Child Benefit

How the latest Budget has  squeezed middle England

and affected Child Benefit.

It has been estimated that there are about 29 million tax payers in the UK and from this group nearly 2 million are earners who generate an income of £50,000 a year or more. This means that 93% of tax payers earn less than £50,000 (source Wikipedia “Income in theUK” article)

We can therefore deduce that only a small percentage will have the opportunity to find true financial freedom. Unfortunately this kind of freedom is nothing but a dream for the majority; indeed nearly 24% of people have an income of less than £10,000 per annum (source Wikipedia “Income in theUK” article)

The Coalition government’s ambition to take people on low incomes out of the tax system took a leap forward in the recent Budget. The Chancellor increased the income level at which people start to pay tax by £1100.  This means that another 800,000 will be taken out of the tax system and since coming to power nearly 2 million people are no longer paying tax as a result of the Coalition’s tax policies.

These measures will surely help the most disadvantaged in the country. Those at the other end of the spectrum that is the 7% on income exceeding £50,000 are relatively comfortable.

The media makes much of the so called “squeezed middle”, it is this group that seems to bear a disproportionate burden at times when a Chancellor has to make tough decisions on where to make unpopular cuts.

Removal of Child Benefit

Before the Budget there was much speculation as to how the removal of child benefit would operate. The original intention was to remove it from higher rate tax payers (income exceeding £42,000).

Clearly this would have been unfair to families with a single earner; where if the income exceeded £42,000 by just £1 they would lose the total child benefit; this did not compare well with families with two earners on £42,000 each who would have kept the benefit in full.

The Chancellors answer has been to raise the threshold so that child benefit is only effectively lost when an income reaches £60,000.

Despite this solution the “squeezed middle” is still being pinched.

Financial planning may not bring financial freedom but can “make do” and mend resources that have not received the attention they deserve.

The results are often surprising and invariably put people in an improved financial position.

In austere times everyone has a responsibility to make the most of their finances.  If you would like to know more about how to  make do and mend your financial recources,

Give your independent financial adviser a call now to find out your child benefit options.

Age Allowance

The Effectsof the 2012 Budget on the elderly and the Age Allowance

A group that is being pressed financially by the latest budget proposals are those who are entitled to what is known as the “age allowance”.

People aged 65-74 and those aged 75 or over enjoy a tax free allowance of £10,500 and £10,660 respectively as long as the level of income does not exceed £25,400.

Where income exceeds the £25,400 the amount of age allowance is clawed back by £1 for every £2 of extra income until it reaches the standard personal allowance of £8105.

The Budget announced that those who attain the age of 65 after 5th April 2013 will not benefit from the higher tax free allowance.

Those who are already entitled to the extra tax free income will retain it but find that the age allowance will be frozen and replaced by the standard personal allowance when it matches the level of the higher figure.

People who find themselves in these groups therefore have the greatest need to nurture everything that they have accrued.

Financial planning may not bring financial freedom but can “make do” and mend resources that have not received the attention they deserve.

The results are often surprising and invariably put people in an improved financial position.

In austere times everyone has a responsibility to make the most of their finances.  If you would like to know more about how to presenrve your tax free Age Allowance

Give your independent financial adviser a call now.

The key to financial wellbeing in later life

What are you looking for out of retirement? Relaxation away from office worries, financial wellbeing in later life,  time and money for new interests and holidays, being able to help out your children and grandchildren …

In short, financial wellbeing.

Whether it’s Tuscany, a visit to the garden centre or supporting younger relatives in tough economic times, retirement should be the time when you can make the most of the savings you have built up over years of work.

If you’re like me you’d like cash for cinema trips, eating out and buying clothes, as well as bigger sums that might go towards a grandchild’s university fees or first-home deposit.

Sometimes a grown-up child might appreciate a stop-gap contribution towards this month’s mortgage or a family holiday.

But to draw the best income from your hard-earned savings you need specialist advice when you’re on the point of retirement.

It is essential to choose the right annuity and retirement income option from the array of complex offers available in the process known as ‘pension crystallisation.’

Those who get it wrong may find they are stuck with less income than they expected or a higher tax bill than necessary. A rotten result all round.

Financial Wellbeing In Later Life

Gordon Tate Associates are specialists in helping you to financial wellbeing in later life. We are qualified, independent and passionate about what we do.

We want to make sure you enjoy the retirement for which you have worked so hard, so we’ll talk through all your plans and needs to find the retirement income option that suits you best.

Then it’s up to you. College fees or a trip to Costa Rica … or both? You decide if you want financial wellbeing in later life!

 

 

 

 

 

When interest rates pay out 0.01%

 

We’ve all seen bank and building society advertisements promising savers attractive headline rates of interest, only to find these returns can later tumble, perhaps as low as 0.01% per annum in some cases.

Such figures are derisory by anyone’s standards and mean savings are constantly eaten away as inflation runs above 5%. This is understandably a big worry for many, particularly those facing retirement on a fixed income.

It was very sobering to see in a report from Saga how one in five over-50s fear they will have to sell their family home to meet the cost of rising energy, petrol and food bills. Another survey found a 30 per cent rise in the number of homeowners aged 66 – 70 selling their houses and becoming tenants.

What can be done about rock-bottom interest rates at a time of rising inflation?

Consulting an independent financial adviser is a sensible step. Qualified, experienced advisers specialising in helping clients to financial wellbeing in later life are able to search the whole market place and can tailor solutions to individual circumstances.

The answer to providing a reasonable income while interest rates are derisory can often come through a blend of different products, funds and accounts.

