Monday 16 December 2013

Start of 2014

With the start of 2014 Sovereign enters its 33rd year of trading. As always there were challenges to overcome in 2013 and more coming up in 2014. 2014 starts with an economy which looks to be on the road to recovery and with that cautious optimism comes an improving property market. The market will continue to benefit from the Government’s Help-to-Buy schemes as more first-time buyers and property movers now can buy with as little as a 5% deposit. In 2014 more employers will face having to move over to Compulsory Enrolment whereby they have to bring all of their staff into a company pension scheme and start paying something into the employee’s pension as well. While it represents a worthwhile effort to get people to start saving for retirement, it represents a large new administrative burden on employers. Those with 50 employees or less are not in the firing line until 2015/16. 2013 certainly had Great Britain fully on display with the Queen’s Diamond Jubilee, the Olympics and Para-Olympics, and a Brit winning the Wimbledon Men’s Finals for the first time in a very long time. 2014 may not be as full of spectacular presentations. There are the Winter Olympics in Russia and the World Cup in Brazil, but predictions of great results in either of these are a bit hard to find. 2014 will probably see politicians making many promises in advance of the next General Election in 2015. This was already visible in the Government’s Autumn Budget Statement. The Chancellor made a number of promises not due to start until April 2015 while the General Election is due to take place on 7 May 2015 and he might not be around afterwards!

Tuesday 10 December 2013

Warning - plastic may damage your wealth!

As we move into the Christmas spending season, do remember that credit and store cards should be paid off in full each month. Otherwise the outstanding amount owed can hang around for many Christmases to come.

Monday 2 December 2013

Will Interest Rates Increase?

Think Ahead ! Improvements in the UK economy are good news but are also warning lights for an increase in interest rates. The Governor of the Bank of England's target for unemployment is getting close. It is a good time to lock into fixed rates with your residential mortgage to avoid hikes in your monthly outgoings. We recommend looking at five year deals.

Monday 25 November 2013

ARE YOUR SAVINGS SAFE?

Remember that your cash savings are protected by the Financial Services Compensation Account, but only up to £85,000 for each saver for each of his accounts with different financial institutions. The thing to be aware of is that some savings institutions are part of the same banking group, and your protection is limited to £85,000 for all of your accounts with that group. It is a good idea to check and make sure. And remember that accounts held jointly with a spouse are entitled to twice the £85,000 protection, i.e. £170,000.

Thursday 21 November 2013

Pension Alerts

The maximum allowance for pension savings is £50,000 in this current 2013/2014 tax year but it reduces to £40,000 in the following tax year. The Pension Lifetime Allowance is also reducing from 6 April 2014. Currently it is £1.5 million but will go down to £1.25 million. If you are one of the lucky ones to have this as a problem, do take advice as you may have some options to help you.

Monday 18 November 2013

Could Mortgage Interest Rates Go Up Soon? Can You Save Money Immediately?

With the economy starting to improve a rise in mortgage interest rates starts to look more likely. Fixed interest rates are at historically very low levels and it is worth taking advantage of this opportunity. Check your mortgage now! If you are on your lender’s normal variable rate, contact us to discuss your options.

Monday 11 November 2013

How to Make the Most of What You Have! (Understanding Your Pension Options)

Pensions can be complicated and difficult to understand, particularly as Governments are forever making changes to pension rules. If you have any pensions that you would like to review, please contact us. We have the expertise and experience to help you understand the options and action your choices. If you are not already in receipt of your State Pension, it is also worth finding out how the coming changes will affect, when you will receive it and how much it will be.

Monday 4 November 2013

USING OUR EXPERIENCE AND EXPERTISE

We have accumulated much experience and expertise over the last 30 plus years which we would be happy to put to use for your benefit. We also aim to provide a speedy and efficient service, and we do consistently receive a “10” rating on the 1 to 10 ratings in our Service Questionnaire. Here are a few recent client comments: “Thank you very much for your continued good services and achievements, and thank you for your patience and care.” – Mr ER of Kent “You have delivered a fantastic service in this remortgage matter. We would like to thank you personally VERY much for your great help with getting us a new mortgage.” – Mr & Mrs WDL of West Sussex “Just keep up the friendly, personal service.” – Mr DM of East Sussex “I wanted someone I felt would give me a personal service. You listened, you were speedy, you helped me. What more could I ask! – Mrs SR of London “We are exceptionally grateful for your persistence and hard work. Thank you ever so much.” – Mr AB and MS HR of Kent “I have worked with you before and have always been happy with the service and advice.” – Mrs D F of London “Thank you very much for your help on this and the speed with which you dealt with our enquiries.” – AG of Wales

