The World In A Week - First mover advantage

Written by Millan Chauhan.

The latest figures released by the Commerce Department Bureau of Economic Analysis in the U.S. revealed that the personal consumption expenditure (PCE) price index figure increased by 2.4% in the 12 months to January 2024, in line with expectations. The core PCE price index (which excludes food and energy) rose 2.8% in the 12 months to January 2024. If you remember in mid-February, it was announced that US inflation figures for  the 12 months to January came in at 3.1% which was above expectations of 2.9%. The U.S. market responded positively to the latest PCE price index figures and the fact they were in line with expectations, as the S&P 500 returned +1.4% last week in GBP terms. The Federal Reserve are set to meet on the 19th-20th March where it will decide the trajectory of U.S. interest rates. We are set to receive one further U.S. inflation print on March 12th, ahead of this much anticipated meeting.

Elsewhere, in Europe, the inflation rate declined to 2.6% in the 12 months to February 2024, slowing from 2.8% in the previous month, however this was still above expectations as inflation is proving to be stickier than initially expected. Energy prices declined 3.7% over the month but food, alcohol and tobacco inflation remain high at 4% and services inflation still remains at 3.9%. Core inflation in Europe was announced at 3.1% with expectations at 2.9% and is a critical measure used by the European Central Bank who are set to meet this Thursday where expectations are that interest rates will be held at 4.5%.

In the UK, house prices increased for the first time since January 2023 according to Nationwide’s House Price Index which rose 1.2% in the 12 months to February 2024 as borrowing costs declined.

There has been much speculation as to what the UK Budget has in store for us with talks of cuts to personal taxes and national insurance. The Chancellor of the Exchequer, Jeremy Hunt is set to unveil his list of measures on Wednesday.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 4th March 2024.
© 2024 YOU Asset Management. All rights reserved.


HMRC in clampdown on ‘side hustle’ tax dodgers

Brits selling second-hand goods or letting out their property online are being targeted by the taxman as part of a clampdown on those not declaring second incomes.

Under the new measures, online marketplaces such as eBay, Amazon, Etsy, Depop and Vinted will be required to report how much money their users are making and report it to the UK’s tax authority.

The new measures are an attempt to weed out those who are making taxable income on a so-called ‘side hustle’ that they have not declared.

An HMRC spokesperson said: “These new rules will support our work to help online sellers get their tax right first time. They will also help us detect any deliberate non-compliance, ensuring a level playing field for all taxpayers.”

Who is affected?

The crackdown is aimed at those who make a second income of more than £1,000 a year online, such as selling secondhand clothes on sites such as Depop and Vinted, letting out their property on Airbnb or delivering takeaway food for the likes of Deliveroo.

Once sellers pass the £1,000 threshold, they may have to register for self-assessment and pay tax on their earnings.

Does that mean I will have to pay tax on things I sell online?

Not necessarily. It all hinges around whether you are deemed to be a ‘trader’ or not, according to the Low Incomes Tax Reforms Group (LITRG).

For example, if you’re selling unwanted personal items such as old children’s clothes or toys online as a one-off, then you are unlikely to be deemed to be ‘trading’, LITRG says. These types of transactions are ‘generally not taxable’, even if you make a significant amount of money, it adds.

However, you may be liable for tax if this is deemed a regular activity and you’ve crossed the £1,000 threshold.

When does it come into effect?

The new rules came into effect on 1 January, although online marketplaces will not start reporting user data to HMRC until January 2025.

Why has this been introduced?

The market for second-hand goods, particularly fashion items, is booming. Websites such as Depop and Vinted have reported surging sales at a time when many fashion retailers have struggled.

A recent report by US marketplace ThredUP suggested the global market for second-hand apparel alone could more than double to $350bn (£276.3bn) by 2027.

Given that many of those who sell on these marketplaces are individuals and not businesses, it has led to concerns that many are not paying tax when they should.

Is this a new law?

