THE YEAR OF THE PENSION - 2015!

With the start of 2015 Sovereign enters its 34th year of trading and we look forward

to an exciting and challenging 2015 – particularly with the changes in pensions and

the coming Election!

2014 was generally a more stable year than the previous one with the UK economy

performing better than most. From a financial services viewpoint 2015 will really be a

Year of the Pension. The number of changes to pension rules due to take place from April

2015 are record breaking. They include removing many of the access rules to pensions

so that most individuals will be able to reach into their pension and take out as much as

they want. In another major change, people dying before age 75 will be able to leave their

pensions to anyone they want – and the beneficiaries will receive the lump sum or income

free of any tax!

And pensions are also a focal point of mortgage affordability calculations – with many

lenders going where previous lending approaches have not gone before – reducing the

amount you can borrow based on the amount of pension contribution you make, i.e.

treating it in the same way as a loan payment or credit card payment would be dealt with.

Pensions in 2015 will be the focal point of most smaller businesses as they feel the hot

breath of The Pensions Regulator on their neck. Tens of thousands of businesses will have

to deal with the compulsory Auto-Enrolment Workplace Pensions as they hit their Staging

Date (start date) in 2015, and hundreds of thousands of small businesses in 2016!

2015 - The Year Of The Pension !

(not the year of the Sheep as the Chinese would have us believe)

There are many changes to the pension rules coming up including accessing your pension pot, compulsory Auto-Enrolment and more.

 Watch this space as we unravel the mystery of pensions.

Tax Discs

A small point but worth knowing about is the coming change with Tax Discs for your car. From the 1st of October 2014 paper Tax Discs will no longer be issued. That saves you having to successfully negotiate the perforations without tearing it!

STRIVING TO MEET EXPECTATIONS!

By survey what our clients value, and why they continue to come back to us, is our independent and unbiased advice on financial matters and mortgages, utilising our extensive knowledge and know-how gained over the last 30 plus years. If this newsletter has started you thinking or raised any questions, please do give us a ring whether it is about a mortgage, pension arrangements, investments, life assurance or any other financial matter. The telephone number is 01342 313302 and the email address is info@sovereignfinance.org.

LIFE ASSURANCE – THE VALUE OF EXPERIENCE AND EXPERTISE!

Not unusually, we were recently contacted by a couple who needed to increase the level of their life assurance, as they had moved and substantially increased their mortgage. This meant the level of cover they took out in 2006 was no longer sufficient. While it would have been easy to simply take out a new policy immediately, we found out from our “fact find” that the wife had contracted cancer in 2009 which she eventually was able to recover from. With this in mind, we made enquiries about her existing policy to see what options it might provide them as in some cases life policies allow the policyholders to increase their cover without any medical enquiries when they are increasing their cover due to a move, or similar circumstances.

From these enquiries we found out that, in fact, the old policy provided cover against incurring certain critical illnesses as well as in the event of one of them dying. We advised the clients that we should see if they were entitled to claim even though the cancer dated back to 2009. We obtained details of the cancer and established that it was the kind of cancer that should be covered. We then assisted the clients to make a claim. The claim was eventually accepted and the clients were obviously more than pleased to find that they were receiving over £100,000 from the claim.

A less professional approach could have missed that completely and just arranged a new policy. The result was certainly in line with our company purpose – “To help individuals achieve their objectives and enjoy financial security.” To cap it off we advised them of the need for a new policy to cover what was still at risk, as the claim on the old policy meant that it had ceased to provide cover.

UTILISING THE VALUE IN YOUR HOUSE — EQUITY RELEASE!

The ability to release some of the equity in a residential property has been important in more and more situations currently, such as dealing with interest only mortgages that will not be cleared otherwise, or providing support for children or grandchildren for education or for purchasing a property.

The most popular of the equity release options has been the Lifetime Mortgage whereby money is borrowed as with a standard mortgage, but instead of payments being made monthly, the interest is added to the amount borrowed and is paid off on the sale of the property. For those who do not want to see interest continuing to accumulate there are now options which allow voluntary payments to be made without penalty – usually up to 10% of the amount borrowed each year.

There are also options to take out guarantees to cover a portion of the property so that you can be certain that part of the value of the property will be passed on regardless of what occurs with the rest of the value of the property. Do give us a ring and we can work out what might be available for you.

