The 2018/19 tax year starts at the stroke of midnight between the 5th and 6th of April.  While many individuals leave tax planning to the end of the tax year, you can look to maximise the benefits by using your personal tax allowances* and reliefs straight away.  Please get in touch to take advantage of one or more of the following: Income Tax (for non Scottish taxpayers) The tax free personal allowance has increased to £11,850 from £11,500 Basic rate tax of 20% will be payable on income above the tax free allowance and up to the new higher rate threshold of £46,350 (which has increased from £45,000). Additional rate income tax remains the same at 45% on income above £150,000 Income Tax (for Scottish taxpayers) New income tax rates and bands apply for Scottish taxpayers. The tax free personal allowance has increased to £11,850 from £11,500. A new starter rate of income tax of 19% for income above £11,850 up to £13,850. Basic rate tax of 20% will be payable on income above £13,850 up to £24,000. A new intermediate rate of tax of 21% for income above £24,000 up to the new higher rate threshold of £43,430. A new higher rate tax of 41% for income above £43,430. Top rate income tax of 46% for income over £150,000. Savings The Junior ISA allowance has risen to £4,260 from £4,128 for children under 18. The adult ISA allowance of £20,000 remains unchanged. If you are 16 or 17 this tax year (or have children of these ages), they can benefit from both the Junior ISA allowance and adult ISA allowance (cash only). The Personal Savings Allowance, which gives you tax-free savings interest, remains £1,000 for basic rate tax-payers.  This reduces to £500 for higher rate tax payers and additional rate tax payers do not get any allowance. Pensions The State Pension has increased by 3%, which for the full allowance is an increase of £4.80 a week to £164.35 Minimum pension contributions (paid by employers and employees) through auto-enrolment have risen to 5% (2% employer and 3% employee) from 2% (1% employer and 1% employee) The Lifetime Allowance for pension savings has increased to £1,030,000. The Annual Allowance stays the same at £40,000 (though this reduces for individuals with income over £150,000 or if you have already accessed your pension savings) Inheritance Tax The Residence Nil Rate Band has risen to £125,000 from £100,000. This can be added to the £325,000 Inheritance Tax allowance when a direct descendant inherits someone’s main house. The annual gifting allowance remains the same at £3,000 and if you did not use it in 2017/18, this can be carried over to this tax year. Investments The tax-free Dividend Allowance has reduced to £2,000 from £5,000 (although dividends received by pension funds and ISAs remain tax-free). There is no change to the taxation of Venture Capital Trusts, so you can invest up to £200,000 and get up to 30% income tax relief. Similarly, the taxation of Enterprise Investment Schemes is unchanged, meaning you can invest up to £1 million and claim up to 30% income tax relief. Capital Gains Tax The Capital Gains Tax allowance has increased to £11,700 from £11,300. Married couples and civil partners will continue to be able to combine their annual allowances. Landlord Mortgages Landlords will only be able to offset 50% of their mortgage interest payments against their rental income (down from 75%). By 2020, there will only be a 20% tax credit saving from a landlord’s mortgage interest. For advice on investments, pensions and tax planning we act as introducers only. Your property may be repossessed if you do not keep up repayments on your mortgage.*This information is based on our current understanding of the rules for the 2018-19 tax year. HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen. The value of investments and any income from them can go down as well as up and you may not get back the original amount invested. The Financial Conduct Authority does not regulate tax, trusts or commercial Buy to Let mortgages.