Monday 28 October 2013

PAYDAY LOANS AND CREDIT UNIONS

There has been considerable controversy about payday lenders providing small loans at very high interest rates. Even the Archbishop of Canterbury has entered the fray. It has served to highlight one of the lesser known type of financial institutions – the credit union. These are small non-profit financial organisations set up by members with something in common and with the intention to benefit their community. The common factor might be those living in the same area or working in the same industry. If you are interested in finding out about credit unions near to you, search on www.findyourcreditunion.co.uk.

Tuesday 22 October 2013

HOW MUCH WOULD LIFE ASSURANCE COST?

We are required by law to insure our car and our driving, our home and its contents, but insuring our lives is not required, even though the consequences of an unexpected death can be very considerable. Research by the Liverpool Victoria Assurance Company has established that only 31% of households in the UK have life assurance. Life assurance does not need to be expensive. Give us a call and we can tell you what it would cost within the hour.

Monday 14 October 2013

BUY NOW!

It is probably the best time to set up a new mortgage whether by purchasing or remortgaging. The rates are at historical lows and there are changes in mortgage regulation being introduced by the Regulators in April next year which could make obtaining mortgages more difficult than it is now. Lenders and mortgage brokers will have more hoops they have to jump through, and lenders are likely to have to keep higher reserves to support their lending. If you are not locked into a mortgage, we would recommend that you look at your options now. Just give us a ring and we can tell you what may be available for you.

Monday 7 October 2013

More Mortgage Options

Also available to help people to buy property are various Shared Ownership Schemes whereby a person buys part of a property and pays rent for the rest of it. To find out more information on this contact the local Help To Buy Agent, by going on line and searching on Help To Buy Agent. There is also to be another Government scheme to be launched in January 2014 which is to help those looking to buy properties which do not have to be new. While we know that it intended to assist those who can only afford a 5% deposit like the other Help To Buy schemes, the full details of this scheme are still being worked on and we will hear more about them later in the year.

Monday 30 September 2013

MORTGAGES AND THE PROPERTY MARKET

The property market is reported to be rising at a rate higher than for many years, although this does vary according to where you live. Contributing to this is likely to be the strong increase in the number of First Time Buyers, which is rising more quickly than for many years. There are several reasons for this. First, mortgage rates have fallen to their most competitive level for many years, if not ever. Another reason is the assistance that the Government has been providing through its “Help To Buy” schemes. The focus of the “Help To Buy” schemes most recently have been new properties. The Help To Buy equity loan scheme provides help in the way of any equity loan so buyers with only a 5% deposit can get help with a loan of a further 20% of the purchase price, so that buyers only have to get a mortgage for 75% of the purchase price. The equity loan carries no payments for the first 5 years. When the property comes to be sold, 20% of the sale price will need to be used to discharge the loan – regardless of whether the property value has gone up or gone down. Another option for new properties has been the NewBuy scheme. This is also intended to help those who can contribute only a 5% deposit. In this case the builder and the Government pay for an insurance policy which guarantees part of the mortgage, so if the property is sold at a loss, the insurance policy will cover the difference. With this scheme and the equity loan scheme, the buyers must be using the scheme to purchase the property for their own private residence. They do not have to be First Time Buyers but they cannot have any other properties. And most importantly, of course, with either scheme the purchasers need to be able to afford the mortgage and meet the lenders’ income and affordability requirements.

