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Time to review your position

There are a number of issues which can, relatively easily, help minimise your liability:

1) Use your allowances

You get a tax-free allowance for both income and capital gains. Most of these cannot be carried forward, so use them each year as much as you can.

2) Maximise your pension contributions

You can now get tax relief on pensions contributions of up to 100% of your salary each year (subject to lifetime limits). It is worth making sure you maximise your contributions – and select the right pension or investments – to help ensure a secure retirement.

3) Consider tax advantageous investments

You get an annual ISA allowance to help reduce your income and capital gains tax bill on investments. This can shelter a whole range of different assets – from secure building society accounts right through to higher risk equities. For those with a significant tolerance for risk, there are also some even more sophisticated schemes available which might be of interest.

4) Plan your inheritance

Inheritance Tax now comes with the ability to pass unused allowances between married and civil partners. If you have not already done so, this is a good time to also look at your plans for beneficiaries and ensure you are making the best of all opportunities now available.

At Census Financial Planning, we have the independence, the qualifications, the experience and the research capabilities to help you make the most of the financial opportunities available. If you would like our help, please give us a call on 02890 668700 or email us at [email protected]. It could save you a great deal.

Note: The Financial Services Authority does not regulate tax advice

from Census Financial Planning http://bit.ly/10mLdh9

Ten reasons to use Census Financial Planning

No 1: To protect your family

There are a lot of people trying to sell you insurance of one type or another but we can tell you which one is actually worth buying. We will assess your position and guide you through the best options to protect yourself and your family - regardless of whether you are single, married, have children or they have long left home. Whatever your needs, we can help ensure personal tragedy does not turn into a financial crisis.

No 2: To help plan your spending – and saving

To secure your long-term future, you need to build some assets, initially to get you through the rainy days and then to pay for holidays and luxuries. Step one is to plan your spending so that you begin to save – and step two is to plan that saving so that you can build your wealth as efficiently as possible. Regardless of whether you currently have £10 or £10,000, our financial planners will look at your situation and find the best starting point for you.

No 3: To help you plan for retirement

Once you have sorted out your short-term saving needs, you can then start thinking about the long-term – and most people these days realise they cannot rely on the State for more than the absolute basics. However, planning for retirement is a complex business and there are many different options available. Pensions have come a long way in terms of flexibility and transparency in recent years and now offer a wide range of investment options. Our financial planners will not only help sift through the many rules and product options but also help construct a portfolio to maximise your long term prospects.

No 4: To secure your house

The mortgage market was complicated enough already, with its discounts and variables, AERs and caps, indemnities and early repayment charges. Then the credit crunch hit and things have got even worse. However, buying a house is still one of the most expensive decisions we make, and the vast majority of us need a mortgage. Our financial planners could save you thousands over the term of the mortgage, particularly at times like this. Not only can we use our specialists to seek out the best rates, we can help you assess sensible levels of borrowing, make the most of your deposit and might also find lenders who would otherwise not be available to you.

No 5: To help meet your investment goals

As you progress through life, you begin to build your assets and your income begins to increase. You then start considering how you can enhance your position rather than simply consolidate it. This could mean anything from looking to retire early through to paying school fees for private schools or investing in overseas property. However as your dreams evolve, a financial adviser can help assess what is realistically possible – and put the best plan in place to help you achieve it.

No 6: To find the right combination of assets

Investment is as much about protecting the potential downsides as it is about targeting maximum growth. High returns are often associated with high risk – and not everyone is happy if their investment falls by a third or more overnight. Our financial planners will make a detailed assessment of your attitude to risk before making any recommendations. They will also ensure you don’t put all your eggs in one basket by helping you diversify not only across asset classes but also across accounts, individual funds and product providers.

No 7: To obtain an objective assessment

Every new product or investment opportunity is accompanied by hype, proclaiming it is the best ever – but that does not mean it is right for you. Investors the world over have been and will continue to be caught out by market bubbles or high charges because they don’t take a step back. Our financial planners know how products and assets work in different markets and can outline the downsides for you as well as the benefits. Between you, you can then make a more informed decision about what hype you can believe – and what products you really need to avoid.

