Your business logo (printed in full-colour), photograph (if required) & business name here. To place an order, or to find ...
Welcome                                             ProtectionEditorial                                         Families f...
06                                                                                                                   IN TH...
Wealth protectionEstate planning requiresa strong foundation anda clear plan of actionHave you made sure your beneficiarie...
IN THE News                                                 Growing up is hard to doTrust in your futureThe structures int...
Retirement                                                                                                     5 April 201...
Wealth creationBeat the AprilISA deadlineYour questions answeredQ: What is an Individual Savings                  Q: How m...
Retirement                                                                                                        18%     ...
InvestmentThe principal tenets ofspreading risk in your portfolioA change in the calendar does nothing to change the inves...
Wealth protectionWhy end-of-tax-year planningshould now be high on your agendaProper tax and financial planning can lower ...
RetirementInheritance Tax (IHT)Use the annual exempt amount of £3,000, the smallgifts exemption of £250 per recipient and ...
IN THE NewsCost of raising achild increases to £218,000Parents would rather do without themselves than radically cut backo...
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Smart Money March April 2012 Singles

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Smart Money March April 2012 Singles

  1. 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 0055 or email sales@goldminemedia.co.uk MARCH / APRIL 2012Navigating Why end-of-tax-year planning should nowthe pensions be high on your agendalandscape Proper tax and financial planning can lower and defer the tax you payThe future is always unknown, Estate planning requiresbut when it comes to retirement a strong foundation and ait pays to be in the know clear plan of action Have you made sure your beneficiaries will be looked after? t the A Bea il IS e Apr dlstions a in deour queered Y w ans The principal tenets of spreading risk in your portfolio A change in the calendar does nothing to change the investment outlook Your contact details & regulator details here.
  2. 2. Welcome ProtectionEditorial Families find discussingT their finances and he end of the tax year is fast approaching and marks a mortality ‘uncomfortable’ significant period of pension change as a result of theFinance Act 2011. The future isalways unknown, but when it comesto retirement it pays to be in the The effects of ignoring the issue and failing toknow. On page 06 we look at someof the areas where clever pension appreciate the value of protecting your familyplanning between now and 5 April The latest Aviva Family Finances Report reveals that many UK families are2012 could provide tax-advantageous putting luxuries ahead of protecting their loved ones financially.solutions for you to achieve theretirement you want. The report discovered that while 50 per cent of time. As a result, many families ignore the Estate planning should start early families are happy to pay for a satellite television issue and fail to appreciate the value ofin life and is for everyone, not just package, just 40 per cent have life insurance. It protecting their family compared to spendingthe very wealthy. It is about ensuring also found that families are more likely to have on other items.control of your estate and planning insurance for their mobile phone (14 per cent)ahead so there are no uncertainties than insurance that will protect their family Avoiding putting measures in placeabout how it is managed in the financially if they were to suffer a critical illness No one likes to dwell on poor health orfuture. On page 04 we consider (13 per cent). mortality, but by denying that illness – or worsehow you could minimise the effect Similarly, more people have taken out an – is even a possibility, people are avoidingof Inheritance Tax and ensure that extended warranty on electrical items (13 per putting measures in place to protect their lovedyour beneficiaries are looked after, cent) than have income protection insurance, ones. Too many people assume that someoneespecially young children or any which would potentially pay an income for life else will step in and look after their families ifdependants who may be vulnerable should they be unable to work as a result of an they weren’t there to provide for them, but theand need special care. accident or illness (10 per cent). reality is very different. A review of your financial and taxplanning to maximise your net income Lack of understanding UNNECESSARY RISKand your business and family assets The report also reveals that the majority of People need to ask themselves just how theyshould now be high on your agenda UK families are avoiding the issue of what would pay for their mortgages, their foodprior to the tax-year end on 5 April they would do if something happened to an and all the other costs of living should they2012. On page 10 find out about income earner because they find discussing suddenly lose an income. While no one likes tohow proper tax and financial planning their finances