Yes and no. There are technically no new tax obligations on individuals: if you made £1,000 or more selling goods online before now and were deemed to be ‘trading’, you likely already had to pay tax on it.

The major change announced this month is the requirement for online marketplaces such as eBay and Amazon to report their users’ data to HMRC routinely.

Do I need to do anything?

Victoria Todd, Head of LITRG, says: “The new rules have caused a great deal of confusion, but they simply mean that HMRC are receiving more information from online platforms than they were before. If you are following existing rules and declaring your income as required, then you don’t need to worry or do anything differently.”

However, if you are unclear whether you should be paying tax on income from goods you sell online, then it’s worth contacting HMRC as soon as possible.


Tax year end: Strategies to safeguard your finances

As the end of the current tax year draws near, we are about to enter the third year of the six-year freeze on income tax thresholds, a move that has significantly altered the fiscal landscape. The proportion of adults paying higher rates of income tax has risen from 3.5% in 1991-92 to an expected 14% by the 2027–28 fiscal year, according to the Institute for Fiscal Studies.

For those recently finding themselves in the higher tax bracket, as well as for those who have been navigating this territory for some time, here are four key strategies to help manage your finances more effectively and reduce tax liabilities:

1. Maximise pension contributions: Contributing to your pension not only prepares you for a secure future, but also offers immediate tax benefits. For higher-rate taxpayers, there is £40 in government tax relief available for every £100 contributed. It’s important to remember that while pension withdrawals are taxable, up to 25% can be taken as a tax-free lump sum, offering a strategic advantage in tax planning and potentially placing you in a lower tax bracket upon retirement.

2. Utilise pension contributions to preserve Child Benefit: For earners exceeding £50,000, the High Income Child Benefit Charge applies, progressively reducing Child Benefit. By making pension contributions, you can lower your taxable income, potentially mitigating or completely avoiding this charge, thus preserving your Child Benefit.

3. Invest in tax-efficient savings: With forthcoming reductions in capital gains and dividend allowances, ISAs and pensions become even more attractive as tax shelters. These vehicles allow you to fully utilise your annual allowances and protect your gains from tax liabilities.

4. Leverage spousal allowances: Married couples enjoy the benefit of double the allowances for ISAs, capital gains, personal savings, and dividends. Transferring assets between spouses can maximise the use of these combined allowances, offering potential tax savings and enhancing your financial strategy.

Beyond these strategies, keeping abreast of changes in tax regulations is crucial. The tax environment is constantly evolving, highlighting the need for dynamic financial planning and expert consultation.

Seeking tailored advice?

We are committed to empowering you with the knowledge and resources necessary for informed financial decision-making. Whether it’s tax planning, pension contributions, or investment strategies, our team is here to provide personalised guidance suited to your unique financial situation.

Contact us

Whether you’re an existing client or new to our services, we’re equipped to support your tax year-end planning and set you up for the year ahead. Why not arrange a meeting with one of our advisers, providing an opportunity to see how our bespoke advice can meet your financial needs. Book your session today to begin shaping your financial future.

Important: When investing your capital is at risk. The value of pensions and investments may fall as well as rise. Tax treatment varies according to individual circumstances and is subject to change. Tax advice is not regulated by the FCA.


The best approach for working with vulnerable clients

Working with clients who may be vulnerable, or show signs of vulnerability, is not uncommon – especially when offering services to those of an advanced age or with complex personal circumstances.

There are important signs to look out for with vulnerability and ways to best approach the issue to ensure best outcomes for clients.

There are important financial regulatory considerations to be made around vulnerable clients, too. City watchdog the Financial Conduct Authority has a specific definition of what constitutes a vulnerable customer:

 “A vulnerable customer is someone who, due to their personal circumstances, is especially susceptible to harm – particularly when a firm is not acting with appropriate levels of care.” 

The FCA refers to vulnerability among clients as creating a “spectrum of risk” which professional services providers need to be keenly aware of and able to deal with.

