Monday 14 December 2015

WHEN LET-TO-BUY MAY BE BETTER THAN BUY-TO-LET!

If you live in a property and then sell it, generally you will pay no tax on any profit you make. And normally, when you buy a property and let it out, you will pay tax on all the profit you make on the sale. (Note: there are some exceptions in both case) However, if you let out a property you have lived in, there are tax reliefs that could save you a great deal of tax on your profits when you come to sell it. When you sell a property you have lived in, even if you are not living in it currently, you can claim tax relief for the time you did live in it and for the last 18 months before you sell it. Additionally you can claim “Letting Relief” of up to £40,000 for the period of time it was let. So if you are planning to invest in additional properties, it is worth knowing how these tax advantages could make Let-to-Buy an attractive option.


Monday 7 December 2015

Improving your State Pension!

If you don’t qualify for any basic State Pension or you qualify for less than the full amount based on

your own contributions, you may be able to make a payment to top it up by 6 years and/or you might

be able to qualify for more through your spouse or civil partner’s National Insurance contributions.

Contact the Department of Work and Pensions for help on this – 0345 3000168.


Note: The above information is extracted from the Department for Work and Pensions pamphlet DWPO23


Wednesday 2 December 2015

Extra State Pension!

You can choose to get extra State Pension if you put off claiming your State Pension for 5 weeks or more.

When you do claim, you will get a higher weekly State Pension for the rest of your life. The amount of extra State Pension you get works out at 1% for every 5 weeks you have put off your claim (about 10.4% for a full year). If you intend to work past State Pension age, this is worth considering.










Monday 16 November 2015

SOME TIPS ABOUT MAKING THE MOST OF YOUR STATE PENSION

The State Pension is a regular payment you may get when you reach State Pension Age. The payment will increase each year. It is based on the National Insurance contributions which you paid, you were treated as having paid, or were credited to you during your working life.

To find out when you would receive your State Pension and how much it might be go to: www.gov.uk/state-pension


Thursday 12 November 2015

UPS AND DOWNS OF INVESTMENTS

Recent events in China and their effect on Stock Markets internationally do show the risk that goes

along with such investments. Some general tips that we would recommend:


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


2. Invest for the medium to long term (5 years plus).


3. Never invest in what you don’t understand.


4. Keep track of your investments and don’t be shy about taking a profit, or saying goodbye to a bad

investment.


5. Be your own person – don’t follow the herd.


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


Tuesday 3 November 2015

WHAT GUARANTEES CAN I GET ON MY INVESTMENTS?

Some guarantees are still possible. The dilemma for many is that they want to get a reasonable income from their investments but they do not want to take much of a risk.

The investment return on cash deposits is currently very limited – 1 to 2%. Better returns are available with annuities but lifetime annuities generally mean a loss of the cash in exchange for the income. But there are guaranteed funds which can provide a guaranteed income for life while still maintaining access to the capital. A client of ours, who is 70 has taken advantage of such guarantees, and has seen her £100,000 investment increase over the last 9 years to £120,000 while also having her guaranteed income for life increase from 5.0% per annum  originally to 6.5%. The funds are invested for growth in stocks and shares and are reviewed annually. If the fund values have improved above a certain point, the guaranteed income for life is increased, while she is still able to access the capital. If the fund values have gone down in that year, the income stays as it was. If she withdraws capital, then her income would reduce proportionately but would still have the lifetime guarantee. The theoretical worst case scenario is that her fund reduces to nil but she would still have the guaranteed income for life.
If you would like to discuss such a guaranteed investment approach to see if it would suit you, contact us.











Monday 26 October 2015

A NEW RETIREMENT MENU FOR PERSONAL PENSIONS!

RETIREMENT MENU

Minimum age 55
(Note: different rules apply to Final Salary/Defined Benefit Pensions and some other schemes)

Cash please
You can have it all as cash but only 25% of it tax-free. You will be taxed on whatever else you take out in the same way as if you had earned it in that Tax Year.

Income please Option 1: You can still get an income guaranteed for life (Annuity -see further
notes below)
Option 2: If you have health issues you may be entitled to a higher guaranteed income for life (Enhanced Annuity)
Option 3: Draw an income from your pension fund itself (Drawdown)
Option 4: Use a guaranteed fund to protect your investment but still be able to take an income (Guarantees).

