Chapters Financial blog

Savings rates in 2012/2013? What are the possibilities?

2012-02-06T12:41:00.000Z

Following my last blog, I have been looking at the current market for deposit savings rates and the possible investment alternatives available.

With what appears to be some greater ' stability' in the expectations of very low base rates (currently 0.5%) and the significant likelihood of additional Quantitative Easing to help UK cash flow further. I am sure many mortgage borrowers will be delighted at this potential prospect. The Bank of England also suggests that there will be no further expectation of the UK falling into recession, although other fiscal think-tanks currently think otherwise.

But what could this mean for savers over the next 12-24 months?

Savings rates

We have seen savings rates climbing over the last year, which is good news for deposit savers. This is not a guarantee of a future trend. However, I have provided some examples below to reference this:

1 year Fixed

AA	3.60% Gross AER	12months Interest paid annually
Post Office	3.25% Gross AER	12months Interest paid at maturity

3 year Fixed

Saga

4.00% Gross AER

36months Interest paid annually

These rates are correct at the time of writing this Blog (February 2012). Other offers are available.

Deposit interest earned (outside an ISA allowance) is taxable at your highest marginal income tax rates. Please check the terms and conditions of each plan/offer before investing.

Please remember the Deposit Protection Limit of £85,000 for a single investor when planning your savings strategy.

To check current rates, I would recommend that you check the Financial Services Authority Website, Money Made Clear here:

http://tables.moneyadviceservice.org.uk/Comparison-tables-home/Savings-accounts/Compare-savings-accounts/

Chapters Financial Limited is not responsible for the content of external websites.

Cash ISAs

Many will know that you can invest £5,340 in a Cash ISA in a tax year and receive interest from the investment in a tax efficient manner. This is usually worthwhile if you have not used your ISA allowance elsewhere (see below). However, it should be noted that most 'deals' are time bound and revert to a low return rate after a period of time, such as a fixed rate for 1 or 2 years.

ISA Transfers

It is possible to transfer ISA arrangements whilst keeping the tax efficient wrapper. If you are in the position, then it may well be worth taking financial planning advice to investigate alternatives and the options available.

Alternatives?

For those investors who are prepared to take greater investment risk, it is possible to consider alternative investment medians, such as a portfolio of Stocks & Shares/Unit Trust/ Open Ended Investments Companies (OEICS) designed to provide a dividend income stream. It should be noted that dividend income can be variable, being received at different times of the year.

It would not be unreasonable for a UK Equity dividend (average) return to provide approximately 2-4% pa gross.

Dividend income is taxable at 10% for basic rate taxpayers, 32.5% for higher rate taxpayers and 42.5% for additional rate taxpayers (tax year 2011/2012).

Capital Gains & Stocks and Shares ISAs

There is also the potential of the investment making capital gain. This gain can be tax efficient in using the annual capital gains tax allowance (currently £10,600). If you select this route, you could also use your ISA allowance of £10,680 (or £5,340 if you use your Cash ISA allowance in the same tax year).

Any capital gain achieved by individuals above the allowance ceiling of £10,600 is taxed at flat rates of 18% for basic rate taxpayers and 28% for higher rate taxpayers.

Seeking Financial Planning Advice

Clearly there are a lot of issues to be considered in this article and no individual advice has been provided in this text. If you wish to consider your end of tax year financial planning then please contact Keith Churchouse at Chapters Financial Limited in Guildford (Independent Financial Advisers/ IFA) on 01483 578800 or at info@chaptersfinancial.com.

Chapters Financial Limited is authorised and regulated by the Financial Services Authority, Number 402899.

The Financial Services Authority does not regulate tax advice.

What does the UK economy look like in 2012?

2012-01-20T10:38:00.002Z

I was fortunate to attend a very interesting Bank of England (BOE) update presentation by the BOE South East Agency in mid-January. For reference, there are 12 regional agencies across the UK. Their purpose, amongst others, is to consult, share and interact with business across the UK as a barometer of views and economic conditions to feed back to the Monetary Policy Committee (MPC).

Further details can be found here: http://www.bankofengland.co.uk/publications/agentssummary/index.htm

(We are not responsible for the content of external websites)

The update and presentation revealed and consider many economic expectations forecast over the next 12 months. Please bear in mind that forecasts are just that, forecasts, and should not be seen as anything else. I have listed these below:

Inflation will continue to fall with the potential of reaching and falling below the MPC’s inflation target of 2.0% by the end of 2012.
Growth was largely flat in the last 6 months of 2011 and is expected to be the same in the first 6 months of 2012.
GDP growth subdued with the expectation that this will start to move positively at the end of 2012.
Base rates are expected to remain unchanged until the end of 2013, unless anything significant occurs.
Further Quantative Easing (QE) is expected in 2012, where needed.
Unemployment has reached about 8%, with public sector jobs falling and private sector roles increasing. Both are expected to level off although the fears for higher unemployment remain.
Consumer consumption has fallen and is expected to fall further.
Business lending still falling and likely to continue.
No expectation of recession, as long as there is no further shocks.

This is not an exhaustive list, but certainly provides a flavour of the expectations for the UK economy over the next 12 months.

This blog is for information only and should not be seen or used as individual advice. Seek independent financial advice (IFA) for your own circumstances.

Chapters Financial Planning Limited can help you with your own investment, pension, retirement and inheritance tax planning. Please feel free to contact us by email or on our telephone number, 01483 578800.

Keith Churchouse FPFS
Director of Chapters Financial Limited, Guildford, Surrey

Chartered Financial Planner
ISO22222 Certified Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Services Authority, number: 402899.

Chapters Financial Limited to build on Churchouse Financial Planning’s award winning service in 2012

2012-01-03T12:27:00.000Z

Churchouse Financial Planning is changing its name to Chapters Financial Limited on 1^st January 2012. The rebrand of the Surrey-based Chartered Financial Planners follows the settling of a trademark issue.

Keith Churchouse, who founded Churchouse Financial Planning, said: “I’m excited about our new name; it really does represent a new chapter for our business. Choosing it wasn’t easy, but we settled on Chapters Financial because it reflects the traditional values of the sound professional financial advice that we uphold, which is so crucial in the current economic climate.”

Esther Dadswell, co-Director of Chapters Financial planning, said: “The last eighteen months have shown us the importance of protecting our intellectual property and brand. The name change has also given us the opportunity to alter the description of our service from ‘Financial Planning’ to simply ‘Financial’ to reflect the breadth of the advice we offer on many aspects of wealth management. But whatever we’re titled, we’ll always be a stalwart supporter of independent financial advice, which our clients have come to rely on.”

Keith added: “This has been the best year ever for Churchouse, culminating in winning a Gold Standards Award for independent financial advice in November. I’m confident that our new name, along with new staff joining in January, will be a springboard for our continued success in providing expert advice to clients across Surrey, London and the Home Counties.”

This blog is for information only and should not be seen or used as individual advice. Seek independent financial advice (IFA) for your own circumstances.

Chapters Financial Planning Limited can help you with your own investment, pension, retirement and inheritance tax planning. Please feel free to contact us by email at info@chaptersfinancial.com or on our telephone number, 01483 578800.

Keith Churchouse FPFS
Director of Chapters Financial Limited, Guildford, Surrey

Chartered Financial Planner
ISO22222 Certified Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Services Authority, number: 402899.

Europe! What is happening?

2011-12-09T09:09:00.000Z

We have seen much volatility in economic markets over most of 2011, partly caused by the historic problems of the Euro and the European zone. Some are predicting further recessionary pressures in various economic zones and Europe is one of them. I have provided comment on this in a previous blog in July 2011, when Greece first started to make front page news, having reached its first decade in the EU. This blog was entitled ‘There may be trouble ahead….Still!/Europe’ and this has certainly proved to be the case as we reach the end of 2011. With David Cameron declining to sign up to the detail of the proposed new treaty overnight (08/09 December 2011) where are we and Europe now….as far as we can surmise?

Although we have our own significant views on investment and asset allocation, to ensure that our recommendations, views and advice is robust, we also employ the services of Cormorant Capital Strategies Limited, to help with our processes.

I have asked them to comment and they have provided the following thoughts:

There are a number of issues I want to lay out. This is not another note on the euro-zone crisis however. To focus on that one issue would be to threaten to miss the wider trend. The wider trend I speak of is characterised by an unusually weak and protracted recovery, most evident in the UK but also apparent in our G7 friends^[1]. The euro crisis is one of three noticeable threats to the global economy^[2] and while I don’t wish to underplay its significance, ultimately I feel the greater danger to investor’s wealth is that posed by sustained low growth allied with poor credit availability.

Before I begin in earnest I really want to tell you that I think much of the gloom that I have read of late is overdone. Actually, a lot of what I have read and a lot of what I have heard from politicians and investment managers have angered me. Let’s begin by framing the discussion to come.

It is my assertion that, if there are ‘investors’ who are unable or unwilling to burden losses over what might be a period of years without selling their positions in the interim then they ought not to be invested in the capital markets (the equity and bond markets). That is not a comment I attach to a particular forecast, trading strategy or timeframe. It is a rule and it applies always, even when the prospective economic environment is benign.

The capital markets exist for one purpose – that is to bring willing lenders (or investors) and willing borrowers (or entrepreneurs) together. That process necessarily involves some risk. I say ‘necessarily’ quite deliberately. Risk is not an unpleasant side effect; it is a pre-requisite for proper functioning capital markets and try as you might there is no getting away from it. The reason any asset pays a return is that it carries risk. If anyone tells you otherwise they are either lying or they are ill-informed. The risk is of capital loss in varying degrees.

The capital markets, and by extension capitalism, work well when all participants are reasonably well informed of the risks they are taking. It is probably the most productive system of all those we have tried in the last few hundred years for allocating capital efficiently. The most recent past has seen terrible meddling in the capital markets (for ‘deregulation’ read ‘rigging’) by politicians, central banks and regulators, but that is a subject for another day. Suffice to say that what has made me most angry in the relatively short time I have worked in the field of investment management (15 + years) is the development and rapid expansion of what I can only describe as an unpleasant sub-system of the financial markets. Many investors – institutional and retail – have been enticed by the promise of high returns and low risks. It is one which Michael Lewis, contributing editor at Vanity Fair, describes eloquently as ‘a tool for maximising the number of encounters between the strong and the weak, so that one might exploit the other’.

So, those who are unwilling or unable to burden the risk of capital loss over what could be a significant period of time can stop reading – they have more pressing matters and a lot of unwinding to do. It’s that simple, there’s nothing people like me can do to prevent the risk of loss. Willing investors read on, perhaps we can mitigate a little of that risk.

I will, of course write a little about developments in the euro-zone. But, first, I want to deal with a background trend that has been developing before and will continue to affect asset prices after the euro-zone crisis has fallen from the headlines (though a continued string of EU summits will doubtless conspire to keep it on page one for many months to come). The pace of recovery from the 2008 recession is an incredibly disappointing one, one which brings with it deep risks. In my discussion of this I will draw heavily on a speech made by Martin Weale, an external member of the Bank of England’s Monetary Policy Committee, which he delivered at the National Institute of Economic and Social Research in London on 25 November. It’s a great piece of work and is available to anyone to download from the speeches page at www.bankofengland.co.uk.

‘Even before the recent problems with the euro area, most countries were experiencing a disappointing recovery from the aftermath of the recession which began in 2008. In the United Kingdom things have been particularly slow’.

To provide some background to this assertion Martin points out that, of the five UK recessions since 1920 and before 2008 the recovery period has probably not lasted longer than 49 months. That is to say that Gross Domestic product (GDP) tracked back to the level of the previous peak in a little over four years. In the international context, the International Monetary Fund estimates that the average time taken for a country to recovery from a recession is just over 27 months. That rises to around 52 months if the recession is closely associated with a banking crisis. If we take the Bank of England’s central estimate for GDP as a reasonable guess at when we might see output in the UK regain the level it showed prior to the 2008 recession (the sixth since 1920) the current recovery period will have lasted for somewhere between 66 and 72 months – five and half to six years. GDP in the UK has not, thus far, fallen as far as it did in the 1930s (7% compared with 9% then) so the current recession has not proved as deep, but certainly in terms of duration it is likely to be the worst. Personally, I think there is a good chance that we will at least flirt with another recession in 2012 which might push back the 2013 target.

Other G7 countries, most notably Canada, are well ahead of the UK on the recovery path. Only Japan (owing to the Tohoku disaster) and Italy (even before the current heightened weakness) lag the UK. For some reason, the UK has been hit especially hard. Martin and his colleagues at Cambridge University find this hard to explain. Needless to say I am unable to shed any light on the matter^[3].

Martin’s work goes on to examine the role of both productivity and consumption in his speech. I think he probably places greater weight on the role of productivity in affecting the recovery process but I want to share with you his observations about the path consumption has taken since the beginning of the 2008 financial crisis.

‘Consumption fell by more than 5% between 2008 and 2009, its largest peace-time fall since that of over 8% in 1921; unlike the early 1920s it has shown no real recovery’. Why might this be? Consumer confidence remains weak, of course, but household incomes, in the aggregate, are at least no lower than those prior to the recession.

Martin discusses a number of competing explanations that do a good job in explaining why this might be. Naturally I am going to add weight to the one I have most sympathy for… ‘…particularly at a time when incomes are weak, they [UK households] might not have access to the resources they need to maintain their spending’. It has been my contention for some time that very low real wage rises, particularly in the last decade and a half, have been supplemented by a credit grab to maintain high rates of consumption. Now that credit has been withdrawn the previous path of spending has collapsed. ‘Obviously the chance of this happening is particularly high if credit has tightened unexpectedly; it may be affecting some consumers even though, as we have noted, income in the aggregate has held up better than consumption’. Added to the mix is the expectation that both job prospects and credit availability will continue to be muted well into the future, so consumers are saving[4] to ‘build up a buffer against future shocks’ and, perhaps for some, the increased deposit required to purchase a home. This rational course of action is probably having a greater impact today because of the very low rates of saving prior to 2008 when we all thought things were only going to get better; our houses can only go up in value, our job prospects improve and banks’ credit card subsidiaries increasingly generous.

I think the problem of weak consumption is going to go on for some time. There’s a cycle here and it has worrying aspects. Weak job prospects, slow wage growth and poor credit availability are also affecting house prices. That doesn’t just have a detrimental effect on consumers; the future of many successful businesses has at one time or other been secured on an entrepreneur’s home. It’s not all bad news though. Our economy doesn’t have to rely so heavily on consumption. Indeed, the balance of aggregate demand needs to shift away from household and public consumption towards net trade and investment if we are going to see sustainable rises in prosperity over the longer term. As it stands, the Bank of England does not have a policy tool to promote such a re-balancing. But we can see strands of this thinking in their other policy actions and I hope we will see it in the policies of government too.

The Bank, for its part, is trying to support ‘aggregate demand’, not just the consumer. The Monetary Policy Committee took a collective risk in looking through a period of high inflation[5] and maintaining its loose monetary policy stance[6]. Arguably this period of high inflation, allied with low wage growth and culminating in a decline in real wages, was a painful but necessary step in the rebalancing process (making UK exports less expensive for overseas purchasers). Ultimately of course, the Bank is judged on its ability to meet the 2% inflation target in the medium term. The medium term is up now, I think. If inflation does not fall, as the bank believes it will, sharply in the opening months of 2012 then it will have lost a good deal of credibility. Personally, I think that had the bank responded to higher inflation with tighter monetary policy in the interim we would have seen a stalled recovery and conditions would have been far worse than they have been. I also think that the Bank is right and that inflation will fall sharply early next year[7]. That would go a long way to improving our lot.

If we do see a rapid decline in the rate of inflation in the early months of 2012 it should to be seen as a vindication of the Bank’s policy actions over a period of time in which it has attracted much criticism. For that matter I also think that a fall in inflation will be a pre-curser for an expanded quantitative easing package – even beyond the £275 billion which will have been laid out by the end of January 2012. The Bank is keen to hold gilt yields low, given that these are the rates of interest most likely to affect the cost of borrowing for businesses and given that credit availability to business is a terrific risk to the downside for inflation. This observation infers that now is not the time to encourage lower allocation to conventional gilts in investor’s portfolios. I make this last point because I have seen a great deal of ill-informed speculation about the relative attractiveness of gilts at this time. More on the subject of things you can actually invest in, as opposed to the slightly nebulous commentary on the macro economy, later. For now though, a little on the euro zone.