Complexity of vulnerability

Vulnerability is a complex problem. When a client should be classed as ‘vulnerable’ isn’t easy to define. The FCA says around 25 million people in the UK exhibit at least one or more signs of vulnerability.

The regulator’s 2022 Financial Lives research defines vulnerability as including low financial resilience, poor health, negative life events and low capability as all pertaining to increased vulnerability.

Health issues are also a clear indicator, but diagnoses such as cancer or dementia have varying effects on an individual’s wellbeing. The prognosis of these illnesses can also lead to some important financial decisions that need to be made.

Such illnesses often initiate a process such as a lasting power of attorney (LPA), a will update, or other legal work change that will have important financial considerations and implications.

Losing a partner is another trigger for vulnerability and the need for clients to seek out professional legal services, particularly if they’re dealing with the estate or other implications from the loss of a loved one.

In these circumstances it is essential to use the expertise of a financial adviser to better discern choices and planning for the vulnerable client in question.

This is important both for the regulatory implications of how you treat that client, but also to ensure the overall health, wellbeing, goals and outcomes for the client are met in the best way possible.

How to look after a vulnerable client

This is a very tricky issue as looking after the needs of a vulnerable client can require patience, empathy and diligence on the part of the service provider.

Within your business, it’s critical you ensure team members who deal with clients and the general public more widely are trained and well-versed in spotting the signs of vulnerability. The FCA has clear guidance on this.

The first step is to ensure your team understands the issue of vulnerability, its scope and how it affects people in their day-to-day lives.

Second, staff should be skilled and trained to offer practical and emotional support to customers who could be vulnerable. Especially important is giving frontline staff the tools and training they need to manage such a client.

Third, practical steps to ensure the wellbeing of the client is protected is key. Products, customer service and communication all need to be empathetic and easy for clients to understand.

When a vulnerable client, their relative, guardian or other trusted third party approaches your business to take care of a specific matter, understanding what their wider needs may be and if broader financial advice should be considered is really important.

Instead of providing singular services this will help them to meet their broader needs and ensure the best outcomes possible in the circumstances.


Law firm reprimanded for misleading financial promotions – how to get yours right

A Dorset-based law firm has been castigated by the Advertising Standard Agency for misleading adverts with the communications banned by the regulator.

The firm, TMS Legal, promoted two adverts which claimed clients had successfully claimed thousands in compensation relating to car financing.

However, the regulator found the advert testimonials were provided by paid actors and were not genuine case studies of successful legal claims.

The firm specialises in mis-selling claims related to packaged bank accounts, according to the report in The Law Society Gazette. The firm removed the offending adverts and apologised, citing internal oversight for the failure.

The company had already been fined £45,000 by the Solicitors Regulation Authority (SRA) for client due diligence failures and making inaccurate claims.

How to get financial promotions right

While mis-selling cases might not be your day-to-day bread and butter, it is essential to get any kind of financial promotions right.

Financial services is (rightly) extremely carefully regulated. The rules around promotions are highly specific and compliance is a central function within financial firms in order to ensure they are not falling foul of the rules.

The scrutiny of financial promotions has also heightened considerably for social media in recent years, particularly in relation to so-called ‘finfluencers’ or financial influencers – a growing area of financial promotions in advertising.

Working with finfluencers can be an effective strategy for a firm looking to promote its services, but again it needs to be fully compliant and carefully managed to ensure potential customers are not misled.

Social media guidance is in the process of being revamped by the financial regulator too, underlining the fact that the framework for promotions is ever-changing, making keeping up with the latest developments even more essential.

The adverts in question were placed on TikTok by the firm – a growing social media platform that is coming under increasing scrutiny from regulators as the quality and content of advertising explodes.

Compliance puzzle

 Promotions should be transparent and ensure truthful representations of case studies and results no matter the platform. While financial promotions are often useful ways to generate new business leads, they should not be taken lightly in their creation.

Legal firms looking to promote their services in the financial space would be best served by working with a professional financial partner in order to ensure full compliance and a successful campaign is possible.