A house is the biggest purchase many people will ever make and hence taking out a mortgage can be a major decision.  Because of this, it is worth taking the time to understand the basics of them. Mortgage lenders have to abide by the Mortgage Market Review The Mortgage Market Review stressed the importance of looking in greater depth at affordability rather than simply looking at headline figures.  This means that anybody looking for a mortgage can expect to be asked detailed questions about their overall financial situation.  This applies to those remortgaging as well as to first time buyers. There are three main types of mortgages: repayment, interest only and offset Repayment mortgages pay off the loan and the interest thereon Repayment mortgages are arguably the simplest form of mortgage to understand.  You make a monthly payment which covers both the loan principle and the interest due and at the end of the term, you own the property. Interest-only mortgages only pay off the interest on the debt; they do not reduce the principle If you wish to keep the home you purchase, then you will need to have a clear plan in place to repay the loan principle at the end of the term.  If you are happy to sell it, then you will still need to have a plan in place for a situation in which house prices drop to the point where you find yourself in negative equity.  Interest-only mortgages aren’t actually banned in the residential mortgage market but they are subject to serious scrutiny regarding the borrower’s ability to repay them at the end of the term.  They are still very much a feature of the buy-to-let mortgage market as landlord’s are buying property to let out rather than to live in, although there is always the risk of negative equity. Offset mortgages work like giant overdrafts Basically, the idea behind offset mortgages is that you put all of your cash into one place and thus give up the interest you would have earned on your cash savings in exchange for paying less interest on your mortgage.  You still have access to your cash savings although there may be restrictions on how much you can withdraw since mortgage lenders have to keep in mind the need for the loan to be repaid by the end of the term.  These are still niche products, but can offer a combination of security and flexibility. Fixed rate mortgages can provide security but this may be at a price It may be tempting to opt for a fixed-rate mortgage as a hedge against rate rises, but remember that your lender will factor in the prospect of rate rises in the deal they offer you.  On the plus side, knowing what you will be paying each month will provide stability, which may be invaluable. Residential mortgages are for the purchase of residential property If you’re interested in purchasing a property to let out, then you need a buy-to-let mortgage. Letting out your property via Airbnb may be against the rules of your mortgage This goes back to the previous comment about residential mortgages being for residential property.  If you are letting out your property in its entirety, by definition, you’re not living in it at the time.  It is strongly recommended to check your lender’s policy on this. Renting out a room may require consent from your mortgage lender The government allows people to earn £1000 income from property without paying tax on it and there is also the “rent-a-room” scheme, which allows people to earn up to £7,500 from renting out furnished accommodation in their home.  This may be fine with the government, but your mortgage lender may have a different view, it’s strongly advisable to check. Your home may be repossessed if you do not keep up the repayments on your mortgage.

There’s a lot goes in to building a house and commercial housing developments are often a matter of teamwork, with tasks handed out to people who specialise in them.  Private housing development, however, can, within certain limits, work within their own rules and you might be surprised at the options for creating your own home from scratch (or almost).  Here are three options for doing so – and three considerations to keep in mind when making your plans. Renovate an existing property By this we mean, essentially, gutting a property which is currently uninhabitable, or close to it, and making it a desirable dwelling place.  This may not be quite the same as starting from scratch, but depending on the state of the property, it may be pretty close to it, in fact it may bring its own challenges.  On the plus side, if there is already a building on the land, you may find it easier to get planning permission, at least as long as you intend to stick fairly closely to what was already there.  If you’re planning something radically different, planning officials may need more persuading. Buy a prefabricated property and put it together yourself. You can buy a “tiny house kit” from as little as £6,500 plus chassis, although this will only give you the materials for the basic structure and you will have to add electricity and plumbing yourself as well as furnishing it.  Life in a tiny house may not be for everybody, but they can certainly be an affordable way of getting on the housing ladder and could be a good solution for young adults in their pre-child years allowing them to avoid handing over money to a landlord while they build savings towards a family home.  You can also sell on a tiny house when you are ready to move on, although this is still a niche market.  