MoneyMatters March/April 2015
ISA shake up The pension
FAMILY TREE End of Tax Year
planning
How to retire at
PROTECTION
55
Lifestyle Protection
Income
Creating Wealth
Tax Rules
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inside inside Pensions Pensions Guidance Guidance Service Service PagePage 2 2
5 things 5 things to do tobefore do before the the end end of tax of year tax year PagePage 3 3
Financial Financial planning planning goals goals PagePage 4 4
The The ISA shake ISA shake up up PagePage 5 5
HowHow to retire to retire at 55 at 55 PagePage 6 6
The The pension pension family family treetree PagePage 8 8
Top Top tips tips for investing for investing PagePage 9 9
Income Income protection, protection, you you never never know! know! PagePage 10 10
Make Make youryour pension pension last last PagePage 11 11
VCTsVCTs
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Pensions Pensions
Guidance GuidanceService Service meeting, or a telephone or a telephone interview. interview. After After the the In January In January 2015 2015 the Government the Government announced announced meeting, meeting, meeting, users users will bewill issued be issued with awith summary a summary the name the name of its of new itspensions new pensions guidance guidance service, service, document so that sothey thatcan theyreflect can reflect on theon the whichwhich is to be is to runbeinrun partnership in partnership with the with the document guidance provided. provided. Citizens Citizens AdviceAdvice and The andPensions The Pensions Advisory Advisory guidance Service Service (TPAS). (TPAS). WhyWhy do we do need we need this this service? service? Pensions Pensions WiseWise With the Withintroduction the introduction of theofnew thepensions new pensions The service The service will bewill called be called Pensions Pensions Wise:Wise: Your Yourreforms reforms in April, in April, the level the of level possible of possible options options Money, Money, Your Choice, Your Choice, whichwhich the Government the Government has increased has increased dramatically, dramatically, bringing bringing a newa new hopeshopes will reflect will reflect the empowerment the empowerment of people of peoplelevel of level complexity of complexity into the intopensions the pensions arena.arena. approaching approaching retirement retirement to make to make confident, confident, This means, This means, making making an informed an informed decision decision informed informed choices choices aboutabout funding funding their their aboutabout how to how manage to manage retirement retirement fundsfunds and and retirement. retirement. The service The service is freeisand freewill andoffer will offer ensuring ensuring retirees retirees are able areto able maintain to maintain an an impartial impartial guidance guidance on theonmany the many different different income income throughout throughout the rest theofrest their of lives, their is lives, is pension pension options options that will thatbecome will become available available even important even important than before. than before. from April, from April, and will andbewill presented be presented through through face- face- The Government’s The Government’s pension pension guidance guidance serviceservice to-face to-face meetings, meetings, telephone telephone conversations conversations or orpromises promises to create to create an essential an essential first step firstfor step for onlineonline guidance. guidance. pre-retirees pre-retirees who are wholooking are looking to findtoout findmore out more The service The service will start will with start awith pilota scheme pilot scheme to toaboutabout their pension their pension options options after April after and Aprilwill and will test what test what does and doesdoesn’t and doesn’t work work well and welltoand tohelp to help guide to guide them them through through what what could could be a be a receive receive customer customer feedback. feedback. difficult difficult journey. journey.
What What doesdoes the service the service provide? provide? The The factsfacts so far so far This service This service is there is there to givetothose give those approaching approachingThereThere are still aresome still some outstanding outstanding issuesissues and and retirement retirement guidance guidance on their on options their options and what and what unanswered unanswered questions, questions, the Government the Government is yet is yet steps steps to take, to but take,it but won’t it won’t offer advice. offer advice. to go to into gofine intodetail fine detail aboutabout what what exact exact Detailed Detailed adviceadvice will still willneed still need to be to taken be taken from from guidance guidance will bewill offered. be offered. professional professional advisers. advisers. This new ThisGovernment new Government It is also It isimportant also important to point to point out that outthis that this serviceservice will hopefully will hopefully help the helpuser theunderstand user understand serviceservice is offering is offering guidance guidance only toonly pre-retirees. to pre-retirees. what what questions questions to asktoand askwhere and where to gettothe get the After After an initial an initial meeting meeting with Pension with Pension Wise, Wise, it is it is best help best as help well asas well provide as provide an idea anofidea how of how still advisable still advisable to meet to meet with awith professional a professional they can theysecure can secure their retirement their retirement income. income. financial financial adviser adviser to go to through go through your options your options in in UsersUsers have to have book to book a appointment a appointment to useto use more more detail.detail. the service, the service, whether whether they want they want a face-to-face a face-to-face
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Not all Not financial all financial advisersadvisers will have will regulatory have regulatory permission permission to advise to on advise every onproduct every product mentioned mentioned in theseinarticles. these articles. CertainCertain products products mentioned mentioned in this magazine in this magazine may require may require advice from advice other from other professional professional advisersadvisers as well as as well youras financial your financial adviser adviser and thisand might thisinvolve might involve you in extra you incosts. extraThe costs. articles The articles featured featured in this publication in this publication are for are yourfor general your general information information and useand onlyuse and only areand notare not intended intended to address to address your particular your particular requirements. requirements. They should They should not be relied not beupon reliedinupon theirin entirety. their entirety. Although Although endeavours endeavours have been havemade beento made provide to provide accurate accurate and timely and information, timely information, there can there can be no guarantee be no guarantee that such that information such information is accurate is accurate as of the as date of the it date is received it is received or that or it will thatcontinue it will continue to be accurate to be accurate in the future. in the future. No individual No individual or company or company should should act upon actsuch upon information such information withoutwithout receiving receiving appropriate appropriate professional professional advice after advicea after thorough a thorough examination examination of theirof particular their particular situation. situation. Will writing, Will writing, buy-to-let buy-to-let mortgages, mortgages, some forms someof forms tax and of tax estate and planning estate planning are notare not regulated regulated by the Financial by the Financial Conduct Conduct Authority. Levels, Authority. Levels, bases ofbases and reliefs of and from reliefs taxation from taxation are subject are subject to change to change and their and value theirdepends value depends on the individual on the individual circumstances circumstances of the investor. of the investor.
