Uncategorised

My previous article was written before the last UK government budget announcement, it detailed the basis of a budget and was written on the eve of the budget revelations. I highlighted the fact that there is often speculation prior to the speech but until the announcement has been revealed it is only guess work. Also, I pointed out there have been many decisions over the years that have been memorable and for me this budget was one of those.

This time the speculation was around the Lifetime allowance increase, but for me the big surprise was that this was removed, although there were a few conditions put in place. So what does this mean? Prior to the budget if you built up over a certain amount in a Pension you would be subject to a tax charge unless your Pension had a form of protection from this charge. The budget removed this rule but there are still restrictions with regard to the amount of tax free lump sum which can be enjoyed. I know I was not the only one surprised by this announcement.

But this may not be the end of the Lifetime allowance. Labour have said if they were to get back into power they will reintroduce the rule. So care still needs to be taken, especially if you have protection in place, which due to the changes may not seem to be relevant at this stage but may be important in the future. This could mean that if you break the terms of your protection now, you may regret it later.

This was not the only Pension announcement, the government also increased the annual allowance from £40,000 to £60,000pa. Now all has been revealed, should you need some help understanding the implications of the latest UK budget and how this is likely to affect you personally, do not hesitate to call us for a free, without-obligation consultation.



_{The content included on this page is based on our understanding of the UK tax
law at the time of publication. It may be subject to change and may not be applicable to your circumstances.}

I am writing this column on the eve of the UK’s ‘Government Budget’, and so I thought it would be an ideal subject to reflect upon. So what is The Budget ? In simple terms it is a projection of the Government’s revenue and spending for a particular period of time, often referred to as a financial or fiscal year. It is no different to a household budget where we look at the amount that is coming in and whether there are ways we can increase this, and then decide how we are going to spend it.

Some of the decisions or announcements have been more memorable than others and not necessarily for the right reason. I am not sure anyone is going to forget the budget of Liz Truss’s reign last September.

For me, the one that was most memorable was the 2014 Budget when the term ‘Pension Freedom’ was announced, when individuals no longer had to annuitise (secure an income from) their Pension at any stage. I heard someone refer to this as a “JFK moment”, and saying that if you ask the majority of our parents what they were doing when they heard about the assassination of JFK they can clearly remember. There have not been many events like this where we clearly remember exactly what we were doing when we heard about something significant, but I do believe that when ‘Pension Freedom’ was announced IFAs would remember when they first heard this news.

There is a lot of history surrounding the Budget which originates from the 1720’s. The red briefcase which carries the papers has been used for over a century and the chancellor is even allowed to consume alcohol whilst delivering it, which is the only time during a parliamentary debate that ministers may consume alcohol in the House of Commons.

There’s always plenty of speculation around what’s going to be in the Budget announcement, but only time will tell. Once all has been revealed, should you need some help understanding the implications and how this is likely to affect you personally, do not hesitate to call us for a free without-obligation consultation.

The content included on this page is based on our understanding of the UK tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances.

During Covid, I feel we saw a higher level of camaraderie that has now somewhat dissipated as life returned to normal, and keeping an eye on loved ones and neighbours is so important, to ensure they are managing through the winter months, particularly with the current cost of living crisis. It’s thought that one of the contributing factors for more elderly people dying in the winter months is due to them not wanting to turn expensive heating on, or even not eating properly as they may avoid venturing out in the cold.



So often, the need for care comes suddenly and the first priority has to be where and how to provide care. However, don’t overlook the need to plan finances, because if you are the one needing care, and you are self-funding, your savings may go down fast.



Too many people approach us for advice when their money is already running out, by which time it’s too late to do anything about it.



As soon as the right care is in place, that’s the time to make sure the ability to pay for it is guaranteed, and if you can plan ahead, that’s even better. You may be eligible for Local Authority financial support, but if you’re not paying the bills, you may have less choice about where you are cared for. If you start out paying for your care, and the Local Authority are required to step in later, the risk is that they may not be prepared to pay the fees for where you are currently placed. What happens then?



This is a worry for some people, but with the right advice from a specialist financial adviser, you can plan your financial affairs so that your money will last as long as possible. It’s even possible in many cases to buy a guaranteed income for the rest of your life, which could remove the risk of your money running out.



So if this is an area you would like to research further why not pick up the phone today and book a free, without obligation consultation.