For those looking for something rather bigger, prefabrication is still very definitely an option and can make the building process quicker and simpler although the nature of prefabrication is such that there can be limited scope for customisation, so whether or not this is an appropriate choice depends on what your priorities are. Build a standard house from scratch In this situation you’re only restricted by your imagination, your budget, the realities of your site and the opinion of local planning officials.  This may sound like a long list, but how much of an issue any of these will be will depend on your plans and it’s worth remembering that, in principle, there’s nothing to stop you from starting small and expanding your home as your budget allows (with appropriate planning consent).  This option allows you to take the home of your dreams out of your head and make it a reality. Some practical advice When you create your budget and timescale allow yourself a generous margin of error and be realistic about how much you can realistically expect to be able to borrow on a self-build mortgage.  You may wish to look into getting professional advice on your options here.  Remember that lenders who provide self-build mortgages do not necessarily release all the funds at once.  They may opt to release them in stages when agreed milestones are met. Always keep the issue of planning consent to the fore when designing your dream home.  Planning officers can and do have the power to order owners of unofficial builds to tear down their creations. Check out other legalities too, for example you may be required to use qualified tradespeople for certain tasks and even if the law does not actually require it, your insurance company might.  If you’re tempted to go off grid, look into the legalities of this as well as the practicalities, for example see where your local authority stands on water disposal. YOUR PROPERTY MAY BE REPOSSESSED IF YOU NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Death is a fact of life, but life goes on for those we leave behind and so being prepared for the reality of your own death can go a long way to easing the making life easier for those who stay behind.  Here are five tips to help you do so. Look at minimising the impact of inheritance tax Estate planning can be a complex topic, but the basic idea behind it is that you do everything legally possible to ensure that as much as possible of your estate goes to who and what you love rather than to HMRC.  If you have significant assets (for example if you own a house) you may wish to seek professional advice on this and if you have any assets at all, it can be very worthwhile to keep the concept of estate planning in your mind during your later years. Put your trust in insurance Life insurance policies can be ring-fenced into trusts, which has two big advantages for the beneficiaries.  The first is that it means that the payout can be made before probate is completed and the second is that is means that the money is excluded from the estate itself for the purposes of inheritance tax calculation. Make a will You have two choices, you take control of who gets what and how by making a will or you leave your estate to be divided up according to rules laid down by the government.  While considering this, you might also wish to consider the fact that while wills and inheritance planning are separate, hence the two separate points, they are related and the way in which you bequeath your assets can influence the amount of inheritance tax, which is ultimately payable.  You may remember that the late, great Rik Mayall died without a valid will, leading to much press speculation on how this would impact the tax payable on his extensive estate. Give guidance as to your wishes regarding the disposal of your body These days a funeral can be anything from a cremation with ashes being sent into outer space (literally) or turned into diamonds (also literally) to a simple burial in an environmentally-friendly casket and wakes can be anything from massive parties to small gatherings of family and close friends.  Setting out your wishes clearly can make it much easier for your nearest and dearest to organise the funeral you want rather than them having to try to second-guess your wishes. Put your (digital) paperwork in order In the old days, people had to think about storing paperwork safely so that it would be both protected from damage and accessible upon their deaths.  These days, there is still an element of this, it will probably be quite some time before it becomes acceptable to keep important legal documents such as wills and land registry documentation in purely digital format.  In fact, arguably anything which is really important should be recorded both on paper and in a digital format.  For example in addition to keeping a paper copy of your will yourself, you can scan a copy of it and keep it in electronic format and also keep a digital note of where your paper copy is kept and the details of the solicitor who drew it up. You should also keep details of any financial products you have such as: bank accounts, credit cards and loans including mortgages, investments, pensions and insurance policies. It is also a good idea to keep relevant documentation for any assets you own, particularly valuable ones such as your house, for example in addition to your mortgage and insurance details, you might find it useful to leave details of any work you had done on your house and any associated guarantees. Finally, in this day and age, you may also want to think about digital assets such as social media accounts. For Estate Planning, Wills, Tax and Trust Advice we act as introducers only The Financial Conduct Authority does not regulate Estate Planning, Wills, Tax and Trust Advice.