and mortality ‘uncomfortable’. think about ‘what ifs’, by not even consideringcould lower and defer the tax you This is in spite of the financial worries that these scenarios, people could be putting thepay, freeing up cash for investment, could be caused by not having protection, future financial security of their families atbusiness or personal purposes. exacerbating emotional distress at a difficult unnecessary risk. n A full list of all the articles featuredin this edition appears opposite. n Want help reviewing yourContent of the articles featured in thispublication is for your general information protection strategy?and use only and is not intended to address The right protection strategy canyour particular requirements. They should protect you and your family fromnot be relied upon in their entirety andshall not be deemed to be, or constitute, unnecessary financial hardship.advice. Although endeavours have been We can help you select the rightmade to provide accurate and timely protection solutions for yourinformation, there can be no guarantee situation, so please contact us tothat such information is accurate as of thedate it is received or that it will continue to discuss your requirements.be accurate in the future. No individual orcompany should act upon such information Source – The Aviva Family Finances Report is anwithout receiving appropriate professionaladvice after a thorough examination of in-depth study into the financial needs of thetheir particular situation. We cannot accept 84 per cent of the UK population who live as partresponsibility for any loss as a result of of a modern family.acts or omissions taken in respect of any Data was sourced from the Aviva Family Index, whicharticles. Thresholds, percentage rates and taxlegislation may change in subsequent Finance used findings from over 10,000 people who areActs. Levels and bases of and reliefs from members of one of the six groups of families identifiedtaxation are subject to change and their value above via Opinion Matters. This report is a definitivedepends on the individual circumstances of appraisal of the personal finances of families in thethe investor. The value of your investments UK. Not only does it look at personal wealth, incomecan go down as well as up and you may getback less than you invested. sources and expenditure patterns, but also tracks how these change across the different types of family unit.02
  3. 3. 06 IN THIS ISSUE ss iscu ial o d inanc T f r ing you lannments p ire tainIn this issue u req to ober 08 or furth tion, rma e infopleast us ac cont02 Families find discussing their finances and 08 Expected retirement incomes hit five-year low mortality ‘uncomfortable’ Taking some practical steps The effects of ignoring the issue and now could mean a more failing to appreciate the value of comfortable retirement protecting your family04 Estate planning requires 09 The PRINCIPAL tenets of spreading risk in a strong foundation and your portfolio a clear plan of action A change in the calendar does nothing Have you made sure your to change the investment outlook beneficiaries will be looked after? 10 Why end-of-tax-year05 09 Growing up is hard to do planning should now be Why we are adopting a more mature high on your agenda approach to handling our finances Proper tax and financial planning can lower and defer the tax you pay06 Navigating the 11 12 pensions landscape Are you getting The future is always unknown, but closer to retirement? when it comes to retirement it pays Being able to retire when and how to be in the know you want to07 Beat the April ISA deadline Your questions answered 12 Cost of raising a child increases to £218,000 Parents would rather do without themselves than radically cut back on what they can provide for their children want to make more of your money IN 2012? For more information please tick the appropriate box or boxes below, include your personal details and return this information directly to us. n Arranging a financial wealth check Name n Building an investment portfolio Address n Generating a bigger retirement income n Off-shore investments n Tax-efficient investments n Family protection in the event of premature death n Protection against the loss of regular income n Providing a capital sum if I’m diagnosed with serious illness Postcode n Provision for long-term health care Tel. (home) n School fees/further education funding n Protecting my estate from inheritance tax Tel. (work) n Capital gains tax planning Mobile n Corporation tax/income tax planning Email n Director and employee benefit schemes n Other (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. 