CHANGES IN THE LAW ABOUT WILLS

The new Inheritance and Trustees Powers Act 2014 takes a number of sensible steps to modernise the way someone’s estate is treated on death when there is no will. This includes the requirement of the court to consider not just spouses, but ex-spouses and co-habitants of the deceased, people who have been treated as ‘children of the family’ and people who were wholly or partly financially dependent on the deceased. While this does bring the legislation more in line with modern life, it is still best to have a will. It is only with a will that you can be sure that your intentions are carried out as to who you want to have what. The lack of a will almost always leads to disputes which are both unpleasant and can be costly.

LANDLORDS GIVEN POLICING FUNCTION

From this year landlords are required by the new Immigration Act to verify their tenants’ nationality and to establish whether they are legally allowed to be in the country, before renting a property to them. While landlords can pass this duty on to a rental agent (subject to a written agreement, of course), it does mean yet another burden for landlords. Some property is exempt, including social housing, student and tourist accommodation, but most privately rented accommodation will be impacted by this. Those who do not comply can face a fine of up to £3000!

MORTGAGES – TIMES ARE CHANGING

The mortgage market is still struggling to adapt to the new MMR (Mortgage Market Review) requirements. There is a much more detailed focus on affordability which has, in our experience, made quite a dramatic difference for those who need to push the boundaries such as borrowing past age 65 or needing to stretch their income as far as possible. We have also seen that virtually any past or present credit difficulty makes it very difficult to obtain borrowing from High Street lenders. There are still possible lending solutions for all of these hurdles but be prepared for the process to take longer and be more difficult than before.

Having said all of that, it is a very good time to move to a fixed interest rate for 3 to 5 years in order to avoid the effects of the coming rate rises. With the average Standard Variable Rate averaging about 4.4%, and 5 year fixed rates available for 1% or more below that, a re-mortgage could allow you to both reduce your outgoings now and avoid the nasty upward movements in interest rates that will almost inevitably start in 2015. We would be happy to make enquiries to see what could be available for you.

INVESTMENT BASICS

When considering investing here are some proven successful tips:

1. Diversify. Don’t put all of your eggs in one basket.

2. Invest for the longer term where possible (5 years plus).

3. Keep track of your investments and don’t be shy about taking a profit.

4. Never buy what you don’t understand.

5. Take your own decisions – don’t follow the herd.

6. Review your investments regularly (at least once or twice a year).

LOW RISK INVESTMENTS

Savings in cash are safe but they are also giving a very low return – 2% to 3% maximum.

This is tempting us to look for better returns. To cater for those with a low risk requirement investment providers are bringing out some investments with guarantees that protect your capital or protect the income.

The guarantees do come at a cost but it does mean that you can seek a better return without risking large parts of your savings. Do contact us if you would like more information on these options. 

NEW PENSION PRODUCTS

The financial services providers are bringing out more and more new products to cater for the

changes that have been announced.

For example, for those who want to access their money now and have an income but also want the option to take it all after next April, there are now one year annuity products. These allow you to take your Tax Free Cash immediately but also allow you to exit the annuity after April next year so you can access more of your pension fund. In addition to short term temporary annuities, there are also investment-based annuities, and enhanced annuities for smokers and those with medical conditions. We would be happy to go over the options that may be available to you.

AND WHY NOT?

There are two good reasons why you might not want to take out all of your pension funds now or next year.

The first is the simple fact that if you take them all out and use them up now, they will be gone, and that could make things harder for you in your later years. The second reason is tax. The first 25% you take out will be free of tax. The rest, however, will be taxed as if you had earned it in that tax year. It is added to your other income in working out how much tax you have to pay.

If you have an income of £10,000 you are likely to be paying no tax. If you then take £30,000 out of your pension fund, £7,500 is free of tax, but the remaining £22,500 is treated as income and would then put your total income up to £32,500. That means all of the £22,500 would be taxed at 20% (£4,500).

Taking even larger sums out of your pension fund might mean paying even higher rate tax on some of it. So it is worth working out your tax position before taking out some or all of your pension fund. In fact, you may even want to delay taking chunks of your pension until you stop working so as to pay as little tax as possible. We can help you with your pension planning.

GETTING YOUR PENSION MONEY NEXT YEAR – OR NOW!

