News Bites
Congratulations – Long Term Care
Athena are pleased to announce that both Carrie Devonshire and Linda Van Meurs have recently passed the Long-Term Care Insurance qualification CF8.
With an ageing population Athena felt this was an important qualification to attain so our clients are even more assured of being well looked after throughout each and every stage of life.
The exam covers all taxation, regulation, legal and advice issues relating to this aspect of planning. So, with this up to date knowledge having been examined so thoroughly recently, if you have any questions in this area in connection to yourself or your loved ones, please feel free to get in touch and ask.
We’re always here for you.
New member of the team
We are excited to welcome Linda van Meurs to our expanding team. Linda joins us with a wealth of Financial Planning knowledge and is here to work with you towards your Financial Planning goals.
Linda can be contacted at the office on 01732 460521.
The ‘Out of Office’ has gone on holiday!!
With July and August now a distant memory, the ‘Out of Office’ message appears to have now gone on a well-deserved holiday itself! With the last of our client’s returning from their summer break within the next hour or so, everyone is now back at their desks with renewed vigor and refreshed minds.
The focus has returned to making sure that the years’ goals and objectives which were set early in January, are now within reach, in order to make 2016 a success when we all reflect in a few months’ time.
Planning for a successful year is key, not only personally and professionally, but financially too. Whether it is the finances of the business you run or the finances of your family, planning is key to ensuring the outcome you desire. By engaging with your finances, understanding your aims and objectives, you can establish a route map of the journey which needs to be undertaken to ensure you achieve a successful outcome.
Route maps at the start of the journey are vital, however, I would suggest that checking the route map throughout the journey is possibly even more pivotal to successfully arriving at your destination.
Imagine, if you will, the plane taking off this lunchtime heading for JFK in New York City. The destination is known, the route is plotted with all currently known factors worked into the plan. From the minute the plane takes off, yes it continues its trajectory, and its course, but it may require adjustment at any point in its 7 hour flight-time, in order to ensure it remains on course to successfully reach its destination as smoothly as possible.
Planning your finances is no different. Know your destination, know your timescales, maybe even plot the route map yourself at the start if you are happy to do so. Then check, check and check again. This way you can be as sure as you can, that just at the point you need your hard earned monies to come into their own, they will be ready and waiting for you and your family to use as you wish!
At Athena we are very used to helping you work through your aims and objectives, and to putting together a route map with you to guide you there. With the current headwinds of the US Presidential Elections, Hard or Soft Brexit and any other socio-geopolitical factor which will undoubtedly come into play, we will then work with you to keep you on course for your own successful financial outcome at the time of your choosing.
So, perhaps as you are re-engaging with the objectives you set early this year, now is a good time to get your financial route map back out (or even up and running!), check your current course, and make sure you are still on track to make the very most of every opportunity 2016 has to offer you. Check the foundations of your family are protected as you wish, check that you are invested as you should be for your risk-profile, using the very best funds you can aligned to your risk profile, and check that every applicable tax wrapper is considered within your planning so you arrive at the end of this year’s financial journey on 6th April 2017 in the best possible state for your longer term destination.
As the directors of Athena and Chartered Financial Planners, both Colin and I would be delighted to assist and advise you in any way we can, and with almost 40 years planning between us, we’re very strong on navigating a successful path through headwinds!
Pop in to see us or call 01732 460521 or email me carrie@athenawealthplanning.co.uk
In the meantime, have a super October all.
Carrie Devonshire BSc(Hons) FPFS
Director and Chartered Financial Planner
This article is considered to be general market or informational commentary and does not constitute any type of investment or other professional advice. It is not a recommendation, nor does it take into account the investment objectives, financial situations or needs (including tax) of individual clients. This document is not intended for, and should not be construed as an offer, solicitation or recommendation to buy or sell any specific financial product or instruments, or to participate in any investment or (other) strategy. You are recommended to seek advice concerning the suitability of any investment from your independent financial adviser. Investors should be aware that past performance is not an indication of future performance and the value of investments and the income derived from them may fluctuate and you may not receive back the original amount you invested.
Athena Wealth Planning is an Independent Financial Adviser and is not tied to one product provider or marketing group. We are authorised to advise on the products of different companies. Athena Wealth Planning Ltd is authorised and regulated by the Financial Conduct Authority FRN 627636: and registered as a limited company at Companies House, England, Company number 9086612. The registered address is 61a Walton Street, Walton on The Hill, Surrey, KT20 7RZ. All comment on tax and investment is based on our understanding of current law and practice and should be referred to your accountant. We recommend that you confer with your accountant before investing in products or investments which depend on tax relief for part or all of their returns.