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Monitor Monitor your your tax tax code code
Before Before thethe 5th5th April April andand thethe endend of the of the tax tax year, year, youyou need need to think to think about about maximising maximising your your saving saving opportunities opportunities before before they they disappear disappear for for good! good! 3 Capital GainsGains Tax Allowance Tax Allowance 1 Flexible 1 Flexible Pension Pension Preparation Preparation and and 3 Capital ManyMany forgetforget the ‘gift’ the ‘gift’ from from the taxman, the taxman, the the Contributions Contributions Capital GainsGains Tax Allowance Tax Allowance is £11,000 is £11,000 for for Your Your pension pension contributions contributions need need checking checkingCapital the current tax year. tax year. This means This means that you that you annually. annually. Contributing Contributing to your to your pension pension is is the current paytaxnoontaxCapital on Capital GainsGains up toup that to this that this oftenoften a good a good way to way manage to manage your your tax tax pay no threshold. It is also It is an alsoindividual an individual liabilities, liabilities, although although it should it should be done be done with withthreshold. allowance, meaning meaning that athat couple a couple can can your your full financial full financial plan in plan mind. in mind. You will You will allowance, shelter shelter up toup £22,000 to £22,000 and genuine and genuine gifts gifts need need to consider to consider the pension the pension lifetime lifetime from from a spouse a spouse or civil or partner civil partner do not do count not count allowance, allowance, whichwhich is currently is currently £1.25£1.25 million. million. towards the allowance. the allowance. ThereThere are various are various Anything Anything aboveabove this level this level withinwithin your your towards otherother exemptions exemptions and careful and careful planning planning can can pension pension can currently can currently be taxed, be taxed, thus thus reallyreally help your help your tax position. tax position. potentially potentially altering altering your your tax planning, tax planning, so so againagain it’s worth it’s worth checking checking the size theof size your of your 4 Junior 4 Junior ISAs ISAs and Children’s and Children’s Savings Savings pension pension pot, remembering pot, remembering to allow to allow for itsfor itsJuniorJunior ISAs for ISAsthis fortax thisyear tax are year£4,000; are £4,000; natural natural growth, growth, if you’re if you’re considering considering extraextratheir their Capital Capital GainsGains Tax Allowance Tax Allowance is setisatset at contributions. contributions. WhilstWhilst you’reyou’re looking looking at your at your the same the same rate as rate adults as adults and they and can theyalso can also pension, pension, consider consider preparing preparing for itsfor new its new makemake pension pension contributions. contributions. flexibility: flexibility: the new the rules new rules announced announced during during 5 ISA 5 Contributions ISA Contributions the 2014 the 2014 Budget Budget comecome into force into force at theat the Finally Finally the ‘big theone’, ‘big one’, the amount the amount you can you can turn of turn theoftax theyear. tax year. investinvest into an intoIndividual an Individual Savings Savings Account Account 2 Watch 2 Watch out for outthe forBudget the Budget (ISA) (ISA) resetsresets at theattax theyear tax end yearand endifand youif you The 2015 The 2015 Budget Budget Statement Statement will be will be don’tdon’t use it,use youit,lose you it. lose Thisit.tax Thisyear, tax year, delivered delivered by George by George Osborne Osborne on on following following the changes the changes announced announced in thein the Wednesday Wednesday 18th 18th March. March. Look Look out for outany for any20142014 budget, budget, the ISA thelimit ISA limit was increased was increased ‘instant’ ‘instant’ changes, changes, such such as theaschange the change to to to £15,000, to £15,000, up from up from £11,520 £11,520 in in Stamp Stamp Duty Duty announced announced during during the the 2013/2014, 2013/2014, whichwhich means means that many that many of us of us December December 20142014 Autumn Autumn Statement, Statement, whichwhichmay not mayhave not have increased increased to thetomaximum the maximum are aare regular a regular occurrence. occurrence. This isThis alsois the also the allowance. allowance. There’s There’s also no alsolonger no longer a limita limit on on Budget Budget prior prior to May’s to May’s UK General UK General Election, Election, how much how much you can youput caninto put ainto cash a cash ISA, so ISA, so so it is solikely it is likely to have to have somesome fairlyfairly majormajor your your entireentire £15,000 £15,000 couldcould be invested be invested in in announcements announcements designed designed to appeal to appeal to to that way, that way, if youifso you wish. so wish. votersvoters that could that could comecome into force into force at theat the start start of theof2015/2016 the 2015/2016 tax year. tax year.
CheckCheck your your pay slip payorslip askoryour ask your tax tax officeoffice for a for coding a coding notice. notice. This details This details your your allowances allowances and any and any deductions deductions due to due state to state benefits benefits or or taxable taxable employee employee benefits. benefits. ErrorsErrors will affect will affect how how muchmuch tax you tax you pay and pay could and could resultresult in a large in a large tax tax demand demand if youif have you have underpaid. underpaid. You could You could also be alsopaying be paying too much too much if, forif,example, for example, where where employment employment changed changed and your and your correct correct tax code tax code wasn’t wasn’t applied applied or you or have you have moremore than than one job. oneYou job.can Youclaim can claim back back overpaid overpaid tax for taxupfortoup four to years. four years.
UseUse all of allyour of your personal personal allowances allowances Ensure Ensure that you that are youmaking are making the the mostmost of your of your individual individual tax-free tax-free personal personal allowance allowance (PA),(PA), whichwhich is is £10,000 £10,000 for 2014/15 for 2014/15 (£10,600 (£10,600 for for 2015/16 2015/16 tax year) tax year) for people for people agedaged underunder 65. For 65.the Forover the over 65s, the 65s, the age-related age-related allowances allowances whichwhich are are worthworth up toup £10,660 to £10,660 assuming assuming your your maximum maximum income income doesn’t doesn’t exceed exceed £26,100, £26,100, after after whichwhich your your PA would PA would reduce reduce by £1byfor£1each for each £2 earned £2 earned aboveabove this figure, this figure, until until it reached it reached £9,440. £9,440. Remember Remember to transfer to transfer any unused any unused allowances allowances to your to your spouse spouse or or registered registered civil partner, civil partner, if they if they havehave little little or noorincome, no income, to ensure to ensure that that they they are able are able to make to make full use fullofuse of their their PA. Care PA. Care should should be taken be taken to to avoidavoid falling falling foul of foul theofsettlements the settlements legislation legislation governing governing ‘income ‘income shifting’. shifting’. Transfers Transfers mustmust be anbe an outright outright gift. gift.
The value The value of your ofinvestment your investment and the and income the income from itfrom can it gocan down go down as wellasaswell up and as upyou andmay younot may get not back getthe back original the original amount amount invested. invested. Past performance Past performance is is not a reliable not a reliable indicator indicator for future for future results. results. PleasePlease contact contact us for us further for further information information or if you or ifare you in are anyindoubt any doubt as to the as to suitability the suitability of an investment. of an investment.