We are reading now about how next year will see the doors to your pension savings open up  completely for those aged 55 and over. Many people, however, will not even have to wait that long. Anyone already aged 55 or over can already access his tax free cash immediately

(and either use the remaining money to buy an annuity or leave it invested).

If you are fortunate enough to have a guaranteed pension income of £12,000 or more (from your State Pension or other pensions), you can access all of your pension fund now and do not have to wait until next year. Whether you should do so or not is another question!

And if you are aged 60 or over, and your total pension savings are less than £30,000, you

can take it all as cash immediately (25% of the fund tax-free and the rest taxed as if you had

earned it in that tax year). Those aged 60 or over with small pension pots (with less than a
value of £10,000) can cash in up to three of these on the same basis.

DECISIONS, DECISIONS, DECISIONS!

There are many new decisions to be made with your financial planning.

There are the latest changes in pensions and how they affect you and your planning. There is the

expected rise in interest rates and the need to decide whether to keep your existing deal

or go for a fixed rate. And those with savings still face the challenge of how to keep their

money relatively safe but still make a reasonable return from investing it.

Contact us for more information.

Interest Rates to Go Up & Mortgage Costs to Increase

There is no real question about whether interest rates will start rising in 2015, only when.



It is worth looking at your mortgage options now. The average Standard Variable Rate currently is 4.4%. Medium term fixed rates have already moved up a bit but there are still bargains to be had. We are recommending interest rates fixed for 3 years or longer.



We are happy to provide information about your options without obligation and in many cases the lenders pay all, or most of the costs for new clients. We have considerable expertise and experience to help you find a deal that saves you money and best suits your circumstances. Just give us a try. Contact us on 01342-313302 or at info@sovereignfinance.org .

STRIVING TO MEET EXPECTATIONS

From our surveys we understand that what the majority of our clients value most from us is our advice on financial matters, utilising our extensive knowledge and long experience over the last 30 plus years.

Those who have used us before know they can rely on us time and time again to provide a high quality service. Some of the recent client comments we have received:

“I would have no hesitation in recommending you. Thank you for all the excellent service over the years.”         – Mr I B of Cambridgeshire     

“We have dealt with Sovereign Finance for over 10 years and we have always been impressed with their attitude, as well as their ability to deliver market leading deals for our mortgages.”

 – Mr & Mrs PJF of Tonbridge

“We have always found them (Sovereign Finance) to be very efficient and helpful.”
 – Mr & Mrs JBF or Worthing

WORKPLACE PENSIONS FACE A LOGJAM

The legislation requiring all employers to set up a pension scheme for their employees, and requiring both employers and employees to contribute to it, continues to roll out. In 2014 it largely affects employees with between 50 and 250 employees. Next year it will start affecting the smaller employers. As there are thousands of them, this is likely to mean a logjam as regards pension providers and advisers.

As there are significant financial and legal penalties that can be levied on employers who do not fulfil their obligations, our advice is for employers to plan ahead. We will only be able to assist a limited number of employers and will give preference to those who are existing clients. Please contact Mr Arie Stuijt here at Sovereign for further information.

PROTECTING YOUR CASH DEPOSITS

Most people are aware that cash deposits in UK banking institutions are protected up to £85,000 in each account (£170,000, if a joint account). This is through the Financial Services Compensation Scheme. In the event of a claim the FSCS is required to refund the monies lost within 7 days. What is not broadly known, however, is that the £85,000 level of protection is only available for each banking group.

For example the Lloyds Banking Group includes Lloyds Bank, the AA, the Bank of Scotland, Capital Bank, the Halifax, Birmingham Midshires, Intelligent Finance, Saga and St James Place Bank.

This means that if you have deposits in several of the above, you are only protected for one total

amount of £85,000. To find out more visit the FSCS website at www.fscs.org.uk.

EQUITY RELEASE CHANGES

With the other changes occurring, there are also some new Equity Release options which permit the individuals taking them out to make payments back into them so as to limit or eliminate any increase in the amount owed.