If a client was able to expose their capital to some risk, they could consider stock market investments that might offer the potential for better returns:

  • Investment in funds that hold cash-rich companies offering decent yields may be one option.
  • Fixed-interest investments could be another option.
  • Holding a proportion in property funds could be a good strategy.

Getting the mix attuned to a client’s tolerances while balancing the need for the potential of a reasonable return requires specialist advice.

We can help you find this balance.

Lessons from Downton Abbey

Lessons from Downton Abbey

 

As fans of Downton Abbey know all too well, inheritance is an issue that can split families, cause emotional upheaval and require heart-rending decisions.

A glorious stately home may not be at stake for many of us, but the question of inheritance is still a very important, and sometimes difficult, matter.

So it was with interest that I read a recent report suggesting that coming generations will experience an ‘inheritance crash.’

Less money will be handed down from one generation to the next because of poor pensions, rising living costs and increased life expectancy, according to the study from HSBC.

As more people live to be 100 (Britain now has more than 12,600 centenarians and there will be 100,000 in 25 years’ time) they are likely to spend their way through their savings and investments in their final years, leaving little for their children to inherit.

Now that we are forewarned, what steps can young families take to prepare?

  • Think about investment options so that money saved now works as hard as possible for you. Consider expected rates of return and risk assessments.
  • Take retirement planning very seriously, even if the day you hang up your business suit for the last time seems far off.
  • Consult an adviser about the right options depending on your personal case: your age, your commitments (school fees, mortgage…)
  • Don’t just choose a pension fund and forget it. Make sure you get ongoing advice as markets and circumstances change.
  • Write a Will and act to minimise inheritance tax.

An independent financial adviser will be able to give qualified, unbiased advice.

 

 

How to avoid a pitiful pension

Neither of my children has saved a penny.

That might sound like a surprising admission for a financial adviser, but sadly it’s not that unusual.

I’ve offered to put them in touch with colleagues who could give them confidential advice, and warned about the difficult old age facing those who don’t save for a pension.

Nothing.

It seems to me that the younger generation live in the fast lane and spend all their money then expect mum and dad to bail them out.

I recently advised a big company based near Heathrow where all the staff had opted for private medical insurance rather than a pension.

The young HR manager told me she’d rather have private medical cover she could use now because she wouldn’t be drawing her pension until she retired – and that was years away.

It’s true that it’s never too late to start financial planning for retirement, but the sooner you start the better:

  • The more you save, the more likely you are to have enough when you retire to enjoy life to the full.
  • With no private pension you will have to manage with a state pension that at the moment can only be described, in my view, as pitiful. No living in the fast lane then.
  • Millions of over-50s worry they will have to sell their family home to make ends meet because of rising inflation, according to research from Saga.
  • Savings accounts may offer poor interest rates but if you were able to expose your capital to some risk you could consider stock market investments which might offer the potential for better returns.

Seeking advice from an independent financial adviser should be the first step. To hear more of my thoughts on this subject
[wpaudio url=”http://www.gordontate.co.uk/wp-content/Gordon_Tate-Radio_Surrey.mp3″ text=”listen to my interview on Radio Surrey” dl=”0″]

When life is one long holiday …

How many of us haven’t sat back on a summer holiday and looked forward to the days when we can give up work altogether?

The thought of having the leisure time and money to treat ourselves to a cruise, go on a city break or enjoy a later-life ‘Gap Year’ is very seductive!

So my heart sank when I read the following headline on the BBC website: ‘Workers facing a bleak old age says pension review.’

The article explained how a review by the Workplace Retirement Income Commission had concluded that up to nine million people faced a ‘bleak old age’ because they were falling through the cracks of private sector pension provision.

The study, led by Lord McFall, found that a third of all the current UK workforce were at risk!

It said many people were not saving enough for their retirement years, did not think pensions were a good deal and thought charges were too opaque.

Yet the picture does not have to be so gloomy. With good, independent financial advice it is possible to make sure your money and/or assets are working as hard for you as they could be so you can make the most of your retirement.

It’s my belief that it’s never too late to look at boosting your retirement income – especially if you do see yourself holidaying or simply enjoying a few luxuries in your golden years.

Whether you’re in your 30s or already retired, an independent financial adviser will be able to help you with sound retirement planning that matches your particular circumstances.

Far better, in my book, than facing that ‘bleak old age.’

Bank admits ‘guarantee’ is not guaranteed

According to a recent press article*, Santander has written to some of its customers to admit that it cannot actually guarantee one of its ‘guarantees’, and that these investors may not be covered by the Financial Services Compensation Scheme.

The bank has run into trouble over two specific ‘structured products’ marketed between 2008 and 2010. (And if you’re wondering what on earth a ‘structured product’ might be, I’m right with you in having little truck with such gobbledygook.)

Santander has now explained that its marketing of these products as guaranteed had been misleading and has removed the word ‘guarantee’ from its literature. The problem arose because savers would not have been covered by the FSCS if Santander went bust – but the marketing material hadn’t made this clear.

Quite frankly, I have never been completely comfortable with the makeup of ‘structured products’ and have never recommended them. They are definitely, in my opinion, NOT for the risk-averse investor and the word ‘guaranteed’ should be taken with a pinch of salt.

Anything marketed as ‘guaranteed’ should be thoroughly investigated before you buy. For example, who is underwriting that guarantee, and what are the terms under which it would be triggered?

To ensure your investments are protected and to reduce the chances of your money being lost, we urge potential investors to seek expert advice before they commit to investments of this nature.

Equitable Life, Keydata, the High Street banks … the list of debacles goes on!

*The Daily Telegraph (13/3/11)