- 1. Your business logo (printed in full-colour), photograph (if
required) & business name here. To place an order, or to find
out more information, call our sales team on:(0845) 686 0055or
email [email protected]/FEBRUARY 2013Tax-saving
ideas Autumnto beat the endStatementof tax year2012Now is the time
you should be Key announcements from thereviewing your financial
affairs Chancellor at a glance Do you need growth,Incomeor both?
Preparing forwhatever economicWhat ups and downs might be
aheadchallengeslie aheadfor investors KEEPING AWATCHFULin
2013?Navigating your way aroundEYE ON YOUR MONEYa wide range of
investment Taxing times for theproducts and strategiesaverage
50-year old Your contact details & regulator details here.
2. Wealth creation Editorial Although making resolutions to
improve Happy ISA tax year your financial situation is good
whatever the time of year, many people find it easierDont get
bitten - talk to us at the beginning of a New Year. Regardless of
when you begin, the basics remain theThis tax year you canshelter
up to 11,280 from tax by investing in an Individual Savings same.
So its with this in mind that we Account (ISA). During his Autumn
Statement last December, the Chancellor, George have provided a
number of ideas insideOsborne, announced plans to increase the ISA
limit to 11,520 from 6 April this year. this issue to get you ahead
financially. In a period of slow global growth,ISA allowance
aggressive central bank actions and nearEach tax year you have an
ISA allowance. For the Discuss your paralysis on the part of many
fiscal policy makers, investors enter 2013 facing a plethora tax
year 2012/2013 (6 April 2012 until 5 April 2013) you can save up to
5,640 in a Cash ISAwith theISA options - dont delay of challenges.
On page 6 we look at the three remainder in a Stocks & Shares
ISA, or you can investWhether youre new to investing or lookingto
grow your portfolio, we can help please main hot topics that are
likely to impact onyour full allowance in a Stocks & Shares
ISA. Yourecontact us to find out more. making investment decisions
over the next only permitted to invest with one Cash ISA provider
12 months: China, the US and the Eurozone.in each tax year and the
same, or another, Stocks & With the end of the tax year
rapidlyShares ISA provider. approaching on 5 April, now is the time
to focus on ways to mitigate any tax liability.Make up any unused
shortfall To make the most of the opportunities If you havent
already used up your full ISA allowance available, if youve not
already done so, you cant retrospectively make up any unused
shortfall you should start putting plans in place later its lost
forever. UK residents aged 16 and over now. On page 10 we consider
some of the can choose to save in a Cash ISA or, if they are 18 or
areas you may need to review to minimiseover, a Stocks & Shares
ISA or a combination of both. a potential tax liability.Parents or
guardians can also open a Junior ISA for This tax year 2012/13, you
canshelterchildren under 18. up to 11,280 from tax by investing in
an The interest on a Cash ISA isnt taxed, so all the Individual
Savings Account (ISA), and interest you earn you keep. With a
Stocks & Shares ISA, the good news is that the Chancellor, all
gains are free from Capital Gains Tax and you dont George Osborne,
announced during hisneed to declare your ISA investments to the
taxman. n Autumn Statement last December plans to increase the ISA
limit to 11,520 fromThe value of investments and the income from 6
April this year. To make the most of the them can go down as well
as up, and you may not get current tax years allowance, you need
toback the full amount invested. The tax benefits and act before
the fast-approaching deadline.liabilities will depend on individual
circumstances and Read the full article on this page. A full may
change in the future. Past performance is not a list of all the
articles featured in this guide to the future. edition appears on
page 3. n The content of the articles featured in this publication
is for your general information and use only and is not intended to
address Inheritance tax, one your particular requirements. Articles
should not be relied upon in their entirety of lifes unpleasant
facts and shall not be deemed to be, or constitute, advice.
Although endeavours have been Helping you to protect and preserve
your estate made to provide accurate and timely Inheritance tax
(IHT) is generally payable uponwill be worth much more as debt is
being paid off. information, there can be no guarantee that such
information is accurate as of the death and during the life of
someone where they give Over the IHT tax-free allowance band, IHT
is paid at date it is received or that it will continue to away
assets. IHT can be reduced significantly by tax 40 per cent and so
it is a significant tax charge levied be accurate in the future. No
individual or planning in advance. on your assets. n company should
act upon such information without receiving appropriate
professional Everyone is entitled to an IHT-free allowance of
advice after a thorough examination of325,000 in the current
2012/13 tax year. A marriedDont leave your their particular
situation. We cannot accept couple or registered civil partnership
would therefore family with a tax bill responsibility for any loss
as a result of acts or omissions taken in respect of any generally
have no IHT to pay if their estate on second If you have
significant wealth you need to articles. Thresholds, percentage
rates anddeath is less than 650,000. The IHT allowance consider IHT
at an early stage. To discuss the tax legislation may change in
subsequent options available to you, please contact us for
threshold which has been frozen at 325,000 since Finance Acts.
Levels and bases of, and 2009 is set to increase to 329,000 in
2015/16.further information. reliefs from taxation are subject to
change and their value depends on the individualWhile net estate
values might be less than 650,000 circumstances of the investor.