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FINANCIAL FINANCIALPLANNING PLANNING 11
• Couples • Couples should should now plan now ahead plan ahead and set and setAs with As with all planning, all planning, you should you should regularly regularly Pension Pension freedoms freedoms themselves up forupa for minimum a minimum of of review review to check to check that plans that plans are on aretrack on track to to Pension Pension saverssavers are eagerly are eagerly awaiting awaiting themselves £21,200 of tax-free of tax-free income income (from(from April April achieve achieve their their goals,goals, takingtaking into account into account the advantages the advantages of theofnew the pension new pension £21,200 by making by making best use bestofuse taxofbands tax bands rule changes rule changes such such as these. as these. TheseThese new new reforms reforms in April in April 2015.2015. An estimated An estimated half ahalf a 2015)2015) and personal and personal allowances. allowances. changes changes to thetotax thetreatment tax treatment of pensions of pensions million million people people will be will able be to able take to take • With the current the current ISA allowance ISA allowance of of and ISAs and on ISAsdeath on death will mean will mean manymany pension pension advantage advantage of these of these increased increased pension pension • With £15,000 to usetoby use 5 April by 5 April and aand newa new investors investors will be will rewriting be rewriting and revisiting and revisiting options options whenwhen considering considering alternatives alternatives to to £15,000 allowance allowance of £15,240 of £15,240 from from 6 April, 6 April, a a their their Wills,Wills, inheritance inheritance tax and taxestate and estate plansplans annuities annuities for their for their retirement retirement income. income. couple couple can shelter can shelter up toup £60,480 to £60,480 from from this year. this year. This means This means it hasitnever has never been been moremore further further taxestaxes over the overnext the four next months. four months. important important to consider to consider how best how to best mixto mix Beating Beating low low interest interest ratesrates It is possible also possible to shelter to shelter up toup to guaranteed guaranteed income income from from the likes the of likes state of state It is also EveryEvery portfolio portfolio should should have have an an £40,000 £40,000 each each tax year tax in year a pension in a pension and and pension, pension, final final salarysalary pensions pensions and and element element of cash of cash available, available, enough enough benefit from from tax relief. tax relief. ThoseThose who do whonot do not annuities annuities with with moremore flexible, flexible, riskierriskier options options benefit should should be held be to held meet to meet short-term short-term already already use this useallowance this allowance through through a a spending such such as drawdown. as drawdown. spending needs. needs. workwork pension pension including including employer employer The right The right approach approach will suit willan suit an Over Over the long the long term term the low thereturns low returns contributions, can top-up can top-up by contributing by contributing individual’s individual’s attitude attitude to investment to investment risk and risk and contributions, offered offered by cash by cash are often are often eroded eroded by by to a private pension pension such such as a as a whilstwhilst tryingtrying to mitigate to mitigate the potential the potential tax tax to a private inflation, inflation, and that’s and that’s why other why other assets, assets, such such stakeholder stakeholder or a SIPP. or a SIPP. High High earners earners can can as shares trapstraps of large of large withdrawals, withdrawals, keeping keeping in in as shares and bonds, and bonds, couldcould be considered be considered forward forward unused unused allowances allowances from from for the mindmind that only that 25% only 25% of a pension of a pension can be can be carry carry forrest theof rest anofinvestment an investment portfolio. portfolio. previous yearsyears to shelter to shelter a total a total of upoftoup to Generally, takentaken tax-free, tax-free, with with the rest thebeing rest being subject subject previous Generally, past performance past performance showsshows that that £190,000 £190,000 in pensions in pensions this tax thisyear. tax year. to income to income tax attax your at your personal personal rate. rate. cash cash is highly is highly unlikely unlikely to beat to beat the returns the returns Remember Remember tax rules tax rules can change can change and the and thefrom from the stock the stock market market over the overlong the long term,term, Reduce Reduce youryour tax burden tax burden valuevalue of anyofbenefits any benefits depends depends on on but unlike but unlike cash cash the market the market will have will have its its Following Following this year’s this year’s general general individual individual circumstances. circumstances. risks.risks. election election most most expect expect the new the new Government Government to increase to increase taxation. taxation. Effective Effective Rethinking Rethinking estate estate tax tax Always Always seekseek professional professional tax planning tax planning is theisutmost the utmost importance importance planning planning advice advice now. now. The new The April new April rules rules will make will make ISAs ISAs Working Working out how out to how arrange to arrange a a transferable transferable to thetosurviving the surviving spouse spouse and and portfolio portfolio for maximum for maximum tax efficiency tax efficiency can can pensions pensions will be will completely be completely tax-free tax-free if if be complicated. be complicated. deathdeath occurs occurs before before age 75. age 75. Making Making the most the most of inheritance of inheritance tax tax planning planning strategies strategies and and deciding deciding how much how much cash cash to to commit commit to thetostock the stock market market are allare all important important financial financial decisions. decisions. It is It is important important to conduct to conduct detailed detailed research research and your and your professional professional financial financial adviser adviser can can offer offer help and helpguidance and guidance to ensure to ensure you meet you meet your your financial financial goals.goals.
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THE THE ISA ISA SHAKEUP UP SHAKE Purchase short-dated short-dated bonds bonds - ISA - ISA investors investors can shelter can shelter as much as much as £30,240 as £30,240 in inPurchase YouGov YouGov have have reported reported in a recent in a recent surveysurvey that that investors investors now have now have the flexibility the flexibility to invest to invest in in around around 77% 77% of British of British adultsadults (around (around 38 38 ISAs. ISAs. individual corporate corporate bondsbonds and gilts and with gilts with Better Better flexibility flexibility – Before – Before thesethese changes changesindividual million million people), people), have have little or little noor no less five thanyears five years to maturity. to maturity. Previously Previously were were restrictions restrictions on how on you howcould you could less than understanding understanding of theofNew the New ISA rules ISA rules that that there there ISA investors couldcould only purchase only purchase thesethese split your split allowance your allowance between between Cash Cash ISAs and ISAs andISA investors camecame into effect into effect in Julyin2014. July 2014. investments with more with more than five thanyears five years to to StocksStocks & Shares & Shares ISAs. ISAs. With With the new the changes new changesinvestments TheseThese changes changes were were announced announced in March’s in March’s maturity. yousplit can your split allowance your allowance as youaswish. you wish. maturity. budget, budget, whichwhich brought brought cheerscheers from from manymany you can Transfer free free Stocks Stocks & Shares & Shares ISAs ISAs - You - You Improved death death benefits benefits - Investments - Investments Transfer because because they made they made ISAs simpler ISAs simpler and more and more Improved always always hold cash hold in cash a Stocks in a Stocks & Shares & Shares are normally are normally subject subject to Inheritance to Inheritance Tax (IHT) Tax (IHT)couldcould attractive attractive than ever, than and ever,increased and increased the the ISA,interest but interest was, effectively, was, effectively, paid net paidofnet of of 40%, if the iftotal the total valuevalue of your of estate your estate ISA, but annual annual allowance allowance to its to highest its highest ever level. ever level. of 40%, rate tax. rateUnder tax. Under the new the rules new rules interest interest exceeds the ‘nil-rate the ‘nil-rate band’.band’. This isThis currently is currentlybasic basic The Government’s The Government’s strategy strategy for change for change was was exceeds on cash on in cash a Stocks in a Stocks & Shares & Shares ISA isISA paidis paid £325,000 for individuals, for individuals, or uportoup £650,000 to £650,000 that itthat would it would encourage encourage individuals individuals to save to save£325,000 and isand completely is completely tax-free. tax-free. Cash Cash ISAs ISAs you inherit your spouse’s your spouse’s or civilorpartner’s civil partner’sgrossgross and invest and invest more more for their for future. their future. Further Further if youifinherit remain unchanged. unchanged. unused unused allowance. allowance. The Autumn The Autumn Statement Statement remain advantages advantages were were also announced also announced in in changes changes meanmean that surviving that surviving spouses spouses will will December’s December’s Autumn Autumn Statement, Statement, allowing allowing ISA ISA Used every every yearyear the ISA the ISA an additional an additional ISA allowance, ISA allowance, equalequal to to Used benefits benefits to be to passed be passed to a spouse to a spouse on death. on death.have have the amount the amount the deceased the deceased spouse spouse had inhad in allowance For those For those individuals individuals yet toyet take to advantage take advantage allowance allows allows savers savers and and their ISA. their ISA. of theofnew the ISA newrules ISA rules it’s not it’stoo notlate tootolate to investors investors to build to build a substantial a substantial benefit, benefit, the tax theyear tax ends year ends on 5 April on 5 April 2015.2015. Transfer Transfer options options – The–new The rules new rules allowallow efficient efficient portfolio. portfolio. If you If you you toyou transfer to transfer from from a Stocks a Stocks & Shares & Shares ISA toISA totax tax What’s What’s changed? changed? a Cash a Cash ISA, and ISA,vice andversa. vice versa. UnderUnder previous previous had had invested invested the full the ISA full ISA NewNew ISA annual ISA annual allowance allowance - the -amount the amount rules rules you were you were only able only to able transfer to transfer from from a a you can youinvest can invest each each tax year tax has yearrisen has risen to to allowance allowance every every yearyear sincesince ISAsISAs ISA toISA a Stocks to a Stocks & Shares & Shares ISA. ISA. £15,000. £15,000. Anyone Anyone who has whoalready has already opened opened Cash Cash launched in 1999, in 1999, you you could could This removes one ofone theofbiggest the biggest barriers barriers to to launched their ISA theirfor ISAthis fortax thisyear tax (2014/15) year (2014/15) beforebefore This removes transferring transferring Cash Cash ISAs to ISAs Stocks to Stocks & Shares & Shares havehave sheltered sheltered as much as much as as 1 July12014, July 2014, can top canuptoptoup thistonew this £15,000 new £15,000 whichwhich was that was you thatcouldn’t you couldn’t transfer transfer £139,080 £139,080 fromfrom tax.tax. ThisThis figure figure annual annual allowance. allowance. In theInnew the 2015/16 new 2015/16 tax tax ISAs, ISAs, back back again. again. year the yearISA theallowance ISA allowance increases increases to £15,240, to £15,240, this means this means over the overnext the few nextmonths few months
excludes excludes investment investment growth. growth.
