Who could be the single largest beneficiary of your estate?

We can help you identify the source of a wealth leak. Contact us to implement a robust protection strategy

Providing all is going to plan, it can be immensely satisfying building up assets and increasing your personal wealth but, as you know, life can throw you a problem when youíre least expecting it. Thatís why we believe that the implementation of a robust wealth protection strategy is as important as a wealth creation strategy.

Mind the pension gap

Laying the foundation to rebuild the UKís retirement savings system

In May this year, the Queen announced the Pensions Bill, a vital reform that lays the foundation to rebuild the UKís retirement savings system and simplify the State Pension for millions of todayís workers, allowing them to plan their retirement with more certainty.

Planning for the worst-case scenario

Families are under-protected and under-prepared

As one in five UK adults fears for job security, Scottish Widows warns of implications of single income reliance and leaving protection until the first rung of the property ladder. Research from Scottish Widows shows that over half (52 per cent) of the UK population with at least one wage earner in the household is reliant on a single income in order to make ends meet for their family.

With 15 million UK adults currently failing to save, and a further one in five Britons who expect their financial priorities to change concerned about their job security, families could be risking their livelihood by failing to protect themselves financially.

Unable to work
The fifth Scottish Widows Protection Report, based on research among more than 5,000 UK adults, shows that despite three quarters of the population living in a one or two income household and 84 per cent being aware of income protection, only 5 per cent of the population have taken it out to protect their salary should they be unable to work. When asked about other types of protection, the report revealed that 89 per cent of adults do not have critical illness cover and 63 per cent do not have life insurance.

Although the findings reveal that many Britons are not planning for the worst-case scenario, the report showed that 16 per cent of the population has experienced a critical illness, with nearly half of people who fell ill forced either to change their lifestyle dramatically or make a number of small changes in order to survive financially. Worryingly, only 5 per cent of those who fell ill had any kind of protection policy in place to help act as a buffer for this substantial shift in wellbeing.

Financial behaviour
Despite a backdrop of continued economic and unemployment uncertainty, the report indicates that families are leaving themselves under-protected and under-prepared, with
56 per cent of people not in retirement saying that if they were to lose their main income they would only be financially secure in the short term (under six months) or ‘not at all’.

The report showed that the main reason behind people taking out protection, such as life insurance, critical illness and income protection, is at the point of purchasing a property, yet with the number of private renters increasing by nearly a quarter since 2008[1], and 61 per cent of renters saying they do not ever expect to buy a home[2], this shift in home ownership trends has worrying implications for the financial security of future generations.

Worst-case scenario
No one likes to think about the unexpected happening to them, and it is clear that this
tendency to ignore the worst-case scenario is preventing families from preparing for the future and protecting their livelihoods. The value of protection is to provide peace of mind and to know that, should the worst happen, then you or your family have a financial safety net. ν

[1] ONS English Housing Survey, 2008-12
[2] Castle Trust Analysis of ONS English Housing Survey
The fifth annual Consumer Protection Report from financial provider Scottish Widows takes an in-depth look at the habits and attitudes of the UK adult population in order to analyse their protection provision.
The survey was carried out online by YouGov, who interviewed a total of 5,086 adults between 4-9 January 2013. The figures have been weighted and are representative of all UK adults (aged 18+).

Investors get more tax savvy with their money

Strategies to save tax and invest more tax-efficiently in 2013/14

Taxation can be a complicated area of personal finance and you can easily miss opportunities to reduce the amount of tax you pay, or save and invest tax-efficiently. Your job, your savings and your familyís circumstances can all have an impact on the amount of income tax you pay each year.

A s taxation rules change it’s important to take professional advice to ensure you do not pay more than you have to, so that you can enjoy more money as a family.

Individual Savings Accounts (ISAs)
This 2013/14 tax year you can invest up to £11,520 in Cash and Stocks & Shares ISAs (the tax year runs from 6 April 2013 to 5 April 2014). You can invest the full amount (up to £11,520) in a Stocks & Shares ISA or up to £5,760 in a Cash ISA with the balance (within your overall limit) in a Stocks & Shares ISA.

There is no capital gains tax and no further income tax to pay within an ISA. If you are married (or in a registered civil partnership), ensure that you both consider using your ISA allowances. Even if one of you is a non-taxpayer it still often makes sense to make use of this spouse’s ISA.

Junior ISA
For eligible children, this tax year you can invest up to £3,720 in a Cash or Stocks & Shares Junior ISA (the tax year runs from 6 April 2013 to 5 April 2014). Those children with a Child Trust Fund (born 1 September 2002 to 2 January 2011) are not eligible for a Junior ISA and these accounts can also be topped up to £3,720 a year (a Child Trust Fund year runs from the child’s birthday, not the tax year).

There has been a considerable simplification of the contribution rules in recent years. The Annual Allowance, the upper cap on total contributions that can be made to your pensions in one year and benefit from tax relief, is £50,000 for 2013/14 and will reduce to £40,000 from April 2014.

Personal contributions also have to be within 100 per cent of your relevant UK earnings (broadly, earnings from employment or self-employment) to obtain tax relief. Non-earners can still contribute and benefit from tax relief up to a maximum limit of £3,600 gross per annum. Tax relief on personal contributions is available at the basic rate (20 per cent) for all investors and at the highest marginal rate for higher rate and additional rate taxpayers.

It’s important to make the full use of your pension allowance. This is still one of the most tax-efficient ways to save for retirement and the new Annual Allowance and Carry Forward rules are potentially highly beneficial. The ability to Carry Forward the unused Annual Allowance from the last three years potentially enables a significant increase or substantial catch-up of contributions.

Even if you have no earnings or you don’t pay tax, anyone under 75 can still invest £2,880 in a pension and the taxman will top up their contribution to £3,600. Contributions made on behalf of a child also benefit from tax relief. For married couples, building up income in both names may be one of the most tax-efficient ways of generating income in retirement. If you maximise the current personal allowance, the amount of taxable income you’re allowed to receive each year tax free is £9,440.

This could mean that married couples can still receive income from pensions, savings and investments of £18,880 a year tax free.

Any tax reliefs referred to are those currently applying, but levels and the bases of, as well as reliefs from, taxation are subject to change. Their value depends on the individual circumstances of the investor. Within an ISA all gains will be free of capital gains tax and a tax credit will be reclaimed on income from fixed interest investments.