Autumn Budget 2015

The Autumn Statement and Spending Review... the biggest headline was a U-turn in cuts from the Chancellor, but there were plenty of other announcements which may affect our clients.

Here our Managing Director Paul Northmore reviews the changes, and how we can help our clients plan for them.

Pensions
There were no major changes for pensions or tax this time round.

The state pension will rise by 2.9%, or £3.35, to £119.30 a week from April, to match the rise in average earnings for existing pensioners.

This comes after the government’s promise for the following five years which ensures the state pension will rise in line with inflation or earnings.

The new flat rate state pension comes into effect next year. This will be £155 a week from April.

Speak to your adviser if you have any questions about your state pension. Whether you get the full £155 will depend on if you have a private or workplace pension or if you have additional state pension.

Is your house made of money?

Our adviser Patrick Goddard will take the time you and your family need to fully explore your options and bring clarity to the subject of equity release

Life expectancy in the United Kingdom has increased to 78.7 years for men and 82.6 years for women, that's up by 26% for men and 14% for women in the last 20 years.

Good news, of course; but a long retirement leaves many people with the very real challenge of how to make savings and pension pots stretch.

Equity release is a real opportunity for retirement age home owners who are 'asset rich' but perhaps 'cash poor'. It’s a means of freeing up money from your home without having to move, to cover everyday expenses, or just to enjoy life a little more!

Money Is Not The Most Important Thing In Life...but it's a pretty close 2nd to oxygen

Steve Manning - Founder of Manning and Company

A wise man (whose name escapes me) uttered these words that I read in 1988 soon after my encounter with a financial adviser who had been recommended to me.

I was not long married, was living in a mortgaged house, looking forward to starting a family and was fully employed with a finance company that was a subsidiary to a major bank.

I reluctantly met the financial adviser but thought that with my company salary, pension and life cover package, I would not require his services.

Suffice to say I was totally misguided in my naivety. Not only did I realise how exposed I was financially and how forces totally outside my control could impact on my future, I was so impressed with what the financial adviser was offering, his passion and absolute belief in his role in people’s lives that I knew for sure I wanted to be him!

Pension freedom - how is it working?

It has been over 18 months since the 2014 budget when, in a surprise announcement, the Chancellor announced that instead of buying an annuity with their pension funds people would be free to spend them how they wish.
Here our adviser Peter Harrison explains

That plan was put into practice last April.

So have you bought your Lamborghini yet?

Well, it’s not quite as straightforward as you might think .........

 

·         First, you have to be over 55 to get access to your pension money.

·         Then it has to be the ‘right sort’ of plan – a lot of public service pensions are not included.

·         Some pension plans, especially older ones, do not yet have the facility to allow you to take all your money out. The government have made it clear that they want to make providers change their rules and cut their costs to let this happen, but in a lot of cases it is taking a long time to take action.

·         It can be expensive – some older plans impose financial penalties for early access, but, again, the government are looking at ways to control this.

·         And then, after all this, there could be a lot of tax to pay. Although it has been spelt out many times, it is not always easy to be sure how much tax will be taken off and how to get tax back if too much has been paid.

Cutting the cost of Christmas

Autumn is upon us and our attention will soon turn to Christmas!  A time of festive cheer… or financial woe?   With our tips below you can be sure to be full of merriment without breaking the bank and without having money worries to last into the New Year.

Remove unnecessary gift giving

Christmas has become a retail festival – but it doesn’t have to be that way.  Think about why you are giving and to whom.  Consider the recipient’s viewpoint too, as giving creates a need for them to give back.

Why not agree to a secret santa with family or friends?  Pick names out of a hat, buy one present in the group and stop buying unnecessary gifts.

Make a list
Don't go on impulse. A list will guide you and keep your spending on the straight and narrow!

Raiders' Player Daryl Corletto supports Cornwood Macmillan Coffee Morning

Businesses of Cornwood's Delamore Park welcomed Plymouth Raiders' co captain Daryl Corletto to their MacMillan Coffee Morning on Friday 25th September.

The event contributed to the charity's famous 'World's Biggest Coffee Morning'.  GSL Media, Portcullis Legals Ltd, Matrix - a creative agency and Manning and Company Independent Financial Advisers joined forces to bake and sell cake creations which raised £210 for Macmillan Cancer Support.

