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01st Jul

New tax year – the key changes you need to know – Leigh Clayden – BLOG

You want to pay the minimum amount of tax legally possible. We want that for you, too. The 2019/20 tax year started on 6 April, and in general taxpayers will have more money in their pocket after increases to allowances came into force. However, there are a few losers, in particular those selling shares and buy-to-let landlords.

Increases to the tax-free personal allowance announced in last year’s Budget have now also come into effect, alongside a number of other proposals. We’ve provided our summary of the key changes.

Income Tax

The tax-free personal allowance increased from £11,850 to £12,500, after Chancellor Philip Hammond announced in the 2018 Budget that he was bringing the rise forward by a year. The higher-rate tax band increased from £46,350 to £50,000 in England, Wales and Northern Ireland. But in Scotland, where Income Tax rates are devolved, the higher-rate tax band remains at £43,430 – £6,570 lower than the rest of the UK.

The National Insurance upper earnings limit has increased from £46,350 to £50,000, and all of the UK is now on the same level of 12% between the threshold of £8,632 and the upper earnings limit of £50,000 before this reduces to 2% on earnings above this level.


The threshold at which the 40% Inheritance Tax rate applies on an estate remains at £325,000. However, the Residence Nil-Rate Band increased to £150,000. This is an allowance that can be added to the basic tax-free £325,000 to allow people to leave property to direct descendants such as children and grandchildren, taking the combined tax-free allowance to £475,000 in the current tax year. However, the allowance is reduced by £1 for every £2 that the value of the estate exceeds £2 million.

When you pass on assets to your spouse, they are Inheritance Tax-free, and your spouse can then make use of both allowances. This means the amount which can be passed on by a married couple is currently £950,000.


The State Pension increased by 2.6%, with the old basic State Pension rising to £129.20 a week, and the new State Pension rising to £168.60 a week.

The minimum contributions under the Government’s auto enrolment scheme have also increased to 8%. The increase means that employers must now pay in at least 3% of an employee’s salary and the employee pays the balance.

The level of the State Pension rises every year by the highest of 2.5%, growth in earnings or Consumer Price Index (CPI) inflation. This is due to the ‘triple lock’ guarantee, which was first introduced in 2010.

The pension lifetime allowance increased to £1,055,000 on pension contributions, in line with CPI inflation. This is the limit on the amount retirees can amass in a pension without incurring additional taxes. Anything above this level can be taxed at a rate of 55% upon withdrawal.

The overall annual allowance has remained the same at £40,000, along with the annual allowance taper which reduces pension relief for those with a yearly income above £150,000.


The Junior Individual Savings Account (ISA) limit increased to £4,368. All other ISA limits remain the same. The annual amount that can be sheltered across adult ISAs stays at £20,000 for the 2019/20 tax year.

The Capital Gains Tax annual exemption, that everyone has, increased to £12,000. Above this amount, lower rate taxpayers pay 10% on capital gains, while higher and additional rate taxpayers pay 20%. However, people selling second properties, including buy-to-let landlords, pay Capital Gains Tax at 18% if they are a basic rate taxpayer, or 28% if a higher or additional rate taxpayer.

Capital Gains Tax for non-UK residents has been extended to include all disposals of UK property.

Entrepreneurs’ Relief gives a Capital Gains Tax break to those who sell shares in an unlisted company, provided they own at least 5% of the shares and up to a lifetime value of £10 million. The holding period to qualify for the relief is 24 months.

This is also the first tax year where claims can be made for Investors’ Relief which, in a similar way, gives Capital Gains Tax breaks to those who sell shares in unlisted firms. While the former is aimed at company directors, the latter is geared to encourage outside investment in firms.

There is no minimum shareholding to be eligible, but investors must have held the shares for at least three years. As the relief was introduced in 2016, this is the first tax year when it can be used.

Buy-to-let landlords

On 6 April, the next stage of the phased removal of mortgage interest relief came into effect. Buy-to-let landlords used to be able to claim the interest paid on their mortgages as a business expense to reduce their tax bill. Now, they will only be able to claim a quarter of this amount as tax deductible ahead of the complete removal of the relief in the 2020/21 tax year. 

Would you like help with tax planning?

The UK tax system is very complex, but the benefits of structuring your finances tax-efficiently can be significant. We are here to ensure that you have made the best use of the  reliefs and allowances available to your particular situation. There are a variety of planning ideas available for individuals, entrepreneurs and business owners. Should you need to discuss or require advice on tax planning ideas, please do not hesitate to contact us.



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01st Jun

Keeping it in the family – Martin Cornell – BLOG

Careful financial planning can reduce or even eliminate the Inheritance Tax payable

Intergenerational planning helps you put financial measures in place to benefit your children later in life, and possibly even your future grandchildren, so it’s important to start planning early.

You may want to keep an element of control when passing on your assets. Or you may want your money to be used for a particular reason, such as paying for school or university fees or for a first property deposit. Perhaps you just want to make sure your money stays within the family.

Without appropriate provision, Inheritance Tax could become payable on your taxable estate that you leave behind when you pass away. Your taxable estate is made up of all the assets that you owned, the share of any assets that are jointly owned, and the share of any assets that pass automatically by survivorship. Careful planning can reduce or even eliminate the Inheritance Tax payable.

Inheritance Tax is not payable on the first part of the value of your estate – the ‘nil-rate band’. The nil-rate band is currently £325,000. If the total value of your estate does not exceed the nil-rate band, no Inheritance Tax is payable. Outstanding debts and funeral expenses can be deducted from the value of your estate.

Leave your interest in the family home

Commencing 6 April 2017, an additional ‘residence nil-rate band’ (RNRB) allowance was introduced if you leave your interest in the family home to direct descendants (such as children, step-children and/or grandchildren). This only applies to your main home but can be available even if that home had been sold after July 2016.

The RNRB is being phased in gradually. For the 2019/20 tax year, the maximum additional allowance is £150,000, increasing your total Inheritance Tax allowance to £475,000 (£950,000 for a married couple). The maximum allowance will rise by £25,000 each tax year until it reaches £175,000 in 2020. This will give you a potential total Inheritance Tax allowance of £500,000 or £1 million for a married couple. For estates worth more than £2 million, the tax relief is tapered away.

There are legitimate ways to plan to reduce the amount of Inheritance Tax you may have to pay. We can advise you on the ways that you may mitigate any exposure, including these:

Make a Will

Dying intestate, or dying without a Will, means that you may not be making the most of the Inheritance Tax exemption which exists if you wish your estate to pass to your spouse or registered civil partner. For example, if you don’t make a Will, then relatives other than your spouse or registered civil partner may be entitled to a share of your estate, and this might trigger an Inheritance Tax liability.

Make lifetime gifts

Gifts made more than seven years before the donor dies, to an individual or to a bare trust, are free of Inheritance Tax. So, it might be appropriate to pass on some of your wealth while you are still alive. This will reduce the value of your estate when it is assessed for Inheritance Tax purposes, and there is no limit on the sums you can pass on.

You can gift as much as you wish, and this is known as a ‘Potentially Exempt Transfer’ (PET). If you live for seven years after making such a gift, then it will be exempt from Inheritance Tax, but should you be unfortunate enough to die within seven years, then it will still be counted as part of your estate if it is above the annual gift allowance. However, the longer you survive after making the gift (subject to surviving at least three years), the lower the Inheritance Tax charge:

If you survive between three to four years from the date of the gift, the Inheritance Tax charge on the gift is reduced by 20%

  • If you survive between four to five years from the date of the gift, the Inheritance Tax charge on the gift is reduced by 40%
  • If between five to six years from the date of the gift, the Inheritance Tax charge on the gift is reduced by 60%
  • Or between six to seven years from the date of the gift, the Inheritance Tax charge on the gift is reduced by 80%

Be careful if you are giving away your home to your children with conditions attached to it, or if you give it away but continue to benefit from it. This is known as a ‘Gift with Reservation of Benefit’.

Leave a proportion to charity

Being generous to your favourite charity can reduce your tax bill. If you leave at least 10% of your estate to a charity or number of charities, then your IHT liability on the taxable portion of the estate is reduced to 36% rather than 40%.

Set up a trust

As part of your Inheritance Tax planning, you may want to consider putting assets in trust – either during your lifetime or under the terms of your Will. Putting assets in trust – rather than making a direct gift to a beneficiary – can be a more flexible way of achieving your objectives.

Family trusts can be useful as a way of reducing Inheritance Tax, making provision for your children and spouse, and potentially protecting family businesses. Trusts enable the donor to control who benefits (the beneficiaries) and under what circumstances, sometimes long after the donor’s death.

Compare this with making a direct gift (for example, to a child) which offers no control to the donor once given. When you set up a trust, it is a legal arrangement, and you will need to appoint ‘trustees’ who are responsible for holding and managing the assets. Trustees have a responsibility to manage the trust on behalf of and in the best interest of the beneficiaries, in accordance with the trust terms. The terms will be set out in a legal document called ‘the trust deed’.

Passing on our assets to our loved ones

Being wealthy can have its benefits, and its challenges too. When we die, we like to imagine that we can pass on our assets to our loved ones so that they can benefit from them. In order for them to benefit fully from our assets, it is important to consider the impact of Inheritance Tax. If you would like to review the potential impact on your estate, please contact us.



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01st May

Seven things you didn’t know a financial adviser could do for you – BLOG

Financial advisers used to have bowler hats, carry a briefcase and sometimes wear a carnation (think Mr Banks in Mary Poppins).  But a lot has changed since then.

We no longer use a mangle to dry our clothes, send messages via fax machine, or rent videos from shops. Likewise, financial advisers no longer just want to sell you some insurance – they are focused on delivering the best outcomes for you and your family. So what DO they actually do and why should you consider speaking to one?

Here are seven things you might not know a financial adviser could do for you:

  1. Personal advice – a financial adviser will find a solution that’s right for you, rather than just hand you an off-the-shelf, one-size-fits all product. They’ll ask you questions about you, your job, family and lifestyle to get a full picture of who you are and what you really need – whether you’re a first-time buyer, a business owner, starting a family, or preparing for retirement.
  2. Knowledge of the market – a financial adviser isn’t tied to a particular bank or provider, which means they can research the whole market to find the right product for you. Because of this, they could have access to products that are more suitable for you than those available online.
  3. Extra benefits – not all protection plans are just about a cash pay-out. Some also include extra benefits. These could include things like support from a qualified nurse, or bereavement counselling that you can access without making a claim. Plans like these are commonly only available through a financial adviser, so it can be useful to speak to one to find out more.
  4. Peace of mind – a financial adviser will find out what policies you already have, even if you’re not sure where the paperwork is. They’ll look at what financial support your employer provides, and confirm what you’re entitled to from the state. They’ll tell you where the gaps in your finances lie so you only buy what you need to. And they can advise you on things like trusts which can help make sure any money that’s paid out from your plan goes to the people you’d intended, without delay. Talking to a financial adviser will give you the peace of mind that all your needs have been considered.
  5. The buck stops with them – with something as important as your finances, you don’t want to worry that you’ve got it wrong. A financial adviser, on the other hand, is a specialist in this area. They’ll keep up-to-date with the latest products and changes in the market, and take responsibility for making the best choice on your behalf.
  6. Practical help – if you ever need to claim on any of your protection plans, your adviser will help you with this. Whether that’s making the initial claim, or following up with any paperwork for you. It’s an adviser’s job to support you throughout your partnership with them – and that includes the aspects that can often be more difficult for you during an emotionally challenging time.
  7. Proactive support –a financial adviser can provide ongoing support to make sure the cover you have is still right for you. For example, you might need to adjust your cover if you move house, have children or change jobs. Rather than leaving you to manage this yourself, your adviser can make the relevant changes so your plans are always valid and up-to-date.

It’s true that we can buy so many things ourselves online now, from flights to holidays to pizzas and fridge freezers, without having to go through a middle man. But when it comes to something as important as our finances, it pays to go to an expert.

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01st Apr

Pension Unlocking – Leigh Clayden – BLOG

Treasury enjoying a tax bonanza from pension withdrawals

Following changes introduced in April 2015, you now have more choice and flexibility than ever before over how and when you can take money from your pension pot.

You can use your pension pot(s) if you’re 55 or over and have a pension based on how much has been paid into your pot (a ‘defined contribution scheme’). Whether you plan to retire fully, to cut back your hours gradually or to carry on working for longer, you can now decide when and how you use your pension and when you stop saving into it to fit with your particular retirement journey.

Flexible payments

HM Revenue & Customs (HMRC) has published its update on flexible payments from pensions. This confirms 585,000 withdrawals were made by 258,000 people in quarter 3 2018, with total withdrawals in this quarter nearly £2 billion. In the three and a half years of pension freedoms, nearly 5 million withdrawals have been made by over 1.3 million people, totalling £21.6 billion (April 2015–October 2018).

You can use your existing pension pot to take cash as and when you need it and leave the rest untouched where it can continue to grow tax-free. For each cash withdrawal, normally the first 25% (quarter) is tax-free, and the rest counts as taxable income. There might be charges each time you make a cash withdrawal and/or limits on how many withdrawals you can make each year.

Secure retirement

Withdrawing money from pensions following the introduction of the freedoms shows no signs of abating. Quite the opposite, in fact, as the latest official figures show the Treasury expects to receive an additional £400 million[1] in tax receipts from flexible pension withdrawals this year. Cashing in your pension pot will not give you a secure retirement income, and you should obtain professional advice if you are considering this option.

The findings show that typically smaller pensions are being fully withdrawn, while people with larger pensions are making multiple withdrawals in a tax year, suggesting they are treating their pension more like a bank account. These pensions are also being accessed for the first time before State Pension age. People accessing their cash also need to ensure they are not paying more tax than they need to.

Tax bonanza

This combination of taking multiple withdrawals in a tax year at earlier ages, when people are still likely to be earning income from work, means many people are likely to be paying more tax than if they took withdrawals more gradually. The Treasury is enjoying a tax bonanza, as predictions that paying Income Tax will be a natural brake on withdrawals hasn’t stopped people simply taking the money.

HMRC also confirmed around £38 million has been refunded in overpaid tax following the application of emergency tax rules on pension withdrawals in the last quarter (1 July–30 September), as many people continue to overpay at the point of withdrawal.

Taking control of your financial future

Retirement is very much in the control of the individual. The money saved now will be in your hands in the future, so now is the time to start making active choices which will help to achieve your retirement dreams. To review your situation please contact us.

Source data

[1] HMRC Pension schemes newsletter 104 for October 2018.








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01st Mar

BLOG from SIFA – Lasting Powers of Attorney – avoid a lifetime legacy of worry

Wills and Lasting Powers of Attorney in the UK

Around 31 million British adults have no will according to a recent survey by Which?

There is a regional split in those without a will – 42% of adults in England say they have a will, 35% in Wales and 31% in Scotland.  The reasons quoted for not having a will are pretty varied, but often revolve around a lack of understanding of the intestacy provisions and a belief that the individual doesn’t have enough money or other assets for a will to be necessary.  Many people also don’t like to discuss the issue of death and so also avoid discussion around writing a will.

While dying intestate can cause many problems for those left behind, it’s fair to say that it doesn’t impact on the deceased.  And this lack of a direct consequence of inaction may also contribute to the fact that so few people have taken the trouble to write a will.

Lasting Powers of Attorney

But there is another legal document, often called a living will, which does impact directly on the individual who sets it up.  According to figures for the end of 2016, less than 4% of the UK adult population have set up what is properly called a “Lasting Power of Attorney” (LPA).

The LPA is designed to allow an individual (known as a donor) to appoint, in advance, another person, the “Attorney” to look after their affairs should they become unable to do so themselves due to mental impairment.  In England and Wales, there are two types of LPA; one deals with Property and Financial Affairs, while the other deals with Health and Welfare.  The Scottish system is similar and also has two types of agreement, while in Northern Ireland there is no arrangement to provide for Health and Welfare decisions.

LPAs (Enduring Power of Attorney (EPA) in Northern Ireland are important.   Without them, there is nobody who has an immediate right/duty to manage an individual’s affairs.

As an example, a Property and Financial LPA (or equivalent) will allow the Attorney to deal with the donor’s:

  • Bill payments
  • Bank etc: accounts
  • Collection of benefits and pension
  • Property sales etc

While a Health and Welfare LAP, or Welfare Power of Attorney in Scotland, allows the Attorney to make treatment and other decisions on behalf of the donor regarding:

  • Activities of daily living (washing, dressing, eating, etc)
  • Medical care
  • Moving into a care home
  • Life sustaining treatment, etc


An LPA can be vital if you hold joint assets, as the assets may not be able to be sold without a court order appointing a “deputy” if you lose your mental capacity without a valid LPA.  Anyone over 18 can apply to become a deputy, providing nobody objects to their application, and they have the necessary financial experience if they’ve applied to be a “Property and Financial Affairs” deputy.

