Savings

Savings

Your Guide to Tax Year Planning

Financial Planning, Investments, ISA, Pensions, Savings, Tax Planning
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We all need to pay our taxes however according to Unbiased UK taxpayers are expected to give away around £4.6 billion in unnecessary taxes.

Yet there are legitimate opportunities to help you reduce your tax bill. You may be unaware of the opportunities,  how to take advantage, or simply not had the time to take action.

With the end of the 2016/2017 tax year fast approaching we wanted to highlights some key tax planning opportunities.

Download Your Guide to Tax Year Planning

2016/17 Your Guide to Tax Planning

There is no doubt that Tax is a complex area. If you have multiple sources of income and/or run a business. However many end up paying more than they should out of fear of paying too little tax .

The most common areas where we find tax planning opportunities are:

  • Tax -efficient Savings
  • Retirement planning
  • Inheritance tax
  • Capital gains tax

A good independent financial adviser or an accountant will help you identify tax planning opportunities. Even small tax planning steps can add up to a significant saving in the long term.

If you would like to explore the options available to you in preparation for the 2016/17 tax year end, please contact us on the number below:

Call 02886 440475 to book an initial consultation now

Please note that the Financial Conduct Authority does not regulate some forms of tax advice.

What you need to know about the Autumn Statement 2014

Financial Planning, General, Investments, ISA, Pensions, Savings, Tax Planning
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What you need to know about the Autumn Statement 2014

On 3rd December 2014 George Osborne gave us his Annual Autumn Statement which for reasons best known to someone else is in December.  But that’s not important right now and if you’re like me it will be googled later.  Anyway here are some of the main points relevant to your personal financial planning broken down into relevant headings.

Income

The income tax personal allowance will rise to £10,600 in April 2014 which is £100 higher than expected. The higher rate tax threshold will also increase to £42,385 in April, again £100 more than expected.

Anyone in receipt of Universal Credit will find their benefits frozen for the coming year.

Savings

The ISA limit has been raised to £15,240 in April.  The chancellor has also said that with immediate effect when the saver dies their spouse will inherit the ISA and be able to maintain its tax free status.  This could be very interesting for future IHT planning.

Pensions

As expected the Chancellor announced that if you die prior to age 75 in receipt of a joint life annuity pension your dependents with receive the dependents income tax free.

This brings joint life annuities in line with flexi-access drawdown but there was no mention of final salary schemes dependents pensions so watch this space.

There were no changes to the tax relief through pensions either before or after age 75.

The single tier state pension is expected to start in April 2016 at £151.25 per week.

Property

As usual the Government wants a headline maker in the Autumn Statement and this year it’s stamp duty.  The stamp duty system has been revamped from a stepped to a tiered charging system as show below.

[table width =”100%” style =”table-striped table-bordered table-hover” responsive =”true”] [table_head] [th_column]Purchase price[/th_column] [th_column]Stamp Duty[/th_column] [/table_head] [table_body] [table_row] [row_column]First £125,000[/row_column] [row_column]0%[/row_column] [/table_row] [table_row] [row_column]£125,001-£250,000[/row_column] [row_column]2%[/row_column] [/table_row] [table_row] [row_column]£250,001-£925,000[/row_column] [row_column]5%[/row_column] [/table_row] [table_row] [row_column]£925,001-£1.5m[/row_column] [row_column]10%[/row_column] [/table_row] [table_row] [row_column]£1.5m+[/row_column] [row_column]12%[/row_column] [/table_row] [/table_body] [/table]

For example if you buy a property for £275,000 you will pay a total of £3,750 in stamp duty which equates to 1.36%. Under the old regime you would have paid £8,250 at 3% on the whole lot.

5 Year Anniversary for 0.5% BoE Base Rate

Business, Mortgages, Savings

The Base Rate stays at 0.5% for 5 years running

Interest rates will remain at 0.5% for another month after today’s announcement by the Bank of England.

At this point economist and advisers all over the UK will be making their predictions as to when the rates will rise. My advice is simple for those with mortgages, stress test your finances by calculating the effect of an interest rate rise.

Check out our earlier post What if interest rates rise?

For savers it’s a little more complicated, savings rates are almost negligible so you may need to consider investing your savings.  But before you invest make sure you understand and are comfortable with the risks.  There is no point chasing returns if you can’t sleep at night worrying about the stock market.

If you need advice on mortgages, savings or your investments call 02895 815000.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

The value of units can fall as well as rise, and you may not get back all of your original investment.

The End is Nigh… well the end of the tax year that is

Business, Financial Planning, Investments, ISA, Pensions, Savings, Tax Planning
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The End is Nigh… well the end of the tax year that is

Last minute tax planning is less than ideal but it’s better than no tax planning.  Every year we all get our tax allowances and every year we get the same warning before April 5th… use it or lose it.