The value The value of your of your investment investment and the andincome the income from from it canitgo can down go down as well as as well upas and upyou andmay you not mayget notback get back the original the original amount amount invested. invested. Past performance Past performance is notisanot reliable a reliable indicator indicator for future for future results. results. Please Please contact contact us forusfurther for further information information or if you or ifare youinare anyin any doubtdoubt as to as thetosuitability the suitability of anof investment. an investment.
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How Howto toretire retireat at55 55 Have Have you you ever ever thought thought “if“if only only I could I could stop stop working”, working”, but but how how could could you you afford afford it?it? The The answer answer will will bebe dependent dependent onon your your pension pension and and how how well well it has it has performed. performed. Here Here wewe look look at at ways ways to to getget your your pension pension into into shape shape 3. If 3. your If your employer employer offers offers you you a a4. Check 4. Check where where youryour pension pension is is 1. Use 1. Use youryour share share of the of the £35 £35 pension at work, at work, taketake it! it! invested invested billion billion the the taxman taxman gives gives pension pensionpension savers savers SomeSome companies, companies, especially especially the large the large ones,ones, Half of Half theofUK thepopulation UK population have have no idea no idea usually usually offer offer workplace workplace pensions. pensions. In many In manywherewhere their their pension pension fund fund is invested, is invested, but itbut it WhenWhen you put youmoney put money in a personal in a personal they pay theymoney pay money into your into pension your pension is important is important to know to know because because you could you could be be pension pension the taxman the taxman also contributes. also contributes. cases,cases, due auto-enrolment to auto-enrolment whichwhich camecame into into missing missing goodgood returns returns if youifdidn’t. you didn’t. Not all Not all Imagine Imagine you pay youinpay £1,000. in £1,000. The taxman The taxman due to in 2012. in 2012. Over Over the coming the coming yearsyears all all investments investments are the aresame the same and the and the automatically automatically adds adds another another £250,£250, so your so youreffecteffect UK companies, UK companies, will have will have to offer to offer a pension a pension difference difference couldcould have have a significant a significant impact impact pension pension pot receives pot receives £1,250. £1,250. to their employees. employees. If youIfopt youout, opt you out, you on your on pension. your pension. That said, That said, all all If youIfpay you40% pay 40% or 45% or 45% rate tax, rateas tax, a as a to their be missing be missing out on out‘free on ‘free money’ money’ from frominvestments investments go upgoand up down and down higherhigher rate taxpayer rate taxpayer you get youeven get even more.more. couldcould your employer. so you somay you end mayup endwith up with less less You can Youclaim can claim back back money money through through your youryour employer. than than you invested, you invested, but but tax return tax return whichwhich means means the £1,250 the £1,250 from from keeping keeping a keen a keen eye on eyeit on it the example the example above, above, couldcould cost you costas you little as little lessens lessens risks risks on returns. on returns. as £687.50 as £687.50 or 55%. or 55%. The amount The amount you get youfrom get from the taxman the taxman depends depends on your on circumstances your circumstances and tax and tax rules rules can and can do andchange. do change. So take So take advantage advantage whilstwhilst it is still it ison stilloffer. on offer. 2. Start 2. Start a pension a pension It is thought It is thought that as that many as many as four as in four tenin ten BritishBritish adultsadults don’tdon’t have have a pension, a pension, including including 1.4 million 1.4 million who are whowithin are within 10 10 yearsyears of retiring. of retiring. If youIfwish you wish to retire to retire at 65aton6565% on 65% of of your salary, your salary, the rule the of rule thumb of thumb is likeisthis; like this; so thesocalculation the calculation is likeisthis, like divide this, divide your your age when age when you start you start your pension your pension savings savings by two by and two contribute and contribute this as this a percentage as a percentage of your of earnings. your earnings. For example, For example, if you’re if you’re 25 25 you should you should aim toaim save to save 12.5% 12.5% of earnings. of earnings. Obviously Obviously to retire to retire at 55atyou’ll 55 you’ll need need to to save save more,more, but the butsooner the sooner you start, you start, the the less itless should it should cost you costtoyou build to build a a substantial substantial pension. pension.
