personal allowance

For anyone earning up to £100,000, you don’t pay tax on any form of income up to the personal allowance of £11,500 (in the 2017-18 tax year). This allowance is reduced by £1 for every £2 earned above the threshold. So when you stop working and start drawing pension income, you won’t pay tax on it until the payments exceed your personal allowance. However, as long as you’re still employed, even in a part- time job, your earnings eat into your allowance. The tax-free lump sums discussed earlier don’t count towards your personal allowance.

 

Individual Savings Accounts (ISA)

If you decide to withdraw a lump sum, one option is to put it in a cash or stocks and shares ISA. ISAs are tax-efficient accounts which protect returns (interest earned in a cash ISA, and gains and income generated by a stocks and shares ISA) from income tax and capital gains tax. The annual ISA allowance of £20,000 in the 2017-18 tax year may come in handy if your pot is big enough.

 

Dividend allowance

You can earn dividends tax-free on investments you hold outside your ISA thanks to the annual dividend allowance. This is £5,000 for the 2017-18 tax year, although it falls to £2,000 from April 2018.

 

Personal Savings Allowance (PSA)

You can also take advantage of the PSA for any savings you have outside a cash ISA. Basic rate taxpayers can earn £1,000 in interest tax-free and higher rate taxpayers can earn £500. Additional rate taxpayers don’t get a PSA.

 

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

 

The value of your investments and any income from them may fall as well as rise and is not guaranteed. You may get back less than you invest. Stocks and shares ISAs are considered medium to long-term investments and you should be prepared to invest for at least five years.

 

If you’d like advice on your retirement options or pension income, please get in touch.

 


 

 *** WEDNESDAY 19th JULY 2017 *** 

 

Achieving Your Financial Goals

We lead complex lives in an increasingly complex world. As financial planning experts we can help you better understand your financial challenges, goals and needs, and help you find appropriate ways to meet them.

Even a seemingly straightforward financial goal can involve numerous decisions and a lot of time and effort getting it right. Whether it’s buying a home, investing for the future or protecting the people and things you cherish, we're here to help you make the right choices for your needs. Here are some of the services we provide, which our clients have told us they value the most.

 

Mortgages - With so many mortgage lenders offering products on the high street and online, it can be tempting to cut out the middle man. But when you’re making such a huge financial commitment, professional guidance can be invaluable, particularly if your needs are out of the ordinary. As well as arranging your mortgage we can also recommend specialist professional services that can help with other elements of your home-buying process, including solicitors and surveyors.

 

Protection - When using comparison sites and direct insurers, how can you be sure their “off-the-peg” solutions meet your specific needs? Using our expert product knowledge we can help you find the most appropriate solution for you. Whatever your particular need – be it income, family, mortgage or business protection – we can access high quality products from a range of handpicked providers; providers we have selected because they are proud to stand behind claims when it matters the most.

 

Investment planning - As well as your pension, you may have opportunities to invest lump sums – such as an inheritance or bonus – but are unsure about how to do this. As with all areas of financial planning, it pays to have a clear objective or vision.

We can talk you through the important things to consider and help you create a balanced and diversified portfolio, taking into account your financial goals, attitude to risk, and any appropriate tax planning.

 

Retirement planning - The responsibility to create a comfortable retirement is falling increasingly on the individual, and the new pension regulations, whilst bringing welcome freedoms, introduce additional complexity to your at-retirement choices. The right financial plan could help secure a more comfortable retirement – not just for you, but also for your loved ones and heirs.

We can help you navigate the complexities of the new rules. Knowing what can be achieved and establishing the right strategy as early as possible can help you prepare for the future.

 

Inheritance Tax Planning - Passing our hard-earned wealth to loved ones often forms a big part of our ambitions. The right forward planning can help you maximise your heirs’ inheritance by minimising tax liabilities. We can help you put the right structures in place.

Your needs in any and all of these areas will change over time, and regulatory changes can impact the effectiveness of any structures already in place. That's why we recommend regular reviews to ensure your plans remain on track.

 

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

The value of investments and any income from them can fall as well as rise. You may not get back the amount originally invested.

Your home may be repossessed if you do not keep up repayments on your mortgage.

 

 


 

*** THURSDAY 11th MAY 2017 ***

 

Investment Jargon Buster !!

 

Assets: anything an individual, company or fund owns which has economic (tradable) value.

Asset classes: Groups of securities or investments with similar characteristics that behave in a similar fashion and are subject to the same laws and regulations. The most common ones are Cash, Shares, Property & Fixed Interest Securities.

Bond: is an IOU for a loan to a government or company. Usually for a fixed term and with a fixed rate of return paid to the investor at fixed intervals until the loan is repaid. Sometimes called Fixed Interest Securities.

Commodities: bulk goods traded on an exchange. Examples include gold, silver and platinum; iron, steel and tin; grain, coffee and sugar.

Consumer Price Index (CPI): periodically measures the price of a basket of goods and services purchased by households, used to give an indication of UK inflation.

Default risk: the risk that the bond issuer will not be able to repay the interest or initial investment to the investor.

Developed market: an established market economy, with sound, well-established economies and are therefore thought to offer safer, more stable investment opportunities than developing markets.

Diversification: a policy of reducing your exposure to any one particular asset or risk. This usually involves selecting a range of asset classes which do not move in perfect synchronisation with each other.

Dividend: a distribution of profits to shareholders. Each share is allocated a percentage of the distribution.

Emerging markets: less developed economies generally characterised as transitioning from a restricted or controlled economy to a free-market economy, with increasing economic freedom, and gradual integration into the global economy.

Equity: a share in the ownership of a company

Fiscal policy: government policies that seek to influence the domestic economy including tax rates, interest rates and spending policies.

Fixed Income Security: a loan to a government or company, usually for a fixed term and with a fixed rate of return paid to the investor at fixed intervals until the loan is repaid.

Investment trust: Set up as companies with a fixed number of shares and like any listed company the shares trade. Allows you to pool your money with other investors to get access to range of assets through a single investment.

Mutual fund: allows you to pool money with other investors to purchase stocks, bonds and other securities.

OEIC (Open Ended Investment Company): this is a collective investment fund. Managers pool investors' money to buy shares, bonds cash, property and other investments. The number of shares in circulation varies depending on demand from investors.

Retail Price Index (RPI): Like the CPI, this tracks changes in the cost of a fixed basket of goods over time. However, the RPI also includes housing costs, such as mortgage interest payments and council tax, as well as TV licence and road tax costs.

Risk: the chance that an investment will lose value or that its return will be less than expected.

Structured deposit: a portfolio that offers a degree of protection to capital whilst offering the potential for higher returns. The higher the risk to capital, the greater the potential return.

Volatility: a risk measure that describes the degree to which performance varies over time and thus an indication of one’s ability to predict whether performance is going to be positive or negative.