Greetings!
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Steve Hopkins Managing Director |
A very warm welcome to the Summer 2012 edition of 'Your Money Matters'. Articles this July include:
- An update on the phasing out of age allowances
- Investec 'Kick Out' plans - How do they work?
- Dimensional - Alternative investment solution
And if you are self-employed please take a look at a recent article featured in the News Section of Firth & Scott's website about campaigns the tax office are currently running, targetted at particular business sectors.
Are you thinking about moving house or nearing the end of your current mortgage deal ?
Let us help you make the right decision moving forwards. You can browse our new online mortgage search facility, supply us with your details and we'll contact you to ensure that you obtain the most competitive deal available.
And finally ...
It's been almost three years now since we launched our client newsletter. It's important for us to keep the newsletters interesting so please tell us what financial issues you would like to read about in the 3rd Anniversary Edition - your feedback, comments and suggestions are all very much appreciated. |
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Financial Tips | |
In each edition of 'Your Money Matters' we aim to provide you with one or two financial strategies we follow when advising clients. Some of these are pretty obvious but it's always worthwhile reminding ourselves of the basics.
Personal Tax Allowances
As the personal allowance, which is currently £8,105 applies to each one of us, then in respect of a couple it is important that both partners utilise their allowance. This can be achieved by realigning investments so that at least £8,105 of tax-free income is received by both couples.
In retirement again both partners should have enough pension income to at least fully use personal allowances. The current basic state pension (£107.45 per week in 2012/2013) alone will not be enough.
Transferring investment capital (if one of the couple is a higher rate tax payer) to the lower or non-taxpayer will help reduce the tax being paid. However, please remember that tax credits on dividend income cannot be recovered and for control purposes, possibly transferring investments into joint names would be more acceptable.
Anyone lucky enough to earn more that £100,000 p.a. - please remember that your personal allowance is reduced by £1 for every £2 of excess income.
This would mean that somebody earning up to £116,210 during the current tax year will lose their personal allowance in part or in total. The real rate of tax therefore for somebody earning £116,210 is actually 60%.
Payment into a registered pension scheme will help, in that tax relief on the contributions will be granted at 60% and possibly, in an employed situation a salary sacrifice scheme should be considered where the employer pays pension contributions and the employee accepts a lower salary. This also helps as far as National Insurance Contributions are concerned.
So lots of things to consider here and please do not hesitate in contacting your Independent Financial Advisor here at Firth & Scott.
Article written by Steve Hopkins FCII.
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Age Allowance & Tax Planning | |
As discussed in April's edition of 'Your Money Matters' the Government propose that the age allowance will be phased out and as a result of this the following measures will be introduced from 6 April 2013.
- Nobody born after 5 April 1948 will become entitled to age allowance, only the standard personal allowance will be applicable.
- The amount of age allowance will be frozen.
- Age allowance will be replaced by the standard personal allowance, when the two amounts are eventually aligned.
As a reminder for the tax year 2012/2013 the relevant amounts for age allowance purposes are:
- Allowances for those aged 65 - 74 - £10,500
- Allowances for those aged 75 and over - £10,660
- Total income figure £25,400
Are you caught by the total income trap?
Individuals who are caught by the total income trap (£25,400 to £30,190 - for those aged 65 to 74 in 2012/2013) can consider various strategies to avoid the problem.
The standard personal allowance is due to increase to £9,205 in 2013/2014 and it is predicted that possibly to £10,000 in 2014/2015, which will mean that eventually fewer and fewer will be caught in the age allowance trap in the future.
So lots of things to consider. Call us on 0115 8400 333 or complete our online enquiry form to take advantage of a no obligation review of your financial situation.
Article written by Steve Hopkins FCII.
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Investec Structured Deposit Plans |
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John Edwards Cert PFS, CeMap |
Are you relatively cautious but frustrated at the low levels of returns on cash deposits?
It may be worth you considering a Structured Deposit plan with Investec.
There are many so called "Structured Products" available on the market but many of them are very complex in their make-up and, in addition, many of them are Capital-At-Risk investments where you could possibly lose some or all of your money.
How does the plan work?
Investec Deposit plans are fairly straightforward, promise to return your initial investment and offer the opportunity to return significantly more than rates available from the banks.
In addition, Investec Deposit funds are covered by the Financial Services Compensation Scheme (FSCS) in the same way as UK bank accounts are covered up to the amount of £85,000 per person.