State Pension please 
The State Pension is increasing but the State Pension age is also going please up. To find out when you will receive your State Pension go to www.gov.uk/calculate-state-pension.

“Side Dishes”

You may have other sources of income to help in retirement. This might be investment income, or rental income from an investment property or income from letting out one or more rooms in your home  (Rent-A-Room scheme allows you to earn up to £7500 tax-free).



More on Annuities 
There are a variety of annuities available. The general concept is that you use all or some of your pension fund to buy a guaranteed income for life or for a specified period. The older you are, the more income you will get for your money. The guaranteed income can be for the person with the pension and a spouse or partner – to go on for as long as the last survivor is alive. The annuity can provide a level income or an increasing income. There are also annuities which are linked to investments so they can go up or down.

More exotic dishes
The pension rules are different for other types of pensions. If yours is not a personal pension, do feel free to contact us for guidance.






Monday 19 October 2015

MORTGAGE PRISONER?

There are a number of property owners who find themselves unable to obtain a new mortgage due to the new mortgage requirements for proving income and affordability.
In some cases that has left borrowers either unable to move, or stuck with their lender’s Standard Variable Rate when new fixed rates are 1% or 2% better. Just a 1% reduction on a £150,000 mortgage would save £1500 in interest each year (assuming a 20 year repayment mortgage). Here are a few examples of this “mortgage prisoner” problem along with possible solutions:

Problem: Some older people cannot get a new mortgage with a long term because of the new attitude of most lenders to maximum mortgage ages.

Solution: Try your present lender to see if they can provide some flexibility or contact us as there are a number of niche lenders who can take a more enlightened view about maximum mortgage ages — where the deal makes sense.

Problem: Some people were able to take a mortgage out in the past when it was possible to self-certify the level of their income. In virtually all cases now income must be proven and the self-employed will be assessed on their net income as shown by the Tax Office.

Solution: Some lenders are more generous in their income calculations than others and some lenders require only one year’s completed accounts. For those over 55, Equity Release solutions may be of help as these are based on age and property value only. We can make enquiries for you.

Problem: Some people took out interest-only mortgages with a plan of how to repay them, but that original plan is no longer possible.

Solution: For some simply downsizing will be a solution. For others who want to stay where they are, however, there are other options. There are still some interest-only mortgage options available if one is simply looking to extend the time he can continue to stay in the property. It is also possible for those aged 55 or older to use an Equity Release lifetime mortgage or similar solution. We can make enquiries for you.

Note: Lending restrictions are expected to tighten even further by the end of March 2016.


Wednesday 14 October 2015

MORTGAGES AND BUY-TO-LETS

Mortgage rates remain extremely low – probably the lowest they have ever been. It is a good time to take advantage of fixing an interest rate for the next 4 or 5 years. Even the costs of changing lenders have been reduced. Call us if you would like a quote.
The July Budget announced a change in the taxation of Buy-To-Let mortgages. Up to now a landlord could obtain tax relief on all the interest paid on his buy-to-let mortgages, and if he were a higher rate taxpayer, that tax relief could be up to 40% or even 45% for the very wealth The Budget announcement confirmed that from the 6th of April next year, this tax relief would be limited to 20% (Basic Rate Tax) even if a landlord is a higher rate taxpayer. The Government is hoping this will result in fewer properties being purchased by landlords
and cool the market down a bit.
Those aged 55 and older may want to look at their Lifetime Mortgage options which would permit interest-only payment arrangements indefinitely.
















Friday 9 October 2015

PENSION INCOME OPTIONS

If you have reached the magic age of 55, you can draw your pension benefits from a private pension in a number of different ways. These include the following:

• you can use all the pension fund to buy an income guaranteed for life (annuity);
• you can take 25% of the pension fund and use the remainder to buy an annuity;
• you can take 25% of the fund tax-free and leave the remainder invested with the option to draw
out a regular income or lump sums as you wish;
• you can cash in the whole pension, receiving 25% free of tax, and the remainder taxed as if you had earned it in that tax year.
Note: Other than the 25% you can take tax-free, all other income or lump sums you take will be
subject to tax, so it is very important to take advice on the tax you have to pay.