No 8: To save money

Once your risk and investment assessments are complete, the next step is to look at tax and even the most basic overview of your position could help. It may simply mean using ISAs or a pension plan to benefit from Government incentives or it could mean choosing growth assets over income to use capital gains allowances rather than pay income tax. Alternatively, for more complicated arrangements, it might mean moving assets to your spouse or children to make full use of their personal allowances. Our financial planners will always have your tax position in mind when making recommendations and can help point you in the right direction even in complicated situations.

No 9: To keep you on track

Even when you have every product you need taken care of and your investments are set up and running to plan, someone needs to keep an eye on them in case changes in markets or abnormal events push them off course. You can ask our financial planners to do this monitoring work for you. They can assess the performance of individual investments against their peers, ensure that your asset allocation does not get distorted as markets move and also help you consolidate gains as the dates of your ultimate goals approach.

No 10: For peace of mind

Money is a complicated subject and there are many things you need to think about to both protect it and make the most of it. Markets are volatile and the media is prone to exaggeration of both the risks and the rewards. Employing a good financial planner can take the emphasis away from you and move it into the hands of an expert.

Whether you need general, practical advice or a specialist with dedicated expertise, the money you invest in taking advice could be paid back many times over in the long term.

Your home may be repossessed if you do not keep up repayments on your mortgage.

For mortgages we can be paid a fee, usually £1141.20, or we can also be paid by a combination of a minimum fee of £462.94 and we will also retain commission from the lender. Changes in the exchange rate may increase the sterling equivalent of your debt.

from Census Financial Planning http://bit.ly/Yo75se

Making Financial Resolutions

So, we’ve put together the top four financial resolutions for you to consider as you look forward to 2013. Resolution 1: Set clear goals It is imperative to set clear and concise financial goals. Be specific and include actual figures and measurements. I’m sure you’ve heard this many times before, but sometimes the old ones are the best ones. Resolution 2: Address your debts Make a list of your debts and arrange them by interest rate. Prioritise paying off those with the highest rate and pay them off first before you start to save. It can be counterproductive to save when your debts are incurring higher interest than any savings might accrue. Resolution 3: Build your savings Once your debts are clear, set up a savings plan to ensure you make the most of the money you are putting away. We can help you build a bespoke programme that will ensure you maximise your opportunities with ISAs, pensions and the right investments. Resolution 4: Time to remortgage? With a New Year and an improving economic situation – albeit slow! – if your mortgage is up for renewal this year, you might find you can save money by shopping around rather than simply reverting to the standard rate. Speak to us and we can take a look for the best deals. Your home may be repossessed if you do not keep up repayments on your mortgage. For mortgages we will be paid by commission, or a fee of usually £462.94 or a combination of both. Further information The New Year is a great time to review every aspect of life and start thinking about how you can improve them. Therefore, if you would like to discuss any of your financial matters in more detail, please do not hesitate to give us a call on 02890 668700 or reply to this email. In the meantime, Happy New Year and I look forward to helping you further in 2013.

from Census Financial Planning http://bit.ly/Wb3yy5

Global Outlook

Elsewhere, the World Bank reported a 10% surge in global food prices during July, caused by drought in the US and Eastern Europe. The news generated speculation that higher food prices could fuel inflationary pressures – particularly for nations who are net importers of grain.

Share prices rallied at the end of the month following a speech by US Federal Reserve chairman Ben Bernanke that triggered fresh speculation the US central bank might initiate additional quantitative easing measures to kick-start the country’s economy. Bernanke described the country’s economic predicament as “far from satisfactory”, and warned that the labour market remains “a grave concern”. As the US Presidential elections draw closer, unemployment is likely to remain a crucial issue for the country.

US economic growth for the second quarter was revised upward to 1.7% from 1.5%, but remains below the previous quarter’s growth of 2%. The Congressional Budget Office warned that higher taxes and lower levels of government spending could undermine economic expansion in the US next year. As for markets, the Dow Jones Industrial Average rose 0.6% during August.

