Advice in an ever changing financial world

Previous blogs have focused on the changes proposed in George Osborne’s recent budget, which have highlighted the importance of properly structured yet flexible financial planning for all. What has had less comments on is that the financial world of investments and pensions will always be evolving (for both good and bad depending on your and HMRC’s perspective), and there are still changes to come. 

 

Pensions and the tax reliefs applicable remain a large part of the focus, and it goes without saying that investors’ plans may be affected by any future change in tax reliefs.  It has been suggested that the current regime is unduly favourable to higher rate taxpayers, who receive relief on pension contributions at their highest marginal rate, but are often able to keep their income withdrawals (in whatever form) within the basic rate band after the 25% tax free cash lump sum is taken. The suggestion (not an official government or HMRC proposal yet)  has been made that relief should be standardised at 30%, which would give 20% taxpayers a 10% extra incentive to save, but at the same time, this could have a significant impact on the plans of 40% and 45% taxpayers.

 

The changes which are taking place, and those yet to come, mean that planning for retirement and drawing income in retirement has become an on-going process rather than a one-off event, and the associated tax planning is now an essential part of everybody’s wealth planning.

 

Duncan Wilson

Private Client Partner

 

Telephone: +44 (0)20 7893 3456

Email:  getintouch [@] broadstoneltd.co.uk

 

What a relief - Retirement and Legacy Planning

One thing we have gleaned lately is that when the Pensions Minister believes change is needed - he makes it happen.

Following the surprise pension announcements in the 2014 budget, which no one saw coming, Steve Webb’s comments about introducing a single tax relief rate possibly carry more weight than before.

Could this be the right time for him to deliver his swansong by creating a single 30% pension contribution tax relief rate?

While the Government is in its “run-up-to-election strategy” and there being little, or no, new legislation on the books perhaps this is the right time for him to strike?

And if he were to include in this the Chancellor’s inference that the 55% pension death benefit tax should be reduced as it is “inappropriate in most cases” - things really come alive!

And if we add to this Mr Webb’s preference for scrapping the lifetime allowance could he possibly be preparing to deal the final ”Ace-in-the-pack” of radical pension reform; bringing the hurdy-gurdy of Pensions Simplification to a close?

Whatever Steve Webb’s final thoughts, one thing for certain is that pension legislation will not stand still and retirement planning and legacy considerations will continue to change and evolve.

Whichever way he goes there will always be winners and losers – after all, the glass is either half full or half empty – but one thing is clear the need for retirement and legacy planning advice has never been greater.

Helen Wilson

Consultant

Telephone:  +44 (0)20 7893 3456

Email:  getintouch[@]broadstoneltd.co.uk

  

Will your tax diversification be in the right shape when you retire?

No, this isn’t another Blog about pensions - this Blog is about tax risk.

Over the last 35 years Income Tax has fallen from a breath-taking 98% (1978/79) to 45% and Capital Gains Tax has bounced from 30% up to 40% and down to 28%.

As a result, tax risk is a serious consideration in your retirement planning strategy especially when you need to retain as much of your net wealth as possible.

In managing tax risk, diversification across the various tax regimes is as important as diversification across the various investment sectors and asset classes.

With ISA Millionaires becoming more prevalent those who took full advantage of their annual allowances are laughing all the way to the bank. Likewise, those with investment strategies that take full advantage of the annual capital gains tax allowance are rubbing their hands with glee.

Tax exemption, Tax deferment and Tax relief are a starting point in all financial planning scenarios.

Transferring assets to your spouse/partner or assigning investments to beneficiaries can reduce, or defer, the ultimate tax point further; whilst sheltering your capital from inheritance tax (without giving it away) not only reduces your inheritance tax risk but allows your family to retain 100% of your tax-sheltered assets.

If you have ‘planned for life’ without ‘life-planning’ what gaps might you have in your tax risk?

At BROADSTONE we specialise in Life Planning – why not give us a call.


Helen Wilson
Consultant

Telephone:  +44 (0)20 7893 3456
Email:  getintouch [@] broadstoneltd.co.uk