There are pros and cons for all of these choices. Do give us a ring if you would like to go over your options.











Thursday 24 September 2015

FREEDOMS AND REPONSIBILITIES

The new pension legislation provides the freedom to access your pension savings from age 55.

However, first you have to have saved up some pension savings to have access to (!) and secondly you need to exercise responsibility and judgement as to how you apply these freedoms to your own personal situation.


If you are approaching age 55 and have pensions and are looking to work how to use them, here are six useful steps to take:


1. Check what the value of each of your pension pots is;

2. Gather information and speak to experts so that you understand your options. Ensure you understand the risks involved and establish your own attitude towards investment risks; (Note: there are some pension funds that come with guarantees.)


3. Work out how long the money needs to last. Even if it is not the most pleasant of subjects, it does mean you need to give some thought to your life expectancy;

4. Work out what your expenses will be in retirement;

5. Understand the tax implications of taking income or lump sums out of your pension;

6. Shop around for the best deals or take on a professional adviser who can do this for you.

The Government has established free sources of guidance to help you with the above. The help
can be on-line (www. pensionwise.gov.uk), face-to-face at a Citizens Advice Bureau, or over the phone, The Pensions Advisory Service. Once you have had “guidance” you may wish to have “advice” and that is where we would come in. We can provide impartial advice based on our extensive expertise and knowledge of the subject.















Monday 7 September 2015

LESS PROTECTION

Cash held in banks and Building Societies have been protected by the Government through the FSCS (Financial Services Compensation Scheme) for up to £85,000 for each banking group.

From the end of the year, however, the level of this protection will be reduced to £75,000. This is a reflection of the increase in the value of the pound against the euro. The underlying European legislation stipulates protection in euros - 100,000 euros. There is a five yearly review. In 2010 the value of 100,000 euros was £85,000. When the review was done earlier this year, 100,000 euros were determined to be worth £75,000, hence the need for the change. If you have arranged your finances based on the £85,000 rule, you will need to review your deposits and bring them down to the new £75,000 level which is the maximum protection in case the banking institution
the money is with goes under.














Wednesday 2 September 2015

PERSONAL SAVING ALLOWANCE

From April 2016 the Government is introducing a Personal Savings Allowance which will exempt

the first £1,000 of savings income from tax for basic rate taxpayers and the first £500 for higher

rate taxpayers. This is in addition to the other allowances. From that same date there will no

longer be the automatic deduction of 20% income tax by banks and building societies on non-ISA

savings. From April 2016 there is also a new £5,000 dividend allowance for those who receive

dividend income.


Wednesday 19 August 2015

HELP TO BUY ISA’s

The Chancellor has announced that their Help to Buy ISA will be available from the 1st of
December 2015. This can enable First Time Buyers to obtain a Government bonus of up to £3000
if they save up to £12,000 in the Help to Buy ISA. Note: the level of contribution will be limited to a £1000 one-off donation initially and then a maximum of £200 per month thereafter.

Wednesday 12 August 2015

THE COST OF DYING – INHERITANCE TAX

The concept that a Government should be able to tax people when they die goes back many centuries as even Julius Caesar had a form of death tax.

However, it really surfaced in the UK in 1796 when “death taxes” were used to finance the war against Napoleon Bonaparte. We have been subject to one form or another of a tax on death since then.


Currently those who die and leave an estate are taxed at 40% on the value of the estate, i.e. the total value of all that a person owns, in excess of £325,000. If they leave their estate to a spouse or civil partner, there is no tax chargeable at that point. When the surviving spouse or civil partner dies, their £325,000 allowance can be added to their partner’s unused £325,000 Inheritance Tax Allowance. Thus tax is only then due on the amount of the estate in excess of £650,000.

The headlines from the July Budget was that the Chancellor would be protecting a family’s estate for up to £1,000,000. While that is good long range news, the facts are as follows:

• The current allowance (nil-rate band) of £325,000 is being frozen at £325,000 for the next two years.


• The increased allowance will only be phased in from April 2017 starting with an extra £100,000. That means it will not be until 2021 when the headline promised £1,000,000 provision would become available.