The euro-zone is on the brink of disaster, we know that because that’s what everyone says, including the chap that came to fix my TV aerial. What most commentators are not acknowledging is that there is nothing the European Central Bank (ECB) can do about it. Calls for the ECB to do more than it is doing already are naïve. Even if the ECB had a mandate which would allow it to print the trillions of euros necessary to remedy the region’s debt problems, the likely impact would be to create inflationary problems^[8] in their stead. That is why the German government is rightly opposed to such a move. What the ECB can do, of course, is help to provide liquidity in an effort to prevent another credit crunch. This is precisely what the ECB is doing, to great effect thus far. In acting in concert with the other major central banks it is working hard behind the scenes to buy time. But this is not a crisis of liquidity so much as a crisis of solvency.

Unfortunately, the 3-point plan^[9] is probably not enough. On the day that the deal was announced[10] European stock markets sighed with relief and produced terrific gains. The bond markets saw little in the way of celebration though. Spanish and Italian government bond yields (in the ten-year range) have breached 7%, though limited intervention from the ECB has brought yields a little lower. Contagion is a formidable problem. In isolation, a Greek default, orderly or otherwise, or exit from the euro does not have the potential to fatally damage the monetary union. In contrast Spain and Italy alone have funding requirements of around €800 billion in the next few years. That makes the €1 trillion European Financial Stability Fund (EFSF) look less like the firewall it was intended to be. Some would argue that the EFSF needs to be closer to €3 trillion. The fund is a long way off that amount. Worse still, if France gets embroiled and loses its AAA credit rating the loss of faith on the guarantees she has made to the EFSF will be fatal to the fund.

Only Germany has the power to progress the situation. In the meantime the euro-zone will remain on the brink of disaster until we see much closer fiscal union (requiring a treaty and amendments to the ECB’s responsibilities) or investors in Greek bonds (and other distressed euro-zone sovereign debt) take a significant and unambiguous loss. Perhaps we will see both. A full collapse and a breakup of the euro zone is, in my opinion, a far more remote possibility than it is currently believed to be, even if a Greek default is inevitable and a number of European banks are nationalised. Expect another much-hyped euro summit to be scheduled soon after the next much-hyped euro summit.

Whatever happens in Europe and whatever happens in the US, however long it takes the UK to recover there is one thing I am certain of and that is that the economies of the UK and our G7 friends will recover. The bond markets and the equity markets will signal that in time. Before then though none of us should be surprised if we see further recession. A slow and protracted recovery comes hand in hand with a greater potential for setbacks. We have not yet achieved escape velocity. Which brings me to my final point.

Equities and bonds ought to make up the bulk of an investor’s long-term portfolio^[11]. Today though, the gross redemption yield on the 10-year gilt is 2.3%, on a basket of sterling investment grade corporate bonds you might get a little over 5.0% for ten years and the annual dividend yield from the FTSE 100 is 3.6%. I calculate a prospective 10-year total return of around 7.4% per annum for the FTSE 100. On this last measure, the FTSE 100 is relatively attractively priced among the more mature markets. Other equity market aggregates, like the S&P 500 in the US, the DAX 30 in Germany or the TOPIX in Japan, do not hold the promise of returns which are sufficiently high to justify the risks they carry. It’s not a terribly enticing menu, so to speak. Almost across the board, I see risky assets which are priced higher than a level with which I would be comfortable. When asset prices are high one of three things will happen. They will go higher, go lower or stay the same. I don’t know which of those scenarios is going to play out. So, quantify your risks and ensure you’re comfortable with them.

Steve Williams

Managing Director

Cormorant Capital Strategies Limited

1 With the exception of Canada; on some measures she has now surpassed her pre-recession level of output.

2 Watch out for further wrangling over US debt levels and rising tension over the Iranian nuclear programme. A US default or a nuclear armed Iran are potentials as unappealing as a euro-zone meltdown.

3 Martin will not be drawing heavily on any of my works in his future works.

4 It is probably more accurate to say that they are ‘not borrowing’. If one pays off a credit card, it increases one’s net worth which is akin, in economic parlance, to saving.

5 The annual rise in the Consumer Price Index has been well above the Bank’s target range since late 2009.

6 Bank Rate, for example, has been 0.5% since March 2009

7 Though not soon enough to save my bet that inflation would be back in range by the end of 2011. You win some, you lose some.

8 It is possible for ‘quantitative easing’ to be rolled out without creating such problems – as looks to be the case in the US and UK and has certainly been the case in Japan – but it seems likely that the mix of circumstances in the euro-zone would result in too high an inflationary price.

9 (1) Greek debt restructuring of 50% rather than the previously agreed 21% (2) bank recapitalization measures and (3) expansion of the European Financial Stability Fund to somewhere between €1.2 and €1.5 trillion. Even if the plan is implemented successfully, the Greek economy faces further contraction (Moody’s Economy.com suggests another 10% on top of the 16% shrinkage already seen) with serious consequences for its citizens for many years to come. A write-down of 50% of the value of Greek bonds is intended to bring the Hellenic Republic’s debt-to-GDP ratio down to 120% by 2020. That is a level that, EU officials suppose, is fiscally sustainable but this assumption is suspect, not least because it is far from clear that 50% of Greek debt will actually be written-off.

10 27/28 October if my memory serves me well.

11 There is, of course, a powerful argument for less traditional forms of investment and I am an advocate of some. Just ‘some’ though.

———————————————————————————————————————————————————————————————————————

We do not necessarily agree with all the view noted in the comments above. However, it does provide a flavour of where we are up to into the Eurozone process.

Churchouse Financial Planning is not responsible for the content of external websites.

Please remember that past performance is not a guide to the future. The value of investments and any income from them can go down as well as up and you may not get back the funds you have invested.

This blog is for information only and should not be seen or used as individual advice. Seek independent financial advice (IFA) for your own circumstances.

Churchouse Financial Planning Limited can help you with your own investment planning and asset allocation, please feel free to contact us.

Keith Churchouse FPFS
Director of Churchouse Financial Planning Limited, Guildford, Surrey

Chartered Financial Planner
ISO22222 Certified Financial Planner

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

Leading Surrey IFA wins Gold Standards Award/ Churchouse Financial Planning Limited

2011-11-24T12:41:00.002Z

Churchouse Financial Planning Limited, Independent Financial Advisers and Chartered Financial Planners, was one of the winners of the Incisive Media Gold Standards Awards 2011 for Independent Financial Advice in London today.

Esther Dadswell and Keith Churchouse, owner-directors of the Guildford-based company, received the prestigious Award at a reception at the House of Commons.

Keith Churchouse said: “We’re delighted! The Gold Standard Awards require a complex and demanding application process and they are extremely thorough in their examination of our processes and client proposition. Having achieved the ‘Highly Commended’ awards in two previous years, we are very pleased that the continued attention to the delivery of our service has been recognised with this winners’ award. I would like to thank the team for all their hard work and diligence over the last few years in achieving this accolade.

“We have many plans for 2012, including our business name change to Chapters Financial Limited in January and the award is an excellent start to this exciting development.”

Chair of the judging panel, Deborah Benn, said: “Churchouse details an impressive set of robust processes. A very transparent and forward thinking business structure that has the client firmly in mind. Judges were particularly impressed with the firm’s industry reputation, which was described as exceptional. Qualifications, training and expertise taken extremely seriously.”

A consumer website, Trust Your Money, will shortly be launched to highlight the principles of the Gold Standard Awards. The website will inform and educate consumers on the key issues when buying financial products and services, which are the same issues that underpin the Gold Standard Awards. The site will offer Gold Standard winners the opportunity to highlight what they are doing to promote trust in financial services.

For further information contact Keith Churchouse on 01483 578800 or info@churchouse.com Esther Dadswell on 01483 578800 or Gail Goodwin on 01483 534388/07801 755477/gailgoodwin@sky.com

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.

No individual advice is offered by this blog. Churchouse Financial Planning Limited is not responsible for the content of external website content.

Auto-Enrolment, NEST & Workplace Pensions? What do they mean to you?

2011-11-14T13:50:00.003Z

The pension’s world is ever developing. This is nothing new and many remain apathetic to contributing to a pension, especially in these times of austerity and economic turmoil. Many have been aware that they have not been saving enough for their retirement over recent years and the situation does not seem to be improving, especially when you consider the ever rising retirement age of State Pension benefits.

However, unfamiliar terms such as Auto-Enrolment, Workplace Pension and NEST Pensions are likely to become household phrases and will affect most employers and employers over the next 5 years.

Auto-Enrolment or Workplace Pension are designed to correct these low contribution levels for those aged 22 or above, introducing mandatory pension savings arrangements through employers, unless an employee opts out. And these changes are only around the corner, with many directors and business owners already having started their planning processes, both for the implementation and for the additional cost that this will add to their overheads.

With reference to timing, full implementation and the start of large employer schemes are being introduced in October 2012 and most employers with more than 50 people in PAYE being joined into the pension arrangement by September 2014 (based on the size of the employers PAYE Scheme at April 2012). Those employers with between 1-49 people in their PAYE scheme will see a staged introduction process between the following dates: August 2014 and February 2016.

28/ 11/ 2011 News Update: Auto-enrolment will be delayed for small businesses, the Department for Work and Pensions (DWP) has confirmed. Pensions minister Steve Webb said today that auto-enrolment for small businesses would not go ahead until after the end of this parliament. Mr Webb MP said: 'Auto-enrolment will not go ahead for small businesses until the start of the next parliament,' he said. 'However this still means more than half of employers will be enrolled before the next parliament. This means the government will extend the deadline by a year for firms with fewer than 40 staff, from 1 August 2014 to 2015.

There will obviously be a cost to this initiative. The initial minimum contribution level is set at 1.0% per annum for employers and 0.8% per annum for employees of their earnings, with 0.20% pa tax relief added. This is effectively 2.0% pa funding of earnings at the outset, although it is proposed that this will climb to a higher total level of 5.0% pa of earnings in 2016. In addition, there is also a third proposed phase in late 2017 at a minimum of 8.0% pa of earnings onwards. Each employers and employees circumstances will be different and therefore, this blog should not be seen or used as individual advice.

More detail on these plans and changes can be found at the following website: http://www.pensionsadvisoryservice.org.uk/future-pension-reforms/auto-enrolment

As noted above, there are many requirements and some costs to this pension planning and Churchouse Financial Planning Limited, Chartered Financial Planners, has detailed these, and many of the other points further, at its website, www.churchouse.com . Alternatively, please call Keith Churchouse on 01483 578800.

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority (Registration number: 402899).

Churchouse Financial Planning Limited is not responsible for the content of external websites.

Quantative Easing and falling retirement income

2011-10-19T09:11:00.000+01:00

2011 has proved to be a volatile economic year and a testament to this manifested itself in the second introduction of Quantative Easing (sometimes referred to as QE2) in early October 2011 by the Bank of England. There are many proposed benefits for this additional cash flow, including the proposed additional funding trying to be established in this round or ‘Easing’ for small to medium enterprises (SME’s).

However, there are some other negative effects. This QE2 introduction has also seen annuity rates fall in the last week or so. This is because the price to providers to purchase Gilts (Government Stock), the financial instrument usually used to purchase an annuity and provides it with the guarantee of income, have increased. This means that annuity providers are now paying more capital to buy the same income. Therefore, as an example, the subsequent pension income provided from the capital deployed has fallen.

Those considering the purchase of pension/ retirement benefits in late 2011 have been concerned by this development and the subsequent annuity rates fall in recent weeks, along with the levels of income that can be achieved from alternative income producing plans, such as the use of the Income Drawdown proposition. This latter Income Drawdown option has also seen a change in legislation this year, reducing the maximum draw that can be taken from a new plan from around 120% of the level of an annuity purchase (GAD rate) to 100% at a new review,. As an example, for older existing Drawdown plans (many have been established for years) the mandatory five year review (new review limit is three years) can see incomes fall significantly from previous allowed maximums. This is a good example of why these types of plans should be reviewed annually.

For annuities, using our services to review the market to seek the best annuity rates (including impaired life/smokers annuity terms) using the Open Market Option (OMO) available under most pension plans (PPP/Section 32/SIPP/SSAS) can make a significant and beneficial difference in the final income that can be achieved.

Talk to us about the full range of options that are available and the income terms that can be achieved. Our website www.churchouse.com features more information on the Retirement Options available here and indicate the variety that each client needs to consider with our guidance and advice. Each client is different and therefore, this blog should not be seen and used as individual independent (IFA) financial advice.

We look forward to helping you with our retirement planning.

Keith Churchouse FPFS

Director

Chartered Financial Planner, ISO22222 Certified Fianncial Planner

Certified Financial Planner

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.

Churchouse Financial Planning Limited is not responsible for the material on the external links to websites.

For the chapters of your (financial) life

2011-10-03T08:30:00.002+01:00

Life, like financial planning can come in chapters. From birth to the grave, life has a habit of turning, like the chapters of a book. And like different chapters in a book, they can be exciting, diverse, creative and sometimes slow. And the book you read could be the details of someone’s life or, as an example, financial chapters.

I wanted to provide some examples of how this might look. This is not an exhaustive list and you should review your own individual needs:

Birth & the early years

You might consider savings accounts (deposit savings) or even the new Child’s ISA (coming this autumn 2011) to start to accumulate cash for a child’s future benefit and use, such as education costs. Parents may also want to review their life assurance arrangements, along with their other protection arrangements (such as Medical Insurance and Income Protection) to ensure these reflect the addition to the family.

Growing up & Education

School fees planning may be on the agenda and early planning of this is vital. Relatives, such as grandparents may want to help with this cost. However, if you have more than one child in close consecutive years, you can find the burden of providing education for both significant. Also, with the recent changes to university costs, accounting for costs to a child’s age of 21/22 may be appropriate ‘Chapter’ in the planning phase.

Employment/ Own Business

You may start to consider pension funding and with the new NEST (National Employers Savings Trust) pensions on their way in the next few years, this saving may become mandatory. This may not be a priority as you look at ways of getting on to the housing market or settling down with a partner. You may also be considering starting your own family and this may introduce the need for protection in the event of death or ill health. Your employer may offer you benefits and you should check these where available.

Family

You may start your own family and the need for protection, school fees planning, pensions and mortgage costs may be upmost in your mind. Sadly also, other issues, such as divorce, may impact on your financial planning. All of these issues need careful planning if needed. This may be the time you may receive an inheritance. You may also want to make sure you have an up to date Will in place along with your spouse/partner to protect your loved ones.

Ending employment & Retirement

Some end work to start their own business (SME) or may reduce their hours before finally stopping work. This is where pension and retirement income planning become vital to ensure that expectations are managed as to what benefit will be provided from the plans that you have been saving into over the years. You (and your spouse/partner) may also be entitled to a State Pension and checking this (using a BR19 State Pension Forecast form) may be worthwhile at the start of this financial planning phase. Some also use other savings vehicles, such as ISA’s to save for their retirement and these can be tax efficient.

You may well have other issues to consider as you approach retirement, such as paying off mortgages and debt. This may be achieved by using all or part of your tax free cash from your pension when drawing income.

Again, seek independent financial advice (IFA) on this subject for your individual needs.

Post Retirement Planning

As you become settled into retirement you may want to consider inheritance tax (IHT) planning or the need for any long term care provision. As you expect, both subjects need careful planning and are not unrelated in the way you handle your finances/ assets as you grow older. Again, you might want to make sure your Will is up to date and reflects any changes in your family circumstances, such as the addition of grandchildren. You may also want to think about whether there is a future need for Power of Attorney protection to help and protect you into the future. You may want to speak to your solicitor about these points.

Summary

It is relatively easy in an article to breeze through the financial chapters of an example lifetime. Because we are all different, each person’s life chapters, financial or otherwise, will be different. However, I hope the above notes provide a flavour of the financial planning issues that you may want to consider as you travel through your life.

Churchouse Financial Planning Limited is a Chartered Financial Planning company and Independent Financial Adviser with over a quarter of a century of experience in UK retail financial services. For information, much of this journey is detailed further in Keith Churchouse’s book, Sign here, here and here! Journey of a financial adviser, available through Amazon here.

The way you chose your financial planning service will vary and no individual advice has been provided in the text of this blog.

Keith G Churchouse BA Hons, FPFS
Chartered Financial Planner

ISO 22222 Certified Financial Planner
Director, Churchouse Financial Planning Limited, Guildford, Surrey.

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.

Churchouse Financial Planning Limited is not responsible for the content of external webpages and their content.

New Name, Continued Service

2011-09-15T16:34:00.002+01:00

Churchouse Financial Planning has enjoyed much success over the seven/eight years it has been providing financial planning advice. We believe that this is a testament to the mutual loyalty and confidence that we share with our clients. We thank you for your continued support.

As our brand has developed, we took the opportunity to trademark the name ‘Churchouse’ in financial services in 2007. Many of our clients are aware that we have received an approach to relinquish our trademark to a new bank and this was finalised recently.