Keep Calm and Carry on Planning
Goodness there’s a lot of noise about at the moment! And I don’t mean the storm raging in the skies above me as I write this, nor the thunderous roar of the crowd as England left the Euros last week in a rather ‘disappointing’ game against Iceland!
I, as a Financial Planner, of course mean the ‘noise’ following the results of the EU Referendum last Friday morning. No doubt that day, 24th June 2016, will be in the minds of the UK, Europe and the World for some time to come.
Whether you were Bremainer or a Brexiter, one thing is for certain, there is a lot of uncertainty, a large degree of political unrest, and lots of people, making lots of noise, both at home in our country, and in the neighbouring Eurozone.
The markets over the last week have been interesting to watch, as have the headlines associated with them. Wednesday 8th June the FTSE-100 was 6,301, Tuesday 14th June saw the FTSE-100 at a level of 5,923, following which it saw steady climb as the Remain campaign seemed to be gathering momentum. Over the next 9 days until it closed on the evening of 23rd June, the market climbed to 6,334, an increase of 6.95% in 7 working days. The morning of the 24th the market fell in the immediate opening session to 5,850, but by the end of the day had rallied to 6,138, now at 6,370 (midday on Thursday 30th June).
However, if you had read the headlines of the papers, with varying degrees of content, you could be forgiven for thinking that we were propelling ourselves off the edge of the market cliff face and heading for very deep waters.
True, some assets and stocks have been hit very hard, primarily concerned with the outcome of the invocation of Article 50. On the reverse, some assets and stocks have shown resilience and some assets and stocks have shot forward.
It goes without saying that if you have a narrow portfolio invested in a small number of stocks or asset classes, whether your portfolio is £1,000, £100,000, £1m or more, you are more likely to be subjected to far greater volatility, especially in times like these. If you happen to be in the resilient and growing stocks then you’re in a happy place, if you are at the other end, then perhaps less so.
We have always been, and remain, great advocates of Multi-Asset investing. This means investing across a wide and diversified range of assets, and doing so in a manner where professional fund managers make decisions in line with the risk mandate of a given portfolio. The simple rationale for this being that for longer term investment, this provides a large degree of the upside of the markets, with a lower degree of volatility than the markets themselves. A little bit like having your cake and eating it, only when you are looking after other people’s money it’s really, really important that you do it well.
Thankfully that’s what we do best. Looking after our client’s monies through long term financial planning, and doing so in a way that our clients not only understand exactly what is happening, they can see it in front of their eyes, and, no word of a lie, they even come to enjoy it! What better job could you want – to see someone’s dreams come true, having looked after and advised them for years!
So, we say, Keep Calm and Carry on Planning. Engage with your professional advisers, this is when you need them most, and by working with them we hope that you are able to navigate the ‘sea of noise’ and make the decisions that are right for the financial future of yourselves and your families.
Have a great summer!
Carrie
The Sun has Risen on the New Financial Year of 2016-2017
This morning saw the dawn of the new tax year, 2016-2017, and the application of many new rules which were announced in the Autumn Statement and Spring Budget.
With the turn of the tax year, it’s always a good idea to make sure that your early planning is up to scratch, fit for purpose, and in line with the new and current legislation.
Here are some early planning tips that would be worth considering:
- The new savings income allowance of £1,000 a year for non and basic rate tax payers and £500 a year for higher rate tax payers. There is no savings income allowance for additional rate tax payers. Consider structuring cash holdings and interest bearing investment as efficiently as possible.
- Structuring your portfolios to take advantage of the reduction in Capital Gains Tax where possible and applicable, new rates of 20% and 10% applying to all but gains on residential property and carried interests.
- The ISA allowance remains at £15,240 this year, with the new Lifetime ISA (LISA) arriving in 2016/2017.
- Are you using or planning use the Help to Buy ISA this year and do you know how this interacts with the full ISA allowance? It’s different for cash and investment ISAs, take care here not to exceed allowances.
- Does the new tapered annual allowance for pension affect you? If so, consider the contributions that you are making and allow for any potential reduction.