Compliance is a tricky thing to get right, even for firms well-versed in the law. However, financial firms such as advice businesses are adept at following the carefully laid regulatory frameworks in place to protect both businesses and consumers.

Partnering with a financial advice firm to promote your financial-related services is a great way to ensure that promotions are fully compliant from the get-go.

Advice businesses take compliance as second nature and are extremely well-positioned to ensure campaigns are thoroughly vetted and maximise the potential to attract new business in the most compliant manner possible.

Partnering with an advice firm will open up a range of potential service possibilities too and increase the likelihood that a client will adopt more services for their legal and financial needs.


The World In A Week - Have we reached the summit?

Written by Shane Balkham.

UK inflation fell to below 5% in October, on the back of a sharp decline in energy costs.  The monthly publication from the Office of National Statistics (ONS) showed a 2.1% drop in UK Consumer Price Inflation (CPI) from 6.7% for September to 4.6% for October.

A significant contributor to this fall was the fall in energy prices; over the year to the end of October, gas prices fell by 31% and electricity prices fell by 15.6%.  Food prices were little changed for October.

This is a positive step bringing inflation back down to the Bank of England’s (BoE) target level of 2%.  There are another three weeks until the Monetary Policy Committee of the BoE meets to discuss the path of UK interest rates, and it remains a delicate balancing act.

The US also had a pleasant surprise for inflation, with a fall greater than expected.  US CPI for October fell from 3.7% to 3.2%, which was marginally below consensus expectations.  The reaction of the US market was one of relief, with US Treasury yields falling and the stock market rallying.

Some commentators believed that this was an overreaction by investors and while inflation is certainly heading in the right direction, there will be challenges ahead.  The US Federal Reserve meets a day earlier than the BoE, with the next decision on interest rate policy coming on 13th December.

It makes sense that the reaction from markets on October’s inflation readings was one of relief.  However, central banks are known for not necessarily doing the right thing at the right time, and although there is optimism that we have reached the peak in the interest rate hiking cycle, we are still treading carefully in our investment decisions.

From policymakers to politics, where the US House of Representatives voted to avert a costly government shutdown last week.  In a similar move to that of six weeks ago, the can has been kicked down the road until early in the new year.  The proposal provides a two-step plan that sets up two new shutdown deadlines next year.  US government funding has been divided into two different parts, with priority given to military construction, transportation, housing, and the Energy Department, which has a new deadline of 19th January 2024.  Anything not covered in this first step would be funded until 2nd February 2024.  Politics will certainly start the New Year in the spotlight and will likely remain there.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 20th November 2023.
© 2023 YOU Asset Management. All rights reserved.


Use it or lose it: last financial orders before the end of the tax year 2022/23

The tax year is soon to come to a close, and with it, any allowances that may have gone unused. This year is possibly the most important of recent times as a number of important tax changes are coming into force from 6 April 2023. Time is running out to use allowances and give your wealth the best prospects for the year ahead.

Here are the key changes you should be aware of, and where to maximise your allowances before they’re gone forever.

Dividend allowances

The dividend allowance is being slashed in half from 6 April to just £1,000. This will then be halved again from April 2024 to just £500. Above this allowance you pay dividend tax on any earnings. Dividend tax is calculated at 8.75% for basic rate payers, 33.75% for higher rate and 39.35% for additional rate payers, potentially taking a big chunk out of any income that isn’t protected by a tax wrapper.

Where possible to bring forward the taking of a dividend, for example out of a profitable business you have a share in, it is essential to max out this allowance or else face paying tax on those earnings from April.

Capital Gains Tax allowance

The Capital Gains Tax (CGT) allowance is currently set at £12,300 but this is being more than halved to just £6,000 from 6 April. From April 2024 this is going to be slashed even further to just £3,000. Maximising the CGT allowance this year is therefore crucial. You pay CGT when you dispose of an asset that has grown in value, including stocks and bonds, property (that isn’t your primary residence) or even personal possessions such as jewellery, paintings or antiques.