A deputy’s powers are much more limited than those of an Attorney who has been appointed under an LPA, and they must pay an annual fee to renew their deputyship.

Obtaining an LPA or equivalent is a straightforward and inexpensive process, which makes the current low take up especially strange.


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01st Feb

Protecting your identity – Adrian Firth – BLOG

Common ways fraudsters can steal your personal information

Identity theft is frighteningly widespread. No one can prevent all identity theft, and cyber criminals are getting more sophisticated in their attempts to steal your identity. Identity theft occurs when someone steals your personal information and uses it to commit fraud or other crimes in your name.

As individuals, throughout our lifetime we exchange personal information with a vast number of institutions including banks, credit card suppliers, utility companies, supermarkets, government organisations and retailers. This may be to receive important services, but also to allow us to do the fun things like shopping, eating out or going on holiday.

Fraudulent or stolen identities being used to make false applications for credit cards or loans, to obtain goods and services, or even to access money or other assets is naturally something that concerns us all. Worryingly, it is not untypical for a victim to first become aware of this when they receive a letter of demand for payment.

Of course, there are a number of basic things we can all do as individuals to protect ourselves against identity crime and reduce the risk of our personal information falling into the wrong hands. If you discover your identity has been stolen, act immediately. Following these steps will help to minimise the impact and prevent additional issues from arising.

Check your credit reports

At a small cost, you can check your credit file with a credit reference agency such as Call Credit, Equifax or Experian to help identify any activity that you are not aware of.

Monitor your mail

Make sure you receive all post that you are expecting. If you think post is missing, contact the Royal Mail. Also, arrange for the Royal Mail to re-direct post to your new address if you have moved house, and inform companies that you deal with regularly that you have moved.

Review bills and bank statements

Check bank, credit card and other financial statements frequently, and look out for transactions that you do not recognise. Check for fraudulent charges or suspicious activity. Report issues immediately. Consider receiving statements and bills electronically, setting up direct deposits, and using online bill payment.

Identity theft protection

Identity theft protection providers monitor your credit reports, as well as online debit and credit card number(s). If suspicious activity is detected, you will be notified and will receive identity recovery assistance.

Shred documents

Carefully dispose of documentation that contains personal details rather than just throwing them away. Use a cross-cut shredder to destroy envelopes and documents.

Secure your computer(s) and mobile devices

Whether a desktop, laptop, netbook, tablet or smartphone, your computer contains critical personal information.

To help protect your electronic devices, you should also:

  • Password-protect your device
  • Install and update operating system, antivirus and anti-spyware software. For smartphones, also install a ‘wiping’ program to erase all data remotely if it is lost or stolen
  • Use a personal firewall
  • When using a wireless network, activate WPA encryption and any other security features available. Change your router’s default password and SSID
  • Beware of ‘smishing’ – text messages containing links capable of downloading malware to your smartphone
  • Do not leave your device unattended or your screen visible to others
  • Close your browser when you’re finished with a secure session
  • Log off when you leave or step away

Use caution online 

  • Only access personal and financial information from a computer you ‘trust’
  • Only do business with financial institutions and online merchants you know and trust. Watch out for copycat sites, and confirm the email address is correct
  • When accessing financial information or ordering online, be sure the site is secure. Look for a URL that begins with ‘https://’ and the ‘closed padlock’ symbol
  • Never reply to an email or pop-up message that requests you provide or update your personal information

On social media sites, it’s always a good idea to:

  • Review the privacy policy
  • Choose a challenging password
  • Not reveal your physical address, date of birth, school names or phone numbers
  • Use privacy settings

If you’re looking for further information or want to discuss any areas of concern, we’re here to help.

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01st Jan

Independence plan – Karen Last – BLOG

Least financially resilient group delay life milestones due to financial insecurity

Life can get complicated when you hit your early thirties, which means your finances are starting to get serious. You might be in the middle of countless transitions, like moving up in your career, starting a business, buying a home, getting married, having children…and a whole lot more.

A study[1] reveals that people in their early thirties are putting off life milestones, such as having children or buying a home, due to being one of the least financially resilient groups in the UK. A quarter (24%)[1] of the 30 to 35-year-olds in the study, of which there are 4.7 million in the UK, feel worried about the financial impact of life milestones – double the national average (12%)[1]. Nearly one in six (17%)[1] say they’ve put off major life milestones because they don’t feel financially mature enough.

30 years or more from retirement 

The great advantage of being in your thirties is your age – you may still be some 30 years or more from retirement and have plenty of time to right the excesses of your twenties. The potential downside, however, is that if you don’t act now, these mistakes could colour your future financial health. Worryingly, seven out of ten under-35s believe their youthfulness will last forever[3], so they don’t properly prepare for risks the future may hold.

The study also found that more than seven in ten (73%)[1] of this age group fall short of the Money Advice Service (MAS)[2] recommended amount of savings to be financially resilient, versus a national average of 56%[1].

Unable to work due to illness or an accident

The research revealed a further one in five (22%)[1] in their early thirties don’t know how long they would be able to cope financially if they found themselves unable to work – for instance, due to illness or an accident. Despite this, fewer than one in twelve working adults (7%)[1] have their own Income Protection insurance in place.

These findings – that many of those in their early thirties are delaying major life milestones because they feel worried, unconfident and ill-prepared financially – are very concerning. And it is worrying that so few can withstand the financial effects of an unexpected income shock – they have no Plan A, nor a Plan B.

Little provision to handle a financial crisis

With low financial confidence and little provision to handle a financial crisis, there is a clear need for a safety net – a form of ‘independence plan’. There are multiple reasons this age group isn’t properly preparing for financial risks. A universal emphasis on the importance of ‘staying young’ means many people are in a state of denial or avoidance when it comes to facing up to the future. We also tend to talk within – rather than across – generational groups, which encourages us to focus inwardly on the present, not the future.

Previously, younger generations would likely inherit their parents’ estate while relatively young, but increased life expectancy means this is no longer the case. By not giving proper weight to their financial status, this group could be at risk of finding themselves with a significant level of responsibility without adequate financial preparation or protection.

Cementing a stronger relationship with money

There are risks inherent in financial decision-making, no matter what your age. In your thirties, however, it’s important to use this decade to cement a stronger relationship with money and take advantage of the time ahead of you. If you would like to discuss your future plans, please contact us to arrange a review meeting.

Source data:

[1] Methodology for consumer survey: YouGov, on behalf of LV=, conducted online interviews with 8,529 UK adults between 20–26 June 2018. Data has been weighted to reflect a nationally representative audience.

[2] Methodology for recognised benchmark of financial resilience: Money Advice Service (MAS) guidelines for financial resilience state that ‘people should hold an emergency fund of three months’ income’. LV= identified the ‘least financially resilient’ groups based on the combined factors of how respondents fared against the MAS definition and how confident respondents reported to feel about being able to manage a financial crisis.

People in their early thirties were identified as one of the least financially resilient groups using the following methodology: 30 to 35-year-olds were identified as the least financially resilient age group, with 73% falling short of having 90 days’ worth of outgoings in the bank against the national average of 33%. Within this age group, 43% lack confidence in handling a financial crisis, versus the national average of 34%.

[3] Dr David Lewis, ‘Life Unlimited – Peak Performance Past Forty’, to be published late 2018


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01st Dec

Key aspects influencing retirement decisions – BLOG – Leigh Clayden

Should I stay, or should I go now?!  Whatever you want to do when you retire, the better prepared you are, the more rewarding it will be. It’s important to assess the key aspects that will influence your retirement, as the decisions you make can have a real impact on your savings. There are some important considerations to think about.


  • Drawing savings too early is likely to result in lower returns and/or lower lifetime income
  • Drawing savings later may not result in higher returns – this depends on how you invest and use your savings

Capital requirements

  • Many people withdraw capital from their pension savings not because they ‘need’ it but because they can, and they end up just retaining it in a less tax-efficient environment
  • Meeting income needs from capital could be extremely efficient – it may even be necessary

Income requirements

  • There are choices to make between generating income now versus providing for your future
  • You may also continue earning some income during retirement through paid work, business ventures or even lucrative hobbies
  • Your income needs are likely to vary over time, and some expenses are fixed while others are variable. Most critically, long-term care can prove expensive
  • Your income preferences are also key – having a known stable income source may be preferable to having a higher but less stable income
  • Generating surplus income is inefficient from a tax perspective

Attitude to risk

This is the trade-off between relative safety (which you may choose out of concern) and taking risk (which you may choose with an aim of achieving growth). Your attitude may also change as you accumulate wealth (because you have more to lose) and as you get older (because you have less time to recover if your investments fall in value). But risk is never completely eroded – even with cash or an annuity.

You also need to ask yourself some of the following questions:

  • What is my life expectancy, and how much money will I need to achieve my retirement plans?
  • How could my income and capital needs change in the future?
  • Do I have an effective plan to leave a financial legacy?
  • How much money would my spouse/partner need if I die before them?
  • How might I protect against the effect of inflation?

Helping you plan and enjoy your future

Regardless of the life stage you have arrived at, it is important to receive expert and professional financial advice on your pension plans and requirements. Talk to us about your circumstances, wants and needs. We will then assess how close you are to achieving them based on your current plans. Please get in touch for more information.

Leigh Clayden


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01st Nov

Impact investing with positive outcomes – Karen Last – BLOG

Impact investing without sacrificing returns or profits

For those looking to make the world a better place, but not wanting to sacrifice returns or profits, impact investing aims to support a positive social or environmental impact as well as looking to achieve compelling financial returns at the heart of sustainable investing.

The term ‘impact investing’ was first coined in 2007, although the practice developed over years beforehand. It seeks to generate both social change and a return on capital and ends the old dichotomy where business was seen solely as a way to make a profit, while social progress was better achieved only through philanthropy or public policy.

Not a recent phenomenon

Socially responsible investing is not a recent phenomenon – it can actually be traced back several centuries. Early initiatives were all based on the exclusion of controversial sectors such as tobacco or armaments rather than on investing in businesses which have the power to do good. That’s what impact investing is seeking to achieve, and it has begun to gain traction.

The upward swing of impact investing is being led by millennials. This type of investing considers a company’s commitment to corporate social responsibility (CSR), or the sense of duty to positively serve society as a whole, before becoming involved with that company. This societal impact differs depending on the industry and the specific company within that industry, but some common examples include giving back to the community by helping the less fortunate or investing in sustainable energy practices.

Social and environmental themes

Once the preserve of the super-rich, individuals and families would come together to identify promising opportunities to make money and do good at the same time. But, increasingly, investor impact strategies are now covering a broader range of social and environmental themes and, in many cases, harness the latest technology or pioneer delivery systems to gain efficiencies and reach those most in need.

Impact investments can be made in both emerging and developed markets and target a range of returns depending on an investor’s strategic goals. The growing impact investment market provides capital to address the world’s most pressing challenges in sectors such as sustainable agriculture, renewable energy, conservation, micro finance, and affordable and accessible basic services including housing, healthcare and education.

Challenging previous long-held views

Impact investing challenges the previous long-held views that social and environmental issues should be addressed only by philanthropic donations, and that market investments should focus exclusively on achieving financial returns.

The impact investing market directs capital to enterprises that generate social or environmental benefits, and offers diverse and viable opportunities for investors to advance social and environmental solutions through investments that also produce financial returns.

Looking for the potential to generate positive outcomes?

Impact investing provides the opportunity to make investments that not only deliver financial returns, but also have the potential to generate positive outcomes that address some of the most imperative challenges that we face as a society, such as climate change and poverty.

To find out more, call us to arrange a meeting or simply ask a question. We look forward to hearing from you.


Karen Last

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02nd Oct

This time next year we’ll be ‘million-heirs’ – Martin Cornell – BLOG

Larger individual wealth and expectation of substantial inheritances

With estate planning, you can decide what happens to your money and possessions – even your pets – if something happens to you. But estate planning is useful in other ways too: it can help you minimise any Inheritance Tax liability and ensure your wishes are carried out in the event of your death or if you need to go into care.

Put simply, Inheritance Tax is a tax charged on your estate when you die. The Government sets a tax-free allowance called the ‘nil-rate band’, which is currently £325,000. Any amount above this level is taxed at 40%. Your estate is the value of everything you own, such as your house, car, investments, life assurance policies and the contents of your home.

UK’s massive wealth increase

One person in 25 expects to become a ‘million-heir’ and to inherit an estate worth £1 million or more, according to Canada Life’s[[1] annual Inheritance Tax Monitor survey of people over 45. Around one person in 50 expects to inherit more than £5 million.

The figures reveal the financial impact of the UK’s massive wealth increase in recent decades, with rising stock markets and increased property values contributing to larger individual wealth and the expectation of substantial inheritances.

Lack of knowledge around the rules

However, without financial planning, much of the estate is likely to be lost in Inheritance Tax for assets above the available nil-rate band threshold. On an estate worth £1 million, over one fifth (£230,000) would be lost in Inheritance Tax, or roughly the equivalent of an average UK house price.

Compounding the problem is the lack of knowledge around the Inheritance Tax rules. The majority of people (70%) could not identify the standard nil-rate tax threshold (£325,000). Meanwhile, only one in 20 of those surveyed knew about the residence nil-rate band tapering for estates over £2 million, likely leading to greater tax bills for larger inheritances.

Substantial amounts of money lost in tax

People’s expectations are likely to be substantially wrong without financial planning, and it’s quite likely they could lose substantial amounts of money in tax. Yet it’s quite possible to ensure that by using a straightforward trust, the entire amount goes where it is intended – to the beneficiaries.

There are several straightforward ways to reduce the amount of Inheritance Tax that is due. And for people expecting around £500,000 or more in inheritance, there is still a danger of losing tens of thousands of pounds in tax. The risk of a big Inheritance Tax bill drops to zero at the Inheritance Tax threshold of £325,000, below which there is no tax.

Source data:

[1] Survey of 1,001 UK consumers aged 45 or over with total assets exceeding the standard inheritance nil-rate band of £325,000. Carried out in October 2017. Percentages may not add up to 100 due to rounding or multiple answer questions. Research conducted by Atomik.

[2] The person taking out the trust must survive seven years after making the gift into the trust for the gift to become totally exempt from the estate.





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06th Sep

Planning for a bigger retirement income – BLOG Adrian Firth

Looking forward to having more time to explore faraway places

Today, with more Britons living longer and healthier lives, the concept of retirement is much different to what it was only one generation ago. For each retiree, retirement is different. Perhaps you’re looking forward to having more time to explore faraway places, or maybe you dream of simply waking up each day and doing whatever takes your fancy.

However you see your future, retirement is a time for you to do the things you’ve always wanted to do. After all, deciding when to retire will be one of the most important decisions facing all of us at some point.

It goes without saying that investing in a pension is an essential part of modern-day financial life. If you want to enjoy a comfortable retirement, then starting to save early and ensuring you keep putting money aside is vital. These are some tips that could help you increase the money you have available in retirement.

Do you know where all your pension pots are located?

  • Locate pension pots that you may have forgotten about. The Pension Advisory Service and the Pension Tracing Service can help you to trace forgotten pension pots
  • Remember to take your State Pension into account

Time to consider topping up your pensions?

  • Think about topping up your pension in the years leading up to your retirement. That little bit extra could make a difference
  • Remember, you might be eligible to top up your State Pension too. This could be particularly beneficial if you’re self-employed or a woman, because it’s possible your State Pension entitlement may be low

From age 55, you can draw your pension savings as and when you need it and still pay into your pension. You’ll continue to receive tax relief on your payments up to age 75, although taking benefits flexibly will limit how much you can put in

Have you considered retiring a little later than you’d originally planned?

  • Delaying your retirement might give your pension fund more chance to grow.  Remember, though, if your pension fund remains invested, the value could go down as well up, and you may not get back what you put in. If you defer your retirement, it’s also important to check whether this will affect any state benefits you’re entitled to
  • Working part-time for a while after you finish full-time work might enable you to delay drawing money from your State Pension or your pension, meaning your money may last longer when you do retire
  • Maybe you fancy trying something new, like setting up your own business. Becoming your own boss could be a good way to stay active and keep earning

Helping clarify your outlook on retirement

Everyone has a different view of what retirement means and what their own retirement may look like. Understanding what’s important to you is an essential factor that not only helps clarify your outlook on retirement, but it also ensures we can recommend appropriate retirement income strategies that can be linked back to your personal goals and objectives. If you want to discuss your plans, please contact us.