The End is Nigh_1038x460

What are the tax allowances for this year?

I’m going to limit this post to the main two tax allowances, Pensions and ISAs. Simply because for most of the population these are more than enough to cover our financial planning needs.

ISA Allowances 2013/14 & 2014/15

Up to the 5th April 2014 you can invest up to £11,520 in ISAs of which £5,760 can be invested in a Cash ISA. Remember there is now carry forward of unused allowances with ISAs.  From 6th April your annual ISA allowance will increase to £11,880 with a maximum of £5,940 in cash.

For those who have a little more to invest and want to create a fund for their child there are allowance for Junior ISAs and Child Trust Funds as detailed in the table below.

2013-14

2014-15

Individual Savings Account (ISA) subscription limit
   Overall limit  £        11,520  £        11,880
   of which cash  £          5,760  £          5,940
   of which stocks and shares  £        11,520  £        11,880
Junior ISA subscription limit  £          3,720  £          3,840
Child Trust Fund (CTF) subscription limit  £          3,720  £          3,840

Pension Allowances 2013/14 & 2014/15

Up to the 5th April 2014 you can invest up to the lower of 100% of your gross earnings or £50,000 in a registered pension scheme.  From 6th April your annual pension allowance will reduce to £40,000 however carry forward is allowed under certain rules.

Although it won’t affect most of us it’s important to remember that there is a lifetime allowance to consider.  This is being reduced from £1.5m to £1.25m from 6th April 2014.

Again for those with a little more to invest there are children’s allowances available.

Beware the Tax Dog

Remember that just because it is tax efficient doesn’t necessarily mean it’s the most suitable investment for you or your objectives.  Think carefully about what you want to achieve before making any investment.  Obviously as a Financial Planner I am going to recommend getting advice but if you are in any doubt on how to proceed then get in touch on 02895 815000.

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Bank of England Base Rate Remains in an Oasis of Calm

Business, Mortgages, Savings

Bank of England Base Rate going nowhere

Hello, the talk tonight will be of the continuing low BoE base rates. We are only a month away from the 5th anniversary of the base rate being reduced to historic lows of 0.5%. It seems as though these low rates may live forever.

If you are worried how an interest rate rise will affect your finances, then don’t go away, read my previous post. Personally I acquiesce that the BoE is unlikely to raise the base rate until 2015. That said, I don’t think that Lenders will continue to offer the low fixed mortgage rates we’re seeing at the moment for very long either. Existing mortgage borrowers who are on their lender’s standard variable rate are going to have to make some decisions. These are likely to be along the lines of either paying a little more now or paying a little more later.

If you have money held on deposit, don’t look back in anger over the past five years of low returns. Instead go let it out little by little and soldier on.

Some might say that monthly posts about nothing happening with the base rate are well… whatever. I look at it as an opportunity to get mucky fingers and slip as many song titles from a certain Mancunian band in, just for the fun of it. D’you know what I mean?

So how many song titles did you count?

What if interest rates rise?

Business, Mortgages, Savings
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How would an interest rate rise affect you?

The Bank of England (BoE) Base Rate has been held at 0.5% since March 2009 and they have previously indicated that they will not consider a rate rise until the UK unemployment rate is below 7%.  Even then the BoE has announced that a rate rise isn’t guaranteed so we can all relax and worry about it in a year or so, right?  Well, no.

BoE Base RateIt’s all well and good that the rate is unlikely to rise in the short term but it is essential to consider the effect of a rate rise on your finances before making any decisions.  Variable mortgage rates tend to increase directly in line with the BoE base rate and this in turn increases the monthly mortgage payment. A 1% rise in interest rates will add an extra £83.33 per month onto a £100,000 mortgage.  If this would seriously affect your monthly budget than a fixed rate mortgage may be a better solution for you.

Bond investments are also affected: as interest rates rise, bond prices go down in order to bring the rate of income they pay back in line.  Businesses are also affected by rising interest rates in the form of higher borrowing costs, which can ultimately hit the share price and have a knock-on effect across your investment portfolio. As usual keep an eye on your long term goals and assess if you are still on track before making any decisions in any circumstance.

From Acorns Financial Planning Ltd are based in Tyrone, Mid Ulster and provide a comprehensive Financial Planning service to both personal and business clients across Northern Ireland and the UK.

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Status Quo for the Bank of England Base Rate

Business, Mortgages, Savings

Bank of England Base Rate remains at 0.5%

The BoE Monetary Policy Committee has today again announced that rates will continue to be held at 0.5%.  The base rate has been held at the record low of 0.5% since March 2009.  Having indicated that the rate may not even consider a rate increase until the unemployment rate falls below 7% back in August, the Bank has given no further guidance.

