Financial protection for you and your family

Sadly, over the last month,  I have had to deal with the loss of two of my clients.  My Blog this week focuses on the importance of ensuring that your protection needs are covered for and also that of your family.

Life and health insurance protection is the underpin of most good financial planning. These types of insurance can ensure that, if the worst should happen, the right amount of money will reach the right hands at the right time.

Life insurance puts money in the hands of those who need it when a person dies. There are many reasons why this money might be needed, including paying off a mortgage (or other loan) if a borrower dies, protecting a family against the early death of a spouse, partner or parent (particularly important for people with financial responsibility for children), paying inheritance tax (IHT) or protecting a business against the financial consequences of the loss of its owner or a key employee.

The life assurance needed to cover a loan is relatively simple to assess. You need enough insurance for the amount of the loan and the cover should last for the time that the loan is outstanding. If you pay off some of the loan, you should be able to reduce the amount of cover earmarked for this purpose. But most people also need insurance cover to replace their income if they were to die. The same principles apply but the calculations are a little more complicated. For example, you decide you need life assurance cover to provide the school fees for a child who is now five and will probably be in school until she is 18. You should therefore first quantify the total amount of school fees that you would have to pay over the period and take out cover of this amount for the next 13 years.

The approach to insuring other needs is roughly the same. For example, you could calculate how much your family would need to cover the general household and other expenses and how long they would need the funds.

You can arrange for life cover to pay out a series of annual amounts over a set period, which is a simple approach to replacing an annual income. But most life cover pays out a lump sum. If you want a lump sum to provide £1,000 a year for 10 years, you would need life cover of about £10,000; if the income were needed for 20 years, you may need an amount slightly less than £20,000 as the invested sum may produce some growth or income.

It’s sometimes hard to work out how much life cover you would require overall for your family, because of the difficulties of assessing your family’s needs after one or both parents have died. Current levels of expenditure provide a good starting point for making these estimates, and then you would have to consider the other costs that might be involved, like childcare. It can be especially difficult to assess the potential financial impact of the death of a parent who spends most of their time looking after children and the household. A good starting point is to estimate the costs of buying in these services.

The best way to ensure that the proceeds of a life policy are paid to the people you intend to benefit is usually to arrange for the policy to be in a trust.* The most appropriate type of trust is generally one that gives the trustees discretion or flexibility about how they distribute the benefits, but it’s a good idea to get advice about this. If you die, the policy proceeds will be paid to the trustees and then the beneficiaries – not into your estate. This arrangement should save inheritance tax and speed up the payment to the beneficiaries.

By contrast, the purpose of health insurance is to provide some money if you fall seriously ill or have an accident, potentially affecting you for many years.  In this case, you would probably stop earning although your financial needs might well be greater than ever. The state benefits you would receive would be relatively low and unlikely to provide sufficient income to meet your needs, especially if you have substantial rent or mortgage payments to make. You might also need capital, for example to make adaptations to your home or to pay off loans or other liabilities.

Virtually everyone who is working needs some kind of health insurance to provide financial protection if their earnings are affected by serious illness or disability. Even if you have no financial dependants, there’s a very strong chance that you will need health insurance.

Income protection – sometimes called permanent health insurance – pays a weekly or monthly income if you cannot work because of illness or disability. You may think you don’t need to worry about this kind of cover, but the fact is that, in the UK, there are over 11 million people with a limiting long term illness, impairment or disability and 1 in 7 working age adults suffer from a disability (Taxbriefs, May 2014)..

Some employers provide income protection insurance, but a very large number do not.  It’s worth specifically checking the position with your employer. Income protection can appear relatively expensive, but can be very valuable if you fall seriously ill.

It is normally advisable for income protection insurance to be inflation-protected in two main ways. You should be able to increase the level of cover from time to time regardless of your state of health, or the cover should increase automatically in line with inflation or some fixed percentage. But it’s also important to make sure that the benefit payments themselves keep pace with inflation otherwise, if the benefit payments never increased after you fell ill and could not work, their real value would be gradually eroded over the years.

Critical illness insurance pays a lump sum if you are diagnosed as suffering from a specified illness. The advantage of critical illness insurance is the benefit is paid shortly after diagnosis of the illness, without any significant delay – unlike the waiting period of income protection. It’s also in the form of a lump sum that can allow you to make rapid adjustments to your lifestyle and pay off loans.