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01st Aug

Cultivating the art of patience – Martin Cornell BLOG

Sticking with a long-term commitment to your investments

If you want to give your investments the best chance of earning a return, then it’s a good idea to cultivate the art of patience. The best returns tend to come from sticking with a long-term commitment to your investments.

The longer you’re prepared to stay invested, the greater the chance your investments will yield positive returns. That means holding your investments for no less than five years, but preferably much longer. During any long-term investment period, it is vital not to be distracted by the daily performance of individual investments. Instead, stay focused on the bigger picture.

Putting your money into the market

Success in the stock market is all about time and patience. But it’s understandable that when you put your money into the market, you will be tempted to check up on how your investments are performing on a regular basis – and in our technology-driven age, you can monitor them 24/7.

Seeing investment prices fall, sometimes with alarming speed, can be enough to spook even the most experienced of investors. But remember that the reasons why you identified a particular fund or share as a sound investment in the first place should hopefully not have changed. The fall could just be down to market conditions as much as anything the individual company or fund manager has done, and in many cases, given enough time, investments should hopefully recover their value.

Leave your emotions to one side

However, at the same time, it is essential to leave your emotions to one side, because on occasion there could be a good reason to sell. Just because something appeared to be a good investment a year ago doesn’t mean it will be going forward.

Developing the art of patience will help keep you focused on your goals. Whatever happens in the markets, in all probability your reasons for investing won’t have changed.

Some investors develop their own exit strategy knowing in advance how far an investment’s value must fall or rise before they will consider selling. Such a plan can enable investors to ride out short-term market corrections and movements.

Help smoothing out your returns

Bear in mind, too, the benefits of so-called ‘pound-cost averaging’ during periods of market volatility. Essentially, if you are investing on a regular basis, your contributions will buy more shares when prices are low and less when they are expensive. Over the long run, this should help smooth out your returns, though there is no guarantee of this.

Too much tinkering not only undermines your investment aims but will also ratchet up the costs. Every time you buy or sell an investment, there’s a charge – sometimes several will be incurred. Investors can easily overlook the reality that by making even small adjustments, the charges can start eroding any profits earned.

Rebalancing your portfolio’s risk profile

As a result, for many investors, it’s best not to develop a regular buy-and-sell habit. And remember, no one knows which days will turn out to be the best trading ones – and by being out of the market, you could miss them.

For all investors, there will come a time when the portfolio needs to be rebalanced. A major reason for a realignment is when the actual allocation of your assets – be that shares, government bonds, corporate bonds or cash – no longer matches your risk profile.

Keeping your investments appropriately diversified

Alternatively, it may be because your investment horizons have shortened. Perhaps, for example, your retirement date is getting closer. These are solid reasons for selling some assets and buying new ones to keep your investments appropriately diversified. Any period of active portfolio management should be a process of change, which is both well planned and well executed.

It may be tempting to spend any income generated by your investments, but if you don’t need it in the short term, why not plough it back into your portfolio? This will increase the number of shares you own. And, of course, a bigger shareholding means more dividend payments next time around.

Need a helping hand planning your financial future?

Whatever you want your financial future to look like, we’ll help make it a reality. So if you need a helping hand planning your financial future or navigating the world of investments, we’ll guide you through the process. To find out more, please contact us.





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01st Jul

People delaying retirement – Leigh Clayden

Access to health and well-being support in the workplace

There is now a clear trend of people working for longer and delaying their retirement. Although some are staying in work out of financial necessity, others want to keep working because they value the mental and social stimulation their job brings.

One of the primary concerns people have about working beyond their 50s is the impact this could have on their health, or whether any health concerns might prevent them from working.

Access to health and well-being support

Although it’s hard to predict what the future might bring, having access to health and well-being support in the workplace can help minimise the impact health problems have on people’s ability to work. Flexible working options and reduced responsibilities are also a way of ensuring those with developing health concerns can remain in the workforce.

More than five million workers over the age of 50[1] are concerned that health issues will prevent them from prolonging their working lives. Half (55%) admit to fearing that work will become detrimental to their health, or they might not be well enough to keep working, including 13% who say this is already an issue for them.

Advice and initiatives in the workplace

Fewer than one in five (17%) over-50s workers say they have access to well-being advice and initiatives in the workplace which could help prevent health issues from impacting their careers.

While the research suggests the average over-50 worker expects to retire completely at 66, many intend to work into their late 60s and beyond. Nearly half (48%) now expect to work past the age of 65 – the former Default Retirement Age – including nearly one in four (23%) who plan to work beyond 70, and 13% who do not expect to ever retire fully. Two in five (41%) don’t know when they’ll be able to retire fully.

Older employees already expect to retire later

Many older employees already expect to retire later than they planned to at a younger age. Among those who know when they expect to retire[2], three in five (62%, or 3.6 million people) say their expected retirement age is older than they thought it would be ten years ago. In 2010, the average retirement age for men and women was 65 and 62 respectively[3]. The research suggests the average expected retirement age for both men and women in 2017 is 66.

Those retiring later than planned are partly doing so out of financial necessity. Two in five (43%) do not have enough in their pension savings to retire when they wanted to, and 32% say the cost of living means they cannot afford to stop working.

Enjoying the mental stimulation of their job

However, a third (34%) choose to keep working, as they enjoy the mental stimulation of their job, and more than one in four (27%) would be lonely without the social interaction.

Another factor which could prevent over-50s workers from working as they age is a lack of employer support – only 14% feel their workplace culture is positive towards older workers.

Employer views on older workers limit their future work prospects

More than a quarter (27%) say their employer values the youth and vitality of younger employees above their experience and knowledge, while one in five (19%) say their employer’s views on older workers limit their future work prospects.

Almost one in four (22%) over-50s workers – or 2.2 million people – worry their jobs won’t suit their needs as long as they need it to. This could partly be due to a lack of appropriate workplace support for older workers.

Positive workplace culture for older workers

The most important forms of workplace support for workers over the age of 50 are a positive workplace culture for older workers (valued by 47%), reduced working hours or part-time working/job sharing (33%), and career flexibility such as reduced responsibilities or a job description change (29%). However, not all over-50s workers are currently able to access these forms of support, with just 11% able to negotiate career flexibility.

One in ten (10%) say new skills training is important for workers over the age of 50, suggesting workplace support is also needed to help older workers continue growing in their careers. A quarter (24%) of over-50s workers agree opportunities for career progression is an important part of working life at their age.

Source data:

The Real Retirement Report is designed and produced by Aviva in consultation with ICM Research and Instinctif Partners. The Real Retirement tracking series has been running since 2010 and totals 29,568 interviews among the population over the age of 55 years, including 1,177 in July 2017 for the latest wave of tracking data (Q2 2017). This edition examines data from 3,327 UK adults aged 50 and over, of whom 1,829 are still working.

[1] ONS Table A05: Labour market by age group: People by economic activity and age (seasonally adjusted). There are 9,934,000 workers aged 50 and above

[2] Representing 59% of over-50s workers, or 5,861,060 people

[3] ONS Pension Trends – Chapter 4: The Labour Market and Retirement, 2013 Edition


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16th Jun

BLOG from SIFA – Interest rates are set to rise

Interest rates are set to rise. The Bank of England has signalled its intention to raise interest rates, and other central banks, including the US Federal Reserve, are likely to be making a similar response to rising inflationary pressures.  After years of easy money following the financial crisis ten years ago, they are concerned to prevent their economies from over-heating.

What does this mean for investors?  The most direct impact will be on fixed-interest securities, or ‘bonds’.  These are issued by both companies and governments which wish to raise money from investors.  The capital is repaid at a fixed date in the future and meanwhile interest is paid at a rate which is fixed at the time when the bonds are issued.

Government bonds are known as gilt-edged securities, or ‘gifts’, because repayment of the capital invested is guaranteed by the government.

Some government bonds are index-linked which means that the value of the capital repaid is linked to the Retail Prices Index, thus providing protection against inflation.  However, most bonds lack this protection and the value of the capital repaid will be subject to erosion by inflation.

This threat to capital, combined with the low interest rates currently available from bonds, make them a poor investment at times like the present when inflation and interest rates are set to rise.

The best time to invest in bonds is when interest rates are high and set to fall.  At such times bonds offer the attraction of higher interest rates than are available from deposits and greater security of capital than is available from shares.

However, apart from index-linked gifts (which can be expensive when inflation is on the rise), there are two types of bond investment which might be considered.

First, strategic bond funds, whose managers have the flexibility to invest in all types of bond, both in the UK and internationally.

Secondly, short-dated bond funds, which invest only in government bonds which are due to be repaid within the next 12 months and are the nearest alternative to cash deposits, but usually with a slightly more attractive interest rate.



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01st May

BLOG FROM SIFA – Market timing and “ETFs”

“Exchange traded funds (“ETFs”) make no sense unless they are vehicles for market timing”.  So wrote investment commentator John Authers in the Financial Times on 24 February 2018.  So how does one square the fact that ETFs have become the “hottest investment product” with the FT’s comment that timing the market is generally regarded as “a mug’s game”?

What are ETF’s?  According to Wikipedia, ETFs are investment funds which are traded on stock exchanges and hold assets such as stocks, commodities or bonds which are the constituents of an index – for example the FTSE 100 index of shares in the 100 largest companies quoted on the London Stock Exchange. In short, therefore, ETFs are index-tracking funds.

Why are ETFs so popular?  The answer is that most actively managed funds fail to out-perform the index to which their mandate relates.  Also, ETFs economise on manager charges and are consequently cheaper.

However, index funds provide no protection against market declines.  If the index which is being tracked fails, so also does the value of an ETF which tracks that index.  By contrast, fund managers would hope to justify their fees by avoiding shares which might be most vulnerable to a sell-off.

Bearing in mind that stock markets do not usually move in unison, there might be advantage in switching from one index fund to another, though this would necessarily incur a charge.

A further disadvantage of index funds is that they have no option but to invest in shares when their prices are high and therefore qualify for inclusion in an index, and to sell them when they fall in value, thus exposing the investor to the perennial danger of buying high and selling low.

There is a widespread view that the best of both worlds can be achieved by holding both actively managed funds and passive index funds within an investment portfolio – index funds for timing the market and active funds for longer-term investment.

Which brings us back to the “mugs game” and another oft-quoted observation, namely that successful investment depends not on timing the market, but on time in the market.  Nick Train, a successful fund manager, counselled against over-active portfolio management with the words “don’t just do something: sit there”.  Market-timers spend more on dealing costs and usually end up worse off than if they had stayed put.

There is a further, potentially more insidious, dimension to this debate, which was suggested as a possible factor behind the sharp correction suffered by markets in February.  Namely, that the increasing volumes of indexed investment, combined with computer-generated activity, might exacerbate volatility and distort markets when they are no longer driven by the intrinsic value of the shares and bonds of which the indices are composed.

The active v passive debate continues, but there is no dissent from the view that investment portfolios, however composed, provide one of the best ways of accumulating wealth over the long term.   Though allocations should be tempered by John Galsworthy’s cautionary words – “moderation in all things”.


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01st Apr

Powers of Attorney fee refunds

If you registered a power of attorney between 1 April 2013 and 31 March 2017 you could be eligible for a partial refund from the Ministry of Justice. The level of the refund will depend on the fees that were paid and will include 0.5% interest.  This applies to both Lasting Powers of Attorney and Enduring Powers of Attorney.

To find out more visit www.gov.uk/power-of-attorney-refund.


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01st Mar

Equity Release – want or need? – Karen Last

Those considering equity release will generally fall into one of two categories….

Firstly, they need the money for regular or occasional expenses, and have no way of finding that money elsewhere.

Secondly, they want to use the money built up in their home before they pass on.

(It is useful to note that clients can borrow funds for any legal reason, even business purposes.)

Clients in the first category often have no choice. Happily though, I have seen clients’ lives transformed by the removal of financially-related concerns.

Money has been released to:

  • Pay for live-in or residential care costs for themselves, or their spouse.
  • Clear maturing interest-only mortgages where the endowment policy has not been sufficient to clear the mortgage completely.
  • Cover day-to-day expenses after the death of a spouse, due to reduced pension income.
  • Pay for medical treatment or essential adaptations to their property.
  • Clear expensive credit which built up during their working life.

Clients in the second category generally have large homes, reduced income and either no children or children who are wealthy in their own right, with no need for a significant inheritance.

These clients tend to borrow money to maintain a standard of living they enjoyed when they were working, so often use funds to:

Continue with the lifestyle they had when at work. For example, regular new cars, expensive holidays, golf memberships, home improvements, and entertaining.   Equally, they may choose to withdraw funds to help children going through divorce, to buy a home or to fund grandchildren through university.

If you would like to know more, please do contact me for confidential, impartial and honest advice without any obligation. Call Karen Last on 01473 730090 or email karen@claydens.com.

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01st Feb

Don’t worry, be happy – how to build a sustainable retirement income plan – Martin Cornell

How to build a sustainable retirement income plan

It is impossible to consider retirement, and our experience of it, without also considering how we’ll pay for it. But almost 30% of people over the age of 55 are unsure if they will be able to retire on their current savings, according to new research[1].

Four out of five Britons are unhappy with the amount they are putting into their pension fund every month, while one in four people regret not starting to save for retirement earlier in life.

A Financial Conduct Authority (FCA) retirement income study has pointed to some of the risks faced by individuals with pensions who are approaching retirement.

Take advice

As people approach retirement, it is crucial they take advice. The FCA has reported that non-advised people almost always remain with their existing pension provider instead of shopping around.

Obtaining professional financial advice will help secure the best value retirement income product to meet a retiree’s needs and help them understand a safe rate of withdrawal, balancing their income needs against life expectancy and the need to invest for income, which is very different to investing for growth.

Think twice before dis-investing your pension

Half of people are taking their pension savings out but not actually spending it. Instead, they are investing the proceeds into other products. This could be in cash, Individual Savings Accounts or buy-to-let properties. These actions will result in them giving up the advantages that pensions offer, such as future tax-free investment growth.

Cash is unlikely to produce good long-term returns, and illiquid assets like property present their own risks. Obtaining professional financial advice will enable people to identify the right approach to investing for their individual needs that match their financial goals in the longer term.

Do you need to touch your pension?

Pensions are not included in an individuals estate on death, which means Inheritance Tax of up to 40% will not apply. They used to be subject to a separate ‘pensions death tax’ but this has been removed as part of the pension freedom reforms. Now any unused drawdown funds can be passed on and will be tax-free or taxed at the beneficiaries’ marginal rate of income tax.

People need to consider whether it would be more tax-efficient to leave their pension invested and use other assets first. The FCA found that 94% of people who made a full withdrawal had other sources of retirement income available to them in addition to the state pension.

Can you afford to retire early?

The FCA report says 72% of pension pots are accessed before age 65, and individuals rarely consider ‘the future and any of the broader issues around how much they would need to live off’. Many people want to retire early, but it is important to ensure that won’t leave an income shortfall later on. A lot of people underestimate how long they will live.

Income requirements are thought to follow a ‘U shape’ in retirement, with the first phase being the most exciting and therefore the immediate focus. This is where people start to enjoy retirement, and the risk is that they get carried away with their spending. Spending then tends to fall as people become a little less active and slow down, but costs may then go up in later life due to health issues, and care may be required.

People should have a plan in place to see them all the way through retirement, not just focusing on the now.

Don’t rule out an annuity purchase

Drawdown has surged in popularity versus annuities. However, before going into drawdown, people should consider which option best suits their needs. For instance, if they cannot afford for their pension to run out, considering an annuity may be more appropriate. Or they may decide to combine drawdown with an annuity to balance flexibility with security.

Consider your housing wealth

Many people have a good deal of their wealth tied up in their home. Relying on their home in retirement is difficult, and accessing it isn’t always simple. However, it is possible to access that wealth through equity release schemes or downsizing.

Stepping off the corporate treadmill

If you’re planning to step off the corporate treadmill in your 50s or early 60s and maintain your standard of living, talk to us so we can assess your existing plans and advise on any necessary changes required to achieve this goal. To discuss your retirement plans, please contact us – we look forward to hearing from you.

Source data:

[1] Pension Geeks




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01st Jan

Equity Release – friend or foe? – Karen Last

Equity release is a much-maligned subject. Sadly, older style equity release mortgages were not as clear and transparent as modern equivalents and they received some pretty damning press coverage.

