How to find an FCA regulated Financial Adviser near you in the UK

A Comprehensive Guide to Finding an FCA-Regulated Financial Adviser in the UK

In the intricate world of finance, seeking guidance from a qualified professional can make a world of difference in achieving your financial goals. Whether you're planning for retirement, navigating investment options, or managing your savings, an FCA-regulated financial adviser can provide tailored advice and expertise to steer you towards financial success.

The Importance of FCA Regulation

The Financial Conduct Authority (FCA) is the UK's financial regulatory body, responsible for overseeing the conduct of financial firms and individuals. When seeking financial advice, it is crucial to ensure your adviser is regulated by the FCA. This provides you with the assurance that they are subject to strict professional standards, ethical guidelines, and consumer protection measures.

Utilizing Directories to Find an FCA-Regulated Financial Adviser

Numerous directories exist in the UK that can assist you in finding an FCA-regulated financial adviser. These directories provide comprehensive listings of advisers, allowing you to filter your search based on specific criteria, such as location, area of expertise, and experience.

Key Steps in Using a Financial Adviser Directory

1. Identify Your Needs and Goals: Before embarking on your search, it is essential to clearly define your financial needs and goals. What type of financial advice are you seeking? Are you planning for retirement, investing in property, or managing your debts? Having a clear understanding of your objectives will help you narrow down your search and find an adviser who specializes in your area of interest.

2. Utilize Online Directories: The FCA maintains a comprehensive online directory of all regulated financial advisers. This directory allows you to search by adviser name, firm name, location, and area of expertise. You can also filter your search to display only FCA-regulated advisers.

3. Consider Independent Directories: Alongside the FCA's directory, there are numerous independent directories available, such as financialadvisers.co.uk. These directories often provide additional information about advisers, such as client reviews, financial adviser qualifications, and fees.

4. Narrow Down Your Options: Once you have generated a list of potential advisers, begin narrowing down your options by reviewing their profiles carefully. Pay attention to their experience, qualifications, areas of expertise, and fee structures. Consider reading client reviews to gain insights into their service and approach.

5. Contact Selected Advisers: Once you have shortlisted a few potential advisers, reach out to them directly to inquire about their services and schedule initial consultations. These consultations provide an opportunity to discuss your financial situation, goals, and expectations, allowing you to assess whether the adviser is a good fit for your needs.

6. Verify FCA Regulation: It is crucial to verify that any adviser you consider is indeed FCA-regulated. You can do this by checking the FCA's Register of Financial Advisers or a searchable list of the FCA directory firms and advisers. This register provides detailed information about each adviser, including their FCA registration number, qualifications, and any disciplinary action they may have faced.

7. Ask Questions and Compare Fees: During initial consultations, don't hesitate to ask questions about the adviser's approach, fees, and any potential conflicts of interest. Compare fees across different advisers to ensure you are getting a competitive rate.

8. Make an Informed Decision: After careful consideration, make an informed decision about which adviser you feel most comfortable working with. Remember, the right adviser will guide you towards achieving your financial goals while providing you with personalized advice and support.

Additional Tips for Finding an FCA-Regulated Financial Adviser

1. Seek Recommendations: Ask friends, family, or colleagues for recommendations of financial advisers they have worked with and found valuable.

2. Attend Financial Education Workshops: Many organizations offer financial education workshops that can provide valuable insights into the financial planning process and help you identify reputable advisers.

3. Beware of Unauthorized Firms: Be wary of financial firms or individuals who claim to be regulated by the FCA but are not listed on the FCA's Register. Only engage with FCA-regulated advisers to ensure your protection.

4. Seek Independent Financial Advice: If you have complex financial needs or are unsure about a particular financial decision, consider seeking independent financial advice from an FCA-regulated adviser.

Remember, finding the right FCA regulated financial adviser can be a significant step towards achieving your financial goals and securing your financial future. By following these guidelines and conducting thorough research, you can identify an adviser who aligns with your needs and provides the personalized guidance you deserve.

Have you thought about your family’s death benefit entitlement?

It is a sad fact but with Coronavirus a threat to us all may be it’s time to review your family's death benefit entitlement.

Outside of any life assurance you may have other sources of death benefit that your family may be entitled to. Here we take a brief look at two sources of provision for your family should you pass away and what your family should do at such a time.

• The State provisions and

• Pension provisions.

 State provisions 

What to do about their State Pension

If the person who died was getting a State Pension, you should tell the Pension Service that he or she has died so that payments stop.

Claiming their State Pension

You might be entitled to extra pension payments from your spouse’s or civil partner’s State Pension.

It depends on the amount of National Insurance (NI) contributions they made and when you and your spouse or civil partner reach(ed) the State Pension age.

If you haven’t reached State Pension age, you might also be eligible to claim Bereavement benefits.

Contact the Pension Service on 0800 731 0469 (free to phone) to find out whether you are eligible to claim.

Claiming bereavement support payment and other benefits

The death of a spouse or partner is a very difficult experience. This change in your life can be even harder if you now have to live on a lower income. The help you can claim depends on your relationship with the person who died and whether you were married or in a civil partnership or living with your partner. This page tells you more about bereavement benefits and other help you might qualify for if you’re now living on a low income.

Bereavement benefits if you were married or in a civil partnership

Bereavement benefits are for people whose husband, wife or civil partner has died. Which benefits and how much you qualify for will depend on:

• your age

• whether you have dependent children

• whether the person who died paid enough National Insurance Contributions during their working lives.

If you and your spouse were eligible to claim marriage allowance at any time from April 2015, but didn’t claim before the death of your partner, you can now claim up to four years’ worth of backdated missed payments.

Bereavement Support Payment

Bereavement Support Payment replaces Bereavement Allowance, Widowed Parent’s Allowance and Bereavement Payment.

The benefit is paid to you at one of two rates depending on whether you are responsible for children.

You must be below State Pension Age to claim Bereavement Support Payment.

Your spouse or civil partner must have made National Insurance Contributions for at least 25 weeks during their working life for you to qualify. If your husband, wife or civil partner died because of an industrial injury, their national insurance contributions might not matter.

Bereavement Support Payment is only paid for 18 months after the date when your spouse or civil partner died so it’s important you claim as soon as possible to avoid losing money.

How much is Bereavement Support Payment?

Bereavement Support Payment is paid at either a higher rate or standard rate:

Higher rate

Paid to pregnant women or if you’re entitled to Child Benefit. You’ll get:

• a monthly payment of £350 for 18 months following the death

• a one-off payment of £3,500 during the first month.

Standard rate

For everyone else. You’ll get:

• a monthly payment of £100 for 18 months

• a one-off payment of £2,500 during the first month.

You might also be eligible to claim other low income benefits to top up your income, like tax credits, Housing Benefit, Council Tax Reduction or Universal Credit.

Funeral Payment

What is Funeral Payment?

If you’re on a low income and struggling to pay for a funeral for your partner, you can apply for a Funeral Payment.

If the person who died left money, you will usually need to pay back any amount you received through the Funeral Payments scheme.

How much you will get

The amount you get depends on your circumstances, but could be up to £700 towards funeral expenses plus payments to cover the costs of things like burial or cremation fees.

How your bereavement benefits affect other benefits

If you are getting Bereavement Support Payment it will not affect your other benefits for a year. After then, the income you get from it will be taken into account for means-tested benefits including:

• Tax Credits

• Universal Credit

• Income Support

• Incapacity Benefit

• Jobseeker’s Allowance

• Carer’s Allowance

• Employment and Support Allowance

The lump sum you get as part of Bereavement Support Payment might count as savings when your entitlement to some means-tested benefits is worked out.