I am sure you will understand that we do not wish to compete with the bank concerned and have negotiated to change our company name from the start of 2012. At that time, Churchouse Financial Planning Limited will change its name to Chapters Financial Limited. The new website address will be www.chaptersfinancial.com

I have taken this opportunity of providing an example of the new brand here:

Please rest assured of our continued support and service, with the ownership of www.churchouse.com and our email addresses remaining in our ownership and forwarding to our new name. Contact with us via email, post and telephone will remain unchanged.

This has been an interesting and exciting development in our evolution and we will aim to tell you more about our new business name and the brand, already registered as a trademark you will be pleased to know, in the next quarter of 2011.

We look forward to working with you further as we head towards our first decade in business.

Churchouse Financial Planning Limited is a Chartered Financial Planning company and Independent Financial Adviser with over a quarter of a century of experience in UK retail financial services. For information, much of this journey is detailed further in Keith Churchouse’s book, Sign here, here and here! Journey of a financial adviser, available through Amazon here.

The way you chose your financial planning service will vary and no individual advice has been provided in the text of this blog.

Keith G Churchouse BA Hons, FPFS
Chartered Financial Planner
ISO 22222 Certified Financial Planner
Director, Churchouse Financial Planning Limited, Guildford, Surrey.
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.

Churchouse Financial Planning Limited is not responsible for the content of external webpages and their content.

Selecting your team for your financial planning ‘World Cup’

2011-09-09T11:17:00.001+01:00

At the time of writing this blog there is much excitement in some quarters of the community about the beginning of The Rugby World Cup, which starts this morning. For those of you that are not well versed or interested in Rugby, the hosts and favourites, New Zealand are set to face Tonga in the opening match and I am sure that a few (probably mainly male) enthusiasts will sneak away from their work desks, computers or other pastimes to watch the first game and the opening ceremony. Because of the time differences between our two nations, many games will be viewed over breakfast and much anticipation will be quenched by the starting whistle of the competition.

Although only a limited sports fan, I am aware that, like most World Cups teams, irrespective of their sporting denomination, much preparation and hard work has been spent to make sure that the best has been extracted and selected from each element of the team, its management, facilities and players to ensure that only the best is fielded for the big tournament.

The competition itself will, in its process, select the best team of the tournament, presenting it with the coveted World Cup and runners up medals to the other finalist team. This ’selection’ process will be decided through the various rounds of the games and I am sure will show who has put the work, preparation and training in to be the best. This is the same in all walks of life and is the same in the profession of financial planning.

The UK consumer has many choices when selecting their financial planning provider. Starting with the basics, a financial adviser can be tied to one provider or independent. If an independent adviser (IFA) is preferred, possibly because of the potential that additional choice could bring, they can then select to work on a fee or commission basis, or a combination of these options. To some, experience and knowledge count for many selections made, along with personality of course. As another example, over the next 18 months, the level of qualification that an adviser has will become very important. This is because of various proposed Financial Services Authority (FSA) rule changes. The qualifications bar is being raised (significantly for some) and this may see a few providers either changing their status to reduce the service they offer or possibly leaving the industry all together. A little bit like losing a round in the World Cup and not making it through to, as an example, the quarter finals.

Much of a financial advisers business offering to you, the buying public, relies on hard work, preparation and selecting the best from their facilities to make sure that you get the best from your financial planning in the ‘tournament’ that is your finances. Make sure that you select well for your financial planning and I hope that your team wins.

Churchouse Financial Planning Limited is a Chartered Financial Planning company and Independent Financial Adviser with over a quarter of a century of experience in UK retail financial services. For information, much of this journey is detailed further in Keith Churchouse’s book, Sign here, here and here! Journey of a financial adviser, available through Amazon here.

The way you chose your financial planning service will vary and no individual advice has been provided in the text of this blog.

Keith G Churchouse BA Hons, FPFS
Chartered Financial Planner
ISO 22222 Certified Financial Planner
Director, Churchouse Financial Planning Limited, Guildford, Surrey.

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.

Churchouse Financial Planning Limited is not responsible for the content of external webpages and their content.

Don’t panic! Don’t panic!…..Downgrading America’s Credit Rating

2011-08-08T11:38:00.003+01:00

In the last week, equity markets have been as volatile and seen falls as significant as those last experienced in 2008, eventually bringing the downfall of Lehman Brothers in September of that year, as one of the many consequences.

The announcement by Standard & Poor’s on Friday, 05th August of the downgrade of the US’s credit rating from AAA to AA+, the first time this has fallen since 1917, is very significant. American politicians and pundits are arguing against this significant change, however, S&P note that part of the reason for the downgrade is last weeks squabbling between the political camps to agree a new US debt limit (now agreed at $16.8 trillion).

The effects of this downgrade change may not be immediate, however many are likely not to see this as a positive change, with some calling for international control of the Dollar as one of the most important central currencies. This also raises the question of what this means for clients in the UK and their investment/pension funds?

The first point to make is not to panic. Selling out of a Market after a fall will only crystallise a loss. If you don’t need to take this loss, then we would normally recommend holding tight. The falls experienced this week and the AA+ announcement, along with the other global economic events, such as the Eurozone debt crisis, has been a fast moving and, if more positive news comes through, markets can move just as quickly in a positive direction, although this is not guaranteed.

Many investments/ pensions are diversified and allocated over a range of different geographical and investment areas, giving some protection against volatility. However, because of the far reaching remit of the Dollar, this may mean that all markets see some turbulence.

We would recommend that you seek independent financial advice (IFA) for your investment and pension planning if you are concerned about the recent events and need to make changes to your fund holdings. Please note that this blog should not be seen or used as individual advice.

Churchouse Financial Planning Limited can help you with your financial planning.

Keith Churchouse FPFS
Director
Churchouse Financial Planning Limited, Guildford, Surrey.
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority (FSA)

Does your family have the protection it needs…….without you?

2011-08-05T15:59:00.001+01:00

Summer is time for family, holidays and fun….hopefully with a bit of summer weather thrown in! Many will spend time with their loved ones, caring for their required needs.

But when is the last time you looked at your family protection to really make sure they are protected…and not just on holiday.

Some clients find this a difficult subject to address because the need is only likely to arise in the event of death or Ill health, neither of which are pleasant subjects, especially when they refer to you. However, I understand that there are two things certain in life, namely death and taxes and sadly you can only normally insure against the former. What should you, your spouse/ partner and your family consider?

1. Start with any employer benefits

When did you last read your employment contract and the benefits your employer offers?

Many employers offer varying benefits, however, benefits might include, as examples:

» Death in Service Benefits, say 2/3/4 X salary in the event of your death whilst employed.

» Medical Insurance, to cover hospital/surgery costs if needed. If you have this cover, are your family included? If not, you may be able to add this protection (at an additional cost). The type of benefit is normally treated as a benefit in kind for income tax purposes.

» How long will you be paid if you were unable to work due to ill health? Some employers offer protection of salary for a period of time, but it is worthwhile finding out how much this is. Some will only offer Statutory Sick Pay (SSP), which is currently £81.60 per week (2011/2012).

Taking all of the above into account, you can then start to plan to protect the gaps in your financial protection planning……if there are any.

This cover may be lost when you leave an employment, and you may want to consider this when looking at an alternative employment/ self-employment option.

2. Existing protection policy cover

You may also have some existing protection cover in place and this may compliment well the benefit provided from your employment, so make sure you keep the details of these plans safe and keep any policy documents safe.

Some older type plans have policy conditions that are now considered generous. If you are thinking of replacing these covers, then check the benefits covered carefully to make sure you are replicating the cover you require.

If you have a financial adviser, make sure they have a list of what covers you have to keep records correct.

3. Examples of types of protection cover

Income Protection (Permanent Health Insurance/PHI)

» Replaces part or your income if you are unable to work for a long period of time due to illness or disability, and will continue to pay out until you can return to some kind of paid work or reach retirement, whichever is sooner.

» Usually, you pay a monthly premium throughout the term of the policy and costs depends mainly on: your age, your sex, your health, your job, hobbies and lifestyle as well as waiting period, which you can choose i.e: 4 weeks up to 104 weeks.

Life Insurance

» Provides a lump sum or fixed regular income, either if you die (if whole of life policy) or if you die within a specified term (term insurance).

» Term insurance – simplest and cheapest. Known as term insurance because you choose how long you are covered for, say 10, 15 or 20 years. Different types of policies are available. Premiums are usually fixed for the whole term and some can be renewed after a certain period, say 5 years. These policies have no value at anytime and if you cease to pay premiums cover also ceases.

» Whole of life insurance – pays out an agreed sum when you die as long as you are still paying the premiums. This is usually more expensive than term insurance. With these policies part of the premium is invested now in order to fund higher life assurance premiums later to avoid passing the additional cost on to you.

We would normally recommend that any individual life cover established is placed under trust to ensure that the proceeds of any policy fall outside the deceased estate for inheritance tax purposes (IHT).

Critical Illness

» Critical illness insurance is a long-term insurance policy designed to pay a lump sum or income on the diagnosis of certain life-threatening or debilitating (but not fatal) conditions such as a heart attack, stroke, certain types/stages of cancer, multiple sclerosis and loss of limbs.

Private Medical Insurance

» All of us are entitled to free healthcare from the NHS but you may consider buying health insurance so you have a choice in the level of care you get. The cover you get varies and certain treatment is not covered i.e. if you have had problems in the past or the treatment of a chronic medical condition. It is important to research the premiums because this is a competitive market and many policies have a standard excess charge where you agree to pay the first part of any claim i.e. the first £50 or £100.

Other points to think about to ensure you and your family are fully protected

» Check the nominations on your pensions – if you have had a change of circumstance since originally setting up your pension/s i.e. marriage or divorce as examples, it would be a good idea to check who is nominated to receive your pension benefits in the event of your death, if you have nominated anyone at all.

Clearly, with the many options (as examples) I have detailed above, you can see that some careful financial planning is worthwhile in maximising the type of protection you want to consider for you and your family, whilst minimising the impact of this cover on your monthly budget. Your budget for cover will be important and you might want to consider this in advance.

This is for information only and should not be seen or used as individual advice. Seek independent financial advice (IFA) for your own circumstances. Churchouse Financial Planning Limited can provide advice and implement suitable cover to help you with your own individual protection planning.

We look forward to working with you soon.

Keith Churchouse FPFS

Director of Churchouse Financial Planning Limited Chartered Financial Planner

ISO22222 Certified Financial Planner

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.

There may be trouble ahead….still!/ Europe

2011-07-26T14:11:00.001+01:00

With the first decade of Greece’s membership of the European Union (EU) upon us, the member states have to be commended for their hard work and recognition of the problems that this country finds itself in. It is good to see that the powerhouses of the EU, such as Germany and France, amongst others, are able to come together and find a solution to the debt problems that are now so apparent. With financial measures now agreed, it will be interesting to see if, in implementing these changes, they will be enough to control any contagion of default to other member states that find themselves with similar, if not larger, problems such as Portugal, Ireland / Italy and Spain ( together with Greece, unfortunately referred to as PIGS).

Many questions and answers lie ahead as to whether the financial measures agreed to help the Greek economy recover in an acceptable fashion, both to other EU states and the Greek people, will work. The major concern has been that as a state, Greece produces only approximately 2% (1.9%) of the EU’s overall GDP (Gross Domestic Product), which is obviously low. Their GDP deficit was over 10% in 2010 and public debt levels as a percentage of GDP at over 140% (142% in 2010). This raises the question of what happens if another larger EU state needs a similar financial solution and rescue?

Of the other countries already mentioned, using Italy in this example, this member state produces over 12% (approximately 12.7% of the EU’s GDP in 2010) and has a GDP deficit as a percentage of national GDP (4.6% in 2010) and levels of unemployment at 8.4% (2010). Their debt level is ‘only’ 119% (in 2010) and, as a further example, this compares to 80% debt level in the UK.

Default on national debt may have the effect of making debt costs rise in the Eurozone, making it likely that it would be more expensive for all countries to borrow funds to help their economies grow. This, in turn, may slow progress for member states out of recession, which most want to avoid. Time will tell if the measures agreed last week will be sufficient to meet the demands of the economies of the EU and I am sure many complications will appear in the coming months. There are many other global states and trading areas that rely on a strong Eurozone, and this is why it is important that these measures work into the future.

This blog is for information only and should not be seen or used as individual advice. Seek independent financial advice (IFA) for your own circumstances.

Churchouse Financial Planning Limited can help you with your own investment planning and asset allocation.

Keith Churchouse FPFS

Director of Churchouse Financial Planning Limited Chartered Financial Planner

ISO22222 Certified Financial Planner

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

Extracts from our Summer Newsletter 2011

2011-07-12T12:25:00.001+01:00

There are usually some tangible times in a calendar year when financial planning is noted in client’s diaries about what they need to undertake to maintain their overall planning strategy. The first more obvious date is the end of the tax year and to use up annual tax allowances, such as pension contributions or annual contributions to cash and/or stocks and shares ISAs, to name just two. Others find that the end of the calendar year, towards Christmas, is a time to consider family and issues such as inheritance tax planning, maybe using the annual gift allowances in the process.

Each client is different and has different objectives, therefore, this blog article should not be seen or used as individual advice.

Summer is a time when many relax a little and enjoy the sun and the warmth (or sometimes rain!) of the season. Many find this season a good time to review their financial planning, and I have provided a few notes below to give a prompt or two, if needed.

Proposed Financial Ombudsman Service award increase to £150,000

The Financial Services Authority (FSA) has been consulting on a proposal to increase the Ombudsman service award limit from £100,000 to £150,000, with a planned start date of 1 January 2012. The FSA made this proposal in order to prevent a decline in the consumer protection afforded by the award limit in real terms. This is to take account of the effects of inflation, which have certainly been more prevalent in recent times.

Following the consultation, the FSA plans to proceed with this increase, along with streamlining of their processes. They plan that these changes will maintain and contribute to increased confidence in financial services.

Implementation of Retail Distribution Review (RDR) End 2011

Some of you may know that the Financial Services Authority (FSA) has been working hard on the way that financial services is distributed in the UK. There has been some press on this topic and this is likely to grow over the coming months. The FSA’s work has taken much time and research, including consultations, and the final changes have been proposed and are likely to form the new regime starting at the end of 2012. As Chartered Financial Planners, we are well placed to meet these new requirements and to be able to continue to provide you with independent financial advice into 2012 and beyond.

One way we have demonstrated our commitment to providing high quality financial advice is to continue to be assessed for the British Standards ISO22222 Personal Financial Planning. My last assessment was in mid June 2011, my fourth year, and was passed successfully. At the end of June, I also studied and passed the Chartered Insurance Institutes Long Term Care exam, called CF8.

We will endeavour to keep you posted on the key changes that may affect you into the future once they are finalised.

Summary

I hope you have a great summer and I, and the team at Churchouse Financial Planning Limited, look forward to helping you with you financial planning over the rest of 2011 and into the year of the Olympics, 2012.

If you would like to review your asset allocation, investment planning, retirement or pension planning then please let us know and we can arrange a meeting to consider your current needs and aspirations.

If you would like to be added to our newsletter mailing list then please contact us for more information.

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.

Keith G Churchouse FPFS

Director, Churchouse Financial Planning Limited, Guildford, Surrey

ISO 22222 Certified Financial Planner

Deliberate Asset Deprivation?

2011-06-27T11:49:00.001+01:00

It sounds like a game show and I am sure the term has got your attention, although for some it is not amusing.

I have been studying the Chartered Insurance Institutes (CII) text for long term care, sometimes referred to as CF8 and passed this test recently. This considers the principals of why this topic should be considered, the conflicts that may arise from other financial planning issues, such as inheritance tax planning (IHT), and some of the solutions that may be considered on their own or in combination with a few arrangements. All very interesting and thought provoking, creating a lot of opportunity to prepare and care for those needing this type of advice and help.

As you can guess, the costs of long term care can be significant and the provision provided by the state once an individual’s assets have been eroded can be low. It may also reduce the choices available to you. Provision from the state will only start after an individual’s assets fall below a current level if £23,250 (2011/2012). And yes, your house value does count towards this (although it may be disregarded in the first 12 weeks of care).

It is this threshold that may encourage some to consider gifting away assets to a level where the cost of care will be met by the state, rather than at the cost of the family. As you can guess, any assessment for care costs will take this into account.

If a gift from the individual’s estate is made within 6 months of the need for care, the gift is likely to be disregarded and added back into the assets of the individual for the assessment. Gifts made prior to this 6 month period may also be included if there was no obvious purpose to the gift being made. Inheritance tax planning may be a fair reason, but the gift away may be challenged if it is believed that the gift was made as a deliberate asset deprivation strategy.

There are a few example cases to reference these challenges and the way gifts (in the specific situations) were treated in each case and these are listed here:

R v. N and E Devon ex parte Coughlan (1999)

Beeson v. Dorset County Council (2001)

Grogan v. Bexley NHS Care Trust (2006)
As you can see from the content of this blog, each case is different and each client and there requirements are different. Therefore, this article should not be seen as individual advice.