The good news is that they are a heavily regulated product now, and only specially trained and authorised advisers can give advice in this field. The regulator takes a special interest in this market particularly as some clients are older and potentially more vulnerable. As a consequence, the whole process is tightly controlled and some providers will not even accept loan applications unless the client has received financial advice.

The bad news is that many people do not take independent advice when choosing their mortgage provider, relying instead on ads in newspapers and during the TV ad breaks! Consequently, they may not be getting the full story, as the best solution for them may not be available directly.

There are so many permutations for clients to consider, especially when taking into account tax implications, benefits, future care costs, disability issues, inheritance protection, wills, Powers of Attorney….and the list goes on.

The list of reasons one might consider equity release is endless…day to day bills, new car, holidays, home improvements, care costs, medical expenses, paying off debts or taxes (including maturing interest only mortgages), helping children, moving to a more expensive area and so on.

The best advice we can give is – take advice, especially from an experienced, impartial, honest and independent adviser.  Our first meeting is free of charge or obligation, so do contact me. I am very happy to meet at your home, and your family are welcome to join us.

Karen Last. 01473 730090. karen@claydens.com


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01st Dec

BLOG – Get ‘wrapped’ up – autonomy to make your own investment decisions – Leigh Clayden

Autonomy to make your own investment decisions

Some people don’t want a pension company deciding how their pension savings are invested – they want to control where their money goes and how it grows. For people wanting to have autonomy to make their own investment decisions with their retirement savings, a Self-Invested Personal Pension (SIPP) may be an alternative solution.

A SIPP is a type of pension called a ‘defined contribution pension’ that allows you access to a wider choice of investments when it comes to saving for your retirement. It works in a similar way to a standard personal pension. The main difference is that with a SIPP ‘wrapper’, you have more flexibility with the investments you can choose.

More flexibility

The new pension freedoms introduced in 2015 mean from age 55 (increasing to 57 from 2028), you can take money out of your pension, normally 25% of which is tax-free and the rest as income, which will be subject to Income Tax.

You can choose which investments you want to put your savings into, and keep control of your savings. A SIPP can also be suitable if you want to consolidate all of your pensions into one pot before you retire, or if you want to keep your money invested after you retire so that you can draw down an income from it.

Investment options

If you are looking to put yourself in control of your financial future and give yourself the freedom to select the investments you think will deliver the best returns, these are some of your investment options:

             Stocks and shares

             Investment trusts listed on any stock exchange

             UK government bonds, plus bonds issued by foreign governments

             Open-ended investment companies which are recognised by the Financial Conduct Authority

             Gilts and bonds

             Exchange-traded funds traded on the London Stock Exchange or other European markets

             Bank deposit accounts including non-sterling accounts

             Commercial property

             Real estate investment trusts listed on any stock exchange

             Offshore funds

Tax facts

A SIPP benefits from the normal tax relief available to pensions. To add £100 to your pension, you pay in £80, and HM Revenue & Customs will add basic-rate tax relief at 20%. If you pay higher or top-rate tax, you can claim back the remaining tax relief through your tax return, meaning you can benefit from up to 45% tax relief. If you own commercial premises, SIPPs can offer valuable tax relief.

You can ‘sell’ your premises to the SIPP and free up funds to reinvest, and there are also Inheritance Tax benefits. They can also be set up under trust, meaning that it separates the legal ownership of your pension assets from your other non-pension assets. This means the fund on your death can normally be paid to a beneficiary without incurring Inheritance Tax. If you die before age 75, there is generally no Income Tax liability on any money your beneficiaries take out of the pension they inherit. However, if you die after age 75, your beneficiaries will pay Income Tax on any money they take out.

Experience counts

SIPPs may be appropriate if you have experience of investing and are completely comfortable making your own investment decisions. Some investments that you can place in a SIPP may be risky and not suitable for you.

If you don’t have experience, a stakeholder or personal pension may be more suitable for you. You may have a more limited choice of investments, but you could choose a fund that has a range of assets in it, rather than picking your own. SIPPs can also be more expensive, and their charges could eat into your returns if you only have a small amount invested. That’s why SIPPs are more suitable for people with larger amounts of savings.

Creating a vision of your ideal retirement

We can help you create a vision of your ideal retirement and calculate how much money you’ll need to fund it. It’s essential to obtain professional financial advice before you make any decisions. To discuss your retirement requirements, please contact us.





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01st Nov

BLOG SIFA News – The value of on-shore trusts

On-shore trusts were very popular for family wealth planning until 2006, when inheritance tax law was changed.

Until that date, the only transfers of assets into trust which incurred a charge to tax were transfers into discretionary trusts, which give trustees the right to select the beneficiaries.  Now, any transfer into trust other than a bare trust, which is tantamount to a direct gift, is a chargeable event.

However, no tax will be payable if the value of the transfer is less than the £325,000 “nil rate band” for IHT and the person setting up the trust survives for seven years after doing so.  Tax will only be charge if the “settler” dies within the seven years.

This would allow grandparents each to put into trust money or financial assets worth £325,000, for example for their grandchildren’s education.  In addition, if they had not used their annual allowance of £3,000 for the previous two years, they could top up the £650,000 transfer by £6,000 each, producing a total gift into trust of £662,000.

With IHT at 40%, this could result in a saving of £164,800 compared with the situation if the assets transferred had remained in the grandparents’ estates; and if they survived the gift by seven years, they could do the same again.

There would of course be charges for administering a trust, which might amount to £3,000 per year, but the trustees might be able to claim income tax relief on this expenditure.

The greatest advantage would be gained from gifts into trust if these were made by grandparents, but it would be equally possible for parents to make the gifts, subject to the important caveat that they should not access the trust funds for the benefit of their children before the children reach the age of 18.  To do so would result in a tax charge to the parents.

Tax advantages are not the only reason for setting up a trust.  Importantly, trusts provide the means of protecting beneficiaries against themselves. Young beneficiaries have often been led astray when entrusted with money at a time when they are ill-equipped to make responsible financial decisions.  Settlers may also wish to avoid the consequences of beneficiaries becoming involved in divorce squabbles.


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01st Oct

BLOG SIFA News – How HMRC catches cheats

HMRC’s efforts to clamp down on the “hidden economy” focusing on small businesses and particular professions which might benefit from undeclared income.

The Financial Times has reported that the number of UK wealth managers providing offshore investment services to their clients reduced by 20% between 2015 and 2016, although two-thirds of the major managers still offer such services.

It appears that the main reason for the decline is the increased sharing of information between tax authorities internationally.  More than 100 jurisdictions now exchange data automatically, with the result that there is virtually nowhere in the world where individuals, trusts and companies can conduct financial activities without the knowledge of their host country.

  • The exchange of information between tax authorities referred to above focuses on offshore tax evasion, and a new £25,000 penalty can be imposed even if there is not intent to defraud HMRC.
  • Leaks by disaffected employees of international financial institutions have implicated thousands of clients of these institutions.
  • Through its “Connect” computer system, HMRC analyses a vast store of data from sources which include banks, credit card companies, the Land Registry, Amazon, Airbnb and PayPal.
  • HMRC’s efforts to clamp down on the “hidden economy” has focused on small businesses and particular trades and professions which might benefit from undeclared sources of income such as buy-to-let.  The licensing of lettings by some local authorities provides a searchable register of buy-to-let landlords.
  • This year, HMRC launched a new hotline to encourage law-abiding taxpayers to report apparent cases of tax fraud and evasion and HMRC has been known to reward informants financially.  Disclosures sometimes happen during the course of an acrimonious divorce.
  • Social media provides a wealth of personal information, and users lay bare their private lives at their peril.  Lavish spending on weddings or home improvements may raise suspicions on the part of HMRC.
  • Banks and professional advisers are duty-bound to file “suspicious activity reports” if they have reason to suspect that transactions may be facilitating money laundering or terrorist activities.
  • In order to encourage evaders to admit their wrong-doing, HMRC has on occasion offered reduced penalties to those who settle up.  At the same time it threatens tougher penalties on those who decline to put their hands up.


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01st Sep

BLOG SIFA News – Tax advantages of marriage

The number of unmarried cohabiting couples more than doubled in the 20 years between 1996 and 2006, from 1.5 million to 3.2 million.

However, research commissioned by law firm Mills & Reeve found that 35% of a sample of over 1,000 cohabiting couples either assumed that they had the same rights as married couples or those in civil partnerships, or were unaware of the tax consequences of their unmarried status. Probably the least significant tax benefit of marriage is the marriage allowance. This enables one spouse to transfer to the other one-tenth of the benefit of their personal allowance (£1,150 in 2017/18). The tax saving is 20% of the allowance, i.e. £230. To qualify, the transferor must be a basic rate taxpayer with income between £11,500 and £45,000 and the recipient should of course be a taxpayer.

When it comes to capital gains tax, each spouse is taxed separately and there is no CGT on transfers between them. So there may be scope to transfer an investment which is pregnant with gains to the spouse with an unused allowance. However, capital gains tax will be payable on the sale of a second home by a married couple, with a top rate of 28%. Unmarried people, on the other hand, can each have a ‘principal private residence’ which is exempt from CGT.

In addition, the purchase of a second home by a married couple will attract the 3% additional stamp duty levy on second homes which applies to purchases in excess of £40,000. This would not apply to unmarried couples each buying one property.

The biggest tax advantage of marriage relates to inheritance tax, and this factor alone lies behind the marriages of many cohabiting couples. Transfers between spouses who are domiciled in the UK are free of inheritance tax, whereas for unmarried couples, tax would be payable at 40% on the value of an estate over £325,000.

Of course, some may say that the main downside of marriage is the cost of divorce!


No responsibility can be accepted for the accuracy of the information in this newsletter and no action should be taken in reliance on it without advice. Please remember that past performance is not necessarily a guide to future returns. The value of units and the income from them may fall as well as rise. Investors may not get back the amount originally invested.

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01st Aug

BLOG SIFA News – Never had it so good?

In 1957 the then Prime minister Harold Macmillan told his electorate “You’ve never had it so good”. In retrospect, the claim has been vindicated by subsequent experience, though it could be said to have sown the seeds of the general election result. As Richard Buxton of Old Mutual has pointed out, the fact is that the post-war ‘baby boomer’ generation has enjoyed financial advantages which are simply not available to the young of today. Unlike the baby boomers, the younger generation often emerge from college saddled with debt. They have little prospect of affording a house in most urban areas, let alone benefiting from the extraordinary house price escalation of the second half of the 20th century. Their greater pre-disposition to spend rather than to save means that even if they were able to do so, they would be unlikely to enjoy the benefit to savings created by the stratospheric increase in share prices since the FT 30 index hit its low point of 146 in 1974. Pensions are on few young peoples’ agendas, but they have little chance of being able to join a final salary pension scheme or to save enough on their own account to provide for retirement.

Mr Buxton concludes that capitalism is not working for the young, and that Jeremy Corbin’s agenda could result in a return to the pro-labour, anti-business agenda of the 1970s, and that if this scenario is reflected in share prices they could have a long way to fall. Other commentators express concern about the effect of such a fall on so-called index-tracking funds, which have become popular because they are cheaper than actively managed funds. Trackers have clear merit when markets are buoyant but provide no protection against falling prices – a factor which is causing some wealth managers to scale back their passive holdings.

One approach which has been used to address this issue is for portfolios to be constructed with a long-term core of active funds supported tactically by a number of shorter-term satellite tracker funds. Overriding all these issues however is the principle that investment should be for the long term.


No responsibility can be accepted for the accuracy of the information in this newsletter and no action should be taken in reliance on it without advice. Please remember that past performance is not necessarily a guide to future returns. The value of units and the income from them may fall as well as rise. Investors may not get back the amount originally invested.

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01st Jul

BLOG Untying the knot. Divorcees twice as likely to have no savings – Martin Cornell

A daunting part of a separation or divorce for most couples is sorting out the finances.  Financial disputes can be a major stumbling block in the divorce process and could take longer than the divorce itself.

This is the business side of divorce, and it may be the most important financial event of your life.  The choices and decisions that you make will have an important influence on your financial well-being for many years to come.  Divorced or separated people are twice as likely to have no savings or investments compared with those who are married (32% vs. 14%) according to research by Zurich UK.

Post-divorce financial considerations

1 Create a new budget

With your household income being impacted, it’s essential to go through your finances.  Creating a budget sheet will help you to keep track of your incomings and outgoings.  It will also help you to spot where you can make cutbacks.  If you’re unsure about how to get started, there are many tools available online to help.

2 Protect your credit score

You’ll be surprised at how many financial products and agreements you share with your ex-partner, from utility bills to mortgage repayments and credit cards, so it’s worth checking your credit record.  Your credit report will list the details of every financial agreement you have.  This will help protect your credit score from anomalous payments on the part of your former spouse.

3 Close joint accounts and open new ones in your name

It’s really important to make sure that all joint credit cards and accounts are closed, paid off in full or at the very least changed to either your name or your former partner’s.  Not doing so could mean them being able to use your accounts, run up debt or use your savings.  This could have a negative impact on your future.  Going forward, make sure you open any accounts solely in your name.

4 Think about your pension

If you’ve been through, or are currently going through, a divorce or separation, your pension is probably the last thing on your mind, but it’s essential for your future that you plan ahead – your future could depend on it.  You and your partner may have built up a strong pension pot, so it’s important to pay particular attention to how this is divided, to make sure you are getting the best outcome.  It’s particularly important for women who may depend on their husband’s provisions for their retirement, as they could be in for a nasty shock.

5 Don’t forget about your protection needs

If you already have life cover in place in the form of a joint policy, make sure you check the policy terms.  Some include a ‘Joint Life Separation Option’, which means that the contract can be amended to cover both parties individually.  Many policies also contain options that allow you to increase the amount of cover you have following life events, including divorce or separation, without needing further underwriting.  You may want to consider increasing your cover if you have had to take on a new or larger mortgage or other debts.

6 Make the most of your protection cover

Once you have changed your policy to protect you individually, it’s worth making use of any support that is offered.  Many protection policies contain valuable support or counselling benefits that can provide vital help or advice if you are going through a divorce.  This support can cover areas from financial to legal to emotional support.

Protection can also play a key role in covering any maintenance liabilities for an agreed period, such as when children reach 18, in the event of severe illness or even death.

7 Update your will

Now that you are divorced or separated, your existing will is unlikely to be appropriate to your new circumstances.  Make sure you update this as soon as possible to ensure that your wishes are followed.

Taking a long-term view

Divorce can be an incredibly challenging time, both emotionally and financially.  Understandably, the focus is naturally on splitting immediate assets, but it’s important that the long-term is also part of the planning.  In fact, after the family home, a pension can actually be the biggest asset at stake, so protecting this in the first instance is crucial.

Source data:

All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,073 adults.  Fieldwork was undertaken between 25 and 26 October 2016.  The survey was carried out on-line. The figures have been weighted and are representative of all UK adults (aged 18+).

900 adult participants (19-55+) who are representative of the general population took part in the Mindlab experiment in the UK from 25-26 October 2016.






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01st Jun

BLOG SIFA News – trusts, pension transfers, premium bonds and reclaiming expenses

Reasons for setting up a trust

A trust is a legal arrangement which enables a person (‘the settlor’) to transfer the legal ownership of property, shares or cash to another person (‘the trustee’) to hold on behalf of a third person or persons (‘the beneficiary’).

The main reason for setting up trusts is for the protection of family interests.  For example:

To protect wife and children

If a settlor wished to ensure that his/her spouse and children were adequately provided for in the event of their death, they might create a trust in his/her Will giving the spouse the right to live in the family home for the remainder of their life, while at the same time ensuring that the house would go to the children of the marriage on the death of the surviving spouse.  By doing this, the settlor would be able to prevent the spouse cutting the children out of their Will in the event of the spouse’s subsequent re-marriage.

To protect individual children

A parent or grandparent might wish to set up a trust to provide for the financial needs of one or more of their children, such as their education or the maintenance of a child with disabilities.

To protect vulnerable children

A settlor might alternatively wish on their death to put inheritance money into the hands of trustees to prevent an immature or irresponsible child from estravagantly dissipating a gift.  Similarly the interests of a son or daughter could be protected against the risk of assets being lost as a result of bankruptcy or divorce.

To provide long term care

A trust could be created to hold sufficient funds to provide for the long term care of an aged dependant, such as a widowed mother, with provision that on the death of the beneficiary the trust capital would revert to the family or settlor.

General skipping

If a wealthy settlor was confident that their spouse had ample funds for their own needs, and wished to avoid adding to those funds and thereby creating an unnecessary tax liability, he or she could set up a trust for the primary benefit of the children, while permitting access for the surviving spouse if needed.