• The extra allowance will only be available to use in relation to residential property being passed on to children and their direct descendants.










Tuesday 4 August 2015

MORE PENSION CHANGES

The Government has announced its intention to further review pensions and how they are treated tax-wise, and they are starting to crack down on pension benefits for the higher earners.

These restrictions on what higher earners can put into their pensions will come into effect from next April. While the annual maximum amount of pension contribution most people can put into their pension will remain at £40,000, those earning in excess of £150,000 will have this reduced on a sliding scale. Those earning in excess of £210,000 will have a maximum pension contribution allowance each year of only £10,000. The Government is also introducing a reduction in the pension Lifetime Allowance (the maximum one can accumulate in pension over his lifetime) from a total of £1.25 million down to £1 million from 6 April 2016.

The Government also announced it will be delaying its plans for setting up a market to allow individuals the freedom to sell their annuities. They have put back the planned starting date until 2017 to allow further studies to be done. There are further changes as to how pensions are taxed on death. Please contact us if you have any questions on these changes as they are somewhat complicated. Note: It is a very good idea to complete a letter of instruction to lodge with your pension provider to specify to whom you want the money paid in the event of your death.







Monday 27 July 2015

RENT-A-ROOM

For some years those letting out rooms in their residential home have been able to make £4,250 each year free of tax. The Chancellor has announced this will be increased to £7,500 per year from 6 April 2016.


Friday 17 July 2015

PERSONAL ALLOWANCES FROM April 2016

Currently the Personal Allowance (the amount that can be earned before any tax is payable) stands at £10,600. It will go up to £11,000 from April 2016.
The level at which 40% higher rate tax is payable is also increasing. From April 2016 this means a person will have to be earning in excess of £43,000 before they start paying 40% tax, up from
£42,385 this year. No change was announced to the level at which 45% tax is payable, i.e. £150,000.






Monday 6 July 2015

INHERITANCE TAX !

Change Coming?  There may be news in the Budget on Wednesday about the taxing of residential property on death.


Tune in !

Monday 29 June 2015

Beware - a Budget approaching !

The Budget the Chancellor will give on the 8th of July may have bad news for Higher Rate Taxpayers. There has been considerable discussion on whether he will limit tax relief on pensions to the Basic Rate (20%) tax relief. If you are a Higher Rate Taxpayer, you might want to consider making your pension contributions in this Tax Year sooner rather than later.

Tuesday 23 June 2015

WHY USE US?

We have over 30 years of experience with financial matters which has given us a great deal of expertise and know-how.



We seek to provide an efficient, professional and friendly service to all our clients.


Here are a few recent client comments:


“You are trustworthy and professional with clear explanations given. Thanks for your patience.”

Mr JG of East Grinstead




“Thank you for your help and attention, excellent as always.”

Mrs CC of Leicestershire


“Ever grateful for your prompt and helpful advice.”
 – Professor BHW of Oxford

“I needed someone I could trust.”
Mr GN of Turners Hill,West Sussex


“That’s brilliant. Can’t believe how quick you got this (mortgage offer) through.”
TM and DW of Crawley, West Sussex



















Monday 15 June 2015

REMORTGAGE RATE WAR

Lenders are still fighting for market share which means that interest rates are at their lowest levels ever. If you are on your lender’s standard variable rate, it is worth finding out what your options are. It could save you hundreds of pounds and, in some cases, even thousands of pounds. We would be happy to provide quotations without cost or obligation.


Thursday 11 June 2015

INTEREST-ONLY MORTGAGES AND EQUITY RELEASE

Interest-only mortgages were popular in past years as the monthly payments for such were extremely low.


However, in many cases the means for eventual repayment of the amount borrowed was not dealt with properly – leaving many with money still owing on their mortgage and a relatively short number of years in which to repay it.


For those over 55 there is now an option to secure an indefinite interest-only mortgage arrangement at a fixed rate for the life of the borrowing. This is a new development in the Equity Release marketplace. Previously the only option one had with a Life-Time Mortgage was to allow the interest to accumulate. The repayment of the interest and original amount borrowed would take place on the eventual sale of the property. Now, however, many providers are offering an option which allows those taking out a Life-Time Mortgage arrangement to make voluntary payments of interest, and even capital. Since these payments are voluntary, you can miss payments without penalty or even stop payments altogether. There are also no affordability requirements as the borrowing is based on age and not on income.