As always, I would recommend that you seek independent financial advice (IFA) for your circumstances and requirements.

Keith Churchouse FPFS
ISO 22222 Certified Financial Planner
Chartered Financial Planner

Churchouse Financial Planning Limited, Guildford, Surrey
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

Making money lasts as long as you do!

2011-06-16T16:04:00.001+01:00

I took a short break from work recently and flew to the sunshine of far away shores. I understand that you need a break every now and then and I managed to smuggle my smart phone into my hand luggage along with an iPad to make the rucksack a mobile office to keep in touch and up to date. All very sad really!

On the gantry to the plane a well known global bank plasters the Walls with thought provoking comments accompanied by related and usually visually dramatic pictures, smothered with their logo. One of these comments read ‘Two thirds of people who have lived over the age of 65 are alive today’. I had to stop (much to the annoyance of the fellow passengers behind me!) and go back again to read this staggering fact. Could this be really true? And if correct, what are the consequences of such longevity?

Making your money last as long as you do is a pre-requisite to overall survival, although we do have the state system to rely on if things don’t go according to plan. However, with the austerity cuts that have been agreed but, in some instances, not instigated yet, relying on the state may not provide you with the minimums you require.

There are also the conflicting demands on your money and assets. You may want to leave as much as is possible to your family on death to save inheritance tax (IHT), but then you might feel that your children have had enough and, to use an acronym, be SKI-ing (Spending the Kids Inheritance-ing). Each will make their own choice.

Questions that need to be asked might be will you have enough income in retirement? Will your retirement spending change when you get there? You might have always wanted to do ‘X’ or ‘Y’ and with some tax free cash in your pocket, your mortgage repaid (hopefully) and the state pension kicking in, now is the time to do it. Think carefully about this. Relating this to the gantry headline referred to earlier, this could just be the third phase of your life (childhood/education, work, retirement, etc). And how long will this last? 20 years? 30 years? Each another chapter of your financial life. Who knows, but planning for this lengthy phase early is vital to make sure that these golden years really are just that, golden.

Have a look at your finances and your financial planning strategy for both know and the future. Then seek independent financial advice (IFA) from a well qualified adviser who can help you plan for this future time. I am sure it will be worthwhile.

As suggested above, we are all different, and will have differing views, requirements, aspirations and needs. Therefore, this blog should not be seen as individual advice.

Churchouse Financial Planning Limited, a Surrey based Chartered Financial planners, can help you with your financial planning as an independent financial adviser.

We look forward to helping you soon.

Keith Churchouse, FPFS

ISO22222 Certified Financial Planner

Chartered Financial Planner

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.

The only way is up! Inflation increases

2011-06-14T15:35:00.001+01:00

I have often jested with clients that there are three levels of inflation. These are the rate the Bank of England suggests, the alternative and usually higher rate that you pay at the till for your groceries every week and the higher rate that you pay for such things as school fees/care costs.

With inflation currently spiking so significantly, these previous ‘jests’ may wel become Ill advised, especially with Sir Mervyn King, Governor of the Bank of England, suggesting that inflation may well peak above its current level of 4.5% (CPI May 2011) at a rate above 5.0%. Personally, I think this may be undershooting the final highs, but this is conjecture.

What does this mean for your finances, other than seeing your fuel bills rising sharply and any salary increases falling short of the increase figures mentioned above? With the possibility of Bank base rates increasing (an historic favoured tool of the Bank to control inflation), many may also see borrowing costs, such as that for mortgages, increasing in the next 12 months. This possible future increase is likely to see family budgets squeezed even further, if and when they happen.

But what of those who are approaching retirement? Many will know that increases in salaries are usually higher than CPI (Consumer Prices Index) and this difference is unlikely to be enjoyed in retirement. This may make your retirement planning even more important because the cost of protecting against the effects of inflation when buying an annuity are far higher than when buying an annuity on a level income basis. Some clients have calculated, that in their opinion, this ‘cost’ is not worth the loss of initial income. However, others see this decision differently and opt for some form of protection against inflation, using a fixed increase or using and index, such as CPI or RPI (Retail Prices Index). Each choice will offer a differing income, dependent on the individual circumstances. Some prefer to use alternative vehicles for their retirement income, such as income drawdown facilities. However, the effects of inflation still need to be considered when thinking about the real purchasing power of your money, both now and into the future.

Financial planning is about considering the choices that you want to provide for, both now and into the future. Inflation and its effects are going to have an impact on these choices. Each of us is different and this article should not be seen as individual advice.

Speak to an independent financial adviser (IFA) about your needs and aspirations for your future requirements.

Keith Churchouse FPFS

ISO 22222 Certified Financial Planner

Director & Chartered Financial Planner

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.

Summer Financial Planning/Attitude to Investment Risk

2011-05-25T15:36:00.002+01:00

There are usually some tangible times in a calendar year when financial planning is noted in clients diaries about what they need to undertake to maintain their overall planning strategy. The first more obvious one is the end of the tax year and to use up annual tax allowances, such as pension contributions or annual contributions to cash and/or stocks and shares ISA, to name just two. Others find that the end of the calendar year, towards Christmas, is a time to consider family and issues such as inheritance tax planning, maybe using the annual gift allowances in the process. Each client is different and has different objectives.

Summer is a time where many relax a little and enjoy the sun and the warmth (or sometimes rain!) of the season. This is a good time to review one of the less calendar bound aspects of financial planning which is investment risk and your attitude to risk at your life stage and overall financial strategy, if you have one.

We have detailed investment risk on our website for many years and this is detailed on the Churchouse Financial Planning Limited website here: www.churchouse.com/risk.php

However, this in itself raises a few additional questions about investment risk and these may reflect changes in your circumstances, such as your age, overall strategy, family circumstances or wealth.

When is the last time you reviewed your attitude to investment risk?

With your personal thoughts complete, when did you last link these thoughts to your investment choices of the past?

Has a change in your circumstances, such as receipt of an inheritance changed your overall attitude to investment risk?

How will you allocate your investment risk profile across your overall funds? Many clients allocate a proportion of their funds towards the lower end of the risk scale to protect against unforeseen expenses and capital requirements. This in itself may allow other investments to be placed at the other end of the selected scale.

Do the investment choice decisions of the past now reflect your current thinking?

Do you have any ethical/ ecological restrictions for your investments and does the current asset allocation reflect this? If uncertain, you may want to look at the website: www.eiris.org which provides independent investment research into the environmental, social, governance and ethical performance of companies.

If required, how is the performance of your funds, such as pensions, unit trusts (OEICS),ISA’s, trusts, investments, portfolio’s, savings and alike benchmarked against a model index, using indices such as APCIMS? APCIMS is the Association of Private Client Investment Managers and Stock Brokers and their website is http://www.apcims.co.uk/

How often should you be reviewing your attitude to investment risk? 6 monthly or annually, as examples?

These are only examples of what you may want to consider. You may have other points that will determine your attitude to risk, however, this blog hopefully probes further into your overall planning strategy to provide the potential to get the most from your investments and pensions as your life and wealth management develops. Whatever you decide to undertake this summer, don’t forget to review your financial planning.

We are all different and therefore, this article should not be seen or used as individual advice. Seek Independent Financial Advice (IFA) for your circumstances.

Churchouse Financial Planning Limited is not responsible for the content of the external websites noted in this article.

Keith Churchouse, FPFS
ISO22222 Certified Financial Planner , Chartered Financial Planner
Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

Churchouse Financial Planning Limited commended in Financial Adviser Life & Pensions Awards 2011.

2011-05-12T17:43:00.000+01:00

I had the pleasure of being invited to join Melanie Tringham, Features Editor at Financial Adviser, the team and their guests to the FT Financial Adviser Life and Pension awards in Savile Row in London on the afternoon of 11^th May 2011.

A great and entertaining event was had by all and the lunch was delicious. Following this, the various industry and adviser awards followed with many excellent results. It is great to see our profession thriving with innovation to continue to show both its excellence and competitive edge.

Churchouse Financial Planning Limited was commended in the Small IFA Firm category and I was delighted to collect a certificate on behalf of the company. I am delighted that our business and the team has been recognised for its hard work and continued professionalism. Thank you to Financial Adviser for the accolade, noted below:

I would like to send a heartfelt congratulations to all those that received accolades yesterday and also many congratulations to the whole team at Financial Adviser for an excellent event.

No advice has been provided in this article.

Keith Churchouse, Director of Churchouse Financial Planning Limited, Guildford, Surrey

Chartered Financial Planners

Time to get busy....Redundancy and the loss of employment

2011-04-21T08:59:00.000+01:00

The loss of employment through redundancy or otherwise can for many be a very worrying time. This Life Junction as I refer to them draws you to a halt at a certain point in your life and asks you to consider the options available to you and, most importantly, which way you turn. I have provided some thoughts below.

Retirement/Early Retirement?

The way you turn may well depend on your current circumstances. As an example, if you have reached an age that was close to your anticipated retirement time, you may decide not to look for further employment because of the current economic climate and look at drawing pension benefits. If you received a redundancy payment then you may use this to subsidise your lost income over a time until you do draw pension benefits or until you find new work and income/salary. You may have sufficient tax free cash and taxable pension income to solve your financial needs into the future and an early look at the planning of this is recommended. You should seek independent financial advice to ensure that you have considered all of the varying options.

Redundancy Payments

Please remember that the first £30,000 of any redundancy payment is tax free with the balance being taxed at your highest marginal income tax rate. This may mean that if you are being made redundant in the early part of a tax year (tax year starts on 06^th April) you could find that any amount being paid above the tax free limit (£30,000) is taxed at basic rate tax (currently 20%) up to the new tax threshold of £42,475 (in the tax year 2011/2012). Make sure you keep hold of any tax documents, such as your P45, for future reference. Also, you may want to offset part of the tax on the excess payment by making a pension contribution. This may be achieved by your own arrangement or through your employer before you leave employment. You should take financial advice on this subject promptly if you wish to look at this option.

Further details on how any income tax liability may be calculated is detailed at the HMRC website here: http://www.hmrc.gov.uk/individuals/redundancy-ee.htm

Emergency Deposit Funds

One financial planning point I would recommend to most clients is to consider maintaining an emergency deposit fund, a fund of readily available cash/deposit funds, of around 3-6 months income to cover unexpected expenses. This might be the car breaking down or the roof leaking. Whatever it is, this fund should be sufficient to cover the cost of unexpected and possibly unwanted liability. Bear this in mind when planning and allocating any redundancy payment you may receive.

Benefits

On a more practical note, I am sure you will be polishing up your CV to send to potential employers and you may be entitled to some State benefits, such as unemployment benefit/Job Seekers allowance. It is usually worthwhile looking at what this involves, especially if finding the right work in your chosen field may be difficult.

One useful website to look at this further is the DirectGov website here: http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/Employedorlookingforwork/DG_10018757

Protection Policies

You should also look at the terms of any existing protection policies that you may have that could help towards to payments of any outstanding debts that you have. Your outstanding debts and liabilities will need to continue to be serviced even if you are unemployed and early financial planning for this is important.

You may have also lost other benefits on leaving your employment. Some may be tangible, such as the company car, which will now need to be replaced, however, some are less tangible. You may have lost your Death In service life cover (DISB), private medical health insurance (PMI), ill health income replacement cover and ongoing pension contributions. If you and your family need to maintain these protection covers, then do look at the continuation/replacement options available to you at an early stage.

Start your own business?

You may decide that now is a good time to start your own business, with all the knowledge, wisdom and expertise that you have accumulated in your role in the past. There is much help on offer from various organisations to allow you to achieve exciting option and any recent redundancy payment may give you sufficient cash flow to achieve this.

Another useful website if you want to look at the way this could work and what help is available is through Business Link at: http://www.businesslink.gov.uk/bdotg/action/getStarted

Summary

Overall, you can see that early planning is vital to ensure that you are ready for the Life junction that is redundancy and the loss of employment. Whatever route you chose, I wish you prosperity and every success into the future.

As I have noted in previous blogs, we are all different and your ongoing financial planning strategy will be individual to your needs, such as the use of a redundancy payment in your circumstance. Therefore, this article should not be seen or used as individual advice.

Churchouse Financial Planning is not responsible for the content of an external web pages noted above.

Seek Independent Financial Advice (IFA) for your circumstances. Churchouse Financial Planning Limited can be contacted in Guildford, Surrey on (01483) 578800.

Keith Churchouse

Director of Churchouse Financial Planning Limited, Guildford, Surrey.

ISO22222 Certified Financial Planner & Chartered Financial Planner

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

Weddings, marriage and all things financial….5 things to consider!

2011-04-11T08:46:00.000+01:00

My best wishes to Prince William and Catherine Middleton on their big day at the end of this month and for their futures together. Wedding fever is likely to build as we approach the end of April 2011 and the Royal couple will not be alone in their preparations, with many marriages planned for the coming spring and summer months in 2011 and beyond.

Obviously, with a wedding or civil partnership, there is much to prepare, from flowers to outfits, wedding breakfasts and cars to speeches and making sure that all the invites have been safely delivered and the various responses gathered in. The frenzy of activity will build until the big day arrives and all hopefully runs smoothly.

With all this focussed effort occurring, it is sometimes easy to forget some of the financial planning that should also be considered, and this is understandable. To help, I have listed below some of my financial tips on what to look at as any happy couple approach their union and future together.

1. Financial gifts on marriage (Inheritance tax)

Parents, and other relatives, may well be pleased to provide the marrying couple with a wedding gift of money on their marriage. For parents, they can give £5,000 to their child with the gift falling outside their estate for inheritance tax purposes at the time of the gift. Grandparents can also undertake a similar gift, limited to a level of £2,500.

This is over and above the normal annual gift allowance of £3,000 in a year.

2. Pension nominations on death before retirement

If you have collected a pension or two in your working life, or are a member/owner of a pension now, you may have made a nomination on the plan in the event of death before you retire. If your plan was started when you were young and before you met your soon to be spouse, this may be nominated to someone else, such as your parents, siblings or someone from a previous relationship. You can normally update this nomination easily and at no cost by writing to the provider or to the HR department of the employer. Some provide a form to do this.

3. Review your life & protection cover

With the marriage complete, the married couple have a new found responsibility to one another, both emotional and financial. Protecting your spouse in the event of your death may become important, especially if you are going through other life changes, such as children, mortgages and other progressions.

It would be prudent to review your life covers and other protection arrangements, such as ill health protection to ensure that you are both comfortable that each of you will be protected if something unfortunate was to happen to either of you.

If you have cover from your employer, such as death in service benefit, you may want to contact your HR department to update their records and record your new marital status.

4. Make a will

A cornerstone of any financial planning is having a will in place. Wills become void on marriage and therefore you should address this as soon as possible after the marriage or, you can have a will prepared in contemplation of marriage. A will could also protect children and mitigate the effects of inheritance tax.

Speak to your legal adviser/solicitor about this to ensure that your spouse/family is protected.

5. Take financial planning advice

Once the honeymoon is over and you start to settle into your stride of married life, think about your long term futures together and what you want to achieve both now and at the life cycles that you may encounter, (as examples) from merging two households into one, children, employment changes, wealth management and retirement. You may well have already discussed together what you hope for, however, it is well worth while getting good quality financial advice about how this can be achieved financially.

As a married couple, it may also be prudent to look at your individual income tax positions and how this can be used effectively to reduce any liability to income tax in future tax years.

Speak to an independent financial adviser (IFA) about your mutual objectives and what can be achieved, based on your individual circumstances.

Summary

If you are or a member of your family is getting married, then I wish you every success for the big day and the future.

There is a lot involved in wedding planning and, as noted, financial planning may come as a low priority when looking at what needs to be prepared, but has significant consequences if you get it incorrect. We would be pleased to expand further on the points in this blog when you enquire and please note that this is not an exhaustive list.

We are all different and the needs of a marrying couple will vary, dependent on their individual situations before the marriage and their futures together. Therefore, this article should not be seen or used as individual advice.

Seek Independent Financial Advice (IFA) for your circumstances. Churchouse Financial Planning Limited can be contacted in Guildford, Surrey on (01483) 578800.

Keith Churchouse

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

A new tax year….2011/2012

2011-04-06T08:25:00.000+01:00

Many of you will know that today (06^th April 2011) is the start of a new tax year for individuals and this brings with it the renewal of many tax allowances. Happy New Year to you all!

In most tax years there is sometimes a scramble at the end of the tax year to ensure that as many tax allowances are used where available, and, most importantly, where affordable. Some clients prefer to use these allowances at the beginning of the tax year, rather than waiting until the end, to try and enjoy the full tax year of benefit which starts on the 06^th of April.