After stagnating during the first three months of 2012, the eurozone’s economy contracted by 0.2% during the second quarter – although the overall euro region is not technically in recession since its economy has not yet registered two consecutive quarters of negative growth. Germany’s Dax index and the French CAC 40 rose by 2.9% and 3.7% respectively over August.

In comparison, the UK economy – which is already in recession – contracted less severely than initially estimated during the second quarter of 2012, shrinking by 0.5% during the period rather than by the 0.7% that was previously calculated. The boost was provided by stronger-than-expected activity in the construction sector. The FTSE 100 rose 1.4% during the month though trading volumes were relatively muted over the summer holiday period, exacerbated by the London Olympic Games.

Various factors continued to place Japan’s economy – and its exporters – under pressure, including the persistent strength of the yen, the eurozone’s sovereign debt crisis and an anaemic economic recovery in the US. The benchmark Nikkei 225 index rose by 3% during the month, despite disappointing news about consumer confidence and industrial production.

from Census Financial Planning http://bit.ly/Qh0sm5

Update on pension reform

The imminent arrival of NEST (National Employment Savings Trust) has been well documented, and is intended to encourage individuals to take responsibility for financing their old age. Also a new law is being introduced requiring employers to automatically enroll qualifying employees in a suitable pension scheme unless they choose to opt out.

In the March 2012 Budget, the Chancellor of the Exchequer announced additional plans designed to simplify the state pension system, based around on a single-tier state pension of £140 per week, and a mechanism to align increases in state pensionable age with longevity. However, the Department of Work & Pensions (DWP) recently announced a delay in the publication of these plans. The government’s White Paper containing the detail was due for release earlier this year; however, according to pensions minister Steve Webb, the government is “still working on the details” and an announcement is not now expected until the autumn. The planned reforms are intended to bring “much-needed clarity and simplicity” to the UK pension system. However, the National Association of Pension Funds (NAPF) commented that “the time for talking should be over by now”, adding: “Our state pension is one of the most complicated and least generous in Europe. People need to know that it pays to save for their old age, and that they won’t see their saving means-tested away.” The NAPF warned that the delay in announcing the detail could endanger the introduction of automatic enrolment, saying: “Defined benefit pension schemes need time to prepare for the end of contracting out. The government must give them enough time and give them clarity as a matter of urgency.” On the other hand, Saga’s director-general Dr Ros Altmann, highlighted the importance of ensuring that the changes are “effective and not rushed”. Looking ahead, regardless of the finer detail in the White Paper, the state pensionable age is set to continue its rise, and many of us will have to save harder or work longer. Ultimately, the best approach is to get started as early as possible. Pension saving remains one of the most tax-efficient ways to save for your retirement and, the longer you save, the more time your contributions will have to grow.

from Census Financial Planning http://bit.ly/WZDMM7

Taking a slice of the rent

However, there is action you can take to mitigate this. Most importantly, you can offset interest payments on your mortgage against any tax liability on rental income, a valuable allowance that can encourage landlords to borrow significant amounts against their buy-to-let properties. You can also offset many of the costs involved in day-to-day maintenance, such as painting and decorating, depreciation of furniture, cleaning charges, the cost of ground rent, service charges, and any insurance cover for buildings, white goods, gas boilers and plumbing. Advertising fees and any fees from your accountant or letting agency can also be deducted. Carefully kept records are essential, however, to make sure you can back up any offset claims. When the time comes for you to sell a buy-to-let property, capital gains tax (CGT) is payable on any profit you make over and above your annual tax-free allowance (£10,600 for the tax year 2012/13). In addition to the original purchase price, the costs of acquisition and disposal (for example, estate agents` and lawyers` fees) and any money invested to improve the value of the property can be deducted from your profits to reduce the taxable gain. Under current CGT rules, the remaining profit is then taxable at a flat rate of 18% or 28% depending on your income. If you wish – or are able – to move into your buy-to-let property, you can then designate it your "principal residence", which means the last three years of price gains will become exempt from CGT. Moreover, if the property has ever been your main residence in the past, the gain for those years is also automatically exempt. However, do remember that you will lose the benefit of rental income from tenants if you take up permanent residence there. YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Paul Dixon FPFS

Chartered Financial Planner

from Census Financial Planning http://bit.ly/Lfp2XT

How diverse is your portfolio

Investors will generally look out for two types of investment; fixed interest funds or equity income funds. In the case of fixed interest funds, the funds invest in either government debt, known as gilts in the UK, or corporate bonds issued by companies to raise money on which they then pay a rate of interest. With Equity income funds, a fund manager will identify firms that have a reliable track record of paying dividends. They tend to be more mature businesses usually in the mid cap or large cap sector.