This means if you have any assets that you were considering selling to cash in on the growth gains, then the allowance should be used now before it is effectively gone. This is relevant for assets held outside of a tax efficient ISA or pension as those assets inside these accounts won’t be liable for CGT.

Inheritance and income

Both inheritance tax (IHT) and income tax aren’t having any changes to their allowances or thresholds per se, but the thresholds have been frozen. This means if you receive a pay rise, or assets inside your estate rise in value, then you’ll see less benefit from those increases in earnings or value.

In order to mitigate the worst effects of the threshold increases, then for IHT it can be a good idea to bring forward some gifting where possible as you get £3,000 a year to gift without IHT liability. You can carry forward this allowance but only for one tax year – so if you haven’t given a gift in either 2021/2022 or 2022/2023 then you could potentially gift away up to £6,000 before 6 April. If you are married, then combined this could be as high as £12,000 over two tax years.

Use your ISA allowance

The ISA is one of the least complicated investment vehicles for our long-term wealth and one of the most generous is tax-exemption terms. The allowance is £20,000 a year, it can’t be carried forward, and anything inside the ISA is protected from any form of tax including the aforementioned CGT and dividend allowances. This makes the ISA allowance extremely valuable in wealth planning terms and should be taken advantage of where possible.

If you’re looking to mitigate CGT, for example, you can use a method called ‘bed and ISA’. This is where you own assets such as stocks or bonds outside the ISA wrapper – you sell those assets then use the cash to rebuy inside the ISA, effectively inoculating your money from tax liabilities.

Investors are prohibited from buying back assets within 30 days of selling them under CGT rules (in order to prevent gaming of the system), but there is an exemption if you sell them outside an ISA then reacquire them within one. If you have assets outside an ISA, and unused CGT and ISA allowance, then it’s a no-brainer to do this to save on hefty tax liabilities. If you have children under 18 and you’re considering strategies for passing some of your wealth on to them, a Junior ISA (JISA) can be a great product to kick-start this too. Unlike a regular ISA, the JISA has an annual contribution limit of £9,000.

Take advantage of pensions allowance

Pensions allowances are also very generous, with up to £40,000 per year available (assuming you haven’t triggered the money purchase annual allowance), plus tax relief on anything you put in. The tax relief is perhaps the most attractive aspect of a pension as it means you have more money to start with than an ISA as you’re bypassing income taxes using the relief.

However, pensions have more tax implications when it comes to withdrawal which are worth discussing with an adviser where possible.

Now is the time to take advantage of left-over tax allowances that you have yet to use.  We are here to advise you, so please get in touch.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 21st February 2023.


Bank of England hikes rates again – where does it go next?

The Bank of England chose to hike rates again on 2 February 2023 by 0.5%, bringing the headline base rate to 4%.

The hike brings the base rate to its highest level since November 2008 – and marks ten consecutive hikes since January 2022. The bank has hiked rates to a 14-year high thanks to rocketing inflation which has taken hold of the UK and the global economy in the past 18 months.

Inflation has soared thanks to a mixture of factors including the reopening of the economy after more than a year of COVID-19 related lockdowns, which caused global supply chain issues. Unlocking the economy also unleashed pent-up cash held by people who were unable to spend on things like eating out, holidays and other out-of-home items. Inflationary pressures were then severely exacerbated by Russia’s invasion of Ukraine, which triggered an energy crisis across Europe which filtered out into the rest of the world.

Why has the Bank of England hiked again?

The latest inflation data from the ONS suggests that we might have reached a peak for accelerating price rises. October 2022 saw CPI inflation hit 11.1%, but this has waned slightly, down to 10.7% in November and 10.5% in December.