Personal injury trusts

People who have received Court awards as compensation for personal injury can benefit from having the award held in a personal injury trust, because money held in the trust and any payments made from the trust are generally disregarded for the purposes of the means testing of Social Security benefits.

Pension transfer caution

There is an on-going decline in the number of final salary pension schemes.  Many of the companies which have provided these schemes for their employees have found the open-ended liability insupportable, and have introduced schemes under which their contribution is defined by reference to the amount contributed rather than the pension which is to be paid.

Providers of on-going occupational schemes are being assisted by low interest rates to increase the size of the transfer payments which are available to members wishing to transfer to other schemes, particularly personal pension schemes which offer the benefit of George Osborne’s ‘pension freedoms’.

In some cases, payments have been offered up to 50 times the annual income from the occupational scheme, so that someone whose pension would have started at £12,000 could receive as much as £600,000.

However, comparing the benefits of defined benefit and defined contribution schemes is fraught with difficulty and the Financial Conduct Authority has warned of the dangers in making the wrong decision.  One of the steps the FCA has taken is to require that anyone wishing to transfer pension rights worth over £30,000 must take financial advice.

Premium bonds improved

The total pool of money from which premium bond ‘prizes’ are paid has been reduced, but a greater proportion of the pool from which ‘prizes’ are paid is now allocated to £25 prizes than to £50, £100 or larger prizes and consequently the chances of winning a £25 prize have increased.

Interestingly, the laws of mathematics suggest that the chances of winning increase according to the number of bonds which are held, and the best chances will apply to investors with the maximum £50,000 holding.

The chance of wining a £1,000 prize is estimated at once in 87 years, while you would have to wait 2,361 years to win a £5,000 prize and 4,825 years to win £10,000.  The odds on anything higher are so remote as to be totally hypothetical.

For the £50,000 bond holder, the effective rate of return based on £25 prizes is 0,98%, tax-free and guaranteed by the government.  For the basic rate taxpayer this equates to 1.22% and for the higher rate taxpayer, 1.63%.

Conclusion: For those able to invest in larger holdings, premium bonds can provide a reasonable income and a useful means of diversifying investment portfolios.

Reclaiming expenses

Despite the fact that, according to HM Revenue & Customs, “the general rule for employees’ expenses is very restrictive”, there is scope for obtaining tax relief of which some people may be unaware.

The condition for company directors and employees obtaining relief is that expenses must be incurred wholly and exclusively for the purposes of business (the rules for the self-employed are less restrictive).

The cost of business travel can be claimed, but not for the journey between home and work.  If it is necessary to stay overnight, the cost of accommodation can be claimed, as can subsistence, congestion charges, tolls and parking charges.

The cost of subscriptions to professional organisations can usually be claimed and those working from home can claim the cost of phone calls, gas and electricity attributable to their work.  However, it is not permissible to claim relief in respect of expenses which are incurred partly for business and partly for personal purposes, such as everyday clothing.


No responsibility can be accepted for the accuracy of the information in this article and no action should be taken in reliance on it without advice.  Please remember that past performance is not necessarily a guide to future returns.  The value of units and the income from them may fall as well as rise.  Investors may not get back the amount originally invested.

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03rd May

BLOG Getting your affairs in order – Karen Last

Getting your affairs in order – what you have and what you want to happen to it

Everyone should have a Will, but it is even more important if you have children, you own property or have savings, investments, insurance policies or you own a business.

The very act of having a Will drawn up can be beneficial in that it makes you think about what you have and what you want to happen to it. While most of us find it difficult to think about our mortality, the fact is that one day we will be gone, and we owe it to our dependants to make that task as easy as we can.

Rules of intestacy will apply

If you do not leave a valid Will, the rules of intestacy will apply in respect of your estate (your ‘estate’ is defined as assets less outstanding liabilities). If your estate is very small, this may not matter, and there are circumstances in which the result might be perfectly acceptable (for example, if the value of your estate is such that it will pass wholly to a surviving spouse or children). In most cases, however, it still makes sense to have a Will drawn up. The rules of intestacy do not provide for ‘common law’ spouses. If you do not provide for them via a valid Will, they may be obliged to make a legal claim against your estate and could find themselves seriously short of funds in the meantime.

Protect certain family members 

The very act of having a Will drawn up can be beneficial in that it makes you think about what you have and what you want to happen to it. For example, whether you  want to protect certain family members (such as minor children or those who will  struggle to manage their affairs), whether you want certain interests to take priority  (for example, giving a second spouse or registered civil partner a right to remain in occupation of  the family home for the rest of their life), whether you want children or grandchildren to benefit equally (or for any inheritance to be adjusted to reflect lifetime gifts), whether you want to benefit charities and whether it would be appropriate to consider some tax planning.

Aspects of your estate

In addition to a Will, you can write a letter of wishes. This is not legally binding, but you can use it to deal with smaller items and more significant matters such as the factors you would want trustees for your children to consider in exercising their discretion. You might also want to guide your executors towards professional advisers who you think would be best placed to deal with particular aspects of your estate or the estate as a whole.

Refusal to act on your wishes

Talk about your Will to those who will be affected by it. You can name people as executors without their prior consent, but they can refuse to act when the time comes. Check that they are willing, tell them why you have chosen them, and make clear why your Will says what it says and what your wishes are in respect of any matters not covered in the Will. Tell them where your Will is kept.

Impact and the legal costs

If the terms of your Will are likely to lead to arguments within your family, think very carefully about the impact and the legal costs associated with any challenge and whether it makes sense to explain things in a covering letter or face to face while you have time. Think carefully about your choice of executors. While family or friends are usually a good option, there are circumstances – for example, if you have business interests, if family conflicts are expected or if there is simply no-one else appropriate – where the appointment of one or more professional executors may make sense.

Keep it under review

If you already have a Will, make sure you keep it under review. Are your chosen executors still the right people? Are they still alive? Have your wishes changed in any way? Have your family circumstances changed (bear in mind that marriage usually makes a Will invalid and that divorce makes any bequests to your ex-spouse/civil partner null and void)? Minor amendments to a Will can be achieved via a codicil.  More wholesale changes call for a new Will, which, assuming it is valid, then takes priority over your old Will.

Make your wishes clear

You cannot bind family or friends in terms of funeral arrangements or, at present, organ donation. You could sign up to the organ donor register and carry a donor card, and – most importantly of all – talk to your family about your wishes and the reasoning that lies behind them.

Keep relevant papers safe

It is essential that Wills are kept secure, whether in a professional adviser’s safe or at home in a fireproof box. Your executors, however, are going to need access to far more. They will need to determine your assets and liabilities on death and, if Inheritance Tax (IHT) is an issue, investigate any gifts in the seven preceding years. Leave them lists, together with relevant papers and life policies and contact details.

Also leave a note of relevant contact details – your accountant, your solicitor, your bank and professional financial adviser with details of pension and life policies.

Immediate family needs

Assets that are owned jointly (including properties held as joint tenants) pass to the survivor automatically on death. Most other assets, however, will be frozen until a Grant of Probate has been obtained (a process that invariably takes several months). Ensure that your spouse or registered civil partner or any adult child who is dependent on your support has sufficient funds in a bank account of their own or in a joint account to meet their immediate needs.

Consider life insurance as an appropriate way of supporting your family after you are gone, and make sure that life insurance policies are ‘written in an appropriate trust’, which means that the proceeds can be released before Probate has been obtained.

Simple and transparent finances

The more complicated your financial affairs, the greater the difficulty could be for those you leave behind. Try and make things as simple and transparent as you can. Go through your documents and either dispose of or identify those that are no longer valid. If there are matters that should have been disclosed to HM Revenue & Customs (HMRC), think seriously about disclosing now and getting everything cleared up.

Inheritance Tax provision

In the event that your estate is likely to be subject to Inheritance Tax (IHT), it requires advance planning. If your estate passes to a surviving spouse or partner (or to charity), IHT is not likely to be an issue. On the second death, the first £325,000 (‘the nil-rate band’) of your estate is likely to be free of tax. You may benefit from an  additional £325,000 if a spouse has pre-deceased you, and those dying after 5 April 2017 may benefit from an additional exemption in respect of the family home.  However, if you have remained single, have divorced and not remarried, or are in a common-law relationship, the exempt amount may be just £325,000 and, if you have made substantial lifetime gifts, this may not be available to set against your estate at death. Any value not covered by reliefs or exemptions is charged to IHT at 40%.

Lasting power of attorney

All of the above relate to what happens when you die. There is a distinct possibility, however, that you will lose capacity to deal with your affairs well before that point.

Lasting powers of attorney (‘LPAs’) are intended to fill the gap – they are legal  documents under which you appoint one or more persons to deal with either or both of your financial affairs and your health and welfare in the event that you are no longer able to deal with things yourself. An LPA is important, and it should be drawn up while you still have full capacity (they are often dealt with at the same time as a Will). Bear in mind that incapacity could be triggered by an accident or a sudden illness, rather than gradual decline.

Need someone to talk things through?

If you want to be sure your wishes will be met after you die, then a Will is vital. Whatever your circumstances, we are there to talk things through and guide you in the appropriate direction. If you require more information or would like to discuss your situation, please contact us.


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01st Apr

BLOG Looking to the future

Cost of essentials is the most common perceived threat to over-55s

While the rising cost of essentials is the most common perceived threat to over-55s’ standard of living over the next five years, concerns over falling returns on savings have risen to the highest point in almost three years, Aviva’s latest Real Retirement Report reveals.

Falling returns

Almost one in four (22%) over-55s now identify falling returns as a threat compared to 17% in Q2. The last time concerns were this high was in Q1 2014 (24%), with this quarter’s jump coming against the backdrop of the decision by the Bank of England to cut the base rate to 0.25% in August 2016.

At the same time, almost half (45%) of over-55s highlight the rising cost of living as their primary concern over the next five years. Following the UK’s decision to vote to leave the EU in June last year, the resulting fall in the value of the pound has led to an expectation that inflation will continue to rise this year and push up prices.

Cost of living

The concerns suggest that, even if interest rates were to rise this year, there is an expectation that returns on savings won’t keep pace with the rising cost of living. Bank of England data shows that average interest rates on a variable Cash Individual Savings Account (ISA) have fallen from 2.5% in Q3 2012 to just 0.7% in Q3 2016 and have been lower than inflation since September, for the first time since October 2014[1].

The data highlights that although over-55s had £1,360 less in savings in 2012 (£17,750 in Q3 2012 vs. £19,110 in Q3 2016), they would have enjoyed £444 in annual interest in Q3 2012 if it was invested in the average Cash ISA, compared to £140 today: just 32% of the 2012[2].

Savings pots

Not only do they receive less interest, but over 55s also have less in their savings pots, with the total amount falling 6% annually (from £20,399 in Q3 2015 to £19,110 in Q3 2016).

However, typical monthly incomes have increased steadily over the last three years to their current level of £1,382 per month. With such a rise, two in five (40%) now cite current income as a source of their savings in Q3 2016, up from 34% in Q3 2015.

Earned income

This has been supported by a rise in employment during later life: the percentage of over-55s receiving wages or other earned income in Q3 2016 was 40%, up from 38% in Q3 2015 and 34% two years previously.

Despite the potential for falling interest rates to reduce the cost of credit, the findings also highlight a worrying increase in the average level of unsecured debt held by over-55s, which has risen by 15% since Q3 2015. Debt levels now stand at £1,904 – up from £1,662 last year.

Most significant

Credit cards remain the most significant source of debt with an average balance of £840, which has also risen by 26% since Q3 2015. However, personal loans – the second largest form of borrowing – have grown by 42% over the same period.

The research also tracked the plans of unretired over-55s since the Coalition Government announced the Pension Freedoms in 2014. Overall, awareness of the reforms remain unchanged with 86% stating that they were aware of the changes, up by only 1% from this time last year.

Perceived advantages

When looking at the perceived advantages of the reforms among over-55s, just 21% feel it would help them to supplement their income in retirement, and 10% said they would use it to pay off their mortgage or other debts such as credit cards.

However, despite the flexible access given to over-55s to their pension savings, almost half (48%) of those who have not yet retired believe there are no advantages from the reforms – only down marginally from 51% in Q3 2015. The data also shows a slight increase in anxiety about having enough money to last for the whole of retirement: 14% were worried about this in Q3 2016, up from 12% a year earlier.

Seismic changes

Last year was a year of seismic changes, and it is still unclear what the long-term impact of the UK’s decision to vote to leave the EU will be. What is clear is that those approaching retirement have heightened concerns for the future following the decision to cut interest rates in the summer of last year and through a growing consensus that inflationary pressures may start to move upwards this year.

Source data:                                                 

[1] Average variable ISA rates from Bank of England Average Quoted Interest Rates (deposit rates, variable rate cash ISA, including unconditional bonuses). 2.5% and 0.7% are the average rate for Q3 2012 and Q3 2016.

Inflation rates from the ONS Consumer Price Index.

Savings rates were lower than inflation in November, October and September 2016.

[2] 2.5% of Q3 2012’s saving pot (£17,750) is £444. 0.7% of Q3 2016’s saving pot (£19,110) is £140.

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01st Mar

BLOG Mid-life savings crisis – Martin Cornell

Mid-life savings crisis – it’s good to talk about your options

Put simply, retirement planning is about how you look at your future, but more than a million Britons are facing a ‘mid-life savings crisis’ as they near the age of 40 with no retirement savings, according to research from Zurich. A third (33%) of British adults aged 35 to 39 – equivalent to an estimated 1.31[1] million people – say they have no money saved into a pension, despite approaching the mid-point of their working lives.

Not saving into a pension

Among ‘millennials’ (those born between 1980 and 1999), the picture is equally bleak with almost two in five (37%) adults aged 25 to 34 – equating to an estimated 3.2[2] million people – not saving into a pension.

The findings highlight how financial pressures could be forcing some Britons to start saving later, while others are struggling to save at all. Rising rents and house prices, combined with years of low wage growth, have made it harder than ever for people to save.

Inadequate income in retirement

With the cost of living rising, some people appear to be putting off saving into a pension, or not saving at all. This is leaving a third of Britons in their late 30s facing a mid-life savings crisis. By delaying saving into a pension, a substantial number of Britons could end up with an inadequate income in retirement.

Younger generations who delay saving may have to retire later. Britons reaching the age of 40 with no pension savings could be forced to work much longer to achieve a secure retirement. Even those nearing their 30s without a pension should not assume they can make up lost ground at a later age, no matter how far off retirement may seem.

Wiping off tens of thousands of pounds

Delaying saving for a few years can wipe tens of thousands of pounds off the future value of your pot. The earlier you start investing into a pension, the more your savings will benefit from the compounded benefit of growth on growth.

It is important for savers to maximise their employer contributions and take advantage of pension tax relief. The good news is that your employer and the Government can help to boost your savings.

Matching your contributions

If you save into a workplace scheme, it is likely that your employer will pay into your pot – with many matching your contribution. It makes sense to take maximum advantage of this. Any money you save is also boosted further by a government top-up in the form of tax relief.

Under auto enrolment, many employers are obliged to pay into a workplace pension for their employees. If you decide to opt out of the scheme, you will miss out on employer contributions and tax relief, which is free money by any other name.

Tips to boost your pension

Regardless of whether or not you have started to save, these four tips can help get your pension on track:

1 Take advantage of tax relief

Any money you pay into your pension receives a rebate from the Government at the same rate as you pay Income Tax – 20%, 40% or 45%. This means it costs a basic rate taxpayer 80p to put £1 into their pension, a higher rate taxpayer 60p and a top rate taxpayer 55p.

2 Maximise employer contributions

Make the most of your workplace pension scheme. Some employers will match your pension contribution, which can turbo-charge your savings. For example, if you increase your current contribution by 3%, your employer may pay in an extra 3% too.

3 Taking risk can work to your benefit in the long term

Even if you’re starting to save at 40, it’s likely you’ll have another 25 years before retirement. This means it’s not too late to take a long-term view and invest in higher risk funds at the outset with potentially bigger returns. By investing for the long term, you are better positioned to weather the ups and downs of the stock market.

4 Plan ahead

Know how much you need to invest each month to achieve your ideal retirement, and don’t forget to factor in inflation. Everyone’s different. And it’s likely the things you spend your money on now will change when you stop working.

Make sure you have sufficient money

A critical aspect of retirement planning is how you structure your financial affairs to make sure you will have sufficient money if and when you stop working. If you would like to review your current retirement plans, please contact us – we look forward to hearing from you.

Source data:

Total sample size was 1,018 adults aged 18 to 39.