- Does the reduced pensions Life Time Allowance affect you? If so speak to you adviser as to whether you may be best placed to apply for Fixed Protection later this summer – there are criteria for this, which come into effect on 6th April so don’t wait until the summer to start looking into this.
- Consider paying regular amounts into your ISAs and pensions if affordable as this stops or reduces the search for lump sums of capital in 12 months time.
The start of the tax year is often as busy as the end to make sure the planning is in place for as efficient a year as possible, so think about getting your planning head on now and making best use of everything at your disposal for the full 12 months of the new year.
If you would like a copy of our Budget Summary to help you, please email adviser@athenawealthplanning.co.uk and we will send you a complimentary copy by return.
As always, if you or anyone you know, would benefit from reviewing their finances, please do get in touch.
Happy New Tax Year!!
Carrie Devonshire BSc(Hons) FPFS
Director & Chartered Financial Planner
This article is considered to be general market or informational commentary and does not constitute any type of investment or other professional advice. It is not a recommendation, nor does it take into account the investment objectives, financial situations or needs (including tax) of individual clients. This document is not intended for, and should not be construed as an offer, solicitation or recommendation to buy or sell any specific financial product or instruments, or to participate in any investment or (other) strategy. You are recommended to seek advice concerning the suitability of any investment from your independent financial adviser. Investors should be aware that past performance is not an indication of future performance and the value of investments and the income derived from them may fluctuate and you may not receive back the original amount you invested.
Athena Wealth Planning is an Independent Financial Adviser and is not tied to one product provider or marketing group. We are authorised to advise on the products of different companies. Athena Wealth Planning Ltd is authorised and regulated by the Financial Conduct Authority FRN 627636: and registered as a limited company at Companies House, England, Company number 9086612. The registered address is 61a Walton Street, Walton on The Hill, Surrey, KT20 7RZ. All comment on tax and investment is based on our understanding of current law and practice and should be referred to your accountant. We recommend that you confer with your accountant before investing in products or investments which depend on tax relief for part or all of their returns.
It’s more of a ‘Not Now’ than a ‘No’
The money and business papers have been full of The Chancellors stay of execution this weekend with regards to sweeping reforms of the pension tax relief system. It was widely expected that following the announcement of a(nother) pension consultation, this time looking into pension tax relief, The Chancellor would take the opportunity to make significant changes in next Thursday’s Spring Budget.
The Sunday papers have been full of it for weeks now, with even the former Minister for Pensions stirring up a hornets nest with his thoughts on the subject.
So, it is interesting to read the many articles written as to where the change of heart has come from, and the theories behind the sea change. Mine is not to speculate, just to continue working diligently with clients, continuing to advise them on how best to use their allowances to achieve their aims. The good news is that instead of the pension tax relief doors being effectively closed on Budget Day next week, there’s more time to work with more people, at least until pension tax relief reforms rears its head again!
Here’s how the BBC reported it – http://www.bbc.co.uk/news/uk-35732604
As always, any questions, just shout, and in the meantime, have a great week everyone!
The Cold Wind Doth Blow…… Are Your Business Foundations Strong Enough?
After a few weeks of tax planning and tax year end discussions, I thought the weather seems appropriate to change focus for a little while and to look at businesses, and how they secure their foundations to make sure they can weather unforeseen circumstances.
Most partners and directors will pay high levels of attention to the daily operational running of their business, they will know their turnover, profit margins, operational cash flow requirements etc, and without that, it’s difficult to understand the success or otherwise of a business.
However, what about the longer game? Not just ‘what is the profit’? but the ‘how, why and who?’ of the profit conversations? Not just, ‘what is the dividend payment’ but the ‘how, when and to whom?’ dividend conversation.
The next few weeks then, as the British Isles are battered by more storms (I’m not running a book on how many more letters into the alphabet we’ll get!), I’m going to look at securing the foundations of your business, to make sure that regardless of what’s going on outside or inside your walls, your business, profit, and your dividends are as secure as they can be, because that way you can sleep safe at night, knowing that you, and your family (which is why most of us toil as hard as we do each day, right?!) will be financially secure regardless.
This week, let’s consider the establishment of a business first. Often done with money made in a previous life, through employment, bonus, inheritance etc. An initial cash injection into a company to get it off the ground, to ensure bills can be paid as the business establishes itself, and very often the life blood of the business for several months/years, until the business is able to financially stand on its own two feet. Consider the director(s) who put the money into the business, always done in good faith, and always on the understanding that this is a ‘loan’ that will be repaid when the company is able to do so. In the normal course of events, of course this happens, a few years down the line, and the life blood loan is no longer required.