This will only be if you have any of the lump sum left over after 12 months that takes you over the savings limit of £6,000 for means-tested benefits.

This means you you might see a reduction in any of these benefits you might be getting:

• Income Support

• Housing Benefit

• Income-based Jobseeker’s Allowance

• Employment and Support Allowance

• Universal Credit

Pension provisions

If someone close to you dies, you may receive a cash lump sum benefit from their pension scheme.

A pension scheme may pay lump sum death benefits to financial dependants if a member dies. The amount paid depends on the scheme’s rules and whether the member was an active member of the scheme. Lump sum death benefits are usually paid tax-free, they are paid at the discretion of the scheme’s trustees or pension provider. The trustees or pension provider will take into consideration the member’s wishes as set out in the expression of wishes or nomination of benefits letter, if this was completed but will not necessarily follow them; for example if they have grounds to believe that they are out of date. It's therefore very important that you keep your expression of wishes form up to date.

Different ways lump sum death benefits may be provided

Life cover: 

Workplace pension schemes may include life cover for members that are contributing to the scheme (active members). The amount payable is often expressed as a multiple of the member’s pensionable earnings or salary (for example, 2 x pensionable earnings or 4 x salary). Defined benefit Pension schemes may also pay a refund of the contributions paid by the member, subject to the scheme’s rules, if the member dies before starting to draw retirement benefits. If the member had started to draw retirement benefits, an annuity may pay a pension protection lump sum if the member dies. This is usually worked out as the difference between the cost of securing the member’s pension benefits and the amount (before tax) that has actually been paid out up to the date of the member’s death;

Defined contribution 

Pension schemes normally pay the value of the pension pot tax free if the member dies before starting to draw retirement benefits, provided they are aged less than 75 at the date of death. If the member has started to draw retirement benefits, and/ or dies after the age of 75, and the value of the remaining pension pot is paid as a lump sum to dependants, this is taxed at the recipient's marginal rate. 

Guaranteed periods on annuities: If an annuitant dies and the annuity includes a guarantee period any outstanding payments due over the guarantee period may be paid as a lump sum. This payment would normally be made to a surviving annuitant or to the annuitant’s estate.

How they are paid

Lump sums are normally paid at the discretion of the scheme’s trustees or pension provider, although you can tell them who you would like to benefit should you die using an expression of wishes letter or nomination of benefits form. These are not binding on the trustees or pension provider and they will take them into account but may not follow them; for example if they have grounds to believe that they are out of date. It is therefore very important that you keep your expression of wishes form up to date. If you purchased an annuity when you started to draw pension benefits, you may have included a guarantee period, which pays the balance of any pension due over the guarantee period if you die, and/ or included a continuing pension after your death payable, usually, to your surviving spouse, partner or civil partner.

Using a trust

If you have a personal pension, self-invested personal pension (SIPP) or stakeholder pension scheme, you may be able to ask your pension provider to pay any death benefits to a trust that you have set up, or that is set up by your will. This may be done for estate planning or inheritance tax planning purposes. You can also ask the trustees of a workplace pension scheme to pay benefits to a trust, but, as mentioned earlier, your request is not binding. Once the death benefits have been paid to the trust, your trustees can distribute them to your chosen beneficiaries, subject to the terms of the trust.

Buy to let or not buy to let that is the question.

Overview

Buy to let property, as well as pensions, continue to be popular investment vehicles for retirement planning. We look at the advantages and disadvantages of each.

Key points

• Property is often considered to be a better investment than pensions but when the numbers are crunched this is often not the case.

• Recent changes to how property is dealt with mean that there are more costs than there previously were in relation to buy-to-let.

• Investment, taxation, maximum contributions, the way in which the asset is dealt with on death and a few other issues need to be considered when weighing up the best solution for the client.

Advantages and disadvantages of buy to let and pensions

Pensions and the purchase of buy-to-let property continue to be popular investment vehicles for retirement planning. I am often asked the question – ‘should I invest in property or a pension?’ With the introduction of Pension flexibilities many people are considering withdrawing their pension to purchase buy-to-let (BTL) property. 

The basics are straightforward:

Investment

• Pensions are a tax-wrapper in which various assets classes can be easily purchased, held, switched and sold (usually without delay) as the client’s need/situation changes or in response to economic movement.

• Buy-to-let property is a directly held single asset class which usually requires to be sold if any reshaping of the investment is required, selling requires finding a purchaser (or paying someone to find a purchaser) who is prepared to pay the required price at the required time.

• Pensions provide the opportunity of diversifying the investment over various assets classes/geographical locations etc.

• Few buy-to-let investors can afford to achieve sufficient diversification within the single asset class, never mind sufficient overall diversification.

Contributions

• Individual contributions to a pension receive tax relief at the marginal rate of the investor (albeit within contribution limits, Annual Allowance and if applicable Money Purchase Annual Allowance and Tapered Annual Allowance).
  

• The purchase of buy-to-let property does not receive tax relief on the initial investment, deposits to buy property are paid from taxed income and the tax paid is not reclaimable.
  

• Pension contributions can be used to manage the Child Benefit and Personal Allowance ‘tax traps’ – management of these traps can result in pension contributions benefiting from an even higher effective rate of tax relief than the rate of tax payable.
  

• Buy-to-let investment cannot be used to manage tax traps.

Taxation

• Investment returns within a pension fund are free of income tax
  

• The rent received from a buy-to-let is taxable at the investor’s marginal rate, and although it was possible for landlords to fully deduct mortgage interest costs from property income this has been subject to changes with effect from the 2017/18 tax year. 

• Investment returns within a pension fund are free of Capital Gains Tax (CGT).
  

• On the sale of a buy-to-let property the profit is usually liable to CGT (assuming Private Letting Relief is not applicable), although purchase and sale costs are deductible. Although the rate of CGT charged on most gains (above the annual exemption) has been reduced from 28% to 20% for higher rate taxpayers and 18% to 10% for basic rate taxpayers, the 28% and 18% rates will continue to apply for gains accruing on the disposal of interests in residential properties that do not qualify for Private Residence Relief. The reason given by the government at the time of the change for retaining the higher CGT rates on property was to ‘provide an incentive for individuals to invest in companies over property’, in other words to dis-incentivise investment in property. It’s also difficult to segment the sale of a property, so managing a CGT liability (for example by spreading the profit over a number of tax years) is difficult. 

On death

• Pension funds (Defined Contribution schemes) can be cascaded through generations usually free of Inheritance Tax. (subject to the scheme rules allowing this)
  

• Buy-to-let properties are liable to IHT as part of the deceased’s (and any subsequent owner’s) estate.
  

• Pension funds are usually accessible tax free by the beneficiary, on the death of the pension holder prior to age 75, and at the marginal rate of the beneficiary on death after age 75 (different tax rules apply to death benefits paid into trusts on death after age 75).
  

• Income from inherited buy-to-let properties is liable to income tax irrespective of the date of death.

Other considerations

• Pensions do not have ‘void’ periods (void period are periods where a rental property is without a rent paying tenant). Although pensions allowed to hold commercial property could be susceptible to this.

• There is no guarantee that the property will always have tenants, even short ‘void’ periods would have a significant impact on the return. If using rental income as income in retirement void periods will have a significant effect. In my experience should a property remain void for any protracted period it becomes increasingly more difficult to let.