The importance of saving for retirement has been really driven home over recent years, particularly with the auto-enrolment campaign (“We’re all in”).  Here is a quick look at the four types of pension and what happens to them upon the holder’s death. The state pension A state pension is given to an individual (even though there are certain circumstances in which a person may be able to claim a state pension based on another person’s contributions).  Therefore, it ends upon the death of that individual. Defined benefits pensions These operate to their own set of rules and hence holders of such pensions would need to check what happens to them upon their deaths. Annuities-based pensions The key point to remember about buying an annuity is that once it is bought it is a done deal.  Therefore, if it is important to you that there is at least the option of your nearest and dearest receiving a legacy from your pension fund after your death, you need to look into this before buying your annuity since it is too late to do it afterwards. Pensions based on income drawdown Since “pensions freedoms day” 6th April 2015, holders of pension pots have been able to bypass the traditional annuities route and use their pension funds essentially as standard investment funds with which to generate an income.  Depending on the investor’s success, there may or may not be capital left over upon their death.  If there is, they are now able to pass the funds onto their chosen beneficiary or beneficiaries by means of a scheme called Nominee Flexi-Access Drawdown and then when the chosen nominee(s) die(s), they can pass it on to their chosen beneficiary by means of a scheme called Successor Flexi-Access Drawdown.  Under current rules, this process can essentially continue indefinitely, as long as there are funds left in the pension fund. In addition to the obvious benefit of being able to pass on your assets to those you love rather than simply handing them back to the company behind an annuity, there is the further benefit that the pension fund itself is excluded from the calculation of the value of the estate for the purposes of inheritance tax calculation.  What’s more, if the current holder of the pension fund dies before their 75th birthday, subsequent drawdowns (withdrawals) will be paid out free of income tax.  After that age, they are taxed as income but still free of IHT. NB: the Nominee Flexi-Access Drawdown scheme was introduced in April 2015, after the initial pensions freedoms, hence existing plans may not be set up to accommodate the scheme.  It is therefore recommended to check promptly whether your current pension scheme has this option and if not to take professional advice as to your best options. A final point about pensions There is a major difference in meaning between the words can and should.  You can choose to use income drawdown to fund your retirement and if you do you may have capital left over to bequeath to your chosen beneficiaries.  At the same time, however, it’s important to remember that the whole purpose of retirement funds is to fund your retirement and that any legacy you can leave is a bonus, which will benefit someone else rather than you.  It’s also important to remember that it may still be possible for you to leave a legacy even if you go down the route of an annuity-based pension, you would just have to look at other options for doing so.  Annuities-based pensions are still a valid way of ensuring an income in retirement and for some people may be a far superior option to income drawdown (whereas for others they may be a terrible choice).  It is therefore strongly recommended to take professional advice before making any major decisions with regard to your retirement. For Investment and pension advice we act as introducers only.

This week interest rates are on everyone’s mind. There are various ways to measure inflation but the basic idea behind them is much the same, inflation indexes track the changes in a basket of goods and services which is considered to be a good representation of how the average person spends their money.  Of course, whether or not it is a good representation of how you personally spend your money, depends on how closely you fit the model of the “average person” and this can work both ways, in other words, you might find that your personal rate of inflation is higher or lower than the official measure. Inflation and income There are essentially two ways inflation can influence income, one is direct and the other is indirect. Direct – inflation as a measure for wage and pension increases Employers can use the official rate of inflation as a convenient measure for determining annual, standard wage increases (i.e. wage increases which are unrelated to either promotion or performance).  It also forms part of the current “triple-lock guarantee” on state pensions (i.e. that they increase by the rate of standard earnings, inflation or 2.5%, whichever is the greater). Indirect – inflation as a parallel to interest rates When inflation is low, if a central bank wants to try to stimulate the economy, it has a choice between lowering interest rates or using quantitative easing.  If inflation rises, however, and a central bank wishes to put a gentle brake on the economy, then it really only has one tool at its disposal, which is to raise interest rates.  This is good news for savers as it increases the interest income they receive but of course it is bad news for borrowers since it increases the amount of interest they need to pay and hence reduces their effective income. A little inflation is seen as a positive The Monetary Policy Committee of the Bank of England is charged with keeping inflation at exactly 2%.  Of course, it's very hard to make sure a moving target stays in exactly the same position, so the MPC is allowed 1% leeway either way before it is called to account for its actions.  A reasonable level of inflation is seen as a stimulus, encouraging people to take action now rather than waiting for prices to rise further.  By contrast stagflation (static prices) or deflation (falling prices) can both encourage people to put off purchases in expectation that waiting will either make no difference or might even be beneficial. Incorporating the reality of inflation into your financial management strategy In very simple terms, any investment decision you make must at least match inflation in order for you to break even and must generate returns which exceed the rate of inflation in order for you to make a profit.  For example, in the current low-interest-rate environment, cash deposits in savings accounts are highly unlikely to make the sort of returns needed to beat inflation, although there may be other, perfectly valid, reasons for keeping them, in which case looking at strategies such as putting them in an ISA wrapper may be valid.  By contrast, stocks in start-up companies may offer the prospect of massive returns – although there may be a very high level of risk involved with them. The skill of balancing risk and reward is at the very core of successful investing and one of the key points which successful investors need to understand, is that sometimes the investments which seem the most safe can actually carry a high risk of their own, namely the risk of having capital devalued by the impact of inflation.  This is not, of course, to say that investors should see this as a sign to dive into the higher-risk end of investment vehicles, just that they may benefit from opening their minds to investments they might otherwise have rejected out of hand for being slightly too risky for their tastes. The value of investments can fall as well as rise. You may get back less than you invested.