The value of now because of a mortgage or some other liability or
IThe Financial Services Authority does not regulate your
investments can go down as well as up and you may get back less
than you invested.loan, it is possible that at the time of death
the estateestate planning, wills or trusts.02 3. IN THIS ISSUETo yo
u r d i s c u s s04f i na n pl c ia lr e q ua n n i n g i o r t or
e m e n t s obf u rt h ta i nIn thisi n f or ma er 07 p l e a st i
o n ,issuec o n ta e ct us02Happy ISA tax yearDont get bitten -
talk to us08Bad news can impact on any one of us at any time
Safeguarding and protecting your familys02Inheritance tax, one of
lifesunpleasant facts standard of livingHelping you to protect and
preserveyour estate09KEEPING A WATCHFUL EYE ON YOUR MONEY Taxing
times for the average 50-year old04Autumn Statement 2012Key
announcements from the 09Could you beChancellor at a glance
short-changed from your 10 future pension income?04Outlook for the
NewCentenarians Reaching retirement is the catalyst for seeking
professional financial adviceFinancial pressures to snowball
forfuture generation 10Tax-saving ideas to beat the end of tax
year06What challenges lie aheadfor investors in 2013? Now is the
time you should be reviewing your financial affairsNavigating your
way around a wide range ofinvestment products and strategies 12Do
you need growth, income or both?0712FLEXIBLE RETIREMENTPreparing
for whatever economicPLANNING SOLUTIONS ups and downs might be
aheadTake the legwork out of yourretirement planning want to make
more For more information please tick the of your money IN 2013?
appropriate box or boxes below, include your personal details and
return this information directly to us. nArranging a financial
wealth check Name nBuilding an investment portfolioAddress
nGenerating a bigger retirement income nOff-shore investments
nTax-efficient investments nFamily protection in the event of
premature death nProtection against the loss of regular income
nProviding a capital sum if Im diagnosed with serious
illnessPostcode nProvision for long-term health careTel. (home)
nSchool fees/further education funding nProtecting my estate from
inheritance taxTel. (work) nCapital gains tax planning Mobile
nCorporation tax/income tax planningEmail nDirector and employee
benefit schemes nOther (please specify) You voluntarily choose to
provide your personal details. Personal information will be treated
as confidential by us and held in accordance with the Data
Protection Act. You agree that such personal information may be
used to provide you with details and products or services in
writing or by telephone or email. 03 4. AUTUMN STATEMENT
2012AUTUMNSTATEMENT2012 Outlook Key announcements from the
Chancellor at a glancefor the NewEconomic Growthn Forecasts for the
next few years are:1.2% in 2013, 2% in 2014, 2.3% in2015, 2.7% in
2016 and 2.8% in 2017. CentenariansPensions and BenefitsFinancial
pressures to snowball for future generationn Most working-age
benefits to rise by1% for each of the next three years. A
generation of New Centenarians will be forced to work well into
their 70s to stay afloat, according ton From 2014/15 lifetime
pension relief new research from Scottish Widows. In addition to
working longer, they will face a hat-trick of financialallowance to
fall from 1.5m to 1.25m pressures as early as their mid-twenties,
with the stresses of saving for their first home, paying back their
annual allowance cut from 50,000to 40,000.student loans and
starting a retirement fund impacting on them much earlier than
other generations. Tn Capped drawdown limit increasedfor pensioners
of all ages with thesehe Office for National Statistics believes
New Centenarians who complete higher educationarrangements from
100% to 120% ofthat one in three babies born in 2012 in could be
paying off their student debts of 73,000 untilthe value of an
equivalent annuity.the United Kingdom will live to be 100.they are
52 years old.n Basic state pension to rise byThis unsurpassed
average life expectancy, Couples will increasingly delay having
their first child2.5% to 110.15 a week.combined with the rising
costs of living, education anduntil they are in their early 30s,
compared to their laten Child benefit to rise by 1% for twohousing,
means that our children and grandchildren 20s now. An increasing
proportion of people will eitheryears from April 2014. will need to
plan much earlier for their future andhave no children or just one
child. After the purchase work for longer than ever of their home,
consideringTaxes and Allowances before. the financial burden of
havingn ersonal basic income tax allowance forP The Scottish
Widowschildren is probably the mostthose aged under 65 increasing
by 1,335 survey of 1,000 parents withimportant financial decision
theyin cash terms to 9,440 in 2013/14.children under the age ofThe
Office for Nationalwill face in their lives.n Higher rate threshold
to rise to 41,450five reveals that nearly Statistics believes that
one in Financial products are likelyin 2013/14, to 41,865 in
2014/15, and 78 per cent are concernedthree babies born in 2012 in
to change to allow for mortgagesin 2015/16 it will be 42,285. that
their children may need the United Kingdom will live to be paid
over a longer periodn Main rate of corporation tax to be cutto work
well into their 70s. to be 100. This unsurpassedof time due to
people workingby extra 1% to 21% from April 2014.n Capital gains
annual exempt willLeading economist and trend forecaster Steve
Lucasaverage life expectancy, longer and increased life expectancy.