Monday 23 September 2013

OTHER OPTIONS FOR INCOME IN RETIREMENT

While pensions are traditionally the way most people will provide for themselves in their later years, they are not the only option. Many people have greater faith in property and will build up a portfolio of residential investment properties producing a net rental income and the possibility of an increase in the property values. Mortgages for Buy-To-Lets have become very competitive and still can be done on an interest-only basis in order to maximise the income produced. Please contact us if you require any further information about Buy-To-Let mortgages. Other savings such as Individual Savings Accounts and stocks and shares generally can also provide an income in retirement. The return on cash investments is not very good currently but has been better in the past. The income from shares in the way of dividends can provide a very useful source of retirement income, for those who understand the risks and are willing to take them. Pretty much a last resort for income or a lump sum in retirement are Equity Release Plans. They are available from age 55 (note: for a couple the qualifying age is determined by the younger of the two). Interest rates and costs for these options have been going down, so they are worth reviewing if needed. We would be happy to provide quotes and clarify the options for you.

Tuesday 17 September 2013

Finding Lost Pensions

Commonly people have accumulated various pension entitlements over the years and it is important to track these all down. The Government provides a Pension Tracing Service which will help you locate any bits that might have gone missing. For details of how to use this Tracing Service (which is free), google Pension Tracing Service or ring them on 0800 1223104.

Tuesday 10 September 2013

Getting the most out of your Pensions

From age 55 onwards you can take benefits from private pensions, although the State Pension will not start until you reach your 60s. Note: to get the date for when your State Pension will start, go on line and google “State Pension Age Calculator” and follow the simple steps. There are a number of ways you can take your private pension benefits and you should take advice to ensure you understand all your choices and to work out what would be best for you. Your financial circumstances, age, and state of health will all need to be taken into account to work out what Tax Free Cash you might want to take and how and when you may want to draw an income. Research has shown that unexpected changes can occur early in retirement with 31% of retirees within the first five years of retirement experiencing worsening health, 10% being diagnosed with a serious illness and 26% needing to help family members financially. These are all points that should be discussed in working out how to best use your pension assets. We would be pleased to use our experience and expertise to assist you.

Tuesday 3 September 2013

COMPULSORY WORKPLACE PENSION

This problem of lack of saving towards retirement is not a new discovery and the Government has sought to help address this with a compulsory workplace pension for all who are employed. This was established as a legal requirement in October 2012 but will take about 5 years to roll out to reach all employers. They have started with the larger employees and between now and 2017 all employers will have to set up a company pension scheme and this will include mandatory contributions by both employers and employees to the employees’ pensions. In many cases employers already have a company pension which can be adapted to the requirements of the Compulsory Enrolment legislation. If a company does not have a pension scheme, it will need to make its own arrangements. The requirements are very precise and employers will need to allow adequate time and resources for putting them in place. It is recommended that an employer starts dealing with this 12 months before their “Staging Date” – the date at which they are required to have the Workplace Pension up and running. Note: an employer can find out when it’s Staging Date is by going on-line to: www.thepensionsregulator.gov.uk/employers

Wednesday 28 August 2013

PENSIONS – THINKING AHEAD

A survey done recently by the consumer group, “Which”, has provided some useful information about thinking ahead to retirement by establishing what a minimum level of pension income provision would be in retirement and how much savings would be needed to achieve it. The survey showed that 59% of people who are not yet retired do not know how much pension they need to accumulate in order to live comfortably in retirement. By further survey they established that the average minimum level of pension income people estimated they would require in retirement at today’s values would be about £15,136 per annum. With the basic State Pension currently providing £110.15 per week, that would leave a shortfall of about £9,408 per annum - £784 per month. As a guideline the survey shows how much per month would be needed to make up this shortfall depending on the starting age. For a 25-year-old it is £214 per month, a 35-year-old £324 per month, and a 45-year-old £581 per month. Sadly the survey also showed that 46% of people who have not yet retired are making no effort to save for retirement.

Tuesday 20 August 2013

The Value of Experience and Expertise!

By survey what you want from us is our advice on financial matters, utilising our extensive knowledge and long experience going back over 30 years. We enjoy helping in this way and continuing to assist our clients and their friends and their children. Those that have used us do know they can rely on us again and again. In recent service questionnaires when asked why they chose to use Sovereign Finance we received answers such as the following: “We dealt with Sovereign Finance before and found them of good service, reliable and honest. Always.” Mr GS of Ashford “Thank you so much for making it all happen so fast. Brilliant!” Mrs SR of London “Mr Shuster is dedicated to getting the right result.” Mrs HT of West Sussex “We had previously used Sovereign and had confidence in the advice given. We expected a good service and that’s what we got.” Mr KH of Eastbourne “The service I received was excellent with regular correspondence and home visits. Good work. Keep it up”! Mr MB of Pembury

Tuesday 13 August 2013

Savings/Investment Tips

1. Don’t put all your eggs in one basket. 2. Do your homework. 3. Don’t gamble with money you can’t afford to lose. 4. Don’t be greedy. Expecting very high returns can expose you to very high risks. 5. Invest for the Long-Term. 6. Include tax planning in working out your savings and investments.