What happens though when the health or life of the generous director changes? What happens if he needs his loaned monies to assist him recover from ill-health? What if his estate needs the money back to assist financially after his untimely death? The things that we would hope would never happen, but the things that could rock the foundations of the business if they did. Does the business have the capital in a lump sum to repay? What impact does the removal of a significant lump sum have upon the trading ability of the business? What happens to the ill director or his estate if the business can’t repay the loan and has to take drastic action writing off any hope of getting the initially loaned monies back?
This is the first step in securing the foundations of a business – looking at the liabilities, not just to your suppliers and contacts, but even more importantly to your fellow partners/directors, and making sure that you have the wherewithal to repay in the event of the unthinkable happening. Not leaving the door to your business wide open for the storm of the unthinkable to rage through and damage anything in its path.
Financial planning in this context looks after you, your family and your business, and (in my opinion) any planner worth their weight will have this high on the meeting agenda when you sit down to your annual review. With many of those reviews happening in the coming weeks as tax year end approaches, it’s a great time to consider your own position, and that of your co-directors and your business and make sure you take steps to start to protect the foundations of your business.
Needless to say, if you need help and assistance, we are adept at planning in this area, and are very happy to speak to you.
Part Two next week, so in the meantime, have another great week, let the storms rage as you plan your own security!
Carrie Devonshire BSc(Hons) FPFS
Director & Chartered Financial Planner
This article is considered to be general market or informational commentary and does not constitute any type of investment or other professional advice. It is not a recommendation, nor does it take into account the investment objectives, financial situations or needs (including tax) of individual clients. This document is not intended for, and should not be construed as an offer, solicitation or recommendation to buy or sell any specific financial product or instruments, or to participate in any investment or (other) strategy. You are recommended to seek advice concerning the suitability of any investment from your independent financial adviser. Investors should be aware that past performance is not an indication of future performance and the value of investments and the income derived from them may fluctuate and you may not receive back the original amount you invested.
The story of the £100,000 – £121,200 income trap and the £12,700 of tax in this bracket alone that never makes it into your bank account.
Following on from last week’s NewsBite and the keen interest shown by many, I thought we’d take the discussion one step further……!
It’s not uncommon for us to see client incomes north of £100,000. Not all the time, and not everyone, but certainly not uncommon. Once you hit the £100,000 level, several things start to happen. One of those things is that you enter the top 1% of incomes in the UK, no mean feat in itself, but did you know that you also start to lose your personal income tax allowance? For each £2 you earn over this level, you lose £1 of your personal allowance. Translating that into English means that by the time you have reached an income level of £121,200, you have lost your personal allowance entirely. The effective tax rate in this income range is 60%, and that’s before you add in National Insurance contributions…….. shall I go on? On the £21,200 of earnings immediately over £100,000, £12,700 goes in tax, with the remaining £8,480 being paid to you.
This is a horrible income area to be in, granted, it could be looked upon as fortunate that you are earning sufficient to be in this position, but if you’re in it, it’s not a pleasant feeling – more of what you earn is going in tax, than into your bank account – not the most motivational speech I’ve ever heard.
However, not to be the bearer of doom and gloom, there may be something that can be done to help you. We look after many clients in this position and have been able to advise them on a course of action which can re-instate their personal allowance, in part or in full, and sometimes go even further that, and save even more tax. Linking directly into last week’s NewsBite, there is quite possibly one last opportunity that you can affect this predicament fully. Next tax year you may be able to mitigate the position partially, but, we believe that this will be the last year where you may be able to work to reinstate the whole of your allowance and regain the full impact it once had upon your bank account.
It goes without saying that each individual has different circumstances, and that careful planning and work with a suitably qualified financial adviser is required. The weeks to 16th March (the day The Chancellor will deliver his Budget Statement) are rolling along, and so, perhaps as you read this with your cup of tea, you will pick up the phone to your planner and make the time to see them and start your conversation. Please, please do not leave it too much longer, this planning takes time, and your adviser will be grateful that you have given them the opportunity to help you as best they can.
Have a great first week of February!