When it comes to working out how much money you’ll need to pay for something, you need to have at least a reasonable idea of how much it’s going to cost.  This holds as true for retirement as for any other aspect of financial planning. Working out the cost of your retirement Look online and you can find plenty of sources giving suggestions as to how much you’ll need to enjoy a comfortable retirement.  These may be good places to give you some inspiration, but the reality is that the cost of your dream retirement will depend entirely on what your dream is.  For example, if you want to spend your winters cruising somewhere rather warmer than the UK then you’ll need more than if you’re happy to spend them curled up by the fire with a pile of good books.  Even if you decide to let dreams take care of themselves and concentrate on practical needs, the fact still remains that the cost of living in the UK varies widely depending on where you live and that is before you start thinking about options such as retiring abroad.  Likewise the opportunities for earning extra income can vary depending on where you live.  That being so, realistically, you will need to do your own sums when it comes to deciding how much money you will need for your retirement. Working out how much you need to save per month to finance your retirement This is actually a hard question and as such you may find it very beneficial to get professional help to answer it.  The only truly simple answer is: “as much as you possibly can”, but this is likely to be of very little practical help given that most people have to work out how to balance the competing priorities of dealing with decisions taken in the past (such as debts) and managing the present as well as preparing for the future.  The practical answer to how much you need to save per month to finance your retirement will depend on a number of factors such as your current age, your intended retirement age and your plans for retirement as well as what you can realistically expect to receive as a return on your retirement-related investments.  Remember, however, that the phrase “how much you need to save” can include contributions made by employers (such as workplace pensions) as well as money gained as a result of tax breaks for pension savings, so even though the numbers may look big and scary, you may be able to get help to achieve them, perhaps more than you currently realise. Working out the practicalities of how you are going to save for your retirement This is another very broad topic with which it may be useful to get professional help.  The first step in working out the practicalities of how you are going to save for your retirement is to work out how to maximise your disposable income, so that you have as much money as possible to save for retirement (or to put towards other purposes).  After that you may wish to look at what your options are for getting “free money” for example employer contributions (such as under the auto-enrolment scheme) and tax incentives for saving towards your retirement.  It’s also worth noting that while “retirement saving” and “pensions contributions” can often seem pretty much one and the same thing, you can save towards your retirement in other ways, such as via a Lifetime ISA or even a standard ISA, although only the former attracts government contributions as well as tax benefits. For Pensions we act as introducers only

The blunt reality of insurance is that insurance companies are businesses and as such they aim to make a profit. The onus is therefore on the buyer to get right type of cover and the right level of cover and, of course, to provide the insurance company with any relevant information needed to assess the price of the premiums. Let’s look at these one at a time. The right type of cover First of all you need to decide what, in your life needs to be insured. This could be anything from your jewellery to your pets to your health to your income. Then you need to look at what your options are for insuring them. For example, these days it may be possible to cover consumer electronics under your home insurance or through a specialist policy. Which one is right for you will depend on your particular circumstances. Sometimes you may find that you need more than one form of cover to give you the security you need, for example, if you are self employed, you may benefit from income protection cover, payment protection cover and critical illness cover, which are all essentially different elements of the same general concept. The right level of cover Depending on your situation this can be a prime example of easier said than done. If you’re a student moving into halls/a student flat then you’ll probably have a fairly good idea how much your belongings are worth and hence what sort of level of cover you need. If, however, you’re an adult with a house full of possessions, of which you’ve long since lost track, then deciding on the right level of cover can be a bit more complicated. Having said that, you probably have a good idea of what really matters to you, so take that as a starting point. Remember that insurance, like life, is a work in progress and so it’s important to keep tabs on your level of cover and adjust it upwards