NEW PENSION OPTIONS AVAILABLE NOW

While we will have to wait until next April to see if the Chancellor does introduce all the pension freedoms he has promised, those who are 60 years of age or older can take advantage now of what are called the Trivial Pension options. These have been improved with effect from April 2014, enabling an individual with a pension plan with £30,000 or less in it to take all of the money as cash. 25% is tax-free and the balance is added to their existing income and taxed accordingly. The same individual can also take a further 3 pension pots in this same way - as long as there is less than £10,000 in them. So a person with £30,000 in his main pension, and 3 smaller pensions of £10,000 each, could take them all as cash. It is important to understand, however, that the non-tax-free element will be added to the person’s other income for the year so some care needs to be taken so as not to end up paying higher rate tax on some of the money being taken out.

EFFECTS OF THE MMR (Mortgage Market Review)

The Mortgage Market Review has resulted in new rules being introduced which have put extra requirements on lenders from April 2014. This is already resulting in major slows in processing applications and also is resulting in many lenders starting to raise interest rates on the new mortgages they are offering because of the extra costs resulting from having to implement these rules.

What we are also seeing is generally a tightening up in lending. Cases which would have gone through smoothly in previous years are hitting major obstacles which, in some cases, have resulted in the mortgage being declined. There is also an even greater reluctance to provide new interest only

mortgages. This is bound to impact on the many who still have an interest-only mortgage which is reaching its end.

We will be happy to assist wherever possible with new mortgage arrangements and we are still recommending that those with mortgages on the lender’s standard variable rate should seriously

consider moving to a rate fixed for 3 to 5 years, or longer. We are of the view that interest rates are likely to start creeping up within the next year or so.

THE NISA!

From the 1st of July 2014 all Individual Savings Accounts (ISA s) will become New ISA s

(NISA s).

It applies to all existing ISAs and to new accounts opened up after the 1st of July. The NISA has three major advantages over the previous ISAs:

First, it has a higher limit of £15,000 per tax year;

Second, the £15,000 can be made up of any combination of cash and stocks and shares, including investing it all as cash;

Third, the new ISA will allow for transfers from current Stocks and Shares ISAs into cash holdings and vice versa (up to now it was only possible for a Stocks and Shares ISA to transfer to cash; now it can go either way). Any payments already made in this Tax Year, i.e. from the 6th of April 2014, into an ISA will count towards the £15,000 total. If you have made payments so far this Tax Year into both a Cash ISA and a Stocks and Shares ISA, you can add to either or both of them as long as the total contribution made in the current tax year does not exceed the £15,000 limit. You can pay into only one Cash ISA and one Stocks and Shares ISA in this tax year, but you should speak to your ISA provider to establish what options they have available for existing ISAs.

Those aged between 16 and 18 can open up a Cash NISA and pay up to £15,000 into it. For those under 16 there is the Junior ISA which, from the 1st of July, will allow up to £4,000 to be paid into it each Tax Year.

QUEEN’S SPEECH

With all of this pension change going through the system, it was surprising to see that the Queen’s

Speech included an announcement that even yet another change was being planned. This change follows the Dutch pension system where pension funds are pooled for better and cheaper results, as opposed to having individual pots for each saver. We are sceptical about this as it seems at odds with some of the other changes, and even the Dutch apparently are looking to move away from this approach.

PENSIONS ALREADY CHANGING IN THE WORKPLACE

The compulsory “Workplace Pension” is already changing how employers and employees deal with pensions.

The law requires that all employers set up a pension scheme into which their employees and the employer have to contribute. It is a worthwhile effort to get people planning for their post-retirement financial security. This process is already in place for the largest employers in the UK and over the next three years, the process will gradually work its way down (based upon the number of employees) until it reaches those employers with only a very few staff.

This is something of a return to the past where employers had good pension schemes and employees had no real choice about joining. Those schemes generally provided a reasonable pension at retirement age. The Workplace Pension is nowhere as good but it is a step in the right direction. Note: The Workplace Pension changes do not apply to the self-employed or one-man limited companies.

The Employee’s Right to “Unjoin”!

An employee who qualifies for Automatic Enrolment has to be enrolled into the company pension scheme, but the employee then has the right to Opt Out and cease to be part of the company pension at any time! The employer, however, must not do anything to encourage the employee to opt out, e.g.
provide an incentive for opting out.

What Will It Cost!