Carrie Devonshire BSc(Hons) FPFS
Director & Chartered Financial Planner
This article is considered to be general market or informational commentary and does not constitute any type of investment or other professional advice. It is not a recommendation, nor does it take into account the investment objectives, financial situations or needs (including tax) of individual clients. This document is not intended for, and should not be construed as an offer, solicitation or recommendation to buy or sell any specific financial product or instruments, or to participate in any investment or (other) strategy. You are recommended to seek advice concerning the suitability of any investment from your independent financial adviser. Investors should be aware that past performance is not an indication of future performance and the value of investments and the income derived from them may fluctuate and you may not receive back the original amount you invested.
Why you may wish to consider getting your financial ducks in a row rather sooner than 5th April!!
Pension Consultation Papers don’t normally spark the ears of the general public, this tends to be reserved for the pension ‘geeks’ amongst us, a category of which I am absolutely convinced applies to yours truly!!
However, the current pension consultation is interesting to all, really it is, bear with me! Initially planned to be announced in October, delayed until the Autumn Statement, and now on the agenda for the Budget in 7 weeks time (on 16th March) this consultation is specifically looking at the tax relief applicable to future pension contributions.
The Chancellor appears to be minded to introduce a flat rate of tax relief on all pension contributions which will have an impact upon every single person in the UK making pension contributions hence forth. It will of course also (potentially) simplify understanding of these interesting beasts – possibly!
All of which is all very well, but why on earth should your ears be picking up?
Right now, an additional rate tax payer making a pension contribution will receive up to 45% tax relief on a pension contribution they make, and a 40% tax payer will receive up to 40%. This means that for an additional rate tax payer a £10,000 pension contribution has a cost as low as £5,500 and for a higher rate tax payer the same contribution has a cost as low as £6,000.
The consultation outcome has not yet been decided, but a flat rate would no doubt be lower than either of the above two rates, meaning that there may be a real advantage to reviewing your finances now and considering whether you wish to make a pension contribution in the current year, with the current rules. We are planning in this way for all of our clients who this applies to – this is simply good financial planning.
Imagine my shock then to turn on BBC Breakfast News last Friday morning to hear the business report discussing the above – and closing with ‘this may of course come into effect immediately on 16th March’, to stop [those who are negatively impacted upon undertaking] ‘emergency planning’. So all thoughts of pension planning for higher and additional rate tax payers within the current tax year have been brought forward. Their planning is now lined up to be concluded by close of play on 10th March, allowing time for monies to be processed and allocated before 16th March.
There is always something to work towards when planning your finances, we all know that, and more often than not, life and all it entails, overtakes, and your planning goes further and further down the list. However, in this instance I would urge you to talk to your adviser, go through your planning and see if there is anything that they would advise you to consider in the coming weeks. This is a real deadline, one that will impact 4.8 million people if the reports are correct – I wonder how many of those people live in Sevenoaks? I wonder if any of those people are you? Please consider speaking to an authorised adviser sooner rather than later and make sure you are appropriately planned!
Carrie Devonshire BSc(Hons) FPFS
Director & Chartered Financial Planner
This article is considered to be general market or informational commentary and does not constitute any type of investment or other professional advice. It is not a recommendation, nor does it take into account the investment objectives, financial situations or needs (including tax) of individual clients. This document is not intended for, and should not be construed as an offer, solicitation or recommendation to buy or sell any specific financial product or instruments, or to participate in any investment or (other) strategy. You are recommended to seek advice concerning the suitability of any investment from your independent financial adviser. Investors should be aware that past performance is not an indication of future performance and the value of investments and the income derived from them may fluctuate and you may not receive back the original amount you invested.
Athena Wealth Planning is an Independent Financial Adviser and is not tied to one product provider or marketing group. We are authorised to advise on the products of different companies. Athena Wealth Planning Ltd is authorised and regulated by the Financial Conduct Authority FRN 627636: and registered as a limited company at Companies House, England, Company number 9086612. The registered address is 61a Walton Street, Walton on The Hill, Surrey, KT20 7RZ. All comment on tax and investment is based on our understanding of current law and practice and should be referred to your accountant. We recommend that you confer with your accountant before investing in products or investments which depend on tax relief for part or all of their returns.
Beware of Alarmist Journalism
With many people looking as to how best to use their relevant tax allowances prior to the end of the tax year, this is the season where monies traditionally flow into Pension, ISA and other tax efficient investment portfolios.