Manning and Company sponsor Plymouth Raider's player Corletto, who supported the Coffee Morning, meeting the businesses, having recently relocated from Australia

Paul Northmore MD of Manning and Company said,
The coffee morning was a great success and we are delighted that we raised such a significant amount for this extremely important cause.  We look forward to similar events in the future with our neighbours at Delamore Park.

Speaking of the sponsorship to the Raiders Paul said,
We have sponsored the Raiders for many years and are firm supporters of the outstanding work the team carry out in the local schools and community. We would like to welcome Daryl to the South West and look forward to watching him make an impact in the team.

Plymouth Raiders' player Daryl Corletto said,
A big thank you to Manning and Company for inviting me to their coffee and cake fundraiser.  As a Plymouth Raiders' player I am extremely proud and honoured to be in a partnership with such a great company that really care about people in the community.  Thank you for being my player sponsor for this season and I'm looking forward to attending many more events in the future.

Portcullis Legals Ltd sponsor Plymouth Raiders' mascot Baby Foxy.

Save energy, save money, it all adds up!

As the autumn approaches here are our pointers on how to save money on your energy bills.

Switch energy supplier

Have you changed supplier in the last three years?  If not you could save money.  Compare prices and change if necessary before the big winter bills set in. Visit www.utilitywarehouse.co.uk

Product efficiency
You could make 20% more tea using a more energy efficient kettle (statistics from British Gas)
When buying anything from a cooker to a kettle, it always pays to check the energy rating and the kwh/annum on the bottom right of the label.

Insulate your home
One of the most effective ways to cut your energy bills.  Based on a semi detached house you could save £140 a year by insulating your loft, and £160 with cavity wall insulation.  (www.energysavingtrust.org.uk) There is funding available if you meet the criteria.

Don't Panic! The Black Monday storm is clearing

by Paul Northmore, Managing Director

This week has been a rollercoaster of a ride for the markets with Monday 24th August being named 'Black Monday'.

The tumble in Chinese equities as a result of a slowdown in the economy has taken its toll on global equity and bond markets with the Chinese Shanghai Composite Index falling over 8%.

This was followed by European and then US market falls, the FTSE 100 finished 4.7% lower at 5,898.87 and the S&P down 3.9%.

The slowdown in China and the devaluation of its currency have spooked markets. We have seen a significant fall in commodity prices on the back of this as well as significant falls in stocks with exposure to China. In addition we are facing further falls in the oil price which is having an adverse effect on oil and gas companies. Some of this we have seen first hand at the fuel pumps.

So your child is going to university....Have you had the 'finance' conversation?

Whether your child is preparing to go to university in a few weeks or thinking of going next year, Nick Kelly gives his take on preparing your child financially for their student years.

I can't quite believe that my daughter has already completed her first year at university.  

It doesn't seem that long ago she was shopping to go.  The list seemed endless.  Cutlery, bed sheets, new clothes etc.  But I found as important as all of these essentials was the chat about money, budgeting and how to survive university financially.

The step from living at home to having to pay bills, rent and grocery shopping can be huge.
Here is my 'important conversations' list to use a starting point over the summer and also tips to put them on the right financial footing for their student years.

Summer Budget 2015

As George Osborne revealed his 7th budget this week, our adviser Steve Ansell explores what this announcement could mean for our clients.

Tax and Personal Tax changes
The chancellor reported  that there would be no increase in VAT, national insurance or income tax.
The basic rate threshold is to increase to £11,000 next year and to £12,500 by 2020 (meaning no tax payable on the first £12,500 of earnings) and the 40% threshold is to rise to £43,000 from April 2016, a small step towards the £50,000 target indicated.  This will reduce the number of clients moving into higher rate tax.  It will benefit those taking income draw down from their pensions allowing an increase in income without a higher tax liability.
This also means that our working clients will have more disposable income.

Inflation - The risk in taking no risk

by Mike LeGassick, Independent Financial Adviser

Any discussion with a prospective investment client should always include a detailed chat about their attitude to investment risk. It should also include their personal capacity for loss and their expectation of return.
My role as an independent financial adviser is largely about managing client expectations; and providing that these things are discussed and accurately recorded, there should be no nasty surprises.
However, in over 20 years in this business there is one hugely important element that most people completely overlook and that is inflation.
It can have a devastating effect on people’s savings over time.  A couple of percent here and there can seem like no big deal let me warn you... disregard inflation at your peril!  It lurks there, quietly in the background but then it never stops.
In my opinion there's a very real risk in taking no risk.