Monday 5 August 2013

Financial Checklist

When reviewing your finances, here are some points to consider: 1. You need to arrange your income and expenditure to ensure you have more coming in than going out! 2. Save for a rainy day. You need to build up a surplus. 3. Virtually everyone should make a will. It is estimated that 30 million people in the UK have not done so! 4. Review your finances (including your mortgage rate and your savings interest rates) at least once a year. 5. Plan ahead. The odds are that you are going to live a long life and you need to plan how you will pay your bills when you no longer are able/want to work. 6. Take professional advice when dealing with major financial decisions – house-buying, pension arrangements, long term savings.

Monday 29 July 2013

Pension Notes

There were fewer changes to do with pensions this year in the Budget, but it is worth reviewing the key facts regarding pensions:

1. The usual minimum age to take pension benefits is 55 – male or female

2. Normally you can take up to 25% of your pension fund as Tax Free Cash.

3. You do not have to retire to take your pension benefits.

4. If the total of your pension funds is less than £18,000, from age 60 you can take it all as cash (25% Tax Free) and the balance taxed as earned income.

5. If you have a couple of very small pots (less than £2000 in each pot), from age 60 you can take these all as cash (25% Tax Free and the rest taxed as income).

6. You have various options when you take your pension benefits including:

a) an enhanced annuity (higher income) if you have serious medical issues;
b) taking just your Tax Free Cash and leaving the balance invested until later and with the option of taking an income from your pension fund annually;
c) taking an annuity which guarantees an income for as long as you live – level or increasing payments.

We can help advise on all of your choices so as to help customise your pension benefits to meet your needs. Give us a ring on 01342 313302.

Monday 22 July 2013

How Much is a Mum or Dad Worth?

Those who have children should certainly consider having life assurance. Recent research showed that only 53% of parents in the UK had life assurance and this level is decreasing. The research looked at what it would cost if a family lost a parent and had to replace all of the work they do. The value of replacing a Mum worked out at £30,032 and a Dad at £21,306 (Dads take note!). Contact us and we can provide quotes speedily.

Monday 15 July 2013

Unusual Mortgage Solutions

While rates are competitive, the majority of lenders have brought in new restrictions on age to meet the regulators requirements. Nevertheless, there are niche lenders who can help deal with such situations where borrowing needs to go past the usual retirement age of 65. We will be pleased to assist in finding a solution. There are also Equity Release options from age 55 onwards although these are usually “last resort” solutions.

Monday 8 July 2013

Cheap Mortgages

Rates for new mortgages are very competitive currently with fixed rates at record lows. However, the majority of borrowers are still suffering from being on their lender’s Standard Variable Rate ranging from 4.5% upwards. If you are a mortgage payer do make a point of checking out what interest rate you are being charged.

We can then assist you with quotes for what you could get if you changed lenders.
Such a change can save thousands of pounds over a year or two.

Friday 5 July 2013

Help for the Property Market

The Chancellor announced additional measures to help more people buy property – whether they are First-Time Buyers struggling to raise a deposit, or those with a growing family needing to move but without sufficient value in their current home to enable them to move to a larger place. This is already in effect for new builds where the builders and/or Government help with the deposit. From January 2014 the help is to be expanded with the Help to Buy mortgage scheme which will not be limited to newly built properties and will only require a 5% deposit.

Wednesday 26 June 2013

Long Term Care Costs to be Capped


In the Queen’s Speech the Government announced their intention from 2016 to put a cap on the costs that people are expected to pay if they go into long-term care. This is expected to be £72,000. Anything over this is to be paid for by the state. Those people who have accumulated savings and bought their homes currently face the prospect of the whole value of the estate disappearing in care home fees. Under the new guidelines it looks we will have the opportunity to keep more of the value of our estates – for our own use or to pass down to our beneficiaries.