Fieldwork was undertaken from 10–13 June 2016. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18 to 39).

[1] Office for National Statistics data 2015 (published June 2016) shows there are 3,961,730 GB adults aged 35 to 39. 33.08% of 3,961,730 is 1,310,540.

[2] Office for National Statistics data 2015 (published June 2016) shows there are 8,574,802 GB adults aged 25 to 34. 37.33% of 8,574,802 is 3,200,974.






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01st Feb

BLOG Navigating your investment options – Leigh Clayden

Navigating your investment options – how professional financial advice can prove invaluable

Few of us really have the time or inclination to understand the vast number of different investment products available on the market and consider what the best options are to suit our particular objectives. To do this effectively, it would need to become a full-time job.

Managing our ever-changing financial affairs

With the busy lives we lead, it can be difficult to find the time to keep fully up to speed with everything that’s going on, including managing our ever-changing financial affairs, especially as investment products are unlikely to remain the same throughout our lifetime. This is where professional financial advice can prove invaluable.

We can help you design a custom investment portfolio to suit your individual situation. It should take into account your financial goals, as well as your need, willingness and ability to tolerate risk. Your investment portfolio should also generally be designed to minimize your tax burden, if possible, and is prudent given your circumstances.

Thinking about your attitude to risk

When it comes to investing, it’s as much about managing the potential downside as it is about targeting potential gains. Generally, higher returns come with higher risk, and professional financial advice can help you think about your attitude to risk before making any recommendations. It’s also important to make sure your portfolio has the right balance for your risk profile by diversifying across asset classes, regions, providers and products as applicable.

To invest successfully, a key step is to think about your long-term financial future. You are at the centre of your financial plan: your goals (both short term and long term), your situation, and your financial strengths and challenges. As time passes and your lifestyle changes, it is important to keep a regular check on your investments. It is likely that the balance of the investments in your portfolio will need to evolve, not only in line with changing market conditions, but also with factors such as your investment goals, your personal circumstances and perhaps most notably your age.

Important considerations when building an investment portfolio:


With vast amounts of information and products available, the whole process of wading through and choosing an investment can be quite daunting. We help you to cut through the noise, discuss your investment objectives, understand which products are available and select those most suited to your investment needs.


Investing is as much about managing the potential downside as it is about looking for potential gains. Typically, investments with the potential for a higher return also carry a higher risk due to the more volatile sectors and regions that are targeted. Part of the process we consider is the risk or return trade-off, and we can help you to gauge your attitude to risk. From this, we can ensure that your portfolio has the right balance of risk by diversifying across asset classes, regions, providers and products as appropriate.


Understanding the jargon used within the financial industry and extracting the important information can be difficult and time-consuming. Our approach is to translate current events and bring out hidden facts in seemingly endless product literature. So whether you want to understand the implications of interest rate increases or of a change in tax legislation regarding an investment product, we will be able to discuss how each issue directly affects you.


As time passes, both markets and your lifestyle can change dramatically. This consequently means that it is important to keep your investments under continual review so that you can get the most out of them. Anything in your life, such as your age or personal situation, could affect the requirements you have for your investments. By us reviewing and, if necessary, adjusting your portfolio, we can help you to meet your evolving needs.


With markets constantly on the move and unforeseen events sometimes having significant impacts – as we have seen since the Brexit referendum result and last financial crisis – the need for ongoing adjustments to your investments can be extremely important, and staying on top of this can be a full-time job. By us taking this important responsibility off your hands and putting it in our hands, we can help you to feel more confident that your holdings are suitably invested for your individual requirements.

Looking to invest for income or growth?

Creating and maintaining the right investment strategy plays a vital role in securing your financial future. Whether you are looking to invest for income or growth, we can provide the quality advice, comprehensive investment solutions and ongoing service to help you achieve your financial goals. To discover how we can help you build a long-term strategy for your investments, please contact us – we look forward to hearing from you.





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01st Jan

BLOG The Autumn Statement in brief from SIFA

The new Chancellor’s Autumn Statement was brief, and Philip Hammond made clear that this will be his last.  He does not favour the idea of flagging up in advance changes which are likely to be formalised in the Spring Budget.  Nevertheless, the Statement provided food for thought.


Only one change was announced in relation to pensions, and this relates to contribution limits.  The current annual contribution allowance is £40,000, but this reduces to £10,000 in cases where the pension holder has begun drawing down income (as opposed to tax-free cash) from a “money purchase” pension.  This £10,000 limit is now to be reduced to £4,000, the aim being to reduce the impact on the Treasury of people recycling pension money and claiming tax relief on the same money twice.

In the words of ex-pensions Minister Steve Webb.  “As soon as someone draws a pound of taxable cash using the “pension freedoms”, the amount they can save in a money purchase pension would be slashed from £40,000 to £4,000″.

It has been suggested that this may be a half-way house to a complete bar on recycling, by reducing the limit to nil.

Looking further ahead, more significant pension changes seem likely.  Mr Hammond commented that pension tax relief is one of the most expensive of all reliefs, and that two-thirds of the benefit goes to higher and additional-rate taxpayers. This is at variance with the Government’s aim to focus resources where there is most need.

A reduction in the availability of higher-rate tax relief may therefore be on the cards in the longer term and, as ever, best advice must be to take advantage of current levels of tax relief while they are available.

The cost of State pensions is another concern to the Government, and the Chancellor hinted that the current “triple lock”, whereby State pensions are guaranteed to increase each year by whichever is the highest of average earnings, the rate of inflation, and 2.5% may not be affordable after 2020.


The Government continues to introduce new variants of ISAs (Individual Savings Accounts).  Last year saw the Innovative Finance ISA, which permits investment in peer-to-peer lending schemes.  These by definition are higher risk than either cash ISAs or stocks and shares ISAs but may provide a higher return than cash ISAs.

Next, in July 2015, came the ‘Help to Buy’ ISA, through which first time buyers who save up to £200 a month towards their first home can receive a £50 bonus from the Treasury for every £200 they save, up to a maximum of £3,000.

Now, the Chancellor has confirmed that, despite widespread misgivings, the Government is to press ahead with the introduction in April 2017 of what has been described as a ‘souped-up Help to Buy ISA’, the Lifetime ISA, or ‘LISA’.

This was conceived by George Osborne with the main objective of encouraging non-pension savings for retirement and at the same time assisting young people with the financing of home purchase.

Savers between the ages of 18 and 40 stand to receive a 25% bonus from the Government on contributions up to £4,000 p.a. and can use some or all of the money to buy their first home, or withdraw the money for other purposes (such as retirement provision) as from the age of 60.  The major caveat is that if money is withdrawn before the age of 60 other than for financing the purchase of a home, not only will the 25% be forfeit but a 5% penalty will be incurred.

Criticism has centred not only on the potential confusion between LISAs and Help to Buy ISAs, but also on the fact that for many people ISAs will be less attractive than pension savings, because they will miss out on both employer contributions and tax and National Insurance relief.  Unusually, the financial watchdog, the Financial Conduct Authority, has gone so far as to issue a warning that LISAs will be an unsuitable investment for most savers.

It is to be hoped that the adverse publicity attaching to LISAs will not discourage people from investing in standard ISAs which remain one of the principal planks for personal financial planning.


The main news on the tax front is the crackdown on employees’ perks through ‘salary sacrifice’. This enables salary to be paid in a form which legitimately avoids incurring employers’ and employees’ National Insurance contributions.  For a higher rate taxpayer, this could mean an increase of 18% in the value of the remuneration.

Salary sacrifice allows employees to boost their pension pots by arranging with their employers that part of their salary should be paid as additional contributions to their pension plans.

The Chancellor announced that salary sacrifice will continue to be permitted in relation to pension contributions and pension advice, childcare, cycle to work schemes and ultra-low emission cars.

However, with effect from April 2017, other employee benefits, such as car purchase, parking, school fees, gym membership, travel insurance and smart phones, will cease to benefit and employees will be in the same position as if they had paid out of taxed income.

Existing arrangements will be protected until April 2018, or 2021 in the case of cars, accommodation and school fees.

Transferring pension benefits

Based on low interest rates, current transfer values make it attractive for members of company ‘defined benefit’  (‘DB’) pension schemes to transfer into some form of personal pension and thus become able to exercise the ‘pension freedoms’, enjoying greater flexibility in accessing funds and potential savings in inheritance tax.  But there are complex issues involved on which specialist advice is needed.

Two main factors may favour staying in the occupational scheme.  First, the level of pension provided will be predictable, whereas the value of a personal pension fund will fluctuate according to the value of the underlying investments.

Secondly, death benefits, whose value may be unaffected by the withdrawal of lump sum cash, but whose importance will vary according to the personal family circumstances of each scheme member.


No responsibility can be accepted for the accuracy of the information in this article and no action should be taken in reliance on it without advice.  Please remember that past performance is not necessarily a guide to future returns.  The value of units and the income from them may fall as well as rise.  Investers may not get back the amount originally invested.



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01st Dec

BLOG Securing more of your wealth

Securing more of your wealth – you don’t have to be wealthy for your estate to be liable for Inheritance Tax

Protecting your estate is ultimately about securing more of your wealth for your loved ones and planning for what will happen after your death to make the lives of your loved ones much easier.

Peace of mind

Making sure that you’ve made plans for after you’re gone will give you peace of mind. It’s not nice to think about but it means that your loved ones can carry out your wishes and be protected from Inheritance Tax (IHT).

You don’t have to be wealthy for your estate to be liable for IHT, and it isn’t something that is paid only on death – it may also have to be paid on gifts made during someone’s lifetime. Your estate will be liable if it is valued over the current IHT threshold on your death. The IHT threshold, or Nil Rate Band (NRB), is fixed until 2020/21 at £325,000.

Your estate includes any gifts you may have made within seven years of your death. Anything under the IHT threshold is not taxed (the ‘Nil Rate Band’) and everything above it is taxed, currently at 40%. Where a person dies and leaves at least 10% of their net estate to a qualifying charity, a reduced rate of 36% IHT can be payable.

Any unused proportion of the NRB belonging to the first spouse or registered civil partner to die can be passed to the surviving spouse or registered civil partner.

Additional Nil Rate Band

From 6 April 2017, the Government will be introducing an Additional Nil Rate Band (ANRB). This will start at £100,000 and increase by £25,000 each tax year until it reaches £175,000 in 2020/21, when it will increase each tax year by the Consumer Price Index (CPI).

The ANRB will be available where you pass your house to your children, grandchildren or great grandchildren. It will also be available if you downsize or cease to own a home as long as the replacement is passed to your children, grandchildren or great grandchildren. It will start to reduce if your net estate is more than £2 million and will reduce by £1 for ever £2 it is over. As with the NRB, the ANRB is transferable between spouses and registered civil partnerships if unused on first death.


Moving ownership of assets to your spouse or registered civil partner may help reduce the IHT liability on your estate. However, don’t forget that this can cause an increased IHT liability when they die. There are also exemptions if you make a donation to a charity.

Making gifts

If you can afford to make gifts during your lifetime, this will also reduce the value of your estate, and so your ultimate IHT liability. You can make a gift of up to £3,000 a year without any IHT liability, and if you don’t use this whole allowance it can be carried forward to the next tax year. You can also give gifts of up to £250 a year to any number of people with no IHT liability.

There are two types of gift which currently have tax implications. The first is Chargeable Lifetime Transfers (CLTs). The most common chargeable transfers are lifetime gifts into Discretionary Trusts. A transfer will be charged if (together with any chargeable transfers made in the previous seven years) it exceeds the IHT NRB (currently £325,000). Tax is paid at 20% on excess over the NRB.

The other type of gift to be aware of is Potentially Exempt Transfers (PETs). Gifts between individuals or into a bare trust arrangement are examples of PETs. These gifts are free from IHT provided you survive more than seven years beyond the date of the gift. The other area to be aware of is that if you are making a gift but try to reserve any of the benefit for yourself, for example, retaining dividend income from shares you have gifted, or living rent-free in a property you have.

Life insurance policy

Taking out a life insurance policy written under an appropriate trust could be used towards paying any IHT liability. Under normal circumstances, the payout from a life insurance policy will form part of your legal estate and may therefore be subject to IHT. By writing a life insurance policy in an appropriate trust, the proceeds from the policy can be paid directly to the beneficiaries rather than to your legal estate and will therefore not be taken into account when IHT is calculated. It also means payment to your beneficiaries will probably be quicker, as the money will not go through probate.

Setting up a trust

The structures into which you can transfer your assets can have lasting consequences for you and your family, and it is crucial that you choose the right ones. The right structures can protect assets and give your family lasting benefits. A trust can be used to reduce how much IHT your estate will have to pay on your death.

A trust, in principle, is a very simple concept. It is a legal arrangement where the ownership of someone’s assets (such as property, shares or cash) is transferred to someone else (usually a small group of people or a trust company) to manage and use to benefit a third person (or group of people). An appropriate trust can be used to reduce how much IHT your estate will have to pay on your death.

Broadly speaking, there are two types of trust to choose from: a Discretionary Trust and Bare Trust.

Discretionary Trusts

A discretionary trust offers flexibility when it comes to deciding who you would like to be the beneficiaries. The appointer can appoint benefits to the beneficiaries of the discretionary trust. With a discretionary trust, there are possible tax liabilities to be aware of. On creation of the trust, IHT might be payable. IHT may also become payable if you die within seven years of the creation of the trust. Depending on the value of assets in the trust, there could be further charges to consider during the lifetime of the trust.

Bare Trusts

A bare trust ensures that, once named, the beneficiaries cannot be changed or added to in the future. Once a beneficiary has reached the age of 18, they can ask for the trust to pay their share to them directly. The major advantage of bare trusts over discretionary trusts is that they are classed as potentially exempt transfers (PETs) with no immediate or ongoing IHT charges, provided the creator of the trust survives more than seven years from the date of the transfer.

Make a Will

By making a Will, you are detailing what you want to happen to your assets after you die. A Will also nominates someone to be in charge of carrying out your wishes. If you die without making a Will, the Government could keep everything if a suitable heir is not found. The rules of intestacy (dying without making a valid Will) can be very complicated, and it should be noted that only your spouse or registered civil partner is assured of any inheritance. 

The sooner you start planning, the more you can do

Whether you want to provide for the next generation or leave a charitable legacy when you die – or simply want to minimise an IHT bill – whatever your priorities are, the sooner you start thinking about this the more you can do. If you would like to discuss your situation or to find out more, please contact us – we look forward to hearing from you.





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01st Nov

BLOG Why now is the time to review your pension

Why now is the time to review your pension – taking an active interest in your retirement savings

Millions of savers currently spend very little time reviewing their pensions, with more than a quarter of savers (28%) admitting to never reviewing their retirement savings, while almost a fifth (19%) of those with a pension said they review it less than once every five years[1] according to figures released by Aviva.

Gender also has a role to play. The number of women who are not engaged with their pension is particularly high, with almost a third (32%) saying they never review their savings, compared to a quarter (25%) of men.

Most people have no idea what their pension is worth

Worryingly, Aviva’s figures show that only just over a quarter of people (27%) think that their current contributions into their company pension scheme will provide enough for them in retirement[2]. Ask most people what they earn now and they’ll have a pretty good idea, sometimes down to the penny, but most people have no idea what their pension is worth.

The figures show that urgent action is needed to encourage people to take an active interest in their retirement savings. While the number of people reviewing their pension is worryingly low, the research shows that the main thing that does cause them to act is the arrival of their annual pension statement.

Regularly check how your pension is performing

Investment funds rarely continue to perform well year after year, so it’s important to regularly check how your pension is performing. In addition, over time the amount of risk many of us are prepared to accept in our investments typically tends to reduce, to the extent that by the time we’re close to retirement we may not wish to take much risk at all.

The closer you get to approaching retirement, the more important it is to know how your pension fund is performing. If you wait until your retirement, the chances are you will have no idea what income you will receive, and then it’s too late to make any changes. The longer you have to prepare for retirement, the much greater chance you have of doing something about it and achieving a comfortable retirement.

Contributions should keep pace with income

As part of a year-long study into people’s financial habits, consumers were asked which events had caused them to review their pension. The most popular answer was receiving an annual statement from their provider (35%), followed by a pay increase (28%) and starting a new job (17%)[3].

Want to make more of your retirement?

Retiring is a huge moment in anyone’s life. If you are thinking about your retirement (and what you want to achieve from it), please contact us to discuss your situation and the options available to you.

