BREXIT UPDATE – ANYTHING NEW AFFECTING YOUR MONEY & INVESTMENTS?
I daren’t say anything… the market has been sanguine, Sterling relatively stable and things generally have benefited from the thought of better trade relations between the US and China. It has become recognised however, that clarity for its sake alone is likely to be more beneficial than the terms of the deal. Things will not be anything like as bad as the worst pessimists portray nor will they be quite as good as the best optimists envisage either. We shall still be here the day after and indeed in ten years and we shall still be eating, drinking, importing, exporting, travelling and enjoying visitors from overseas – and more so than we have ever done in the past no doubt too (especially if the thickness of the weekend newspapers’ travel supplements is an indicator of that!).
TAX YEAR END
It is too late for you to do anything – well soon! We can still process pension and ISA applications up till Thursday close of business so if you haven’t done yours and should – don’t dilly-dally anymore! The staff may glare at you but we’re here to help you…! And remember, next Monday you can subscribe the whole amount again so why on earth wait for another year to pass and another year’s valuable tax allowance to be missed for a year? Do something next week if you are in that ‘must’ category of taxpayer or asset-rich individual. Scrutinise your CGT for the past year too – there’s a chunky tax free allowance and if you haven’t used it all then do so by close of business on Friday if you have a large portfolio, even paying a little tax at 20% to make sure you use all the free bit to the penny. You can also sell things to make a loss if your profit is above the allowance but remember, it is better using losses against investment property gains if you have them as they are taxed at 28%.
Another financial adviser has advised us of one of the most sophisticated scams I have seen yet. Whilst extolling our ‘excellent newsletters’ (thank you – very humbling from a fellow professional…). In a nutshell, his clients’ totally innocent and relatively small property company was hi-jacked and used to deceive prospective investors to invest in a bond offering of which the clients knew nothing and of course were in no ways connected to it! I have seen the glossy particulars and they are impressive, with great ‘pretend’ industry sign-offs and theoretical guarantees and of course any prospective investors doing their research would have found the genuine company to ‘prove’ what they thought they were reading.
At least two of this other advisers’ clients succumbed to the details. Of course, the website has gone and the deceivers disappeared without trace and no-one is there to pursue – and the investors are without their funds and with little recourse (though I have tried to suggest a few courses of action to help them). Please don’t follow them – trust a regulated independent financial adviser, backed by the FCA and with compensation protections behind them too. However, more than anything – use a good dose of common sense and check the reputation and integrity of the firm you entrust and when you find a good one – TRUST them – they won’t be ‘perfect’ but you’ll know that your best interests come above theirs. I hope, then, that you can trust them into your dotage as an additional imperative barrier between you and vulture fraudsters who are circulating constantly to try to extract your money from you – they only need a tiny chink in your armour and it’s too late. There can be such a point when you or any of us is vulnerable, from the weakest to last week an ex-Bank of England high-ranking official…
NON-RESIDENT FOR UK TAX
Watch-out for significant changes to the tax rules affecting the disposal of property in the UK. http://moneyage.co.uk/Non-resident-UK-property-owners-warned-of-tax-change.php In the ‘old days’ a non-resident could make capital gains totally free from tax but from now forwards, things are going to be different.
PENSIONS – ARE YOU OPTED IN?
We have sent a message to all workers in North Devon and beyond, which is to join pension schemes as soon as they are available to them! Recent figures show that nationally, ‘auto-enrolment’ pensions (for employees) now exceed 10million people but this is only one-third of the UK’s workforce. A large proportion of the workforce is either self-employed (of which the South West has many), do not earn the minimum £10,000 to qualify (again hitting the South West as one of the lowest paid regions) or are under 22. Employees may also have opted out as they have an existing salary-related pension or other pension arrangement in place from which they have disconnected and that includes unbeatable schemes like the NHS and other public sector employers – are they mad!
Auto-enrolment has proved a huge success for the Country as it was clear that without this, too few were choosing to save for their retirement. State pensions will never be enough nor affordable by the State to meet most people’s real wants. Now, with employees opted-in automatically and forced to opt-out if they don’t want them and the fact that employers must also contribute to the pension, more employees are staying put!