Monday 17 June 2013

State Pension to Change

The Chancellor has also confirmed some changes in the future. Probably the most

significant one is a change in the State Pension from 2016. All those reaching their
State Retirement Age from 6 April 2016 onwards will receive a flat-rate State Pension
of £144.00 per week. This change will only be for new pensioners so existing pensioners will still have the Basic State Pension, and any additional State 2nd Pension/ State Earnings Related Pension they may qualify for. Along with the higher State Pension will come the requirement that Pensioners seeking the maximum will need to have worked and paid National Insurance Contributions for 35 years as compared to the current requirement of 30 years.

Monday 10 June 2013

Capital Gains Tax

The Capital Gains Tax allowance has gone up slightly – from £10,600 to £10,900.


The Inheritance Tax Threshold remains at £325,000. The Cash ISA (Individual

Savings Account) annual maximum has increased from £5,640 to £5,760. A

Stocks and Shares ISA in 2014 can have £5,760 put in it as well, so the total

ISA allowance is £11,520. The Stamp Duty Tax on property purchase remains

the same as last year with those purchasing a property for over £2,000,000 suffering

an eye-watering 7% tax (£140,000 on a £2,000,001 purchase).

Monday 3 June 2013

Personal Tax Allowance

The Personal Tax Allowance goes up from £8,105 to £9,440. This is the amount you can earn before you start paying tax. However, the Government has also once again reduced the point at which higher rate tax becomes payable. This kicks in now at £34,370. For those with the standard personal allowance this means they would start paying 40% tax on earnings above £43,810 (personal tax allowance of £9,440 plus the Basic Rate Band of £34,370). In 2013/14 the highest rate of tax – for those earning in excess of £150,000 – has come down from 50% to 45%.

Tuesday 28 May 2013

Pension Changes

The new state pension – which will be introduced no earlier than April 2017 – will be equal to £144 a week in today’s money. All state pension rights accrued under the old system will be recognised, so people will not lose any pension they have earned.


Individuals will have to make 35 years worth of National Insurance contributions in order to receive the full amount and will have to accrue a minimum number of qualifying years – probably between seven and 10 – to be eligible for any state pension at all. The Department for Work & Pensions calculates, by the 2040s, more than four-fifths of people achieving state pensionable age will receive the full flat-rate pension payment.

The National Association of Pension Funds (NAPF) has welcomed the announcement, describing the new system as “a much-needed shake-up that will ultimately help millions of pensioners and savers”, adding: “A flat-rate system dovetails with the recent auto-enrolment reforms by helping workers see what they need to save in their new workplace pension.” However, the NAPF also warned the transition needed to be managed “carefully”.

The government believes at least half of all people reaching state pension age before 2050 are likely to be better off under the new system. In particular, self-employed people and women who have left the workplace to bring up children are likely to benefit. On average, 750,000 women who reach state pensionable age in the decade after the introduction of the new system are expected to receive an additional £9 a week in today’s money.

Nevertheless, many people will not benefit from the new system, including those who reach state-pensionable age before April 2017 and, while it does improve the ‘safety net’ for British pensioners, it should really only be seen as part of an overall retirement plan.

Wednesday 22 May 2013

Pensions Update

Meanwhile, according to Scottish Widows’ ‘Women & Pensions Report’, 43% of women will rely on joint savings with their partners in order to fund their retirement. Only 17% of women believe their own savings will be sufficient to fund their retirement, compared with 30% of men. Yet one in three UK marriages now end in divorce within 15 years and so it is important women take charge of their own retirement plans. After all, alongside accepting the inevitability of old age, we should also accept the possibility of unforeseen events.


At the same time, women are saving an average of £776 a year less than men for their retirement. Scottish Widows calculates a 30-year-old woman who maintains this average annual rate of saving will save £29,800 less than her male counterpart by the age of 65. More worrying still, 26% of women are saving nothing at all for their retirement, compared with 19% of men.

Of course, it is not always easy to plan for the future, particularly in an environment of rising prices. Pressure on household budgets can make it a challenge to find additional cash that can be earmarked for retirement. Nevertheless, it is worth reviewing your current expenditure to see how your lifestyle would be affected by retirement. Most of us have a finite number of years in which to put aside money for our old age and it is never too soon to start.