Note: this type of equity release is only available from age 55. At age 55 you can only take about 25% of property value. This rises to about 48% of property value for those in their 80s.

Contact us with any questions you have or for quotations.


















Monday 1 June 2015

NOT YET 55?

If you have not reached the age of 55, you will have all of this ahead of you, but it does lay out a pension future with many more choices.


Those who are employed and now part of the compulsory Automatic Enrolment Company Pensions will have the satisfaction of knowing that they will be able to eventually access the money they and
their employer put in as cash. In this way pensions become much more of a transparent, tax-effective
long term savings plan. Hopefully it will also mean that more people will save more in their pensions,
 know that they eventually will be able to cash it in – either all at once, or bit by bit.




 













Tuesday 26 May 2015

BETTER IN A BUY-TO-LET?

It is expected that many people may want to empty their pension funds and put the proceeds into one or more residential buy-to-let properties. This may suit many, but there are some factors to take into
account:
• How much tax will have to be paid on the money withdrawn (if in excess of the 25% tax-free sum);
• The amount of Stamp Duty to pay (on properties costing in excess of £125,000);
• The legal fees and other costs to be paid to purchase a property;
• The fact that rental income is potentially liable to tax;
• That there may be Capital Gains Tax to be paid on the eventual sale of the property.

This is not intended to be a statement that no-one should use their pension fund to invest in a Buy-to-Let, but it is meant to ensure that anyone who intends to do so balances the desire to acquire a property with the advantages of keeping the money in a pension (tax free increase in value; ability to pass to beneficiaries free of tax; ability to access income from the pension fund instantly rather than suffering the delays in releasing the value locked up in a property).



Monday 18 May 2015

New Pension Vehicles

Providers are developing new and updated pension contracts to take advantage of the new rules. Contact us to discuss your options.


Tuesday 12 May 2015

WHY TAKING OUT THE MAXIMUM MIGHT NOT BE THE BEST IDEA!

1. The first reason obviously is that you will have to pay tax on what you take out over and above the first 25%.


2. The other reason is that money in a pension fund can pass to a beneficiary, and, indeed, down a line of beneficiaries – all free of Inheritance Tax. And once a beneficiary receives entitlement to the inherited pension fund, the money they take out is ALL tax-free. (Note: if the person with the pension fund dies aged over 75, the rules are slightly different; contact us if you need more information on this.)

So, if you have other alternatives to provide you with the income you need, you may wish to consider preserving the pension fund as an efficient means of providing an inheritance.


Monday 27 April 2015

PENSION FREEDOM AND RESPONSIBILITY

From the 6th of April the various new pension rules come into effect. They allow those with personal pensions from age 55 to take money out of their pension as much as they want, and when they want. The general rule still applies that only the first 25% of the fund can be taken tax-free. If more than that is drawn out, it will be taxed as if it were earned income in the Tax Year in which it is taken. You will still have the option to use your pension fund to secure a guaranteed income for life by purchasing an annuity or using a Drawdown Pension to keep your money invested with or without guarantees.  



This “pension freedom” approach has been in effect in Australia for many years and generally people have made sensible decisions with their pensions – with a minority taking it all out to splurge on a world cruise or buying a fancy car. With the freedom to access the money, comes a need to assess how you will use it. Pensions generally are intended to replace earned income as one grows older and works less, or gives up paid work all together. This means some forward planning will need to be done including working out how long you are likely to need to draw on the pension fund and what your budget is now, and what it will be in the future. This planning will be different from person to person.
 

The level of tax you will have to pay on the money you take out may well determine how much you take out and when. To repeat what we said before, the first 25% of the pension fund can be taken free of tax. The balance of any additional money taken out will be added to any other taxable income you have in the Tax Year and you will pay tax accordingly. If we look at the Tax Year beginning 6 April 2015, you have your Personal Allowance which means, for most of us, that the first £10,600 of income will not be taxed at all.The next £31,785 you earn will be taxed at 20%. After that you will pay tax at 40% for the next £107,615, and any income taken above that will be taxed at 45%.