What then of the recent increase in alarmist articles written across different media, all prophesizing various connotations of the Global Economy and stock market………? How does this impact the average person wanting to make use of such allowances and reading the popular press? Be wary of alarmist journalism and how you react to it.
The message from experts who have experienced booms and busts is: Hold Your Nerve. Investments are for the longer term. Those that are not for the longer term should not be held in markets anyway – that, of course, is nothing new. Longer term is anything five years plus, monies therefore set aside for retirement, longer term savings, umbrella funds, that sort of thing. ‘It is precisely when investors are at their most pessimistic and commentators are issuing their most dire warnings that the best buying opportunities arise’, says Brain Dennehy of Fund Expert.’ It is quite possible that things will get worse before they get better, but taking a long term view, this is a time to start buying. We are now moving into so-called ISA Season – leading up to the end of the tax year in which the highest proportion of ISA accounts are purchased – and this year we could be seeing the best opportunity for ISA investors for years’ he continues. Justin Urqhuart Stewart from Seven Investment Management says ‘there are some real fears out there. However, it is almost always a mistake to be spooked into exiting the stock market, because you will miss out on future market rises as well as valuable dividends.’
Obviously, in a perfect world, we would all buy in at the bottom, exit at the top, then wait and go in again. However, this wouldn’t be a natural market, and wouldn’t provide anyone with any opportunities to capitalise on the sometimes unfounded sentiment which can drive markets, causing irrational investor behavior.
Rather than trying to time markets, Athena believes it is for sensible to hold a spread of assets suited to the risk you are comfortable taking over the longer term. This means that you will ride out the ups and downs, and be comfortable when you sleep at night knowing your portfolio is behaving within your own agreed risk parameters. Whether you are a 2/10 and very defensive, or a 9/10 and very aggressive, or anything inbetween, the most important aspect of a portfolio is to be multi-asset and risk adjusted, just for you. This is the practice that we have always adopted with our client monies, and not surprisingly, this provides our clients with enormous comfort – it also of course means that we, as their advisers, get to sleep at night too, which has to be a good thing!
Carrie Devonshire BSc(Hons) FPFS
Director & Chartered Financial Planner
This article is considered to be general market or informational commentary and does not constitute any type of investment or other professional advice. It is not a recommendation, nor does it take into account the investment objectives, financial situations or needs (including tax) of individual clients. This document is not intended for, and should not be construed as an offer, solicitation or recommendation to buy or sell any specific financial product or instruments, or to participate in any investment or (other) strategy. You are recommended to seek advice concerning the suitability of any investment from your independent financial adviser. Investors should be aware that past performance is not an indication of future performance and the value of investments and the income derived from them may fluctuate and you may not receive back the original amount you invested.
Forward Thinking with your Tax Planning
Everyone knows that an IFA can sort out your mortgage or help you invest in a pension or an ISA, but I thought it would be good to share with you what a really good planner does and what an impact they could make.
A good planner knows and understands their clients and can use all relevant tax allowances and reliefs to make the very best of what a client is doing to meet their financial objectives. They work with your accountant and other advisers to let you concentrate on doing your day job- it’s what you do best.
I thought it would be good to share a current advice case with you so you can see the impact we can have on our clients lives:
I have two directors who started talking to me just before Christmas. The two directors are 40 and 60, and they run a successful company which has strong trading income and good levels of profit. They pay themselves a mixture of salary and dividends, nothing strange or unusual so far……. Until you delve a bit deeper, the salary and dividends takes one of them beyond £100,000 of earnings, which means that they now lose their personal allowance – this means that on the earnings between £100,000 and £121,200 there is an effective 63% tax charge, on that £21k income alone that is £13,300 of tax!!
By knowing these clients, how they structure their pay, and knowing their business, we can work to get back this personal allowance and save this director the £13,300…… sounds brilliant doesn’t it, and it works, but going one step further we can save the company a further £68,000 in tax, just by knowing our stuff, and applying the principles of financial planning to each client as needed.
This means these two gents have saved over £80,000 in tax!
Now planning like this doesn’t suit each client, obviously, and we need to look after each client and their objectives in isolation, but imagine if this was ‘just’ a one man Ltd co, the impact could be £47,000 of savings, or if it’s a three man company £117,000 or a four man company £153,000 – The impact of a planner in organizing your finances is huge.