Above all, you need to plan early to allow yourself as much time as possible to build your nest egg. Take control of your future – your financial adviser can help you to develop a suitable long-term savings strategy for you. The only thing you cannot afford to do is nothing.

Monday 13 May 2013

Managing debt

For many people, debt is a necessary part of everyday life – for example, few people are able to buy a home without a mortgage. If properly managed, debt can be a useful tool – but it is essential to remain in control.


You are unlikely to receive more interest on your savings than you will pay on your borrowings. It is generally prudent therefore to concentrate on paying down your debts before you focus on savings. Nevertheless, you should still aim to have a cash buffer you can access in an emergency – as a rule of thumb, enough to last you for three months.

Don’t ignore debt – it will not disappear. If you have debts on top of your mortgage, the most sensible strategy is to try to pay off any outstanding loans, using your savings if necessary. You should always clear your most expensive loans first, although you should check in case there are charges for early repayment. According to the Money Advice Service, the most expensive debts are incurred through credit or store cards, unauthorised overdrafts, catalogue shopping, payday loans and door-to-door loans.

Nevertheless, bills such as mortgage or rental payments, electricity or gas bills, council tax, income tax or VAT remain top priority. Failure to keep up with these payments could result in loss of energy supply, perhaps the loss of your home and maybe even a prison sentence. Although credit-card debt is expensive, failure to pay will not end in prison, although you might face court action and the seizure of your possessions.

According to research by Nationwide Building Society, more than half of UK credit cardholders would never consider doing a balance transfer on their credit cards. However, by not moving their balance, people are not taking advantage of a useful way to manage their debt and could be missing out on making savings.

Debt consolidation services allow you to combine all your loans into one. However, they are a relatively high-risk strategy – their long-term cost can be very high, and they are usually secured against your house, putting your home at risk if you do not manage to keep up with the loan repayments.

If you are having problems, take expert advice from your financial adviser or a free debt advice agency, or talk to the Citizens Advice Bureau. Above all, make sure you are in control of your debt. Don’t allow your debt to control you.

Tuesday 30 April 2013

COMPULSORY PENSION JUST AROUND THE CORNER!

If you are an employee or an employer, this is vital data that affects you. Over the next few years all employers will have to set up a mandatory pension for their employees into which both employer and employee must contribute. This comes from The Pensions Act 2008 Section 3(2) which states: “The employers must make prescribed arrangements by which the jobholder become an active member of an automatic enrolment scheme…” The only exception would be a one man limited company with the director being the only employee. There are estimated to be 1.2 million employers and, of these, some 86% (over 1 million) have no pension scheme for their employees. The penalties for non-compliance can be severe starting with a Fixed Penalty of £400 and rising up to “imprisonment for a term not exceeding two years or to a fine, or both”.


This compulsory pension is being phased in – with the employers with the highest number of employees being required to start first. Each company will have its own “Staging Date”, i.e. the date by which it needs to action the setting up of the compulsory pension. If you are an employer, you can find out your Staging Date by going on line to www.thepensionsregulator.gov.uk/employers/staging The level of contribution starts at 1% of salary by employer and 1% by employee. From 2017 this goes up to 2% by employer and 3% by employee. And by 2018 it reaches its final level of 3% of salary paid in by the employer and 5% by the employee.

Not only will this represent an additional expense by employers who have no current pension scheme, it will also require a significant amount of time to carry out all of the actions required. While those with less than 30 employees will not reach their Staging Dates until 2016/2017. It is estimated that all employers need to take action at least 12 months before their Staging Date. There will be 10s of thousands of companies with the same staging dates and those who do not prepare in advance may find that there is little or no help available to them, with the help available having already been taken up by other companies who have acted earlier. Effective software will be the key to a successful operating basis for a compulsory works pension.

Monday 22 April 2013

A HIGHER STATE PENSION ON THE WAY?

If you are doing some pension planning, it is worth knowing that the Government is proposing to bring in a flat rate State Pension from April 2017 which would be the equivalent to £148.00 per week now. Currently the Basic State Pension is £107.45 per week. The new flat rate pension is intended to simplify the system. It is intended to improve the "safety net" for British pensions, but it should only really be seen as part of an overall retirement plan.