I have taken this opportunity of listing some of the allowances that you may want to consider in the coming time as we approach Easter and, of course, the Royal Wedding towards the end of April 2011.

Increase in ISA investment allowances 2011/2012

The ISA allowance for this new tax year (2011/2012) is £10,680 in total. This amount can be fully invested in equity type investments (such as stocks/OEICs/Unit Trusts), or, if you prefer, you can put up to £5,340 in deposit/ cash holdings, still leaving a balance of £5,340 available to go into investments.

This is usually an annually renewable allowance and you can use your new ISA allowance each year with different providers if you prefer. (ISA rule restriction of one provider of each option per annum). It is now proposed that the annual ISA allowance will now increase each year in line with the Retail Prices Index (RPI).

As noted in a previous blog, a new Junior ISA of £3,000 has been proposed (initially for those without a Child Trust Fund) is in consultation. This may be available from November 2011.

Capital Gains Tax allowance (CGT)

This is an allowance which allows a tax free gain to be made in a tax year from the sale or transfer of an asset, such as shares or unit trusts, up to a limit in the new tax year of £10,600. Some assets, such as your main residence and your personal car are exempt from this tax.

Many clients, especially higher rate tax payers, find this allowance valuable. If a gain is made above the exemption amount, the gain is then taxed at a flat rate of 28%.

Annual Gift allowance

To save some inheritance tax (IHT), many clients like to use their annual gift allowance of £3,000. If they did not use last year’s allowance, they can go back one year and use this allowance, making a total gift of £6,000. With the Royal Wedding nearly upon us, it should also be noted that a gift on marriage by a parent to a child of up to £5,000 is also exempt.

The nil rate inheritance tax band of £325,000 currently remains the same in the new tax year 2011/2012. Thereafter, an estate is taxed at 40%. Married couples can combine their allowances together to a total level of £650,000, having taken into account any potentially exempt transfers (PETs) in the past or gifts to others on death.

Changes in pension contribution rules

In this new tax year (2011/2012) there are many changes in pension legislation and part of these changes have been noted to you in previous newsletters. One example is the change in the level of pension contribution that can be made to a new level of £50,000 gross in the tax year.

There is also a new three year carry forward facility being introduced and if you would like to review your pension contribution planning then please let me know and we can undertake a review based on your circumstances accordingly.

Summary

As you would expect, this is not an exhaustive list of the changes in the new tax year. Because we are all different, any individual needs for saving (both for yourself and for children/grandchildren), retirement, investment or pension planning, as examples, will vary, dependent on your individual requirements. Therefore, this article should not be seen or used as individual advice.

This article contains links to websites of which the content has not been approved by Churchouse Financial Planning.

Seek Independent Financial Advice (IFA) for your circumstances.

Keith Churchouse, Chartered Financial Planner
Director of Churchouse Financial Planning Limited

ISO22222 Certified Financial Planner

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

CHURCHOUSE is a Trademark of Churchouse Financial Planning Limited

Proposed new Junior ISA account/ November 2011

2011-04-04T09:29:00.002+01:00

A consultation paper has now been issued to confirm the plans for the new tax efficient Junior ISA account, which is proposed to start from 01 November 2011 and will allow an overall annual contribution limit of £3,000 (proposed not for those without a Child Trust fund/CTF). Full draft regulations can be found at the HMRC website here: http://www.hmrc.gov.uk/budget-updates/march2011/junior-isa-regs.pdf

In part, the proposals for this style of new account is a replacement for the Child Trust Funds (CTFs) and their payments which were allowed for children born between 01 September 2002 and 02 January 2011. After that time, all government contributions to CTFs ceased. Also, any payments that would have been made to disabled and severely disabled children will be channelled to other kinds of support.

The value of the proposed new Junior ISA plan will be locked in for the beneficiary until they reach the age of 18 and then the account will become an adult ISA thereafter. It is anticipated that many of the current providers who offer adult ISA arrangements will expand their range to offer the new Junior ISA option. As with the current standard ISA regime, investment will be able to be made into a stocks and shares arrangement or into a cash /deposit type plan. It is planned that these new ISA limits will be confirmed once the consultation in May 2011 is complete.

Many parents and grandparents may find this of interest for future family savings. We are all different and the needs for saving (both for yourself and for children/grandchildren), retirement, investment or pension planning, as examples, will vary, dependent on your individual requirements. Therefore, this article should not be seen or used as individual advice.

This article contains links to websites of which the content has not been approved by Churchouse Financial Planning.

Seek Independent Financial Advice (IFA) for your circumstances.

Keith Churchouse, Chartered Financial Planner
Director of Churchouse Financial Planning Limited

ISO22222 Certified Financial Planner

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

CHURCHOUSE is a Trademark of Churchouse Financial Planning Limited.

It’s budget 2011 day (23 March 2011) and all things fiscal!

2011-03-23T08:49:00.002Z

It’s budget 2011 day (23 March 2011) and all things fiscal will be on the agenda for many of us today.

For most, whether they be business owners or individuals, smoker or drinker, driver, low earners or higher earners, today’s announcements are likely to catch up with us all in some format in the near future. There is always much speculation of what may be changed, put in place, deferred or reduced, and sometimes this speculation is correct, but often not. It has to be noted that some of this speculation is driven by those that may have a motive for the success of their campaign to stop or reduce a tax, as an example.

Some of the headline taxes that many will focus on today may be:

Personal Taxes

Income Tax

Capital Gains Tax (Currently £10,100 in 2010/2011)

Inheritance Tax (Current nil rate income tax band at £325,000/ £650,000 joint for married couples)

Business Taxes

Corporation Tax (Details of this and the new tax year can be found at the HMRC website here: http://www.hmrc.gov.uk/rates/corp.htm )

National Insurance Rates

Indirect Tax

Value Added Tax (VAT) currently 20% (current business threshold £70,000)

Fuel Tax

Tobacco & Alcohol tax

One other significant way that the pound in your pocket can be effected is with the allowances that are sometimes allowed before you pay tax, such as the personal allowance (currently £6,475 (Below age 65) 2010/2011) which we know is increasing in the new tax year (starting 06 April 2011) to £7,475 income in the year. This £7,475 threshold has a limit of £100,000 before it starts to reduce. More details on the Income Tax allowances for the new tax year 2011/2012 (in comparison to previous years) can be found at the HMRC website here: http://http://www.hmrc.gov.uk/rates/it.htm

Other tax efficient savings plans, such as ISA’s (current allowance 2010/2011 is £10,200, however this is increasing to £10,680 in 2011/2012) and pension contributions may also be affected, although much work has already been undertaken on the current pension regime in the new tax year, as already noted on these Churchouse Financial Planning web pages and also indicated on the HMRC website here: http://www.hmrc.gov.uk/rates/pensionsschemes.htm

Today will be an interesting day, with many speculating that it will be a pro business day, however, the UK purse does not have much to give away. These comments are made prior to the budget announcement and may be subject to change. We will plan to keep our website updated with any changes of significance over the coming months that may affect your financial planning.

There is usually a lot involved in any financial planning and we can go into detail with you when you enquire. We are all different and the needs for saving, retirement, investment or pension planning, as examples, will vary, dependent on your individual requirements. Therefore, this article should not be seen or used as individual advice.

This article contains links to websites of which the content has not been approved by Churchouse Financial Planning.

Seek Independent Financial Advice (IFA) for your circumstances.

Keith Churchouse, Chartered Financial Planner
Director of Churchouse Financial Planning Limited

ISO22222 Certified Financial Planner

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

Race to the end of the tax year 2010/2011

2011-03-11T16:52:00.001Z

The ‘starter’s gun’ seems to have been fired and the end of the tax year (05th April) dash seems to have started.

For most financial planners, this is the busiest time of the year with many clients and enquirers focussing on their allowances and effective ways of using them for the tax year 2010/2011 and thinking about the new (and in many cases changed) tax allowances in 2011/2012. 2011 is no different judging by the interest we are experiencing in all things financial planning.

In recent blogs I have covered many of the aspects of financial planning that our readers will want to consider at this time of year. However, as a reminder and ready-reckoner of some of the points that many are contacting us about at this time, you will find an example list below of the points being raised by many:

Individual Savings Accounts/ ISA’s:

As noted in my February blog, the ISA allowance for this tax year is £10,200 in total: This amount can be fully invested in equity type investments (such as stocks/OEICs/Unit Trusts), or, if you prefer, you can put up to £5,100 in deposit/ cash holdings, still leaving a balance of £5,100 available to go into investments. This is usually an annually renewable allowance and you can use your new ISA allowance each year with different providers if you prefer. (ISA rule restriction of one provider of each option per annum).

In the new tax year (2011/2012), the ISA allowance is being increased to £10,680 in total.

Pension Contributions:

Pensions are becoming an ever more topical subject at the moment. With Lord Hutton’s in-depth report yesterday on the ways forward for Public Sector pension schemes and ‘Unisex’ annuity rates being proposed by European Law from December 2012, the next few years are going to busy.

The regulation for ‘Anti-Forestalling’ limits (currently £20,000)will also end in this tax year, with a new ‘ceiling’ for pension contributions of £50,000 being introduced (along with a new additional ‘carry-back’ facility) and the need to purchase an annuity at any point in the future will also end in April 2011.

There are also significant changes proposed to the way that benefits could be made available under Income Drawdown type plans, as detailed in a previous 2011 blog. Pensions, in all their formats, are certainly a topic that I would recommend any investor or retiree/potential retiree takes individual advice on to ensure that they get the best from their financial planning decisions.

Capital Gains Tax/ CGT:

I always think this is a worthy allowance which is a missed opportunity for many. Each individual is allowed to make a gain of £10,100 tax free in this tax year from assets such as Stocks and Shares or Unit Trusts/ OEIC’s. If you have a gain within a portfolio that is worth taking, and you should seek advice on this point, then review your investment before the end of the tax year. If there is a significant gain, you could consider splitting the gain by selling part of an investment holding in this tax year and then using next year’s allowance early in the new tax year (in this example 2011/2012). The current flat rate charge for CGT is 18% and this rises to a flat rate of 28% for higher rate taxpayers.

Bed and ISA-ing:

In line with the use of your Capital Gain Tax allowance, it is possible to combine to allowances. In the example above, if you sell Stocks and Shares, you are not able to re-buy the same asset within 30 days without losing the tax benefit. However, if you sell Stocks and Shares or units in a portfolio and re-buy the same asset straight away under the shelter of an ISA (up to the maximum allowance of £10,200 in this tax year 2010/2011) this is allowed. For those who do not want to invest additional cash into an ISA, but do have a portfolio of assets, this may be an effective way of using up these valuable allowances.

Annual Gift Allowance:

It is possible for an individual to gift away £3,000 in a year and for this gift to fall outside their estate from the date of the gift. If they did not use last year’s allowance, they can go back one year and gift away a further £3,000, a total of £6,000.

Many parents and grandparents contemplate the benefit of this allowance each year. Some, with surplus income, also consider gifting further amounts away, although I would recommend that full professional advice is sought on this issue before proceeding.

Child Trust Funds/ CTFs:

The maximum contribution that can be added to these CTF plans by, as examples, parents and grandparents is £1,200 in total in the year. This may be worthwhile to build benefits for the child owner in the future.

Summary

This is not an exhaustive list, but gives a reasonable indication of what many will be considering as the race to the end of the tax year moves into top gear.

As I have noted in previous blogs, we are all different and your ongoing financial planning strategy will be individual to your needs, such as the use of annual tax allowances. Therefore, this article should not be seen or used as individual advice.

Seek Independent Financial Advice (IFA) for your circumstances. Churchouse Financial Planning Limited can be contacted in Guildford, Surrey on (01483) 578800.

Keith Churchouse

Director of Churchouse Financial Planning Limited, Guildford, Surrey.
ISO22222 Certified Financial Planner & Chartered Financial Planner

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

Churchouse is a Trademark of Churchouse Financial Planning Limited

Are ‘Unisex’ Annuity Rates on their way?

2011-02-21T14:15:00.001Z

The world of retirement planning seems to in a state of transition at the moment with the proposed changes of the coalition government to end the need to purchase an annuity, whilst also introducing an uplift in the death duty on vested pensions from the current level of 35% to an increased level of 55%, such as Income Drawdown plans. I have covered this in greater depth in a previous blog earlier in late January 2011 (called Income Drawdown Policy Review and Proposed Rule Changes on Annuitisation).

European law may now also have an effect of the income available from future retirement funds with the possible introduction of unisex annuity rates from early March 2011. Along with other gender based products based on the sex of the applicant, such as many insurance based products, a ruling from the European Court on 01 March 2011 may see the terms of future contracts change, with varying results dependent on whether you are male or female. My understanding is that their ruling will be based on the argument that the current gender based regime is discriminatory because there is overlap between men and women in the ages to which most people die. Obviously, there are opposing views to this argument and its subsequent studies and the European Court will rule accordingly on 01 March 2011.

This is a multi-billion pound market in the UK each year and many insurance companies and annuity providers are already gearing up for this potential change and the unisex annuity rates from many may change quickly, if not immediately, to meet the new requirements. This may well have an effect on your pension income planning if you are looking at drawing your benefits in 2011. Your Independent Financial Adviser (IFA) should be able to guide you with your individual planning.

As a general suggestion, if this legislation is approved, male annuity rates are likely to fall (some suggest up to 5%) and female annuity rates may rise by approximately 3%. Joint life annuity rates may see a fall of around 1%, as approximate examples, although we will wait to see how providers react. This may see the prevalence of more research by investors into the retirement options available for their pension benefits, such as the use of the Open Market Option (OMO). I have detailed retirement options further on our website here, Retirement Options.

Retirement planning is a complex subject and this article should not be treated as individual advice. Individual advice is only available based on your individual circumstances. Further information, advice and contact details are available at our websites, www.churchouse.com or www.planmypension.co.uk

Keith Churchouse

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. www.planmypension.co.uk is a trading name/style of Churchouse Financial Planning Limited.

The changing rules for ISAs in 2011

2011-02-10T14:56:00.000Z

There have been many changes to the ISA allowances in recent years.

No new changes have been proposed for this tax year. This allows a maximum contribution of £10,200 to be made (2010/2011). If you chose, you can split this contribution, with £5,100 being made into a Cash ISA and £5,100 going into an equity type ISA. You can use one provider for each in a year and can vary providers each year if you require. The terms Mini & Maxi ISA’s have now been abolished.

ISA contribution allowance increase 2011/2012

In the new tax year 2011/2012, the new ISA allowance is proposed to increase from the current level of £10,200 to a new level of £10,680 from April 2011. This is an increase in the allowance with RPI (the Retail Prices Index) and it is now proposed that this limit will increase each year

New Junior ISA, October 2011

For further information, a Junior ISA (for those up to the age of 18) will be available from October 2011. At the time of writing, the maximum contribution limit is yet to be decided. Many parents and grandparents may find this of interest for their family in the future.

Review

Through the changes that have occurred with ISA regulations in recent years, it is always worthwhile reviewing your existing investment strategy (including ISA’s) , your asset allocation and your need for income, capital growth or both. This will usually be based on your circumstances and your attitude to investment risk. A guide to investment risk can be found here: http://www.churchouse.com/risk.php. ISA investment may not be suitable for everyone.

As I hope you can see from the above, there is a lot to consider both in the months of February and March 2011 and the forthcoming tax year (2011/2012). With this in mind, it should be noted that we are all different and your ongoing financial planning strategy will be individual to your needs, such as the use of annual tax allowances. Therefore, this article should not be seen or used as individual advice.

Seek Independent Financial Advice (IFA) for your circumstances. Churchouse Financial Planning Limited can be contacted in Guildford, Surrey on (01483) 578800.

Keith Churchouse
Chartered Financial Planner & ISO22222 Certified Financial Planner

Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

February 2011….a month for financial planning?

2011-02-07T10:12:00.000Z

February is usually a month for both snow and end of year tax planning. Hopefully we will avoid the former of these two this year, especially after the deluges in December, which may leave more time for the latter, i.e. effective financial planning.

Many of you will be aware of the usual and more obvious end of year allowances which, if not used, will be lost, with new allowances made available in the tax year 2011/2012, starting on 06^th April 2011. I have listed some of these below:

ISA allowance, £10,200 in total: This amount can be fully invested in equity type investments (such as stocks/OEICs/Unit Trusts), or, if you prefer, you can put up to £5,100 in deposit/ cash holdings, still leaving a balance of £5,100 available to go into investments. This is usually an annually renewable allowance and you can use your new ISA allowance each year with different providers if you prefer. (ISA rule restriction of one provider of each option per annum).
Capital gains tax allowance (CGT): This again is an annually renewable allowance and currently stands at £10,100 in this tax year. This can be a highly efficient tax allowance for those able to use it, especially if you are a higher rate tax payer. The current flat rate charge for CGT is 18% and this rises to a flat rate of 28% for higher rate taxpayers.
Personal income tax allowance: Currently up to £6,475 can be earned in this tax year without paying income tax in most circumstances. In the new tax year (2011/2012) the nil rate income tax band is increasing to £7,475 for the year, which may be advantageous for those on lower incomes.