The market globally has seen some interesting developments. For example, many emerging market nations are offering inflation linked government bonds, while the number of companies globally that pay reliable dividends has been increasing. These developments have extended the investment universe significantly. Of course, many fund managers see many opportunities in the UK in both corporate bonds and in income-producing shares, though recent problems at BP, which briefly suspended its dividend, may suggest investors need to consider how diversified their portfolio is.

However, neither strategy is without risks. For example, the economic crisis means that government bonds are much riskier particularly in Europe, while returns on all bonds are vulnerable to inflation. Investment on equity is usually even higher on the risk scale.

If you have decided to focus on investing for income, you may consider investing in a new fund, perhaps with this year’s ISA allowance. Otherwise, if you have a larger portfolio, you might tilt your asset allocation. You may wish to move some interest-paying cash savings. Cash deposits are safest with the least risk to both the capital sum and any desired income level, but that usually means returns are low and can be eroded by inflation.

If you are considering changing your investments to increase your income, please contact us so we can match your attitude to risk to the appropriate investments.

Paul Dixon Chartered Financial Planner

from Census Financial Planning http://bit.ly/MD9BGb

"An ugly picture"

The measures – announced at the annual Mansion House dinner – are aimed at protecting the UK banking sector whilst tackling the increasing cost of mortgages and loans. They reflect escalating concerns over the possible effects of the eurozone’s debt crisis: according to BoE Governor Sir Mervyn King, the measures were initiated as a result of the deteriorating economic backdrop. The sovereign debt crisis in the eurozone has fuelled bank funding costs, increasing the cost of borrowing for UK businesses and individuals. The BoE has opted for a different method of stimulus from the quantitative easing measures that policymakers have previously employed. Under the new “Funding for Lending” programme, the BoE will provide cheap loans to banks, which are intended to tackle the increasing cost of mortgages and loans. Rates will be low and will be linked to the banks’ performance in maintaining or increasing lending to non-financial UK companies. The BoE also announced the activation of the Extended Collateral Term Repo Facility, which will provide short-term funds to banks to allow them to redress any shortfalls in liquidity. Sir Mervyn described the measures as “a temporary bank funding scheme to bridge to calmer times” Chancellor of the Exchequer George Osborne warned that a shortage of credit is damaging businesses and costing jobs. He believes the measures will “support the flow of credit to where it is needed in the real economy”, but warned, “Things could still get worse before they get better”. In response to the announcement, the Confederation of British Industry (CBI) described the BoE’s plans as “a sensible pre-emptive move” but warned that the “Funding for Lending” scheme will need to be “practical for banks to participate... and, most importantly... easily accessible for small and medium-sized businesses.” The BoE’s view of the economy appears to have deteriorated over recent months. The UK has fallen back into recession and the euro debt crisis has created “a large black cloud of uncertainty”. Meanwhile, further afield, there are signs of slowing in activity in “previously buoyant” emerging economies such as China, India and Brazil. Above all, UK policymakers appear anxious to ensure that the UK economy is not hindered in recovery by further turbulence in the eurozone.

Paul Dixon FPFS

Chartered Financial Planner

from Census Financial Planning http://bit.ly/MBB89t

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A summary of what has been happening in the past week in the financial world.

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How diverse is your portfolio?

If you are considering changing your investments to increase your income, please contact us so we can match your attitude to risk to the appropriate investments.

Paul Dixon Chartered Financial Planner

from Census Financial Planning http://bit.ly/MD9BGb?

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A summary of what has been happening in the past week in the financial world.