Monday 8 April 2013

Review your mortgage arrangements

If you are on your lender’s Standard Variable Rate and paying more than 4.5%, find out what other options your lender can offer and then contact us. We can look at what is available in the marketplace so you have some basis of comparison. It can save you thousands of pounds over the term of the mortgage.

Tuesday 2 April 2013

Review your pensions

You may have pension pots in various places from previous employments or pension savings arrangements. Find out what the fund values are and what funds you are invested in. You can then look squarely at how much pension income you are likely to have available in your later years and act accordingly. We will be happy to help you work out what these might add up to eventually. Also, make sure that your various pension providers have your current address so they do not lose track of you.

Monday 25 March 2013

Review your life assurance arrangements

Pull out the documents and see how much you are covered for and for how long. You may find a policy is coming to its end and you can ask us to check the cost to ensure you are not overpaying for your life assurance. The Uni-Sex insurance directive that came into force at the end of 2012 has brought about various changes in the costs of life assurance – some good and some bad!

Monday 18 March 2013

Be aware of your Tax Allowances

Be aware of your Tax Allowances and take advantage of them and ensure your spouse does so as well - if you are married.


                                                       2012/13                                          2013/14

Personal Tax Allowance                   £8,105                                           £9,440

For those aged 65/74                       £10,500                                         £10,500 (no change)

For those 75 and over                      £10,660                                         £10,660 (no change)


Note: The Age Related Allowances above are only available to those whose total income is less than £25,400 in the current Tax Year and £26,100 in the new Tax Year.

Monday 11 March 2013

The end of the Tax Year

We are approaching the end of the Tax Year and it is a good time to ensure we are all taking advantage of all of the tax allowances available, including the Personal Tax Allowance, the ISA (Individual Savings Account) allowance, the Capital Gains Tax allowance, etc.


Use your Capital Gains Tax Allowance if you have investments that have gone up in value. You can realise tax-free profits of up to £10,600. As with your ISA allowance, you cannot carry this forward. Use it or lose it!

Maximise your pension contributions where possible. In the current Tax Year you can put a maximum of £50,000 into your pension, and even more if you have not used up your pension payment allowance in the preceding three years. In the new Tax Year this maximum reduces to £40,000. We would be pleased to assist.

Monday 4 March 2013

Review all of your cash deposit accounts

We are approaching the end of the Tax Year and it is a good time to ensure we are all taking advantage of all of the tax allowances available, including the Personal Tax Allowance, the ISA (Individual Savings Account) allowance, the Capital Gains Tax allowance, etc.


Review all of your cash deposit accounts. Find out what interest rate you are receiving. You may be shocked to find interest rates of 0.10% for monies held in a savings account with the glorified name of “Gold” or “Platinum” savings account. Look for better rates.

Tuesday 26 February 2013

Use your Cash ISA allowance

Cash savings will almost always do better in a Cash ISA. Generally the interest rates are better and, of course, you get the interest free of tax. Since you can arrange to have immediate access to the cash in an ISA, it makes virtually no sense not to have as much of your cash savings as possible in Cash ISAs. In this Tax Year (2012/13) each individual can put up to £5,640 into a Cash ISA. If you do not use this year’s ISA allowance, you lose it. It cannot be carried forward.

Wednesday 13 February 2013

Workplace Pensions

If you are an employer, or even a one-man limited company, you will need to find out when you have to implement the Compulsory Enrolment Workplace Pension, then give yourself 12 months to prepare for it. If you leave it until the last minute, it may be difficult to find someone available to assist you, as there are likely to be thousands or even tens of thousands of businesses looking for help and advice at the same time. This is not a matter to ignore, as there are significant penalties if you do not meet the timetable of requirements. Contact us on 01342 313302 or email us at info@sovereignfinance.org

Monday 28 January 2013

Workplace Pensions – Important

The bad news is that all employers (even if you have only one employee) will be required to set up a Workplace Pension with the automatic enrolment of the their employees, and they will also be required to make payments into their employees' policies.

The good news is that if you have 40 employees or less, you will not be required to set up your Workplace Pension until some time in 2015. The Workplace Pension is being phased in over 6 years in stages with the largest employers who had to begin it in 2012.