People often take out critical illness insurance to cover a mortgage or other loan. Because you are more likely to have a critical illness than die, it’s more expensive than life insurance, but this reflects the likelihood of needing to claim on the policy.

The final area to consider is medical insurance. These are policies that help you to afford the cost of private medical treatment.

Private medical insurance (PMI) pays for private health treatment, whereas health cash plans pay for everyday health costs, typically 75% – 100% of costs for dentistry, optical and consultation costs, plus a small sum for each day spent in hospital.

Insurers are constantly looking at new ways to meet people’s needs, such as through life insurance that includes critical illness and/or income protection insurance, which may be cheaper. It’s important to look at your options and seek the assistance of a trusted adviser.

*Trusts are not regulated by the Financial Conduct Authority.

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The importance of business succession planning

The importance of business succession planning

Over the past few weeks a number of my meetings have been with business owners who have expressed  concern about the importance of succession planning. I do hope you find the article below of interest.

What happens to a business if its owner or co-owner dies or falls seriously ill? Much will depend on the type of business – sole trader, partnership or limited company – but unless there has been some advance planning, the chances are that there will be disruption, arguments and the strong possibility that all or part of the business will end up in the wrong hands.

So if you’re a business owner, business succession planning and insurance is important. It’s quite simply the process of planning for what you want to happen if you (or your co-owner, if you have one) were to die or fall seriously ill.

If you would like further information in relation to the importance of business succession planning , please visit my website.

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How retirement will look in 2015

As you may be aware there are several changes planned to Pension Legislation over the forthcoming months which are summarised below.

Should you have any queries, please do not hesitate to contact me on 01676 530606.

On 21 July 2014, the government released their response to the ‘Freedom and Choice in Pensions’ consultation, effectively giving the go-ahead for the sweeping pension changes that were proposed as part of the 2014 Budget in March. These changes could radically alter your plans for retirement.

From April next year, we will see more freedom in ways people can take their pension benefits when they reach 55. Few would argue that choice and flexibility are good things, but what do the changes mean if you are planning your retirement? Here we give you five areas for consideration.

More freedom in how you draw your income

In theory, the flexibility will allow you to treat your pension fund in the same way as any other investment: you will be able to take withdrawals whenever you want.

From April 2015, if you are a member of a defined contribution pension scheme and aged 55 or over, you will be able to draw money from it as you see fit. You can receive a tax free cash sum of up to 25% of the amount you take, then you will have the freedom to access some or all of the remaining fund as income, taxable at your marginal rate of income tax. So if you want to access all of the money from your pension, you will be able to take it as a lump sum.

As tempting as it sounds to get hold of your money when you want it, in practice, the tax treatment may discourage you from extracting large sums in a single year. So unless you really need the extra income, you may want to withdraw your pension savings at a slower rate that is more tax-efficient.

Although the new pension freedoms mean you will no longer be compelled to buy an annuity, if you are looking to secure a guaranteed income for the rest of your life, an annuity will still be an appropriate option for you, especially as it’s impossible to tell how long you will live.

Changes to how much you can contribute

From April 2015, if you are drawing an income from your pension (after taking tax free cash) and wish to make contributions defined contribution schemes, you can continue to do so, but the amount on which you can receive tax relief (the ‘Annual Allowance’) will be cut from £40,000 to £10,000 a year. This could be via employer or personal contributions.

The £10,000 Annual Allowance will be introduced for those already in ‘flexible drawdown’. This provides a potential advantage as the existing rules prohibit tax-relievable contributions if you are already taking income from Flexible Drawdown.

In some circumstances the Annual Allowance will not apply, but the rules can be complex. For example, you will be able to take income from a maximum of three smaller personal pension pots, or an unlimited number of smaller occupational pension pots (in both cases, worth less than £10,000), without being subject to the Annual Allowance restriction. Similarly, if you enter Capped Drawdown before April 2015 and take income within your income limit after this date, the Annual Allowance will remain at £40,000 a year in these cases.