New Centenariansincrease to 11,000 in 2014/15 and of Development
Economicscombined with rising costs ofare likely to be paying off
their11,100 in 2015/16.analysed the financial and lifeliving,
education and housing, mortgage until they are at leastn Temporary
doubling of small businessmilestones that babies bornmeans that our
children and61, four years later than theirrate relief scheme to be
extended by in 2012 will reach beforegrandchildren will need to
parents and seven years laterfurther year to April 2014.they turn
100. Looking plan much earlier for theirthan their grandparents.n
Inheritance tax threshold to beincreased to 329,000 in 2015/16.
backwards from 2112, the research paints a picture offuture and
work for longerIn order for New Centenarians to provide ann Bank
levy rate to be increased towhat life might look like forthan ever
before.acceptable standard of living for0.130%.these babies and
examines themselves in old age, a pensionn 5bn over six years
expected fromthe steps an averagepot of 2.4m in retirementtreaty
with Switzerland to deal with New Centenarian will have taken
throughout life in savings will need to start sooner.undisclosed
bank accounts. comparison to his or her parents and
grandparents.The cost of social care is likely to be anothern ISA
contribution limit to be raised to major concern for this future
generation. Many New11,520 from 6 April.The personal financial
landscape Centenarians will need to contribute financially to then
Prosecutions for tax evasions up100 years in the futurecare costs
of their parents generation, as well as try to80%, with anti-abuse
rule to come in.Changes to ways that student loans (and, for
manyput some funds aside for their own care costs in their people,
high tuition fees) are provided mean that thosefinal years.04 5.
Financial planningNature of work is likely to changecent are
pleased to think their children will commencement of working lives
and ages ofThe state retirement age will be at least 70 by
accomplish more in life because they will be retirement. ONS data
was also used to estimatethe turn of the next century and an
increasinghealthier longer. n expected future trends for financial
mattersproportion of people will continue working wellincluding
earnings, rents, house prices, mortgageinto their 70s, either
because they cant afford to costs and retirement incomes. A range
of otherretire or because they feel it is in their best
interestSaving enough information sources published and
unpublishedto continue working.for a retirement were utilised to
obtain insights into recent and However, the nature of their work
is likely to of 30 years or more expected future social
trends.change. According to Lucas, In the future, olderThe dramatic
speed at which life expectancyworkers especially in the
professional and business is increasing means we need to
radicallyEstimates of future financial costs includingservices
sector are likely to stay working longer rethink our perceptions of
life, especially forearnings, housing costs, student debt and
retirementinto their 70s, but the nature of this work willour
children. Most workers today expect their savings were calculated
using bespoke economicbecome more flexible and probably more
part-pension to fund a retirement of up to 20 yearsand financial
models developed by the authors of thebut increased life expectancy
means Newtime. Workers in manual or vocational careers are
research. These figures were estimated by projected-Centenarians
may have to save enough for aalso likely to look to extend their
working lives byretirement of 30 years or more. To discuss
howforward underlying trends evident in existingundertaking a less
strenuous, more part-time role. we could help you plan for your
childrens anddatasets, coupled as appropriate with trend-based
However, this means that New Centenarians could be grandchildrens
future, please contact us for inflation assumptions.supporting
themselves with a potentially limited income further information.
Dont leave it to chance.for up to 30 years of retirement. In order
to properlyThe main exception is in the area of futureprepare for
prolonged retirement and counter the effectsThis research was
undertaken based on past student debt, where a new system is
currentlyof the collision of financial pressures, Lucas explains
thatand expected future demographic trends usingbeing introduced
and for which current dataNew Centenarians will need to begin
saving for their published research and data from the Office for
cannot be used to construct forward estimates.retirement from at
least age 25 and that parents should National Statistics (ONS);
this included trendIn this case future estimates were based on
aencourage their children to start understanding finances data on
life expectancy, healthy life expectancy,literature review of
estimated future student debtand the importance of saving from a
young age.fertility, marriage, divorce, having
children,liabilities, using sources including the Department for
Education, the National Union of Students andIt isnt all doom and
student loan companies.gloom for this generationAlmost 45 per cent
are concerned that theirchildren will not be able to save enough
moneyfor a longer retirement. Yet almost 40 per cent ofparents are
not considering their childs long-termfuture as part of their
financial planning and halfof all parents would not consider
starting a pensionfor their child on their first birthday. However,
it isnt all doom and gloom forthis generation, as 41 per cent of
parents areexcited about the potential for long-lastingfamily
relationships and a further 37 per 2.4mThe pension pCenten ot New
ar i an sto provwill nei d e an eds t an d a accepta rd of liblet h
e ms ev i n g folves in r old age . 05 6. Wealth creationWhat
challengeslie ahead forinvestors in 2013?Navigating your way around
a wide range of investment products and strategiesIn a period of
slow global growth, aggressive central bank actions and near
paralysis on the partof many fiscal policy makers, investors enter
2013 facing a plethora of challenges.T here are three main hot
topics that areview and see their capital fluctuate in value
could2000 many investors who were over-exposed to likely to impact
on making investmentconsider taking more risk to try and achieve
anthese areas suffered heavy losses. Diversification decisions over
the next 12 months: inflation-beating return.mitigates risk, as
different areas perform well at China, the US and the
Eurozone.Shares are different from most goods in that different
times. Paradoxically, though, its also Chinese monetary
policy-making bydemand often increases as prices rise. If an
important not to be too diversified.the new leadership needs to
tread a fine line between investment area is fashionable, it could
be a sign that One of the biggest dilemmas investors face isslowing
economic growth, which could cause social it is overvalued.