While these falls are small, they do give a small amount of hope to the economy that pressure might be beginning to ease. However, the Bank of England has maintained its policy of hiking rates despite this easing. There are a few reasons for this. Firstly, the jobs market remains really robust, with little signs of rising unemployment. This sustains demand and can help to keep prices rising more strongly than otherwise. Secondly, wage rises are still relatively strong. Although on average workers are not getting pay rises that beat inflation – currently 6.4% for regular pay – this is still relatively high in historic terms. Like employment this means that inflation overall could prove to be ‘stickier’ than otherwise as people’s pay packets are boosted.

Finally, core inflation – which measures less volatile segments of price rises – remains relatively high. This measure excludes volatile prices such as food, energy, alcohol and tobacco. Both core and services inflation rose in December, despite the headline fall. This tells the Bank of England that important parts of the economy are still experiencing rising demand and a shortage of provision for that demand – the basic cause of inflation. The Monetary Policy Committee (MPC) will have looked at these factors to decide where it should go with its base rate, and this is why it has chosen to continue hiking.

Where next for rate hikes?

The Bank of England has kept its cards fairly close to its chest on what it will do in subsequent months this year in the face of inflation. Much depends on changing economic conditions. For its forecast, it sees the UK economy entering a shallower recession than previously estimated, which would suggest it expects rates will have to stay higher for longer to tame price rises. Ultimately, the Bank of England has a mandate to bring inflation to a level of 2%. As long as inflation persists at higher levels, it could be drawn to more hikes to temper the economy.

However, looking at important factors in the current inflationary mix suggests that price rises could soon fall quickly. Energy prices have come way down from their wholesale peak in June 2022. While it takes time for this to feed through into the wider economy and ultimately our bills, energy has a big influence on prices as almost all businesses need to use energy to provide the goods and services they offer, while households are reliant on it to run their own homes.

What does this mean for your finances?

Higher interest rates have a number of effects on personal finances and wealth. The most obvious is higher debt costs. As the Bank of England hikes rates, financial firms are obliged to raise the interest they charge for borrowing. This includes everything from mortgages to loans and credit cards.

Mortgages are the most obvious place where rates visibly rise. However, most households are on fixed rates. Those households that are facing coming off their fixed rates this year are likely to see their monthly payments soar if rates continue to persist higher. After the disastrous mini-budget of October last year, some of the so-called ‘moron premium’ added to average rates has come down slightly. However, rates are still higher than they might have been.

Another important area that is affected is savings and investments. Savings accounts are offering better rates than previously, but largely still well below inflation. This means that while a savings account might provide a much better headline rate than in the past, it still isn’t preserving the value of that money.

Investments had a tough year in 2022 as they adjusted to the new conditions. However, higher rates offer opportunities in new areas such as the bond market which now has attractive valuation levels. Equities have also had a stronger start to 2023 as markets have priced in some of the worst effects of rate hikes.

If you would like to discuss this or anything else not mentioned in this article, don’t hesitate to get in touch.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 13th February 2023.


Why making a will matters

Making a will might not be at the front of your mind. Nevertheless, if making sure your finances are properly managed, then ensuring you have one in place is a crucial aspect of good financial health.

Wills can be a tricky subject matter. They force us to confront one of the most difficult issues in life – what to do with your worldly possessions when you’re gone. However, it is an essential matter to take care of, especially to give your loved ones peace of mind should the worst happen. It will also ultimately provide your family with clarity over inheritance and your wishes. A will can prevent messy issues and even disputes over what happens to your estate.

If you die intestate, there are rules that govern how an estate can be allocated, which can lead to suboptimal outcomes depending on what you want to happen. This particularly matters for couples that are unmarried, as the partner could conceivably be left in the cold without a will to provide for them. There are also potential tax implications if an estate is not managed properly after death.

If you don’t draft a will, your spouse or civil partner (if you have one) will inherit your personal possessions and the first £250,000 of your estate, plus half of whatever is left after that. If you have children, they will then be entitled to the rest. If you don’t have a spouse but do have children, the estate will be divided equally among them. If you don’t have children, whoever are your nearest relations will inherit instead.