Retirement Retirement rules rules areare changing changing as as of of April April 2015. 2015. If you If you areare 5555 or or over, over, you you will will have have a lot a lot more more freedom freedom and and flexibility flexibility onon how how you youcan can draw draw your your private private pensions pensions
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Avoid Avoid becoming becoming a 45% a 45% taxpayer taxpayer overnight overnight
lot more freedom and flexibility on how freedom and flexibility on how 5. Make small, regular increaseslot more 5. Make small, regular increases youdraw can draw your private pensions. your private pensions. a person 30 contributing Take Take a person agedaged 30 contributing £150£150you can Youtake can lump take lump (single sumssums (single or or his pension month. If every You can net tonet histopension everyevery month. If every periodical), income (secure or flexible), income (secure or flexible), or a or a year person that person increases that amount year that increases that amount by byperiodical), combination, youeven can even take your you can take your or £7.50 a month forfirst the year, first year, 5% or5% £7.50 a month for the at atcombination, WhenWhen takingtaking benefits benefits from from a pension, a pension, pension as cash one go. wholewhole pension fund fund as cash in oneingo. agehe65could he could find himself an extra age 65 find himself with with an extra 25% 25% is usually is usually tax-free tax-free and the andrest theisrest is However, remember the 25% first 25% remember the first you you addedadded £190,642 his pension, assuming £190,642 in hisinpension, assuming basicbasic However, to other to other income income in that in tax thatyear tax year withdraw is usually tax and free,the andrest the rest and subject is usually tax free, tax relief and the thatfund the fund tax relief and that growsgrows 4% a4% a withdraw and subject to income to income tax. For tax.those For those willtaxed be taxed as income. will be as income. year after charges. year after charges. planning planning to take to large take large lumplump sumssums out, out, Choosing how to draw your pension how to draw your pension is is this could takeaways: this should NeverNever mindmind takeaways: this should pay pay Choosing this could push push income income into ainto higher a higher the most important financial one ofone theofmost important financial for quite fewdining fine dining meals! for quite a fewafine meals! tax bracket. tax bracket. At theAtextreme, the extreme, someone someone decisions youhave will have to make. you will to make. Meaning increase cana go Meaning a littlea little increase can go longa longdecisions couldcould instantly instantly become become a toparate top rate Remember you need may need for30 20,or30 or you may it for it20, way the future. However, this exampleRemember way in theinfuture. However, this example taxpayer taxpayer (45%). (45%). 40 years. So ensure you out find out even even 40 years. So ensure you find only based on today’s and doesn’t is onlyis based on today’s termsterms and doesn’t One option One option to reduce to reduce tax istax to is to the rules new rules and opportunities aboutabout the new and opportunities consider inflation reduce consider inflation whichwhich wouldwould reduce real real spread spread withdrawals withdrawals over aover number a number of of available. available. over time. valuesvalues over time. years.years. Investors Investors - perhaps - perhaps basicbasic or or 8. Don’t delay on your pension 8. Don’t delay on your pension 6. Trace old pensions 6. Trace old pensions non-taxpayers, non-taxpayers, mightmight even even consider consider It is thought that as many 3.5 million that as many as 3.5asmillion people around 10 during jobs during It is thought MostMost people have have around 10 jobs somesome this tax thisyear. tax year. people no plans to working stop working people have have no plans to stop at at takingtaking working life many and many or don’t their their working life and forgetforget or don’t Although Although the new the rules new rules don’tdon’t take take all, many because they have no monetary all, many because they have no monetary the pension schemes keep keep track track of alloftheallpension schemes they they effecteffect until until 6 April, 6 April, pensioners pensioners can can support structure in place, but wishing support structure in place, but wishing during career. have have joinedjoined during their their career. already already use income use income drawdown drawdown to take to take they had. they had. you recall joining If youIfrecall joining moremore than than one one tax-free cash cash and some and some taxable taxable youtoday do today WhatWhat you do couldcould makemake all theall the tax-free pension but don’t the details pension but don’t have have the details to to withdrawals. withdrawals. Until Until April April most most people people difference for future your future and relaxing for your and relaxing at at youtrace can trace for with free with difference hand,hand, you can themthem for free are restricted on the onamounts the amounts they they 55 sounds working 55 sounds betterbetter than than working hard hard well well are restricted the Pension Tracing Service. the Pension Tracing Service. take out. take From out. From April April the limits the limits are are into later your later years!years! 7. Approaching retirement? into your 7. Approaching retirement? effectively effectively removed. removed. Retirement are changing Retirement rules rules are changing as of as of Please Please remember, remember, a pension a pension is is you55 areor55 or over, April April 2015.2015. If youIfare over, you you intended intended to provide to provide income income for a for a will have will have a a retirement retirement potentially potentially lasting lasting 20 years 20 years or more. or more. Taking Taking excessive excessive withdrawals withdrawals increases increases the risk theofrisk running of running out ofout of money money later later and could and could have have a a significant significant impact impact on lifestyle. on lifestyle. In In income income drawdown drawdown the pension the pension fund fund remains remains invested invested so will sorise willand risefall andinfall in value.value. It is aIthigh is a high risk option risk option so will so will not be not suitable be suitable for everyone for everyone and and income income is notissecure. not secure. Tax treatment Tax treatment and pension and pension rules rules will change will change over over time time and will anddepend will depend on individual on individual circumstances. circumstances.
The value of pension andincome the income produce canas fallwell as well as rise. You may get back less than you invested. The value of pension and the they they produce can fall as rise. You may get back less than you invested.
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The Thepension pensionfamily familytree tree pension, it is subject at their pension, but itbut is subject to taxtoattax their of April this year, private pension wealth As ofAs April this year, private pension wealth highest marginal if taken as income. highest marginal rate ifrate taken as income. can be passed to other members, can be passed on toon other familyfamily members, generally fall outside an estate, generally fall outside an estate, in some completely tax-free. a Pensions in some casescases completely tax-free. This isThis a is Pensions and are thusfree are of free of inheritance inheritance tax. tax. big opportunity for those looking to makeand thus big opportunity for those looking to make The Chancellor has made it possible has made it possible to to investments fornext the generation, next generation, investments for the as it as it The Chancellor pension wealth in a more pass pass pension wealth on inon a more tax- taxupconcept the concept the pension up the of theofpension familyfamily Husband Husband dies age dies74 agewith 74 with £500,000 £500,000 in in opensopens efficient manner. That said tax rules efficient manner. That said tax rules can can tree. Children or grandchildren can inherit tree. Children or grandchildren can inherit his SIPP his SIPP change in future andtreatment tax treatment in future and tax will will pension, and should youbefore die before change your your pension, and should you die £500,000 £500,000 passes passes tax free tax free to to depend on your individual circumstances. on your individual circumstances. theofage 75 will theynot willpay nottax payontax on depend the age 75ofthey wifewife It is considered thataverage the average It is considered that the life life withdrawals they make withdrawals they make from from it. it. expectancy theofage theisUK at theatage 65ofin65 theinUK 86 is 86 the previous pension UnderUnder the previous pension rules,rules, once once expectancy Wife Wife inherits inherits the pension. the pension. for and men89 andfor89women, for women, so theso the youstarted had started to draw pension, for men to draw your your pension, Withdrawals Withdrawals are tax arefree tax as free husband as husband you had Government estimates people Government estimates most most people will will an annuity or income drawdown, by anbyannuity or income drawdown, died under died under age 75. ageLeaves 75. Leaves £400,000 £400,000 eithereither survive the75 agethreshold, 75 threshold, and thus the age and thus in most anything paidtoout to your survive in most casescases anything paid out your to pass to pass on when on when she dies she age dies85. age 85. tax receipts they die. in taxinreceipts whenwhen they die. surviving beneficiaries was subject surviving beneficiaries was subject to to bringbring £400,000 £400,000 passes passes tax free tax free to to Pensions are governed the lifetime are governed by thebylifetime income if taken as income, or a 55% Pensions income tax iftax taken as income, or a 55% theirtheir twotwo children children allowance, is currently whichwhich is currently set atset at flat-rate if taken as a lump flat-rate tax iftax taken as a lump sum. sum. In theIn theallowance, Two children Two children inherit inherit half each, half each, whichwhich case case £1.25m: anything overisthis is subject anything over this subject to a to a of income, this could only be to paid to£1.25m: of income, this could only be paid they both they both keep keep with with a SIPP, a SIPP, so there so there is is someone tax charge to 55%. tax charge of upoftoup 55%. someone financially dependent on like you, like financially dependent on you, no taxnototax paytoon paythe oninvestment the investment No news or research is a personal No news or research item item is a personal spouse or a dependent your your spouse or a dependent child.child. growth. growth. Withdrawals Withdrawals are subject are subject to to recommendation to deal. All investments to deal. All investments the rules new rules of April UnderUnder the new as of as April 6th, 6th, recommendation income income tax. Both tax. Both children children die after die after age ageregardless canasfall as as well in value so you well riseasinrise value so you regardless of whether you have started of whether you have started to tocan fall 75. 75. get back less than you invest. get back less than you invest. a pension, remaining drawdraw a pension, your your remaining fund fund can can couldcould be passed on tax-free, youbefore die before on tax-free, if youifdie the the Remainder Remainder passes passes tax free tax free to to be passed age of 75. age of 75. grandchildren grandchildren nominated beneficiary canituse Your Your nominated beneficiary can use to it to Grandchildren Grandchildren inherit inherit the pension the pension with with provide provide a tax-free income a tax-free income or a or a the same the same options options as their as their parents. parents. tax-free sumdoes and does tax-free lumplump sum and not not Withdrawals Withdrawals are subject are subject to income to income be financially dependent need need to beto financially dependent tax. tax. on Ifyou. youondieoron or after on you. youIfdie after theofage 75, the 75,ofthe HowHow to structure to structure and and set up setaup a the age beneficiary can receive beneficiary can receive the the pension pension family family tree tree
Your Your pension pension family family tree tree
You simply You simply nominate nominate who you whowould you would like the likeremaining the remaining pension pension paid to paid to whenwhen you die you(you die can (younominate can nominate moremore than than one person) one person) and you andcan youchange can change the nomination the nomination at anyattime. any time. The The nomination nomination also applies also applies to income to income drawdown, drawdown, an option an option wherewhere you draw you draw retirement retirement income income directly directly from from the the SIPP, SIPP, but itbut does it does not apply not apply to anto an annuity. annuity. The nomination The nomination is notislegally not legally binding, binding, but itbut is seen it is seen as your as your wishes. wishes. Nominated Nominated beneficiaries beneficiaries and and dependants dependants can choose can choose whether whether they they take an takeincome an income or lump or lump sum. sum.