The level of contribution by the employer and employee will be phased in over the next 4 years. The required contribution levels are approximately as follows:

Date                               Employer (%)           Employee (%)                     Total (%)

Oct 2012 to Sept 2017           1                                 1                                           2

Oct 2017 to Sept 2018           2                                 3                                           5

Oct 2018 onwards                  3                                 5                                           8

The Employee’s Viewpoint – An Enforced Pay Rise

An employee will benefit from the enforced employer’s contribution but will also have to

make their own payment into the pension.

In the long run an employee will benefit from this mandatory savings process.

If you are an employee, you will fall into one of the following categories:

• Eligible Jobholder

• Non-Eligible Jobholder

• Entitled Worker

The vast majority of employees will fall in the category of “Eligible Jobholder”, i.e. those aged between 16 and 74 and earning in excess of £10,000 per annum. These all must be compulsorily enrolled. Those who fall outside of that age range or income level, will come under one of the other two categories. They do not have to be compulsorily enrolled but will have the option to join the pension scheme voluntarily.

Note: If the only employee(s) being paid on PAYE are directors of their own limited company, they will not have to set up an Auto-Enrolment Pension or be compulsorily enrolled.

The Employer’s Viewpoint – A Pain in the Proverbial!

If you are an employer and have any staff that you pay on a PAYE basis, you will have to set up a company pension scheme and both you and your staff members will have to contribute to their pension.

All the costs of setting up the pension and running it have to be paid by the employer, along with the company contribution made into the employee's pension.

The new legislation came into effect in October 2012 and is being phased in – with the largest employers having been first to have to set up their pension scheme. In the current year (April 2014 to April 2015) those companies with between 50 to 250 staff will have to set up their Auto Enrolment Pension.

Those with fewer than 50 employees will be given “Staging Dates” (their starting dates) between 2015 and 2017. An employer has no choice about this and there are significant penalties for failure to set up the pension scheme and to ensure it runs properly.

Those companies large enough to have dedicated accounts staff will find that the procedure can usually be linked to the existing PAYE process but there is still quite a bit that will have to be done by the employer – including choosing the pension provider they will use and establishing the required procedures and communications to staff. Where there is already an existing company pension scheme, it will have to be reviewed to see if it can be used as it is, or whether modifications will have to be made. It is estimated that an employer should begin dealing with the Auto-Enrolment process 6 to 12 months before the Staging Date, which is when the pension has to be up and running.

We will be offering an advisory service for employers with up to 50 staff. Contact us for details.

A Pension Evolution (Revolution) ?

Ignoring the Budget announcement for a moment, the largest change in pension legislation for many

decades is already coming into effect. While we are told we live in a democracy, it hardly comes across as democratic when a Government can create a law that forces employers and employees to set

up and pay into a company pension. This development goes back to 2006 when serious concern was raised about the fact that a large proportion of the working population were saving little or nothing

towards their retirement needs. The Government could read the handwriting on the wall. They introduced the Pensions Act 2008 which established the principle of compulsory enrolment, i.e. that all companies had to set up a company pension and that all employees would be required to join it – with both the employer and employee being required to contribute to the employee’s pension. The Pensions Regulator is the governmental body responsible for company pensions, and they are the ones responsible for ensuring that all employers set up these Auto-Enrolment Pensions.

Note: This law applies to employers and employees but not to those who are self-employed.

Tax Facts!

Some key tax facts to remember for 2014/15:

Personal Tax Allowance: £10,000

Higher Rate Tax Band: starts at £41,865

Capital Gains Tax Annual Exemption: £11,000

Inheritance Tax Nil Rate Band: £325,000

Maximum Pension Lifetime Allowance:
£1.25 million
Residential Property Stamp Duty: the same as last year.

A NEW ISA

From 1 July 2014 the amount that you can put into an ISA will go up to£15,000 – about £4000 more than currently.

It will also be much more flexible than existing ISAs as it will allow both cash savings and stocks and shares in the one investment. And, boldly, it will allow cash held in existing ISAs to be transferred

to stock and shares and reversely, will allow investment holdings in ISAs to be transferred fully to cash holdings regardless of the amounts –all remaining within the ISA tax-free wrapper.

Savings Changes

To help pensioners who have been suffering from very low interest rates on their savings, the Chancellor has announced that in January 2015 he will be introducing a new “Pensioner Bond” for those aged over 65.