However, tax planning needs to be made before the end of the tax year, so the time for action is now, and so content are we with this planning that we will donate some of our fees for this work between now and the tax year end to charity – for every £10,000 tax we save, we will donate £100 of our fee to Ellenor, in support of the fabulous work they do within the local community.
Nothing contentious, nothing out of the park, just good solid financial planning. And, by helping 30 or so similar people we could save in the region of £1m, and at the same time donate £10,000 to Ellenor – that’s got to be worthy of talking about, and thinking if you, or anyone you know, could benefit from a talk with not just any IFA, but a really good financial planner!!
*Each case will have it’s own specific details, and it’s own unique calculations. The above is a generic guideline and no advice should be construed from this article at all, or acted upon, without taking individual independent advice
A Healthy Financial Start to 2016
With many of us returning to work today there is much talk of starting 2016 off in a healthy way, making sure we eat well, drink less alcohol and more water, and exercise more. It’s a great idea to apply these principles to our finances too, so here are 7 ideas for a healthy financial start to 2016:
- Get organized! Get on top of your files, paperwork and plans and make a simple and clear summary of what you own, owe, receive and spend.
- Understand what you are spending. It doesn’t matter how much you earn, if you spend too much, then you will never be financially secure. If you never seem to be able to regularly save a meaningful amount, or you are racking up debt, then chances are you don’t know exactly how much you are spending and on what. Try and get to grips with what is actually going on in your accounts.
- Manage your debt carefully. Although interest rates are abnormally low at present, it’s unlikely that they will stay that way forever. Even so, some types of debt, such as credit/store cards and higher cost loans, charge high interest. Debt repayment represents a risk-free, tax-free return equal to the interest you will avoid.
- Check your mortgage interest rate. Again, interest rates are unlikely to remain at their current levels forever, so if you are on a variable rate, or approaching the end of a fixed or discounted rate on your mortgage, this is a good time to consider your options and make sure you are getting the best rate possible for your circumstances.
- Create an Emergency Fund. As a rule of thumb, your emergency fund should include enough to cover 6-12 months of household expenses.
- Review your protection policies. Many people build up protection policies over the years that can become out of kilter with their situation several years down the line. In addition, protection companies compete to make sure they have the ‘best’ definitions of illnesses etc, and by reviewing your policies, you will make sure your protection is right for your needs now, and it is up to date in today’s world. With the equalisation of premiums which happened a few years ago, it is quite possible that you may also be able to save yourself some money too.
- Look for tax advantaged ways to save and use all relevant and appropriate allowances before they disappear. Think about ISAs, Pensions, VCTs, EISs and AIM portfolios. Do you use these? Do you use them well? Are you using them as best you can? Do you understand your allowances and how by working smarter you can make your money work harder?
By applying your mind to your finances in the same way as we are all applying our minds to our health and lifestyle, you can make sure that you have a healthy financial start to 2016, and if you need the help of an expert, you know where we are!
7 Thoughts for a New Years Wish List
The final build up to Christmas is upon us, and many of us will take time out with our family’s and loved ones over the next week or so, and will have a little bit of time (and head space) to gather our thoughts ahead of the New Year.
Let’s just put it out there, I don’t like New Years resolutions, I think they are reflective and focused on negativity…… ‘I won’t….’ or ‘I’m going to stop……’, and without many exceptions, gradually one by one, they fall by the wayside, and we end up maybe having been good for a month (at a push!) and then reverting to our normal selves.
So, I thought I would share with you a little bit about how I do it…….. We have a New Year Wish List. A list that is written on New Years Day, and passed around all those people at my lunch table, each writing a wish for the coming year, the list goes on and on until there are no more wishes, and it then goes onto the fridge. As the year passes, we tick off the wishes that have come to fruition. At the end of the year, you then have a little list of happiness and can see what you have achieved.
So, why am I bothering to share this? I’ve been thinking about how our clients feel once they have their financial planning in place, and the wishes that came before that initial contact, to kick start them, and I thought these might help with your own ‘2016 Wish List’. So, when you are surrounded by your family and friends this festive season, maybe take a step back and think of the following wishes for your own ‘2016 Wish List’
- I am going to get my finances in order, and make sure I am not spending more than I need to and saving as much tax as I can!
- I’m going to think about my financial future, and understand what the bumps in the road are and how I can smooth them out
- I am going to understand my income and expenditure, and make sure I know how I will manage if my income stops
- I’m going to check my mortgage is a good as it can be – can I save any money here?