Traditional areas, such as blue chip market timing. Jumping in and
out of markets on aunrest, and creating asset bubbles. A US debt
ceiling companies, often generate the best long-term
returns,regular basis not only requires constant monitoringbreach
around March 2013 could lead to draconianso it makes sense for most
investors to avoid the latest of daily events but also requires the
skill to act onconsequences if an agreement is not reached.
Finally, fad. However, it is important to remember that all such
events.The return from a lump sum investmentthe on-going Eurozone
sovereign debt crisis althoughstock market investments will
fluctuate in value, so can depend heavily on the entry point. One
way tosteps have been taken in the right direction, Europe is you
could get back less than you invest. achieve this is to spread or
drip-feed a lump sumstill not fixed. into the market as opposed to
investing it all in oneMaximum use of tax sheltersgo. In fact,
during volatile times this strategy allowsGood financial planning
Investors also need to make the maximum use of tax you to benefit
from what is known as pound costNavigating your way around the
plethora ofshelters as tax can eat away at your returns. These
canaveraging.Regular investing provides an alternativeinvestment
options out there can be very daunting include pensions and
Individual Savings Accounts method of building positions over time.
nand requires professional financial advice. Before(ISAs) at one
end of the spectrum to Enterpriseinvesting, you need to ask
yourself a basic question. Investment Schemes and Venture Capital
Trusts atWhat are you investing for? Good investment the other,
higher-risk end.Improved returnsrequires good financial planning
first of all. You mustEven following the proposals announced by the
within yourdecide what your objectives are, what return you needto
achieve that objective and what risk you are willingChancellor,
George Osborne, concerning pension taxrelief in his Autumn
Statement, pensions still offer investment strategyto take to
achieve that return. very attractive tax benefits through the
income taxOur services cover a wide range of Deciding how much to
invest in equities, fixed relief you receive on the contributions.
investment products and strategies. Ourinterest (gilts and
corporate bonds), property and In the current 2012/13 tax year,
there is no tax to pay dedication to flexibility and innovation
ensures we are able to secure new andcash is the first step in
constructing a portfolio. Manywithin an ISA on any capital gains
and no further tax to tactical opportunities for improvedinvestors
are understandably nervous about taking pay on any income and you
can shelter up to 11,280, returns within your investment
strategy.risks with their hard-earned capital during thiswhich is
set to rise to 11,520 from 6 April this year. To discuss what you
need to do next,current period but not taking enough risk can be
justHaving said this, making an investmentplease contact us for
further information.as damaging as taking too much. decision based
on a tax saving alone should notbe the main consideration at the
expense of theTaking a long-term view other rules of investing.
Information is based on our current understandingAll asset classes
carry risk including cash, which of taxation legislation and
regulations. Levels andcan lose its spending power over time
because ofDifferent areas perform bases of and reliefs from
taxation are subject toinflation. Most investors see risk as the
risk of short-well at different times legislative change and their
value depends on theterm price falls but fail to consider the risk
that their An undiversified portfolio will only perform well
individual circumstances of the investor. The value ofinvestments
will not grow fast enough to meet their some of the time. Good
examples of this are theyour investments can go down as well as up
and youobjectives. Those who can afford to take a long-termbanking
crisis of 2008 and the technology crash ofmay get back less than
you invested.06 7. RetirementFLEXIBLE retirementThe SIPP wrapper is
separate from the contents and, as such, has distinct, often fixed
charges.PLANNING SOLUTIONS Because you can now accumulate a number
of pensions over your working life, consolidating them all into a
SIPP means that you have one company carrying out your pension
administration.Take the legwork out of your retirement planning
This could reduce your reporting and paperwork; however, you should
ensure that the additional investment options a SIPP provides are
required,People are living longer and the number of retirees is
growing. Longevity should as it can cost more to administer than a
normalbe a blessing but many investors are worried they will
outlive their savings. So it is personal pension plan.essential to
consider saving for retirement as early as possible and to decide
whereSIPPs are appropriate for people comfortable with making their
own investment decisions andbest to invest for your requirements.