4. Wealth protectionEstate planning requiresa strong foundation anda clear plan of actionHave you made sure your beneficiaries will be looked after?Estate planning should start early in life and is for everyone, not just the very wealthy. It is about ensuringcontrol of your estate and planning ahead so there are no uncertainties about how it is managed in the future.Minimise the effect of tax n Certain gifts that you have made in the individuals who are not UK resident or not UKIt can also help minimise the effect of tax last seven years domiciled are different and therefore tax andand ensure that your beneficiaries are n Assets held in trust from which you local laws should be considered.looked after, especially young children or receive personal benefitany dependants who may be vulnerable n If you own assets jointly, your share of Planning for IHTand need special care. Inheritance Tax (IHT) their value is included in your estate There are a number of things you couldis a tax on your estate – the things that do to reduce your family’s potentialbelong to you – when you die and is also IHT matters IHT bill:sometimes payable on trusts or gifts made For the 2011/12 tax year, no IHT isduring your lifetime. charged on the value of your estate up to Make a Will – an effective Will could help IHT is often called a voluntary tax £325,000. This is known as the ‘nil rate to reduce your IHT billbecause, with careful planning, the amount band’ and everything above that is taxed at Look into exemptions – there are ayour estate has to pay could be reduced 40 per cent. number of exemptions you could useor removed completely. From writing a If your IHT nil rate band is not used up to reduce the value of your estate. ForWill, to understanding the exemptions and on your death, the unused proportion can example, moving assets between spousesmaking lifetime gifts, there are currently be transferred to your surviving spouse or or registered civil partners does not createseveral options to help mitigate IHT. registered civil partner. an IHT liability Your estate includes the total of Assets passed to your spouse or Consider gifts – if you can afford to giveeverything you own and a share of registered civil partner are exempt from away some of the assets that you own, it mayanything you own jointly. Things that might IHT (assuming your spouse or partner is be possible to reduce the size of your estatecount towards your estate include: domiciled in the UK), regardless of your Think about life assurance – a life worth and how soon you die after making assurance plan won’t actually lessen then Property them. These rules also apply to gifts made IHT bill, but the proceeds could be used ton Investments to charities. help pay the bill on death if written in ann Insurance (not written in an Additionally, any amount of money you appropriate trust appropriate trust) give away outright will not be counted Consider trusts – if structured carefully,n Payment from a pension plan or for IHT if you survive for seven years after trusts can help to reduce or even eliminate employee death benefit (unless in making the gift. If you die within this your IHT liability n a trust) period, the amount of the gift will ben Other assets, for example, cars, art, included within your estate. Taper relief Tax laws are subject to change, possibly jewellery, furniture may also apply in these circumstances and retrospectively. The rules for individuals whon Gifts you have made but still benefit could reduce the amount of IHT due. are not UK resident or not UK domiciled are from, for example, a house you have Bear in mind tax laws are subject to change, different and therefore tax and local laws given away but still live in possibly retrospectively. Also, the rules for should be considered by a potential investor.04
  5. 5. IN THE News Growing up is hard to doTrust in your futureThe structures into which you can transferyour assets can have lasting consequencesfor you and your family and it is crucialthat you choose the right ones. The right Why we are adopting a more maturestructures can protect assets and give yourfamily lasting benefits. approach to handling our finances A trust can be used to reduce howmuch IHT your estate will have to pay on While 18 is traditionally seen to be the age at which we becomeyour death. A trust, in principle, is a very adults, as a nation we are beginning to delay taking on the roles andsimple concept. It is a legal arrangement responsibilities adulthood brings, according to new findings fromwhere the ownership of someone’s Scottish Widows’ Attitudes to Planning survey.assets (such as property, shares or cash)is transferred to someone else (usually a Grown up per cent) into second place. Leaving full-timesmall group of people or a trust company) Nearly half the population (47 per cent) do education (13 per cent) came in third.to manage and use to benefit a third not feel like a responsible ‘grown-up’ in allperson (or group of people). areas of life until the age of 25, with a third Future plans There are basically several different types (33 per cent) of Britons not feeling like an These figures support the earlier findingsof trust to choose from, however the ones adult until they are 26 or over. Surprisingly, of the report, which showed the youngermost commonly used are Bare Trusts and a massive 49 per cent of those who don’t generation leading the way when itDiscretionary Trusts. feel like a grown-up believe they will never comes to planning for the future. By the feel like a grown-up. time Britons hit their mid-30s, nearly halfDiscretionary Trust However, perhaps the nation is growing (48 per cent) say that they like to planA Discretionary Trust offers flexibility when up more quickly than they think, as Britons what their lives will look like, comparedit comes to deciding whom you would like are starting to take control of their money to just a third (31 per cent) of those agedto be the Beneficiaries. You (as Settlor of matters at an early age, which could 35 and above. These future plans arethe Trust) together with the Trustees can suggest that growing unemployment and clearly weighing on their minds, withchange who the Beneficiaries are at any an uncertain economic climate could be half (50 per cent) of 18 to 34-year-oldstime. The Trustees have ultimate discretion doing this. already worried that they haven’t spentto allocate capital and income to any of enough time planning for retirement. nthe Beneficiaries. Financially responsible However, with a Discretionary Trust On average, well over half (58 per cent) ofthere are possible tax liabilities to be people felt financially grown-up by the timeaware of. So, if you transfer assets to they were 26 years old. Getting their first joba Trust within seven years of death, was found to be the number one life stage atdepending on the value of assets in the which most Britons (29 per cent) started to feelTrust there could be further charges to financially responsible, placing marriage (14consider during the lifetime of the Trust.Bare TrustA Bare Trust ensures that, once named, 48%the Beneficiaries cannot be changed By the time Britonsor added to in the future. Once aged hit their mid-30s, 58%18, a Beneficiary can ask for the trust nearly half say thatto pay their share to them directly. The they like to planmajor advantage of Bare Trusts over what their lives will Percentage ofDiscretionary Trusts is that they are look like people who feltclassed as Potentially Exempt Transfers financially grown-up bywith no immediate or ongoing IHT the time they were 26charges, provided the creator of the trust years oldsurvives more than seven years from thedate of the transfer. Want TO FIND OUT MORE? For further information about the services we offer and to discuss how we could help you protect your wealth for you and your family, please contact us for further information. 05
  6. 6. Retirement 5 April 2012 Clever pension planning before this date could provide tax-Navigating the advantageous solutions for you to achieve the retirement you wantpensions landscape £1.8m Lifetime allowance for 2011/12The future is always unknown, but when it comes toretirement it pays to be in the knowThe end of the tax year is fast approaching and marks a significant period of pension change as a result of theFinance Act 2011. The future is always unknown, but when it comes to retirement it pays to be in the know.These are some of the areas where clever tax year is used first, ensuring the pension Recycling of unused incomepension planning between now and input period for this contribution ends no withdrawals as allowable contributions5 April 2012 could provide tax- later than 5 April 2012. – minimum £3,600 but could be higher ifadvantageous solutions for you to achieve Employer contributions to reduce you have relevant earnings.the retirement you want. taxable profits in trading periods Gifting income using ‘normal Subject to 50 per cent income tax – pay ending before 5 April 2012 – these expenditure’ from drawdown fundspersonal contributions within 100 per cent of can be used for carry forward of unused – reduces potential 55 per cent taxrelevant earnings threshold to reduce taxable annual allowances, for the current annual charge on death from drawdown fund,income below the 50 per cent threshold. allowance and for the 2012/13 tax year. while ensuring future growth is with Adjusted relevant income over Registering for fixed protection – this the beneficiary and not part of taxable£114,950 – pay personal contributions must be completed no later than 5 April drawdown fund. Funding third-partyto registered schemes to reduce taxable 2012. 2011/12 is the last tax year in which contributions to pension arrangements ofincome below £100,000, enabling your money purchase contributions can be paid children or grandchildren is an option.full personal allowance to be regained and if fixed protection is to apply. Maximise this Early crystallisation – for some peopleproviding marginal rate tax relief of year’s annual allowance plus carry forward aged over 55 crystallising benefits this60 per cent on contributions paid of unused relief for pension input periods tax year while the lifetime allowance isbetween £114,950 and £100,000. ending in 2008/09 to 2010/11 tax years. £1.8m will create higher retained lifetime Carry forward of unused annual Clever use of pension input period planning allowance for future use. nallowance from 2008/09 – this will be will allow funding of 2012/13 annuallost if not used. You must ensure the full allowance this tax year to maximise input.£50,000 annual allowance for the 2011/12 Want to discover why a pension is a wise investment choice? There have been some significant changes to financial legislation in the past 12 months and you may be unaware of your entitlements. For more information about how you could benefit from some of the tax planning opportunities that pension funding could provide over the coming weeks, please contact us for further information. . A pension is a long-term investment. The fund value may fluctuate and can go down as well as up. You may not get back your original investment. Past performance is not an indication of future performance. Tax benefits may vary as a result of statutory change and their value will depend on individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.06
  7. 7. Wealth creationBeat the AprilISA deadlineYour questions answeredQ: What is an Individual Savings Q: How much can I contribute to an ISA?Account (ISA)? A: Your annual ISA allowance is £10,680A: ISAs were set up to give you tax in the 2011/2012 tax year. Of this, up Q: What is a Junior ISA?advantages on your savings and to £5,340 can be saved in a Cash ISA A: A Junior ISA is a tax-efficient wayinvestments. There are two types of ISA: with one provider. All of your allowance to save for a child’s future and can beCash and Stocks Shares. You can earn or the remainder can be invested in a set up in the child’s name by a parentinterest free of UK income tax with a Cash Stocks Shares ISA. Bear in mind that the or guardian. You can set up a Stocks ISA and interest free of UK income and value of tax relief depends on individual Shares ISA or Cash ISA or a combinationcapital gains tax with a Stocks Shares ISA. circumstances and tax rates are subject to of both and any investment growth is change; if you don’t pay tax, you will not free of UK income and capital gains tax.Q: Am I eligible for an ISA? benefit from any tax relief. Annual limits are The annual investment limit is currentlyA: To open an ISA you have to be aged also subject to review and the government’s £3,600, but this will rise in line with16 or over if the ISA is a Cash ISA or 18 or favourable tax treatment of ISAs may not inflation from 2013. The money is lockedover if the ISA is a Stocks Shares ISA. You be maintained. away until the child reaches the age ofhave to be resident and ordinarily resident 18, giving the investment time to grow.in the UK for tax purposes, or a Crown Q: What are my annual ISA The child is the beneficial owner of theemployee, such as a diplomat or a member allowance options? Junior ISA. Children are not eligible for aof the armed forces, who is working Junior ISA if they have or were eligible foroverseas and paid by the government. Individual Savings Account a Child Trust fund. n Subscription LimitsQ: What is the difference between a Tax Year 2011/2012Cash ISA and a Stocks Shares ISA? Need help making theA: A Cash ISA is like a normal savings account, Cash ISA Limit £5,340 right ISA decision?but you don’t have to pay UK income tax on Stocks Shares ISA Limit £10,680your interest, provided all ISA conditions are Time is running out if you want to Total ISA Limit £10,680met. Some Cash ISAs are offered as a fixed- take full advantage of your ISAterm or fixed-rate account. allowance before the tax-year end on 5 April. Remember, if you don’t A Stocks Shares ISA allows you to Q: I have used all my annual Cash ISA fully utilise your ISA allowancepurchase investments in a ‘tax-efficient’ allowance for this tax year. Can I still by this date it will be lost forever.manner – your returns are free of UK contribute more? So whatever your wealth goalsIncome and Capital Gains Tax. As your A: As your total ISA allowance is £10,680, if might be, we can help you put thatmoney is invested directly or indirectly appropriate, you could still invest a further plan into action. To discuss yourin stocks and shares, the value of your £5,340 in a Stocks Shares ISA. ISA options, please contact us forinvestment can rise or fall so you could end further information.up with less than you invested. The tax Q: How many ISAs can I have?credit on an ISA dividend is not recoverable.  A: There is no limit on the number of The value of these investments and the The Stocks Shares ISA wrapper lets you ISAs you can hold, but you can only income from them can go down as well asinvest in funds that have no fixed maturity open and subscribe to one Cash ISA up and you may not get back your originaldate, although they are designed to be held and one Stocks Shares ISA per tax investment. Past performance is not anfor the medium to long term (usually five year. This could be a Cash ISA with indication of future performance. Taxto ten years). Their value at any particular one provider and a Stocks Shares ISA benefits may vary as a result of statutorytime will always depend on how well the with a different provider, or both with change and their value will depend onunderlying investments perform, so if this the same provider. However, be sure individual circumstances. Thresholds,has been poor it could be less than the that you don’t exceed the maximum percentage rates and tax legislation mayoriginal amount you invested, irrespective of amount you’re allowed to put into change in subsequent Finance Acts.how long you have held the investment. ISAs each year. 07
  8. 8. Retirement 18% Percentage of those planning to retire in 2012 who have no idea of the level of income they will needExpected retirement to live comfortably 37%incomes hit five-year low Fewer than two in five of the Class of 2012 say that they have saved enough to secure a comfortableTaking some practical steps now could retirementmean a more comfortable retirementPeople retiring in 2012 expect to live on an average annual income of £15,500 – over £1,000 a year less(6 per cent) than those who retired in 2011. The figures come from Prudential’s unique Class of 2012 research,which provides insights into the financial expectations of Britons planning to retire in the next 12 months.Expected annual The perfect storm taking some practical steps now, workersretirement incomes The current economic climate has created and imminent retirees could ensure a moreThe results of Prudential’s annual survey, first the perfect storm for people in the run-up to comfortable retirement. For those whocarried out in 2008, show that expected retirement. The impact of the credit crunch, are still working, it has never been a moreannual retirement incomes have dropped banking crisis, recession and concerns over important time to save into a pension.by more than 16 per cent in the last five the Eurozone has been reflected in the fact However, even if you are due to retire thisyears. The Class of 2008 retirees looked that expected retirement income levels have year, you could still make your retirementforward to a total annual income, including hit a five-year low. funds generate better incomes. nprivate, company and State pensions, of It is concerning that expected retirementapproximately £18,600 – £3,100 a year incomes are going down, while pensioner Need ideas about savingmore than those planning to retire this year. expenditure is going up. However, by for your retirement? As a sign of the ongoing financialchallenges facing those due to retire in To discuss how we could help you to make more informed pension2012, one in five will get by on an expected saving and retirement incomeannual income of less than £10,000. Fewer decisions, please contact us.than two in five (37 per cent) of the Classof 2012 say that they have saved enough tosecure a comfortable retirement. Source – Online survey conducted by Research Plus on behalf of PrudentialGender difference between 2 and 12 December 2011Men are more optimistic about their among 9,614 UK non-retired adultsretirement than women, with 45 per aged 45+, including 1,003 retiring incent of men confident they will be 2012. All retirement income figuresfinancially comfortable compared within this release are rounded to thewith 31 per cent of women. However, nearest hundred.nearly one in five (18 per cent) of thoseplanning to retire in 2012 have no ideaof the level of income they will need inorder to live comfortably.08
  9. 9. InvestmentThe principal tenets ofspreading risk in your portfolioA change in the calendar does nothing to change the investment outlookOne of the principal tenets of spreading risk in your portfolio is to diversify your investments whateverthe time of year. Diversification is the process of investing in areas that have little or no relation to eachother. This is called a ‘low correlation’. Diversification helps lessen what’s known as 2: Sector 4: Company‘unsystematic risk’, such as reductions in the Once you’ve decided on the assets you want It’s important not to invest in just onevalue of certain investment sectors, regions in your portfolio, you can diversify further company. Spread your investments across aor asset types in general. But there are some by investing in different sectors, preferably range of different companies.events and risks that diversification cannot those that aren’t related to each other.  The same can be said for bonds andhelp with – these are referred to as ‘systemic For example, if the healthcare sector takes property. One of the best ways to do this isrisks’. These include interest rates, inflation, a downturn, this will not necessarily have via a collective investment scheme. This typewars and recession. This is important to an impact on the precious metals sector. of scheme invests in a portfolio of differentremember when building your portfolio. This helps to make sure your portfolio is shares, bonds, properties or currencies to protected from falls in certain industries. spread risk around.Five main ways you candiversify your portfolio 3: Geography 5: Beware of1: Assets Investing in different regions and countries over -diversificationHaving a mix of different asset types will can reduce the impact of stock market Holding too many assets might be morespread risk because their movements are movements. This means you’re not just detrimental to your portfolio than good. Ifeither unrelated or inversely related to each affected by the economic conditions of one you over-diversify, you may be holding backother. It’s the old adage of not putting all country and one government’s fiscal policies.  your capacity for growth as you’ll haveyour eggs in one basket.  Many markets are not correlated such small proportions of your money in Probably the best example of this is with each other – if the Asian Pacific different investments that you won’t seeshares, or equities, and bonds. Equities are stock markets perform poorly, it doesn’t much in the way of positive results. nriskier than bonds, and can provide growth necessarily mean that the UK’s marketin your portfolio, but, traditionally, when the will be negatively affected. By investing in The value of these investments and thevalue of shares begins to fall bonds begin to different regions and areas, you’re spreading income from them can go down as wellrise, and vice versa. the risk that comes from the markets. as up and you may not get back your Therefore, if you mix your portfolio Developed markets such as the UK and original investment. Past performance is notbetween equities and bonds, you’re US are not as volatile as some of those in an indication of future performance. Taxspreading the risk because when one drops the Far East, Middle East or Africa. Investing benefits may vary as a result of statutorythe other should rise to cushion your losses. abroad can help you diversify, but you need change and their value will depend onOther asset types, such as property and to be comfortable with the levels of risk that individual circumstances. Thresholds,commodities, move independently of each come with them. percentage rates and tax legislation mayother and investment in these areas can change in subsequent Finance Acts.spread risk further. 09