Eight tips to help you get a mortgage

by Lisa Burton, Independent Financial Adviser

A year on from the Mortgage Market Review and the landscape for mortgages has evidently changed.

Our suggestions for mortgage and remortgage applicants would be as follows:


With lenders checking applications even more thoroughly, it saves time if you tell us about all of your financial commitments initially rather than the lenders finding out and returning with queries.

Mortgage interest rate cycle - will the cost of borrowing ever be this low again?

Independent Financial Adviser Patrick Goddard gives his view on the current market.

Economic fundamentals (i.e. the strength of the general economy and the jobs market along with the Help To Buy' scheme and the stamp duty reforms) all combine to create an environment that encourages demand for housing and the confidence to borrow. 
There is continuing demand and limited supply - we have not been building enough houses for many years now, and this is most likely to have an upward effect on house prices. 

As people clamour to get in the market or move up-market, the increase in prices is driven yet further, as is the demand for mortgage borrowing.

This overview is evidenced by the latest Council of Mortgage Lenders housing commentary which reports gross mortgage lending in March at 21% higher than in February.  As wages inflation continues to outstrip price inflation and confidence is further encouraged by continuing low interest rates, so this upward trend is expected to continue.

So what does all this mean for individuals?

Why pensions are like ice cream

Mike LeGassick, Independent Financial Adviser with Manning and Company, explains why the blended approach to retirement income planning could be the best choice.

If you were born around 1960, you will soon be facing a pivotal decision: how will you shape your life over the next 30 years?

First of all think back 30 years, to 1985 – when music came on vinyl or cassette, and the internet hadn’t yet arrived.  Can you think ahead to the year 2045 and imagine what life might be like?  Honestly, can any of us?!

Yet thanks to the new pension freedoms which come into effect in April, that’s exactly what anyone aged 55 or over will have to do.  As never before, your future is in your hands.

Budget 2015: good news for savers, first-time buyers and pensioners

by Patrick Goddard, Independent Financial Adviser

By and large, it was the pre-election Budget that everyone expected; and it provided at least something for most people to smile about. 

Overall there was plenty of good news for our clients at every stage of their financial journey – along with some announcements that mean certain clients need to plan or take action soon.

Pensioners with annuities

For those who have already retired, the biggest headline was annuities.  From 2016 it is proposed that pensioners will be able to trade in their existing annuities for cash, if their provider permits it.  The cash can be taken as a taxable lump sum (with the 55% tax charge abolished and tax applied at the marginal rate); or it can be used to provide a flexible annuity; or invested to provide a flexible retirement income.

New pension rules: don’t forget about tax

by Paul Northmore, Managing Director

The new pension rules announced last year come into effect on 6th April 2015 – “Freedom Day”.  

From that date, if you are 55 or over you can withdraw your entire ‘defined contribution’ pension pot as a cash lump sum if you wish.  (‘Defined contribution’ means how much you receive depends on what you’ve paid in.) 

Many are tempted by the new freedom.  A recent survey by The Pension Advisory Service and TD Direct Investing indicated that 24% were planning to take at least half of their pension pot as cash. 

But there are some important tax considerations.

The new tax rules for pensions

75% of each lump sum you withdraw is subject to tax – and your pension pot withdrawals are classed as ‘income’ and taxed by the same rules.  This means:

Should you cash-in your final salary pension?

By Patrick Goddard, Independent Financial Adviser

If you have a final salary pension scheme, many people may be rather envious!  These schemes, which usually pay a proportion of your salary at the time you retire, are now few and far between.  

Final salary schemes are a type of pension known as ‘defined benefit’ – no matter how the markets perform, you know how much you’re going to get when you retire.  

But most schemes now are ‘defined contribution’ schemes – the only certainty is how much gets paid into the scheme, not what your payout may be.

The certainty of a final salary scheme is what’s so appealing.  So who would give that up?

Well, with the pension reforms which come into effect in April 2015, everyone has considerably more freedom in how to use their pension fund – whether it’s a defined benefit or defined contribution scheme.

I am fed up with my job – can I retire?

by Peter Harrison FPFS, Independent Financial Adviser.

This is a question I get asked a lot: “I’ve been at work since I left college – now I want to live a little! Can I afford to?”

The first step in answering this question is to understand what capital and income you may need if you stop full time work – bearing in mind that you may need cash for a long holiday, buy a camper-van and travel the world, carry out some home improvements, help out the children a little.

After that, you need to remember that your resources will now have to last you for the rest of your life – and inflation will erode their value over time.