Stock Market / Spanish Debt Bailout / Japanese Consumer Sentiment / China Interest Rate / US Consumer Confidence / European Interest Rates / German Unemployment / UK Manufacturing

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Salary Exchange and Child Benefit

There are a number of strategies you can consider, although in recent years the Government have reviewed many of these under anti-avoidance measures. One that has been left untouched is salary exchange (sometimes referred to as Salary Sacrifice).

Salary exchange has been commonly used in the past and in fact it is referred to on the HMRC website. It is a tried and tested way to reduce your liability (and your employers) to national insurance contributions (NICs). In essence you give up your right to part of your salary in exchange for receiving something else from your employer. Most commonly this has been used in exchange for a pension contribution from your employer, which is equivalent to the salary being exchanged plus, if the employer agrees, the NIC savings. However with the imminent changes to child benefit from 7 January 2013, you may be able to use salary exchange to your advantage, to get a very attractive pension contribution plus ensuring you keep your child benefit entitlement.

Salary exchange is set up by the employer issuing a letter detailing the reduction in salary from a given date and detailing the increase in pension contributions from a given date. It is important to note that this must be done before any entitlement to the salary is earned. Both employer and employee will sign to agree the changes.

In the last budget the Chancellor confirmed there will be a tax charge for people with income over £50,000 if they or their partner are in receipt of child benefit. The new rule comes into place 7 January 2013.

For anyone whose income is between £50,000 and £60,000, the tax charge will be 1% of the amount of child benefit for every £100 of income in excess of £50,000. For those earning over £60,000 they will effectively have lost all their child benefit.

However for the current tax year 12/13, the child benefit tax charge will only apply to child benefit paid from 7 January 2013 to 5 April 2013 although the income for the full tax year will be used.

Lets assume, Paul, is married with two children, and receives child benefit of £1,752pa. If Paul’s income is £55,000, then the tax charge will be £876, which is £17.52 for every £100 of income above £50,000.

The income for the purposes of the calculation is an individual’s ‘adjusted net income’. It is this measurement, which allows us to use salary exchange to save on the tax charge.

If Paul exchanges £5,000 of his salary his total income is reduced to £50,000. The monthly equivalent is £416.67. We have set out below how this would work.

2012/13

Earnings

£416.67

Income Tax (at 40%)

£166.67

National insurance (at 2%)

£8.33

Net Pay

£241.67

This would produce the following savings for the employer:

2012/13

Reduction in salary

£416.67

National insurance saving (at 13.8%)

£57.50

Total employer saving

£474.17

The employer would then pay the £474.17 into the employees pension. This reduction in salary would also save £73 per month in child benefit tax charge (£876/12). By exchanging £416.67, Paul has saved 40% income tax, 2% NICs and 13.8% employer NICs and a child benefit tax charge. The total saving is £166.67 + £8.33 + £57.50 + £73 which gives a total saving of £305.50. This is an effective savings rate of 73.3%.

For further information on how we could help you make similar savings please give us a call.

Paul Dixon FPFS

Chartered Financial Planner

from Census Financial Planning http://bit.ly/KnuPKv

Ten tips for pension tax savings

Higher rate and Additional rate tax relief – if you are a higher-rate taxpayer, you may be able to claim additional tax relief, depending on how much you earn over the higher-rate tax band. Make hay while the sun shines – the top tax rate for high earners will fall from 50% to 45% from April 2013. If you pay tax at the highest rate, you should consider maximising the tax benefits arising from your pension contributions before the top 50% tax rate is cut. Annual allowance - you can save as much as you like into your pension scheme(s). However, the most you can contribute to your pension each year whilst receiving tax relief is either 100% of your earnings or £3,600 (whichever is greater), subject to an annual allowance of £50,000. Contributions paid by your employer also count towards the annual allowance. Carry it forward – if you want to pay more than £50,000 into your pension in a year, you can carry forward any unused annual allowance from the previous three years to the current tax year, and add it to your annual allowance for the current year. Don’t lose out – even if you are a non-taxpayer, you can pay into a personal pension scheme and receive tax relief at the basic rate on the first £2,880 you pay in. Family ties – you can pay into the pension schemes of your spouse, civil partner, child or grandchild. They will benefit from tax relief at the basic rate, and this will not affect your own tax bill. These contributions might also prove helpful for inheritance tax planning. A lump sum – subject to the rules of your pension scheme, you can draw out a tax-free lump sum of up to 25% of your pension fund from the age of 55, as long as your total pension savings fall within the “lifetime allowance”, which currently stands at £1.5m for the tax year 2012/13. Flexible drawdown – you may be able to withdraw income from your pension fund, as long as you already receive a secure annual pension income of at least £20,000, and have finished saving into pensions. Gains without pain – pension funds do not pay tax on investment income or capital gains.