  10. 10. Wealth protectionWhy end-of-tax-year planningshould now be high on your agendaProper tax and financial planning can lower and defer the tax you payA review of your financial and tax planning to maximise your net income and your business andfamily assets should now be high on your agenda prior to the tax-year end on 5 April 2012.Proper tax and financial planning could General planning Up to £5,340 can be invested in a Cashlower and defer the tax you pay, freeing and tax shelters ISA, the balance held in a Stocks Sharesup cash for investment, business or Reduce exposure to the 50 per cent tax ISA. The tax credit on an ISA dividend ispersonal purposes. With the 40 per rate and/or minimise the loss of personal not recoverable. cent threshold coming down as the tax allowances by deferring income intopersonal allowance goes up, there are 2012/13 where possible, or accelerate Pension rule changesstill ways for higher rate taxpayers to expenditure into 2011/12. Making pension contributions reducesmaximise their allowances ahead of the Consider selling assets that stand at a taxable income.tax-year end. loss in order to crystallise that loss for use Pension rule changes and the transition against current year gains. to the new annual and lifetime limitsMaking sense of your Review your investments to see if any in 2011/12 provide opportunities.planning and finances have become of negligible value which In particular, people who have beenFrom 6 April 2012 the threshold for could crystallise a useable loss. prevented from making pension provisionshigher rate will be taxable income of If you have more than one residence, greater than the £20,000 special annual£34,371, down from £35,001. So, make sure you don’t miss the allowance may be able to increase theireven after including the increase in the opportunity to minimise CGT by electing pension provision in 2011/12 by usingbasic personal allowance from £7,475 within two years of any change in unused allowances brought forward underto £8,105 the normal higher rate combination of residences. the new pension regime’s transitional rules.threshold will remain at £42,475. For withdrawals from 6 April 2012, The annual allowance for contributions We can help you make sense of currency gains and losses will be taken out is £50,000. Any unused allowance maythe areas you need to consider for of the tax net, so avoid crystallising gains be carried forward for three years, butyour planning and finances, which is early but be sure to trigger losses before anything unused from 2008/09 will be lostessential with the ever-changing tax that date. after 5 April 2012.laws and the wide range of financial The lifetime allowance reduces to £1.5mproducts and solutions available. Below Revisit deceased estates from April. Consider if benefits should beare some of the main areas that you If a relative has died within the past two taken or registered for fixed protectionmay wish to consider discussing with us years, a rearrangement of their estate before 6 April 2012.before the tax-year end. could put income into the hands of family members whose income level isMarried couples below the 40 per cent or 50 per centMarried couples should consider whether income tax threshold.equalisation or joint ownership ofinvestments will transfer income to the Individual Savingslower-taxed one. This can be done free Account (ISA)of capital gains tax (CGT) for married An ISA provides saving andcouples and registered civil partnerships. investment in a tax-efficient Unmarried couples can equalisenon-CGT assets such as bank accounts environment. The current annual ISA subscription £50,000and may find it possible to equalise or limit is £10,680.  The annual allowancetransfer assets on which gains are lessthan their annual CGT exemption. Even for pension contributions £10,680if an asset is put into joint ownership The 2011/12only the day before it produces income annual ISA– for example, through interest or a subscription limitdividend – that income will still be splitequally between both owners.10
  11. 11. RetirementInheritance Tax (IHT)Use the annual exempt amount of £3,000, the smallgifts exemption of £250 per recipient and makeregular gifts out of income. Any death benefits from pension arrangementsand life assurance policies should be written in anappropriate trust, so that any proceeds are outside Are you gettingthe estate. Consider lifetime gifts so the seven-year clockstarts to run to mitigate IHT on death. closer to retirement? Review Wills, powers of attorney and estateplanning arrangements. n Being able to retire when and how you want to Making your savings grow and being able to retire when and how you Do you have the best want to is likely to be one of your most important financial objectives, strategies in place to grow but achieving this goal requires planning and perseverance. and protect your wealth? With the tax-year end rapidly approaching, The closer you get to retiring, the There are still steps you