For further information and to establish your exact “Staging Date”, go online to www.thepensionsregulator.gov.uk/automatic-employment

Tom Shuster
Partner

Monday 21 January 2013

Changes you should know about

• There is a reduction in the amount a person can earn before he starts having to pay 40% tax. Taking into account the personal allowance, in this Tax Year (2012/2013) 40% tax kicks in above £42,475. In 2013/14 it will kick in at the lower level of £41,450.


• The maximum pension contribution annually will reduce from £50,000 to £40,000 but not until 2014/2015, so it will still be possible to contribute up to £50,000 in 2013/2014 (Note: there is no change to the rule that the maximum personal contribution an individual can make is limited to 100% of their taxable earnings; so, if their total taxable earnings are less than £50,000, this earnings level becomes their limit; however, there is also no change to the fact that a company can contribute up to £50,000 to an employee’s pension - even if that is more than his taxable income).

There are also a few promises the Chancellor has made for the future such as promising to raise the Inheritance Tax nil rate band in 2015/16 and also to make increases in the Capital Gains Tax Allowance, but I do not think we are being too cynical if we choose to ignore these until they actually happen! 2012 saw the Property Market pretty much flat, but the rental incomes generally increased as those who were unable to buy, had to rent. This has tempted landlords to buy more property. 2012 also saw the insurance market turned a bit on its head as a result of an EU Gender Directive – dictating to insurance companies that they had to give men and women equal insurance quotes – despite the over-riding statistical proof that young men have more automobile accidents than young women and that women generally live longer than men. 2013 also sees the FSA (Financial Services Authority) morph and divide itself into two new bodies – the FCA (Financial Conduct Authority) and the PRA (Prudential Regulatory Authority). We will have to wait and see whether this change will mean.

Monday 14 January 2013

TIPS FOR THE MATURE AMONGST US!

If you are 65 or older, you can still get a mortgage. Most lenders have become very cautious about lending past the normal State retirement age, but there are still a number of smaller lenders who are willing to help and who can arrange borrowing even into a person’s 80s – where the pension or other guaranteed income can justify it, of course. We can assist you to find out what options would be available. Using the equity in your property may be a last resort but it is important to understand the options open to you. There are basically three approaches that are included under the term “Equity Release”.


– an Interest-Only Mortgage where you pay only the interest each month with no end date;

– a Life-Time Mortgage where the interest is added to the amount borrowed so no payment at all needs to be made;

– a Home Reversion Schemes whereby you give up ownership on part or all of the property in exchange for a lump sum and the right to live in the property indefinitely.


Equity Release options start to become available from age 55 onwards. Here, too, we can help you find out what is available for you to see if it helps you with what you want to achieve. Equity Release can, in some circumstances, provide a short-term solution to a financial problem. One of our clients who was selling his house to buy another decided to use Equity Release as a bridging loan.

Monday 7 January 2013

PERSONAL TAX CHANGES

There were some useful improvements to individual tax benefits – although some of these were just future promises. The following were the immediate changes, which we felt were most significant for individuals:


• The increase in the Personal Allowance from 6 April 2013 to £9,440. This represents the amount an individual can earn before he starts paying any tax and is the largest ever such increase in one tax year. The current level is £8,105.

• The increase in the Individual Savings Account (ISA) from £10,680 per year to £11,280 from 6 April 2013. Half of this (£5,640) can be put into a Cash ISA.

• The reduction in the maximum rate of income tax from 50% to 45% from 6 April 2013 (for those earning in excess of £150,000).

• The increase in the Basic State Pension from £107.45 per week to £110.14 per week.

• Corporation Tax for smaller businesses does not change this year but it does remain very low at 20% and Corporation Tax for larger businesses will reduce from 24% to 23% in the new Tax Year.

There was also an announcement that will help many older people who have private Drawdown Pensions. The Government is reversing its previous position announced two years ago. This will allow individuals to draw a higher income from their Drawdown Pensions than before. This should mean that those with such pensions will be able to access approximately 20% more income than they can take currently. However, the Government has not yet announced a date from which this change is to apply so it is likely to take some months before we know when people will be able to take this higher income from their pension.