Monday, 6 September 2010
Friday, 3 September 2010
Thursday, 2 September 2010
Tax changes for Discretionary Trusts
Before the recent change of government, the previous Chancellor Alistair Darling increased the highest rate of income tax to 50%.
As a consequence the tax rate applicable to discretionary trust increased, however without the benefit of the £150,000 tax band. Any income over and above the £1000 basic rate will be taxed at the 50% level.
On top of the increase in Income tax the recent emergency budget increased capital gains tax on certain types of trustee investment from 18% to 28%.
Trusts are also disadvantaged as the CGT free threshold is only £5050.
Taking into account all of the tax changes trustees have a responsibility to review existing trust arrangements. There are a number of ways to reduce the tax paid by trusts.
Trustees should carefully consider any proposed changes. We would recommend that trustees seek independent financial advice from a specialist that deals with trustee based investments.
Before the recent change of government, the previous Chancellor Alistair Darling increased the highest rate of income tax to 50%.
As a consequence the tax rate applicable to discretionary trust increased, however without the benefit of the £150,000 tax band. Any income over and above the £1000 basic rate will be taxed at the 50% level.
On top of the increase in Income tax the recent emergency budget increased capital gains tax on certain types of trustee investment from 18% to 28%.
Trusts are also disadvantaged as the CGT free threshold is only £5050.
Taking into account all of the tax changes trustees have a responsibility to review existing trust arrangements. There are a number of ways to reduce the tax paid by trusts.
Trustees should carefully consider any proposed changes. We would recommend that trustees seek independent financial advice from a specialist that deals with trustee based investments.
Wednesday, 18 August 2010
Thursday, 12 August 2010
Monday, 24 May 2010
The Chancellor ? George Osborne news conference
(My Original Blog Post: http://ping.fm/cgHNw)
The chancellor news conference has announced a wide range of spending cuts .Mr Osborne confirmed the government’s objective of cutting wasteful spending. He went on to cover 3 principles to help reduce the current budget deficit. The principles were:
- Urgent Action is needed now- UK taking a lead in Europe to reduce debt.
- All in this together- “looking after the most vulnerable”
- Control future spending
Budget for Health, Defence, International Development have been ring fenced in addition to Schools, Sure-start and Support for 16-19 year olds.
Treasury has identified over £6.25 billion of savings.
David Laws confirmed that there were “No easy Choices”.
The Vince Cables, business dept has been asked to reduce spending in 2010/11 by £836 million
Over £1 billion will be saved by cutting outsourced consultancy work.
[Blog] The Chancellor – George Osborne news conference: The chancellor news conference has announced a wide ran... http://ping.fm/3ibiG
[Blog] The Chancellor – George Osborne news conference: The chancellor news conference has announced a wide range of spending cuts .Mr Osborne confirmed the government’s... http://ping.fm/lZR89
Friday, 7 May 2010
Taking control of your existing pensions
(My Original Blog Post: http://ping.fm/yGsMD)
Transferring your pensions to a SIPP
If you would like to have more control over your own pension fund and be able to make investment decisions yourself with the option of our professional help, a Self-Invested Personal Pension (SIPP) could be the retirement planning solution to discuss with us.
Many SIPP providers will now permit you to set up a lump sum transfer contribution from another pension with as little as £5,000, and while most traditional pensions limit investment choice to a short list of funds, normally run by the pension company’s own fund managers, a SIPP enables you to follow a more diverse investment approach.
A SIPP will typically accept most types of pension, including:
- Stakeholder Pension Plans
- Personal Pensions Plans
- Retirement Annuity Contracts
- Other SIPPs
- Executive Pension Plans (EPPs)
- Free Standing Additional Voluntary Contribution Plans (FSAVCs)
- Most Paid Up Occupational Money Purchase Plans
You can typically choose from thousands of funds run by top managers as well as pick individual shares, bonds, gilts, unit trusts, investment trusts, exchange traded funds, cash and commercial property (but not private property). Also, you have more control over moving your money to another investment institution, rather than being tied if a fund under-performs.
Investing in commercial property could be a particularly useful facility for owners of small businesses, who can buy premises through their pension funds. There are tax advantages, including no capital gains tax to pay, in using the fund to buy commercial property. The rental income is received tax-free by the fund and when the property is sold, which must be before the pension is drawn.
If you own a business and decide to use the property assets as part of your retirement planning, you would pay rent directly into your own pension fund rather than to a third party, usually an insurance company.
Ordinarily, a business property will, assuming that its value increases, generate a tax liability for the shareholders or partners. Unless, that is, you sell the property to your SIPP.