ThisThis article article is based is based on our on our understanding understanding of current of current and and draft draft legislation, legislation, which which could could change change in future. in future.
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Top Toptips tips
for forinvesting investing
It’sIt’s never never tootoo latelate to review to review your your investments. investments. If you If you want want your your money money to work to work hard hard forfor youyou andand have have thethe potential potential forfor greater greater returns returns thisthis year, year, here here areare some some tipstips to help to help upunits and cost unitsmore, cost more, and you’ll and you’ll buy more buy more the potential the potential to produce to produce muchmuch higherhigher returns. returns.up and Remind Remind yourself yourself of your of your financial financial the market the market is down is down and units and cost unitsless. cost less. Generally, Generally, the longer the longer you have you to have reach to reach your your whenwhen targets targets Over time, Over you time,should you should average average out atout a lower at a lower the less therisk lessyou risktake. you take. A yearAcan yearbecan a long be a time long when time when investing, investing, goal, goal, cost-per-unit cost-per-unit than ifthan youifinvested you invested in oneinlump one lump most most believe believe that you thatonly youreach only reach a goala that goal that Investment Investment charges charges sum. sum. really really meansmeans something something to you. to you. Charges Charges erodeerode your returns your returns every every year, so year, it’sso it’s Perhaps Perhaps you’veyou’ve experienced experienced some some changes changes important important that you thatknow you know for how for long how and long and Be prepared Be prepared to top-up to top-up your your duringduring the year theand yearit’s and time it’s your time investment your investment how much how much you are youpaying are paying and that andyou’re that you’re investments investments targets targets reflected reflected them?them? Welcoming Welcoming children children or orgetting getting good good serviceservice for your for money. your money. Always Always If youIffind youyourself find yourself behindbehind your investment your investment grandchildren grandchildren to a family to a family can change can change your your ask your ask Financial your Financial Adviser Adviser to show to show all theall the target,target, top uptop your up investment your investment to bridge to bridge the the perspective, perspective, so it’sso well it’sworth well worth takingtaking some some time time charges charges beforebefore you agree you agree to have to them have them work work shortfall. shortfall. to think to think aboutabout what’swhat’s important important to youtonow. you now. for you. for you. By topping By topping up youupcan youkeep can investments keep investments on on If yourIfsituation your situation has changed, has changed, speakspeak with your with your The risk Theofrisk high of charges high charges is especially is especially severeseverecoursecourse and even and help even you helpreach you reach your goals your goals financial financial adviser adviser aboutabout how you howupdate you update your your for older for older investments, investments, such as such dormant as dormant early. early. You don’t You don’t have to have wait to until wait you’re until you’re targets targets and progress and progress towards towards them them this year. this year. pensions. pensions. It mayItbe may more be more cost effective cost effective for you for youbehindbehind to top-up, to top-up, you can youalso canadd alsofunds add funds whenwhen to transfer to transfer your dormant your dormant pensions pensions into one intopot one pot you have you extra have extra cash. cash. BuildBuild an emergency an emergency fundfund with lower overalloverall fees. fees. Investments Investments are long-term, are long-term, so it’sso best it’snot besttonot to with lower MakeMake the most the most of tax-efficient of tax-efficient touchtouch them them even ifeven youifneed you need cash to cash cover to cover an anAlways Always take take a long-term a long-term viewview investing investing unforeseen unforeseen emergency. emergency. Investments Investments shouldshould be thought be thought of as long of as term long term Use your Use annual your annual ISA allowance ISA allowance of £15,000. of £15,000. To cover To cover such emergencies, such emergencies, you could you could goals goals that are thatatare least at five leastyears five years away.away. With With This isThis tax-free is tax-free savingsaving and should and should be one beofone of consider consider a casha reserve. cash reserve. Try toTry have to at have least at least ever changing ever changing markets, markets, it’s over it’s the overlong-term the long-term the first the places first places you invest you invest your money. your money. three three months months of your ofregular your regular outgoings outgoings in cash, in cash, that you’ll that you’ll usuallyusually see investment see investment growth. growth. The The You have You have until 5th untilApril 5th April to usetoup useyour up your whichwhich shouldshould cover cover most most problems. problems. longerlonger you have you to have invest, to invest, the better. the better. allowance. allowance. By withdrawing By withdrawing from cash from in cash times in times of need, of need, Remember, Remember, don’t don’t panic panic if the ifmarket the market goes goes Remember the ISA theallowance ISA allowance is personal, is personal, you keep you your keep investments your investments tax-efficient. tax-efficient. If youIf youdown,down, you’reyou’re investing investing for theforlong-term, the long-term, not not Remember so a couple so a couple can shelter can shelter £30,000 £30,000 from from the the had no had other no other optionoption but tobut take tomoney take money out ofout offor just fortoday. just today. your ISA, youryou ISA,would you would not benot able beto able puttoit put backit back taxman. taxman. The allowance The allowance startsstarts againagain on April on April Invest Invest regularly regularly in again in again if youifhad youalready had already reached reached your your 6th and 6th you and can’t you can’t carry carry over any over unused any unused Regularly Regularly add more add more to your to investments, your investments, this this annualannual allowance allowance of £15,000 of £15,000 for thefor2014/15 the 2014/15 amount. avoidsavoids ‘lump‘lump sum shock’ sum shock’ wherewhere you might you might amount. tax year. tax year. As as well anas ISA, anyou ISA,can youinvest can invest up toup to investinvest a lumpa lump sum the sumday thebefore day before a big adrop big in drop in As well ThinkThink of risk of and risk return and return together together £40,000 in your in pension your pension this tax thisyear. tax year. the market. the market. Over time Over you’ll time you’ll make make your money your money£40,000 Everyone Everyone needsneeds to appreciate to appreciate the link thebetween link between Use allowance your allowance todaytoday to gettoyour get money your money back, back, but bybut regular by regular investing, investing, you spread you spread the theUse your risk and riskreturn. and return. risk. Investing risk. Investing the same the same amount amount each month each month invested invested for longer. for longer. Low-risk Low-risk investments investments usuallyusually provide provide lowerlowermeansmeans that you’ll that you’ll buy less buywhen less when the market the market is is returns, returns, whereas whereas higher-risk higher-risk investments investments have have The value The value of your ofinvestment your investment and the and income the income from itfrom can itgocan down go down as wellasaswell up as andupyou andmay younot may get not back getthe back original the original amount amount invested. invested. Past performance Past performance is notisa not reliable a reliable indicator indicator for future for future results. results. PleasePlease contact contact us forus further for further information information or if you or ifare youinare anyindoubt any doubt as to the as tosuitability the suitability of an of investment. an investment.