This is not an exhaustive list and you should seek independent advice (IFA) about your own circumstances.

The new tax year (2011/2012) is likely to see changes that may well affect your financial planning going forward and I have listed some of the less obvious points as they stand at this time below.

Higher rate income tax threshold: As noted above, the nil rate income tax band is increasing by £1,000 in the new tax year to £7,475. However, the level of income that can be earned before paying higher rate income tax is falling by a slightly higher amount, to a new level of £42,475 (20% tax band will fall from £37,400 to £35,001 / High rate income tax charge rate applied previously at £43,845 in 2010/2011). There has been much press comment noting that this may affect around 750,000 people. An example is here: http://www.ifs.org.uk/publications/5452
The effects of higher rate income tax can be offset by pension contributions, however, in the new tax year 2011/2012), there are many changes expected for pension legislation. One example is the change in the level of pension contribution that can be made to a new level of £50,000 in the year. There is also a new three year carry forward facility being introduced and this is detailed on the HMRC website here: http://www.hmrc.gov.uk/pensionschemes/annual-allowance/changes.htm#5
Other examples of proposed pension changes can be seen in my previous blog (Income Drawdown Policy Review and Proposed Rule Changes on Annuitisation) here: http://www.churchouse.com/blog.php

Seek Independent Financial Advice (IFA) for your circumstances. Churchouse Financial Planning Limited can be contacted in Guildford, Surrey on (01483) 578800.

Keith Churchouse
Chartered Financial Planner & ISO22222 Certified Financial Planner

Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

Income Drawdown Policy Review and Proposed Rule Changes on Annuitisation

2011-01-31T12:52:00.000Z

With most New Years, we find that proposed and draft legislation swings into action in the lead up to the end of the fiscal year, 05th April. Rule changes and tax rates need to be published and in place for the start of the new tax year, 06th April 2011. 2011 is no different and HM Treasury are now keen to give all parties three months notice of their intentions to allow some planning to affected, if needed.

One good example of this is the proposed change to the start of the higher rate tax threshold to £35,001, down from £37,400 this financial year (2010/2011). You will have to add to this the new nil rate income tax band, which is proposed to increase from £6,475 pa (2010/2011) to £7,475 pa (2011/2012) under age 65. This has been widely publicised in the media. I have attached a link here for further information: http://www.bbc.co.uk/news/business-12321524

The purpose of this blog is to look at some proposed changes to the overall pensions legislation of the UK. These included the ending of the need to purchase an annuity at age 77 (originally 75). This change along with others is due to happen in the new tax year 2011/2012, starting on 06th April, although it should be noted that the detail here is still draft legislation and may be subject to change. Full details of all of the draft changes and consultation in the Finance Bill 2011 can be found at the HM Treasury website here: http://www.hm-treasury.gov.uk/finance_bill_2011.htm

Income drawdown plans have also received some attention with regards to rule changes and I am now writing with regards to your plan both to update you on its value, as I did in the spring of last year, but also to identify the proposed changes as we know them. Some of this legislation is yet to be finalised and may be subject to change.

In no specific order, the proposed changes are as follows:

1. The maximum age to which annuity benefits had to be purchased increased from age 75 to age 77 this tax year. From April 2011, annuity will not have to be purchased at any age. There is also an increase in income flexibility (subject to an annual allowance charge if used) for those with a lifetime pension income of at least £20,000 per annum.

2. Currently, on death before age 77, fund benefits are available to your beneficiaries as a cash payment, subject to a tax charge of 35%. From April 2011, this death charge after this date will be 55%.

3. Currently, the maximum income available under an income drawdown is 120% of the annuity income that could be purchased under the plan on a single life basis. From April 2011, this is being reduced to 100% at your next 5 year review date. Thereafter, it will be reviewed every 3 years until age 75, whereby this changes to an annual review.

These are draft changes and propsals and may affect you planning. If you would like to review your plan or your future planning then please contact our office accordingly.

As always, it should be noted that we are all different and this information should not be used or relied on as individual financial advice. Please note that the website links above are to websites for which Churchouse Financial Planning has not approved the content.

Keith Churchouse
Chartered Financial Planner & ISO22222 Certified Financial Planner

Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

New Year’s Resolutions 2011, Some Financial Planning ideas

2010-12-29T10:16:00.003Z

With the memory of Christmas still fresh in our minds, the New Year is nearly upon us and many of us are making plans as to what new challenges we would like to achieve in 2011. From a financial perspective, 2010 was a tricky year for many businesses and individuals and there are likely to be a few more challenges in 2011 as the year unfolds.

I have penned a few notes in this blog to allow you to consider some of financial issues you may want to consider when looking at your financial planning over the next 12 months. This is not an exhaustive list because each of us will have different circumstances. You will already know that VAT is going to rise from 17.5% to 20.0% from the 04^th January and this seems certain, bar any last minute change in Government policy. What is not certain is what will happen to Bank of England base rates over the coming period. With the base rate having reached a historic low of 0.5% some 21 months ago (March 2009) many are predicting that this will rise in the spring of 2011 and this may have an affect on savers and those with mortgages, loans and credit card debts.

Some financial planning ideas for your 2011 Resolutions:

1. VAT increase: If you are planning a purchase of a large capital item, such as a car or caravan and are ready to buy, you might want to try and beat the VAT increase of 2.5% from 04^th January. This is not a large increase, but on larger sums, it may make a significant difference.

2. Review your borrowing costs and conditions: With the possibility of borrowing costs increasing in 2011, check you borrowing costs and charges to see if they offer value and if they need to be changed. Look out for redemption charges and set up fees if you are thinking of switching providers.

If you are in a position to pay down debt, then have a look at this to keep your costs down.

3. Check your deposit savings rates: Some reasonable savings rates are still available from many institutions, although you do have to hunt around. With the deposit protection/compensation limit increasing to £85,000 from £50,000 from 31/12/2010 (announced by the FSA in December 2010) those with larger savings amounts should find it easier to protect their savings. One of the most impartial comparison sites is from the FSA at www.fsa.gov.uk/tables.

It is still prudent for individuals to hold 3-6 months income in readily accessible savings to protect against unforeseen events as an emergency deposit fund.

4. Make a Will: Always has to be on this list, however, make a Will if you have not already done so. You may not think that you have much to leave, but making it easy for your loved ones with a simple Will is always worthwhile. I would recommend that you use a professional solicitor to achieve this. If your budget does not allow this, then think about a Will Kit from any good stationers, cost about £15-£20.00.

5. Pension changes: Every year we talk about this year’s proposed changes to the way you can save for your retirement, and this year is no different. The amount you can save into a pension is changing in the next tax year to try and simplify the rules for many investors. This may mean that for some who prefer to save a lot into their pensions, they will be restricted to £50,000 in the tax year. Also, the age to which you have to buy an annuity has already increased to 77 from 75 and for those with pension incomes above £20,000 per annum, you may not have to buy an annuity at all. With these and other changes in mind, review your retirement savings strategy both now and regularly in the future.

6. Use your tax allowances: You have tax allowances available each tax year that are lost if not used within 06 April-05^th April (The tax year). A simplified example list is noted below.

ISA (Individual Savings Account):

Cash ISA maximum £5,100
Stocks and Shares ISA £10,200

Capital Gains Tax(CGT)

£10,100 tax free gain allowed in this tax year

Annual Gift Allowance

£3,000 can be gifted away by an individual in a tax year and the gift falls outside their estate for inheritance tax (IHT) purposes.
If they did not use last year’s allowance of £3,000, they can go back 1 year, making a total possible gift of £6,000 for both years.

7. Protecting the family: When is the last time you checked your life assurance protection and your protection in the event of ill health and inability to work because of this? For many, these subjects may come low on the priority list, but they can be vital in protecting the wellbeing of the family if something goes seriously wrong.

8. Monthly budgeting: Many of us budget every month to ensure that our income covers the costs of our outgoings, hopefully with some left over to enjoy. If you have not looked at this recently, then now is a good time to look at your bank statements and payslips to make sure that everything is in order and is balancing. If not, make sure that you make changes to balance the books.

As noted before, this is not an exhaustive list because we are all different and therefore, this article should not be seen or used as individual advice. Seek Independent Financial Advice (IFA) for your circumstances.

Churchouse Financial Planning Limited wishes you a happy and prosperous New Year!

Further details of our service are available at our website, www.churchouse.com

Keith Churchouse, Chartered Financial Planner

ISO22222 Certified Financial Planner

Director of Churchouse Financial Planning Limited, Guildford, Surrey. 01483 578800

Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority

Some good news for savers at the end of 2010? Well, possibly!

2010-12-21T09:19:00.000Z

2010 and the end of 2009 has not been a vintage season for savers with the Bank of England’s base rate remaining at 0.5% for all this year and part of last year. An unprecedented period of around 20 months (05 March 2009 to 0.5%) has elapsed since the based rate sank to this low level. With inflation on the rise (the Consumer Prices Index (CPI) rose to 3.30% in November 2010 from 3.20% in October 2010) the real capital value of savers deposits in most cases is falling in real purchasing value.

For those with higher levels of deposit, there is also the problem of maintaining levels of deposit that enjoy the current deposit compensation/protection limit of holdings below £50,000 in the UK. Those deposit taking institutions that use the European protection system see those limits increase to €100,000, which is about £70,000 in sterling, although this fluctuates all the time with currency movements.

From 31 December 2010, The Financial Services Authority (FSA) has announced this month (December 2010) that the current UK deposit guarantee/compensation limit is to increased to £85,000, from £50,000. This will at least have the beneficial effect of reducing the need to open various accounts and spread deposit funds around for those investors with significant funds to invest wishing to stay below this limit.

Further details of this announcement can be found at the Financial Services Authority website here: http://www.fsa.gov.uk/pages/Library/Communication/PR/2010/181.shtml

The way you deal with your deposit funds is a key point to financial planning and this planning needs to be considered carefully, especially with this new deposit protection limit change in mind. A regular review of savings strategy is always worthwhile to ensure that the best is being made of your capital with historically low bank base rates and rising inflation. The beginning of a New Year might be a good opportunity based on your circumstances and needs?

At the same time, you may wish to check your position with regards to the use of this year’s Cash ISA allowance of £5,100, if you have not used this in full.

With this in mind, it should be noted that we are all different and your savings strategy will be individual to your needs, such as access and your overall tax position. Therefore, this article should not be seen or used as individual advice.

Seek Independent Financial Advice (IFA) for your circumstances. Have a great New Year.

Churchouse Financial Planning Limited can be contacted in Guildford, Surrey on (01483) 578800.

Keith Churchouse

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

All I want for Christmas is…….?/2010

2010-12-17T13:26:00.000Z

All I want for Christmas is…….?/2010

First of all, I would like to thank our clients and enquiries for their business over the course of 2010 and the team at Churchouse Financial Planning Limited look forward to serving you further in 2011 and beyond.

The year of 2010 and beyond…

In reflecting on the year, it seems a long time ago since a night’s sleep was lost for the General Election and the hazy summer days of the World Cup. Snow seems to be a rather too regular feature of the year at both ends and of course, ‘Austerity’ was another buzz word that we have all endured and are likely to endure for some months to come. With the VAT rise from 17.5% to 20.0% due to appear on the 04^th January and Bank of England base rates seemingly frozen (excuse the topical pun) at 0.5% savers and borrowers will feel the effects of these issues in 2011.

Inflation has also to figure in these thoughts and the Consumer Proces Index (CPI) rose to 3.3% in November 2010 (from 3.2% in October), with a continued target of 2.0%.

Christmas spending and debt

Before we get to the New Year, Christmas is nearly upon us and many will feel the financial stress of funding what can be an expensive period. Clearly, this year will see the availability of credit potentially reduced and this may well be a good thing in keeping debts under control. As most are aware, the bills for credit cards usually arrive around the 20^th January in the following year and this needs to be borne in mind when you are queuing at the till this month. Remember, many employers pay staff early in December to meet the demands of the extra Christmas costs, which means that you then have around 6 weeks before you are paid again.

Protecting the family

This leads me to think further about other issues for financial planning. I am not referring to buying a pension policy for your spouse for Christmas , as noted in my book, Sign Here, Here and Here!…Journey of a Financial Adviser. I am referring to other issues to protect your family, such as making sure your life assurance planning covers your liabilities, such as mortgage and loans, leaving some excess to ensure that your family has some cash in the event of your death. If your employment offers benefits, such as death in service cover, then make sure that your nomination in the event of your death is correct and documented accordingly.

Protecting income and capital

Also, you should think about protection of your income in the event of a critical illness or inability to work due to ill health. This can be covered by plans such as Income Protection plans (sometimes known as PHI cover) or, as a compliment to this type of cover, a Critical Illness type cover. Again, you employer may protect your income if you are unable to work, but you should check this with your HR department. You don’t want to find out too late that you are not covered. The premiums for both types of plan vary and will be affected by your medical circumstances, age, sex and other things, such as smoker status or occupation. These types of cover are subject to medical underwriting and this can take a little while to arrange. If you are planning to start cover in the New Year, you might want to start the application process early to make sure you have time to ensure cover is ready for you.

Take advice

Talk to an Independent Financial Adviser (IFA) to help you understand your existing cover and, as the title of this blog suggest, what you want (maybe not just for Christmas!)

We are all different and therefore, this article should not be seen or used as individual advice. Seek Independent Financial Advice for your circumstances.

Further details of the book and our service are available at our websites, www.signherehereandhere.co.uk or www.churchouse.com

Keith Churchouse, Chartered Financial Planner

ISO22222 Certified Financial Planner

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

University Education and School Fees…..Only for those who planned financially?

2010-12-06T09:08:00.000Z

This week’s vote in the House of Commons on the issue of further tertiary education costs will be critical to the future of many of our young people and their ability to attend university in the future. The cost of tuition has always been controversial and the proposals to increase student fees from around £3,000 per annum to £6,000 and even £9,000 per annum at some top education institutions.

At Churchouse Financial Planning Limited, we receive many enquiries each year from Clients, usually parents and grandparents, about the issues of planning both for school education costs and then for university costs thereafter for children and grandchildren. I am sure the number of these enquiries will increase, possibly based on the vote on Thursday, 09^th December 2010. Whichever way the result goes, I am sure that the issue will increase fears that education will rise in the future. Sadly, I believe that this is an issue in England that it not going to go away.

In addition to this potential rise, there is also the concern that the rate of inflation in School/education fees may be higher than the standard rate applied in the Consumer Price Index (CPI).

This raises the question about what can be done to ease this situation if you are thinking about helping your children or grandchildren. Clearly, some good financial planning may well go a long way to help the future of your loved ones education.

In financial planning, there are many ways that an investor can approach this topic and, as ever, early planning is part of the key in building sufficient funds to meet the future liability. There are a few steps to this process, and these are detailed below:

First of all, we maintain an education cost modeller to predict the total liability into the future, applying an assumed inflation rate into the future to predict the real cost, based on the anticipated education path in the future.
With this knowledge, it is then possible to project the anticipated capital to meet these fees and then roll these back to your current financial planning to look at the amounts that need to be invested to meet these education costs into the future.
This then leads to the way that these funds are invested, using any available tax wrappers where available, such as the ISA allowances of parents and grandparents. It should also be noted that the young people involved also have their own tax allowances, such as nil rate income tax allowance (currently £6,475 pa, tax year 2010/2011) and their own Capital Gains Tax (CGT) allowance (currently £10,100 in this tax year 2010/2011). Based on your needs and the circumstances, investments can be made in their name, whilst keeping control of the funds for their purpose. Clearly important!
Finally, some Clients like to insurance their liability to future education fees with Life Insurance to make sure that no education opportunities are lost, even in the event of death. Some chose to write this type of cover in Trust to place the proceeds outside their estate for inheritance tax.

There is a lot involved in this planning and we can go into detail with you when you enquire. We are all different and the needs of education costs will vary, dependent on where the student wants to go and when in the future. Therefore, this article should not be seen or used as individual advice.

Seek Independent Financial Advice (IFA) for your circumstances.

Churchouse Financial Planning Limited can be contacted in Guildford, Surrey on (01483) 578800.

Keith Churchouse, Chartered Financial Planner

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

December 2010, a time for giving….and snowing!

2010-12-01T08:59:00.000Z

Finally December 2010 has arrived. The shops have been anticipating Christmas for some weeks now, but few expected the snow falls that most have seen at the end of November and the very early days of December.