It will pay much better rates of interest than currently available. At this time it is estimated that the Bond will pay 2.8% for one year deposits and 4.0% for three year deposits. Up to £10,000 can be invested in each bond. He is also raising the cap on Premium Bond holdings in June from their current level of £30,000 to £40,000 and offering an additional million pound prize.

A BUDGET WITH PROMISE AND PROMISES!

The Chancellor’s March Budget was aimed primarily at helping UK businesses increase their production but it also includes a number of new measures affecting savings and pensions – some effective immediately and some promised for April 2015.

Pension Changes

The most revolutionary announcements relate to personal pensions. With immediate

effect those who are aged 60 and over can cash-in small pension pots – up to 3 different

pots and to a maximum of £10,000 in each pot. 25% of the pot can be taken as tax-free

cash with the balance being taxed as if it were earned income. The Chancellor has also

increased the “Triviality” limit whereby a pension fund of up to £30,000 can be taken as

cash (25% tax free) if that is the only pension benefit a person has. The promise is that by

April 2015 this freedom to access the money in your pension pot will apply to the whole

pension for those aged 55 and over. Here again 25% of what you take out will be tax-free

and the balance will be treated as earned income.

The Chancellor wants to enable everyone to be able to access their pension savings at any

time after age 55 and without having to purchase an annuity – although an annuity may

well still be the best choice for many. With immediate effect he is increasing the level of

income a person with an Income Drawdown Pension can take each year. Those who have

a guaranteed pension income of at least £12,000 will be able to access all of the money in

their pension fund.

ACT TODAY - MAKE SURE YOU USE YOUR TAX ALLOWANCES

In the run up to the end of the tax year, it's important that you consider all the tax-relief/exemptions and allowances that the Government offer. Please remember, many of these will be lost if you don't act before the tax year ends, on 5th April 2014.


You can manage your finances in a more tax-efficient way through:


- Savings - using tax efficient ISAs;
- Pensions - carrying forward any unused allowances;
- Investments - using up capital gains tax (CGT) exemptions and income tax personal allowances;
- Estate planning - inheritance tax (IHT) allowances and exemptions.


Do get in touch with us.

Income Please

Income please


After you have taken your tax-free cash

Option 1 Take a guaranteed income for life (Annuity).

Option 2 Receive a higher guaranteed income for life due to an adverse medical condition or medical history or history of smoking (Enhanced Annuity).

Option 3 Take a fixed income for a period of time (usually 5 years) and have a guaranteed amount left at the end so you can then review your options (Temporary Annuity).

Option 4 Get an income which can possibly increase depending on the underlying investments (Investment Based Annuity).

Option 5 Leave your monies invested with the option to draw an income from the fund itself (Drawdown). There are two possibilities here.

The first is called Capped Drawdown. With this one the maximum you can take is based on your age and the value of the pension fund. The second is called Flexible Drawdown. This allows you to take out as much as you want from your pension fund – but only if you already have a guaranteed pension income of at least £20,000 per annum (this can be made up of the State Pension and Private Pension income but cannot be made up of other earned income or investment income).

All as cash please !

If you are aged 60 or older and the total value of all your pensions is less than

£18,000, you can take it all as cash. 25% is tax free and the balance is taxed as

if it were income you had earned in that tax year. If you cannot take advantage

of that option, but have a couple of very small pension pots (£2,000 or less),

you can do the same with them – up to two such small pots per person.

RETIREMENT MENU

RETIREMENT MENU
Minimum age: 55


Cash please


You can have a maximum of 25% of the value of your pension funds (This refers to personal pensions; the rules are different for a Final Salary Scheme where the benefit is based on the salary and years of service.). So, if your pension funds total up to £20,000, you can get £5,000 as tax-free cash. If they are worth £100,000, you can have £25,000 tax free.






More 'Menu' to follow next week

Attack the Plastic

One of the unhappy after-Christmas and New Year “surprises” is the arrival of the credit card bills for the Christmas spending. Of the various financial tools available, the one we find most misused and most destructive are the credit card and store cards. A credit card used properly can be a very useful way to make purchases on-line, or when you are abroad, or to take advantage of a special offer. If you then pay the credit card balance off in full, you will have had 4 to 6 weeks free credit and will have avoided the “honey trap”. If you do not pay it off in full, it is all too easy to fall into the habit of just paying minimum payments. Paying minimum payments of 2% or 3% of the balance is an invitation into NeverNeverLand, as it will not pay off the debt and you will end up having paid an enormous amount of interest, while the credit card balances remain unpaid. If you need credit and are not going to be able to pay it off in full, use a loan. They are structured to ensure that the amount owed does really get paid off.