are not a risk-free product. The capital may be at risk due to the
investments held within thisDeciding how to planInvestment
choicepension arrangement; the value of investmentsThere is a
bewildering choice when deciding how You can invest in a wide range
of investments andcan go down as well as up and you could getto
plan for your retirement, and it is importantthis includes any
number of approved funds. Most back less than you invested. Tax
reliefs will alsoto weigh up the cost and complexity against the
SIPP providers allow you to select from a range of depend on your
personal circumstances and thepotential returns. If appropriate,
one option toassets, including: pension and tax rules are subject
to change byconsider is a Self-Invested Personal Pension the
government. n(SIPP). Originally designed for people with n stocks
and shares quoted on a recognised UK orhigher-value pension funds,
theyve become more overseas stock exchangeprevalent since the UK
pension simplification n government securitiesBUILDING A BIGGER
PENSIONlegislation of 2006.n unit trusts Before applying for a
SIPP, you should seek SIPPs are tax-efficient wrappers within which
youn investment companies professional financial advice. To find
outcan select your own pension investments from a wide n insurance
company funds how much you should be saving to helpvariety of
sources and choose how to spread yourn traded endowment
policiesachieve your desired retirement income,money among a whole
range of different investment n deposit accounts with banks and
building societiescontact us for further information.types subject
to both HM Revenue & Customs rulesn National Savings
productsand any limits set by the SIPP provider.n commercial
property (such as offices, shops orfactory premises)Information is
based on our current understandingTax-efficiencyof taxation
legislation and regulations. A SIPP isA SIPP offers the same tax
benefits as otherRetirement FLEXIBILITYa long-term investment, and
the fund value maypersonal pension plans, with personal A SIPP
allows you to choose from the full range fluctuate and can go down.
Your eventual incomecontributions eligible for Income Tax relief
andof options at retirement, from purchasing an may depend upon the
size of the fund at retirement,investments within the SIPP able to
grow free ofannuity to taking a managed income withdrawal future
interest rates and tax legislation.Capital Gains Tax.from your
fund. SIPPs are tax-efficient wrappers within which you can select
your own pension investmentsfrom a wide variety of sources and
choose how to spread your money among a whole range ofdifferent
investment types .07 8. ProtectionBad news can impacton any one of
us at any timeSafeguarding and protecting your familys standard of
livingBad news can impact on any one of us at any time, in the form
of an illness or sudden death. We dont like to think aboutit but we
do have to plan for it. So having the correct protection strategy
in place will enable you to protect your familyslifestyle if your
income suddenly changes due to premature death or illness. However,
choosing the right options can bedifficult without obtaining
professional advice to ensure you protect your family from
financial hardship.Obtaining advice is essential toYour life
assurance premiums will vary according to aThe other type of
protection available is amaking an informed decision number of
different factors, including the sum assuredwhole-of-life assurance
policy designed toabout the most suitable sum and the length of
your policy (its term), plus individual provide you with cover
throughout your entireassured, premium, terms and lifestyle factors
such as your age, occupation, gender, lifetime. The policy only
pays out once thepayment provisions. We work state of health and
whether or not you smoke. policyholder dies, providing the
policyholderswith our clients to create tailored protection If you
have a spouse, partner or children, you dependants with a lump sum,
usually tax-strategies that meet their financial goals and
needsshould have sufficient protection to pay off your free.
Depending on the individual policy,and were committed to ensuring
that our clientsmortgage and any other liabilities. After that, you
policyholders may have to continue contributingenjoy the best
financial planning service available.may need life assurance to
replace at least some of right up until they die, or they may be
able to Whether youre wanting to provide a financialyour income.
How much money a family needs will stop paying in once they reach a
stated age, evensafety net for your loved ones, moving house or a
vary from household to household so, ultimately, its though the
cover continues until they die. nfirst-time buyer looking to
arrange your mortgage up to you to decide how much money you
wouldlife insurance or simply wishing to add somelike to leave your
family that would enable them tocover to what youve already got
youll want to maintain their current standard of living.ADDED PEACE
OF MINDmake sure you choose the right type of cover. Thats There
are two basic types of life assurance, termWe can help make sure
you and yourwhy obtaining the right advice and knowing whichand
whole-of-life, but within those categories therefamily is
financially protected, whichproducts to chooseis essential.are
different variations. means added peace of mind for you Life
assurance helps your dependants to copeThe cheapest, simplest form
of life assurance is and protection for them. Contact usfinancially
in the event of your prematureterm assurance. It is straightforward
protection, today to discuss your requirements.death. When you take
out life assurance, youthere is no investment element and it pays
out aset the amount you want the policy to pay out lump sum if you
die within a specified period. Thereshould you die this is called
the sum assured.are several types of term assurance.Even if you
consider that currently you havesufficient life assurance, youll
probably needmore later on if your circumstances change.If you dont
update your policy as key eventshappen throughout your life, you
may risk beingseriously under-insured. As you reach different
stages in your life, theneed for protection will inevitably change.