The latest figures have the unemployment rate at 7.4% and some experts expect that it will fall below 7% this year.  A few months ago the Bank predicted that unemployment would not reach 7% until 2016 which means an interest rate rise may happen sooner than we thought.

I don’t expect the Base rate to rise but like a good former boy scout I recommend that you ‘be prepared’. Do your sums and make sure you understand the consequences of any rise in interest rates for your personal and/or business finances.

In other news I have decided, on behalf of From Acorns Financial Planning Ltd, to sneak rock band names into random post titles.  Status Quo have not made any comment that I know of regarding the Bank of England Base Rate.

What you need to know about the Autumn Statement 2013

Business, General, Help To Buy, Mortgages, Pensions, Savings
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What you need to know about the Autumn Statement 2013

Income

The income tax personal allowance will rise to £10,000 in April 2014 as expected and will rise in line with inflation from 2015/16.  Inflation will be measured by the Consumer Prices Index (CPI) in this context.

From April 2015, a new transferable tax allowance will be made available for married couples and civil partners who are basic rate taxpayers.  This will enable people to transfer £1,000 of their personal allowance to their respective partner.

Benefits

A new welfare spending cap is to be introduced in 2014, although this will not include the cost of providing State pensions or Jobseeker’s Allowance.

Those claiming benefits aged 18-21 will need to demonstrate basic English and Maths, take skills training or they will risk losing their benefits.

Benefit claimants who are out of work for longer than six months will have to start a traineeship; do work experience or a community work placement rather than risk losing their benefits.

Some change is always good

Pensions

The Basic State Pension will rise by £2.95 per week in April 2014, meaning a single pensioner will now receive £113.10 per week.

Plans were announced to increase the state pension age to 68 in the mid-2030s and to 69 by the late-2040s, based on the latest life expectancy figures.

For those with sizeable pension pots there has been no change to the way GAD rates are calculated for Income Drawdown.

Savings & Investments

The Annual Allowance for Individual Savings Accounts (ISAs) will rise to £11,880 in 2014/15 of which £5,940 can be invested in cash.

Junior ISAs and Child Trust Fund (CTF) limits will also increase to £3,840 per annum.

In a drive to encourage funds to locate in the UK, Exchange-Traded Fund (ETF) stamp duty will be abolished.  This could save investors 0.5% on domiciled ETFs next year.

Mortgages

It was announced that two more lenders, Aldermore and Virgin, are expected to join the Help to Buy scheme in December 2013.

Businesses

From April 2015 employers will no longer have to pay employer National Insurance contributions for 16 to 21 year old employees, a potential saving of £500 for each employee on £12,000 per annum.

The business rate relief scheme for small businesses will be extended for a further year and end in April 2015. Additionally, the planned rate increase for all business premises will be capped at 2% from 2014.  A discount of £1,000 will be available for some small businesses and a 50% business rates discount will be available for those taking on vacant units.

Taxes

Importantly for commuters the planned fuel duty rise next September of 2p a litre was cancelled, that’s as good as we can hope for in terms of fuel duty.

From April 2015 foreign residential property owners will pay capital gains tax (CGT) future gains on the sale of UK property.

We already mentioned the removal of stamp duty on the purchase of ETFs in the Savings & Investments section.

The Autumn Statement also contained a package of five measures to address tax avoidance and tax evasion.

Bank of England Base Rate to remain at 0.5%

Mortgages, Savings

Bank of England Base Rate to remain at 0.5%

The BoE Monetary Policy Committee has announced today that rates will be again held at the record low of 0.5%.  The base rate has been held at 0.5% since March 2009 and the Bank has indicated that the rate will not even consider a rate increase until the unemployment rate falls below 7%.

The latest figures have the unemployment rate at 7.6% and inflation has fallen to 2.2% according to the Consumer Price Index (CPI)

This is further good news for existing mortgage borrowers, especially those on low variable rates and more bad news for savers with money held on deposit.

Bank of England Base Rate held at 0.5%

Mortgages, Savings

Bank of England Base Rate held at 0.5%

Although not much of a surprise the BoE Monetary Policy Committee has announced that rates will be held at the record low of 0.5%. The base rate has been held at 0.5% since March 2009 and the Bank has indicated that the rate will not rise until the unemployment rate falls below 7%.

Under the guidance of Mark Carney the Bank predicted that the unemployment rate would not fall below 7% until 2016 though, many experts feel that given the strength of UK’s economy this could happen in 2015. The June-to-August figures have the unemployment rate at 7.7%.

Good news for existing mortgage borrowers, especially those on low variable rates but continuing bad news for savers with money held on deposit.