EXPERIENCE AND EXPERTISE

Although no longer as young as we would wish, over 3 decades of experience does give us the know-how and expertise to use in assisting our clients. We aim to achieve maximum customer satisfaction and responses such as these recent ones: “Thank you for all your help and advice.” (Mrs LW of East Grinstead) and “It was a pleasure dealing with you.” (Mr MH of Kent).

TAKE ADVANTAGE OF THE VALUE IN YOUR PROPERTY

As more and more older people need to take advantage of the value in their residential properties to help supplement income or for home improvements, the Equity Release market is growing. With the increased competition there is more choice and better interest rates. If you are in a position where you may need to consider this, we will be pleased to assist in researching the options for you without cost or obligation. Just give us a ring on 01342 313302 or email us. Note: the minimum age for Equity Release is usually 55. In the case of a married couple, the younger of the two would have to be at least 55 years of age.

COMPANY ANNIVERSARY - 33 YEARS !!!!!

Sovereign Finance in East Grinstead celebrates its 33rd Anniversary at the end of January 2014. The longest established firm of financial advisers, Sovereign Finance has been involved closely with the community throughout its 33 years, including sponsorship of youth sport, charitable fundraising, serving on the Chamber of Commerce (not the East Grinstead Business Association). Senior partner, Tom Shuster, commented: 'Nice to be helping the children of our original clients! 33 years gives us a lot of experience and know-how which we can use to help all our clients'.

NEWS ON THE STATE PENSION

More and more people are reaching what used to be the Basic State Pension Retirement Age (60 for women and 65 for men), only to find the goal posts having been moved with 66 being now the State Pension age for most. And the Autumn Budget made it clear that the goal posts will be wheeled back even more in the future with those now in their 50s given the expectation of working until age 67 and those in their 40s having to work to 68 before the State Pension kicks in. It is not good news but the fact is that with the UK population having a larger and larger proportion of older men and women, the Government cannot afford to pay the State Pension from an earlier age. To some degree this news may help focus many on accumulating their own private pension savings. Currently the legislation allows those benefits to be taken from age 55, and no-one is pushing for that age to be increased – at least for now!

THE AUTUMN STATEMENT

If we focus on the changes taking place in April 2014, we have the following tax changes: 1. Personal Tax Allowance increased from £9,440 to £10,000 2. Basic Rate Tax Band down from £32,010 to £31,865 (meaning that with the first £10,000 earned being subject to nil tax, you will not start paying 40% tax on earnings until they exceed £41,865 – marginally better than last year’s £41,450). 3. Individual Savings Accounts (ISAs) go up to £11,880 (last year £11,520) with half of this(£5940) able to be put in a Cash-ISA. 4. The main rate of corporation tax will be cut from 23% to 21% from April 2014. 5. A £1000 business rates discount in 2014/15 will apply to retail properties including pubs,cafes, restaurants and charity shops; and a 50% business reoccupation relief for businesses that move into retail premises that have been empty for a year or more. There is no change in the Property Stamp Duty Tax (still nil on purchase prices up to £125,000, 1% up to £250,000, 3% up to £500,000, 4% up to £1 million, 5% up to £2 million and 7% for over £2 million). The threshold for Inheritance Tax also remains unchanged at £325,000. The Capital Gains Tax Exemption is another tax allowance that is not changed this year –remaining at £11,000. And for those with significant pension savings, there is actually a reduction in the amount of pension they are entitled to accumulate in their lifetime (Lifetime Allowance) from £1.5 million to £1.25 million. The future carrots being dangled include: 1. From April 2015 no employer’s National Insurance tax on employees under the age of 21. 2. From 2015/16 married couples who are not higher rate taxpayers being able to possibly benefit when one spouse is not earning enough to use up all of their Personal Tax Allowance. Effectively this will be worth up to about £200 a year less tax for the couple to pay. 3. The Capital Gains Tax Exemption is promised to go up to £11,100 from April 2015. And then there is the contentious issue of an 11% pay rise for Members of Parliament from April 2015!