Theseare typical events when you should review your lifeassurance
requirements:n Buying your first home with a partnern Having other
debts and dependantsn Getting married or entering into a
registeredcivil partnershipn Starting a familyn Becoming a
stay-at-home parentn Having more childrenn Moving to a bigger
propertyn Salary increasesn Changing your jobn Reaching retirementn
Relying on someone else to support youn Personal guarantee for
business loans08 9. TaxationRetirement Could you be short-changed
from your future pension income? Reaching retirement is the
catalyst for seeking professional financial advice There is a world
of choices and decisions to be made when reaching retirement, and
thats before you even look at whether you should take an enhanced
annuity. For many individuals, reaching retirement is the catalyst
for seeking professional financial advice. Suddenly you can be
faced with a pension pot be it large with myriad options, or small
and needing to be stretched as far as possible. According to the
National Association of Pension Funds (NAPF), nearly two- thirds of
us could be eligible for higher pensions when we retire. Thousands
of people are missing out because they do not realise that having
certain medical or lifestyle conditions could significantly boost
their retirement incomes whenKEEPING A WATCHFUL buying an annuity
or annual pension. The NAPF estimates that about half aEYE ON YOUR
MONEY million people retiring each year are being short-changed by
up to 1bn from their total future pension income. If you or your
partner suffers fromTaxing times for the average 50-year-old
medical and/or lifestyle conditions, you may qualify for enhanced
terms on your annuity option, which could increase yourThe average
50-year-old has paid 190,400 in direct taxes by the time they
retirement income. Enhanced annuitiestake into consideration
detailed informationcelebrate their 50th birthday equivalent to
around three-and-a-half times more about yourhealth and lifestyleto
providethan theyve invested in their pension, new analysis from
MetLife [1] shows. you with a more personal annuity.T Typically,
when an annuityhis study of the finances of 50-year-olds last 16
years of their working lives when their focusproviderquotes for an
enhanced annuity,shows they have an average of 54,300 will be on
retirement planning.they will pay close attention to all the
factorssaved in pension funds but have paid out Men working from 21
to 66 will pay a total of that will affect your life expectancy.
Thismore than three-and-a-half times that in316,950 in tax and
National Insurance during theirincludes where you live, whether you
smoketax and National Insurance. working lives, while women will
pay 247,350, theand drink, your lifestyle and your medical People
on median earnings starting work at 21 will figures show. nhistory.
They can then build a more accuratehave paid out 114,148 in income
tax with the otherpicture of your life expectancy, on which76,000
going on National Insurance during the course of they base their
calculations.their working lives, figures show. For men the total
direct Concerned about yourtax bill by 50 comes in at 205,000,
while women pay anaverage 167,370 in income tax and National
Insurance.retirement provision?Securing a bigger The amount paid in
tax is another illustration ofIf you are concerned about your
retirement retirement incomethe financial pressures on the group
born between provision, please contact us to review yourYou need to
bear in mind that oncecurrent situation its always better to do you
commit to an annuity, you1961 and 1981. While the tax bill appears
high, thesomething rather than nothing. The problem willwill be
stuck with it for life, so itgood news is that pension saving
continues to attractnot go away and over time will only get worse.
is essential to obtain professionalsignificant tax relief and is a
good way to maximise taxefficiency while planning for
retirement.financial advice. Contact us today According to the
analysis, people working on to [1] MetLife analysis of HMRC and
ASHE data to discuss how you could secure a bigger retirement
income.66 from age 50 on median earnings will find their
totalpublished 07/11/12.tax bill rising to 290,560 another 100,000
in the09 10. Wealth protectionTax-saving ideas tobeat the end of
tax yearNow is the time you should be reviewing your financial
affairsWith the end of the tax year rapidly approaching on 5 April,
now is theTax credits on dividends are not repayable so
non-taxpayers should ensure that they have other sourcestime to
focus on ways to mitigate any tax liability. To make the most ofof
income to utilise their personal allowances.the opportunities
available, if youve not already done so, you should startputting
plans in place now. Here we look at some of the areas you may
needPension contributionsto consider to minimise a potential tax
liability.There are many opportunities for pension planningIbut the
rules can be complicated. f your partner pays a lower rate of tax
than Children also have their own Capital Gains TaxThe rules
include a single lifetime limit, currently you, you could consider
transferring assets (CGT) annual exemption of 10,600 (2012/13).
If1.5m in 2012/13 but reducing to 1.25m in into their name. This
makes particularappropriate, it may be more effective for parents
to 2014/15, on the amount of pension saving that can sense if one
of you is a non-taxpayer, as invest for capital growth rather than
income.benefit from tax relief. There is also an annual limityour
taxable income will be lower than your tax The government
introduced the Child Trust on the maximum level of pension
contributions,allowances, which means you wont have to pay anyFund
(CTF) for children born on or after currently 50,000 for 2012/13
reducing to 40,000tax on savings interest. Interest on savings
accounts1 September 2002. The idea was to promote tax- in 2014/15.
The annual limit includes employeris usually paid after 20 per cent
has been deductedefficient savings by family and friends and
included pension contributions as well as contributions byby the
provider. Higher rate tax payers pay 40 per government
contributions as an incentive. Allthe individual. Any contributions
in excess of thecent interest. government contributions have now
ceased and annual limit are taxable on the individual. To receive
your interest paid tax free, you will need children born on or
after 3 January 2011 no longerThis year and in the next tax year,
carry-to complete form R85. This is available from banks,qualify
for a CTF account. forward provision allows investors to
contributebuilding societies orthe HM Revenue and CustomsExisting
CTF accounts continue alongside a newup to a maximum of 200,000.