There have been quite a number of issues of the Investec Structured Deposit plan with varying rates, but a typical plan could be as follows:
Your money is invested and there is a start date of the plan. The level of the FTSE 100 is the reference point for future potential payouts.
After two years (usually) the FTSE 100 is measured against the level as at the start date of the plan and, if the level is higher (averaged over the last five days), the plan will pay out the initial investment plus 6% per annum (not compounded). For example, on an investment of £10,000 you would receive back your initial £10,000 plus £1,200 after two years.
If the FTSE 100 is not higher after two years, then the measure against the initial starting point is made at the three year anniversary and so on up until a maximum of five years. If at the end of the five years the FTSE 100 has never been higher at any anniversary then your initial investment is returned.
Diagram illustrating how the FTSE 100 Kick Out Deposit plan works.
If you wish to find out more about Investec "Kick-Out" products, please contact your Advisor here at Firth & Scott.
Warning:
Please note this is not a specific recommendation and you should discuss all potential investments and the risks associated with your adviser before making any investment decisions. Investec "Kick-Out" products are not suited to everybody and there is the possibility that you could receive only your initial investment back as compared to receiving a lower, but guaranteed, return from other institutions such as banks and building societies.
We would not recommend Structured Products for a large proportion of anybody's overall investable assets, although these can fit in well within a broad range of investments.
Article written by John Edwards Cert PFS, CeMap
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Is there an alternative investment solution? | |
Not surprisingly due to all the uncertainty we have experienced over the last five years, clients often ask if there is an alternative way of investing monies in the markets to achieve more consistent returns in line with their desired risk taking.
Over the last couple of years many Independent Financial Advisors, including ourselves, have started to look at alternative investment solutions, moving away from the active stock-picking managers that have been prevalent over the last 50 or so years.
One of the Investment Management firms that Firth & Scott are now recommending is an organisation called Dimensional who were founded in the early 1970's and believe in the 'efficient market hypothesis'.
We believe that the story from Dimensional is worth listening to and considering and your Advisor here at Firth & Scott will be only too delighted to discuss with you and explain in more detail what Dimensional and other investment managers have to offer, as an alternative to the active fund stock-picking type organisations.
If you wish to find out more about Dimensional please consult your Independent Financial Advisor here at Firth & Scott.
Article written by Steve Hopkins FCII.
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The information contained in this message may be confidential and is intended for the addressee only. Any unauthorised use, dissemination of the information, or copying of this message is prohibited. If you are not the addressee, please notify the sender immediately by return e-mail and delete this message. Although this e-mail and any attachments are believed to be free of any virus, or other defect which might affect any computer or system into which they are received and opened, it is the responsibility of the recipient to ensure that they are virus free and no responsibility is accepted by Firth & Scott Ltd, 579 Mansfield Road, Sherwood, Nottingham NG5 2JN for any loss or damage from receipt or use thereof.
Firth & Scott Financial Services Ltd, Tel No 0115 8400 333, are authorised and regulated by the Financial Services Authority.
Registered Address: 579 Mansfield Road, Sherwood, Nottingham, NG5 2JN |
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Summer Edition
July 2012 |
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Meet the Advisors |
To see more details about each of our Financial Advisors please click on the links below: |
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"Even though we live in Hampshire your advisers, especially Steve Phillips and David Skelton, are willing to visit. Always helpful. Never pushy. Well done!"
Mr T J Clark & Ms L Moor
Thank you very much for your help and support. The process of buying my first house was made much easier as a result of your service"
Mr N C L Edwards
"First class & professional in every way"
Mr I Rankin
"Simon Hill has looked after my finances for a number of years and I highly recommend him to friends, family and colleagues"
Miss C L Herbert
"We have been totally satisfied with your service over many years. David Skelton has always ensured that we are well informed, and fully understand all information given. We will continue to use Firth & Scott"
Mrs K I Jackson | |
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IMPORTANT NOTE | |
This newsletter is designed to provide you with general information only and does not attempt to give you advice on any particular investment or to recommend any particular investment to you. If you have any doubt as to whether a particular investment is suitable for you you should contact Firth & Scott Financial Services Ltd for advice.
Firth & Scott Financial Services Ltd are independent financial advisors and are authorised and regulated by the Financial Services Authority. |
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