or downwards as your circumstances change. For example, if your only reason for having life cover is because you have a mortgage, you can lower the level of your cover as you pay off your mortgage. It should, however be noted that even though overpaying for excessive cover carries a financial cost, it is generally far less of a potential problem than underpaying for inadequate cover. Making yourself an attractive client – ethically Ultimately insurance is a business of risk and reward and, hence, anything you can genuinely do to lower your risk to insurers is likely to be rewarded in the form of lower premiums. An obvious example of this is giving up smoking, which is, understandably, looked on very favourably when taking out health and life insurance. Sometimes it is possible to improve your premiums, if only slightly, with a little finesse. For example, in some forms of insurance, for example car insurance, occupation can be taken into consideration. Therefore if you have a job which can reasonably be described in different ways, then you may want to do some research into which definition is likely to get the best response from an insurance company. At all costs, however, avoid the temptation to tell “little white lies” even if “everyone else is doing it”. For example, if a teenager is the main driver of a car then they need to be listed as such, even though it’s almost certainly going to make a sharp difference to the premiums. Leaving aside moral issues, the simple reality is that insurance companies may take your word about facts when they are taking your money for premiums, but in the event of a claim, they may well decide to do their own fact checking and that is when you could find yourself facing significant problems.

It’s probably fair to say that in the UK, topics related to the NHS tend to make their fair share of news headlines, both positive and negative. The NHS can and does save lives, but at the same time, it is facing (more than) its fair share of pressures, both in terms of budget and in terms of possible staffing issues post Brexit. It is therefore, arguably, hardly surprising that sometimes the NHS is unable to deliver either the level of care or the speed of care patients and their families would prefer. Crowdfunding is the new charity appeal The basic concept of people needing medical care getting help from their community when the NHS was unable to meet their expectations is nothing particularly new. Prior to the advent of the internet and the digital age, people ran official or unofficial charity appeals to help raise funds either for their own treatment or for the treatment of someone they loved. The digital age has, however, helped to make this fact more visible since it is much easier to look at the entries on crowdfunding sites than to keep track of appeals, large and small, across the UK. The statistics are revealing. On the crowdfunding site JustGiving, a total of 2,348 medical-treatment-related campaigns were initiated during the course of 2016 – as compared to a mere 304 in 2015. That’s an increase of around 700%. Cancer still kills – and it kills children As a parent, when you think about your children’s health and wellbeing, the idea of them getting cancer may seem far-fetched but actually any child under the age of 15 has approximately a 1 in 500 chance of being diagnosed with cancer and even once they reach their young adult years (15-24) the danger is far from over with over 2000 young adults being diagnosed with cancer each year. In fact, it is the most common cause of death in children (aged up to 15), ahead of the likes of traffic accidents, even though the latter may be far more visible. While children in the UK are typically eligible for NHS treatment, the treatments available and the speed with which it can be delivered may fall rather short of what those on the receiving end would consider ideal. Even when the NHS can deliver what is required with the minimum possible delay, the consequences of a child becoming ill can really drive home the fact that children and specifically childcare can be very expensive. Even if one parent is already a home maker, the extra requirements of caring for a sick child can mean that they need additional help either from their partner or family or from professionals. Either of these options has the potential to have a severe impact on the family finances, which can put a strain on the strongest of relationships at what is already a difficult time. Critical illness cover can protect both adults and children When looking at insurance, it may be tempting to focus on the breadwinner(s) in the family to protect the income they generate in the event that they become unable to work. In reality, however, if one member of a family falls victim to a critical illness, then the impact is very likely to extend to the family as a whole and that impact may well have a (significant) financial element even though the child in question is too young to bring in any meaningful income. Because of this, it can be very advisable for parents to take out critical illness cover for both home makers in a family and for minor children (and to encourage young adults to take out their own policies) as well as for income earners.