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Income Incomeprotection, protection, you younever neverknow! know!
CanCan youyou riskrisk notnot being being protected protected if you if you areare unable unable to work. to work. Here Here we we explain explain howhow Income Income Protection Protection Insurance Insurance works works andand what what to look to look outout for.for. HowHow would would you meet you meet your your financial financial debtsdebts if theifworse the worse HowHow can income can income protection protection insurance insurance help?help? Income Income Protection Protection is an is insurance an insurance whichwhich is there is there as a safety as a safety net tonet to happens? happens? help cover your outgoings your outgoings whilewhile you are youunable are unable to work, to work, income income WhatWhat if an illness if an illness or injury or injury prevented prevented you from you from working? working? The impact The impacthelp cover protection protection startsstarts if youifhave you have an accident an accident or fallorill.fall Payments ill. Payments normally normally of youofbeing you being too illtoo to work ill to work couldcould have have devastating devastating consequences consequences for for beginbegin as soon as soon as youassuffer you suffer a lossaofloss income, of income, through through illnessillness or an or an your family. your family. accident. accident. Protecting Protecting your loved your loved ones ones by taking by taking out income out income protection protection If claimed in accordance in accordance with your with policy’s your policy’s termsterms and conditions and conditions insurance, insurance, whichwhich pays out paysifout youifbecome you become unable unable to work, to work, couldcould proveprove If claimed this could this could be within be within a fewaweeks few weeks of your of accident your accident or, if your or, if contract your contract to be to a very be a wise very move. wise move. states states that your that employer your employer will continue will continue paying paying your full your salary full salary for a for a WhatWhat help help is available? is available? set time set time the payments the payments could could start when start when your salary your salary payment payment stops.stops. ManyMany of us of believe us believe the Government the Government or ouroremployers our employers will help will us help us Which Which means means you can you defer can defer payment payment of benefits of benefits to suit to your suit your whenwhen we are weunable are unable to work. to work. We know We know the state the state benefits benefits we qualify we qualify circumstances and reduce and reduce the cost theof cost theofinsurance the insurance premiums. premiums. for can foroffer can offer somesome limited limited help, help, particularly particularly if youifhave you have a mortgage. a mortgage.circumstances These These premiums premiums are also are variable also variable depending depending on how on much how much income income You may You even may even qualify qualify for benefits for benefits like housing like housing or carer’s or carer’s allowance, allowance, you want you want to receive to receive while while you are you not are working. not working. You can You generally can generally but itbut canitbecan a while be a while beforebefore it is available it is available and normally and normally will only will only choose choose to receive to receive up toup 75% to 75% of your of salary your salary but you butwill youpay willless payifless if covercover the interest the interest on your on loan. your loan. you think you think you can you survive can survive on 50% on 50% of your of salary. your salary. Even Even if youifare youemployed are employed full-time, full-time, your employer your employer will, after will, after a a
Is critical illness illness insurance insurance the same? the same? period, period, ceasecease paying paying your full yoursalary, full salary, leaving leaving you and youyour and family your family to to Is critical No, Income No, Income Protection Protection is notisthe notsame the same as Critical as Critical IllnessIllness Insurance. Insurance. survive survive on benefits. on benefits. This can Thisbecan from be from as little as as little £85 asper £85week. per week. It is important It is important to realise to realise that Critical that Critical IllnessIllness Insurance Insurance does does not not replace replace the need the need for income for income protection protection covercover because because the benefits the benefits offered offered are different. are different. Critical Critical illnessillness insurance insurance pays out paysa out lump a lump sum ifsum youifare youdiagnosed are diagnosed with an with illness an illness that isthat included is included on a pre-determined on a pre-determined list. list. Income Income protection protection insurance, insurance, on theonother the other hand,hand, pays you paysayou regular a regular income income if youifare youunable are unable to work to work due todue an to illness an illness or an or injury. an injury. WhatWhat is notiscovered? not covered? Income Income Protection Protection Insurance Insurance will not willcover not cover loss ofloss income of income due todue redundancy to redundancy or being or being sacked sacked by your by employer. your employer. Illnesses Illnesses that you thathave you have had inhad theinpast the are pastalso arelikely also likely to to be excluded, be excluded, as areascertain are certain riskierriskier professions. professions. You should You should always always read the readexemptions the exemptions on theon the policypolicy carefully. carefully. Also ensure Also ensure you read you the readterms the terms and conditions and conditions of theofpolicy the policy carefully, carefully, and make and make sure you sureunderstand you understand all thealldefinitions. the definitions.
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Make Makeyour yourpension pensionlast last With With thethe new new pension pension freedom freedom rules rules being being introduced introduced in in April April 2015 2015 savers savers willwill be be able able to access to access their their pension pension fund fund at at anyany time time from from thethe ageage of 55. of 55. ThisThis means, means, if you if you wanted wanted to, to, youyou could could withdraw withdraw all of all your of your pension pension savings savings as cash, as cash, subject subject to tax, to tax, andand then then spend spend it initany in any wayway youyou wish. wish. 4. Always 4. Always have have a tolerance a tolerance band band built into built into The Government The Government is passing is passing the responsibility the responsibility HowHow to make to make youryour pension pension last last your financial your financial plans,plans, as they as rarely they rarely comecome in in to thetopension the pension holderholder to ensure to ensure that their that their through through retirement retirement on target. on target. UnlessUnless of course of course you are you are pension pension money money lasts through lasts through retirement. retirement. 1. You 1.have You have to remember to remember that your that pension your pensionbang bang buying an annuity, an annuity, whichwhich provides provides a a This means This means the safety the safety net ofnet restrictions, of restrictions, savings savings will have will have to seetoyou seethrough you through for 20, for 20,buying guaranteed guaranteed income income for life, forthen life, you thenare you are such as such having as having to take to most take most of your of your 30 or30 even or even 40 years. 40 years. So work So work out the out the guessing your life yourexpectancy life expectancy and hoping and hoping retirement retirement savings savings in theinform the form of an of income an incomepension pension income income you are youlikely are likely to need to need by by guessing that your that money your money lasts your lasts lifetime. your lifetime. will bewill gone. be gone. identifying identifying your fixed your fixed livingliving costs,costs, then then 5. Never underestimate underestimate inflation inflation pressures, pressures, Industry Industry experts experts are concerned are concerned that some that somecalculate calculate how much how much you need you need for other for other 5. Never they are they there are there and always and always will be. will Costs be. Costs people people retiring retiring this April this April may feel mayinstantly feel instantly essentials essentials . This,. when This, when totalled, totalled, is theisbare the bare generally over time over always time always increase. increase. rich, for rich,the forfirst thetime first in time their in lives, their lives, as their as their minimum minimum you require, you require, but don’t but don’t forgetforget to to generally 6. If it6.sounds If it sounds too good too good to be to true beittrue it pension pension money money that was thatlocked was locked awayaway factorfactor in inflation. in inflation. probably probably is, so is, beso onbeyour on guard your guard for scams. for scams. becomes becomes very accessible. very accessible. ThereThere are concerns are concerns2. Never 2. Never go it alone, go it alone, always always take take A reputable financial financial adviser adviser will not will not that the thatover the 55s overwill 55sgo willongoanon unstoppable an unstoppableprofessional professional financial financial advice. advice. Simple Simple actions actionsA reputable approach you with you an with offer an offer out of the out of the spending spending spree.spree. like withdrawing like withdrawing your pension your pension in oneinlump one lump approach blue with blue with a ‘must a ‘must do investment’. do investment’. Only trust Only trust ManyMany people people are aware are aware there there are a are a sum could sum could have have significant significant implications implications such such reputable financial financial advisers advisers and be and wary be wary of of number number of pension of pension scammers scammers waiting waiting for this for this as losing as losing a large a large sum in sum tax.inAlso, tax. Also, takingtaking a a reputable any callers cold callers with investment with investment eventevent to begin to begin and this andisthis already is already of bigof big large large withdrawal withdrawal and putting and putting it intoitainto casha cash any cold opportunities. opportunities. If in doubt If in doubt checkcheck out any out any concern concern to pension to pension regulators. regulators. This isThis is savings savings account account or trying or trying to invest to invest the the investment investment company company or individual’s or individual’s expected expected to increase to increase as retirees as retirees have have more more money money yourself yourself couldcould be highly be highly risky without risky without credentials credentials by contacting by contacting the Financial the Financial options options for using for using their pension their pension savings. savings. knowing knowing all theallfactors. the factors. Conduct Authority Authority (FCA)(FCA) at at TheseThese scammers scammers are expected are expected to target to target the the 3. Appreciate 3. Appreciate the stock the stock market market rises and rises and Conduct consumer.queries@fca.org.uk. over 55s overwith 55s promises with promises of high of returns high returns in in falls. Factor falls. Factor this inthis by in investing by investing sensibly sensibly and andconsumer.queries@fca.org.uk. 7. Ifare youever are concerned ever concerned or worried or worried exchange exchange for cash for from cash from smallsmall pension pension pots, pots,making making planned planned withdrawals, withdrawals, then your then your 7. If you about about a possible a possible scam scam pension pension proposal, proposal, you you promising promising to invest to invest in complex in complex structures structures portfolio portfolio should should continue continue to provide to provide you with you with can inform can inform the Pensions the Pensions Advisory Advisory Service, Service, whichwhich may seem may seem valid valid and trustworthy, and trustworthy, but buta reliable a reliable income. income. It willItbewill important be important to findto find Fraud,Fraud, or theorFCA the or FCA speak or speak to your to your turn out turntoout be to non-existent be non-existent follies.follies. the right the right product product or investment or investment that can that can ActionAction financial adviser. adviser. meet meet your income your income plan and planneeds, and needs, but one but one financial that isthat notisrisk notloaded. risk loaded.
The value The value of pension of pension and the and income the income theythey produce produce can fall can as fallwell as well as rise. as rise. You may You may get back get back less less thanthan you invested. you invested.
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VCTs VCTs offer the opportunity to invest in newly formed and small companies, providing the capital they need to develop the business. A VCT typically invests in around 20 such businesses. These are chosen by the VCT manager, who is an expert in identifying this type of opportunity and negotiating attractive deals on behalf of the VCT’s shareholders. Like traditional smaller company unit trusts and OEICs, VCTs aim to generate capital growth. But VCT rules are different and allow them to pay out the majority of this capital growth to shareholders in the form of tax-free dividends.
ISAs and pensions are popular and well-known choices for tax-efficient investing. If however, you have fully maximised these allowances you may consider an additional, although higher risk, option: Venture Capital Trusts (VCTs).
However, dividends are not guaranteed. Many managers will also aim to grow capital modestly over the long term. Investing in this vibrant area makes VCTs an exciting investment proposition, but they will perform differently from mainstream funds, and have substantially higher risks. They invest in small companies which are often at an early stage of their development and not listed on the stock exchange. This means they can be harder to buy and sell; and are more prone to failure. The shares in the VCT itself can also be difficult to sell, and will rise and fall in value meaning investors could lose money. In acknowledgement of the risks the Government offers certain tax benefits to investors.
• 30% income tax relief for subscriptions in new VCT fund raisings • Dividends paid by VCTs are free of tax • No capital gains tax (CGT) to pay when the VCT is sold The income tax relief means those investing £10,000 could receive a rebate of £3,000 from the taxman, although investors must keep the VCT for five years or they will have to repay any tax relief received. In addition, tax-free dividends from VCTs don’t need including on a tax return. The tax benefits should be seen as the icing on the cake, rather than the main reason for investing. Tax and VCT rules can change and tax benefits depend on individual circumstances. No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.
The value of your investment and the income from it can go down as well as up and you may not get back the original amount invested. Past performance is not a reliable indicator for future results. Please contact us for further information or if you are in any doubt as to the suitability of an investment.
For more information on any subject that we have covered in this issue, or on any other subjects, please tick the appropriate box or boxes, include your personal details and return this section to us. Thank you for your honest and trustworthy approach! As a company your advice and knowledge has been invaluable. We were looking for a company that could not only look after our company’s pensions plan, but also advise us on which type of insurance policies were applicable to us. Your advice on, key man, death in service, and life insurance has made all of our directors, not only feel comfortable about the future of the company but also for their families.
Sarah Kneller (Pensions and Insurance)
Thank you so much for sorting out my Mortgage and Life insurance. I felt completely informed and well looked after throughout my house buying process. I will be recommending your services to all my friends and family.
Chris Riley (Mortgage and Insurance)
After years of careful financial planning. I put my trust into Premier Independents Advisor’s, they proved to be highly knowledgeable, and were easily able to explain my options to me in a concise manner, that left me feeling better informed to make future financial decisions. I continue to ask for their expertise before investing my savings.
Mr John Haynes (Investments)