- I’m going to play Goalkeeper and ensure my family can manage financially if I’m not around
- I’m going to think about the longer term and make sure I’m using every allowance I can so I can lead the life I want to lead later on.
- I’m going to get financially fit
So see how your Wish List goes, and how much you can achieve in 2016 – it’s a brilliant feeling at the end of the year to look back and pat yourself on the back!
All that remains to be said is that all of us at Athena wish you and your families a Very Merry Christmas and a Healthy, Happy and Financially Fit 2016.
Carrie, Colin and Kathy
The effect of Buy to Let and Second Home Stamp Duty Increases – 10th December 2015
The Autumn Statement on 24th November announced that there would be significant changes in the amount of Stamp Duty Land Tax (SDLT) for Buy to Let investors and those wishing to purchase a second home.
It was announced that an additional 3% Stamp Duty will apply to the whole property purchase price for these types of property purchases. The tax bill on a property valued at £250,000 will jump from £2,500 to £8,800 from 6th April 2016. This is an increase of £6,300!! This move will net The Exchequer an extra £625m next year alone.*
The impact upon the total purchasing costs of buying these properties is easily calculated, but what about the impact to the mortgage market in this area? As advisers we are already seeing changes coming through from lenders in the way that they calculate the rental ‘stress test’ for Buy to Let Properties. This week some lenders confirmed that they are looking to factor in the extra Stamp Duty costs for Buy to Let landlords, and they will be increasing the rental ‘stress test’ from 125% to 135%. Put simply, to obtain a mortgage of £150,000, the rental income for the property would now have to be £977.06 per month. At the previous 125% ‘stress test’ level, the rental income would have needed to be £904.69 per month.
We will wait to see if other lenders follow suit……
If you are thinking of buying another property either as a Buy to Let, or a second home, it is certainly worth considering your position before 6th April when these SDLT increases come into effect.
Your home will be repossessed if you do not keep up repayments on your mortgage. The Financial Conduct Authority does not regulate Buy To Let Mortgages.
*Source: The Daily Telegraph 9th December 2015
Athena’s Autumn Statement Summary 30th November 2015
Perhaps the most talked about announcement is the increase in Stamp Duty Land Tax (SDTL) on those properties purchased as a second home or a buy to let property….. but there are other announcements to be taken note of…..
We have prepared a summary of the Autumn Statement which details the announcements made on 24th November which we have emailed to all our clients and professional contacts. The summary covers the scrapping of the proposed changes to tax credits, as you will recall the proposal was rejected by The House of Lords in October, at a cost of £3.4bn to The Treasury. In addition the dates for the contribution rate increases under Auto Enrolment have been pushed back to align to the tax years in 2017 and 2018, this will save The Treasury some £840m in tax relief. ISA limits will remain at the same level as 2015/2016, £15,240.
As widely anticipated, there was no announcement at all around the Green Paper in Consultation with regards to pension tax relief. The Chancellor confirmed that any changes would be announced at the Budget Statement in March 2016. The jury is still out as to the most likely format of the changes, but the jurors seem to be agreed that the changes will be significant. Early planning, and certainly before April, is therefore uppermost in many people’s minds as we enter the festive season this week.
Please do take a look at our Autumn Statement Summary, and if there is anything contained therein, upon which you would like more information, clarity, or advice, do let us know.
Embracing Auto Enrolment at Athena Wealth Planning – 26th November 2015
Today we welcome our trusted business partners in accountancy, banking and law firms in Sevenoaks to our seminar entitled – Auto Enrolment: The simple, compliant and low cost way for you and your clients to ‘Tick That Box’
With Auto Enrolment (Work Place Pensions) phasing in from October 2012, starting with the largest of companies first (by payroll system data), the SME market is reaching their Staging Dates between May 2015 and April 2017. We can offer a full advice service to those clients who want this, or we can facilitate a non-advised solution if this is preferred. In terms of a non-advised facilitation, we have started to work with a fabulous provider who will enable you and your clients to have the whole process taken care of. We have chosen our facilitation provider as they provide a complete end to end solution, covering all the preparation, implementation and establishment – even handling the Declaration of Compliance that each SME must make to The Pensions Regulator.
This is a great way for us to continue to help and advise many clients and build upon our reputation as the leading Independent Financial Adviser practice in Sevenoaks and West Kent.