Managing your money in a tax-efficient manner is generally to be recommended at any stage in life, but it’s arguably most important for pensioners, who need to make the income they’ve earned during their working years, last them all of the rest of their days, literally. Over recent years, the government has permitted greater flexibility with regard to how people can manage their pension, however greater freedom brings with it a greater degree of responsibility for people to understand what their options are and what they mean in practical terms. You have several options as to how to treat your pension pot when you reach retirement ageOption 1 – withdraw up to 25% of your pension pot as a tax-free lump sum and use the rest to buy an annuity. This was one of the only options prior to the world of pension freedoms and it may still be a very good option for some people. Annuities have the advantage of reliability and simplicity and in some cases these may be major selling points. Option 2 – withdraw up to 25% of your pension pot as a tax-free lump sum and reinvest the rest to provide an income (known as income drawdown). This approach carries the usual risks and rewards of any form of investment and as such benefits from being well-managed. Option 3 – withdraw cash lump sums on a regular basis, paying tax on 75% of each withdrawal. This keeps your pension pot in limbo, so to speak, in that you neither get the security of an annuity nor the potential returns offered by income drawdown. Option 4 – withdraw the full pot as a lump sum and pay tax on 75% of it. This option is only likely to be recommended in a very small percentage of instances. Option 5 – leave it be for the time being. You can simply leave your pension pot to grow until you have need or want to use it. Pensions income is taxable but you still have a personal allowance At current time (2017/2018 tax year), if your total income is less than £100K, the first £11.5K of your total income is tax free. The key word here is total income, in other words, if you have non-pension income, such as income from employment, then this will also count towards your taxable income. If you find you can live comfortably on less than your personal allowance, it may still be worth your while to withdraw extra income from your person, to make the most of your tax-free income allowance each year. If you earn £100K or more, then each £2 you earn reduces your personal allowance by £1, hence, if you earn 123K or more, then your personal allowance will be eliminated. Other standard tax-free allowances still apply You can still hold ISAs and take advantage of their tax effectiveness. For example, if you withdraw more income from your pension than you actually need in order to make the most of your personal allowance for income tax, you could find it useful to place the extra in an ISA (cash or any other form) to shield it from tax. If you want, or need, to hold funds outside of an ISA wrapper, there are further options available to you. At this point in time, you have a dividend allowance of £5K although this is due to reduce to £2K next (tax) year. Similarly you have a personal savings allowance of £1K (base rate tax payers) or £500 (higher-rate tax payers), meaning that you can earn interest on savings up to this amount without having to pay tax. For pension and investments advice we act as introducers only.

Money only has any meaningful value, when it’s used to help you achieve your goals. When you’re thinking of how to allocate your disposable income, here are five outcomes you may wish to keep in mind. Looking after yourself and your loved ones It may lack glamour, but having the right insurance in place can make a huge difference in difficult times. When thinking about insurance, it’s often a good idea to start by thinking of yourself. What would happen if you A) lost your job, B) became ill and required care or C) died? You need to determine what sort of funds you would need to be able to keep going comfortably in order to be able to determine whether or not any existing protection is sufficient. Then broaden the net to the people you love, your pets and your possessions. Finally, think about your daily life and consider whether there are any ways you could feasibly cause accidental damage to someone else or even just be blamed for it and if so whether insurance could mitigate this. For example, third-party insurance is mandatory for drivers, but cyclists could also benefit from it since they will have someone on their side if they are blamed for an accident. Likewise third-party insurance for pets, particularly dogs, can also come in useful. Preparing for your later years As long as you live, you’re only going to get older. When you’re in your twenties, your later years are literally a lifetime away, but starting your preparations early can really give them a head start. The older you get, the closer your later years get and the more important it is to be ready for them. Planning for your own death In simple terms, as soon as you have either A) assets or B) people who depend on you in any way at all, then you should really be thinking about what will happen to them in the event of your death. This applies even if you’re a young adult. Sadly young people can and do die and those with assets and/or personal responsibilities need to be prepared for that possibility. Saving and investing for your future plans The main difference between saving and investing is that saving emphasizes preservation of capital, whereas investing emphasizes growth. For most people, both form an essential part of achieving their plans and life goals. Organising a place to live For many people this phrase will translate as “buying a house” but there are other options, such as building your own home or living on board a boat. You may even enjoy the flexibility of renting and having the use of a home without the responsibility of maintaining it. Whatever your preferences, you do need somewhere to live and hence this fact should be incorporated into your financial plans. Your plans are your own but help is available These days there seems to be a whole barrage of adverts from companies which claim that they can either offer you the cheapest deal themselves, or get the cheapest deal for you. The problem here is that the deal with the cheapest headline price may actually be inappropriate for your situation and you may only find this out when you have already spent a lot of money on it and need to make use of it only to discover that it falls short of your expectations. Getting professional advice can help to avoid this pitfall and to ensure that you get the deal which delivers the best value to you and the people you love. They will also work to get this deal for you at the best available price. Ideally, you should have a “financial health-check” with an adviser on a regular basis and certainly in preparation for any major life change, such as a house purchase or the arrival of a new baby.

