Category: Financial News

1. Investing can beat cash over the long term There’s never a bad time to consider investing when you’re focussing on the long term – five years or longer. No one knows whether the stock market will be higher or lower tomorrow. There’s never really a picture-perfect moment to invest or to sell. And buying in at the market low point and selling at the top is almost impossible to get right. Generally, investing in the stock market has yielded better returns than cash over the long term. Taking a long-term approach with your investments helps cut out the short-term noise and with it, the worries about finding the right time to invest. If you think you’ll need the money in the next five years, it’s sensible to hold cash. So if you’re putting away money for the long term, and are happy with the extra risks involved, investing in a stocks and shares ISA could ...

Safeguarded benefits are defined as benefits that are not money purchase or cash balance benefits. This means defined benefits, guaranteed pensions including guaranteed minimum pensions and guaranteed annuity rates (GARs). An individual with safeguarded benefits worth more than £30,000 within a pension must take financial advice before they can do any of the following: Convert these benefits into a different form of flexible benefits under the scheme.Transfer these benefits to another scheme to take flexible benefits.Take a cash lump sum in respect of these benefits. The issue of giving up Safeguarded benefits is a tricky one. Pensions that have a ‘defined benefit’ or a ‘final salary’ are usually best left where they are. The FCA’s position is that you start your advice from the position of it being ‘unsuitable’ to transfer and then work from there! Where the ...

The most common types of pensions are: State pension – this is a regular pension that you receive from the government which you can claim when you reach state pension age. Workplace pension – this is usually arranged by your employer. A percentage of your pay is put into your pension every payday and your employer will usually contribute. Private/ personal pension and Self Invested personal Pension (SIPP) Approachable finance offer private and SIPP pensions these give you an alternative or additional pension income to your work-based pension. A good IFA and Wealth Manager will advise the portfolios that are best suited your needs and risk approach and will manage the investments for you. 2. Pay into your pension as soon as you can – the earlier that you start paying into your pension, the longer that the investment has time to grow. 3. Free money from the government...

Please see below some useful information on the COVID-19 and financial planning. Furloughed Employees Owner Managers/Director Clients and the Job Retention Scheme FCA Guidance on Pensions Advice: Covid-19 Gifting wealth Funding ISAs Please find below a summary of the latest thinking on pension contributions and revised patterns of income. Many of your clients and/or their family members/friends will be impacted by the recent government announcements and their pension provision is an important part of their employment package. Below is a brief summary of the key pension points and some additional clarification on individuals that have been furloughed. Furloughed Employees   For employers that are furloughing their employees They can claim up to £2,500 per month in salary for each furloughed employee. There is a ceiling of 80% of the employees’ salary as at February 2020. Th...

Hi Everyone Here is the link to the government website for help to small business. https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses Few points to mention There should be a major announcement in the next 48 hrs for help with self-employed income. In regards to staff, normal contracts apply so if you are considering making people redundant check staff contracts e.g do they need to be paid for a full month/ redundancy pay. In relation to the point above look at the employee retention scheme that runs from the 1st April avoiding those issues. For those limited companies corporation tax bills are due 9 months and 1 day after the end of their business year. These can be negotiated with HMRC into some kind of payment plan Make sure you apply for the rates relief with your local council Commercial mortgages can also b...

The main reason most people use a mortgage broker is that they take out most of the leg work of looking for a mortgage. They will search the market and compare the different deals that are available to you. A mortgage broker will not only look at interest rates, but also other charges such as valuation fees, which could affect the overall cost of your mortgage. When a mortgage broker makes a product recommendation to a client, they give financial advice, meaning that mortgage brokers must have qualifications in order to operate. They also have a duty of care to their clients, to give the best and suitable advice available.   Some more experienced mortgage advisers could also have contacts at different banks and building societies, this may help to ensure your mortgage application is processed efficiently. They will also have access to ‘broker only’ deals. Mortgage brokers a...

 If you’re a low-earner and your spouse (through Marriage or Civil partnership) is a basic rate tax payer, you can apply to transfer your unused personal tax allowance to them. The higher earning person will receive a tax credit equivalent to the amount of personal allowance that has been transferred to them. The amount is deducted from the amount of tax they would usually have to pay. The full amount that can be transferred is £1,185 and if you decide to transfer any allowance, you must use the full amount. The low earning partner’s pay before tax must be less than the personal allowance – which in 2018/2019 is £11,850. The threshold for basic rate taxpayers in 2018-19 for most of the UK is £11,850-£46,350, so the higher earning partner’s salary must fall between these boundaries. In Scotland, the thresholds for basic tax rates are different, so the higher ear...

As an IFA I have often discussed with my clients the possible financial returns and also the responsibilities of considering investing in the ‘Buy to Let’ property market as opposed to Unit linked investments such as ISA’s or a Pension. Recently, the Chancellor has decided to financially hit ‘Buy to Let’ investors quite hard which may tip the balance against this option, encouraging many to invest in other areas. Thus, from April anyone buying a property for investment will be required to pay a ‘special ‘ stamp duty of 3% with a starting rate of zero and this will be in addition to the residential tax duty rates which apply for properties above £125,000. Also, from April 2017 Mortgage Interest Relief is also being overhauled. The changes are being phased in, but by 2020 all mortgage interest on ‘Buy to Let’ mortgages will no lon...

Maximising state pension benefits. A key part of financial planning often overlooked is making sure that you receive the maximum state pension in retirement. To get a state pension forecast simply use the tool on the website https://www.gov.uk/check-state-pension. If there is a shortfall, there are 2 options: –          If there are likely to be tax years in the future where the client will not achieve a qualifying year because of insufficient earnings or Credits, then in those years, it is possible to pay Voluntary or Class 3 NICs. –          If there are historic gaps in a client’s NI record, it may be possible to pay Voluntary or Class 3 NICs as a one-off lump sum to make up any shortfall. A key question however is are Class 3 NICs Good “Value for Money”? The ...

Pension Freedoms. There is an old adage that “Just because you can, doesn’t mean you should” however, according to the Association of British Insurers,  over £3 billion has been paid out in lump- sum cash payments from British pensions. If you choose to access your pension- pot ‘as a lump sum’ then 25% of it is paid tax free which means the remaining 75% you will be paying tax at your standard marginal income tax rate. It is important to remember that, if you are still earning, then any extra pension monies you take out will be included in your total tax liabilities before working out your tax levels. In most cases to lose 20% of your pension fund or, in some cases 40%, in order to have the ‘cash in the bank’ is ill- advised, especially when pensions themselves are efficient tax- saving wrappers. This argument is enforced by the l...