How to make a will

A will is a legal document, so ultimately writing what you want down on a piece of paper and signing it won’t be enough. However, making a list of your wishes is a good place to start. It isn’t an obligation to use a solicitor to draw up a will. To do so can be as simple as writing your wishes up and having two people witness you sign it. This must be done voluntarily and without pressure from a third party.

You can also use professional will writing services, charities such as Will Aid or your bank (although not all offer such a service). The costs of this will vary depending on the service offered. Beneficiaries, including partners or children, should not act as witnesses as this can lead to disputes down the line. You will also need to nominate executors to carry out your wishes. This can be a spouse, child or children or another trusted friend or relation.

It is a good idea to keep your will up to date as well. This should be done every five years, or any time there is a significant change in your financial or lifestyle circumstances. Alterations should not be made to the original document. You can add supplements, called a ‘codicil’ for minor changes which should be signed and witnessed in the same manner as the original will. Big changes however, such as divorce or remarriage, generally require a new will to be drafted in toto.

Once your will is drafted it is important to keep it somewhere safe, and ensure that the executors of the will know where it is located and how to access it (if it is in a place such as a secure lock box or safe).

How a financial adviser can help

A DIY will might seem simple, but depending on the complexities of your wealth and possessions, it is advisable to consult with a professional, be they a solicitor or a financial adviser. A financial adviser can help you to make a list of the wealth that sits within your estate, what should or should not be included in the will and how it should be apportioned. This is particularly relevant when considering the implications of inheritance tax. An adviser can help to assess the best way to share your estate that reduces IHT liabilities. They can also advise you on important exemptions such as gifting throughout your lifetime or giving money away to charity, plus the rules around ‘potentially exempt transfers.’

A financial adviser can also help you to structure your wealth in a way that minimises IHT liabilities and will be able to advise you on limits relating to property wealth and other allowances. Tax wrappers such as pensions can help to mitigate some of the liability, but come with rules that need to be carefully followed.

The complexities of getting a will right make it a potentially crucial document in your financial planning. For this reason, it is essential to consult a financial adviser to ensure your will is drawn up with the most careful consideration possible.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 13th February 2023.


Government to accelerate State Pension age uplift - could you be affected?

The Government is looking to bring forward the date at which the State Pension age increases, according to a report from Money Week.

Under current plans the State Pension age is set to rise from 66 to 67 by 2028. The next increase is currently set for 2046, when the limit will rise to 68. However, under plans being considered by the Government, the next increase could be brought forward by over a decade to as early as 2035. This means anyone aged under 55 now could face waiting longer to receive their State Pension, depending on what year the Government brings forward the age uplift to. Those born after April 1971 will already have to wait till age 68 under current rules.

Why is the State Pension age under review again?

The State Pension is one of the largest single costs the Government faces in its annual budgets. This is why in recent years it has pushed up the State Pension age to save on costs, particularly as life expectancy has soared for men and women in the years since it was introduced. Birth rates have also fallen, leaving less people to pay the taxes to fund an ageing population.

Conversely, critics of the Government’s new plans have highlighted that life expectancy levels have in fact reversed in the past few years, meaning the projected future costs are lower than anticipated. The Government has a life expectancy calculator you can check here.

With recent economic events the Government is finding it hard to plug shortfalls in its budget, with a combination of low growth and high debt costs squeezing its spending power. While politically difficult, increasing the State Pension age is one way for it to save money. The Government is now set to publish its State Pension age review in May.

What should I do?

While many people see the State Pension as a right they accrue through a lifetime of work and paying taxes, there is no ‘pot’ of money being saved into. The Government pays for the State Pension with taxes it rakes in each year from those in work. This is why it doesn’t have the funds to meet commitments it previously made, and why it is backtracking on those historic pledges.

The message here is that you should not rely on receiving a good State Pension income in retirement. While it can help, there are things you can do now to plan to build your wealth so as not to be dependent on the benefit in old age. This includes saving into pensions, ISAs and other tools for building long-term wealth.

If you would like to discuss your options, don’t hesitate to get in touch.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 13th February 2023.