could take there is no substitute for professional greater the need to preserve your to boost the income you’ll get when advice. No matter what your age, savings and ensure they will last you retire. personal or financial status, we can help you make well-informed decisions all through your retirement. If you It may also be appropriate to to ensure that you and your family are are approaching retirement, do you combine your various savings ‘pots’ following the best strategies to grow and need to make any further changes to make managing your money protect your wealth. Please contact us to your investments? easier. As you get older you may for further information. You may think you have your appreciate the simplicity of having retirement planned, but could a everything in one place. n Levels and bases of and reliefs from taxation pension shortfall catch you out? are subject to change and their value depends on the individual circumstances of the investor. The Boosting your value of your investment can go down as well retirement savings as up and you may not get back the full amount If you invest in non-pension savings, invested. Tax laws are subject to change, possibly you can use these to supplement retrospectively. The rules for individuals who are your pension savings – and still not UK resident or not UK domiciled are different access your money if you need to. and therefore tax and local laws should be Ensure you have the right mix of considered by a potential investor. investments, which could help your savings outpace inflation. If you are approaching retirement you will generally be able to take up to 25 per cent of your pension fund as a tax-free lump sum. You could use it to supplement your retirement income by reinvesting in a flexible investment. It’s not too late to improve your retirement finances Wherever you are Is your pension with your retirement planning still savings, don’t be on track? put off from Your pension may be up and taking action – running, but that’s not the end it’s not too late. of the story. It’s important that you review your payments, particularly if you have a change of circumstances. To make sure that your pension planning is still on track, please contact us to discuss your requirements. 11
  12. 12. IN THE NewsCost of raising achild increases to £218,000Parents would rather do without themselves than radically cut backon what they can provide for their childrenThe annual Cost of a Child Report [1] from protection and retirement specialist LV=, reveals the cost of raising a child frombirth to their 21st birthday now totals a record £218,024. This equates to £10,382 a year, £865 a month or £28.44 a day.Overall cost Long-term picture Economics and Business Research (CEBR) onThe report shows that the overall cost When considering ways to ease the family behalf of LV= in December 2011 and areof raising a child has increased by budget, it is important that you keep in based on the cost for the 21-year period to3.3 per cent in the last year, with education mind the long-term picture. Cancelling life December 2011. The report also includesand childcare remaining the biggest cover or income protection, for instance, omnibus research conducted for LV= byexpenditures, costing parents a massive as a short-term measure to save money Opinion Research from 3-5 January 2012.£71,780 and £62,099 respectively. The cost can have catastrophic implications if either The total sample size was 2,119 UK adults.of education, including school uniforms, parent were unable to work or weren’t Results have been weighted to nationallyafter-school clubs and university tuition around in the future. representative criteria.fees, has experienced the biggest rise, witha 5 per cent increase in spending over the Parents don’tpast year. begrudge the money The overall cost of raising a child has Despite an uncertain UK economy forcingincreased by 55 per cent since LV=’s first more pressure on the family budget, it’sCost a Child Report in 2003. clear that parents don’t begrudge the money they spend on their children, andNot protecting would rather do without themselvesthe family’s future than radically cut back on what they canSome 50 per cent of parents don’t have provide for their children. nany life cover or income protection in place.Just a third (32 per cent) of parents have life Source – [1] The Cost of a Child Reportcover and only 11 per cent have both life calculations, from birth to 21 years, havecover and income protection. been compiled by the Centre for The costs in detail Expenditure from Total % difference % difference from 2003 birth to age 21 cost from last year - first year of the report Education* £71,780 5.1% 120% Childcare  babysitting £62,099 2.7% 57% Food £18,667 4.0% 25% Clothing £10,781 3.7% -5% Holidays £15,532 1.6% 36% Hobbies toys £9,248 -4.6% 4% Leisure  recreation £7,303 -0.6% 15% Pocket money £4,337 4.8% 28% Furniture £3,373 2.5% 62% Personal care £1,143 2.6% 24% Other (includes driving lessons, first car, £13,761 4.8% 56% birthday and Christmas presents) TOTAL £218,024 3.3% 55%*Does not include private school feesPublished by Goldmine Media Limited,Prudence Place, Luton, Bedfordshire, LU2 9PEArticles are copyright protected by Goldmine Media Limited 2012.Unauthorised duplication or distribution is strictly forbidden.

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