 



Friday 10 April 2015

THE BUDGET – PROMISES, PROMISES!

Besides the announcements of the increase in Personal Allowances and tax thresholds, there was very little of immediate interest.

There were many possible future changes announced but most will not come into effect until much later - either from this Autumn or from April 2016. There is little to gain in seeking to comment on these possible future developments at this point because they are little more than promises which will be subject to various reviews and changes and all of which rely on the results of the May election. We would particularly draw attention to the Government’s announcement about wanting to make it possible for those taking annuities to exchange them for a cash lump sum. This is still only a proposal and it will be long after the 6th of April, if ever, that this becomes a real possibility.



















Monday 23 March 2015

THE YEAR OF THE PENSION!

There are a number of changes to pension rules due to take place from April 2015. 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. 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!



Pensions in 2015 will be the focal point of many smaller businesses as they feel the hot breath of The Pension 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 and 2017!



As always we are happy to use our experience and expertise to help you unravel the mystery that pension changes sometimes bring.

Monday 16 March 2015

EXPERIENCE AND EXPERTISE

Although we are 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 we are happy to receive client feedback such as:



“Your service has never been anything short of excellent.” Mr IB of Leeds

 “Thank you very much for the helpful advice you have provided. I feel a lot better now understanding more about the pension side of life – very important.” Mrs ACL of Canterbury



“Thank you for your time and patience today. It was most helpful.” Mr JR of East Grinstead

Best wishes, Tom Shuster

Wednesday 11 March 2015

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. If you then pay the credit card balance off in full, you will have 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% will not pay off the debt and you will end up having paid an enormous amount of interest and the credit card balance still 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.

Monday 2 March 2015

MERGER – AVIVA AND FRIENDS LIFE

Two of the largest UK life assurance companies – Friends Life and AVIVA are planning to merge. Their strategy is to increase efficiency and savings by economy of scale. What the real result will be is more uncertain. Each of them already have commitments from having absorbed a number of earlier life companies. For example, Friends Life took over Friend Provident, F&C (Foreign and Colonial), BUPA, Resolution and others. While AVIVA have General Accident, Commercial Union, Norwich Union and others. Each of their subsidiaries brings past responsibilities and contracts to honour. At the moment the Stock Market considers it a good idea for Friends Life and a not-so-good one for AVIVA and their share prices have reacted accordingly.







Monday 23 February 2015

STUCK WITH AN INTEREST ONLY MORTGAGE?

More and more people are having to come to terms with an interest-only mortgage they have which does not have a repayment strategy. There are various solutions available. More and more lenders are willing to negotiate an extended term to enable a solution to be found – whether that be switching to a repayment-type of mortgage over a longer term, or perhaps an equity release type of solution with interest-only payments being continued definitely, or a lifetime mortgage arrangement whereby no payments are made and the mortgage and interest are paid from the eventual sale of the property.


Monday 16 February 2015

OTHER NEWS: MORTGAGE RATE WAR

There is still fierce competition as regards mortgage interest rates. While the Bank of England seems minded to move slower rather than faster in raising interest rates, we still believe it is an excellent time to take advantage of the current fixed interest rates – with 5 year fixed rates under 3.0%. We would be pleased to provide you with quotations so you can see what savings you can achieve. This can be done very speedily.


Monday 9 February 2015

COMPULSORY PENSION ENROLMENT

The crunch time for companies, particularly smaller companies with 50 staff and less is approaching. It is estimated that in 2015 there will be tens of thousands of companies having to set up their compulsory Auto Enrolment Company Pension Scheme, and in 2016 that will rise to hundreds of thousands. Failure to meet your Staging Date can result in fines and other penalties from The Pensions Regulator who are in charge of this vast change in the pensions landscape.

Even now when less than 30% of employees have now been automatically enrolled, there is evidence that the pension providers are beginning to creak under the strain of the new business. In the Tax Year 2015/16 tens of thousands of employers will reach their Staging Date and in 2016/2017 it increases to hundreds of thousands! This will certainly stretch the resources of the pension providers and the number of pension advisers. It is a good idea to plan ahead.