Paul Dixon FPFS

Chartered Financial Planner

from Census Financial Planning http://bit.ly/N32Zmc

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A summary of what has been happening in the past week in the financial world.

FTSE / Japanese Inflation / Chinese Growth Forecast / US Housing / Euroxone Purchase Managers Index / UK Inflation & GDP Dowgrade / Vodaphone, M&S, Brberry & Rio Tinto Stocks

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Advice is essential for mortgage customers

What analysis can be made from the Money Marketing statistics? Tough market conditions and the increase in regulatory costs have severely impacted the number of mortgage advice firms. As Andrew Montlake, Director of Coreco Group, says: “The market is tough. Regulatory costs, the Mortgage Market Review and lenders’ lack of lending have all taken their toll.”

What does Census Financial Planning take from this? We believe that the strongest, most professional firms have survived. The quality of advice is essential, especially in relation to mortgages as this will be most people’s biggest financial commitment and financial risk.

The falling number of mortgage advice firms is certainly a reflection of current mortgage market conditions, but the one thing I think we can all agree on is the high level of advice and professionalism must be maintained. Contact Census Financial Planning today to speak with myself or another of our highly-qualified mortgage advisers.

Christine Newton Financial Planner

from Census Financial Planning http://bit.ly/KWVV6w

The eurozone: tired and emotional

During the recent parliamentary elections, many Greek voters cast their ballots in favour of parties opposing controversial spending cuts. Attempts to form a coalition government have failed in the country, undermining confidence that spending cuts can be successfully implemented and rekindling fears that Greece might leave the single currency. The European Financial Stability Facility, the eurozone’s bailout fund, subsequently announced it would withhold €1bn of its latest tranche of bailout funds for Greece. Meanwhile, the appointment of a new French President, Francois Hollande, who intends to prioritise economic growth over austerity, raised questions over the future prospects for the eurozone’s struggling economy, particularly as German Chancellor Angela Merkel continues to espouse austerity. To compound this, a disappointing election result in one of Germany’s most significant state elections undermined Merkel’s focus on austerity as a solution to the eurozone’s debt crisis. European leaders are caught in an increasingly unpleasant ‘Catch-22’ situation that forces them to attempt to balance austerity with growth. However, it is hard to see how sustainable growth can be generated in the short term. European manufacturers are still suffering in an environment of declining demand and soaring unemployment. The rate of unemployment in the eurozone surged again during March to an aggregated level of 10.9%. Unemployment in Greece reached 21.7%, while Spain’s jobless rate hit 24.4%. Amongst young people, the unemployment rate in Greece and Spain is more than 50%. The eurozone’s economy stagnated during the first quarter of 2012, registering zero growth. The region only just managed to avoid tipping back into recession, having previously contracted by 0.3% during the last three months of 2011. However, the economy was shored up by relatively strong growth in Germany. France’s economy did not grow at all during the first quarter of 2012, while the economies of Spain and Italy contracted. Greece’s economy shrank by 6.2% during the period. Figures from the Investment Management Authority show that European funds remain very unpopular with investors. Amid the ongoing uncertainty, share prices have tumbled around the world, and this is likely to overshadow corporate fundamentals until investors feel that they can face the future with a degree of confidence.

Paul Dixon FPFS Chartered Financial Planner

from Census Financial Planning http://bit.ly/KnrW8L

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A summary of what has been happening in the past week in the financial world.

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