• Tenants can constitute a risk to your rental income if rent is unpaid and unfortunately it is not exceptional to find that tenants do not have the same respect for your property as you would have. I recall as an ex local authority housing manager inspecting a property (that we had regained possession of) to find that every salvage of timber had been used to heat the house, from doors to architraves to floor boards, in fact the house was a mere brick shell.  You may imagine what the costs of repair were.

• The pension provider will not contact the pension holder on a Saturday evening to advise that the boiler has broken down.

Costs

• Apart from the standard plan charges, which are clearly declared in the policy terms and conditions, pension investments do not usually incur any further costs. Property on the other hand will incur additional costs, including:

• Costs on Purchase

• Legal fees and costs, typically £750 to £2,000 (including local searches etc.)

• Possibly Stamp Duty Land Tax (SDLT) on purchase, depending on value of property (see below for recent increases in SDLT for buy-to-let properties). Based on a £200,000 buy-to-let property SDLT would cost £7,500 (previously this would have been £1,500). Land and Buildings Transaction Tax (LBTT) replaced UK Stamp Duty Land Tax (SDLT) in Scotland from 1 April 2015- in this case the LBTT would be £7,100. 

• Landlords Licence may be required by some councils (not just House of Multiple Occupation (HMOs)). Application costs vary from council to council but can run into ‘hundreds of pounds’, however, failure to obtain a licence can result in fines of ‘tens of thousands’ of pounds.

• The mid level of solicitors fees quoted above and adding in stamp duty for a £200,000 house would be the equivalent of a 4.44% initial charge in the pension’s world.

 Ongoing costs

• Letting agent fees – unless the investor wishes to get involved with the advertising, interviewing, referencing and monitoring of tenants/inventory and the collection of rent. These can be charged at a flat rate or a percentage of the rent. Expect to pay between 10-15% as standard with additional costs as applicable. The vetting of tenants is an essential element of ensuring that your investment has a reasonable chance of securing a good return, in such letting agent fees should be integral to your costs.

• Possible debt and eviction litigation costs. The cost of litigation to remove a tenant can be high. One specialist in this area quotes £120 for an eviction notice, £950 for court fees, £250 for county court Bailiff, £860 for High Court Enforcement Officer. The chances of recovering these costs as well as any outstanding rent arrears (and costs incurred in rent arrear recovery) are questionable. Afterall if the tenant didn’t or couldn’t pay you whilst they lived in your property, what is the likelihood of recovery after you have evicted them?

• Wear and tear, maintenance/refurbishment costs, (see below). Many people renting may not treat the property as you would like and recovery of cost of damage (above the nominal deposit) may require further litigation. Older properties and flats above ground level in particular can be expensive to repair. Insurance may cover the cost of some types of damage to property. 

• Cost of Energy Performance Certificate – landlords must have a valid certificate before any views are taken. It is valid for 10 years but can be reviewed if energy efficiency improvements have been made. Cost estimate £60-£120.

• Gas Safety Certificate – all gas fittings must be checked annually by a Gas Safe registered engineer. Cost estimate £75 per annum.

• Electrical safety checks – Portable Appliance Testing (PAT) of any installations in the property for the supply of electricity, electrical fixtures and fittings, any appliances provided by the landlord – cost estimate £35-£80 for testing of appliances, £100-£200 for consumer unit testing. Smoke and carbon monoxide alarms must also be fitted and maintained (mains powered) – variable cost.

• Landlord emergency repair service may be required to reduce the stress of late night boiler failure (and other emergencies) – cost £12- £25 per month (but may include required safety certificates)

• Landlords insurance – variable cost dependant on property

Whilst most of these may be deductible from any profit made, a pension with such high annual fees (letting agent fees of 10% etc.) would be frowned upon by customer and regulator alike.

Costs on sale

• Estate agency fees – cost can be anywhere between 0.75% and 3.5% plus VAT – dependant on type of contract and services provided (viewings etc.)

• Legal fees, typically between £500 and £1500.

• Given the cap on exit fees for the over 55's, would a pension provider be able to charge this amount?

Recent changes

There have been a number of recent and ongoing legislative changes in the BTL arena, none of which appear to add any weight to the perceived ‘buy-to-let’ side, including:

• From April 2016, buy-to-let properties have incurred an additional 3% Stamp Duty Land Tax (SDLT), as detailed above.

• Tax relief on buy-to-let mortgage interest payments reduced from April 2017 with full implementation by 2020. Landlords are no longer able to deduct all of their finance interest costs from their property income to arrive at property profits. They will instead receive a basic rate reduction from their income tax liability for finance costs.

• Landlords will be able to obtain relief as follows:

• 2017-18 75% finance costs deduction and 25% given as a basic rate tax reduction.

• 2018-19 50% finance costs deduction and 50% given as a basic rate tax reduction.

• 2019-20 25% finance costs deduction and 75% given as a basic rate tax reduction.

• 2020-21 all financing costs incurred by a landlord will be given as a basic rate tax reduction.

• Changes to the 10% ‘wear and tear’ allowance. From April 2016 this allowance was replaced with a new system that enables all landlords of residential property to deduct only those costs actually incurred. 

At the time of writing, the outcome of this was not known. With effect from 6 April 2017, there are two new annual tax allowances for individuals of £1,000 each, one for trading and one for property income. The trading allowance will also apply to certain miscellaneous income from providing assets or services.

Where the allowances cover all of an individual’s relevant income (before expenses) then they will no longer have to declare or pay tax on this income.

Those with higher amounts of income will have the choice, when calculating their taxable profits, of deducting the allowance from their receipts, instead of deducting the actual allowable expenses. The trading allowance will also apply for Class 4 National Insurance contribution purposes.

The new allowances will not apply to partnership income from carrying on a trade, profession or property business in partnership.

The allowances will not apply in addition to relief given under the Rent-a-Room Scheme legislation.

The budget on 29 October 2018 introduced a change to Private Residence Relief that is due to commence from April 2020. The final period of ownership that is exempt from CGT is to reduce from 18 to 9 months. This represents a further reduction as until 2014 this was a period of the final 36 months.

Additionally from April 2020 lettings relief will be altered so that this is only available if the owner and the tenant are in shared accommodation

Potential issues to consider

As well as considering whether you would have been better leaving your money in the pension you will have to consider a number of additional issues as a result of your decision to invest directly in buy-to-let property, including:

• Capital gains tax will usually be payable on any capital gain (at the higher 18% and 28% rates-above the annual exemption) when the property is sold (spreading gain from property over a number of tax years can be difficult).

• On death, inheritance tax could be payable on the property.

• There is no guarantee that the property will always have tenants, even short ‘void’ periods would have a significant impact on the return. If you were using the rent as your “pension” void periods could have a significant impact on your standard of living, for unknown periods of time.

• The deposit paid by the tenant needs to be lodged with the relevant tenancy deposit protection scheme (different schemes for England & Wales/Scotland/Northern Ireland).

• There could be maintenance and/or repair costs. Large repairs like roof replacement, replacing central heating boilers can be expensive, may result in having to raise additional capital and will certainly impact on yield. 

• If the tenants can’t get in contact with the letting agent on a Saturday night, you may start to receive phone calls when the central heating boiler breaks down.

• Other costs may be applicable, such as service charges, factors fees, building insurance costs, costs which are usually paid by the property owner.

• The value of the property may fall.

• The rental amount could fall.

• Unpaid rent may be unrecoverable and/or result in litigation costs, watchers of various television programmes will be only too familiar with the difficulties landlords can encounter in removing ‘undesirable’ tenants.

• Litigation (and the costs of such action) may be required to remove a tenant who is unwilling to abide by the terms and conditions of their lease.