Monday 2 February 2015

NEW PENSION SOLUTIONS

Along with these changes are coming new product developments. Various hybrid new products will have the benefits of some guarantees, like annuities, while also providing access to capital. We will be pleased to use our knowledge and expertise to help you with your planning.


Monday 26 January 2015

PENSION FUND ON DEATH CAN BE GIVEN TO ANYONE NOMINATED AS BENEFICIARY – WITHOUT TAX!

Under current rules if you die and want to leave the remaining value of your pension to your spouse or your estate, the fund will suffer tax at 55%. Under the new rules from the 6th of April, if you die before age 75, you can leave the pension fund to anyone you nominate and they will receive it free of tax – and if it involves an income, that income will be free of tax! Under the new rules, if you died aged 75 or older, then the person receiving the pension fund or pension benefit would have to pay tax on it based only on the level of their income tax – up to a maximum of 45%.

This gives a genuine incentive to save, as you will be able to pass the pension savings on in a very tax efficient way.

Recommendation: Ensure you complete a Nomination of Beneficiary form and lodge it with your pension provider, and review it regularly in case your wishes change as regards to whom you want to give it.

DO CON TACT US IF YOU NEED ASSISTANCE IN UNRAVELING THESE NEW PENSION RULES. FURTHER RULES CAN MAKE IT SEEM EVEN MORE OF A MYSTERY BUT THE RE WILL BE SENSIBLE TAX -EFFICIENT WAYS TO TAKE ADVANTAGE OF THESE NEW RULES .





Monday 19 January 2015

UNLIMITED ACCESS TO YOUR PENSION FUND

Assuming the rules receive final approval, from the 6th of April 2015 those aged 55+ will be able to take unlimited amounts of cash from their pension. The first 25% will usually be tax-free and the rest will be taxed as income. It will be added to any other taxable income received during the tax year (e.g. your salary) and subject to tax at your highest rate. This new pension option is being call a “flexi-access drawdown”.

Note: Those with Final Salary Pensions (i.e. those based on the number of years you have worked and your salary when you retire) will not have the same unlimited access based on the proposed rules – unless they transfer their pension to a Money Purchase Scheme, i.e. one with a cash value.

Pitfalls to avoid:
1. Taking out too much, too quickly.

If you take it all out, you will have nothing to fall back on and you could pay high levels of tax. You can keep the tax low by taking amounts out annually at a level which keeps you from paying a higher rate of tax.

2. Once you start taking it out, you will severely limit how much you can then put into an existing or future pension.

Instead of  being able to contribute up to £40,000 a year into a pension, you will be limited to only
£10,000 a year. However, careful handling can enable you to gain some access to your pension fund while also being able to contribute up to the maximum of £40,000.





















Wednesday 7 January 2015

The December 2014 Autumn Statement:


If we focus on the changes taking place in April 2015, we have the following tax changes:


1. The Personal Tax Allowance is increased from £10,000 to £10,600.

2. The Basic Rate Tax Band is slightly down from £31,865 to £31,785. This means that from 6 April 2015, with the first £10,600 earned being subject to no tax, you will not start paying 40% tax on earnings until they exceed £42,385. This is marginally better than last year’s £41,986.

3. The Individual Savings Accounts (ISAs) annual limit goes up to £15,240 and all of this can be put into cash or into stocks and shares.


The Chancellor also announced a major change in the way Stamp Duty is charged on property purchase. Under the old rules the Stamp Duty was calculated at a single rate based on the band into which the purchase price fell. Now you will pay only the rate of the tax on the part of the property price within each tax band – like income tax.


The tax bands are as follows:

£125,000                                      nil


£125,001 to £250,000                  2%


£250,001 to £925,000                  5%


£925,001 to £1,500,000              10%


£1,500,001 and over                    12%


Examples of the new calculations for the tax versus the old calculation:


Purchase Price              Tax under                      Tax under
                                        old rules                         new rules


£125,000                           nil                                    nil


£275,000                           £8,250                            £3,750
average family home       



£510,000                           £20,400                          £15,500
average London home


This should give a boost to property purchases.