You need to learn to see pensions in a different light so here it is, in bold print. They are now very cheap financial products and you can almost put pretty much anything you want into them too! Your payments receive tax relief on the way in, your pot grows free of all tax, your employer contributes for free, it is a form of free life insurance for your nearest and dearest and you could use the whole lump sum even to repay a mortgage if you want. Why do people not use them? The older you are then the dafter it is not to have one as you can grab the whole pot from age 55 or possibly earlier on impaired health! Up till 75 you can even buy a personal pension if you don’t work or are retired!
The news is great but the figures show there are still many missing out. It is absolutely imperative you put something aside for later life, however little that may seem. It is not sensible to rely upon the State nor upon future inheritances or the unlikely lottery or Premium Bond prize! We are very happy to offer personal advice to everyone and have been doing so now for approaching thirty-four years. Many tell me that their home (or rental property) is their pension, which concerns me greatly when considering the tax implications and how time consuming and costly it can be to release money tied up in bricks and mortar – which can also plummet in value. Pensions are a wonderfully tax-efficient way to accumulate a pot for retirement and there are very few restrictions on accessing your pot, whether through a tax-free lump-sum or retirement income. On death, family can also inherit any remaining pension pot free of tax.
How many do you have? And you know they keep changing the design so you need to recycle them too…? The number of these in circulation, in our evermore cashless society, has doubled in the last ten years, totalling £17billion and nearly a quarter of all the cash in issue. Why the increase? Some are suggesting it is from any form of ‘what if Brexit’ scenario and some suggest that actually despite the apparent glaring and universal poverty, more people like the idea of ’loadsamoney’ and to display a wodge of such notes in their wallets.
There is anecdotal evidence of ‘super hoarders’ too. It is suggested Brits stash say £3billion but one in every thousand adults has £100,000 in filthy lucre… and that would account for a tenth of all notes. As interest rates drop and remain low, the cost of holding ’cash’ also drops of course even if it still loses its buying power every year. The black economy is still there too despite Money Laundering rules cutting a swath in that and cashless transactions hitting opportunities for certain industries to cheat the taxman. Feel sorry though for those with big cash balances – as it is really quite hard to spend that now and even banking it isn’t easy in any sense of the word!
Well, were you on time? 750,000 left filing their returns till the very last day. My own was close – it becomes more and more complicated as the years pass and waiting for certificates for whatever purpose means early submission can be a false economy if you have to keep altering the figures later. 27,000 of those pressed ‘submit’ the very last hour of 31 January too! That was a record 10.8million people this last January representing 94% of those who should have done so. So that means as many as 700,000 people didn’t and will start to suffer penalties and these can be quite swingeing too! Why not appoint a tax adviser, like ourselves? Yes, there is a cost involved but that should be retrievable in time with savings from efficient tax planning and think about it, the Taxman is more likely to review a hurriedly completed form which is late or last minute and with lots of omissions than an efficiently provided one with accurate information first time. The penalties grow after three months up to a maximum £900 whether or not you owe any tax too (but then also a surcharge on any tax due too).
Stock market investments can offer income through the payment of dividends and interest and good opportunities for capital appreciation over the longer term. By this, generally we mean periods in excess of five years, preferably much longer. However, we can never promise you particular returns, especially in the short-term. At any point in time but especially in the short term, your capital could be worth less than the original amount invested as some of the selected holdings may fall in value, regardless of expectations at the time of acquisition. We may also invest in funds that hold overseas securities. The value of these investments may increase or decrease as a result of changes in currency exchange rates. Returns achieved in the past cannot be relied upon to be repeated.
To remind you, why do I send out occasional emails? Because everyone can save money. We have no connection with any companies mentioned and you have to make your own contacts and satisfy your own enquiries. What is in it for us? If we can prove that we are knowledgeable and that our service and advice have good value, then you might contact us for professional financial planning and investment help. You don’t have to do that though and there’s no charge for emails. If simply they save you money, then accept them with our compliments! However, you’ll know where we are!
If you have any queries of any form or indeed any subjects you think I could include, please contact me. I also refer you to our website www.miltonpj.net. We celebrated our thirtieth anniversary in 2015 and have been publishing a well-respected independent column in the local Paper for most of that time and free client newsletters as well.
Do not forget however the usual caveats – this is not ‘advice’ and you are encouraged to seek that before embarking upon any financial route involving investments, etc.
My best wishes
Philip J Milton DipFS CFPCM Chartered MCSI FPFS FCIB
Chartered Wealth Manager
Fellow Of The Personal Finance Society, Fellow Of The Chartered Institute Of Bankers