Before transferring to a SIPP it is important to check whether the benefits, such as your tax-free cash entitlement, are comparable with those offered by your existing pension. Make sure, too, that you are aware of any penalties you could be charged or any bonuses or guarantees you may lose.
If you have had an annual income of £130,000 or more since April 2007 and make regular contributions to a pension, changes announced in the 2009 Budget could affect you. Switching regular contributions to a new pension may mean future regular contributions are subject to a £20,000 limit.
You cannot draw on a SIPP pension before age 55 and you’ll need to be mindful of the fact that you’ll need to spend time managing your investments. Where investment is made in commercial property, you may also have periods without rental income, and in some cases, the pension fund may need to sell on the property when the market is not at its strongest. Because there may be many transactions moving investments around, the administrative costs are higher than those of a normal pension fund.
The value of your SIPP when you draw benefits cannot be guaranteed as it will depend on investment performance. The value of fund units can go down as well as up and investment growth is not guaranteed. The tax benefits and governing rules of SIPPs may change in the future. The level of pension benefits payable cannot be guaranteed as they will depend on interest rates when you start taking your benefits. The value of your SIPP may be less than you expected if you stop or reduce contributions, or if you take your pension earlier than you had planned.
Transferring your pensions to a SIPP
If you would like to have more control over your own pension fund and be able to make investment decisions yourself with the option of our professional help, a Self-Invested Personal Pension (SIPP) could be the retirement planning solution to discuss with us.
Many SIPP providers will now permit you to set up a lump sum transfer contribution from another pension with as little as £5,000, and while most traditional pensions limit investment choice to a short list of funds, normally run by the pension company’s own fund managers, a SIPP enables you to follow a more diverse investment approach.
A SIPP will typically accept most types of pension, including:
- Stakeholder Pension Plans
- Personal Pensions Plans
- Retirement Annuity Contracts
- Other SIPPs
- Executive Pension Plans (EPPs)
- Free Standing Additional Voluntary Contribution Plans (FSAVCs)
- Most Paid Up Occupational Money Purchase Plans
You can typically choose from thousands of funds run by top managers as well as pick individual shares, bonds, gilts, unit trusts, investment trusts, exchange traded funds, cash and commercial property (but not private property). Also, you have more control over moving your money to another investment institution, rather than being tied if a fund under-performs.
Investing in commercial property could be a particularly useful facility for owners of small businesses, who can buy premises through their pension funds. There are tax advantages, including no capital gains tax to pay, in using the fund to buy commercial property. The rental income is received tax-free by the fund and when the property is sold, which must be before the pension is drawn.
If you own a business and decide to use the property assets as part of your retirement planning, you would pay rent directly into your own pension fund rather than to a third party, usually an insurance company.
Ordinarily, a business property will, assuming that its value increases, generate a tax liability for the shareholders or partners. Unless, that is, you sell the property to your SIPP.
Before transferring to a SIPP it is important to check whether the benefits, such as your tax-free cash entitlement, are comparable with those offered by your existing pension. Make sure, too, that you are aware of any penalties you could be charged or any bonuses or guarantees you may lose.
If you have had an annual income of £130,000 or more since April 2007 and make regular contributions to a pension, changes announced in the 2009 Budget could affect you. Switching regular contributions to a new pension may mean future regular contributions are subject to a £20,000 limit.
You cannot draw on a SIPP pension before age 55 and you’ll need to be mindful of the fact that you’ll need to spend time managing your investments. Where investment is made in commercial property, you may also have periods without rental income, and in some cases, the pension fund may need to sell on the property when the market is not at its strongest. Because there may be many transactions moving investments around, the administrative costs are higher than those of a normal pension fund.
The value of your SIPP when you draw benefits cannot be guaranteed as it will depend on investment performance. The value of fund units can go down as well as up and investment growth is not guaranteed. The tax benefits and governing rules of SIPPs may change in the future. The level of pension benefits payable cannot be guaranteed as they will depend on interest rates when you start taking your benefits. The value of your SIPP may be less than you expected if you stop or reduce contributions, or if you take your pension earlier than you had planned.
[Blog] Taking control of your existing pensions: Transferring your pensions to a SIPP
If you would like to have more control over your own pension fund and be able to make ... http://ping.fm/bKAMM
If you would like to have more control over your own pension fund and be able to make ... http://ping.fm/bKAMM
[Blog] Taking control of your existing pensions: Transferring your pensions to a SIPP
If you would like to have ... http://ping.fm/vMcod
If you would like to have ... http://ping.fm/vMcod
How to invest for growth, income or both
(My Original Blog Post: http://ping.fm/5waSP)
Whether you want to grow your capital, increase your income or both, this will determine the type of investments you choose. A growth investment is designed to expand the original amount of money you’ve set WHEREAS an income-driven investment is meant to generate regular payments to you, ideally without eating into your money.