• There is also an issue regarding the ability to access the funds tied up in the property, especially in a downward market, or periods where potential buyers have difficulty in accessing mortgages, or with a sitting tenant. 

• Investing all his pension funds in property may result in a lack of investment diversification. Putting all your eggs in one basket can be a very high-risk strategy.

On the upside

• The property may increase in value, this would increase his overall yield when he sells the property (increase in value would only be realised on sale and any gain would of course be potentially liable to Capital Gains Tax).

• The fall in the relative value of Sterling may attract foreign investors which could inflate house prices.

• He may get a long-term tenant that pays the rent on time and looks after the property, and as such the rental yield, property prices and capital gains tax may be the only issues he needs to consider.

Of course, if you are adamant that property is your preferred investment of choice, you could have accessed the investment potential of property (albeit commercial) via a Self-Invested Personal Pension and/or investing in the various pension property funds (although we need to be mindful that Pension Property Funds may have the right to defer encashment or switching out of these funds in periods of high volatility, usually for a period of up to 6 months). 

Looking at each of these:

Self-Invested Personal Pensions (SIPP)

Within a Self-Invested Personal Pension Plan most providers permit direct purchase of commercial property, such as offices, retail units and factories. Commercial property can produce substantial yields.

While the risks attached to property values/ rental income/ void periods remain; as the investment stays within the pension the preferential tax treatment of pension investments is preserved, such as exemption from income tax, CGT and normally IHT.

The cost of the SIPP will likely be higher than standard Personal Pension plans, and the trustees will make additional charges for facilitating the direct purchase of commercial property, so this needs to be taken into consideration. Other indirect property investments are also available to SIPP investors.

Pension Property Funds

Collective investment in property, via various pension property funds, provides indirect access to many property based opportunities. Most providers have a property fund and may give access to other provider’s property funds.

These funds can usually be accessed within standard Personal Pensions, which usually enjoy a lower charging structure than SIPPs. You  can then sit back and let the fund manager make all the decisions, and because the funds remain within the pension, the preferential tax treatment is retained.

Additionally, as there will be professional property managers involved you will not receive a call from tenants to complain about a broken boiler!

Conclusion

It is important to consider all available options when undertaking financial planning.

Things to think about include:

• The level of risk being taken against the actual net yield received.

• Recent legislative change appears to do little to encourage BTL investment and everything to encourage pension investment (pensions freedom).

• With the longer-term ramifications of Brexit still unclear, the risk involved in investment into an undiversified, directly held, single asset class may have increased.

• The decision not to take advantage of pensions, or to “cash-out” a pension to invest in an alternative investment, may have a significant impact in an investors quality of life today (use of pension contributions to manage tax traps etc.) and a permanent impact on quality of life in retirement, as such, it is a decision which should not be taken lightly.

Transparency? Chase de Vere advice fees go missing

One of Britain’s largest independent financial advice firms removed a document from its website that disclosed the high fees its customers are charged — only to put the details back after being contacted by The Times.

After last week’s Times exposé on the sales culture at Chase de Vere, the firm took down the link for a 6,600-word brochure that outlined most of its fees and charges. The document was available on the firm’s website when The Times revealed how top-performing advisers, who are understood to earn more than FTSE 100 bosses, were able to win luxury all-expenses-paid trips.

Calculations showed that Chase customers who invested £100,000 could end up paying £100,000 in fees over 20 years, eating into half of their profits. Last week the company’s Private Client Terms of Business document was no longer available on its website.

When Times Money raised the issue, Chase claimed that the document was never published on its website and was not removed. It was only intended for use by its advisers to send to prospective clients. Later that day it said the document may have accidentally become available via a Google search. However, it stated that the document would now be made available on its website.

On top of this, the firm published a slimmed-down version of its charges online that was aimed at customers, including its upfront “initial” and annual “ongoing” advice fees.

However, this new fees web page left out many charges. These include fees for moving money into an Isa, re-balancing a portfolio and transferring money between different funds. Most other wealth managers do not charge separate fees for these services, instead including them within their annual fee.

Chase manages about £10 billion for 16,000 clients and levies a fee of up to 3 per cent for these procedures on up to £499,999, according to the Terms of Business document. This is on top of its annual advice charge of up to 1.08 per cent. Schroders Personal Wealth, St James’s Place and Hargreaves Lansdown include these simple services in their annual fees of up to 0.65, 0.5 and 0.438 per cent respectively.

Mark Polson of the Lang Cat, an analyst, said: “Most firms include all normal portfolio services in their ongoing charge. This normally includes portfolio re-balancing and all ongoing advice services. It’s unusual to find firms who charge explicitly for such activities. I’d expect any firm that does so to charge a lower ongoing fee than the market.”

When Times Money queried the lack of detail in Chase’s new fees page, the company said it would add more of its charges “within 48 hours”, and did so by yesterday morning.

There is no regulatory requirement on advice firms to publish their fees. There are also no rules about what initial and ongoing fees should cover.

Chase said that it was transparent when it came to fees, and that it focused on long-term client satisfaction.

Source: The Times

Game-changer? Vanguard launches cheap pension

But investors are restricted to the company’s own range of funds, only a few of which are actively managed

The fund manager Vanguard has thrown the gauntlet to the rest of the pensions industry by launching the cheapest self-invested personal pension (Sipp) in the UK.

Industry experts are forecasting that the new Sipp, which the index-tracking giant launched this week, will attract an influx of money from investors who are disillusioned by poorly performing funds held on high-charging platforms.

Holly Mackay, the founder of Boring Money, a price comparison website, says that a significant number of the investors she talks to have reported that they intended to move from their present platform once the Vanguard Sipp had opened.

“In the past they may have been deterred by inertia and a dislike of the extra admin involved [in moving platforms],” she says.

“But I think this time the good reputation of Vanguard, the very low fees and the fact that the market leader among platforms is now walking-wounded, courtesy of [the disgraced fund manager Neil] Woodford, will mean that we see a significant shift of assets into Vanguard at the expense of all the major DIY fund platforms, but notably Hargreaves Lansdown.”

Pension savers will be able to sign up for the new Vanguard Sipp by investing from as little as £100 a month or a lump sum of £500. They will then have access to 77 funds, including low-cost index trackers and exchange-traded funds, which operate like trackers, but are shares traded on a stock exchange. The range also includes some actively managed funds as well as Vanguard’s Target Retirement and Life Strategy funds.

Vanguard says that if you combine its platform charge of 0.15 per cent with the annual charge of 0.06 per cent on one of its cheapest tracker funds, the Vanguard FTSE 100 Index fund, you are getting a Sipp investment for the rock-bottom annual charge of 0.21 per cent, which is cheaper than most other financial groups’ platform charge alone.

It commissioned research by Platforum, an independent research company, to examine the cost of holding a Sipp with Vanguard compared with the cost on 14 other platforms. It found that the total annual charge for holding £40,000 in a Vanguard Target Retirement fund would be £172 on Vanguard’s platform, but would rise to £283 for the average platform and £396 for the most expensive platform.

The big drawback with the Vanguard offering is that you are restricted to its range of funds and cannot access any of the thousands of other unit and investment trusts on the market. It also has a limited number of actively managed funds so if you favour those it may be worth looking at other platforms, which have a much wider selection.

Source: Holly MacKay of the Times, February 2020

How to make the most of your tax allowances

Tax relief on savings us once more under threat. So use your allowances while you can. 