Source data:

[1] Friends Life (now part of the Aviva group) survey of 9,498 people in the UK with a pension, carried out by YouGov (Jan–Dec 2015)

[2] Friends Life (now part of the Aviva group) survey of 3,618 people in the UK who contribute to a company pension, carried out by YouGov (Jan–Dec 2015)

[3] Friends Life (now part of the Aviva group) survey of 2,347 people in the UK who have reviewed their pension, carried out by YouGov (Jan–Dec 2015)




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01st Oct

BLOG Retirement Freedoms

Retirement freedoms – what are the income options for your pension? 

Deciding what to do with your pension savings is an important step we will all have to take. Following changes introduced in April 2015, you now have more choice and flexibility than ever before over how and when you can take money from your pension pot. These changes give you freedom over how you can use your pension pot(s) if you’re 55 or over and have a pension based on how much has been paid into your pot (a defined contribution scheme).

When and how you use your pension

Whether you plan to retire fully, reduce your hours gradually or to carry on working for longer, you can now tailor when and how you use your pension – and when you stop saving into it – to fit with your particular retirement plans.

Currently, the minimum age you can take any workplace or personal pension is age 55. You need to check with your scheme provider or insurance company to make sure the scheme will allow this. This is proposed to increase to age 57 by 2028.

From 2028 onwards, the proposal will be for the minimum pension age to increase in line with the State Pension age. This means there will be a 10-year gap between when you can take your own pensions and any State Pension you are eligible for.

There’s a lot to consider when working out which option or combination will provide you and any beneficiaries with a reliable and tax-efficient income throughout your retirement.

Leave your pension pot untouched

Once you reach the age of 55, you have the right to take as much of your pension fund as you like as cash – but that doesn’t mean that you have to do so.

You may be able to delay taking your pension until a later date and may wish to leave your money where it is so that it still has the potential to grow – though your fund could also go down in value, of course. Equally, you might just want some time to consider all your options before deciding whether to take cash from your pension fund – and, if so, how much.

Use your pot to buy a guaranteed income for life – an annuity

You can choose to take up to a quarter (25%) of your pot as a one-off, tax-free lump sum, then convert the rest into a taxable income for life called an ‘annuity’. There are different lifetime annuity options and features to choose from that affect how much income you would get. You can also choose to provide an income for life for a beneficiary after you die.

Use your pot to provide a flexible retirement income – flexi-access drawdown

With this option, you take up to 25% (a quarter) of the pension pot that is being crystallised as a tax-free lump sum, then re-invest the rest into funds designed to provide you with a taxable income. You set the income you want, though this may be adjusted periodically depending on the performance of your investments (funds can be left alone to accrue if there is no immediate need for income). Unlike with a lifetime annuity, your income isn’t guaranteed for life – so you need to manage your investments carefully.

Previously, there were government limits (known as ‘Government Actuary’s Department’ or GAD limits) on how much income you could withdraw each year. This still applies to existing capped drawdown contracts where taxable income was being taken before 5 April 2015, providing the GAD limit is respected. These restrictions have been removed from 6 April 2015 for new flexi-access drawdown contracts.

Take small cash sums from your pot

If you’re not sure how your income needs will change in the future, you may wish to take money from your defined contribution pension pots as and when you need it and leave the rest untouched.  For each cash withdrawal, the first 25% (quarter) is tax-free, and the rest counts as taxable income. There may be charges each time you make a cash withdrawal and/or limits on how many withdrawals you can make each year.

Take your whole pot as cash

You could close your pension pot and take the whole amount as cash in one go if you wish. Anyone over 55 can take their entire pension fund as cash. The first 25% (quarter) will be tax-free, and the rest will be taxed at your highest tax rate – by adding it to the rest of your income.

If you cash in your entire pot, it’s highly likely that you’ll have to pay a considerable tax bill. If the provider applies an emergency tax code, too much tax will be deducted, in which case you would have to reclaim this from HMRC. In addition, it will not pay you or any beneficiary a regular income, so without very careful planning you could run out of money and have nothing to live on in retirement.

You don’t have to choose one option when deciding how to access your pension – you can combine options and take cash and income at different times to suit your needs. You can also keep saving into a pension if you wish and receive tax relief up to age 75.  Which option or combination is right for you will depend on a number of different factors.

Helping you find your way forward

Wherever you stand on the road to retirement, we can help you. If you are approaching retirement and would like to discuss the ways you can take an income from your pension pot, please contact us to review your particular situation – we look forward to hearing from you.




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01st Sep

BLOG Financial planning for the future

Financial planning for the future – why it’s important to know your start and end points

Reaching wealth goals and achieving personal ambitions are major objectives of the financial planning process. In order to make plans for the future, you need to know where you are today and where you want to be in the future.

Wealth goal-setting is very much like creating a business plan. You need to know a starting point and ending point, the time frame for ‘exiting’ (or reaching your goals), and the estimated cost involved.

Types of wealth goal

The three most common types are:

  • Retirement planning or property purchase over the very long term (15 years or more)
  • Life events, such as school fees over the medium term (10-15 years)
  • Rainy day or lifestyle funds to finance goals such as a dream sports car over the medium to shorter term (5-10 years).

Wealth goals that really matter most

It’s important to consider and plan for which wealth goals really matter most. Instead, many people muddle through their financial lives, spending to meet the day-to-day expenses that dominate their attention. That’s why to get what you want most, you must decide which wealth goals will take priority and work toward the lesser goals only after the really important ones are well provided for.

Approach to achieving your goals

The minimum time horizon for all types of investing should be at least five years. Whatever your personal wealth goals may be, it is important to consider the time horizon at the outset, as this will impact on your approach to achieving your goals. It also makes sense to revisit your goals at regular intervals to account for any changes to your personal circumstances, for example, the arrival of a new member to the family, or as you enter retirement.

Clearly define your specific goals

As a starting point, consider the goals you set previously, and reflect on what worked and what didn’t and why. Once you’ve done this, it’s time to clearly define your specific goals. Most people tend to set wealth goals that are more about money than about things that motivate them emotionally.

SMART goals you truly value

Goals that are tied to what you truly value are often easier to achieve than goals that are simply tied to money. Part of what gives this goal its power is that it’s SMART – it is Specific, Measurable, Attainable, Relevant and has a Timeline.

Define your goal clearly

A wealth goal is the first step that sets you on a path and should also be:

  • Specific To get wealthier’ is not a specific or clear goal, but ‘to achieve a two-thirds of your previous working lifetime income at 55 when you retire’ is
  • Measurable Set deadlines for your wealth goals, such as the age at which you want to retire, or the timeline for buying a holiday home
  • Achievable Use your own income (and expected income) to set your wealth goals for the future. Don’t count on inheriting money
  • Relevant Create a personal financial bucket list of wealth goals but always view it as a flexible document that will change with time as your interests and life situation changes
  • Timeline – Identify your time frame by categorising your objectives by short-term, medium-term and long-term wealth goals to provide focus and to help match your goals with appropriate savings and investments

A financial to-do list provides important action steps that can help you keep your financial plans on track. Some of these include:

  • Giving your portfolio a regular check-up to make sure your mix of investments accurately reflects your current goals, time frame and risk tolerance
  • Taking full advantage of your employer’s pension plan (if you’re not doing this already)
  • Tracking your spending to see where your money is going
  • Calculating your net worth so that you understand where you stand financially
  • Creating a legacy for future generations and/or charitable organisations that reflect your values

As crucial as a financial to-do list is to your long-term financial security, creating a not-to-do list is equally important. That’s because a not-to-do list can help you avoid some of the mistakes that may be keeping you from making the most of your money. For example, do not:

  • Try to time the market. No one knows for certain which way the market will head next. Instead, be strategic and thoughtful about your investment decisions
  • Make investing decisions in isolation. Rather, consider how each may impact your overall wealth goals
  • Delay saving for retirement. The sooner you get started, the greater the impact time and compounding may have on your ability to build financial security for the future
  • Gain access to your retirement savings unless in an emergency. Taking money from your pension pot is like borrowing from your future to pay for your present needs
  • Ignore the important role risk plays in your portfolio’s ability to grow over time
  • Minimise the impact of inflation on your money’s future buying power
  • Review your investments periodically to make sure they’re performing as expected. If they’re not, be ready to make changes as needed

Changing personal and financial situation

Over time, your personal and financial situation is likely to change. Consider how this may impact your wealth goals, risk tolerance and time frame, as well as your investment and protection planning requirements.

Make sure you have a properly drafted and signed Will. Check to see that your Will (and any trust) accurately reflects your wishes and that the beneficiaries on your pension plans and life insurance policies are up to date.

Is it time you reviewed your wealth goals?

We all have dreams for the future, and many of those dreams require wealth to make them come true. Reaching those milestones starts with setting clear wealth goals. Saving and investing with a goal delivers its own reward: the purchase or life change that you’ve dreamed of and worked to achieve. We’re committed to our clients’ financial success and would like to have an opportunity to review your wealth goals. To find out more, please contact us – we look forward to hearing from you.






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01st Aug

Preserving wealth for future generations BLOG

Preserving wealth for future generations – should you review your situation with further changes on the horizon?

Inheritance Tax (IHT) affects not just the very rich – other people may be liable without realising it. Few taxes are quite as emotive – or as politicised – as IHT.

Give your family lasting benefits

The structures into which you transfer your assets can have lasting consequences for you and your family. We can help you choose structures and trusts designed to protect your assets and give your family lasting benefits.

It is crucial to find out now if you potentially have an IHT liability – or could do so in future years. Historically, IHT planning used to be an activity confined to the very rich. However, growing affluence means that this is no longer the case. Even families and individuals with a relatively moderate level of wealth should consider planning ahead to ensure that their assets are passed on to their loved ones as efficiently as possible.

Safeguarding your own financial future

Property price increases have also dragged many middle-class working families into the IHT bracket. Safeguarding your own financial future is very important, and giving too much away could put this at risk.

At the moment, if your estate is worth more than £325,000 when you die, your assets may be subject to IHT. This means the value of your assets above the £325,000 threshold could be subject to IHT at 40%. 

Passing on assets worth up to £650,000

Married couples and registered civil partners are allowed to combine their allowance, so they can pass on assets worth up to £650,000 before IHT is due.

From 6 April 2017, the Government is adding a family home allowance to the tax-free allowance. It will start at £100,000 per person in 2017, rising to £175,000 by April 2020.

Combined tax-free allowance of £1m

This means that individuals will eventually be able to pass on an asset worth up to £500,000 without any IHT being due. For married couples and registered civil partners, this adds up to a combined tax-free allowance of £1m. However, if your estate is worth more than £2m, the family home allowance will gradually taper away.

This change is designed to allow middle income families whose only large asset is their home to pass it down the generations without paying a significant IHT bill, which in some cases can only be met by selling the property.

Family home allowance draft legislation

The draft legislation currently states that the family home allowance is only applicable if the assets are passed on to children, including stepchildren, adopted and foster children, grandchildren, and other lineal descendants or the spouses of lineal descendants. So if you don’t have children or grandchildren, you may still face an IHT bill.

If you want to move to a smaller property, you will be able to still keep an allowance based on the value of your previous property as long as assets of equivalent value are left to direct descendants.

One of life’s unpleasant facts

IHT is a very complex area of financial planning, and in the UK may be one of life’s unpleasant facts, but IHT planning and obtaining professional advice could help you pay less tax on your estate. To discuss your situation and the options available to you, please contact us – we look forward to hearing from you.



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01st Jul

Lifetime ISA v pension v ISA BLOG

Lifetime ISA v pension v ISA – as from April 2017, a new variant of the ISA will become available to investors under the age of 40, namely the Lifetime ISA, or ‘LISA’.

Investors’ contributions will be limited to £4,000 p.a., but unlike standard ISAs, LISA investments will be topped-up by the Government with a 25% bonus on all contributions made before the age of 50, so that those making the full £4,000 contribution will receive a top-up of £1,000.

Sums invested can be drawn as from the age of 60 to provide income or capital for retirement, or they can be drawn earlier to fund the purchase of a first-time home with a value up to £450,000.  Withdrawals made in any other circumstances will forfeit the Government bonuses and growth on those bonuses and incur a 5% penalty.

Comparing LISAs with pensions, both offer tax-assisted investment growth, but whereas the pension provides tax relief on contributions at the investor’s highest marginal rate, the 25% top-up on the LISA equates to only basic rate tax relief of 20%.  The big unknown here is that the Government may well at some future date (possibly the March 2017 Budget?) reduce the rate of tax relief on pensions.

Another factor favouring pensions is that tax relief is immediate for basic rate taxpayers, whereas the LISA bonus is not paid until the end of the year in which each contribution is made.  Also, pension funds can be drawn at age 55, whereas the LISA investor must wait until age 60.

A major plus point for LISAs is that withdrawals will be tax-free whereas, apart from the 25% which can be drawn as tax-free cash, pension fund withdrawals are subject to income tax at the tax-payer’s highest marginal rate.

So, overall the LISA is likely to be a better proposition for the basic rate taxpayer; and it is markedly superior for anyone who might be a basic rate taxpayer when contributing but a higher rate taxpayer when drawing benefits.

By contrast, pensions are more likely to appeal to people who can claim higher rate tax relief on contributions but expect to be basic rate taxpayers in retirement – subject again to any changes in the relief available on contributions.

Pensions also win if employers are contributing.  LISAs cannot accept contributions from employers, but pension contributions can be paid by employers and have the advantage of being exempt from National Insurance contributions.

Some employees ask their employers to reduce their salary and pay an equivalent amount, plus the employer’s saving in NI contributions, as pension contributions – an arrangement known as ‘salary sacrifice’.  This practice has become so popular (and therefore costly to the Government) that it may not be available for much longer.

The limiting factor with LISAs is the low contribution limit.  This is consistent with the fact that the main beneficiaries will be basic rate taxpayers and new home owners, and suggests that this new product is aimed primarily at the younger generation, who might progressively be weaned off the assumption that pensions (which are expensive for the Government to subsidise) should be regarded as the automatic means of providing for retirement.

For higher rate taxpayers and more mature investors, standard ISA’s (for which the contribution limit will rise to £20,000 in April 2017) will continue to be attractive, ideally as a complement to pensions.  It will not be permitted to invest in both LISAs and standard ISAs.

Dividend changes for employees

With effect from 6 April 2016, the way in which share dividends are taxed has changed; and the change will affect shareholder directors who have benefited from drawing remuneration in the form of dividends rather than salary, and thereby avoided the impact of National Insurance contributions.

Of particularly concern to HMRC have been the personal service companies which have been set up for computer consultants and other freelancers who would otherwise have either been self-employed or employed by the firms for which they work, and thereby subject in either case to NI contributions.

Before the changes, dividends carried a 10% credit, which was added to the amount of the dividend to produce a gross sum on which tax was then levied.  So a £1,000 dividend would give rise to taxable receipt of £1,111.  Now, tax is levied simply on the amount of dividend received.

Under the new arrangements, the first £5,000 of dividends received in any tax year is excluded from tax (although included as income for the purposes of calculating liability to higher rate tax).

Dividends in excess of £5,000 p.a. are subject to tax at 7.5% in the hands of basic rate taxpayers; 32.5% in the hands of higher-rate taxpayers; and 38.1% in the hands of additional rate taxpayers.  The tax rate applicable to trusts is also 38.1%, though the first £1,000 is taxed at basic rate.  However, trusts do not have the benefit of the £5,000 ‘allowance’.

The net result is that it is clearly advantageous for a shareholder director to draw a dividend of up to £5,000 in lieu of salary, because this is subject neither to tax nor NI contributions.  However, the possible savings on larger dividends are smaller.

Basic rate taxpayers and non-taxpayers do not gain any advantage from the £5,000 allowance and will be worse off if they receive dividends in excess of this amount, on account of the 7.5% tax charge.

Investment Drivers

Advocates of behavioural psychology suggest that private investors are influenced by two factors:

The prospect theory – that we hate losses twice as much as we like profits

The status quo effect – that we like what we already own more than what we do not yet possess.

Supplied by SIFA.

No responsibility can be accepted for the accuracy of this information and no action should be taken in reliance on it without advice.  Please remember that past performance is not necessarily a guide to future returns.  The value of units and the income from them may fall as well as rise.  Investors may not get back the amount originally invested.



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01st Jun

How will the new mortgage regulations affect me? BLOG

On the 21st March 2016 new EU-wide rules will come into force that are designed to protect consumers who are taking out credit agreements for residential property.