Growth investments
An investment grows in value when its price increases and you can sell it for more than you paid for it. The difference between the price you paid and the price for which you sell is known as your capital gain.
Growth investments usually suit people who are willing to keep their money tied up for five years or more. The longer you leave your money invested, the greater the likelihood that you’ll realise a capital gain when you decide to sell.
Although past performance is not an indication of future performance, investors looking to see their assets grow over time should consider investing in the stock market, which is generally considered to be the best home for a long-term investment.
Growth stocks are also less stable than their income-generating counterparts, because there is no guarantee that their value will continue to rise. Many areas of growth tend to be subject to changes in investor sentiment.
Generating An Income
Generating an income from your investment is often an important requirement for people who are retired or approaching retirement or those who need to supplement their salary.
The most popular forms of income investment are bonds (which are also known as ‘fixed income’ investments) and cash, both of which pay a regular, consistent rate of interest either annually, twice a year or four times a year. You can also obtain an income from shares in the form of dividends, and many equity funds are set up solely with the aim of generating a stable income.
Deciding between growth and income investments
How can you decide between growth and income investments? It all depends on your investment time frame, your attitude to investment risk and what you need the investment to provide for you. If you need a regular stream of income, you should focus your portfolio on assets that will help you achieve this, such as cash and bonds that will provide a fixed income. If you have a longer investment time period, or you do not need an immediate income, you should think about a larger allocation to growth-focused investments.
Whatever your preference, if you hold a variety of investments, both growth and income, you should be better prepared for whatever economic ups and downs might be ahead. As your financial situation changes over time, you should also be prepared to make the necessary adjustments to your investment portfolio and switch from growth assets to income as your investment needs change.
The value of investments and the income from them can go down as well as up and you may not get back your original investment. Past performance is not an indication of future performance. Tax benefits may vary as a result of statutory change and their value will depend on individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent finance acts.
If you feel it is important to obtain impartial investment advice please contact us.
Whether you want to grow your capital, increase your income or both, this will determine the type of investments you choose. A growth investment is designed to expand the original amount of money you’ve set WHEREAS an income-driven investment is meant to generate regular payments to you, ideally without eating into your money.
Growth investments
An investment grows in value when its price increases and you can sell it for more than you paid for it. The difference between the price you paid and the price for which you sell is known as your capital gain.
Growth investments usually suit people who are willing to keep their money tied up for five years or more. The longer you leave your money invested, the greater the likelihood that you’ll realise a capital gain when you decide to sell.
Although past performance is not an indication of future performance, investors looking to see their assets grow over time should consider investing in the stock market, which is generally considered to be the best home for a long-term investment.
Growth stocks are also less stable than their income-generating counterparts, because there is no guarantee that their value will continue to rise. Many areas of growth tend to be subject to changes in investor sentiment.
Generating An Income
Generating an income from your investment is often an important requirement for people who are retired or approaching retirement or those who need to supplement their salary.
The most popular forms of income investment are bonds (which are also known as ‘fixed income’ investments) and cash, both of which pay a regular, consistent rate of interest either annually, twice a year or four times a year. You can also obtain an income from shares in the form of dividends, and many equity funds are set up solely with the aim of generating a stable income.
Deciding between growth and income investments
How can you decide between growth and income investments? It all depends on your investment time frame, your attitude to investment risk and what you need the investment to provide for you. If you need a regular stream of income, you should focus your portfolio on assets that will help you achieve this, such as cash and bonds that will provide a fixed income. If you have a longer investment time period, or you do not need an immediate income, you should think about a larger allocation to growth-focused investments.
Whatever your preference, if you hold a variety of investments, both growth and income, you should be better prepared for whatever economic ups and downs might be ahead. As your financial situation changes over time, you should also be prepared to make the necessary adjustments to your investment portfolio and switch from growth assets to income as your investment needs change.
The value of investments and the income from them can go down as well as up and you may not get back your original investment. Past performance is not an indication of future performance. Tax benefits may vary as a result of statutory change and their value will depend on individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent finance acts.
If you feel it is important to obtain impartial investment advice please contact us.
[Blog] How to invest for growth, income or both: Whether you want to grow your capital, increase your income or both, this will determine the type of investments you choose. A... http://ping.fm/ZisEF
[Blog] How to invest for growth, income or both: Whether you want to grow your capital, increase your income or bot... http://ping.fm/h96yY
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