You can carry(HMRC) website. If you are a non-taxpayer, but
haveJunior Individual Savings Account (Junior ISA) forward any
unused annual allowance from thepaid tax on your savings, make sure
you claim it back. which has been introduced for those children who
previous three years, which will give peopleYou need form R40 from
HMRC. are not eligible for a CTF account. This includessome scope
to catch up on contributions they Income from jointly owned assets
is generally children born before 1 September 2002 as wellhave
missed. You could potentially invest up toshared equally for tax
purposes. This appliesas children born from 3 January 2011. Both
CTF 200,000 (assuming a 50,000 allowance from theeven where the
asset is owned in unequal sharesand Junior ISA accounts allow
parents, other current year and an assumed 50,000 allowanceunless
an election is made to split the income family members or friends
to invest up to 3,600 from the previous three). If these are
personalin proportion to the ownership of the asset. (2012/13)
annually in a tax-efficient fund for a contributions they cannot
exceed your earningsThe exception is dividend income from
jointlychild. There are no government contributions and in the
current tax year.owned shares in close companies, which is splitno
access to the funds until the child reaches 18.Directors of family
companies could, as anaccording to the actual ownership of the
shares.alternative, consider the advantages of setting upClose
companies are broadly those owned by the Taxpayersa company pension
scheme or arrange for thedirectors or five or fewer people. The 50
per cent additional rate of income tax on company to make employer
pension contributions. taxable incomes above 150,000 reduces to 45
per If a spouse is employed by the company, considerChildren cent
on 6 April this year. This means that those who including them in
the scheme or arranging forChildren have their own allowances and
tax bands.are able to defer income from 2012/13 to 2013/14 the
company to make reasonable contributions onTherefore it may be
possible for tax savings to be could benefit from a 5 per cent or
more reduction in their behalf.achieved by the transfer of
income-producing the tax charged on the amount deferred.assets to a
child. Generally this is ineffective if Employer-provided cars and
fuelthe source of the asset is a parent and the child is
Non-taxpayersIf applicable, you should also check that anunder 18.
In this case the income remains taxableChildren or any other person
whose personalemployer-provided car is still a worthwhile
benefit.on the parent unless the income arising amounts to
allowances exceed their income are not liable to It may be better
to receive a tax-free mileageno more than 100 gross per annum. tax.
Where income has suffered a tax deduction allowance of 45p per mile
(up to 10,000 miles) You could consider transferring assets from at
source a repayment claim should be made.for business travel in your
own vehicle. If another relatives, for example, grandparents
and/orIn the case of bank or building society
interest,employer-provided car is still preferred,
consideremploying teenage children in the family business to a
declaration can be made by non-taxpayers tothe acquisition of a
lower CO2 emission vehicle onuse personal allowances and the basic
rate tax band. enable interest to be paid gross (form R85).
replacement to minimise the tax cost.10 11. Wealth protection Where
private fuel is provided, the benefit always consider the differing
levels of risk and your shares at a profit will be CGT-free (a
reduction ofcharge is also based on CO2 emissions. You
shouldrequirements for income and capital in both the the current
rate of 28 per cent to 0 per cent).review any such arrangements to
ensure nolong and short term. An investment strategy basedAny size
of capital gain made on the disposalunnecessary tax charges arise.
purely on saving tax is not advisable.of any kind of asset can be
deferred by re- investment into EIS-compliant companies. TheCapital
Gains Tax (CGT)Individual Savings Accounts deferred gain is then
due on the sale of the EISWith 5 April fast approaching, it is a
good idea to be Individual Savings Accounts (ISAs) provide an
shares unless the sale is to a spouse or on thethinking about using
up your CGT exempt amount Income Tax and Capital Gains Tax
investment death of the shareholder.to make the best use of tax
advantages. For 2012/13wrapper. The maximum investment limits are
set Investments in EIS-compliant shares can attractevery individual
has a CGT exempt amount offor each tax year. Therefore to take
advantage of Inheritance Tax business property relief (BPR)10,600
where no CGT is payable. Any capital gains the limits available for
2012/13 the investment(s)equal to 100 per cent of the investment
value onon disposal of assets or investments are added tomust be
made by 5 April 2013 (this tax year you gifting or on death.income
and taxed at 18 per cent over this exempt canshelter up to
11,280).A Venture Capital Trust (VCT) invests in theamount to the
basic rate limit of 34,370 for 2012/13 An individual aged 18 or
over may invest in oneshares of unquoted trading companies. An
investorand then at 28 per cent for any gains over this. Cash ISA
and one Stocks & Shares ISA per tax year in the shares of a VCT
will be exempt from tax Depending on your income from capital but
limits apply. A Cash ISA allows you to invest on dividends
(although the tax credits are notgains, timing can become an
important issue. up to 5,640 (2012/13) with one provider only, in
repayable) and on any capital gains arising fromIf appropriate, you
should aim to use up yourany one tax year. disposal of shares in
the VCT.personal exemption before 5 April but if your A Stocks
& Shares ISA allows you the option toIncome Tax relief,
currently at 30 per cent, isincome from capital gains is high
enough then youinvest up to 11,280 in the current tax year with
available on subscriptions for VCT shares up tocould wait until the
2013/14 tax year to possiblyone provider. 200,000 per tax year so
long as the shares are heldavoid paying tax at 28 per cent
unnecessarily.If you want to invest in both a Cash ISA and a for at
least five years. CGT liabilities are calculated with your
Self-Stocks & Shares ISA, the overall amount is cappedFinally,
review your borrowings. Full tax relief isAssessment Tax Return and
tax payable is due byand you cannot exceed the 11,280 limit
(2012/13).given on funds borrowed for business purposes.31 January
2013 for the tax year ending 5 April 16 to 17-year-olds are able to
open an adult Cash2012. Therefore part of your planning may be
toISA in 2012/13 and can also have a new Junior ISAleave disposals
until after the year end to give you account. This means that a
combined maximum Isnt it time youanother 12 months to pay the tax
liability.investment of 9,240 (5,640 Cash ISA + 3,600took advantage
of If you have two homes you could considerJunior ISA) is possible
for 2012/13.any tax breaks?making an election, so that future gains
on your Its important to take advantage ofmain residence are exempt
from CGT.Other investments timely tax breaks. To investigate the A
capital gain can also be deferred if theNational Savings &
Investment bank (NS&I) opportunities available to you,
pleasegain is reinvested in the shares of a qualifying products are
taxed in a variety of ways. Some, such contact us today.unquoted
trading company through the Enterpriseas National Savings
Certificates, are tax-free.Investment Scheme.Single premium life
assurance bonds and roll No CGT planning should be undertaken in up
funds can provide a useful means of deferringThe value of
investments can go down as wellisolation. Other tax and non-tax
factors may beincome into a subsequent period when it may be as up
and you may not get back your originalrelevant, particularly
Inheritance Tax, in relation to taxed at a lower rate.investment.
Past performance is not an indicationcapital assets. The Enterprise
Investment Scheme (EIS) allowsof future performance. Tax benefits
may vary as income tax relief at 30 per cent on new equity a result
of statutory change and their value willInvestmentsinvestment (in
qualifying unquoted tradingdepend on individual circumstances.
Thresholds,There is a wide range of investments with
varyingcompanies) of up to 1m in 2012/13. As long aspercentage
rates and tax legislation may change intax treatments. When
choosing investments, shares held for at least three years, the
sale of thesubsequent Finance Acts. 11 12. Wealth creationDo you
needgrowth, incomeor both?Preparing for whatever economic ups and
downs might be aheadThe volatility in global markets over the past
four years has tested the nerves of even the most experienced
investors,making it a difficult time for individuals who rely on
income from investments for some or all of their needs. The
searchfor inflation-beating income is forcing many investors to
move money out of cash accounts and into investment funds,with the
aim of achieving a rising level of income.H ow should you decide
between Balance between investment portfolio and switch from growth
assets growth and income investments? the different asset types to
income as your investment needs change. n Much will depend on your
Wealthier investors, who can cope with a little investment time
frame and what fluctuation in their income and capital, could
lookyou need the investment to provide for you. to include
corporate bonds, property and dividend-What is yourWhen considering
the answer, its important paying shares. Bonds and property
traditionally pay financial personality?not to ignore the concept
of total return. Totalhigher yields than equity income shares, but
equitiesThere are many facets to your financialreturn looks to
combine income with capital have provided the greatest opportunity
for capitalpersonality and many ways to generategrowth to achieve
the best overall return. Onegrowth and growth of income. A balance
betweenboth growth and income from yourway of achieving this is
with equity income the different asset types should provide the
best investments. To discuss the optionsfunds, where investors
saving for retirementchance for a reasonable and growing income.
available to you or to review your currentprovision, please contact
us.could reinvest the income until the day theyIncome-paying
equity, bond and property fundsretire and then elect to have it
paid to them can be a good investment for those investing
forinstead, producing an income without the costscapital growth
too, as its simple to arrange forLevels and bases of and reliefs
from taxationof completely overhauling their portfolio.income to be
reinvested.are subject to legislative change and their
valueIndex-linked investments, such as certain gilts and Whatever
your preference, if you hold a variety of depends on the individual
circumstances of theNational Savings certificates, can protect
againstinvestments, both growth and income, you should investor.
The value of your investments and incomeinflation eroding capital
and income, but in todaysbe better prepared for whatever economic
ups and can go down as well as up and you may get backlow-inflation
world investors need to compare the downs might be ahead of you. As
your financial less than you invested.total return to that
available from an ordinary gilt or situation changes over time, you
should also besavings account.prepared to make the necessary
adjustments to yourPublished by Goldmine Media Limited,Basepoint
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