As we prepare to bid a (fond) farewell to the year 2017, here’s a quick round up of the year’s main financial news. January While it wasn’t, strictly speaking, financial news, the inauguration of President Trump, was pretty much guaranteed to set the stage for some major changes in numerous areas, including financial changes.  As the UK looks to leave the EU, it will presumably have to negotiate a trade deal with President Trump and his government. March The triggering of Article 50 and the consequential start of the Brexit negotiations was arguably the single, biggest financial event of 2017, at least from the perspective of people living in the UK. March was also the month in which the UK held what was billed as its last ever spring budget.  The chancellor, Philip Hammond, declared that going forward, budgets would be presented in the autumn.  This, however, is unlikely to be the point for which the Spring 2017 Budget will be remembered.  It is, arguably, far more likely to be remembered for the chancellor’s decision to raise national insurance for the self-employed and the political furore which resulted.  Ultimately the chancellor backed down. May The election of President Macron put an end to fears that the far right would take power in France and set France on the path to economic reform.  At present time it remains to be seen how far and how fast France will travel down that path, let alone where it will eventually lead or what implications it will have for the UK.  President Macron is likely to be one of the major figures on the EU’s side of the Brexit negotiations. June Right after the French election, the UK had an unexpected election, which, it was hoped, would bring about a more decisive result than the 2016 election.  In actual fact, it left the Conservatives with an even smaller majority and a “confidence and supply” deal with the DUP.  From a financial point of view, what was noticeable was not just what parties offered in their manifestos, but what they didn’t.  For example, the Conservative manifesto conspicuously did not include a promise to refrain from raising national insurance for the self employed. July The government announced plans to ban retailers from charging customers for using payment cards (both debit and credit).  While the change is in response to an EU directive, the government has gone further than the directive required by also banning charges for the use of ewallets such as PayPal.  On the one hand, it’s understandable that governments would wish to encourage the use of digital payments in an attempt to squeeze out the (untaxed) cash economy.  On the other hand, it will be interesting to see the effect of this move in practice, since real-world retailers have the option to stop accepting payment cards and online ones could simply move to “handling fees”. September While Angela Merkel technically won a historic fourth term as German chancellor, her party did not win an outright majority and has struggled to form a coalition.  To put a new twist on an old joke, when Germany sneezes, the EU catches a cold.  More accurately, it is likely to be difficult for the EU to progress with key decisions until they know which way the political winds will be blowing in Germany.  A long period of political uncertainty in a key EU state could turn out to be very unsettling both for the markets and for Brexit negotiators. November Inflation saw the Bank of England raise interest rates from 0.25% to 0.5% and a new mandate saw Philip Hammond u turn on his spring u turn and start to implement his plan to increase national insurance for the self employed.  Presumably the increased revenues he expects to collect from the self employed will at least help to cover the stamp duty exemption he granted to first-time buyers (for the first £300K of homes costing up to £500K) and the 3% increase in the state pension promised for next year.