Savers are in the new chancellor’s firing line as budget day approaches. Rishi Sunak is under pressure to lay out ways to fund higher public spending in his March 11 statement, and pension concessions for higher earners are a soft target.

This week it emerged that the Treasury was considering plans to cut the rate of pensions tax relief for higher earners from 40 per cent to 20 per cent. The move could raise £10 billion a year as 3.85 million people — equivalent to one in seven taxpayers — pay the higher rate of income tax and are entitled to tax relief on pension contributions.

Whether you are among them or not, with the end of the financial year six weeks away you still have a little time to make use of your tax-free allowances. Act quickly — you don’t know how much longer they’ll be around.

Pay more into your pension

Pension tax relief costs the government close to £40 billion a year, so it is likely to be a target for a cash grab by the chancellor. It makes sense to maximise your contributions now.

The system is complex. When you save into a pension the Treasury gives you back the income tax you have already paid on that money. So if you are a basic-rate taxpayer, when you pay 80p of taxed income into a pension you get back the 20p you paid in tax. Higher-rate taxpayers (who earn more than £50,000) get back 40p for every 60p they pay in, and top-rate taxpayers (who earn more than £150,000) get back 45p income tax for every 55p they pay in.

Basic-rate taxpayers automatically receive the relief, but higher and top-rate taxpayers who contribute to a personal pension often have to claim back the 20 per cent or 25 per cent, respectively. Many people who do not fill in a self-assessment form forget to do this and can lose thousands of pounds a year. How much you can contribute to your pension each year is capped at £40,000, except for top-rate taxpayers, whose contribution limit tapers until it reaches £10,000 on incomes of £210,000 or more.

Over your lifetime you are entitled to build a pension pot of £1,055,000. If you exceed the limit you could face penalty charges of up to 55 per cent.

“For high earners who are not close to breaching the £1,055,000 lifetime allowance there is a lot to be said for pumping as much as you can into your pension because these benefits look under threat,” says Charles Calkin, a financial planner at James Hambro & Partners. “Those earning more than £100,000 should particularly consider this. For every £2 you earn over £100,000 you lose £1 in personal allowance. The effect of this is that your marginal rate of tax between £100,000 and £125,000 is 60 per cent.”

If you have not maximised your pension contributions in the past three years you can carry forward the unused allowance into this year. That means you could invest £160,000 (three years’ contributions, plus this year’s one) in your pension. This will save you at least £64,000 in tax, assuming your contributions are from higher-rate earnings.

A caveat is that if your total income, including investment and rental income, takes you over the £150,000 threshold, you will be hit by the tapered allowance. You can also make contributions of £3,600 into a pension scheme for a spouse, civil partner or child if they have no earnings and are on the basic rate of relief. So if you contribute £2,880, HMRC will top it up to £3,600.

Use your dividends wisely

All investors receive the first £2,000 of dividends tax-free. Anything above that is subject to income tax on dividends at 7.5 per cent if you are a basic-rate taxpayer, 32.5 per cent for higher-rate payers and 38.1 per cent for those on the top rate of tax.

To avoid getting hit, investors should shift as much as possible of their dividend-bearing investment into an Individual Savings Account (Isa). You can put £20,000 a year into an Isa and the money will roll up free of income tax or capital gains tax.

Laura Suter of AJ Bell, a wealth- management company, says: “By holding an investment pot of £100,000 that is yielding 4 per cent in, rather than out, of an Isa an investor will save £150 a year in tax if they are a basic-rate taxpayer, £650 a year if a higher-rate taxpayer and £762 a year if a top-rate taxpayer.”

Wrap up your savings allowance

Basic-rate taxpayers get the first £1,000 of annual savings interest tax-free. Higher-rate taxpayers receive a £500 allowance, but top-rate taxpayers get nothing. If you have savings income above the allowance, shelter some in a cash Isa, provided that you have not used up your Isa allowance. Your interest payments will not be subject to tax.

Reduce your inheritance tax bill

Rising house prices and stock markets mean that more people have wealth substantial enough to trigger inheritance tax (IHT) on their estate when they die. To minimise the bill your heirs may have to pay, consider gifts. You can give away unlimited amounts of wealth to whomever you want, and if you live for seven years after giving it there will be no IHT to pay. You can also give away up to £3,000 a year, in any way you want, and make as many gifts as you want of up to £250 to different people free of IHT.

Use your annual capital gains tax allowance

Unless assets are in an Isa or pension, capital gains tax (CGT) is charged on any you cash in that have risen in value. We each have a CGT allowance of £12,000 of gains that we can cash in yearly free of tax. Higher-rate taxpayers pay 20 per cent on gains over the allowance. For basic-rate taxpayers it is 10 per cent. Gains on residential property other than a primary residence carry an extra 8 per cent tax on the basic and higher rates.

If you are a higher-rate taxpayer and sell £50,000 of shares that you bought a decade ago for £10,000, the gain is £40,000. Your £12,000 CGT allowance means you pay tax on a gain of £28,000 at 20 per cent. You can give assets to a spouse or civil partner without triggering CGT. They can sell some, and you have effectively doubled your CGT allowance. This is most useful if your partner pays tax at a lower rate.

Invest in VCTs and EISs

People are turning to venture capital trusts (VCTs) and enterprise investment schemes (EISs) to shelter money. With VCTs you can invest up to £200,000 a year and receive tax relief of 30 per cent on the sum. The money builds, free of income tax or CGT, if you keep it invested for at least five years. It goes into a portfolio of “qualifying companies” on the alternative investment market that are less than seven years old and have less than £15 million of gross assets.

With an EIS you invest directly into a small and growing business, so that you hold a direct stake in the company. You can invest up to £1 million a year and receive tax relief of 30 per cent if you hold the investment for three years. There is no CGT payable on gains, but dividend income will be taxed. After two years the investment is eligible to be passed on free of inheritance tax.

Source: Mark Atherton of the Times February 2020

Advice fees may be bad for your wealth - so negotiate

Haggle over your adviser’s charges and you could save a packet

If you think you are paying too much for financial advice, ask to pay less — it could save you a fortune.

The rate that most advisers quote online or in brochures will, in reality, be much less if you argue your case.

For example, Hargreaves Lansdown, Britain’s largest do-it-yourself investment platform, levies up to 2% of the sum you want to invest as a charge for initial advice. However, the firm said clients can negotiate that rate. The average paid across its business is 1.2% a year.

Britain’s largest wealth manager, St James’s Place (SJP), advertises an initial charge of 4.5% when advising on new money added to its funds. But its average initial charge is 2.99%, it revealed.

Fees are generally tiered by how much you have invested, but a survey by the Financial Conduct Authority (FCA) showed that the lowest rate people actually pay is 1% on average for initial fees and a 0.5% ongoing annual charge.

Mark Polson of investment analyst the Lang Cat said: “Firms have the right to charge what they feel is appropriate and clients have a right to challenge it.

“The key thing is to make challenges from a position of really understanding what the adviser or planner is doing for you, and what it costs not in percentage terms but in pounds and pence.”

The cost of financial advice is under scrutiny amid concerns that people do not appreciate the long-term impact of what look like small percentages. Say you have a pension pot of £100,000 and are charged 2% a year. Assuming 6% annual growth, you would lose £22,000 in charges and lost growth over 20 years compared with someone paying 1.5%.

Over three decades, you would lose £50,200.

Typically, the more you have invested, the better deal you can negotiate. Brewin Dolphin, for example, will only negotiate fees if you have £5m-plus invested. Another large wealth manager, Quilter, charges an initial 1%-3%, but as its advice is “highly personalised”, it occasionally agrees a bespoke fee.

One smaller firm, Candid Financial Advice, which charges 1% for initial advice and then an average of 0.35% a year, encourages clients to haggle. Its founder, Justin Modray, said: “If you think an adviser is charging too much, try and negotiate a fairer fee. The worst that can happen is they say no, and you can take your custom elsewhere.”

SJP said: “There are occasions where [fees] may be adjusted but that will depend on a number of factors, such as the complexity of the advice being provided, the size of investment and the scale of the existing relationship.”

Other wealth managers may be less flexible. Tilney, for example, says its charges are not up for negotiation. However, the firm charges customers “appropriately, commensurate with the level of work identified”.

It said: “There is a world of difference between complex inheritance tax planning and relatively straightforward work. Fees are typically £200 per hour.”

Schroders Personal Wealth said: “It’s not part of our approach to offer discounts. We are committed to maintaining competitive pricing and our fee structure is simple and transparent. Our clients can easily see what they are paying for.”

For anyone who received advice before 2013, it’s worth asking whether you are invested in a cheaper, modern version of a fund.

Financial advisers were banned from receiving commission from investment providers in 2013 and have had to levy upfront charges instead. The intention was that this would give investors a better understanding of costs. However, advisers can continue receiving payments from business written before 2013. Commission has fallen since then but was still worth £756m in 2018, down from £1.5bn in 2013, said the FCA.

Some firms will also charge a fixed fee or a fee per hour. For example, Chase de Vere offers the option to pay by the hour — at £400 for services such as “estate planning” or “complex pension advice”. Its standard advice costs £250 an hour; basic administration is £80 an hour.

Bancroft charges a flat annual fee of £500 for managing up to £5m of assets. However, unlike Chase, its 15 independent advisers are available only on the phone and online, not face to face.

Last week, AdviceBridge launched pension advice for as little as £100 a year, excluding platform and fund charges. It only has two full-time advisers, but its annual charge does cover services such as re-balancing a fund to maintain a level of risk, switching between funds, and moving in and out of cash to mitigate volatility.

Chase will charge separately for these services — as much as 3%. The firm said: “We are transparent with our clients regarding our maximum fees, although the actual fees we charge are always client-specific.

“Our advisers operate under strict guidelines with regards to fees, in order to ensure consistency across our business, and our clients are always fully aware of our fees and have the choice of how and when we work for them.”

 Source: Sunday Times 23/02

If you need financial advice check out this list of UK financial advisers.

Pension tax relief will survive, but the rest is up for grabs

Cutting tax relief on pension contributions for higher earners, we are told, would fit with the new Tory mantra of “levelling up” the country. Not so. Reducing the size of the average pension pot and making more people reliant on the state in retirement is levelling down. It’s not aspirational, it undermines personal responsibility, and I don’t believe any Conservative chancellor, no matter how big his party’s majority, would ever do it. The system is too embedded, the political fallout would be toxic and the practical cost for businesses (not just for savers) is too great.

Even George Osborne — who as chancellor so loved to chip away at the pensions system — wasn’t brave enough to tackle this troublesome issue.

That said, I suspect other bits of the pension system may well be up for grabs. Some argue that the current system of reliefs is unfair, in that a £1 contribution costs a basic-rate taxpayer 80p but costs a higher-rate taxpayer only 60p. About 60% of reliefs are handed to higher-rate payers.

The flip side of this is that, put another way, pension relief is deferred tax: you might not pay it on the way in but you do on the way out. So scrapping this principle will in effect mean that anyone on the higher rate will pay tax twice. It will cost them 44p to save, even if you include the tax-free lump sum.

There have been those pushing for a flat-rate system — so that we all get, say, 30p for every £1 contributed. But anyone who thinks a chancellor will reform tax relief and simply redistribute the reliefs available in the current system is living in la-la land. As I wrote here a few weeks ago, every chancellor in the past 25 years has looked at the £50bn in reliefs handed out on pensions every year and thought: “I’ll have a bit of that, thank you.”

With almost 10 million more people now in a workplace pension thanks to auto-enrolment, the tax relief bill — even at the basic rate — is growing massively.

All this isn’t to say that pensions tax relief acts as an incentive to save. Most people don’t even know it exists.

I suspect the chancellor will back away from higher-rate relief reform when he realises the full ramifications.

Besides, if the argument is about fairness, there are more practical and effective ways to make money from pensions. He could cap the 25% tax-free lump sum — an enormously generous giveaway. However, limiting it to, say, £100,000 would hurt only the very wealthiest pensioners, given that the average pension size is less than £200,000. It would also incentivise people to turn their pensions into an income in some way.

Also up for grabs are national insurance reliefs on pension contributions made by businesses — that’s £11.2bn. Finally, and only whisper it, you could make workers over the state pension age pay national insurance contributions.

Over the past 20 years, the number of over-65s in work has risen from 455,000 to 1.31 million. With an increased burden on social care and the state pension, allowing this group to avoid paying national insurance on their earned income is anomalous.

I would be shocked if the chancellor scrapped higher-rate tax relief in the budget, but I would not be surprised if we got a major consultation on our rickety pension system.

Watchdog barks but seldom bites

I know newspapers get accused of scaremongering, but you should read last week’s Sector Views report by the Financial Conduct Authority. Investment mis-selling, final salary pension transfers, high-risk mortgage lending, the dangers of big data and open banking, high investment costs, bank fraud . . . basically everything a Money reader knows about already.

It is encouraging that the regulator can see the threats to consumers. The challenge it always struggles to rise to is acting on them — and quickly.

Source:  The Sunday Times February 23 2020

Retirement planning: is a buy‑to‑let property better than a pension?

With interest on savings still painfully low, are you better off banking on bricks and mortar?

Savings ain’t what they used to be. A series of rate cuts by banks and building societies was followed last week by news that National Savings & Investments is slashing payouts on accounts and Premium Bonds for its 25 million customers. In the background, the Bank of England has maintained a painfully low base rate of 0.75% — still, incredibly, the highest it has been for nine years.

All this adds up to an inhospitable environment for savers. Investing in bricks and mortar to fund a comfortable retirement is a time-honoured British tradition, and for many it looks like a foolproof way to make money. For others, pensions are lower-risk and much less work. But what do you need to know before you decide where to put your hard-earned cash?

How much money can I make?

It is true that property is profitable — if you know what you’re doing. House prices in the UK have risen by 34% on average over the past 10 years, according to Savills estate agency, but when inflation is taken into account, they are down by 0.3%. Buyers who invested in a second home in Aberdeen, for instance, lost 8% over the decade, but those who bought in Waltham Forest, northeast London, saw their investment double.

Over the long term, prices rose by 117% in the 2000s, 21% in the 1990s and 180% in the 1980s, which illustrates the fluctuations buyers face. It all depends on what and where you buy, when you buy it and when you choose to sell up.

Savills predicts that property values in the UK will grow by 15.3% by 2025. In comparison, the average pension fund grew by 14.4% in 2019 alone, although annual growth over the past five years is 7.5%, according to the Moneyfacts UK Personal Pension Trends Treasury report.

“Being successful in property is about buying at the right price in the right location,” says Stephen Moss, managing director of Sourced Capital, a peer-to-peer property investment company. “We’ve seen investors’ mentality shift from London to the north.” The Savills forecast predicts that values in London will rise by only 4% over the next five years, while in the northeast of England they will increase by 24%.

“When I hear about growth that high, that makes me nervous,” says Romi Savova, chief executive of PensionBee, a website where savers can manage their pensions online. “High return usually means high risk, so I would question what is driving that rate of growth.”

One of the great advantages of owning a second property is that you can let it and receive a monthly income on your investment. Again, rental yields can vary; landlords in Scotland can expect a return of about 5.8%, while those in Wales are seeing only 3.6%, according to Sourced Capital.

With property, you’re arguably relying on research to get the most out of the housing market, which itself is subject to economic winds and government legislation. With pensions, the scheme you’re automatically enrolled in via your employer is likely to be invested in a relatively low-risk diverse fund — and the company contributes as well. In addition, the government puts in £25 for every £100 for basic-rate taxpayers.

“Spreading your eggs across many baskets can insulate you from one-off shocks to the market,” Savova says. “These are harder to avoid in property, particularly when you consider recent flooding.”

How much will I be taxed?

House prices may have gone through the roof, and you might be making a decent amount on the side in rental income, but when it’s time to sell, you will have to pay capital gains tax on the increase in your property’s value, even if it’s overseas. Basic-rate taxpayers pay 18% and those in higher bands pay 28%.

From this April, you won’t be able to deduct mortgage expenses from your rental income, either. Instead, landlords will have to make do with a tax credit equal to 20% of the mortgage interest payments on the property.

Another factor that could make a significant dent in your profit is a rise in interest rates. If your buy-to-let is financed with a tracker mortgage, then this could lead to a hefty reduction in your monthly income. Pension-fund growth is tax-free, provided you don’t hit your annual or lifetime allowance. If your entire pot is more than £1.055m, you can be taxed up to 55%. If you save more than £40,000 in a single year, you will also be taxed at a marginal rate. The cap can be as low as £10,000 for the highest earners.

What happens when I want to take money out?

When you start to draw down your pension, the first 25% is tax-free and the rest is treated as income. There are ways to withdraw your pension in stages that are more tax-efficient. You can only start to access a private pension once you are 55 years old, while the state pension kicks in at 65, for now (with exceptions for a change in circumstances such as a terminal illness).

This makes it far less flexible than a second home, which you can sell if you want to give your child a home deposit, for example, or remortgage to start a business. “Property isn’t seen as a liquid asset, but if you need to get your money back, you usually can in about six to eight months,” Moss says.

What happens if I die?

If you die before you sell, any properties you own will be subject to inheritance tax. Second homes can qualify for the residence nil rate band (up to £175,000 from April, on top of the standard tax-free allowance of £325,000) if left to a child or grandchild, but your executor can only nominate one property in your estate to receive it. If it is a second home, you need to have lived in it at some point.

If you die before the age of 75, your pension can be passed down tax-free to any nominated beneficiary as a lump sum. Should you die at 75 or older, however, the beneficiary will have to pay income tax on any money they receive from your pension.

How much work is involved?

Lifestyle is an underrated factor in the property v pension debate. Aside from inheritance tax, older or retired investors may not be able to take on the work of being a landlord. A raft of new licensing and immigration legislation has increased the paperwork involved, and the Tenant Fees Act 2019 means you can’t charge the tenant for your time or impose administration fees on them.

Attending to repairs and queries can also be time-consuming, and any amount you spend paying an agent to handle them will reduce your yield.

Conversely, Brits persist with bricks because pension funds are seen as too “hands-off”. Having money squirrelled away in a fund you can’t touch for decades, invested in companies you don’t have time to keep track of, is unappealing to many.

“Property is a love story,” Moss says. “It has made money for generation after generation. If the market crashes, you can still park in the driveway and there’s a house you own. That’s quite a big safety net for a lot of people.”

Savova believes it doesn’t have to be this way, and her business, PensionBee, attempts to demystify pension pots by uniting all of an investor’s old pensions in one place online. The idea is, once you can see all the contributions and top-ups, you’ll be empowered to take a more active role in managing your pension.

“You need to take a balanced approach,” Savova says. “Both your home-ownership ambitions and your pension are important, and it makes sense to allocate capital to both.”

NEED TO KNOW

• The Private Landlords Survey from MHCLG shows that landlords in England earn £15,000 a year on average before tax and other deductions

• The average amount sitting in a pension pot after a lifetime of saving is £61,897, according to the FCA. This will give you an income of £2,500 a year — even adding on the state pension, that’s below the minimum wage

• If the value of all your pensions exceeds £1.055m, you could be taxed up to 55% when you try to draw down the money. In 2017-18, HMRC took £185m from people who exceeded the lifetime allowance

• The typical sum paid into a pension in 2017-18 was £2,700, according to HMRC

• 45% of landlords surveyed said they owned one buy-to-let property; 59% of landlords said they are 55 or older 

Source:  Sunday Times February 23 2020

Are higher rate taxpayers about to lose the 40% break on their pension tax-relief?

Boris Johnson and new Chancellor Rishi Sunak ‘could strip higher earners of their 40% pension tax relief’ in next budget

Boris Johnson and newly-appointed Chancellor Rishi Sunak are set to strip higher earners of their 40 per cent pension tax relief in next month's budget.

They will meet for budget talks for the first time tomorrow to flesh out Mr Johnson's pledge to 'level up' the UK economy, as reported by The Times.

It was suggested Ministers were preparing a 'mansion tax' and a subsequent re-evaluation of homes, but this was met with consternation by Tory MPs and grassroots activists alike.

The Treasury has now drawn up plans for a £10billion raid on pension tax breaks, which would see retirement savings pots set at the same rate for everyone.

Currently higher earners get 40 per cent tax relief on pension contributions, compared with 20 per cent for lower earners.

But the proposed changes would mean everyone would get 20 per cent pension tax relief.

A report in the Financial Times suggested that previous Chancellor Sajid Javid was not entirely convinced by the plan, which is likely to arouse strong opposition among traditional Tories if introduced in the upcoming Budget.

It comes as Mr Javid waded into a Conservative row over the prospect of tax rises in his successor Rishi Sunak’s forthcoming Budget.

The former Chancellor nailed his colours to the mast by ‘liking’ a tweet warning that Britain is already ‘overtaxed’ with the highest tax burden for a generation.

His intervention came amid concerns on the Tory benches over hints that Boris Johnson wants next month’s Budget to mount a tax raid on Middle England.

There have been rumours of a squeeze on savings tax relief, a mansion tax or the creation of new council tax bands for expensive homes.

Mr Javid, who resigned as chancellor in Thursday’s reshuffle rather than fire his team of aides, stepped into the debate via Twitter.

He liked a comment made by blogger Paul Staines, also known as Guido Fawkes, that read: ‘Needs constant restating, the tax burden is the highest it has been for a generation. Britain is overtaxed.’

A source close to Mr Javid said: ‘He is on the record many, many times as being a low-tax Chancellor.’

Former Cabinet minister John Redwood said that instead of tax rises the Government should be drawing up a list of targeted tax cuts, including stamp duty, to stimulate growth.

He said: ‘You cannot tax people into prosperity. You do not make the less well-off rich by taxing entrepreneurs to take fewer risks and run fewer businesses.’

Mr Sunak, the new Chancellor, is understood to be considering delaying the Budget beyond the currently announced date of March 11. 

Source:  JOE MIDDLETON FOR MAILONLINE and DANIEL MARTIN POLICY EDITOR FOR THE DAILY MAIL

18/02/2020

Save or invest?

Save or invest

You’ve sold your business and are now planning for the next stage of your life, whether that means retirement in the sun, helping the family out with its finances or even starting another business.

Whatever your aims, you need to consider how best to protect and grow the money you have made. There are two main options open to you: saving the money in a bank account and investing in the stock market.

Both have their benefits and risks. Savings will keep your money secure, but the value could fall over time because of inflation and taxation. Investing comes with more risk due to the volatile nature of the stock market but provides a greater opportunity for growth and income over the longer term.

Shares have risen

History suggests that investing in stocks and shares, rather than leaving your money in cash, has been the best way to grow your money in real terms over the long term. Yet it would be a mistake to view this as an either-or decision.

“Regardless of whether interest rates are high or low, you should have a comfortable cash cushion to meet short-term needs and give you the peace of mind to take more risk with any money you've invested for the longer term,” says Phil Woodcock, Head of Investment Communications at St. James’s Place Wealth Management.

“Inflation may be low today but it's a constant threat to the value of your money and very few savings accounts are offering inflation-beating returns. The delay to Brexit may have pushed back any interest rate rises to the second half of 2020, so there is little respite for cash savers. Just as when you were in business, you need to take some risk with your capital if you are to achieve a decent return.”

How to invest

But where do you begin on the investment path? The answer is to start with safety.

“There is no hard and fast rule, but you need to be comfortable that you can meet any expected, or unexpected, short-term expenses from cash," says Woodcock. "That way, you can avoid the need to cash in long-term investments at what might be the wrong time, for example, when markets have fallen. It's worth keeping six months' worth of income requirements readily available.”

As for the shape of your investment strategy, you must start with the end in mind: what do you want to achieve and when?

“Do you need income now or in the future when you retire?” says Phil. “Are you saving for another specific purpose such as your grandchildren’s education or to buy a second home? With that focus you can then work out the plan needed to meet that goal.”

The main investment options are shares, bonds, commercial property and alternatives such as gold, timber and other commodities. You can access these most easily via an investment fund, which pools your money with other investors and spreads your investment across different regions, economies, hundreds of individual companies and other assets.

“You should spread your investments as widely as you can to manage the risks. That way, while they may not all be going up at the same time, they are unlikely to all be going down at the same time either,” he says.

Accepting risk

Yet investing is risky, and your holdings are likely to be buffeted by economic and political uncertainties both at home and worldwide. New trade tariffs can hurt share prices or, in extreme cases, holdings could be wiped out if a business goes into administration. Property prices could plunge, or a government could collapse, hitting bond values.

A financial adviser can help you determine your attitude to such risks and how that will affect your investment strategy.

“You need to understand your capacity for loss – in other words, how will you react to a market fall?” says Woodcock. “How achievable are your goals based on the level of risk you’re comfortable taking? It’s also possible that you may have different risk thresholds depending on what you’re investing for. For example, you might be prepared to take more risk with money you’re investing long term for grandchildren, compared to money needed for your own retirement in five or 10 years’ time.”

Your age can also affect your strategy, since your risk tolerance reduces as you get older.

“You might be tempted to invest in areas like emerging markets that have the highest return potential,” says Phil. “However, that comes with increased risk of short-term volatility. As you get older, you have less time for your investments to recover significant losses, so it normally makes sense to rein in your risks as you approach retirement.”

Your personal goals should always be central to your financial decisions. By managing your cash well and taking some investment risk, you can both protect yourself and give your wealth a chance to grow.

“By investing in assets like shares for the next 10 or 20 years, you may greatly improve the chances of being better off than you are today,” says Woodcock.

 Past performance refers to the past and is not a reliable indicator of future results.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

An investment in equities does not provide the security of capital associated with a deposit account with a bank or building society.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

Source: St James Place May 2019

Why create a bucket list?

A bucket list is important for one thing and one thing only. Want to know what it is? 

It is happiness!

When we cross things off our bucket list the immediate emotion that results is happiness. Achieving a goal makes us all happy. Merely ticking it off our list gives us a great sense of satisfaction. It puts a smile on our face, especially if it’s a real accomplishment. 

“Happiness lies in the joy of achievement and the thrill of creative effort.” – Franklin D Roosevelt

Even if you frequently live by goals or to-do lists, they are probably framed within a certain social context e.g. your performance, career, health. A bucket list opens up the context. It’s a forum to write down anything and everything you’ve ever wanted to do, whether it’s big, small or random. It’s just like pinpointing all the highlights you want for your whole life

If you don’t have a bucket list, why not start one today? It won’t cost a penny to produce – only your time. 

How long will it take? Only about 30-60 minutes (more if you get really caught up in it). What do you stand to gain? Significant clarity and focus on what you want from your life. It’s an invaluable exchange.

Come up with as many items as you can. The items should be things you have not done yet. Don’t stop until you finish listing at least 101 things! 

yourself stuck, chances are you are mentally limiting yourself. Release those shackles. Your bucket list is meant to be a list of everything you want to achieve, do, see, feel and experience in your life. 

Good Luck !

Retirement resilience

Taking the reins and having more control over your pension pot.

Saving for retirement is one of our greatest financial priorities, especially as life expectancy is growing and retirements are likely to last longer. It may be the case that you’d prefer to take the reins and have more control over your pension pot. For appropriate investors, one option to consider is a Self-Invested Personal Pension (SIPP).

Please note that a SIPP is a type of Personal Pension, and the rules as to how much you can contribute to a SIPP are the same as a Personal Pension. Also, when it comes to taking the pension, the same rules apply to both a SIPP and a Personal Pension.

Saving Discipline

A SIPP is a tax-efficient wrapper for your pension investments and gives you control of your pension, whereas most members of a company pension scheme have very little control and almost no idea where their pension money is invested. SIPPs enforce saving discipline until retirement since you cannot withdraw your money early. Also, with many of the UK’s largest companies closing their final salary schemes to all members, many members now have to look at taking their pensions into their own hands. You can make both regular and one-off payments into your SIPP, and even putting a small amount away early will make a difference to how much you will eventually have to fund your retirement.

Extra Flexibility

Once you reach 55, you can access your whole pension pot. You decide how and when to use the fund built up in your SIPP to provide you with an income. You can take up to 25% of your fund as a tax-free lump sum and use the balance to provide you with a pension through income withdrawal from your SIPP, or through the purchase of an annuity. You can also take a series of lump sums from your SIPP – it’s flexible. SIPPs can be opened by almost anyone under the age of 75 living in the UK. You can open a SIPP for yourself or for someone else, such as a child or grandchild. Even if you’ve already retired, you can still open a SIPP and take advantage of the extra flexibility that it gives you over your pension savings in retirement – but you may be limited by how much you can pay into it. 

Investment Control

SIPPs offer a wider investment choice than most traditional pensions based on investments approved by HM Revenue & Customs (HMRC). They give you the chance to pick exactly where you want your money to go and enable you to choose and change your investments when you want, giving you control of your pension and how it is organised. 

Most SIPPs allow you to select from a range of assets, including:

• Unit trusts

• Investment trusts

• Government securities

• Insurance company funds

• Traded endowment policies

• Some National Savings & Investment products

• Deposit accounts with banks and building societies

• Commercial property (such as offices, shops or factory premises)

• Individual stocks and shares quoted on a recognised UK or overseas stock exchange

Time to Take Control of your Retirement Plans for the Future?

A SIPP is not right for everyone, but the freedom it offers you compared to a traditional pension could far outweigh the extra time taken to run your own pension. To find out more about setting up a SIPP, please contact us and we’ll arrange a meeting with one of our Financial Advisers to discuss your requirements – we look forward to hearing from you.

Please note: you must pay sufficient tax at the higher and additional rates to claim the full higher-rate tax relief via your tax return.