These rules, known as the Mortgage Credit Directive (MCD), are far reaching and driven by two key considerations:

  • That an owner-occupier’s own home is at risk, so there are potentially significant implications if these borrowers are not adequately protected
  • That buy-to-let borrowers tend to be acting as a business

Whilst many people are already familiar with “buy to let” mortgages, they may not be aware that the new regulations will introduce two new types of mortgage:

  • Consumer Buy to Let
  • Investment Buy to Let

Consumer Buy to Let mortgages are designed for borrowers who have not entered into a mortgage contract for the purposes of a business, often known as “accidental landlords”.  An example of this would be where the property has been inherited and either the borrower or a relation has occupied the property; or where a borrower is looking to let their current home and buy another. These types of mortgage will become regulated. They will benefit from a higher level of consumer protection, such as the right to complain to the Financial Ombudsman and the requirement for lenders to treat consumer arrears reasonably.

Investment Buy to Let mortgages (that are for business/investment purposes) fall outside the remit of these regulations and therefore will not come with any consumer rights.  It is important to note that in the UK the majority of Buy to Let mortgage lenders have agreed to willingly provide information to customers in a way which is clear, fair and not misleading, as well as to lend responsibly and treat customers fairly.

The new MCD rules will also apply to Second Charge lending.

Second charge lending relates to loans secured against your home. These types of arrangement are commonly known as “secured loans” or “second charge mortgages”.  At present second charge lenders are not obliged to “stress test” the affordability of the loans they grant, however from the 21st March 2016 robust affordability assessment will be undertaken before loans are granted. This could cause difficulties for borrowers with impaired credit because impaired credit loans usually carry a higher interest rate/monthly payment and are therefore less affordable.

Bringing the regulation of second charge lending within the same regime as mortgages means independent advisers will need to consider the suitability of these loans when providing advice to clients. This is a positive step for consumers, especially those looking to raise additional funds to pay for certain items such as home improvements because it may be financially advantageous for them to remain with their existing mortgage lender rather than re-mortgage to a new lender, particularly where they are currently benefiting from a favourable rate on their main mortgage.

Adrian Firth, Clayden Financial IFA


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01st May

Offshore shenanigans BLOG

Offshore shenagigans – politicians are inevitably exposed to public scrutiny, and times have changed since a Chancellor of the Exchequer, none other than Winston Churchill, was able to run up massive debts and unpaid bills without public knowledge or censure.  The eternal truth, however, was expressed in the words of the press Baron Lord Northcliffe, that “news is what somebody somewhere wants to suppress”.

The Government and HM Revenue & Customs have become increasingly vigilant over recent years in relation to what they regard as unacceptable ways of minimising tax, and some of the schemes which are now coming under scrutiny were acceptable in their time.  Much water has flowed under the bridge since 1929, when Lord Justice General Lord Clyde said in a judgement “No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores.”

So what are we to make of the recent exposures of Panamanian tax-based investment schemes and press headlines about the legitimacy of lifetime gifts?

Schemes based in obscure third world locations have always been suspect and should be shunned in the same way as Polish property schemes and investments promoted by advertisements featuring scantily-clad girls and bottles of champagne. Equally, the caveat emptor (buyer beware) warning shines brightly over schemes such as those promoted by fraudster Bernie Cornfield in the 1970s, using the slogan “Why work for money when you can make money?”  The old mantra applies that if it seems too good to be true, it probably is.

As regards lifetime gifts, which become free of inheritance tax after seven years, these have been permitted by the UK tax laws for decades, and the only reason they have become press headlines is that they have a benefited a Prime Minister.  So what?!

Clients taking advice from FCA-regulated independent financial advisers have no cause for concern – particularly if the advisers are members of SIFA (Solicitors Independent Financial Advice).  Offensive tax schemes are invariably created by accountants or foreign law firms, to whom only the mega-rich would refer for advice.  IFAs are under strict control of the Financial Conduct Authority and would be unable to obtain the mandatory professional indemnity insurance if they were to over-step the mark.

The closest most IFAs are likely ever to get to offshore activity is to recommend offshore investment bonds, which are simply a variant of the on-shore bond, but based in a jurisdiction with a different tax regime from the UK, which has disadvantages as well as advantages.  Bonds marketed by providers with household names are 100% respectable and, again, have been in popular use for decades.

The Government is keen to encourage people to save and invest, and has specifically created a range of tax-efficient schemes for this purpose, the most valuable being pensions, with ISAs following closely behind.  There is ample scope for returns to be made by sticking to the straight and narrow.

No responsibility can be accepted for the accuracy of the information and no action should be taken in reliance on it without advice. Please remember that past performance is not necessarily a guide to future returns.  The value of units and the income from them may fall as well as rise.  Investors may not get back the amount originally invested.




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01st Apr

Q: I’m self-employed. How does this impact on my mortgage application?

Adrian Firth, Clayden Financial IFA, answers this question posed by Property Writer, Charlotte Smith-Jarvis   (East Anglian Daily Times)

Being self-employed brings many challenges and with 4.62 million people now registered as self-employed, an increasing number are experiencing difficulties in obtaining mortgage funding.

On April 26, 2014, the regulator (the Financial Conduct Authority) introduced new rules for mortgage lenders and advisers in the UK, designed to improve the process of obtaining a mortgage and to ensure they are:

  • suitable for the applicant’s needs and circumstances
  • affordable for them both now and in the future

In the past some lenders offered self-certification mortgages that did not require proof of income.

The default rates for these mortgages were far higher than normal and, because of the harm caused to consumers, the regulator banned self-certification mortgages when these rules were introduced.

This ban has led to a number of existing self-employed borrowers stranded on high interest rate mortgage schemes.

If you are self-employed seeking a mortgage or remortgage the requirements are more onerous than for employed applicants, who often only need to produce three months’ pay slips and bank statements as evidence of income.

Sole traders will generally need to prove profit before tax.  Those who own a limited company will need evidence of their total wage and any dividends.

Some lenders will, where money is left in the company rather than taken as income, take this into account, but others will not.

Most lenders will want to see up to three years’ worth of accounts (or SA302s) and up to six months’ bank statements, so it is helpful if you have these available for review.  SA302s provide a brief summary of the income that has been reported to HMRC.

It documents exactly how much income you have declared and is an easy way for a lender to verify that the income on a mortgage application is the same as you have shown to HMRC.  They assist if you are unable to provide formal accounts.

As there are specialist lenders actively helping self-employed applicants it is essential you seek professional help from an experienced independent mortgage broker.  A number of non-mainstream lenders only require one year’s evidence of income and these schemes may not be available on the high street.

It is also important that independent financial advice is sought in relation to any associated protection arrangements because certain contracts do not adequately cover the self-employed and may not pay out if a claim is made.


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03rd Mar

Brexit: the financial implications BLOG

Brexit: the financial implications – highlighting the uncertainty around the EU Referendum

The outcome of the In/Out EU referendum on 23 June is far from certain. The bookmakers still suggest that the ‘In’ campaign should prove successful, but, with months of political posturing ahead, we have been considering what the financial implications of a Brexit could be.

There have been a range of previous studies published on the subject with a wide range of potential outcomes forecast. Capital Economics were commissioned by Woodford Investment Management to examine the United Kingdom’s relationship with Europe and the impact of ‘Brexit’ on the British economy, and their report draws a measured and neutral conclusion. The report considers several of the most important elements of the Brexit debate including immigration, trade, financial services, regulation and the public sector.

Benefits for certain industries

Annual net migration from Europe has more than doubled since 2012, reaching 183,000 in March 2015, boosting the workforce by around 0.5%. Currently, labour movement within the EU is free, whereas leaving the EU could allow immigration policy to be restricted and focussed on certain skill bases, which could benefit certain industries. Restriction of low-skilled worker immigration could however be detrimental to low-wage sectors such as agriculture, and could increase wage-growth and inflation.

Free trade with EU countries would be impacted. Under the Lisbon Treaty, a country leaving the EU has two years to negotiate a withdrawal agreement, and it is very likely that a favourable trade agreement would be reached in a Brexit scenario, albeit with some potential additional costs to exporters. Indeed, the ability to negotiate our own trade agreements with other non-EU countries may be favourable to going via the bureaucratic processes of the EU, and this could potentially offset some of the additional cost of dealing with EU members.

Saving on red tape

The City’s position as a global financial hub is certainly helped by being part of the EU, allowing unfettered access to European markets to London-based firms. The City currently exports £19.4bn of financial services to the EU, and this would be significantly disrupted in the short term. Over the long term, the UK could broker deals with emerging markets to help allay this impact.

Saving on the red tape and regulation emanating out of Brussels is often cited as a potential positive of Brexit. This might however prove be a smaller boost to productivity, as exporters will still need to comply to easily access the EU, and the UK may therefore decide to retain many EU rules.

Similarly, the UK’s significant £10bn contribution could be saved through Brexit, but in reality this saving may not be fully felt. The economic impact in other areas may offset some of this, and indeed the Government may have additional costs in compensating certain sectors and regions that current receive EU subsidies.

Uncertainty will dominate

In summary, the effect on the UK economy of a Brexit may not prove to be too significant in the long term. However, much will depend on how an unprecedented exit is handled and how the UK can then independently negotiate with other parts of the world.

As the vote draws ever closer, it will be interesting to see whether economic impacts draw more headlines than the current focus on political issues. However, it is hard to currently see how the debate will be dragged too far away from the emotive issue of immigration.

Until such time as the outcome is clear, uncertainty will dominate – something which will not be beneficial for financial markets. In the event of an ‘Out’ vote, the uncertainty will continue for some time, whereas a vote to remain in will provide some quicker clarity. This suggests that financial markets may continue to demonstrate volatility in the months ahead.


All figures sourced from Capital Economics report, published February 2016  –  https://woodfordfunds.com/economic-impact-brexit-report/

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18th Feb

Estate Matters BLOG

Estate Maggers: Structuring your affairs efficiently means starting the correct planning early enough

Inheritance Tax (IHT) is payable by some people that, for the most part, could have been avoided.
If you want your estate to go to your loved ones with the minimum amount of IHT payable, you
should obtain professional advice. There are currently a number of generous reliefs relating to IHT.
Indeed, if the correct planning is started early enough, it may be possible to avoid IHT altogether.

New main residence transferable nil-rate band
From 6 April 2017, there will be a new main residence transferable nil-rate band (family home
allowance) that will apply when a main residence is passed on to a direct descendant. This new
main residence transferable nil-rate band will work alongside the existing IHT nil-rate band, which
is currently £325,000. In the same way as with the current nil-rate band, any unused main
residence transferable nil-rate band will be transferred to a surviving spouse or registered civil

A property which was never a residence of the deceased, such as a buy-to-let property, will not
qualify. The allowance will initially be set at £100,000 in 2017/18, increasing to £125,000 in
2018/19, £150,000 in 2019/20 and up to £175,000 in 2020/21 (and then increase each year in line
with inflation [CPI]).

Inherited from a spouse
It is possible therefore that by 2020/21, an individual will have their own nil-rate band of £325,000
as well as a main residence transferable nil-rate band of £175,000 in respect of their main
residence, plus a nil-rate band of £325,000 inherited from their spouse and a main residence
transferable nil-rate band of £175,000 inherited from their spouse.

This gives the much advertised total of £1 million. It is worth noting that the current nil-rate band of
£325,000 is now set to remain until 2020/21. There is also going to be a tapered withdrawal of the
main residence transferable nil-rate band for estates worth more than £2 million.

Effect of the proposed changes
Few taxes are quite as emotive – or as politicised – as IHT. The structures into which you
transfer your assets can have lasting consequences for you and your family. The
current rate of IHT payable is 40% on property, money and possessions above the nil-rate
band. The rate may be reduced to 36% if 10% or more of the estate is left to charity.
It makes sense to ensure that your affairs are structured in the most tax-efficient way
possible. However, it isn’t easy to keep up with the many exemptions and reliefs available.
So what should you consider?

Lifetime gifts
Lifetime gifts to individuals are potentially exempt transfers and fall outside the scope of IHT,
provided the donor survives at least seven years from the date of the gift.

Trusts can sometimes help you to eliminate unnecessary tax charges, enabling the maximum
possible part of your family’s wealth to be preserved. You may like to transfer part of your wealth to
a family member but still retain control; our specialists can advise on setting up trusts and can take
care of all the administration.

One important way to minimise IHT is to make a Will, so as to leave your family with the maximum
assets and at the least tax cost.

Business and corporate structures
If you have a business, it is also important to examine the structure of your business when
considering your affairs. Changing the structure of a business can have significant tax implications.

Enjoy special concessions
The treatment for IHT purposes is more favourable for some assets than others. Business assets
and shares in unquoted companies, agricultural land and works of art, for example, all benefit from
special concessions which may assist in passing wealth from one generation to the next.

Charitable gifts
Making gifts for charitable purposes can be highly effective in potentially reducing an IHT charge
on death.

Are your needs fully considered?
Without the right advice and careful financial planning, HM Revenue & Customs could become the
single largest beneficiary of your estate following your death, which is why you should obtain
professional financial advice to ensure your needs are fully considered. To review your situation,
please contact us.

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21st Jan

Pension Planning Apathy BLOG

More than ten million pots are being left largely un-monitored

Individuals are living longer, meaning that savings have to fund a longer period of retirement.
However, there has been a well-documented decline in pensions saving over time. Many people do
not think about retirement as they consider it’s too far in the future and almost two thirds (63%) of
over-45s who are not yet retired admit they pay little or no attention to their pensions, leading to
more than ten million pots being left largely un-monitored[1].

The findings form part of research from Aviva which also highlights that two fifths (41%) of over-45s
never spend any time planning and reviewing their pensions, while almost a third (29%) spend just
one day a year or less doing this.

Failing to dedicate any time
Those who are further away from retirement are most likely to spend no time reviewing their
pension, but a quarter (25%) of those retiring in two years or less still fail to dedicate any time
towards doing this.

Among those with more than one pension, just 27% manage them all very closely, while 34%
ignore their secondary pots completely – including a worrying 24% who ignore their main pension
pot too. Even among those who have just one pension pot, 33% do not pay any attention to it.

Unclear about the types of pensions
The majority (61%) of over-45s with a personal pension scheme have only joined one scheme,
although more than a quarter (28%) have started two or more. A similar proportion (29%) of those
with the most common type of company pension – defined contribution – has two or more.
However, many over-45s aren’t sure how many pension schemes they have started. Overall, 6%
don’t know how many personal pension schemes they have, rising to 7% who are unclear on the
number of defined contribution schemes and 9% who don’t know how many defined benefit
schemes they have. This may suggest that some savers are unclear about the types of pensions
they have and/or are not closely involved in managing them.

Too late to make any improvements
Half (49%) of over-45s do nothing about the routine information they receive about their pension,
including one in ten (12%) who don’t even read it. Only a third (37%) use the information to check if
their pension savings are on track and act upon it. An even smaller proportion (7%) discuss this
with a professional financial adviser.

One in ten (11%) over-45s ignore their annual statements because they say they don’t know how
to manage their pensions, while the same proportion believe their pensions are so small they aren’t
worth bothering with. 8% delay looking at them until they are ready to retire – when it could already
be too late to make any improvements on their financial situation.

Top three reasons that over-45s ignore their pension statement

I don’t know how to manage my pensions (11%)

My pensions are worth so little they’re not worth bothering about (11%)

I prefer to look at it when I’m ready to retire (8%)
However, people tend to make more effort to monitor their pensions the closer they are to
retirement – for example, only 7% of those retiring in two years or less believe their small pension
pots are not worth the effort, compared to 11% who are retiring in six to ten years.

Multiple pension schemes
Just 14% have consolidated their pension pots or intend to do so in the future. A fifth (17%) will
keep their multiple pension schemes separate, and 13% are waiting for their pension provider to
contact them before deciding what to do with their pots. More than one in ten (14%) prefer to keep
things simple by having just one pension pot and don’t intend to change this in the future.
Of those who have consolidated their pots, 21% did so because they took the advice of their
professional financial adviser – however, nearly the same proportion (19%) did so because they
found it easier to manage.

Planning in an informed way for retirement
An alarming proportion of the UK’s pension pots are being left un-monitored, with many simply
ignoring their pension statements and hoping for the best. At the heart of this is how involved
people are with their pensions. At the very least, people need to understand what their total
savings are across all of their pension pots, so they can plan in an informed way for their
retirement. To discuss any concerns you may have about your retirement provision, please contact
us – we look forward to hearing from you.

Source data:
The Real Retirement Report is designed and produced by Aviva in consultation with ICM
Research. The above findings are based on an online survey carried out among more than 1,500
over-45s who have not yet retired.
[1] ONS Pension Trends Chapter 7 (October 2014) estimates there are 8.1 million active
occupational pensions and 8.2 million active members of private pension schemes. 63% of 16.3
million = 10,269,000.


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