Transferring defined benefit schemes

Transfers from private sector defined benefit to defined contribution schemes will continue to be allowed. The government is also consulting further on allowing full or partial withdrawals direct from private sector defined benefit schemes, to remove the need to transfer out to a defined contribution scheme before taking benefits. If you are a member of a defined benefit scheme that is already in payment and you wish to transfer out, this will continue to be prohibited.

Transfers from unfunded public service defined benefit schemes will not be allowed. Transfers from funded public service defined benefit to defined contribution schemes will be permitted.

Taxation on death to be reviewed

The tax position on death under the current rules is that lump sum payments from any money remaining in drawdown is subject to a death tax charge of 55%. The same tax rate also applies to any remaining pension fund not being used to provide benefits, if the death occurs from age 75 onwards. The government has said 55% may be too high and is now consulting on this. It intends to announce its decision in the Autumn Statement.

Guidance or advice?

From April 2015, the government will introduce a new right to impartial financial guidance at the point of retirement, for anyone with a defined contribution pension scheme. The guidance will be delivered through a range of organisations, including the Pensions Advisory Service and the Money Advice Service. But it’s important to understand that what will be on offer is just guidance – not advice – so while guidance will explain the impact of these new rules and let you know what you could do, it won’t tell you what you should do. Advice, therefore, remains essential.

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.

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Budget 2014 – The Pensions Revolution

Budget 2014 – The Pensions Revolution

Following the announcement in the budget of the possible changes in Pension legislation from April next year, and the very recent confirmation of how the new rules will look in practice, I thought it would be useful to summarise the changes

The 2014 Budget proposals have been described by some retirement planning experts as a ‘pensions revolution’. The new reforms come at a time when the world of pensions is already undergoing other significant changes.

The annual allowance – the maximum tax-efficient limit for contributions to all your pension arrangements during a tax year – was reduced again for tax year 2014/15, this time to just £40,000 – compared with the £255,000 it was as recently as 2010/11.

There was also another cut in the lifetime allowance. This effectively sets the maximum tax-efficient limit for the overall value of your pension benefits. The lifetime allowance is now £1.25m against a peak of £1.8m.

Automatic enrolment of employees and other workers into pension schemes is gradually progressing through the labour force, having started in October 2012 for the largest employers.

The current structure of the state pension – basic state pension plus, for employees, the State Second Pension (S2P) – will be replaced by a new single-tier state pension, from April 2016. This will cover both the employed and the self-employed, and it will be worth a maximum of about £150 a week in today’s terms, before any transitional increments apply.

In the background, the earliest age at which people will be allowed to start drawing their state pension is set to rise: it will be 66 for both men and women by October 2020, with another year added between April 2026 and April 2028.

The latest proposals announced in the 2014 Budget are designed to change the retirement landscape further by breaking the link between pensions and annuities.

The proposals focus on money purchase pension arrangements, sometimes called defined contribution pensions. These types of pension schemes allow you to build up a fund of money that you use to provide a retirement income and a tax-free lump sum.

Traditionally, most people have used their fund to buy an annuity to provide a regular retirement income, or accessed their fund through a capped drawdown plan.

But from 6 April 2015, all members of a defined contribution arrangement will be able to draw money as they see fit after the age of 55, subject to the rules of their scheme also permitting this. The tax-free lump sum limit of up to 25% of the fund will remain, with the rest of the fund taxable as income.

In theory, the flexibility will allow a pension fund to be treated in the same way as any other investment: you will be able to take withdrawals whenever you want. However, in practice, the tax treatment will discourage the extraction of large sums in a single year. So, unless you really need the extra income, you may want to limit any increase to keep you in your current tax band.

The tax position on death under the current rules is that any money remaining in a pension fund being used for drawdown is subject to a flat tax charge of 55%. The same tax rate also applies to any fund that’s not being used for drawdown if the death occurs from age 75 onwards. Normally there is no inheritance tax due, so with the right trust structure, £1,000 of pension fund can become £450 of cash for your chosen beneficiaries.

The Budget statement said that “…the government believes that a flat 55% charge will be too high in many cases in the future” and promised to “engage with stakeholders” in reviewing the rule. Whether this will mean a reduced tax rate for all, a two-tier system of pension and inheritance tax, or something else remains to be seen.