November is a busy month for the team at Churchouse Financial Planning and 2010 has been no exception. With many seeing December as a deadline, they have focussed on finalising many aspects of their financial planning, from pension contributions, ISA investments, Capital Gains Tax, IHT (Inheritance tax planning) and, in line with this, the use of their annual allowances in time for Christmas.

It is this last point that I wanted to focus on in this blog. For many, the next month will be a time for family and for giving. Some like to sprinkle in some tax efficiency into this mix by gifting away their annual gift allowance of £3,000 in the tax year. This limit is per donor and if you did not use last year’s allowance, you can go back on year and gift this away at the same time, making your total gift £6,000 (for that first gifting year). If you are married/in a partnership, and in a position to gift away significant fund, both spouses/partners can undertake this process and gift away a total of £12,000 between the two of them (providing it was not used last year). Some find that the end of December is a focal point for them achieving this planning. This places the gifted proceeds outside your estate for inheritance tax purposes from the date the gift is made. You should check this with your independent financial adviser or accountant before proceeding.

I would normally recommend that if you were to consider this type of gifting, you might want to ensure the recipient has some documentation to confirm why this gift is being made and we can help you with this.

Taking this a stage further, after making these gifts, some still have surplus to gift away and another allowance that can be employed is the use of the ‘Surplus Income’ allowance. This is a more complicated process than the normal gift allowance and may need a regular gifting pattern to make it viable. You should take advice from an independent financial adviser (IFA) on this issue to see if this is achievable, if you want it to be.

As the snow thaws over the coming few days, you may want to have look at these allowances to see if they could be useful to you and your family in the coming weeks.

We hope that you have a great festive season and look forward to helping you with your financial planning in 2011.

This article should not be treated as individual advice. Individual advice is only available based on your individual circumstances. Further information, advice and contact details are available at our websites, www.churchouse.com or www.planmypension.co.uk

Keith Churchouse, Director of Churchouse Financial Planning Limited, Chartered Financial Planner.

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.

www.planmypension.co.uk is a trading name/style of Churchouse Financial Planning Limited. CHURCHOUSE is a trademark of Churchouse Financial Planning Limited.

The end of the Euro, but not Europe?

2010-11-24T12:02:00.001Z

As we draw towards the end of 2010 many are turning to the prospect of all manner of festive things and as I write this, the prospect and forecast of snow is on the horizon. Sadly, for those in the Emerald Isle of Ireland, the realisation of an economy in significant trouble is at the forefront of many minds.

Amongst other economic measures, a Bi-Lateral loan of around £7.0-£8.0 Billion has been offered by the UK to Ireland to help with its problems and with the International Monetary Fund (IMF) busy in its halls of power, the political power of the existing administration looks weaker by the day, with the election polls beckoning in January. Their austerity plan due to be released in Dublin later today will make interesting reading.

Ireland is far from being alone in this situation, and many other nations such as Greece and Portugal have suffered similar fiscal situations and other nations, such as Spain, are not looking as healthy as many would want. Other nations in the Euro-Zone, such as Germany, are not seeing the same economic problems and, in a contrary fashion, are seeing sustainable growth going forward, although time will tell if this remains constant. As with all of these things, past performance is not a guarantee of future performance. This imbalance is creating some economic friction. With some nations fiscally falling behind others, the pockets of the wealthier countries that have been dipped into to help out are, as the saying goes, beginning to get deeper with shorter arms, causing concern that this may undermine their own economies. Remember, this has been a painful time for all countries financially and attitudes are changing to the protection of their own countries rather than that of the Euro-Zone.

This has led to some speculation on the future of the Euro as a currency for the Euro-Zone. Some now suggest that the Euro in its present format will not survive. That some of the northern countries will form their own Euro currency, introducing a two tier Euro-Zone or simply revert back to their old currency from whence they came. However, there seems little speculation on the Euro-Zone as a whole, just the currency it uses.

Where does this trouble, concern, comment and speculation leave us as investors?

In my opinion, the answer lies in one word, which is ‘diversification’. The future for Europe as an investment area remains reasonable, although it is likely to go through some change going forward. By diversifying your investments (Pensions, ISA’s, OEICs, Portfolios) to ensure that you are not overly exposed to one investment area and taking regular advice from your Independent Financial Adviser (IFA) you should maintain the potential of reducing exposure to investment risk.

When looking at an individual investment area, you should also do this in conjunction with your overall attitude to investment risk. This should provide a more encompassing approach and Churchouse Financial Planning Limited has prepared an Investment Risk Scale to help with your considerations and this can be found here.

Past performance is not a guarantee of future performance. Values can fall as well as rise and are not guaranteed.

Keith Churchouse

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. www.planmypension.co.uk is a trading name/style of Churchouse Financial Planning Limited.

CHURCHOUSE is a trademark of Churchouse Financial Planning Limited.

National Employers Savings Trust (NEST)

2010-11-15T13:47:00.002Z

The last administration proposed a wide-ranging review of pension saving in the UK and introduced the concept of the National Employers Savings Trust or NEST for short. Much work was done on this subject prior to the election in May 2010 and some felt that NEST would not survive the new Coalition Government. After some consideration NEST seems now to be proceeding at pace with a trial pilot (through Volunteer employers) starting next year (2011) and full implementation with the full scheme being launched in 2012 and most employers being tied into the arrangement in 2014.

It is clear that the public in the UK is not saving enough for its retirement income because many individuals will fall short of their target income at retirement. With the pressures on the State Pension increasing, many people will know of the proposed levelling off of State Pension benefits for all at a level of £140.00 per week from 2015. We are also aware that the State Pension age is increasing from 65 to higher ages, such as 66 for both men and women from 2020 with further changes to follow.

To help with this situation, NEST is being introduced. It is proposed from the start date the contribution level to the scheme of a minimum of 2.0% pa, with 1.0% pa being paid by employers and 1.0% pa by employees (0.8% pa net contribution and tax relief of 0.2% ).

I have listed a link below for the phased start dates based on the number of staff that you have within your organisation.

http://www.thepensionsregulator.gov.uk/pensions-reform/duty-dates-timeline.aspx

There will then be a phasing of increased contributions with a minimum total level of 5.0% pa being introduced between October 2016 and October 2017 and then from 2017 a contribution level of 8.0% pa, with 3.0% pa coming from the employer, 4.0% pa coming from the employee and the balance as tax relief (subject to any changes). It should be noted that the percentage is of all income including basic salary, commission, bonus and overtime. Therefore if an employer is looking at the cost to their company of NEST then it should be looking at the total salary cost including all of these items rather than base salary.

Employee Opting in and out

All employers will be required to automatically enrol (on their Automatic Enrolment Date/ AED) their eligible workers into a qualifying pension scheme and to make the relevant contributions to the qualifying scheme selected. NEST is one option available to all employers. Employees will have the facility to opt-out of their employer's qualifying scheme after being automatically enrolled within a prescribed time period if they do not want to join in. They have one month from the date that they have been given prescribed information to opt out and they may do this by contacting the scheme. They will then be put back in the position they would have been in if they had not joined the scheme. This may involve a refund of any contributions taken following automatic enrolment into the scheme. They can opt out after the a enrolment period, but this may mean they are given a preserved pension. Some trust based schemes may provide a refund less tax under short service refund rules applicable to some occupational pension schemes within two years of joining. If an employee opts out the employer will not have to make their required contribution but the employer cannot induce the employee into doing so.

They can opt back in later at the employer/qualifying scheme’s discretion and will be automatically re-enrolled every three years. The employer will then have to contribute again in accordance with the phasing above.

Administration & Existing Schemes

An employer can decide to run a scheme within its own arrangements or use the NEST arrangements put in place by the Government to collect contributions and to administer them accordingly. Some employers already have pensions schemes in place and an employer will need to designate these schemes with The Pension Regulator to join them into the NEST programme. If an employer wants to do this they will need to look at the cost to them and the scheme in doing this.

Dates and Contribution Phasing

The employer will be notified by The Pensions Regulator 12 months prior to the date they have to implement their phase of the NEST funding. The contribution level will be phased from the outset with larger employers starting in October 2012. The initial contributions will be as follows (Contributions to be made on a band of earnings between £5,715 pa and £33,540 pa (the lower limit to be linked to the National Insurance LEL and the higher limit in 06/07 terms and up-rated in line with National Average Earnings)

Employer: 1.0% pa of earnings
Employee: 0.8% pa of earnings
Tax relief: 0.2% pa of earnings

Second Phase - October 2016 to October 2017
From October 2016 the second phase starts and will see an increase in funding/contributions to 5% of earnings (salary/bonus/overtime, etc within band earnings) divided as follows:

Employer: 2.0% pa of earnings
Employee; 2.4% pa of earnings
Tax relief: 0.6% pa of earnings

Third Phase -October 2017 onwards
From October 2016 the second phase starts and will see an increase in funding/contributions to 8% of earnings (salary/bonus/overtime, etc within band earnings) divided as follows:

Employer: 3.0% pa of earnings
Employee: 4.0% pa of earnings
Tax relief: 1.0% pa of earnings

You can see that there are some significant consequences to this legislation and therefore many employers need to start planning now to ensure that they are ready for the changes in their cost projections, and also the requirement to ensure that they are ready to meet their responsibilities.

It should be noted that the level of tax relief, the way contributions are calculated based on income levels or ‘Band Earnings’ and some other issues may vary and are open to consolation at this time.

Churchouse Financial Planning Limited is well placed to help employers with this and we would be pleased to speak with directors of your company to ensure that you meet the requirements needed. This should not be seen or used as individual advice and you should seek independent financial advice for your own circumstances.

Contact Keith Churchouse on 01483 578800 or via churchouse.com

Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority.

2010 and The FTSE 100 Index

2010-11-10T12:23:00.000Z

2010 has proved to be a very different year for many of us. With snow disruption causing havoc in January, a late Spring election, Quantative Easing, the football World Cup and finally and more recently, the Comprehensive Spending Review which has bought into sharp focus the economic position of the UK and the cuts required to achieve balance going forward. We have not seen the true effects of these cuts yet, although we now understand how tricky they may be. We are all different and each change may vary the outcome for each of us.

With all of these issues occurring, I thought it might be worth noting what has happened to the FTSE 100 index (the UKs top 100 shares) over the same time. Opening at the start of January (open 04/01), the index stood at 5412.9 points. By 01 June, we had fallen to 5188.4 points this year and at the time of writing this blog on the morning of November 10th 2010, (opening), the index stood at 5875.1 points. Past performance is not a guarantee of future performance, however, is interesting to see what has happened to an index that affects many clients’ investments.

If you would like an independent (IFA) review your pension, retirement planning or investments in light of these changes then please let us know.

As noted in this text, we are all different and this information should not be used or relied on as individual financial advice. The Financial Services Authority does not regulate Taxation advice.

Further details of this are available at our website, www.churchouse.com

Keith Churchouse

Chartered Financial Planner & ISO22222 Certified Financial Planner

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

November Notions…..Your financial planning month?

2010-11-08T08:49:00.000Z

With the sky alight at the weekend with the beautiful colours of fireworks and the air thick with the smells of bonfire, I know that it is going to by a busy month in financial planning. For those of you who know that I complete 25 years in the profession in 2010, I would note that this experience has always taught me that November is a key (if not the key) business month in the annual calendar to seal off the years production. Can I add that this is not me suggesting this, but our clients usually requiring it.

I don’t know if this is because it is the last month on normality in the year before all things Christmas descend upon us, with the corresponding time and monetary commitments, or whether the first month of truly dark nights, providing more time to focus on financial planning, independent advice (IFA) and getting all things money in order. Whatever the reason, we always ensure that we are ready to help.

Like all financial planning, each client’s requirements, needs and aspirations are different and this variety is inspirational in making our work so enjoyable. I have given some examples below.

Pension Planning:

With many changes in the way the limits on pension tax relief have been applied or restricted and more changes proposed for lifetime allowances (LTA) , this is an area that is regularly changing and many find needs regular attention for contributions to Personal pensions (PPPs), Stakeholder Pensions and Executive / Employer schemes.

For employers, the effects of NEST (the National Employers Savings Trust) on the immediate horizon, this is taking up significant thinking time on the approach to the overall outcome of these plans.

Retirement Planning

I always recommend that a client starts to plan their retirement income planning around 6-12 months out from the date they plan to retire. This is because many want to know what they are likely to get in terms of tax free cash and the final income they can draw, either via an annuity purchase (Open Market Option/ OMO/ Impaired Life Annuity) or, for those prepared to take some additional risk, an income drawdown plan. As with most pension issues, the rules applicable are regularly changing and the increase in the age to which annuities have to be bought from 75 to age 77 is a good example. More changes are proposed for the future.

Early advice and guidance will provide retirees time to think about how the retirement options available and what will suit their needs both at retirement and into the future. Time is a key point here because there is usually a lot of information to take on and digest.

To help with this, we do offer a simple Retirement Options guide free of charge and this can be found here.

Investment Planning:

As we pass the half way stage in the fiscal year (April-April) many chose to invest in ISA’s rather than wait for the deadline of April 05^th. This seems to be another popular deadline that clients focus on. With the full ISA allowance at £10,200 each (2010/2011), this is a valuable tax efficient allowance that many use each year to shelter their investments. In addition, most have a full capital gains tax allowance (CGT) of £10,100 in a tax year (2010/2011) and again many find this of significant advantage in their overall planning. With the highest tax charge above this allowance at 28% as a flat tax rate, this can work well for high rate taxpayers.

Many also start to plan to use their gift allowances in the next month or so, such as the annual gift allowance of £3,000 each or gifts from surplus income.

Summary

You can see that there is usually a lot to think about in financial planning for many around this time of year, whether that be one individual topic or a combination of these, along with other areas of planning, such as inheritance tax.

As an amusing aside, I was horrified when I found out that ‘Santa Claus’ was following me on Twitter the other day (follow me as ‘Onlinefinancial’). At least he had waited until November to start. Either I have been a very good boy in the year or it is just a marketing gimmick. Sadly, I fear it is the later and not because I have not been good.

As we lead up to the festive season, please remember that it is not too late to get your finances in order and ready to face Christmas, 2011 and beyond.

As noted in this text, we are all different and this information should not be used or relied on as individual financial advice. The Financial Services Authority does not regulate Taxation advice.

Further details of this are available at our website, www.churchouse.com

Keith Churchouse

Chartered Financial Planner & ISO22222 Certified Financial Planner

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

Anniversary/ 25 years or a quarter of a century in Financial Services?

2010-10-25T11:34:00.000+01:00

It all comes to pass in December 2010

It is hard to believe that in the winter of 1985, a spotty teenager (namely me!) joined a bank in a small branch in Surrey and began his career in Financial Services. As we draw towards the winter of 2010, I can look back over a quarter of a century of unbroken service in UK retail financial services.

25 years later, the world has changed since that cold December morning when I rolled up for my first day, having experienced my first dose of redundancy the week before. We have moved from the Margaret Thatcher era with the promotion of financial services, Big Bang and Black Monday, through the Blair/Brown ‘New Labour’ years of ‘no more boom and bust’ to what appears to be a time of austerity under the Coalition Government of Messer’s Cameron and Clegg.

In financial services, we have seen everything from the PIA to the FSA to MIRAS to LAPR and QE to the banking crisis, recession and now, as already noted, austerity. We seem to love our acronyms, don’t we! I have gone into more detail about my personal journey through these changes in my first book, Sign Here, Here and Here!…Journey of a financial adviser (Available from Waterstones/Amazon)

It has been a pleasure to serve the public in such a diverse and dynamic role and I am looking forward to the next 25 years. I will be aged 68 by the end of this time and based on the way the minimum State Pension age is increasing, I should be just in time to sign off after 50 years and collect my State Pension at that stage, if it still exists. With careful planning, most should be able to enjoy a comfortable retirement.

The best part of the journey for me has been the customers and clients that I have looked after in that time. They make the whole profession worthwhile and I thank them for the trust that they have placed in me and my company, Churchouse Financial Planning Limited, over the 6 years that we have been offering our financial solutions. A big thank you to you all, both past, present and future and I look forward to the next few decades and the challenges that these will bring.

We are all different and therefore, this article should not be seen or used as individual advice. Seek Independent Financial Advice (IFA) for your circumstances.

Further details of the book and our service are available at our websites, www.signherehereandhere.co.uk or www.churchouse.com

Keith Churchouse, Chartered Financial Planner

ISO22222 Certified Financial Planner

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

Don’t forget your State Pension Benefits when getting divorced

2010-10-21T12:16:00.000+01:00

When you are going through a divorce and considering your financial settlement then you should not forget the benefits available under the State pension scheme.