A New year and a fresh start, but what will 2023 bring?
As usual I am writing this article prior to Christmas and to begin with I opened the piece I wrote last year with the realisation, little did I know what 2022 would bring. It has certainly been an interesting year: The Ukraine war, cost of energy increasing sharply, three Prime Ministers and the very unfortunate passing of our Queen.

When you look at the statistics I think it’s fair to say that we didn’t think it was going to be an easy year. Statistics showed only 36% of the UK public expected to see their personal financial situation improve over the course of 2022, whilst half of the population (50%) thought it unlikely. Younger people were more hopeful, 51% of under 35s thought their situations were likely to improve compared with 28% of 35-75 year olds.*

However I do think we need to consider the positives as well. This is the first Christmas for two years that I will be having a normal Christmas, whereas last year our Christmas party was cancelled because people were still worried about COVID. Also in 2022 I was able to start travelling again as holidays had been hard for me during the pandemic. Although at the same time many of my clients said that during the pandemic, when our lives slowed down, that they would not allow their lives to become hectic again, unfortunately I have observed that many of them have done just that.

So what then for this year?
I don’t think it is going to be very easy but I always love January when you have closed the door on last year and start afresh. I do consider that times are not at all easy for many, and goal setting and budgeting is probably even more important than it has ever been. I believe that goal setting gives direction, strength and purpose in uncertain times. With soaring bills, and high inflation, budgeting has it’s own importance.
As I have said many times before if you need help with goal setting or budgeting pick up a phone and book a free without obligation consultation.

*www.ipos.com

The answer to this will be different for everyone and it will depend upon each individual’s circumstance, but it may be the right time to consider this if your Pension is in drawdown. A Pension annuity provides an income for life and is taxed as income. As the market in the last few years has been volatile and if you are taking income from drawdown it may have been concerning you, even causing sleepless nights. If this is the case it may be worth getting an annuity quote, even if only to confirm this is not the right course of action for you.

An annuity based on a level, single life annuity for a 65 year with a purchase price of £100,000 is up a record 47% or £2,400.00 during 2022 reaching a 14 year high. This is due to the central bank base rate rises and the mini budget uncertainty. Based on the same example in Feb 2008 £100,000 bought you an income of nearly £8,000pa, in Aug 2016 it reached an all time low of less than £5,000pa. In June this year it had gone up to just under £6000pa and in October it had gone up to over £7,000pa*.

Obviously no one knows how long the uncertainty or higher interest rates will last, so we don’t know how long annuity rates are going to remain as attractive as they are now, they may even improve further as providers may not have factored all the points in. The above is also based on a level Pension with no guarantees. I would always recommend that you look at all the options available to you including guarantees.

With a guarantee, the annuity will pay out whether you are dead or alive for a predetermined time (usually either 5 or 10 years), but continues afterwards if you are still living. Often when we have quoted there is very little difference in the amount when we have included a 5 or 10 year guarantee and including this can be beneficial.

If you would like to see what annuity rates are available for you please pick up the phone today. We would always recommend that advice is sought for this as once you have bought an annuity you will not be able to change it.

<sub>*Sharing Pension 31st October 2022 based on annuity rates on the 15th October 2022

The content included on this page is based on our understanding of the UK tax law at the time of publication. It may be subject to change and may not be applicable.</sub>

Many new clients are often embarrassed about how little they know about their current investments, but I would say that often clients have very little financial knowledge so I thought it could be useful to go through some typical scenarios.

Retirement planning is a key area that we work in and many clients who have approached us at this stage have a collection of different policies with very little knowledge about them or how they can take the benefits. Often they are looking to consolidate Personal Pensions.

Individuals often don’t realise that care needs to be taken when consolidating Personal Pensions as each Pension is different and it could have a guaranteed investment growth or guaranteed annuity rate which are worth keeping. But with Pensions it’s not just about the underlying Investment funds, there is often the tax implication to consider when deciding how to take the benefits. Yet it’s not just income tax but also lifetime allowance charges, so sometimes the simplest route is not the most tax efficient.

The starting point with retirement planning has to be how much income you need at retirement and then projecting ahead and ensuring that this level is sustainable with the current investments. Annuities are often ruled out but another of my key phrases is that when you make any financial decision you should look at all the options and I think annuities can still have their place for covering basic expenditure needs in retirement. The guaranteed income they provide can also give a person some peace of mind, especially in times of market volatility.

Looking at the entire portfolio of holdings is key and then putting the equivalent of a business plan together about how to fund your income needs. Also it doesn’t stop there, reviewing them and tweaking them on an ongoing basis is also important, for example in the current climate of market instability, if you are taking income for a drawdown pension and have a large amount on deposit, one consideration may be to use your funds on deposit instead to fund your income needs. If you are approaching your retirement and would like to have some help why not pick up the phone today and book a free without obligation consultation with us.

I think the passing of the queen could make this, using her own words, an “Annus Horribilis”. Having said this, I do not think I would complain if I had lived an active life until the age of 96 years old. I thought reflecting on some of the financial changes during the reign of Queen Elizabeth II could offer some real perspective on the length and breadth of this time.

As most of us have a good understanding of house prices I thought this was a good starting point. After the war, if you could afford to buy a house it was often a new one. In the 1950s the average cost of a new house was £1,891, and the average salary was roughly £365pa, so it wasn’t easy to become a property owner even in those times, with average house prices representing more than 5 times salary.^1*

When you look at the increase of other basic commodities you get a sense of how long ago this really was, with a loaf of bread costing 4p, a pound of butter 18p and a pint of
milk 3p.

Also, in the 1950’s and 60’s the highest rate of tax was 90%. It wasn’t until Margaret Thatcher came to power in 1979 when the top rate was 83% and basic rate 33%, that action was taken, as Margaret Thatcher’s beliefs were that the state should receive more of its revenue from indirect taxes such as VAT and National Insurance.^2*

For me, looking at the figures helps me to reflect on the number of years Elizabeth has been our queen and some of the changes during this time. I am sure many who read this article will remember some of these changes too.

But most of all at this time, my thoughts are with the family, as it’s never easy to lose someone close to you.

^1* www.sunlife.co.uk
(12th July 2022)
^2* www.familymoney.co.uk
(14th July 2017)

With the deadline for the registration of trusts looming we are spending a lot of our time making sure that clients are registering their trusts. Do you have any trust funds and if so have you registered them? They need to be registered by the 1st September. Even if the deadline has passed by the time you read this article, your trust will still need to be registered.

The benefits of putting funds into a trust includes: Protecting your assets in your lifetime and ensuring your estate is securely and safely passed on.

The Trusts Registration Service (TRS) is a new online service that provides a single route for trustees and personal representatives of complex estates to comply with their registration obligations under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

There are some exceptions to registering trusts and these include:
• Holds money or assets of a UK registered pension scheme – like an occupational pension scheme.

• Holds life or retirement policies (as long as the policy only pays out on death, terminal or critical illness or permanent disablement, or to meet the healthcare costs of the person assured).

• It’s a charitable trust that is registered as a charity in the UK or which is not required to register as a charity

As with most regulation changes this can often lead to confusion, so if you would like to have your hand held through the registration process please pick up the phone and give us a call today and book a free without obligation consultation.

The content included on this page is based on our understanding of the UK law at the time of publication. It may be subject to change and may not be applicable.

I have talked about market falls in recent articles, but I don’t think I have pointed out the fact that this is not at all unusual after an event such as the Ukraine invasion. For those individuals who have recently invested and whose investments are currently in negative territory the situation can be daunting but understanding how historic events have panned out can help your perspective.

After 9/11 the S&P 500 (The Standard and Poor’s 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on exchanges in the United States) fell by more than 14%¹. There has even been research² that there was some unusual trading shortly before and after the event, including specific investments in American Airlines and Morgan Stanley. However, there is no proof that it was the terrorists who made these investments.

The FTSE 100 (a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalisation) was adversely affected after the London bombing 7/7, but not as sharply.

I have always said that one of the best ways we can help clients is by being a sounding board, and at times like this I think this is even more relevant. When the markets have gone down it is a particularly worrying time, therefore a simple conversation and informed reassurance can be invaluable. There is never a guarantee that markets will go back up and even if they do how long this will take. But as long as investments are retained they are only losses on paper.

So during these uncertain times if you do need to speak to someone please do not hesitate to pick up the phone today and we will be happy to talk to you.

¹ Investopedia; ²Hugh McDermott(https://truthout.org/authors/hugh-mcdermott)