The standard earliest age at which you can draw pension benefits is currently 55. A consultation document published alongside the Budget proposed that this minimum age should increase in line with the state pension age (SPA), with the first rise being to 57 in 2028, coinciding with SPA reaching 67. However, the document also asked for views on whether a ten-year gap between the minimum pension age and SPA should be reduced to five years, “to allow more time for people to accumulate pension wealth before they reach retirement.”

And at present there is no tax relief on your personal contributions to pensions that you make once you have reached your 75th birthday. The government now wants to consult on whether to revise or abolish this ceiling.

The complexity of the new options has prompted the government to introduce a new right from April 2015 to impartial financial guidance at the point of retirement for anyone with a defined contribution pension. How this will operate in practice is now the subject of discussion between the Treasury, the Financial Conduct Authority and pension providers. One point is already clear: what will be on offer is just guidance, not advice.

There were a range of other interim measures introduced earlier in 2014 to help smooth the transition to the planned changes in April 2015. At this stage the broad outline of the reforms is clear, but not all of the detail. So it’s important to seek advice from a professional who can keep you up to date with the reforms and build a complete picture of how the new retirement landscape could affect you.

If you require any assistance or have any queries on this or any other issue, please do not hesitate to contact me.

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.

The levels and bases of taxation and reliefs from taxation can change at any time and are generally dependent on individual circumstance.

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Exclusive client day at The Belfry

Exclusive client day at The Belfry

The latest in Janine Edwards’ highly popular client days; the event was set in a first class environment with a friendly and social atmosphere whilst addressing the latest wealth management news from industry experts.

To start the event Janine introduced Tim Knight, Head of Investment Consultancy at St. James’s Place head office, who delivered an engaging speech around the investment market performance, before moving on to provide an outlook for the economy.

Following on from Tim, the clients were introduced to Charles Mitchell Wines. Since 1981 Charles Mitchell Wines have been sourcing the finest hand crafted wines from boutique wine growers around the world and they provided an opportunity to taste some fantastic exclusive Grand Cru Champagne and Wine.

To finish, clients were treated to dinner in the fantastic ‘Ryder Room’ at the newly refurbished Belfry Hotel.

We are delighted to provide below some client feedback regarding this event:

‘Very informative talk, good food, venue excellent, good company’ – Tony Billingham

 ‘Easy going, very informative, with current market trends and forecasts explained without being too technical’ – Peter Yates

 ‘Easy to understand, well presented and well structured’ – Harry Kershaw

 ‘The talk on the economy was most informative and enjoyable’ – Alison Ramoutar

 The next event will take place on 30 October 2014  at Lumbers, Jewellers, in Leicester.

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Inheritance Tax and care fees planning do not mix

The focus on my appointments over the past couple of weeks has been on Inheritance Tax planning and care fees. The following article from the  latest edition of the Generation Newsletter provides some useful food for thought.

Inheritance Tax and care fees planning do not mix

Or can they? Many of our clients have expressed a desire to make gifts to reduce their liability to Inheritance Tax but are worried about potential care costs. They feel they have more than enough to live on now, provided nothing happens requiring them to pay for care in the future; whether in their own home, or a residential or nursing home. If this were to happen, their expenses could rise dramatically. This understandable and realistic concern led to the development of the Later Life Planning Scheme, specifically designed to address this problem.

The scheme allows you to make a gift of capital in order to reduce the value of your estate for Inheritance Tax purposes whilst, at the same time, providing you with a predetermined ‘income’ to help meet the expenses of your care in later life, but only if required. As you are unlikely to know when a need for care will arise, it is possible to arrange for the ‘income’ that you retain to increase by a fixed percentage each year. This increase will apply from the date of the gift and will continue while the ‘income’ is in payment.

How does the arrangement work?
• The scheme combines an investment with a specifically worded discretionary trust*.
• At the outset, you select the amount of ‘income’ you wish to receive should you need care, and how you would like this ‘income’ to increase, if at all. Once selected, the ‘income’ cannot be changed and, if it becomes payable, it will be paid for the rest of your life or until earlier fund exhaustion.
• We suggest that no more than the current limit of the nil-rate band (£325,000) is invested, assuming you have not used any of your Inheritance Tax nil-rate band elsewhere in the previous seven years.
• The original amount invested will fall outside of your estate if you survive for seven years from the date of the gift. It is possible, in limited circumstances, that tax at a maximum rate of 6% may be payable every ten years and/or
when capital payments are made from the trust.
• On your death, the investment remains in the trust and is held for a selected beneficiary or beneficiaries.
• While alive, you retain complete freedom to change the beneficiary/ies, the amounts they receive and when they benefit.
• After your death, your chosen trustees can decide whether the trust fund should be distributed to your selected beneficiary/ies or retained within the trust for their future benefit. You can give your trustees guidance via a letter of wishes.

In summary, investing in this type of arrangement would mean:

• any growth in the investment is outside your estate for Inheritance Tax purposes, and
• you can have peace of mind that, should you need additional income to meet care costs, you are able to access it without losing any of the valuable Inheritance Tax benefits that may have accrued.
This plan will not be suitable for everybody and it is important to take advice from your St. James’s Place Partner if this is of interest to you.

For more information about Inheritance tax, please visit my website.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You (or your beneficiaries) may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

*Trusts are not regulated by the Financial Conduct Authority.

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Funding residential or nursing care fees

Funding residential or nursing care fees

Funding care fees, fully or even partially, can be an expensive business. Understanding, therefore, what the state provides plus being clear about costs and affordability
is essential. This article seeks to outline information which any self-funders
should know.

About the 12-week property disregard

Where, excluding your property, your capital is below the threshold – in England and Northern Ireland, £23,250; in Wales, £24,000; and in Scotland, £26,000 (2014/15) – and your income is insufficient to meet the care fees, the local authority can assist with the costs for the first 12 weeks of permanent care. Any financial help beyond that period, however, will be a loan against the value of your property and recovered from the eventual proceeds of its sale.

About deferred payments agreements

If social services has assessed you as needing care and your capital is below the threshold, they can lend you the funds to pay for care, to be repaid from the proceeds of your property when it is ultimately sold. There is, however, a limit to the amount they will lend you. Plus it could also adversely affect your means-tested benefit entitlements.
About Council Tax exemption Should you move into care and leave your property unoccupied, you should be entitled to a full exemption from Council Tax until it’s sold.
About Pension Credit and Severe Disability Addition If you are entitled to Attendance Allowance, then subject to your savings and income, you may be entitled to claim Pension Credit with a Severe Disability Addition, but only where your property is on the market. If it is not on the market, it will almost certainly be treated as capital and affect your entitlement to this benefit.

About Attendance Allowance

Attendance Allowance is a non-means-tested, non-taxable allowance paid at the lower rate of £54.45 per week to those needing care by day or night, and at a higher rate of £81.30 per week for those needing care both by day and night.

About Registered Nursing Care Contributions

Irrespective of whether your stay in care is temporary or permanent, if the care home provides nursing care, the NHS makes a Registered Nursing Care Contribution.
This currently amounts to weekly contributions of £110.89 in England, £120.55 in Wales, £100.00 in Northern Ireland and £75.00 (plus £166.00 for personal care) in Scotland and is paid directly to the care home.

About the National Framework for NHS Continuing Healthcare

Where your needs are primarily healthcare-related, you may be entitled to full care fees funding from your local Primary Care Trust following an assessment under the National Framework for NHS Continuing Healthcare. You can request a review of eligibility at any time.

About local authority funding if your money runs out

Once your capital reduces to the threshold, you can seek local authority assistance. If there is any possibility that you will not be able to meet the full cost of your care in the long term, arrange an assessment of your care needs to ensure they will step in to help with the funding when required.

About financial products to meet care costs

It is perhaps surprising that there exists only one dedicated financial product that has been specifically designed to meet care costs: the immediate needs annuity. This can provide a regular increasing income for as long as you need care, which should cap the cost of care from the outset. It is important, however, to seek advice and not to try to do it alone, as such annuities do not suit all circumstances.

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When we have to sell or let a parent’s property

In recent months, I have visited several clients who have expressed concerns about the challenges and decisions to be faced as  their elderly parents find independent living increasingly difficult to cope with. The following insert from the last Generation newsletter by Robert Dolbear, Director at Bridgefast Property Services, provides some useful advice and guidance.

There comes a time in our lives when we have to start thinking seriously about whether our parents can cope independently in their home. This can be a stressful time and involve some difficult conversations to try to agree what is for the best.

This can be all the more challenging when living remotely from our parents, an ever more common occurrence, either within the UK or overseas.

The options available when independent living becomes too difficult are many, but once a decision has been made the challenges change. If it is a planned move while health is relatively good, it tends to be easier than if health is deteriorating making the move more urgent. The issue of dealing with a parent’s property sadly also arises on the death of a parent.

However the position arises, the options are simple: either sell the property or rent it. There are a number of aspects to think about under either option and this article highlights the considerations.


The initial marketing period is crucial; incorrect decisions at this stage are difficult to recover. Things to address and think about are as follows:

• You will need to obtain at least two appraisals from estate agents. If you don’t know the local market very well, selecting those agents can be difficult.
– Have a look at the types of property they are currently selling and obtain information on the size of their portfolio and the percentage they have under offer
– Check how properties are advertised; both the quality of presentation and where – which websites, papers etc
– Check that the agent’s branch is open 7 days a week
– Ensure the commission charge is reasonable

• Selection of the agent to market the property will depend on the factors above as well as:
– The quality of service
– The quality of information provided to substantiate their recommendations on asking price, achievable sale price and probable timescales

• Don’t be seduced by the highest valuation; you are looking for the optimum valuation, as a property that is overpriced for the initial marketing period can ultimately be difficult to sell for its fair value.

• An Energy Performance Certificate (EPC) will be required for the property.

• What arrangements will need to be made with respect to key access?

• Obtain an independent assessment of whether any remedial work is required to achieve a satisfactory sale. In general we would say this is not necessary as buyers like to make their own mark on a property; but if there are obvious issues which are affecting the initial appeal of a property then they should be considered.

• You will need to monitor the activity of the agent to ensure satisfactory progress. This can be time-consuming, but an agent should be accountable for activity on a weekly basis and be able to provide qualitative feedback. It is so important to build up momentum, starting from when a property is first marketed, through to a fair and satisfactory sale.

• Negotiating on offers is a skill in its own right.
– Are you comfortable doing this yourself or confident the agent can act in your best interests?
– Potential buyers may try to exploit circumstances if they know a move is urgent or if the property is already empty.

• Potential buyers need to be assessed to ensure their ability to complete on the purchase. A lower offer from a cash buyer may be better than a higher offer from a buyer in a chain.

• Appointing and dealing with solicitors who will do the conveyancing: they too will need to be monitored to ensure sale completion is achieved as quickly as possible.

• Remember: if a property is left vacant, most policies will lapse or reduce cover after, typically, 30 or 60 days; so separate vacant property insurance is required. Care needs to be taken with the selection of the policy because of these costs and minimum period conditions that may apply.

• An empty property will need care and maintenance, particularly over the winter when a ‘drain down’ is likely to be required. You may consider it appropriate to change the locks.

• Dealing with removals. This is often a combination of taking certain items to the new home, arranging for some items to go to family and friends, obtaining auction appraisals for more valuable items and arranging house clearance and collection by charities for what is left. Selecting the right service providers to help with this is important.

You will need to identify the utility suppliers and contact them to close accounts when the property is sold.


The option to rent out a property has the obvious attraction of generating some income (notwithstanding tax implications) but do your parents, or you on their behalf, want to become landlords?

Tenants can be demanding, requiring requests and repairs to be dealt with promptly. Do you let the property furnished or unfurnished? Furnishings need to meet a certain standard as well as the requirements of health and safety legislation. If you opt for unfurnished, who is going to deal with the sale/disposal/storage of belongings? If you budget for a certain amount of rent, what happens if there is a gap between tenants or market rents fall?

If the property is tenanted, the homeowner is effectively exposed to the vagaries of the property market with, as recent history shows, no guarantee of an upward trend.

So whilst renting can be appropriate for some, you need to be aware of the issues before embarking on this course of action.


If the sale of a property is associated with a move in to care, it is frequently the case that funding is required to pay for care, often in advance of the sale of the property. Professional, specialised, financial advice should be sought in these circumstances to ensure the right solution is put in place.


Dealing with property is invariably stressful, particularly so when this involves a parent’s property with additional concerns and emotions such as a move into care or, most difficult of all, the death of a parent. One’s own location, work and family situation can add to these stresses. It is important to go into it with your eyes open, which I hope this article has helped to address, and to know what you can achieve on your own and when professional support is required.

If you require any assistance or have any queries on this or any other issue, please do not hesitate to contact me.

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Budget 2014 – Brave new world

Spring Budgets have had little to promise or offer UK savers and investors in recent years, apart from setting out the depth of the economic challenge ahead for the coalition government.

Only last year, the mood was subdued, with talk of a potential triple dip into recession and a long and bumpy road to recovery. The UK’s economy, twelve months on, is undergoing a regeneration and a rate of growth that is now the fastest in the Western world. As Britain looks towards a general election in May 2015, the Budget contained far-reaching changes for its savers and investors.

Chancellor George Osborne, in his address on 19 March, said the Budget rewarded “the makers, the doers and the savers” in Britain. And the new pension and tax-efficient saving arrangements certainly offer radical reform of the UK’s personal finance landscape and welcome breaks for savers and investors after four years of austerity. A significant change in pension arrangements has lifted restrictions on access to pension pots and made it more attractive for individuals to invest for their retirement through pensions. And the reform of Individual Savings Accounts (ISAs) brings a very welcome increase in the annual allowance to £15,000 from July this year.

The boost that the 2014 Budget has given to investors, however, comes amid continued austerity, with the government only halfway through the fiscal consolidation it embarked on in 2010. Public borrowing levels still remain at £108 billion for 2014 (, 21/3/14). When the coalition came to power in 2010, Osborne had planned to balance the budget by 2016. Instead, the aim is 2019 (, 19/3/14). The recovery also remains prone to wider global risks, whether from China’s economy or Russian military action. Meanwhile, there are widespread concerns that the recovery has been driven by consumers running down their savings, while households are squeezed by living costs as prices rise faster than earnings.

But the good news for business, markets and households is that the UK economic recovery has entrenched. In March, the Office for Budget Responsibility (OBR) revised up its forecast for the pace of the recovery in 2014 to 2.7%, from 1.8% a year ago (when its estimate for 2013 growth was a mere 0.6%). The OBR also expects earnings will grow by 2.5% this year, and inflation by 1.9%. Osborne, in these more secure conditions, packed his Budget with a broad range of pre-election giveaways, including a reduction in the savings tax rate and an increase in the personal tax-free allowance to £10,500 for 2015/16. The Budget also restated that the Inheritance Tax threshold will remain at £325,000 until April 2018.

For more information on the budget, please visit my website.

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

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Tax year-end checklist

The end of the tax year provides a deadline for some important and valuable investment and tax planning opportunities which are often overlooked, but can help build wealth and also help keep it in your family.

Your plans may be specific – investing this year’s ISA allowance, topping up your pension, tax efficient savings for children or grandchildren, or making use of your Inheritance Tax gifting allowances – or you may feel that now is the time to complete a comprehensive review of your circumstances.

Whatever your plans, you must act by 5 April to avoid missing out on the opportunities provided by tax year-end. The below questions identify planning ideas to consider before the end of the 2013/14 tax year.

Q: Have you fully used your 2013/14 ISA allowance?
Q: Have you considered contributions to a Junior ISA for children and grandchildren?
Q: Have you utilised your annual Capital Gains Tax exemption of £10,900?
Q: Have you fully funded your pension for the 2013/14 tax year?
Q: Have you taken full advantage of any unused annual pension allowances since 2010?
Q: Have you reviewed the tax position of any death in service or pension benefits?
Q: Have you considered your small gifts exemptions or instigating regular gifts from income to reduce your Inheritance Tax liability?
Q: If you will be affected by the reduction in the personal pension allowance, have you considered where to redirect excess contributions?
Q:Have you used your annual Inheritance Tax gifting exemption for 2013/14 and 2012/13?
Q: Have you discussed the possibility of tax efficient investment schemes?

To find out more tax year-end planning opportunities, please visit my website.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels an bases of taxation and reliefs from taxation can change at any time and are generally dependent on individual circumstances. 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.


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