This might seem to be the least of your worries, but with a current value of £97.65 per week (2010/2011) without any additions (that’s just over £5,000 per annum gross to you and me!), it could have high value in your dotage.

Considering that most of us will make to around our mid eighties, this means that we could get this benefit for around twenty years. We also have to take into account the news from the Comprehensive Spending Review that all State Pension benefits from 2020 will only be available from age 66, rather than 65.

This is the same if you have not been working during the course of the marriage, as you will see.

Let’s look at the issues.

1. Basic State Pension…..and possible additions?

You may not know that there are usually two types of state pension that may be accrued, namely the Basic State Pension and the State Earnings Related Pension) (SERPS) or Second State Pension) (S2P) as it is now called.

This may be particularly relevant if the divorce happens close to the end of a working life, as many over 50’s are finding.

Most people are entitled to some form of state pension at any age from 60 for women and from 65 for men. This age is rising to age 66 from 2016 for men. The minimum age for the state pension is equalising for all to age 65, and then this is likely to increase further to 67 or 68 in future years.

Have you ever found out what your benefit is worth? The benefits available can be checked by completing a BR19 State Pension Forecast form, which will tell you what you are entitled to, both now and in the future.

Your spouse should also be entitled to individual pension benefits.

On divorce, there is the potential to transfer some of the State Pension Benefits to your ex-spouse dependent on your circumstances and this may be required as part of a divorce settlement.

To find out the transfer value of any benefit you can request this information from The Pension Service in Newcastle using an original BR20 form, one for each party. They don’t like photocopies and the valuation is valid for twelve months.

2. Forms and independent advice

Both are easy to check and the BR19 Pension Forecast Form and the BR20 Form are available on The Pension Service website, www.thepensionservice.gov.uk.

Whether or not you are divorcing, it’s always worth checking your State Pension to make sure you are maximising the pension benefit that could be available to you.

For married couples, I would usually recommend that both parties check to ensure that the household will benefit from this income.

Your Independent Financial Adviser (IFA) can also look at this information for you to see if there are any shortfalls in the value and if this can be added to with extra contributions.

This information should be explained in the detail. It’s just a question if it offers good value and this is where advice is vital.

3. Tax on the income

You knew that income tax will come up somewhere.

Currently the income from the State Pension is paid gross to the recipient, but is taxable. This may mean that any other earned or pension income you receive above the State Pension has a greater tax charge to take account of the State Pension already in payment.

4. Contribution records and State Pension Benefits after divorce

I hope that your financial negotiations have gone as well as you planned. Remember, you pay to argue.

When the divorce is finalised and completed, you can re-check the State Pension benefits available to you, to see whether they have changed.

As a point of interest, you may see an increase in your benefits if your spouse’s National Insurance contribution record was higher than yours as they may use this record as a substitute.

Again, you can use a BR19 form for this, updated with the concluded changes, such as the fact that your marital status is now ‘divorced’ and the date of the divorce. The detail comes back in around a month’s time, however the time taken can vary.

5. Further details

Divorce can be a difficult and emotive time, but with some focus and quality advice, I hope that you reach your objectives. Thsi article should not be seen or used as individual advice.

To expand on all things divorce and the fundamentals, I have been able to outline the full process in my new book, Addicted to Wedding Cake, The Journey of Divorce.

Further details of this are available at our websites, www.addictedtoweddingcake.co.uk or www.churchouse.com.

Keith Churchouse is Director of Churchouse Financial Planning, a firm of Chartered Financial Planners in Guildford, Surrey. Keith is a Chartered Financial Planner and Certified Financial Planner (CFP) professional. Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority.

Probably not such an Equitable Life ‘Henry’!/ Compensation finally looms

2010-10-19T08:27:00.000+01:00

It is nearly 10 years since the demise of what was declared the ‘oldest mutual organisation in the world’, first formed in 1762. And in a variation to many of the ‘Henry’ clients portrayed in the television adverts, it turned out not to be such an Equitable Life after all. Sadly, it is estimated that some 50,000 policyholders have died waiting for any form of compensation to be paid since 2000(Source/Report: Daily Mail, July 2010).

Finally, this week, it is reported that the details of a £1.5 billion compensation package will be announced and finalised by the Coalition Government after nearly a decade of delays, enquiries, arguments and disagreements, including investigations by the Parliamentary Ombudsman. This is way short of the £6.0 billion package that many felt was required. Although this announcement will be a momentous occasion in itself, I am not sure it will make the top headlines it deserves because it will come in the Comprehensive Spending Review that will have many other (mainly negative) headlines of its own. Wednesday the 20^th October 2010 will be a day of history whatever happens.

And what now for the policyholders? Bearing in mind that the with-profits fund at the end of 2000 had an estimated value of around £26 billion (source: Wikipedia), you might see that the proposed £1.5 billion in the big picture may not spread very far, although admittedly something is better than nothing! I understand that they may start to provide compensation to those who have or are suffering ‘hardship’ and this might, as an example, include those that took out a with profits annuity which has seen the income first projected fall away over the years. Others who have not suffered any ‘hardship’ but seen their investment bond, pension (executive pensions/ Section 32/retirement annuity) or income drawdown go down in value may find themselves lower down the pecking order of compensation payments. I have no doubt that the devil will be in the detail on this one, but I believe that the principal of priority list is correct.

We are likely to know after Wednesday. I am only sad that it has taken so long to get this far.

Whatever the outcome of the Equitable Life compensation scheme and its subsequent effects, it is always worth seeking independent financial advice (IFA) to ensure that you are getting the best from your financial planning.

Keith Churchouse, Chartered Financial Planner

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. www.planmypension.co.uk is a trading name/style of Churchouse Financial Planning Limited.

CHURCHOUSE is a trademark of Churchouse Financial Planning Limited.

H M Treasury reveals new pension restrictions

2010-10-14T11:14:00.004+01:00

Just when you thought is was safe to save for your retirement , HM Treasury has today revealed its plans to change the restrictions on pension accumulation to lower levels.

The Coalition Government confirmed in June that it wanted to reform pensions tax releif and these new changes will come into force.The HM Treasury website quotes the following points: ‘On the 14th October the Government announced that, from April 2011, the annual allowance (AA) for tax privileged pension saving will be £50,000 and that from April 2012 the lifetime allowance (LTA) will be £1.5million.’

The basic changes are as follows:

Lifetime allowance

Was Reducing to (April 2012)

£1,800,000 £1,500,000

Annual Allowance

Was Reducing to (April 2011)

£255,000 £50,000

It has been noted that there may be transitional arrangements for those close to or above £1,500,000.

If you have the benefit of a final salary scheme and see a significant jump in your salary you could see yourself facing a tax charge. This may be the same if you want to make a large contribution to a personal pension plan or money purchase pension plan.

Fuller details can be found at www.hm-treasury.gov.uk/press

If you are or are potentailly effected by these arrangements then early planning is recommended to ensure that you are not adverserly affected by these changes.

Speak to Churchouse Financial Planning Limted on 01483 578800

This should not be seen as individual advice and you should speak to your independent financial adviser (IFA) about your individual circumstances and needs.

Keith Churchouse
Chartered Financial Planner
ISO22222 Certified Financial Planner

Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority.

CHURCHOUSE is a trading name of Churchouse Financial Planning Limited

Comprehensive Spending Review…It might be personal!

2010-10-12T08:48:00.000+01:00

Is it me, or is the whole of the UK waiting for the sword of the Governments Comprehensive Spending Review to fall and make the proposed cuts that so many print pages have been exhausted over in the last few months. Whichever way the cuts are made, I am sure that it is not going to be a pretty sight on the 20th October 2010. Let’s see what George Osborne has to say.

In a simplistic way, any business manager or owner will tell you that there are only two real ways of managing a business. One is to keep costs low and income high. Sprinkle some cash flow in between and away you go. Balancing the budget of the UK is likely to be very much more complicated, throwing in things such as additional bouts of quantitative easing and keeping our sterling currency sound, however, the principals are the still similar.

This is all very interesting to economists, but what does it mean to the person on the Omnibus? Clearly cuts are likely to lead to reduced spending and this may lead to cost cutting with the reduction of manpower. Redundancy, unemployment, severance packages and employment are likely to be key words in the winter and not for the right reasons. I am sure the employment solicitors/lawyers will be busy! All gloomy reading, but what can the person on the Omnibus do to help ensure that he or she is financially ready if this is to be last trip on the bus for a while?

Returning to the analogy of how a business works, they can entertain the same logic of looking at reducing or cutting outgoings and increasing income. I have expanded on this below with a few examples, although this list is not exhaustive:

Budgeting

Irrespective of your circumstances, it is always worthwhile looking at your household budget to ensure that you are extracting value from your outgoings. It’s worth doing this regularly and don’t wait for a redundancy to arrive to find out that you can’t afford to make ends meet.

Your household will need to ‘buy in’ to the process, and keep your debts under control and make sure you maintain an emergency deposit fund of 3-6 months income available to meet any short term liabilities as they arise. You might want to use a Cash ISA (ISA) arrangement to achieve this, or, as an alternative, Premium Bonds, which offer tax free winnings. If your spouse has a lower income tax band than you then you might want to consider having any taxable savings in their name.

Income

If you are fortunate enough to have a few investments behind you then check if these can provide you with income if needed. You might want to leave any pension benefits untouched until you retire, but seek independent financial advice (IFA) if you have this potential fallback position. Approximately half way through the tax year 2010/2011, as October is, might be a good time to review your ISA’s and Capital Gains Tax position (CGT) if you have one and make any necessary changes to meet you current circumstances and any future situations.

Summary

Whatever happens, as we move into these times of austerity, make sure that you keep your financial planning up to date and ready to meet your needs.

This should not be seen as individual advice and you should speak to your independent financial adviser about your individual circumstances and needs.

To expand on the issues of business planning for SME’s and the fundamentals, I have been able to outline the full process in my new book, Sign Here, Here and Here!…Journey of a Financial Adviser.

Further details of this are available at our websites, www.signherehereandhere.co.uk or www.churchouse.com

Keith Churchouse, Chartered Financial Planner

Director of Churchouse Financial Planning Limited, High Street, Guildford, Surrey

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

Redundancy, a life junction?

2010-10-02T12:06:00.001+01:00

Having been made redundant twice myself in the past, I know that this situation can be emotional, stressful and daunting. Sadly, with the current austerity cuts proposals of the coalition Government in their comprehensive spending review, we may see an increase in this situation occurring.

If you find yourself in this position, then it might be worth taking some financial planning measures early to ensure that you try and get the best from the situation.

First of all, you may receive a redundancy payment. The first £30,000 of this should be paid tax free, as long as it is a true redundancy situation. If your departure from work is not deemed to be a redundancy, such as a severance agreement, then the tax situation may be different. Please check this point before agreeing to leave an employer. Any balance above £30,000 will be taxed at your highest marginal income tax rate. As tax year starts in April, and if we think that it is now October, then we are seven months into a tax year. Therefore, if you add the payment above £30,000 to your earned income so far, you may well find that you will be taxed at 40%, however check this with an accountant or tax adviser because all of our circumstances will be different.

Dependent on your situation, you may want to offset part of the tax on any excess redundancy payment by contributing to a pension. If you have an employer’s scheme, such as an AVC, money purchase or Executive Pension scheme, then you may need to arrange this before you leave service. Therefore, some early planning in the negotiation phase may well be worthwhile. For this financial planning, you should seek Independent Financial Advice (IFA).Although this may be tax efficient, take account of your cash flow situation. Planning for your immediate future is vital.

With the potential of no income coming in for the short term, you are still need to meet the cost of your liabilities and this has to come first. You may want to check any policies that may pay out in the event of redundancy. Some of these plans require you to apply for Benefits and you may plan to arrange this anyway. Also remember that you may be losing other benefits by leaving your employer, such as death in service and ill health/ medical insurance cover. You should check this to ensure that the protection levels you require are maintained.

Others may have reached an age where drawing pension benefits may be an option. Seeking good financial advice at an early stage is important to make sure that this planning is arranged correctly. You may want to use tax free cash and income to replace the income lost from employment. If you are looking at this, then it may well be worth your while checking your state pension benefits, and that of your partner/spouse if you have one, to ensure that you know what these can offer. You can do this by using a BR19 State Pension Forecast form and this can be found here.

Redundancy can be seen as a life junction and possibly an opportunity to reinvent your future employment situation. You may choose to start your own business and, as an aside, Surrey Chambers of Commerce can help you with this. I have detailed my own personal experiences in my book, Sign Here, Here and Here!...Journey of a Financial Adviser.

We are all different and therefore, this article should not be seen or used as individual advice. Seek Independent Financial Advice for your circumstances.
Further details of the book and our service are available at our websites, www.signherehereandhere.co.uk or www.churchouse.com

Keith Churchouse
Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

SME’s and all things marketing

2010-09-20T16:12:00.000+01:00

In my opinion, marketing is one of the vital components of your business strategy, especially if you are a small to medium size enterprise (SME). Never be embarrassed about the scope and scale of your marketing. Remember that in a new business, no one else is going to do it for you! This is also the case when you enter a partnership with business colleagues.

As we move into an autumn of possible austerity measures being implemented by our coalition Government and the potential of redundancy looming over some employees, planning your strategy for a new start up business is going to be important in the balance of 2010 and into 2011.

Someone within the new business specifically has to own the marketing project and be enthusiastic to promote the ethos of the business. Never assume that someone else is dealing with marketing: get it agreed at the outset who is leading the role and get them (or you) to put together the marketing plan for the next three years. Create a specific 12-month plan as well. I suggest limiting the length of the second plan to 12 months at the outset because your marketing will need to be agile in its approach, taking advantage of opportunities as and when they arrive. Using financial planning and independent financial advice as examples, there could be a change in legislation or an upturn in a particular investment market.

What’s the difference between economies of scale and economies of scope, and why is this important to your marketing strategy?

This was an important learning point for me, especially with regard to marketing. When applying economies of scale to marketing you are sending out a single message in bulk, such as a newsletter. This does work. Because of the volume being used, production of your marketing can be cheap and timely.

But what about taking the same message and rearranging it to re-use parts of your message elsewhere to amplify your message? This is an economy of scope. The same newsletter you wrote to take advantage of economies of scale may feature various newsworthy topics in your profession. You will have spent time checking these topics to ensure that they are relevant, compliant and above all, interesting.

Example of an Economy of Scope

* Create a ‘blogspot’ on your website and segment the topics from your existing newsletter. Then turn them into blogs on your website. You will know that Internet listing sites crave new content.
* Record a five-minute discussion about an interesting and topical subject with a colleague, friend or family member. Then podcast this on your website, or if you are more sophisticated, video it and ‘vodcast’ it. Watch your Internet rankings soar.
* Use social networking sites to discuss the same issue, such as Twitter. However, make sure that it is both relevant and compliant for your regulatory authority, if you have one. (my name on Twitter is ‘onlinefinancial’)
* Convert your regular newsletter into an article, and write to the press about the issues you are considering. Choose an issue that you are well qualified to talk about and are able to answer questions about. This may also have the advantage of demonstrating your commitment to the FSA’s Treating Customers Fairly (TCF) initiative which we endorse.

By doing this, you have taken one newsletter and reinvented it in four other formats, giving the same informed message in very different distribution styles, increasing the potential for audience variation and penetration. With a little extra application, it is possible to diversify your message and distribute it into other areas, creating greater scope for your message to be heard by new prospects.

Once you are recognised as an expert in the topic selected, update your thoughts and understanding and repeat the process.

As an example, many television channels have used the same philosophy, broadcasting their standard channel, then a ‘plus 1’ model, as a new separate channel, just one hour forward. They then add a website distributing the same information. This creates three distribution models for the same message. It’s both innovative and cost effective.

Marketing techniques have changed significantly in recent years and I have found that subtlety over ‘in your face’ promotion works best. Many financial services organisations (other than the banks) lack a shop window and many would not want one. When you have got your marketing right, these prospects will find you easily and sales, either fee based or commission driven will be achieved.

Also, the timing of your marketing is vital. Referring back to your year’s sales target, you have correctly divided your sales target up into months to ensure that you maximise peak performance. Your marketing campaign must coordinate with this sales strategy. If you were running a Christmas shop, you probably would not start your company’s peak marketing campaign in July. The same applies to financial services. You might build your campaign up to March/April/May and then regenerate it again to October/November.

We wish you every success with your new business venture.

Extracts from the new book, Sign Here, Here and Here!…Journey of a Financial Adviser ISBN: 978-0-9564325-0-6

Further details on this topic can be found in the new book available at our website, www.signherehereandhere.co.uk or on Amazon here.

Speak to Churchouse Financial Planning Limited (or your independent financial adviser/ IFA). This statement is not individual advice and should not be relied on because each clients circumstances are different.

Keith Churchouse

Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority