As we entered the new year with further lockdowns and history making world events, the hope of spring hangs in the air, an enticing prospect, this year, more than ever. While we’re waiting for the green shoots of spring to emerge, why not use the time effectively by getting your finances in order before the end of the tax year?

The tax year ends on 5 April 2021, which is Easter Monday this year, so don’t wait until the last minute to double-check you’ve taken advantage of all the tax-efficient allowances available to you. To avoid a last-minute Easter rush, we’re on hand to get you organised with all aspects of your end of tax year planning. Here’s a reminder of some of your main tax planning opportunities:

Pensions
— The current Annual Allowance is £40,000 (for every £2 of adjusted income over £240,000, an individual’s Annual Allowance is reduced by £1. The minimum Annual Allowance is £4,000
— The Lifetime Allowance places a limit on the amount you can hold across all your pension funds without having to pay extra tax when you withdraw money. The limit is currently £1,073,100

Tax efficient investments
— Individual Savings Accounts (ISAs) – maximum annual contribution of £20,000 per adult (stocks and shares, and cash options available, maximum allowance not to be exceeded)
— Junior Individual Savings Allowances (JISAs) – maximum annual contribution of £9,000 per child (stocks and shares, and cash options available, maximum allowance not to be exceeded)
— Enterprise Investment Schemes (EISs) – maximum investment of £2,000,000, relief on investments in certain unquoted trading companies, up to £1m per annum (or £2m as long as at least £1m of this is invested in knowledge intensive companies)
— Venture Capital Trusts (VCTs) – maximum annual investment of £200,000, relief on investment in certain qualifying companies

Making Inheritance Tax-free gifts
— Each financial year you can make gifts of up to £3,000 (in total, not per recipient) and if you don’t use this in one tax year, you can carry over any leftover allowance to the next year (some other exempted/ small gifts allowable)
— To reduce the amount of IHT payable, many families consider giving their assets away during their lifetime. These are called ‘potentially exempt transfers.’ For these gifts not to be counted as part of your estate on death, you must outlive the gift by seven years
— If you have enough income to maintain your usual standard of living, you can make gifts from your surplus income.
Advice is essential as strict criteria apply

Using Capital Gains Tax allowances
— Annual exemption of £12,300 per person, £6,150 for trusts – currently under review, correct at time of publication.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.

Past performance is not a reliable indicator of future performance and should not be relied upon.

Due to the high-risk nature of these products (EISs and VCTs) they will not be suitable for everyone.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Estimates suggest that well over one million borrowers have lapsed onto their lender’s default standard variable rate (SVR). Has this happened to you? If so, now could be the perfect time to consider a remortgage, to get your finances in good shape for the year ahead.

Do you know your mortgage rate?
If your current tracker, fixed rate, or discount mortgage deal has ended, you are likely to be switched onto your lender’s SVR and could be paying way over the odds, perhaps without even realising. It has been found that borrowers on an SVR could save an average of £1,602 a year, that’s over £133 every month!

Sound familiar?
Even with a potentially sizeable saving to be made by remortgaging, it’s surprising how many people just stick with their SVR. Why is that?

“I didn’t realise my mortgage deal had ended” - your lender should have let you know, but always remember to make a note of the end date of a new mortgage deal so you don’t forget.

“My lender contacted me, but I didn’t understand”- mortgage jargon can be confusing, but it pays to check out important mortgage correspondence.

“It’s too much hard work to find a new deal”- it’s true that the mortgage market can be bewildering as there are so many deals to choose from. That’s where we can get involved – to help find you a suitable deal. You can then choose what to do with any savings made!

Time to remortgage?
It’s important to regularly review your mortgage. Particularly now, when mortgage rates are at record low levels, it makes sense to consider your options to see if you can get a more cost-effective mortgage deal.

Are you still covered?
If you’re thinking of changing your mortgage, remember to review your protection policies at the same time - especially if you don’t already have cover in place, or your circumstances have changed since you last reviewed your cover.

To discuss your remortgaging options and to see if you could save money, please get in touch. Rest assured we are here to help if you have any questions about your mortgage or your protection requirements.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

We all know we need to save for retirement, don’t we? But we also know it’s not always that easy to find the spare cash required to do so, especially amid a global pandemic.

Research studies, though, typically show that many retirees wish they’d saved on a more consistent basis and managed to accumulate a larger nest egg. Mike is one of those people who entered retirement harbouring financial regrets.

Plan? What plan…?
Last January, after working for over 45 years, Mike decided it was finally time to retire. But he soon hit a snag; Mike simply hadn’t thought enough about the detail of how he would finance his retirement. Although he knew the State Pension wasn’t huge, he hadn’t realised just how difficult it would be to make ends meet and found it quite a shock when reality hit home.

And Mike isn’t alone. Research suggests more than a third of over 50s either leave their retirement financial plans until the two years before retirement or don’t plan at all. As a result, many retirees are ill-prepared for what’s to come.

Funding retirement
Many people save for their retirement through a pension. Encouragingly, the introduction of auto enrolment has resulted in a rising proportion of the workforce having access to a pension with research highlighting almost three in four workers are now offered a retirement plan by their employer. Worryingly, though, the self-employed largely seem to be neglecting their retirement needs, with just 16% currently saving in a private pension.

An alternative strategy is to use other investments, such as ISAs. These also offer a tax-efficient savings route and can provide greater flexibility than a pension. There is also a specific type of ISA – Lifetime ISA – that 18 to 39-year-olds can use to accumulate retirement funds. Bricks and mortar can also be a valuable source of retirement income, either by investing in buy-to-let property or unlocking wealth tied up in a family home by downsizing or through equity release.

Advice is key
Like many people, Mike regrets not saving more across his working life and has two pieces of advice for younger generations: start planning your retirement in plenty of time and seek expert guidance on how to best organise your retirement finances.

Retirement should be something we all look forward to and enjoy but, to do so, it’s vital to plan ahead. We can help with all aspects of retirement planning, whether you’re just starting out and want help choosing a pension, or you’re ready to utilise your retirement pot and want to know the most efficient way of accessing the funds. Just get in touch if you need our expertise.

An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both.

The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested

Past performance is not a reliable indicator of future performance and should not be relied upon

Has the pandemic caused you to worry more than usual about your finances? Well, you’re not alone…
With 47% of respondents to a global survey stating they are less well-off now compared to before the pandemic and 24% worried about job security, it’s clear that the virus is continuing to wreak havoc on our financial – and mental health.
The kids are… not alright

And it’s not just adults who are feeling the pressure – our kids are picking up on it too. According to a monthly study of children’s mental health symptoms during the pandemic, children from poorer households were more likely to be unhappy or worried, or show behaviour such as clinginess or restlessness, between March and October 2020 when compared with other children.

How can I support my child?
Tempting as it is to try and protect children from your money worries, a keyway of allaying their fears is to actually get them involved with the household finances – after all, we tend to fear what we don’t understand. Research shows that children who are exposed to conversations about money and financial responsibility are more confident and tend to do better with money as adults3. So, here are some top tips to get your kids on the path to financial success.

Our top tips:

• Regular pocket money – whether it’s £1 or £10 per week, giving children their own money to manage can help foster positive conversations about budgeting, saving and spending
• Reward hard work – offering cash in exchange for household chores is an excellent way to teach children the value of money, i.e., it is something to be earned through work
• Involve them in household spending decisions – whether you’re doing the weekly grocery shop or looking for a new broadband deal, challenge the kids to find better deals! As an incentive, you could even offer them a percentage of whatever savings they make
• Play a board game! – there are plenty of board games that can help kids learn about key financial concepts in a fun way. From Payday, which introduces the concepts of budgeting and living expenses, to Monopoly, which helps kids learn about financial negotiation and dealing with taxes, there are plenty of educational games out there
• Think out loud – talking through any money-related decisions with your children will help them learn by example. Did you just choose a supermarket-own washing up liquid instead of a well-known brand on the weekly shop? Tell them why!

And how can we support you?
Our advisers understand how thinly parents are stretched now. That’s where we come in. Let us shoulder some of the burden so you can concentrate on looking after your family. We can help you explore the available options to get your finances back on track so you – and the kids – can feel positive.

Let’s be honest, on the morning of 21 October few of us were waiting with bated breath as the latest UK inflation stats were revealed. But, for millions of people, that moment was significant.

That’s because the September (Consumer Price Index) CPI inflation figure forms part of the government’s ‘triple lock’ formula used to determine the forthcoming rise in the level of State Pensions.

Triple lock
The triple-lock safeguard was introduced by the Conservative-Liberal Democrat coalition in 2010 and aims to ensure that the value of the State Pension is not eroded by inflation. The three-pronged guarantee states that, each year, the State Pension will increase by whichever rate is higher out of: September’s CPI inflation; July’s average earnings growth, or 2.5%.

And, as September’s CPI was 0.5% and July’s previously announced earnings growth was 1.0%, next year’s State Pension is set to rise by 2.5%, the minimum amount allowed by the legislation. As a result, from April 2021, pensioners on the ‘old’ basic State Pension will see weekly payments increase by £3.40 to £137.65, while the full ‘new’ single-tier State Pension will rise by £4.40 to £179.60.

Don’t rely solely on it
The actual amount of State Pension retirees receive is also dependent on their National Insurance record. To qualify for any State Pension, you need at least 10 years’ worth of contributions, while to obtain the maximum amount, 35 qualifying years are required. This means the amount pensioners receive can vary significantly with some not entitled to any State Pension at all.

Additionally, experts have stressed that, even if you do qualify for the full State Pension, this on its own is not enough to retire on. Indeed, analysis shows that, on average, retirees require more than twice the maximum State Pension to enjoy a comfortable retirement.

Plan, plan, plan
In other words, people need to build up a sizeable nest egg which can be used to supplement any State Pension payments, if they wish to retire in relative comfort. Personal pensions are the most common way of doing this, largely because of their favourable tax treatment, but other investments, such as ISAs, can also be used to accumulate retirement funds.

The key is careful planning. And, as retirement planning is never a case of ‘one size fits all’, it’s vitally important to obtain expert advice to ensure any plans are tailored to meet your specific needs. If you’re worried about how you might survive on the State Pension and need help creating a well-structured retirement plan, then we can assist – we’re only a phone call away.

An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both.

The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.

Contrary to costs such as legal fees, estate agency fees or Stamp Duty, having your new home surveyed isn’t actually compulsory. However, with a property being the most expensive thing most of us will ever buy, the price of not having it checked by a surveyor could be devastating.

If you buy a property for the seller’s asking price and later find it has serious defects, it’s too late to back out of the purchase or renegotiate a price with your seller. You’re also likely to find yourself paying out to rectify the fault – and probably a lot more than you would have paid for a survey in the first place!

A survey to suit your needs
There isn’t just one type of survey available – you can get different ones that range in cost, according to the kind of property you’re buying:

1. Condition report
   What is it: a basic overview of the property that only highlights the most significant defects; it doesn’t go into detail.
   Suitable for: those buying a relatively new homes in good condition.
2. Homebuyer report
   What is it: a more comprehensive survey that highlights obvious defects such as damp or subsidence. It will include advice on any necessary repairs or maintenance and may also include a valuation or an estimation of rebuild costs. However, it’s not an intrusive survey, meaning the surveyor will only be picking up on visible issues.
   Suitable for: those buying a standard property in a reasonable condition.
3. Building survey
   What is it: the most comprehensive type of survey, which looks at the property’s structure and condition, lists any defects and advises on repair and maintenance work. Unlike a homebuyer report, this is a much more hands-on survey, so the surveyor will do things like going up in the loft or looking under floorboards or behind sofas.
   Suitable for: older or listed buildings, or properties that are in poor condition or have an unusual design or structure.

But what if I’m buying a new build?
Even though it’s tempting not to have a new build property surveyed, there can still be issues with new build homes that could be costly to repair. If you’re buying a new build, you’ll need a slightly different survey called a snagging survey. It identifies any defects with new build homes, from cosmetic issues to structural problems, which the developer will then have to fix within the two-year warranty period.

We can help
As a member of Openwork, we can refer you to our specialist Surveying Service, which offers access to a large network of approved surveyors across the UK. For your peace of mind, get in touch.

Surveying is not regulated by the Financial Conduct Authority.

As a nation, we aren’t great with our financial acronyms and terminology. Life is busy and our heads are often full of important things to get done to make it through the week, without having to worry whether we know our LTV from our ERC!

You’re certainly not alone if you’re feeling financially flustered. Recent research has found that more than a fifth of British adults are confused by everyday financial terms.

Worth taking the time to review your mortgage
When you do find some time to settle down on the sofa with a cuppa or a glass of wine in hand, if you are a mortgage holder, it could be a good time to become familiar with one important acronym worth knowing - SVR or Standard Variable Rate.

You may find that you are automatically switched to an SVR when your existing mortgage deal, whether that be a tracker, fixed rate or discounted mortgage, comes to an end. Unfortunately, this could mean you’re paying over the odds, perhaps without even realising.

SVR rarely offer the most competitive rates and the SVR interest rate is usually linked to a percentage above the bank’s base rate, meaning the rate can rise and fall, which makes you more vulnerable to potential interest rate rises in the future.

Take advantage of record low mortgage rates
After two Bank of England base rate cuts earlier this year, mortgage rates have remained at record low levels, so it makes sense to see if you can save money by switching to a better rate.

Good advice that cuts through the jargon
In a complex environment, getting good, clear advice can really pay – so get in touch and we’ll guide you through the process, without using jargon.

Don’t worry if you’re currently locked into a mortgage deal that has exit charges, you don’t have to wait until it has come to an end as your adviser can help you find a deal three or six months before your lock-in period finishes.

Incase you were wondering....
LTV - Loan-to-value
ERC - Early repayment charge
SVR - Standard variable rate

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

When James and Allison first started renting together, they were determined it would be a temporary move.

Fresh out of university, they turned their attention immediately to homeownership, putting away as much of their money as their rent and living costs would allow.

Allison had always been careful with my money and imagined with both of them saving they would be able to get a foot on the property ladder sooner rather than later.

Along came COVID
Fast forward six years with a budget of £250,000 and a carefully scrimped and saved £25,000 deposit and the couple finally started house hunting.

Then along came 2020. A global pandemic, the closure of the property market, a failing economy and widespread job losses. James, a hotel manager, was placed on furlough. Allison was fortunately able to work from home. With government support and the hope that the situation would be temporary, the couple remained optimistic.

Mortgage lenders took a more cautious approach, however. In the months that followed, news that lenders were pulling hundreds of mortgage products for buyers with 5% and 10% deposits was widely reported in the media.

The struggle to find a mortgage
Just before lockdown hit, James and Allison had managed to secure a mortgage in principle with a 10% deposit. Now, like many others, they faced being denied a mortgage despite having an agreement in principle. Through no fault of their own, they found themselves thousands short on their deposit

Difficult, but not impossible
Reporting shows first-time buyers are set to lose their ‘share-of-sales stronghold’ by the end of the year, James and Allison are far from alone in their experiences. And, while 56% of first-time buyers under the age of 35 have received financial assistance from the Bank of Mum and Dad, not everyone is in the same position.

Getting a mortgage may still be possible for the many despite the difficulties in the market. That’s where we come in. We can help people like James and Allison to get a grip on their finances and find a mortgage that suits their circumstances. We’re here to consider all the options available to you.

Latest news
Boris Johnson recently announced his intention to develop plans to allow more low deposit mortgages to be made available. Ministers are scoping plans to allow more mortgages to be offered with a 5% deposit. We will keep you up to date with developments.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

With Covid-19 rules changing almost daily, extensions to furloughs and local and national lockdowns many are facing money worries this winter. If you’re trying to get a mortgage and want to push your property transaction through before the Stamp Duty holiday ends, how do you prove your income – especially if it has temporarily been reduced due to furlough or short-time work?

For those who remain on furlough or have otherwise seen their income temporarily reduce, providing proof of income to mortgage lenders now presents a serious challenge. Many mortgage providers have tightened their lending criteria, especially for furloughed workers, amid concerns of future job losses.

CASE STUDIES

An employed restaurant manager
Sally works as a restaurant manager and is looking to buy a house with her partner, Nathan. Since July, Sally’s employer has brought her back to work on part-time hours and furloughed her for the remainder. Nathan is employed at a marketing agency and is working remotely on full pay. As a result, their prospective lender has asked for the following as proof of income:

— Three months’ payslips and two years’ P60s (these are standard requirements, although some lenders may accept less)
— Three months’ bank account statements
— For Sally, the lender has also asked for a reference from her employer to confirm the date she will be returning to full-time work.

Sally does have three months’ worth of payslips to give to her lender, although these show her reduced furloughed salary, rather than her full salary. As a result, it is likely the lender will use this figure to calculate affordability for her.

A self-employed graphic designer
Dan works for himself as a graphic designer. He has seen his income dip significantly since the onset of the pandemic, with clients delaying or cancelling many projects. After confirming to HMRC that his business had been adversely affected by the crisis, he applied for and received a grant under the Self-Employed Income Support Scheme (SEISS).

Just before the pandemic began, Dan had been looking to buy a flat, but getting a mortgage has since become a lot more difficult. His prospective lender is now asking for:

— Three years’ full business accounts, signed off by a Chartered accountant
— Three years’ SA302 year-end tax calculations and corresponding tax year overview from HMRC
— Most recent three months’ bank statements.

In order to make it more likely that his mortgage application will be accepted, Dan is also hoping to approach some of his clients to ask them for references, stating the work they are likely to have for him over the next 12 months.

Assessing your options
Without a doubt, it is more challenging for some people to get a mortgage at present, given the increasingly stringent affordability requirements that many lenders are introducing – so it’s likely you’ll be wanting a little extra help! Whether you are buying your first home, taking a step up the property ladder or looking to downsize, don’t worry, we’re here for you.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

Did you know that the State Pension age (SPA) increased to 66 for both men and women in October 2020 and it’s set to rise further? Knowing your SPA, together with how much you can expect to receive, is an important part of your retirement plan that is often overlooked.

Why do I have to wait longer?
In 1908, when the first State Pension was introduced in the UK, you would have to wait until the grand old age of 70 before being able to claim. This was at a time when life expectancy at birth was around 40 years for men and 43 for women, and when only 24% of people reached State Pension age!

As recently as ten years ago, women could claim their state pension at 60, while men had to wait until they were 65, but qualifying ages have now been brought into line. The changes were introduced due to increased life expectancy, as people are now likely to spend a larger proportion of their adult lives in retirement than ever before.

66, 67 or older?
To find out your SPA, visit the government website www.gov.uk/state-pension-age - this will provide you with an exact date. However, you are no longer forced to take your pension at this age, so you could consider working longer if that suits your circumstances.

If you were born after April 1960, your pension age will be 67 and people born after April 1977 will have to wait until age 68 under current proposals, although the government is considering plans for this to be brought forward.

How much will I get? The State Pension is paid to anyone who has made at least ten years’ worth of National Insurance contributions during their working lifetime. The maximum payment is currently £175.20 a week (£9,110.40 a year), but how much you get depends on how many years you contributed for. To check your State Pension forecast, go to www.gov.uk/check-state-pension.

You may also be able to apply for National Insurance credits or pay voluntary National Insurance to boost your State Pension, although the best options will depend on your individual circumstances.

A timely reminder to plan ahead
Why not let the recent increase to the SPA act as a reminder to review all your pension pots, including your State Pension, to consider whether your savings are going to allow you to have the retirement you’ve dreamed of. We can help you get on track, so why not get in touch?

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested

Wherever you go, you’d be hard pressed to find a house without at least a little bit of clutter.

From the kids’ old teddies (well, they might want Ed the Ted for their own children, you see) to receipts from the 1980s (they might take it back after 40 years), attics and basements across the UK are full of what optimists might call ‘keepsakes’ and what others would probably call ‘junk’.

But is it always? If Flog It or Cash in the Attic are anything to go by, our houses are literal gold mines of undiscovered treasures, just waiting to be found amongst the everyday bric-a-brac.

What could your attic hold?
Over the years, some truly priceless artefacts have been uncovered in the homes of unwitting residents. Here’s a list of some of the oddest – and most valuable.

An ‘old box’ that was more than it seemed
A battered looking wooden box, used as a TV stand by an elderly gentleman, was discovered upon his death when his house was being cleared out. This unassuming item turned out to be an ancient Japanese Mazarin Chest, and is valued at a staggering £6.3m.

Rare rugby memorabilia
A treasure trove of extremely rare rugby kit and memorabilia from the turn of the 20th century (including an England shirt from the first ever game in Twickenham in 1910) was found languishing in a dusty box by the great grandson of rugby player and WWI hero Charlie Pritchard. The priceless items are currently on loan to the World Rugby Museum in Twickenham.

Priceless Indian artefacts
The ancestors of a British army officer were amazed to discover a cache of Indian arms taken from a Sultan’s palace at the turn of the 19th century. Wrapped in newspaper and discovered in a dusty Berkshire attic, the weapons, including an ornate, gold-encrusted sword and a gun believed to be the one fired by the ‘Tiger of Mysore’ himself in his final stand against the British in 1799, are expected to fetch millions at auction.

Time for a clear out?
If you’re feeling galvanised into a spring (or winter) clean, then be careful what you chuck out! You too could be sitting on a valuable treasure.

Don’t be underinsured
Have you reviewed your home contents insurance policy and make sure you’re covered for everything you own – including the contents of your attic and basement.

Get in touch with us and we can help find a contents insurance policy that suits your needs. In the meantime – we’re off to watch Antiques Roadshow!

Nudge theory was popularized in 2008 by behavioural economist Richard Thaler and legal scholar Cass Sunstein. In simple terms it is about making it easier for people to make a certain decision that is ultimately in their own self-interest.

Day-to-day
In the short term there are some financial nudges you can do to apply nudge theory to your own finances.

Put your decisions into context – During lockdown, local or national (or whatever COVID-19 throws at us next) do you really need to buy another plant, candle or pair of joggers.

Set simple and clear goals – A single goal like save £6,000 for a car is much easier to achieve than multiple goals like save for a home, car, and holiday.

Make it easier to do the things you should do (and hard to do the things you shouldn’t) – Putting small barriers in the way of everyday things, like not allowing your browser to remember your PayPal password, makes it harder to spend money and you may ultimately decide not to.

Don’t ignore information and the facts – check your budget, bank statements and accounts regularly.

Long-term
Do you like going on holiday, eating out and enjoying your hobbies? If so, it’s likely your ‘future self’ will too. Far from sitting in an armchair in your carpet slippers and a tartan blanket, it’s much more likely that your future self (who is, after all, still you) will want to enjoy their retirement in style.

So, what’s the dream? Well, according to research from Aviva, almost half of people want to travel when they retire, while taking up a new hobby and helping their children and grandchildren out financially come second and third on the list – all suggesting that people want to live their lives to the fullest in their later years. Unfortunately, translating the dream into reality is where it falls apart for some – 23% of people think their retirement is likely to be a financial struggle.

Living the dream
A study has hit on a novel solution to the problem – ‘nudges’. In other words, by making small behavioural adjustments to your spending habits, you could enjoy an additional £7,000 every year in retirement income.

The key lies in encouraging young people to imagine themselves in the future, rather than viewing their ‘future self’ as a different person.

Understandably, a lot of young people are focusing on their current financial priorities – after all, we’re in the midst of a global pandemic. But that doesn’t mean your future financial needs have gone away. So, rather than thinking of your ‘future self’ as a stranger, treat your pension like a gift you’re giving yourself – you just can’t open it yet!

Get nudging
COVID-19 hasn’t given us many silver linings but reduced living expenses due to remote working and the closure of bars, restaurants and other leisure and hospitality businesses could provide a welcome boost to our savings.

Similarly, you could save around £40 a month by keeping going with the home workouts, like the 72% of people who say they have no plans on going back to the gym. In addition, many kids’ clubs have yet to start back up following lockdown, so parents could be making big savings here, too.

Save on subscriptions
Foregoing the latest iPhone could also save you a hefty sum. Keeping your existing handset instead, and switching to a SIM-only deal, could help you move some welcome funds into the pension pot.

Or, you could divert an average £39 per month in wasted subscriptions into your pension. Unused gym memberships, phone contracts and subscriptions to online video streaming services are all common culprits, according to research.

Expert ‘nudgers’ at your service
If you need a ‘nudge’ from us to help boost your retirement income, we’re just a phone call away.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

When Tom and Pete bought their first property together, things couldn’t have been going better. They both had good jobs, were pulling in decent salaries and were excited about spending the rest of their lives together.

They chatted about making a Will a few times, but somehow life always got in the way. Until one day, 10 years later, Pete got a call that would change his life forever. Knocked down by a car while crossing the road, Tom had tragically passed away.

The intestacy trap
Grieving for the loss of his partner, Pete then found out that, due to the UK’s intestacy laws, he wasn’t entitled to inherit any of Tom’s property, financial assets or belongings, unless they were jointly owned. Despite Pete knowing that Tom had loved him and would want him to inherit, the absence of a Will meant that none of that mattered.

Thankfully, Pete and Tom had owned their property as joint tenants, meaning Tom’s share automatically passed to Pete according to the rights of survivorship. However, without children or any surviving parents or siblings, the remainder of Tom’s assets ended up being passed on to a distant uncle with whom Tom didn’t have any contact.

Now, Pete faces a battle to pay his bills and mortgages without Tom’s savings and investments, life insurance policy and even the car that Tom owned but they both used.

How a Will could have helped
Had Tom got around to writing a Will, he would have been able to specify exactly who would receive what from his estate, including his savings, investments, car and other belongings. In addition to writing a Will, Tom could have made his wishes known, by nominating beneficiaries to his pension and writing life policies under trust. By taking these steps, Pete would have been given the extra financial support he now so desperately needs.

As it stands, Pete still has the legal right to claim against Tom’s estate as they had been cohabiting for more than two years - but this will be a costly and time-consuming process and a positive outcome isn’t guaranteed. If Tom had a Will, this added stress could have been avoided.

Don’t put it off
With cohabiting couple families growing faster than married couple and lone parent families, it’s clear that more people are choosing not to get married, just like Tom and Pete. However, there’s a catch. Cohabiting couples have none of the legal protections afforded by marriage, meaning that a Will is one way to ensure your partner inherits according to your wishes. Despite this, research shows three in five UK adults do not have one.

Let us help
Don’t let what happened to Pete, happen to you. Speak to a solicitor or Will writing expert to make sure your loved ones are protected.

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An Individual Savings Account (ISA) is a tax wrapper for your money. There are two main types available depending on the level of risk you’re prepared to take:

• Cash ISA
• Stocks and shares ISA

If you’re 16 or older you can have a Cash ISA, whereas Stocks and Shares ISAs are aimed at 18s and over. In both cases you’ll need to be a UK resident to be eligible.

The ISA was launched by then-Chancellor, Gordon Brown, on 6 April 1999, as successor to the TESSA (Tax-Exempt Savings Account) and PEP (Personal Equity Plan) and has now reached the grand age of 21.

When the ISA was launched, the annual subscription allowance was £3,000 into a cash ISA or £7,000 into a stocks and shares ISA. The overall allowance has risen steadily over the years to reach a generous £20,000 in the 2020-21 tax year.

A first route into investment
Junior ISAs (JISAs) were introduced on 1 November 2011 and can be opened by parents or a guardian with parental responsibility, for a child from the minute they are born. Once opened, anyone can pay into the JISA, but a crucial point to note is that the child is not able to access the cash until they reach the age of 18. In the Budget earlier this year, the JISA annual allowance was increased by almost double to £9,000 per child per tax year.

Popularity
Over the 21-year timespan, ISAs have proved to be a popular investment choice for many; the most recently available government figures, which are for 2018-19, show that around 11.2 million adult ISA accounts and around 954,000 JISAs were subscribed to in the 2018-19 tax year, with new investments totalling around £67.6bn and £974m, respectively.

Long-term investing pays
Looking at some figures from a recent hypothetical example, if you had been in a position to be able to invest your full ISA allowance for each of the past 21 years (a total of £226,560) and this had been invested in the FTSE All-Share Index, your total investment would be worth more than £307,000 as at 6 April 2020. However, you should be aware that this figure excludes any charges or fees and past performance is not a guide to the future.

Regular investing also pays
If you can’t afford to invest the full £20,000, don’t be deterred. Figures from the same hypothetical example, show that an investment of £100 a month invested in the FTSE All-Share Index over 21 years (a total of £25,200), would be worth over £39,000 at at 6 April 2020, before charges and fees, taking into account the large market-hit from the pandemic this spring.

The value of investments can go down as well as up and you may not get back the full amount you invested.

The past is not a guide to future performance and past performance may not necessarily be repeated.

If one of your children has recently celebrated their 18th birthday then there’s a good chance they’ll have some money in a Child Trust Fund (CTF), which they can now access for the first time. It could be worth thousands of pounds depending on how much you’ve contributed over the years.

Although this might sound like a brilliant present, the responsibility that comes with receiving a large amount of money could be a bit daunting.

CTFs were set up by former Labour Chancellor Gordon Brown in September 2002, and every qualifying child was given a £250 voucher (or £500 if you were on a low income). The idea was to help make sure children arrived into adulthood with some savings and were encouraged to save, as well as understand why it’s important. The scheme lasted until January 2011, when it was replaced by Junior ISAs.

If you have children aged nine or older then they will probably also have a CTF, which will mature when they turn 18. Rather than leave it to chance, these accounts provide the perfect opportunity to get them thinking about money and start learning about saving and investing. Here are five things you might like to talk about to get the conversation going.

1. Discuss their goals
Like any financial planning exercise, a good place to start is by talking to your teenager about what they’d like to do with the money. For example, they could use some of it to help pay their university fees. Alternatively, they may be more interested in putting the money towards more longer-term aspirations like a deposit for a house or flat. You might even decide to enjoy spending some of the money together now as a family.

2. Explore the options
When a CTF matures, you can either cash some or all of it in or transfer the money into an adult ISA. If you do not inform your provider what you would like to do, they will hold the money in a ‘protected account’ until you contact them. The funds will still be tax free, and any terms and conditions that applied to the CTF before it matured will still apply.

3. Start the investment journey
With so many different markets and products available today, investing can seem like a complex process. Yet there are some basic principles that stand the test of time, such as making sure you spread your risks and keeping a long-term perspective. Your children might also be interested to know that they can invest in ways that reflect their personal values about society and the environment.

4. Consider switching before maturity
The investment management charges on CTFs tend to be high compared with Junior ISAs. Meanwhile, with interest rates at record lows, cash CTF savers are being paid paltry returns. That’s why it might make good financial sense to transfer any account before it matures. As well as potentially lower fund charges, ISAs also tend to offer more flexibility and choice when it comes to deciding how you’d like to invest.

5. Talk about inheritance
When you talk to your children about their CTFs, you could mention how you plan to pass on your own wealth. Decisions about inheritance are usually best taken together as a family, which will give everyone the chance to put across their point of view about what’s important to them. Open and honest discussions with your children can help you all develop a sense of trust and common purpose.

Next steps
If your children have CTFs and you’d like us to help you work out what to do then please get in touch. As well as exploring all the tax-efficient savings and investment options, we can get them thinking about their own financial futures as they enter into adult life.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

Prior to lockdown, over half (51%) of businesses had some form of debt, owing an average of £176,000 each – and yet just 20% used an insurance policy as security.

To add to this already significant issue, bank lending to struggling businesses via government-backed COVID-19 loan schemes reached nearly £52bn as of mid-August – meaning that UK businesses are more heavily indebted than ever.

Business loan protection
Business loan protection provides funds to repay a business loan, commercial mortgage, or a director’s loan if one of the company’s owners were to die or be diagnosed with a serious or terminal illness. Essentially, this type of insurance comprises a life cover or critical illness policy taken out on the life of the business owner or key person, with the payout ensuring the business can pay its debts should the worst happen.

Most lenders require some form of security when lending to businesses; often, business owners will use their own personal wealth (e.g. their property) as security. So, in addition to their business suffering if they were to unexpectedly die or become seriously ill, their family could face serious financial hardship or even lose their home.

Director’s loans
It is common for businesses to have a director’s loan account, through which the director can:

— Lend money to the business to fund initial start-up costs or see it through cash flow pinch

— Borrow money from the company that is not classed as salary, dividends or expense repayments.

According to research from Legal & General, the average director’s loan totals £169,000 – and yet well over a quarter (28%) of businesses are unaware that director’s loans must be repaid upon death. This means the business could collapse if there is no insurance policy in place as

Loss of a key person

A staggering 52% of businesses say they would cease trading within a year if they lost a key person. Losing a key member of staff can have a huge impact on the business in terms of lost profits, poor cashflow and, potentially, a change in its creditors’ attitudes to outstanding debts. That’s where business loan protection comes in – it can help alleviate financial pressure by paying off the company’s debts and enabling the business to get back on track.

As with all insurance policies, conditions and exclusions will apply

The COVID-19 pandemic has had a significant impact on the property market, but latest figures indicate there are positive signs of growth following the introduction of the Stamp Duty holiday.

Property searches rise
Coinciding with the Stamp Duty cut July was the busiest month so far this year for mortgage searches. The largest rise occurred in the £500,000 - £1m region, with Stamp Duty savings making these properties more accessible. Remortgage levels have remained consistent with pre-lockdown levels and purchase levels have quadrupled. Searches from first-time buyers are also up.

House prices jump
On another positive note, house prices rose by 7.5% year-on-year in October bringing the average price to £250,457, according to data from Halifax.

Pent-up demand and a low supply of available homes, plus support from the Stamp Duty holiday, has helped to exert upwards pressure on house prices. This, along with a significant jump in mortgage approvals and signs that confidence is growing, suggests the immediate future for the housing market is looking brighter. However, Halifax also warned that looking further ahead, there is still much uncertainty around the lasting impact of the pandemic, particularly as government support measures come to an end.

Increasing interest from overseas
The Stamp Duty cut has also led to a surge in interest in the UK property market from overseas. In addition, many overseas buyers are looking to purchase property before the introduction of an extra 2% Stamp Duty surcharge for non-UK buyers in April 2021.

Throughout July, highly searched terms by mortgage advisers included ‘visas’, ‘expats not in the UK’ and ‘foreign income’. One in 22 residential searches related to a query for an applicant currently on a visa or an expat not based in the UK.

How the Stamp Duty holiday works
On 8 July, the threshold at which Stamp Duty became payable on properties was increased from £125,000 to £500,000. This means almost nine in 10 buyers will pay no Stamp Duty before the holiday ends on 31 March 2021.

For those purchasing properties the rates are as follows:

• 0% - £0 to £500,000
• 5% - The part from £500,001 to £925,000
• 10% - The part from £925,001 to £1.5m
• 12% - Anything above £1.5m

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

You’ve retired from work, you’ve waved a cheerful goodbye to your colleagues and you’re ready for the rest and relaxation you so rightly deserve. It’s exciting! For a couple of weeks. Then the doubt sets in.

What will you do with your life, you might find yourself asking? How will you fill the long daytime hours? How will you manage without the comfort of your routine? Where will you find your purpose, if not from work?

Planning – it’s not just financial
Whenever we talk about retirement, it’s all about the pension. If you have enough in your pension pot when you retire, you’re all set, right?

Many retirees simply aren’t prepared for how significantly their life will change, and many, while not missing work per se, will certainly miss the sense of purpose it offered. And, with life expectancy on the rise, it’s daunting to contemplate the next 20 to 30 years without any of the structure around which you’re used to organising your life.

‘Reinvent’ yourself
A European study funded by the Erasmus program argues that we should start preparing for retirement as early as 50. Suddenly stopping work after spending a lifetime focused on your career, it argues, can be the catalyst for depression and other mental health issues. That’s why we need to ‘reinvent’ ourselves in our 50s by discovering new passions and interests, improving our mental and physical health, and generally forging a life for ourselves outside of work in the run-up to retirement.

So, what steps can you take to prepare for a happy retirement?

Happy, healthy, whole
Retired or not, you’ll still want and need similar things in life: a sense of purpose, social interaction and activities that interest and stimulate you. With this in mind, here are our tips for preparing for a fulfilling retirement:

Wind down in stages – rather than going from full-time to retired overnight, why not try reducing your hours first, giving you the fulfilment of work combined with the free time to pursue other interests?

Exercise your body – and your mind – experts have long extolled the virtues of exercise for our physical and mental health. Getting into the habit now could really help your emotional state when you retire.

Be a social butterfly – in addition to solitary hobbies and interests, joining groups and clubs can help you develop social networks outside of the workplace.

Get a furry friend – as well as keeping you company indoors, a pet (such as a dog) will give you an incentive to get outside in the fresh air.

Don’t neglect your pension – while preparing emotionally is a big part of retirement, the money still has to be there to allow you to live life to the fullest.

Would equity release be right for you? A way of supplementing your retirement income using the value tied up in your home, although not right for everyone, we can help you explore your options.

We do the finances, you do the rest
That’s why we’re here! We can help you sort out the financial stuff to provide you with the resources to spend your retirement free from money worries, so you can concentrate on enjoying your later years. Why not give us a call?

You will need to take legal advice before releasing equity from your home as Lifetime Mortgages and Home Reversion plans are not right for everyone. This is a referral service.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Despite rising coronavirus cases and increased lockdown measures, there was a renewed sense of optimism about the global recovery as we said goodbye to 2020

Although many countries have begun the new year under strict lockdown measures, vaccinations are providing a light at the end of the tunnel. Investors are optimistic that life will return to normal gradually in 2021 and that the economy will begin to heal.

While there’s been a spike in coronavirus infections during the winter, economic activity seems to have become more resilient to Covid-19 restrictions. There are a number of possible explanations, including less public fear about the virus, improved government policies and increased preparation by businesses.

Central banks continue to hold interest rates at record low levels to help governments fund their spending programmes. Although government borrowing will inevitably continue to rise, the cost of servicing these debts should remain low.

Global recovery hopes boost markets
The increased sense of optimism about the global economic recovery has already rippled across financial markets and most major stock market indices rose in January. Emerging markets remained popular due to rising investor confidence and dollar weakness. Cyclical stocks that are more sensitive to economic growth, including energy, banking and industrials, also benefited as vaccines continued to be rolled out.

Economically sensitive sectors also received a boost following the slim ‘blue wave’ in the US election results. The Democrats have now secured both houses of Congress as well as the presidency, increasing expectations that the government will introduce further stimulus measures to support the economy.

The 10-year Treasury yield rose above 1% for the first time since March as investors anticipated increased issuance of government bonds to fund US spending packages. Yields on 10-year gilt yields also rose after sharp falls in December amid concerns about coronavirus restrictions.

What’s happening with GameStop?
Conditions in stock markets became more volatile towards the end of the month as amateur investors bought shares in struggling US video games retailer GameStop. As a result, the share price jumped from less than $20 at the end of December to almost $350 on 27 January.

The surge was attributed to a community of independent traders on Reddit who banded together against hedge funds that had predicted GameStop’s share price would drop. These professional investors were left nursing substantial losses.

Brexit risks fade on last-minute deal
The UK and EU began their post-Brexit trading arrangement in January. The long-awaited deal, struck on Christmas Eve, has resolved one of the major risks hanging over markets and pushed the pound and stock market higher.

At the same time, UK equities performed well overall. This pattern is a reversal of what we usually see, as a stronger pound generally negatively affects large-cap UK stocks. The situation reflects the UK stock market’s bias towards more economically sensitive areas of the economy, including energy and financials.

Green tech in the spotlight
The coronavirus pandemic has put environmental concerns and social inequalities into the spotlight, and policymakers have responded by declaring that the recovery can improve the world around us by “building back better”. In line with these shifting attitudes, green tech stocks have surged in popularity. For example, Tesla’s share price reached $900.40 in January, an increase of almost 700% over the past year.

Overall, the outlook is looking much brighter than it was this time last year. The IMF projects that global economic growth will rise by 5.5% this year and by 4.2% in 2022 (6). However, risks remain – coronavirus still poses a significant threat and central banks will need to keep an eye on inflation as the world returns to some form of normality.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

As the number of people affected by Covid-19 now appears to be slowing as vaccines are rolled out, Mr Sunak was clear on the government’s intention to see out the next few months as lockdown eases with similar support for businesses and individuals. The existing pandemic schemes with which we have now become familiar – furlough, self-employment schemes, business loans and grants – have been extended through to the end of June or even beyond. He chose to spend big initially, announcing major investment incentives for companies in the next two years, adding further to the government debt mountain.

However, after companies have had their investment binge, the widely anticipated corporation tax rise then kicks in with a vengeance as the main rate leaps by 6% to 25% in just two years’ time.

Individual taxpayers did not escape paying their fair share either, with Mr Sunak reaching for the old stealth tax favourite of freezing bands, thresholds and allowances. The inheritance tax nil rate band, which was originally frozen at £325,000 in 2009, is not now due to increase until April 2026.

As a cornerstone of his ‘Plan for Growth’ for post-Brexit Britain, the Chancellor announced the launch of freeports, naming eight throughout England, from Teeside to Plymouth and South Devon. These will enjoy a range of tax benefits including full business rates relief, enhanced capital allowances and stamp duty land tax exemptions.

With the COP26 climate conference due to take place in Glasgow later this year, there were also a number of green initiatives. The first green government bond (a green gilt?) will be issued in the summer. Around the same time National Savings & Investments will launch its own green savings product.

By then, of course, we all hope, the Chancellor perhaps even more than most, to have turned the corner of the last pandemic year.

Economic Forecasts
The Chancellor began his statement by revealing the latest forecasts produced by the Office for Budget Responsibility (OBR) which provide hope of "a swifter and more sustained economic recovery" than previously expected. The economy is now forecast to grow by 4% this year and by 7.3% in 2022, which means it will regain its pre-pandemic level by the end of Q2 2022, six months earlier than November’s forecast implied.

In terms of public finances, the OBR expects government borrowing to rise to a peacetime record of £355bn in 2020/21 in order to fund the government’s economic support measures. As the economy reopens and emergency fiscal support is withdrawn, borrowing is forecast to fall back to £234bn in 2021/22. The Chancellor did not set any new fiscal targets in this Budget, though he did acknowledge that tax rises would be needed in the coming years to help repair the public finances.

COVID-19 Support Measures
Prior to Budget day, Mr Sunak had already announced a number of coronavirus support measures including an extension to the Coronavirus Job Retention Scheme, further support for a greater proportion of self-employed workers and details of the Restart Grant and traineeship schemes. During his speech, Mr Sunak reiterated that he “will continue doing whatever it takes to support the British people and businesses through this moment of crisis”, before confirming details of the various initiatives that will see total fiscal support rise to over £407bn:

• The furlough scheme will continue until September with no change to employee terms, although in July businesses will be asked for a 10% contribution rising to 20% in August and September

• The Self-Employment Income Support Scheme will pay a fourth and a fifth grant, which will potentially be available to an additional 600,000 self-employed people

• The Universal Credit £20 per week uplift has been extended for a further six months

• A new Recovery Loan Scheme will replace existing government-backed schemes at the end of this month offering an 80% government guarantee on SME loans of between £25,000 and £10m

• The business rates holiday in England has been extended until the end of June with a two-thirds discount then available across the rest of this year

• £126m of new money will enable 40,000 more traineeships, with cash incentives for firms taking on an apprentice doubling to £3,000

• The 5% reduced rate of VAT for tourism and hospitality sectors has been extended until the end of September followed by an interim rate of 12.5% for a further six months

• A £5bn Restart Grant scheme will provide grants of up to £18,000 for high street businesses.

Personal Taxation, Wages and Pensions
The Chancellor will freeze personal tax thresholds and increase tax rates on corporate profits in a policy he says is “progressive and fair.”

From April, the Personal Allowance will rise with inflation as planned, to £12,570, before 20% Income Tax becomes payable. The Income Tax higher rate threshold, at which people start to pay tax at 40% will rise to £50,270. Both thresholds will remain at these levels until April 2026 (rates and thresholds may differ for taxpayers in parts of the UK where Income Tax is devolved). As previously announced, the National Insurance threshold will rise to £9,568 from April and the Upper Earnings Limit will be £50,270.

Looking at Inheritance Tax, the nil-rate bands will remain at existing levels until April 2026: £325,000 nil-rate band, £175,000 residence nil-rate band with taper starting at £2m.

The 2021/22 tax year ISA (Individual Savings Account) allowance will remain at £20,000. The JISA (Junior Individual Savings Account) allowance and Child Trust Fund annual subscription limit will stay at £9,000.

The Capital Gains Tax annual exemption will also remain frozen at £12,300 for individuals, personal representatives and some types of trusts, and £6,150 for most trusts.

The National Living Wage will rise to £8.91 per hour and for the first time will include those aged 23 and over. The Lifetime Allowance for pensions will stay at its current level of £1,073,100 until April 2026. As previously pledged, the new single-tier State Pension will increase from £175.20 a week to £179.60 in April 2021. The older basic State Pension will increase from £134.25 to £137.60 per week. The rise is the result of the triple-lock system, whereby the State Pension rises in line with CPI inflation, average earnings, or 2.5%, whichever is the highest. For this year, the increase is 2.5%.

Business Taxes
In 2023, the main rate of Corporation Tax, paid on company profits, will increase to 25%. Businesses with profits of £50,000 or less will continue to be taxed at 19%. A tapered rate will also be introduced for profits above £50,000, so that only businesses with profits of £250,000 or more will be taxed at the full 25% rate. A temporary super-deduction tax incentive will cut companies’ tax bills by some 25p for every £1 they invest, by providing allowances of 130% on qualifying investment in new plant and machinery.

Housing
A three-month extension to the temporary Stamp Duty Land Tax ‘holiday’ in England and Northern Ireland was announced, with the £500,000 threshold at which SDLT starts to apply now set to end on 30 June. A threshold of £250,000 applies for a further three months, with the regular £125,000 threshold returning from 1 October 2021.

The Chancellor introduced a new mortgage guarantee scheme. From April, the government will provide guarantees to UK lenders who offer mortgages to buyers to secure a loan with a 5% deposit on a property of up to £600,000 up to 31 December 2022.

Environment and ‘Help to Grow’ Initiatives
Mr Sunak outlined his plans for Britain’s “future economy”, with a “commitment to green growth” at its heart. He announced:

• The UK’s first Infrastructure Bank, based in Leeds, with an initial capitalisation of £12bn, it will invest in green projects across the UK

• New funding for offshore wind infrastructure in Teesside and the Humber

• A new NS&I retail ‘green’ savings product

• An updated monetary policy remit for the Bank of England, reinforcing the importance of environmental sustainability and the transition to net zero

• Support for the development of new solutions to cut carbon emissions

• At least £15bn of green gilt issuance in the coming financial year.

Skills training for small businesses is also part of the future economy, Mr Sunak said, announcing a £520m ‘Help to Grow’ scheme that includes:

• Help to Grow: Digital – offers SMEs free online advice and a 50% discount on productivity-enhancing software (up to the value of £5,000)

• Help to Grow: Management – offers access to a 12-week training course with leading business schools, which is 90% government subsidised.

Other key points

• The establishment of eight new freeports in England
• As previously announced, an extra £1.7bn will be allocated to help the government reach its vaccination target of offering a first dose to every adult by 31 July
• £400m to help young people catch up on lost learning
• £700m to support the UK’s arts, culture and sporting institutions as they reopen
• £150m to help communities take ownership of pubs, theatres, shops, or local sports clubs at risk of loss
• Over £1bn was announced for 45 new Town Deals across England
• Increased funding for the devolved administrations; £1.2bn for the Scottish government; £740m for the Welsh government; and £410m for the Northern Ireland Executive
• Fuel duty and alcohol duty frozen
• An extra £19m was pledged for domestic violence programmes
• An additional £10m to the Armed Forces Covenant Fund Trust, to support veterans with mental health issues (2021/22)
• Contactless payment card limit increased to £100 for a single transaction and cumulative contactless payments up to £300, the new limits will be implemented later in 2021
• Air Passenger Duty rates will increase in line with RPI from April 2022
• Company vehicles – fuel benefit charges and the van benefit charge will increase in line with CPI from 6 April 2021
• VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2022
• Taxpayer Protection Taskforce is being established, costing over £100m to combat fraud within COVID-19 support packages
• City and Growth Deals – over the next five years £84.5m in funding will be brought forward to speed up investment in local economic priorities
• £375m for a new Future Fund: Breakthrough scheme, facilitating investment in high-growth, innovative UK firms
• The government is launching the prospectus for the £4.8bn Levelling Up Fund
• The symmetric inflation target of 2% for the 12-month increase in the CPI measure of inflation will remain in place for the financial year 2021/22.

Closing comments

The Chancellor signed off saying, “An important moment is upon us. A moment of challenge and of change. Of difficulties, yes, but of possibilities too. This is a Budget that meets that moment.”

With hopes rising about vaccines and the end of lockdowns, could we see a rise in inflation when the economy reopens?

As vaccines continue to be deployed rapidly around much of the world, hopes are increasing about the global economic recovery. Many people expect there to be a strong rebound once coronavirus restrictions are lifted, but there are fears that the rebound could increase inflationary pressures.

As well as increasing demand, there are concerns that central bank quantitative easing (QE) programmes and increased government spending could combine to push up the rate of inflation. Notably, US President Biden’s $1.9 trillion stimulus package is likely to be introduced in March.

What would higher inflation mean for investors?
Government bond yields have been rising substantially (which means prices have fallen) as investors price in the impact of higher inflation on returns. Inflation is bad news for government bonds because it erodes the real value of the fixed interest rates that they pay.

The concerns have also affected the stock market. Investors are worried that if inflation spirals out of control then banks will have to stop QE and perhaps increase interest rates. That would be bad news for big tech companies in particular, where today’s share prices depend on rates remaining low. While low rates increase the current value of their future cash flows, the present value of future earnings falls if rates rise.

As a result, cyclical stocks that are more sensitive to the economy, such as industrials, are looking more attractive, while growth stocks like tech are becoming less popular.

Could inflation spiral out of control?
While inflation is likely to increase in certain areas of the economy after lockdowns ease, we believe it would just be a short-lived rise. Longer-term deflationary forces including ageing demographics, low productivity growth and efficient global supply chains cast doubt over predications of a new age of higher inflation.

We’re also confident that if inflation does increase slightly then it’s likely to be because economic growth is strong, which is in turn good for company profits and investment returns. With interest rates at record low levels, central banks have plenty of room to increase them to levels that would still be below the long-term average. Conditions in stock markets appear to have steadied already after the recent bond market tantrum.

Earnings season better than expected
Many companies performed better than expected in the fourth quarter of 2020. Tech giants reported strong earnings, with Apple’s revenue reaching $111.4 billion in its best quarter ever. Resilience from companies in more cyclical sectors reinforced shifting sentiment about the economy. For example, Caterpillar, which makes mining and construction equipment, beat expectations for the final three months of 2020 – earnings per share fell 22%, as opposed to the 30% estimated by analysts.

The recovery should benefit UK equities

The economic recovery should favour the more cyclical nature of the UK stock market, which is weighted towards sectors that are more sensitive to the economy, such as energy and financials.

Sterling also strengthened against the US dollar and euro as investors grew more confident about the UK’s vaccine programme and prospects for reopening the economy. In February, sterling rose to $1.40 against the dollar for the first time since 2018.

The current tax year ends on 5 April 2021, so now’s a good time to make sure your finances are in order and book an annual review with your financial adviser. We’ve taken a look at some of the main allowances you’ll need to bear in mind as you prepare for the end of the tax year.

ISAs
An ISA is a tax-free wrapper in which you can hold various types of savings and investments. There are different types and the amount you can place in them without being charged tax (the tax-free allowance) varies. You can spread your money across different types of ISAs, but you can’t exceed the maximum annual allowance of £20,000. It can’t be rolled over to next year, so if you don’t use it, you’ll lose it.

Which ISA is right for you?

Pensions
There’s a maximum amount you can put in your pension tax-free each year. The annual allowance for 2020/21 is £40,000 and includes:

• the total amount paid in to a defined contribution scheme in a tax year by you or anyone else (such as your employer); and
• any increase in a defined benefit scheme in a tax year.

You might be able to carry over your annual allowance from the last three years if you’ve not used all of it. Bear in mind that it may be lower than £40,000 if you have flexible access to your pension pot. You’ll also have a reduced (‘tapered’) annual allowance if:

• your ‘threshold income’ (your net income for the year) is more than £200,000; or
• your ‘adjusted income’ (which includes the value of all your employer’s pension contributions) is more than £240,000.

Capital gains tax
You’ll have to pay capital gains tax (CGT) on your overall gains if they go above your tax-free allowance – otherwise known as the annual exempt amount. The CGT annual exempt amount is £12,300, or £6,150 for trusts.

You may also be able to reduce your tax bill by deducting losses or claiming reliefs, but this depends on the asset, so make sure you ask your financial adviser for more information.

Inheritance tax
The rules surrounding inheritance tax (IHT) are really complicated and it’s important to seek financial advice before making any decisions. For example, you can give away assets or cash worth up to £3,000 a year and there will be no IHT to pay regardless of the total value of your estate when you die.

You can also give as many gifts of up to £250 to as many people as you want each year – although not to anyone who has already received a gift of your whole £3,000 annual exemption. To make use of this exemption, it’s important to keep accurate records.

To learn more about how to make the most of your money this tax year and for more information about your tax-free allowances, speak to your financial adviser.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

If you’re struggling to pay your bills due to the coronavirus crisis, the deadline to apply for a payment holiday is fast approaching

The coronavirus crisis has fundamentally changed the way we live, with lockdowns shutting down parts of the economy and forcing many businesses to close. Sadly many people have lost their jobs or been put on furlough, leaving them with less money to pay their bills.

If your household income has taken a hit due to the pandemic, it’s important to know you have options. You can still apply for a payment holiday from lenders but you’ll need to hurry – the deadline is Wednesday 31 March 2021.

Payment holidays are available for up to six months. Generally, providers will offer you a three-month payment freeze to start with, after which you can resume payments or ask to extend until you reach the six-month limit. If you still need help after a six-month payment holiday, your lenders should work with you to offer you additional support.

Payment holidays are available on a number of borrowing options and finance agreements, including:

• mortgages
• personal loans and credit cards
• insurance
• car finance

Mortgages

Many people have struggled to meet their mortgage repayments during the pandemic, with 1.8 million payment holidays taken at the height of the first UK lockdown. If you want to apply, remember you’ll still need to pay interest. If you can afford it, take a partial payment holiday so less interest builds up.

If you’ve already taken a six-month payment holiday, your mortgage provider may offer:

• another payment deferral
• another period of reduced payments
• an extension to your mortgage term
• a change to your mortgage type

Personal loans and credit cards
During the first lockdown, more than 1.7 million loans, credit cards and store cards were on payment holidays in the UK. While this number has since fallen, many people still need support. If you apply for a payment holiday on your loan or credit card, bear in mind that interest will continue to be charged.

If you find yourself in a similar situation after six months, your lender will need to provide extra support and may offer:

• another payment deferral
• another period of reduced payments
• to waive or reduce interest
• to agree a repayment plan
• to refinance your credit agreement

Insurance
Before you apply for a payment holiday on your insurance premiums, ask your provider to review your policy and see if there are any other more suitable and affordable options. If you do take a payment holiday and are still facing financial difficulties after six months, your insurer may offer to do the following:

• review your policy
• another payment referral
• another period of reduced payments
• waive or reduce interest
• agree a repayment plan

Car finance

Are you finding it a challenge to make your car, van or motorbike finance payments during the pandemic? If so, you’ll be able to take a payment holiday, but remember that interest will continue to be charged. Consider taking a partial payment holiday if you can to avoid paying extra interest. If you need more support after six months, your lender may offer to do the following:

• another payment deferral
• another period of reduced payments
• waive or reduce interest
• agree a repayment plan
• refinance your deal

If you still need support from lenders after six months, bear in mind that this may affect your credit report.

Hopefully the demand for payment holidays should keep falling as vaccines continue to be administered and the world gradually returns to normal, but it’s good to know that help is available now if you need it.

We can help you explore the available options so get in touch.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT

Nevertheless, 23 March became labelled Tax Day and the focus on its contents intensified when the Chancellor avoided Budget comment on, for example, the future of inheritance tax and capital gains tax. Both had been the subject of detailed reports from the Office of Tax Simplification (OTS), one of which had been commissioned by Mr Sunak.

In the event, the day was marked by publication of over 30 documents, ranging from new consultations and discussion documents to interim reports, calls for evidence and summaries of responses. Despite the quantity, there were some surprising absentees from the list of topics, including tax relief on pension contributions, which had been the subject of an earlier call for evidence.

We have summarised some of the key areas likely to have a direct impact on your tax planning in the months and years ahead. Links to individual measures are given for exploring further details.

The full collection of documents is available online at .GOV.UK.

PERSONAL TAXATION

Self-catering lets and business rates
Following on from a consultation paper issued last November, there will be legislation to change the criteria determining whether a holiday let is valued for business rates to account for actual days the property was rented. Details of the reform and its implementation will be published shortly by the Ministry for Housing, Communities and Local Government.

PENSIONS, SAVINGS AND INVESTMENTS

Pensions tax technical updates
The Treasury has identified “several aspects of the pension tax framework that do not work as intended in all situations”. For example it cites how the current framework does not easily permit individuals to ask their pension scheme to settle annual allowance charges from previous tax years by reducing future pension benefits (‘Scheme Pays’). Technical updates will be made to remove such anomalies.

There was no comment on pension tax relief administration, the subject of a call for evidence that ended last October.

Tax treatment of Superfunds
There will be a review of “the appropriate taxation framework” for Superfunds, which act as consolidator funds for defined benefit pension schemes. The Treasury says that “it should not be assumed that the tax regime that currently applies to entities and transactions in the Superfund structure or the pension schemes that have transferred to the Superfund will remain unchanged”.

Social investment tax relief (SITR)
A summary of responses to the earlier call for evidence on SITR confirmed the Budget announcement that the relief will continue until April 2023.

CAPITAL TAXES

Inheritance tax (IHT)
The reporting regulations for estates will be amended so that from 1 January 2022, over 90% of non-taxpaying estates will no longer have to complete IHT forms when probate or confirmation is required. The Treasury says it will respond to other OTS proposals for simplifying IHT “in due course”.

The taxation of trusts
Responses to a taxation of trusts consultation launched in 2018 have finally been published. The Treasury notes that “The responses did not indicate a desire for a comprehensive reform of trust tax at this stage” and it will now “keep the issues raised under review”.

BUSINESS TAXES

Business rates
An interim report on last year’s fundamental review of business rate incorporates responses, but no new proposals. A final report is scheduled for autumn 2021.

Transfer pricing documentation
A new consultation seeks views on transfer pricing documentation requirements.

Aggregates levy
A consultation seeks view on proposals for a more restrictive treatment of aggregate removed during construction works.

Landfill tax review
Aspects of the landfill tax in England and Northern Ireland will be reviewed following discussion with stakeholders.

Residential property developer tax
A consultation will be published in the coming months on a new tax on the largest residential property developers to help pay for the costs of cladding remediation. The tax will be introduced in 2022.

VALUE ADDED TAX

VAT partial exemption and capital goods scheme
A response to the 2019 consultation includes details of how HMRC intends to update internal systems to simplify the existing process.

VAT grouping
Before the summer the Treasury will publish a summary of responses to its VAT grouping call for evidence. No further action will be taken on this subject.

Value shifting for VAT
A summary of responses to the consultation on VAT and value shifting will be published in the summer and, subject to those responses, new rules will be prepared and an update on next steps will be issued later in 2021.

TAX ADMINISTRATION AND TAX AVOIDANCE

The tax administration framework: supporting a 21st century tax system
This call for evidence is part of the government’s 10-year tax administration strategy and seeks ideas on how the tax administration framework could be updated and simplified.

Timely payment
The Treasury describes this call for evidence as “the start of a conversation about the benefits and challenges of the current tax payment timings, and for moving to more frequent, in-year tax calculation and payment”.

Making Tax Digital
Making Tax Digital (MTD) is the first phase of moving to a digital tax service. The government confirmed that legislation later this year will extend MTD to income tax self assessment from April 2023.

Clamping down on promoters of tax avoidance
A new consultation on a “package of measures to clamp down on promoters of tax avoidance” is published alongside draft technical guidance on other anti-avoidance measures contained in Finance Bill 2021.

Raising standards in the tax advice market
A consultation proposes a standard definition of tax advice together with a requirement that tax advisers hold professional indemnity insurance.

Helping taxpayers get offshore tax right
A discussion document focuses on the mechanisms HMRC can use to assist with offshore tax compliance.

Preventing and collecting international tax debt
This discussion document examines issues around international tax debt, including how it can be collected.

Hidden economy conditionality
This consultation sets out proposals for making renewal of certain licences in Northern Ireland and Scotland subject to appropriate tax registration from April 2023.

Tackling disguised remuneration tax avoidance
A summary of responses has been published to last year’s consultation paper. The government’s main reaction to these responses is a continued clamp down on promoters of tax avoidance schemes and the education of taxpayers about the risks.

Successful vaccination programmes are rolling out on both sides of the Atlantic, pointing to a brighter economic outlook.

The US and UK continued their rapid vaccine programmes to combat the coronavirus pandemic, while Europe lagged in its rollout, resulting in a resurgence of COVID-19 cases in some parts of the EU. As a result, the US and UK are likely to be able to reopen their broader economies sooner, while much of Europe still faces strict lockdowns.

Budget brings some relief
In his March Budget, Chancellor Rishi Sunak outlined stimulus measures to support businesses and workers through to the autumn. This much-needed spending foreshadows the largest hike in taxes for decades, with tax and spending decisions to total almost £60 billion in the 2021–22 fiscal year.

In addition, the government mapped out its plan for lifting lockdown restrictions and hopes to be in a position to remove all legal limits on social contact on 21 June. Pent-up demand is likely to push up the pace of economic growth for the rest of this year and in 2022.

US introduces new stimulus measures
In the US, Joe Biden’s $1.9 trillion stimulus passed through both houses of Congress in March. Under the legislation millions of Americans will receive one-off cheques for $1,400 and the unemployed will continue to receive $300-a-week top-ups until September. The OECD believes the stimulus will turbocharge the American economy and add a percentage point to global growth.

The US also leads the world in total coronavirus vaccines administered, suggesting the American economy is likely to begin its recovery process sooner than many other developed regions.

Inflation worries linger
Inflation worries hit bond markets, but the consensus is that any rise in inflation is most likely to be short lived. Government bond prices fell sharply (and yields increased), reflecting concerns about an increase in inflationary pressures as the global economy started to recover from the pandemic. Inflation is detrimental to bonds because it erodes the real value of the fixed interest rates they pay.

Investors are concerned about inflationary pressures as economies reopen, but we don’t expect the likely spike in consumer prices to persist. Inflation is likely to pick up as spending on services surges when lockdowns end, and government spending is another tailwind. But it’s likely to be a fleeting phenomenon and should not pose a longer-term challenge to fixed income markets.

Cyclical stocks are still attractive
Cyclical stocks remain in favour, as vaccines are administered and the economic outlook improves. Cyclicals like financial and energy stocks tend to perform well when the economy is expanding. But sectors that benefited during the height of the pandemic, such as tech, have fallen as prospects for the economy brighten.

This environment has benefited Europe’s stock market, which comprises fewer technology firms than America, and more cyclical companies such as banks and commodity firms. The broad rotation away from tech towards cyclicals looks likely to continue.

Big money in digital art
Commodity prices have risen this year, including copper and other metals used in electric vehicles, as well as oil. But gold lost some of its shine as a safe and steady investment, with its price falling steadily since the start of the year.

The Suez Canal was the scene of a stuck cargo vessel in March, blocking the vital shipping route for several days. Around 12% of the world’s trade happens via the Canal and it is thought that each day of the blockage halted billions of dollars in trade traffic.

In March, auction house Christie’s sold a digital piece of art by contemporary artist Beeple for $69.3 million – the latest example in the market for non-fungible tokens (NFTs). The artwork itself was composed as a single, unique and encrypted image file – the first sale of its kind by Christie’s, with bidding opening at $100. The eventual anonymous buyer paid for the work in Ether, a cryptocurrency.

As well as peace of mind, many insurance providers offer additional benefits that you may not know about.

Whether we’re crossing the road or getting on a plane, we encounter risks every day. For many of us, life has felt more uncertain than ever over the past year as we continue to deal with the coronavirus pandemic. Although we can’t always control what’s happening in our lives, we can plan for the unexpected.

By taking out a protection policy, you can safeguard your family’s finances if your situation changes. The main types of protection include:

• Life cover – pays out a lump sum if you die
• Health insurance – pays medical costs at a private hospital or private ward
• Critical illness – pays a tax-free lump sum if you’re diagnosed with a major illness
• Home contents and buildings – covers your home’s structure (including fixtures and fittings) and contents (furniture)
• Income – pays out if you can’t work due to illness or injury

As well as peace of mind, protection policies often come with added extras. We’ve highlighted examples of some of the perks you could receive when you take out a policy, even if you don’t make a claim.

Welcome gifts
When you sign up for a protection policy, some providers offer a welcome gift. For example, health insurers sometimes offer gadgets like an Apple Watch to help you track your activity – with some even offering a discount based on the amount of exercise you do each month.

Discounts
Many health insurers offer discounts on gym memberships and weight-loss programmes to help you embrace a healthier lifestyle. Some also offer you the option of taking a health check to reduce the amount you pay each month.

It’s worth noting that when you take out a protection policy, your provider is likely to offer you discounts on other products such as pet or travel insurance.

Additional healthcare options
Some health insurers now cover complementary therapies such as osteopathy and acupuncture, giving you more treatment choices. In addition, counselling services are now included in most health insurance policies and many also give you the option to upgrade your hospital room if you need treatment.

Will writing
Some providers of life insurance give new policyholders the opportunity to draw up a will free of charge.

Cover for children
Many critical illness plans include free cover for dependent children.

What support do insurers offer after the event?
Illness and bereavement help. Many providers give free access to services offering practical and emotional support for those left behind after the death of the policyholder.

Rehabilitation
Insurers usually offer back-to-work support services, including physiotherapy, careers guidance or advice if you choose to go self- employed. If you’re returning to work following a mental health issue, providers will continue to cover counselling sessions for a set period of time.

Whatever type of protection you’re looking for, get in touch and we can help!

Moving home can be a hectic and exciting time, but don’t forget about protection – taking out the appropriate policies can save you a lot of stress in the long term.

If you’ve just moved home or are about to, it probably feels like you’ve been caught up in a bit of a whirlwind over the past few months. With searching for a property during a pandemic, making the move before the stamp duty holiday ends and potentially getting caught up in the resulting conveyancing backlog, protection policies are probably not top of your priority list.

Yet it’s important to take the necessary precautions to ensure your new home and possessions are looked after – now more than ever. Here are some of the main types of protection you should be thinking about.

Mortgage protection
If you’re unable to work due to illness or injury or because you’ve lost your job, mortgage payment protection will cover the cost of your mortgage each month. These policies usually last for a year or until you return to work – whichever is soonest.

You can pick how much you want your policy to pay out each month, and this can include a buffer for other expenses, such as bills. It’s important to bear in mind though that providers usually set monthly limits of between £1,500 and £2,000. You won’t always be able to claim straight away, and there’s usually a waiting period of one or two months. The cost of mortgage protection will depend on:

• your salary;
• the size of your mortgage repayments;
• the type of policy you choose; and
• how soon you want to be covered.

Income protection
Income protection provides you with a regular income if you are unable to work due to illness or injury. There’s usually a minimum wait of four weeks before you can start receiving payments.

Buildings insurance
If you’ve got a mortgage, you’re likely to have buildings insurance to cover the cost of repairing damage or rebuilding the structure of your home if it’s damaged. But have you looked carefully through the policy and made sure that it definitely covers everything you need it to? Once you’ve moved, you may realise that your new home has a slightly more complex structure than you first realised, and it’s important to make sure your buildings insurance takes this into account. If you’re lucky enough to not have a mortgage, it’s still a sensible idea to invest in this type of insurance for peace of mind.

Contents insurance
If you’ve bought new furniture and gadgets for your home, you might need to review your contents insurance. This type of insurance covers the cost of replacing possessions in your home if they’re stolen, destroyed or damaged. It’s a good idea to double check which of your items are covered so that you’re not caught out if something does go wrong.

Act now
When you’re caught up in the excitement of moving, thinking about protection might be the last thing on your mind. But remember that your circumstances can change quickly and it’s important to make sure you’re prepared now in case things don’t go to plan in the future. For more information about protection and to talk about whether your current policies are right for your situation, speak to your financial adviser today.

The economic recovery is gathering momentum as the pandemic recedes and successful vaccination programmes continue to roll out on both sides of the Atlantic.

April saw the continuation of progress made in March, as a more settled month in the investment markets, with equities performing well and bonds showing stability and positive returns. The International Monetary Fund (IMF) increased its forecast for growth in 2021 to 6%, citing stimulus bills in richer countries helping economies bounce back from the Covid-19 pandemic1. Equities in the US and UK performed well – no doubt helped by progress made in vaccination rollouts and their economies beginning to open up again.

US stimulus measures
The US experienced a stronger first quarter than experts predicted, with the banking sector in particular exceeding expectations, and a rise in consumer prices. This was helped by increased activity in areas like retail investing, aided by the Biden administration’s stimulus measures to regenerate the economy. The next target to help fuel the recovery is an infrastructure spending plan, which aims to strengthen ailing sectors like transport, roads and the electric grid.

Boost for the UK stock market
With the reopening of non-essential shops and services in the UK, the number of job vacancies picked up in April. Along with a successful vaccination programme, this gave a boost to the stock market. The spending plans for workers and businesses outlined in the government’s latest Budget also helped soften the blow of the pandemic. The market’s bias towards economically sensitive sectors, including finance, energy and hospitality, and a relatively small tech sector, means it should continue to rise as the economic recovery picks up.

In Europe, the recovery has got off to a slower start, due in part to the delay of the vaccine rollout, which has dented investor confidence. But there was some encouraging activity in April, with Europe performing better than expected and the Stoxx Europe 600 Index hitting an all-time high.

Oil prices rise
In April, the International Energy Agency amended its forecast for the growth in oil demand, following faster economic recoveries in the American and Chinese markets than expected.2 The market for oil itself saw a rise in price, pushing up inflation as well the price of gold. Gold as a commodity is attractive to investors as a safe place to invest during times of unrest in the markets and rising inflation.

The markets in April saw a continuation of the trend from previous months, with a general shift away from technology stocks (which saw good profits from the stay-at-home economy) to more cyclical companies – such as banks, airlines and industrial firms, which benefited from reopening economies. After such a long period of inactivity and stagnation due to the global pandemic, things are now moving unusually fast in the world economy and financial markets.

Putting your hard-earned cash into savings accounts may not be the most efficient way to make your money work for you.

If you’ve been placing your cash into a savings account over the past decade, you might be surprised to find that your money could now be worth less now than when you first put it away. According to research from AJ Bell, if you’d put £10,000 into a cash ISA 10 years ago, it would now be worth £9,772 even when accounting for interest.

So why is this? Inflation is currently outpacing interest rates, with the latest figures showing that it reached 0.7% in January. Meanwhile, the Bank of England (BoE) base rate has stayed at 0.1% since March 2020 and doesn’t look likely to rise any time soon.

The BoE base rate influences how much banks can charge people to borrow money or what they pay on savings. As a result, the current situation is bad news for savers as it reduces the spending power of their money. Yet it’s good news for some borrowers – for example, those with a fixed-rate mortgage benefit from inflation as it effectively reduces their debt.

What is inflation?
Inflation is the rate at which prices for goods and services increase, affecting what you can buy for your money. The most common estimate is the Consumer Prices Index (CPI) measured by the Office for National Statistics (ONS).

It looks at the prices of thousands of things people spend money on, from cinema tickets to bikes, computers and TVs. It’s important to remember that inflation is only an average rate that looks at certain products, so it affects households in different ways.

One of the BoE’s key roles is to ensure that inflation stays at a target of around 2%. So if inflation falls below this level, the BoE is likely to cut interest rates to lower the cost of borrowing and encourage spending.

What’s the alternative to cash?
If you’d used your whole cash ISA allowance each year and put in the maximum of £127,320 since 2011, it would now be effectively worth only £124,857, according to AJ Bell. Yet if you’d put the same amount into an average global stock market fund, it would now be worth £196,079 after accounting for inflation.

This means that if you’d started putting your money into a stocks and shares ISA at the same time, you’d be much better off than if you’d stuck with a cash ISA. Despite this, many people still hold onto their cash because of the security and convenience it offers. While it’s important to have access to some cash for your short-term needs, it makes sense to invest your money when thinking about the long term so you don’t lose out to inflation.

What about junior ISAs?
A junior ISA is a useful way to save or invest for a child under the age of 18. When they turns 18, the account can be converted to an adult ISA. There are two types available: a junior cash ISA or a junior
stocks and shares ISA. As with an adult cash ISA, putting the money into a junior cash ISA means it may not grow as quickly as inflation. Alternatively, the returns from a junior stocks and shares ISA
depend on the performance of the underlying investments.

So although investing does come with its own risks, you’re likely to achieve higher returns than if you leave your money in a cash savings account. If you’d like to find out more about investing, a financial adviser can talk you through your options and help you find the most appropriate solutions for your circumstances.

An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value ofyour investments and any income from them can fall as well as rise.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

The number of people using equity release schemes fell last year as older homeowners grew more cautious.

Older homeowners seemed to be more reluctant to release cash from their homes in 2020, according to the Equity Release Council. Data from the trade body shows drawdowns from lifetime mortgages fell by 21% last year and 10% fewer plans were agreed than in 2019.

This drop suggests the coronavirus pandemic affected the equity release market in 2020, with activity slipping to a four-year low between April and June. Yet the end of the year was a different story – a backlog of cases meant it was unusually busy, with 11,566 new equity release plans agreed between October and December.

What is equity release?
Equity release enables homeowners who are aged 55 and over to access some of the money tied up in their homes. You can take the money as a lump sum or in several smaller amounts. Many people choose this option to supplement their retirement income, make home improvements or help children or grandchildren get onto the property ladder.

The most common way to release equity from your home is through a lifetime mortgage, which allows you to take out a loan secured on your property, provided it’s your main residence. You can ring-fence some of the property value as inheritance for your family and you can choose to make repayments or let the interest roll up. The mortgage amount, including any interest, is paid back when you die or move into long-term care.

Alternatively, you can take out a home reversion plan, which enables you to sell all or part of your home for a lump sum or regular payments. You can continue living there rent-free until you die, but you’ll have to pay to maintain and insure it. You can ring-fence some of the property for later use. At the end of the plan, the property is sold, and the proceeds are shared according to the remaining proportions of ownership.

Is equity release falling out of favour?
In 2020, £3.89 billion of equity was released from property, compared with £3.92 billion in 2019 and £3.94 billion in 2018, according to the Equity Release Council. These figures suggest people are biding their time before unlocking wealth from their homes, according to David Burrowes, the trade body’s chairman.

Yet interest rates for lifetime mortgages are now falling, which could encourage people to take the next step. The average equity release interest rate fell to around 4% during the last three months of 2020, with the lowest rates now at around 2.3% This rate is less than many of those available on 10-year fixed-rate mortgages, but higher than a lot of products with shorter fixed periods.

Is equity release right for you?
Deciding to release funds from your home isn’t a decision to take lightly. While equity release means you have money to spend now instead of leaving it tied up in your property, it can be a complicated process. Remember that equity release often doesn’t pay you the full market value for your home and it will also reduce the amount of inheritance your loved ones could receive. It’s important to talk to a financial adviser who can help you decide whether the process is appropriate for you.

A Lifetime mortgage is a loan secured against your home. A Lifetime mortgage may affect your entitlement to state benefits, and it will reduce the value of your estate.

We explore what makes an emerging market and why they can offer attractive investment opportunities.

For example, South Korea is one of the world’s largest and wealthiest nations. Its GDP per capita – which measures economic output divided by total population – was $31,846 in 2019, outranking countries like Spain, which had a GDP per capita of $29,600. Yet South Korea is still classed as an emerging market in many stock market indices, such as the MSCI Emerging Markets Index. So why does the country fall into this category?

Markets have to meet specific criteria to be included in an index based on factors like their size and how easy it is to buy and sell securities. In investing terms, South Korea is not currently considered to be as accessible as its developed market counterparts. While its economy may be stronger than those of some developed markets, its financial markets are less efficient.

In short, financial markets in developing countries are less mature than those in developed countries. This means it’s often difficult to obtain information about companies listed on their stock markets and it may not be as easy to buy and sell shares.

Why invest in emerging markets?
In general, emerging markets appeal to many investors because they offer the potential for relatively high returns – but this comes with greater risk. One benefit is that economies that fall into this category usually experience faster growth than that seen in developed markets.

For example, the economic growth of most developed countries, such as the US, Germany and Japan was less than 3% in 2019. On the other hand, the economies of emerging markets like Egypt, Poland, India and Malaysia expanded by 4%. China, which is also in this category, experienced growth of around 6%.

Many of these countries follow an export-driven strategy due to a lack of domestic demand. This means they produce low-cost consumer goods and raw materials to export to developed markets, driving economic growth and boosting investor returns.

What are the risks?
While emerging markets do offer attractive investment opportunities, investors have to be willing to do the appropriate research to find them. Many of these countries experience high volatility due to natural disasters, external price shocks and government instability. In addition, they’re vulnerable to currency fluctuations, especially in relation to the US dollar.

Recent dollar weakness has been beneficial for emerging markets because the value of foreign-currency denominated assets rises for US investors as the dollar falls. In other words, imagine you’re an American tourist going overseas. When you convert your dollars into foreign currency, it won’t go as far when its value is lower. Another benefit for emerging markets is that a weaker dollar helps them pay off their US-denominated debt.

What are frontier markets?
Frontier markets are smaller, less accessible and riskier than emerging markets, but offer potential for high returns over the long term because they could grow to be much more stable over the next few decades. Examples of frontier markets include Kazakhstan, Nigeria and Sri Lanka.

Emerging markets offer a range of attractive investment opportunities, but you should also be aware of the risks involved. If you’d like to find out more about investing in emerging markets or investing in general, speak to your financial adviser.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

Past performance is not a reliable indicator of future performance and should not be relied upon.

The combined economic effects of stimulus measures, inflation and increased spending all contributed to an eventful month.

In May, vaccine rollouts gathered pace and pandemic-based restrictions began to lift in many countries. However, a new wave of cases in India raised concerns worldwide.

Despite reports that the UK economy shrank in the first quarter compared with the previous three months, the level of employment increased, although it remains below pre-pandemic levels. Inflation doubled to 1.5% in April, and the next stage of reopening the country took place in May, with indoor dining allowed and air travel to a ‘green list’ of countries.

America saw its GDP grow by 1.6% in the first quarter, bringing it back almost to where it was before the coronavirus struck. Household spending on imported goods from China especially soared – perhaps as a result of stimulus checks and the reopening of services following the vaccine rollout implemented by the new Biden administration.

Inflation is picking up
With increased spending came the news that the US inflation rate soared to 4.2% in April, which is higher than expected, and cause for concern around supply, with bottlenecks pushing up costs for manufacturers and consumer prices. The stimulus checks are thought to account for some of the rise, and experts also believe a boom in consumer demand is behind it too.

The Federal Reserve’s position is that inflationary pressures are temporary, and policymakers believe it will fall back down towards the end of the year. It’s not seen as something that will force central banks to increase interest rates any time soon.

Commodity prices are rising
Commodity prices in May rose, with the price of iron ore and copper reaching record highs. Copper – seen as a bellwether for the global economy – rose to over $10,000 a tonne, surpassing the previous peak set in 2011 (during a commodities boom.) Demand for copper comes from China and the green transition in rich countries: it’s used in a range of industries, from electric vehicles to wind turbines and solar panels.

‘Dr Copper’ is closely watched in markets because of its ability to diagnose important shifts in the world economy. Plans for fiscal stimulus in America and Europe lean towards the ‘greening’ of economies, favour copper demand. As a pliable, cost-effective conductor of heat and electricity, copper is a vital input to green tech.

There is concern that a green energy bubble could form due to the large investment in the sector (like wind, solar or hydro industries.) These companies have stretched market valuations – and may not be earning as much as their share values suggest.

Bitcoin in freefall following Musk snub
The walk-back from Elon Musk in his support of Bitcoin, underlined concerns around the feasibility of cryptocurrencies as a stable investment. Musk – previously an outspoken supporter – announced his company Tesla would not be accepting Bitcoin as payment for its vehicles.

His retraction followed news of the environmental effects from the electricity used to mine the currency. The result was a huge drop in the value of Bitcoin (and other digital currencies) – which continued its plummet days after the announcement.

June saw a delay to the planned reopening of UK business and services, a drop in unemployment and some promising world economic news.

June brought the news that the UK’s unemployment rate fell to 4.7% in the three months to April – a slight improvement from 4.8% in the three months to March. This, coupled with strong consumer spending figures for the month, offered some hope despite inflation jumping to 2.1% - mainly driven by the increase in the cost of fuel, clothing and eating out. Overall, the job market in particular showed good signs of recovery, with the opening of non-essential shops and outdoor hospitality venues across the UK.

The UK’s planned ‘freedom day’ on 21 June was pushed back to July, due to the increase in Covid-19 cases following the spread of a new variant of the virus. The vaccination effort in turn stepped up – with the aim of vaccinating as much of the younger population as possible to stem the spread. Despite this news, the Confederation of British Industry (CBI) reported in June that its forecast for GDP growth is 8.2% by the end of 2021 – fuelled by a steady increase in household income and spending following the pandemic-related slowdown.

G7 makes vaccine pledge
The group of G7 economies met in the UK over three days in June, pledging among other things to commit one billion vaccines to poorer countries struggling with their rollouts. It showed that tackling the pandemic – as a global effort – is still at the forefront for many leading economies.

The latest outlook from the Organisation for Economic Cooperation and Development (OECD) was positive, forecasting that the world economy will grow by 5.8% this year. This is an improved revision from its previous forecast and can in part be attributed to successful vaccine rollouts in larger economies and the huge stimulus bill in the US.

The OECD estimates a longer period for the economic recovery in Europe and parts of South America, in contrast to the rapid bouncing back of the South Korean and US economies.

Inflation update
In May, the eurozone’s annual rate of inflation jumped to 2%, which passed the European Central Bank’s (ECB) target. The rise in inflation across the UK, Europe and US should not be a cause for concern, according to the ECB and Federal Reserve – which maintain the view that it’s a fleeting phenomenon.

Competing with China’s chip industry
In the US, the Senate passed a bill that aimed to compete with China’s growth in the technology sector by funding research into artificial intelligence, quantum computing and developing the country’s own chip industry.

However, China had cause for optimism in June, after reports that its producer-price index (which measures the cost of goods after they’ve left the factory) rose by 9% in May, the fastest pace since September 2008. It’s thought this surge was caused by rising prices for oil, iron ore and non-ferrous metals.

Insurance claims for accidental damage increased over the past year as more people worked from home, so it’s a good time to check your own coverage.

Figures from some of the country’s biggest insurance providers have shown a sharp rise in claims of accidental damage during the lockdown.

With many millions now working from home, the chances of accidents and damage to property have inevitably gone up. Halifax Home Insurance reported a rise of 35% for claims between July and September 2020 compared with the same period in 2019.

Types of accidents included damage to computers and other electrical items, broken windows and water leaks. With holidays cancelled, children home schooling and everyone staying in, appliances were used a lot more than normal, along with central heating systems.

Millions paid out in home insurance claims

One Insurance provider paid out £33 million in home insurance claims in 2020, with 15% going towards accidental damage claims. General claims not related to accidents accounted for 25% and were mostly related to appliance and pipework damage.

The biggest rise in claims related to damage to computers and electrical equipment because of spillages. As working from home turned many of us into amateur office managers, the usual health and safety measures within a normal office environment were not easy to replicate – especially with children and pets in the picture.

Admiral reported its accidental damage claims increased by 28% since the lockdown started in March 2020, compared to the previous year. Damaged laptop claims increased by 31% and claims around damage caused by home renovation also rose.

Check your accidental damage coverage

It’s a good time to see what your home insurance policy includes when it comes to covering accidental damage to your property.

1. Check that you have the accidental damage cover in place, because it’s often offered as an optional extra to your home insurance.
2. Check the limits and exclusions on your accidental damage cover, making sure there is enough to cover any new gadgets or equipment you bought during lockdown.
3. If you have made renovations and upgrades to your home during lockdown, try to calculate the extra value they bring to your home to ensure your home policy covers it.

How to avoid accidental damage in your home

Sometimes, accidents just happen. But there are ways to reduce the likelihood of an accident, like keeping drinks in a closed cup, away from computers, or tidying cables to avoid tripping.

With many homeowners installing wooden flooring, it’s worth keeping rugs secure with non-slip backing, and encouraging children to be aware of risks in the home when they are playing.

And it’s always a good idea to have your insurers’ telephone number and the policy details handy for when you need them.

Along with helping you check the small print in your accidental damage policy, your financial adviser is here to help you find insurance plans that work best for you and your family, to make sure you’re best protected.

The pandemic continued to unsettle global financial markets during August.

August turned into a month of highs and lows for markets, especially in Europe. There was positive news that the euro area’s economy grew by 2% in the second quarter, which was then countered by a heavy fall in share prices, with the FTSE 100 in London, Frankfurt’s Dax and the Europe Stoxx 600 all dropping more than 2%.1 Causes for concern in Europe centred on fears of a new wave of Covid-19 as well as a reduction in economic stimulus measures.

US Federal Reserve signals slowdown
In the US, markets were struck in August with fears of a slower economic rebound from the pandemic, after the Federal Reserve (Fed) signalled that discussions had started on when to start tapering its fiscal stimulus programme. As a result, there were heavy falls in stocks and commodities, with investors unsure about monetary policy and the slowdown in growth globally, all of which dampened sentiment.

At the annual Jackson Hole symposium, Fed Chairman Jay Powell did point to the strength of economic rebound in the US so far; underlining the Fed’s belief that a gradual withdrawal of stimulus will not adversely affect the US economy.

America’s own economic rebound slowed to its lowest level in eight months in August. However, the US job market showed strength, with over 900,000 new jobs added in July, along with the unemployment rate dropping to 5.4%.

Growth for the UK economy
The Office for National Statistics reported that the UK economy grew by 4.8% in the second quarter, following the easing of lockdown restrictions. Along with increases in retail trade, food services and hotel accommodation, there was an increase in construction and production output during the period, too.2

Emerging markets experience mixed fortunes
The Chinese government clamped down on its tech sector in August, announcing its plan to ban unfair competition among internet companies. Although surveys have suggested that Asia’s economic recovery is slowing, South Korea’s economy in 2021’s second quarter was larger than at the same time in 2020. However, China has suffered from renewed travel restrictions and natural disasters including severe flooding – which affected rates of output, retail sales and investment, slowing its economic recovery.

After a successful summer Olympics amid the pandemic, there was further cause for celebration in Japan – its economy grew in the second quarter, beating forecasts and boosted by consumer spending and investment. However, the country’s recovery is behind other large economies, which is largely due to the slow vaccination rate slowing a full reopening.

Big profits for big oil
The high price of oil in the last quarter boosted energy company profits during the period, even allowing for the ongoing shift into greener energy sources. ExxonMobil, for example, registered a net profit of $4.7 billion in the second quarter, following a loss during every quarter of 2020.3

Elsewhere, the auto giant Toyota announced it will cut production by 40% in September due to the shortage of semiconductors around the globe. Most of these chips are made in Asia, but the Delta variant has affected production.

Make the most of your tax allowances by using the different types of ISAs that are available.

Individual Savings Accounts (ISAs) were first introduced in 1999 and are a tax-free way to save into a cash savings or investment account. There lots of different types of ISA available, but the right one for you will depend on your financial goals. We explain how they work so you can choose the one that is best for you.

Cash ISA
A cash ISA works in the same way as traditional savings account but you won’t have to pay tax on any of the interest you earn.

For the 2021-22 tax year each person has an ISA allowance of £20,000. To take out a cash ISA you have to be a UK resident and over the age of 16. If you don’t use the allowance before the end of the tax year you will lose it and you’ll have to start anew on 6 April.

Some cash ISAs are instant access while others have a fixed rate. You can only open one cash ISA per year but you are allowed to transfer to another cash ISA or a stocks and shares ISA with another provider if you want to.

With a stocks and shares ISA you can hold a variety of investments such as shares, bonds and funds. Just like the cash ISA you can save up to £20,000 a year tax free, but you get to choose what investments you put inside it, so it’s worth getting financial advice. You also have to be 18 or over to be eligible.

Stocks and shares ISAs provide an option for people looking to avoid the erosive impact of inflation on returns. Over time there is the potential for better returns with an investment ISA over cash, although the risks are also greater.

If you want to invest in a stocks and shares ISA you need to be comfortable with the possibility of making losses and prepared to invest for the longer term.

Lifetime ISA
The lifetime ISA (LISA) can be used by first-time buyers to fund a deposit for a property or taken tax-free at the age of 60. As well as paying interest, LISAs benefit from a 25% bonus from the government to encourage saving towards a home or retirement.

The maximum you can put in each year is £4,000, which comes out of your £20,000 ISA allowance. The LISA can only be opened by anyone aged 18–39, but you can keep saving in one until you are 50.

With the LISA, you can get a bonus of up to £1,000 a year up until you are 50. If you open one at the age of 18, this means you could end up with a maximum bonus of £32,000.

However, there are some restrictions with a LISA. You have to keep your money in a LISA for a minimum of one year before you can withdraw it and if you take your money out before you are 60 and you don’t use it to buy a home, you will have to pay a 25% penalty.

Junior ISAs
If you're looking to put some cash aside for your kids, Junior ISAs (JISAs) are a great way of doing so. These accounts are available to anyone under 18 and tend to offer much higher rates than adult accounts, but there are some restrictions.

Like the adult accounts, you won’t pay any tax on your interest. In the 2019–20 tax year you can save or invest up to £9,000 in a JISA. You can save for your child either in a cash JISA, a stocks and shares JISA, or a combination of the two. JISAs can be opened by parents with children aged under 16 and then by children themselves when they are aged 16 and 17.

Innovative Finance ISA
If you invest with an innovative finance ISA (IFISA) the company offering the ISA will use the money to lend to borrowers or businesses – known as peer-to-peer lending. You’ll be offered a rate of interest from the borrower when paying back the money you’ve invested.

You can invest up to £20,000 a year in an IFISA and any interest earned will not be taxed. While you can earn higher rates of interests than with a traditional savings account, they are a much riskier option than a cash ISA as the borrower could potentially default on their loan.

Our financial advisers can help you and your family find the right product to suit your needs and financial situation.

An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.

Working out how long your pension pot will need to last – as life expectancy rises – is worth thinking about sooner than later.

The lockdown caused many people to reassess their lifestyles, which for some meant choosing early retirement. But what retirees have found is that pension pots are not matching the period of time needed to enjoy a comfortable life.

Life expectancy is going up. The Office for National Statistics offers an online calculator which gives an estimate of life expectancy – and with it an idea of how many years people will need their pensions to sustain them.

What’s your number?
The ‘Class of 2021’ report from Standard Life Aberdeen lays out how much value an average pension pot needs – around £366,000 if you multiply the average annual amount retirees surveyed said they would spend (£20,000) by 20 years of post- retirement time. A third said they had less than £100,000 saved.

Retirees need more than they think
The survey reported that two thirds of retirees were at risk of running out of money post retirement. Along with people living longer (on average, people aged 55 today will live to their mid-to-late 80s) there is the issue of rising inflation which raises the cost of living as years go by. Volatility in the investment markets also adds to the concern for people approaching retirement when it comes to pensions.

How to plan for the years ahead
Those surveyed did have plans to tackle this issue, however. Half of the those surveyed aimed to reduce the amount of money they spent on a day-today basis in order to save for retirement. Other considerations include downsizing their home and seeking part-time work after retirement in order to generate an income.

There is concern among almost half of those surveyed about being financially ready to finish working in the coming year. Yet many are aware of the need to be prepared when it came to their finances post-retirement, making any necessary adjustments – ideally with help from a financial adviser.

Keeping track of workplace pension plans and thinking about consolidating them into one pot might be a good place to start planning towards the goal of making your retirement as financially worry-free as possible.

Our financial advisers can help you review your pensions and advise on how to make the most of your pension.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

Many fixed mortgage deals will be approaching the end of their term this October, so it’s a good idea to review your buy-to-let mortgage.

With interest rates still at low levels and demand for rental properties increasing around the country, investing in a buy-to-let (BTL) is a popular choice for many.

Buy to let basics
A BTL mortgage is a specific type of product for those who want to buy a property with the intention of renting it. Because of this, there are different terms and rules around a BTL mortgage (compared to a regular mortgage for a property the buyer intends to live in.)

• With a BTL mortgage, the anticipated rental income is taken into account when the lender calculates how much you can borrow.
• A BTL mortgage could suit investors with enough equity to put down a deposit of at least 20% of the value of the property (but some lenders could require up to 40%.)
• Your credit record is closely scrutinised with a BTL mortgage, as with a regular mortgage application.
• Interest rates for BTL mortgages are usually higher than a regular mortgage.

Things to remember
If you have a BTL mortgage already and its fixed interest rate term is coming to an end, you may be thinking about switching products or providers to gain a better deal.

Here are some other things to look out for:

• Examine all of your options into the type of product to suit your investment going forward. A financial adviser is best placed to help you with this.
• Don’t forget to research any fees and charges around changing your product too, as these could be higher than you expect.
• When changing products, you may be asked about your property’s rental income history in order to assure any new lenders that you are able to keep up with mortgage payments.
• Show that you have sufficient savings to cover any gaps in rental periods when your property could be unoccupied.
• For your own peace of mind, having a cushion of savings available to cover any essential repairs is important.

If you are looking to remortgage your BTL property or are thinking about transferring your mortgage to a different provider, our advisers can help you find a product that best suits you.

Some buy to let mortgages are not regulated by the Financial Conduct Authority.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE

You might be thinking about whether to invest in crypto currencies. We explain why it may not be the right choice, and how to better approach your portfolio.

This year has been eventful for bitcoin, with the cryptocurrency reaching a record high and then almost halving in value all in the space of six weeks. The walk-back in May from Tesla’s Elon Musk in his support of bitcoin underlined concerns around the idea of cryptocurrencies as a stable investment. Musk – previously an outspoken supporter – announced his company would not be accepting bitcoin as payment for its vehicles.

What followed was a series of plunges in its value – not helped by the additional news of Chinese regulators signalling a crackdown on the use of digital currencies.

Bitcoin in brief
Bitcoin is a type of digital, decentralised currency, allowing the transfer of goods and services without the need for a trusted third party. The network is based on people around the world called ‘miners’ using computers to solve complex mathematical problems in order to verify a transaction and add it to the ‘blockchain’ – a massive and transparent ledger of each and every bitcoin transaction maintained by the miners. The first to verify is rewarded with bitcoin. Thereis a finite amount of bitcoin that can be produced and, as more are created, the mathematical computations required to create more become increasingly difficult.

Cryptocurrencies can be volatile
Bitcoin’s high volatility (risk) makes it a poor substitute for money in a broad sense. The unsteady air around cryptocurrencies in May showed the speculative nature of this asset class. Bitcoin and cryptocurrencies in general have more in common with commodities and currencies – they are much harder to value than cashflow-producing equities and bonds.

Reasons to be crypto cautious

• Cryptocurrencies are a volatile choice and susceptible to stock market bubbles, which can affect investments negatively during a downturn.
• They’re not a tangible form of investment, and are not regulated, which can be a red flag when it comes to your investments.
• Volatility means investors are likely to act on doubts and sell if they fear a fall in return.

Where to invest?
A sensible approach is to invest in high-quality companies that are well-established businesses. These are usually businesses with strong management teams, serviceable levels of debt and predictable cash flows. To avoid being hit by market volatility make sure your portfolio is invested in a wide range of assets, and less vulnerable to market shocks.

Staying invested when there is a downturn can help you get through any turbulent times and put you in a good position to benefit from any ensuing recovery.

Our financial advisers can help advise you on your investment choices.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

Chancellor of the Exchequer, Rishi Sunak, delivered his third Budget and the results of his Spending Review on 27 October, declaring that it begins "the work of preparing for a new economy post-COVID." The Chancellor struck an upbeat tone during the key fiscal event, as he outlined his vision of “an economy fit for a new age of optimism, where the only limit to our potential is the effort we are prepared to put in and the sacrifices we are prepared to make.”

Economic forecasts
The Chancellor began his statement by revealing updated projections from the Office for Budget Responsibility (OBR), which predict that recovery from the depths of the pandemic will be quicker than previously thought. The revised figures suggest that the UK economy will grow by 6.5% this year, a significant upgrade from March’s 4% figure. The forecast implies the economy will regain its pre-pandemic level by the turn of the year, six months earlier than previously expected.

Medium-term GDP predictions were also upgraded as the OBR now estimates that long-term pandemic-related economic scarring will be 2% rather than the 3% assumed in March. As a result of this, along with a number of government policy changes, public sector net borrowing is now projected to be equivalent to 7.9% of economic output, down from the previous forecast of 10.3%. In addition, borrowing figures across each of the subsequent four financial years have also been lowered.

The Chancellor did, however, acknowledge that the cost of living is rising. The OBR predictions suggest the CPI measure of inflation will average 4% over the next year, peaking at 4.4% in the second quarter of 2022. Mr Sunak said, “The pressures caused by supply chains and energy prices will take months to ease" adding "it would be irresponsible for anyone to pretend that we can solve this overnight."

Spending Review
Prior to Budget Day, the Treasury had released a series of funding announcements including statements setting out spending plans for transport, health and education. During his speech, Mr Sunak stated that his Budget “increases total departmental spending over this Parliament by £150bn, with spending growing by 3.8% a year in real terms.” He added, “As a result of this Spending Review, and contrary to speculation, there will be a real terms increase in spending for every government department.”

The specific spending pledges mentioned during the Chancellor’s speech include:

• £21bn on roads and £46bn on railways, with a guarantee to spend £5.7bn on London-style transport systems across city regions
• £3.8bn on skills and training over the course of this Parliament
• £1.7bn in grants from the Treasury’s Levelling Up Fund for towns and cities including Stoke-on-Trent, Leeds, Sunderland, Doncaster and Leicester
• £5.9bn in funding for the NHS to tackle the immediate backlog of patients awaiting treatment
• Scottish government funding will rise by £4.6bn; Welsh government funding by £2.5bn, and £1.6bn more for the Northern Ireland Executive.

Personal taxation, wages and pensions
Following the recommendations of the independent Low Pay Commission, the government will increase the National Living Wage for individuals aged 23 and over by 6.6% from £8.91 to £9.50 an hour, effective from 1 April 2022.

The taper rate that applies in Universal Credit will be reduced from 63% to 55% by 1 December 2021 and the Work Allowance will be increased by £500 a year.

The Chancellor announced that the year-long freeze on public sector pay will be lifted as the economy recovers from the pandemic, with the government seeking recommendations from Pay Review Bodies where applicable.

The new Health and Social Care Levy, announced in September, will be introduced across the UK from April 2022. The tax will initially begin as a 1.25 percentage point increase in National Insurance contributions, paid by both workers and employers. From April 2023, it will become a separate tax on earned income, calculated in the same way as National Insurance and ring-fenced as a Health and Social Care Levy. Tax on share dividends that are outside tax-free allowances is also scheduled to increase by 1.25 percentage points from April 2022.

As previously announced and following the government’s decision to suspend its triple lock guarantee for one year, September’s CPI rate will be used to calculate the uplift in the State Pension. As a result, the value of the basic State Pension will increase in April 2022 from £137.60 to £141.85 per week, while the full new State Pension will rise from £179.60 to £185.15 per week.

The 2022/23 tax year ISA (Individual Savings Account) allowance will remain at £20,000. The JISA (Junior Individual Savings Account) allowance and Child Trust Fund annual subscription limit will stay at £9,000.

Many tax allowances remain unchanged, as previously announced in the March Budget:

• The Income Tax Personal Allowance and higher rate threshold are to remain at current levels – £12,570 and £50,270 respectively – until April 2026 (rates and thresholds may differ for taxpayers in parts of the UK where Income Tax is devolved)
• Inheritance Tax nil-rate bands continue to remain at existing levels until April 2026 – £325,000 nil-rate band, £175,000 residence nil-rate band with taper starting at £2m
• The Capital Gains Tax annual exemption remains frozen at £12,300 for individuals, personal representatives and some types of trusts, and £6,150 for most trusts
• The Dividend Allowance remains at £2,000
• The Lifetime Allowance for pensions will remain at its current level of £1,073,100 until April 2026.

Business taxes
Business rates will be reduced by a total of over £7bn over the next five years:

• · Up to 400,000 eligible retail, hospitality and leisure properties can claim a new 50% business rates discount (max £110,000) for one year – worth £1.7bn of business rates relief (2022/23 tax year)
• · The business rates multiplier will be frozen in 2022/23, a tax cut worth £4.6bn over the next five years
• · From 2023, a new business rates relief will support investment in property improvements so that no business will face extra business rates for 12 months after making qualifying improvements to a property they occupy
• · Also from 2023, exemptions will be introduced for eligible plant and machinery used in onsite renewable energy generation and storage as well as a new 100% relief for eligible heat networks.

The government also intends to support UK businesses by extending the temporary £1m limit of the Annual Investment Allowance to 31 March 2023, providing businesses with upfront support, encouraging them to bring forward investment and simplifying tax for businesses investing between £200,000 and £1m.

Children and education
“The evidence is compelling that the first 1,001 days of a child’s life are the most important,” the Chancellor said as he moved onto the government’s spending plans for childcare and education. Mr Sunak therefore announced additional funding to support young families, help schools recover from the pandemic and improve education across the UK, including:

• £300m for the ‘Start for Life’ scheme to fund Family Hubs, perinatal mental health support, breastfeeding services and parenting programmes
• An extra £200m for the Supporting Families Programme
• An additional £170m for childcare providers by 2024-25
• £150m to support training and development for early years workers
• £200m per year to continue the holiday activities and food programme for disadvantaged children
• An extra £4.7bn for schools by 2024-25, restoring real-terms investment in schools to 2010 levels
• A £1.8bn package across the Spending Review period to help schools and colleges recover from the effects of the pandemic
• £2.6bn provision for children with Special Educational Needs and Disabilities (SEND), to help fund 30,000 new places, improve existing buildings and add new facilities
• £560m for the new Multiply programme to improve basic maths skills among UK adults.

Housing
In his speech, Mr Sunak commented, “We are investing more in housing and homeownership with a multi-year settlement totalling nearly £24bn.” This includes £1.8bn of funding announced in this Budget (helping meet the government’s commitment to £10bn for new housing) to be spent on housing developments on brownfield land. The Chancellor also reconfirmed the government’s £11.5bn investment in the Affordable Homes Programme (2021-26) to deliver 180,000 units.

He pledged £5bn for the removal of unsafe cladding from high-risk buildings, to be partly funded by the Residential Property Developer Tax, which will be levied at a rate of 4% on profits in excess of a £25m threshold.

Other key points

• Green measures include - £3.9bn to decarbonise buildings, including £1.8bn to support low-income households to make the transition to net zero while reducing their energy bills
• Community - 20,000 new police officers, an extra £2.2bn for courts and rehabilitation facilities and £3.8bn for prison-building
• R&D investment - £20bn by 2024-25
• Alcohol duty reform – the planned increase in alcohol duty that was due to take effect from midnight on Budget Day will be cancelled. A new five-point plan, which takes effect in 2023, will restructure duty to tax drinks in direct proportion to their alcohol content (including a new ‘Draught Relief’ policy set to cut duty on beer and cider sold in pubs). Consultation will close on 30 January 2022.
• Tobacco duties – duty rates on all tobacco products increased by RPI+2% from 6pm on Budget Day
• Fuel duty rates – frozen UK-wide for the 2022/23 tax year
• Company vehicles – from 6 April 2022, the van benefit charge and the car and van fuel benefit charges will increase in line with CPI
• Tonnage Tax reform – a package of measures to reform the UK’s Tonnage Tax regime will be introduced from April 2022
• Aviation tax reform – from 1 April 2023 a new domestic band for Air Passenger Duty (APD) will be introduced. For 2023-24, the economy rate for the domestic band will be set at £6.50 and rates for the short and long-haul bands will increase in line with RPI. A new ultra-long-haul rate will be introduced.
• Capital Gains Tax (CGT) property payment window – from Budget Day the deadline for residents to report and pay CGT (where applicable) after selling UK residential property increases from 30 days after the completion date to 60 days.

Closing comments
Rishi Sunak signed off his announcement saying, “This Budget helps with the cost of living. This Budget levels up to a higher-wage, higher-skill, higher-productivity economy. This Budget builds a stronger economy for the British people. And I commend it to the House.”

While some of the announcements may have seemed rather long term, Mr Sunak did provide some more immediate relief for households and businesses still fragile from the effects of the pandemic.

The previously announced freezing of tax allowances and thresholds for income tax and the introduction of the new Health and Social Care Levy are due to raise very large amounts of revenue over the next five years. These, together with the accompanying increase in dividend tax, provide a crucial backdrop to the spending increases and tax changes announced in the Autumn Budget.

In the more immediate future, there was, however, a slight loosening of the rules governing CGT: effective immediately the deadline for reporting and paying CGT after selling UK residential property will increase from 30 days to 60 days after completion.

A 6.6% increase to the national living wage to £9.50 an hour, starting on 1 April 2022, was confirmed. Young people and apprentices will also see increases in the national minimum wage rates.

And, as the country grapples with petrol prices at their highest level for eight years, a planned rise in fuel duty was cancelled again, the 12th time in a row.

In welcome news for drinkers, a fall in tax on their favourite tipple is likely, as long as it’s at the softer end. Reform of the levy on alcoholic drinks will see tax pegged to alcohol content, with higher strengths incurring proportionately more duty. All tax categories (e.g. beer, wine) will move to a standardised set of bands, with reduced rates for products below 3.5% ABV.

Businesses in the retail, hospitality and leisure sectors received particular sympathy from the Chancellor. Still reeling from months of Covid-enforced shut down, they were recognised as needing ongoing support, with a 50% cut in business rates in 2022/23. The business rates multiplier will also be frozen for 2022/23. From 2023, no business will face higher rates bills for 12 months after making eligible improvements to an occupied property.

How the Chancellor’s plans play out against a backdrop of potentially rising inflation and no let up in the calls on the public purse should make for a lively run up to the new tax year.

Financial markets were unsettled in October for a number of reasons. They include soaring energy prices due to the global shortage of natural gas supplies and high demand in Asia. Markets became calmer after Russian President Vladimir Putin indicated that his country could supply additional gas to Europe. The increase in energy prices and shipping costs prompted the The Organisation for Economic Co-operation and Development (OECD) to raise its inflation forecast for the G20.

The natural gas shortage pushed up oil prices, with Brent crude rising to its highest level in seven years. The Organisation of Oil Exporting Countries (OPEC) agreed to increase oil production gradually to meet high demand as countries come out of pandemic-induced lockdowns.

US stocks rally

In mid October the S&P 500 index enjoyed its best days since July, making up for fall earlier in the month. Strong company earnings results contributed to the performance, as did the stability brought by the news of the Senate’s decision to temporarily raise the federal debt ceiling.

October followed September as a month of rising inflation in the US. However, higher prices didn’t deter consumers, with retail sales also up from previous months. There was another lower-than-expected jobs report, with the working economy still affected by the Delta variant and a sluggish labour market.

UK Budget news and interest rate speculation

In early October the FTSE 100 had its best first week of the month since May, helping it to a 20-month high and a recovery of most of the losses it experienced since February 2020 and the start of the pandemic.

However, the Bank of England warned that the UK economy is more vulnerable to the global rise in inflation than other G7 nations, and that it could slow the recovery. Attention remained on the Bank of England’s move to raise interest rates, with economists predicting a rise as soon as early 2022. City traders are betting that it will happen before the end of this year.

In this year’s much anticipated Autumn Budget, Rishi Sunak set out the government’s plans to help get the economy back on track following multiple lockdowns. Policies announced included an increase in the National Living Wage and a 50% business rates discount for firms in the retail, hospitality, and leisure sectors up to a maximum of £110,000. Dividend tax rates will also rise by 1.25% from April next year which means investors will pay more on their earnings. Further thoughts from Omnis Investments’ CIO, Robert Jeffree, can be found here.

China’s third-quarter slowdown

Asia suffered an ongoing shortage of coal, with power cuts reported across countries reliant on the fuel, like China (where coal generates two thirds of the country’s electricity), and with India on alert for similar outages. Coal prices in China hit a record high during the month along with a dip in manufacturing (the latter due to power shortages and ongoing outbreaks in coronavirus cases).

The crisis surrounding the Chinese property developer Evergrande saw the company sell part of its stake in a bank to a publicly owned investment group on condition that the developer uses the proceeds to repay a loan. Figures released in October also showed that the pace of economic growth in China slowed in the third quarter compared with the previous year.

Markets signed off the year amid high inflation rates and renewed concerns over the coronavirus.

The Omicron variant of the coronavirus unsettled markets at the beginning of December, with investors unsure about how renewed restrictions on socialising and travel will affect the global economy. The Organisation for Economic Cooperation and Development (OECD) urged national leaders to accelerate the vaccination rollout in order to slow the spread of the virus and reduce the impact of new strains.

Stock markets in the US and Europe had recovered most of their initial losses by the middle of the month after being encouraged higher by reports that the variant would unlikely be as disruptive as first feared. Persistently high inflation is another theme that has dominated markets throughout 2021 and the readings at the end of the year provided no relief.

The cost of living rises

The UK’s inflation rate surged in November to 5.1%, which is its highest rate in more than a decade, and exceeds the Bank of England’s expectations. According to the Office for National Statistics, the Consumer Price Index was propelled upwards by soaring energy costs but prices rose across the board.

The euro area’s average annual rate of inflation rose to 4.9% in November, the highest it has been since the creation of the single currency more than 20 years ago. In Germany inflation stood at 6%, a level not seen since the aftermath of reunification three decades ago.

Annual consumer price inflation in America rose to 6.8% a 39-year high. Prices jumped by 0.8% from October to November. A range of factors have fuelled inflation lately, including supply chain bottlenecks, labour shortages, fiscal stimulus and ultra-loose monetary policy.

Central banks take action

Policymakers on both sides of the Atlantic decided to act. In the UK, the Bank of England has raised interest rates from 0.1% to 0.25%, its first increase in more than three years, saying that the risks of inflation required it to take pre-emptive action even as the Omicron wave of coronavirus engulfs the UK. The bank’s Monetary Policy Committee decided it could not wait any longer before seeking to cool the spending in the economy.

Meanwhile, the US Federal Reserve said it will accelerate its “tapering”—the reduction of monthly bond purchases—in order to wind down economic stimulus and contain runaway inflation. From January the central bank will reduce its asset-buying by $30 billion every month—double its current pace.

To keep your investments from losing value or slowing the growth of your as- sets, avoid these common investing mistakes.

There are more risks and opportunities than ever for investors to navigate in today’s rapidly evolving markets. Here are four approaches we believe every investor should follow.

Don’t pile into cash – stay invested

The biggest advantage of cash is that it offers relative safety. Cash can help diversify a portfolio during times of volatility and is easy to access in an emergency. With cash you’ll be paid interest on the money, which will be tax free where it’s in an ISA.

You won’t lose any money by putting your money in cash, but it tends to offer lower returns than other asset classes. It’s also important to know about the impact of inflation on your savings and investments as it can make a huge difference to how much profit you make. Cash is seen as a short-term safe haven and should not be held over a substantial period of time to avoid the impact of inflation.

While it’s good to have some cash savings for a rainy day, the spending value of your money can fall over time if inflation is higher than the interest rate you receive. With interest rates on cash investments at historically low levels, and well below the inflation rate, millions have seen the value of their savings eroded in recent years. To make money on your investment you’ll need to find an account or investment that gives you a greater return than the current rate of inflation.

Don’t go chasing fads – think about the long term

Short-term gains can seem appealing for investors, but if you don’t want to lose your savings, it’s best to not believe the hype about the latest investment craze. Choosing the wrong investment can be a costly mistake. Many investors are turning to social media platforms such as Facebook, Twitter, YouTube, TikTok and other unregulated sources for information about investing.

While it may seem tempting to get investment recommendations this way, it puts you at significant risk from volatile stocks or even fraud. It’s easy to jump on the bandwagon, but momentum is typically falling by the time most people join.

Don’t put all your eggs in one basket – diversify

One of the biggest mistakes when investing is putting all your eggs in one basket as it can leave you exposed to fluctuations in the market. If you’ve invested in one stock and something unexpected happens and it plummets, you could find your nest egg suddenly disappearing.

One way to lower risk is by spreading your wealth over a wider range of investments so it’s not concentrated in one place (known as diversification). By diversifying your portfolio, you can reduce the risk that all of your investments will experience the same negative impact at the same time.

Ideally, you should be looking to build a diverse portfolio with a mix of different investments in line with your attitude to risk. A balanced portfolio will contain a mixture of asset classes, such as stocks, bonds, and alternatives.

Sit tight when it’s right

When markets wobble it can be tempting for investors to sell their shares to avoid any further losses. It’s easy to react to short-term losses but the best thing you can do is most often precisely nothing.

Timing the market involves buying and selling investments when you think they will rise or fall at exactly the right moment. It’s a difficult strategy that rarely works and there are too many unpredictable factors.

If you sell into a falling market you will lock in your losses and it could take you years to get back to where you were. While markets can fall sharply, given time they can rebound, so instead make sure you take the long view. Stock markets have a history of recovering from downturns. If you see your investment drop, don’t worry. Just keep your cool and sit tight.

It pays to seek advice

A financial adviser can help you work out how to achieve your long-term financial goals, while taking inflation into account so it doesn’t eat up your returns. Your adviser will speak to you about your attitude towards risk and the level you are comfortable with, helping you make the right investment choices..

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

At the start of 2022, the World Bank issued a warning that the global economy faces a variety of challenges, including new Covid variants, high inflation and an uncertain geopolitical landscape. Its economists lowered their growth forecasts and suggested that some richer countries might not reach pre-pandemic levels of output until 2023, with poorer ones taking longer.

Central bank monetary policies are another uncertain factor. After the US Federal Reserve (Fed) said it could raise interest rates multiple times this year and sooner than expected – to curb inflation – stock markets dropped in early January. The Fed is worried that inflation could spiral out of control, and a strong labour market has added to these pressures.

Stocks in the technology sector were among the hardest hit. The Nasdaq Index had its worst start to a new year since 2008 and European technology shares fell too. By the middle of January conditions had stabilised, with investors reassured by the Fed’s announcement that it would tackle the surge in inflation. However, tech share prices suffered again towards the end of the month.

Inflation soars
The annual rate of inflation in the US jumped to 7%, which is its highest level since June 1982. Several factors are sustaining rising prices, with energy costs the largest contributor. In the UK, figures released in January showed inflation at a 30-year high, increasing pressure on the Bank of England to raise rates. The euro area’s annual inflation rate crept up to 5%, another record high for the currency bloc. Energy prices were again the main factor.

Yet the underlying investment environment remains buoyant with the global economy continuing to expand, and while the rate of growth has slowed, it is still doing so at a decent pace, and companies are delivering good profits growth. Notably, the UK’s economy has already recovered to its pre-pandemic level following a strong period of growth in the last few months of 2021, due in part to early Christmas shopping and an increase in dining out in November. This was, of course, before the Omicron variant of Covid became prominent in the UK.

China’s economy has been suffering from a variety of pressures, including a heavily indebted property sector, and it slowed at the end of 2021, which prompted a cut to one of its key interest rates. However, full-year growth was 8.1%, exceeding the government’s target of 6% and rebounding from the 2.2% growth registered in 2020. With much of the world dependent on Chinese exports, the country posted a record trade surplus of $676 billion in 2021 – the highest since 1950.

The triumph of tech
With so many aspects of our lives shifting online during the lockdowns and ongoing digitalisation trends, it’s not surprising that the technology sector often dominates the headlines. Notably, Apple became the first company to reach a market value of $3 trillion. The company’s share price has more than tripled since the depths of the pandemic in March 2020.

Meanwhile, Microsoft announced a massive $69 billion deal to buy the games publisher Activision Blizzard. The move shook the gaming industry and after news of the acquisition, rival Sony saw a $20 billion drop in its market value. The deal promises to turn Microsoft into one of the world’s biggest interactive entertainment players.

In the Financial Lives 2020 survey from the FCA, it has been found that older adults were more likely to hold a savings account of any type, than younger adults. For example, 83% of those aged 55+ did, compared with 63% of 18–24-year-olds. So, how could an ISA help you?

ISA
An ISA is an individual savings account that allows you to save tax-free money in a cash or investment account, so you could end up getting more for your money. An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth, income, or both. There are a few different types of ISAs including, Cash ISA's and Stocks and Shares ISA's. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.

Cash ISA
A Cash ISA is a tax-free savings account where you can deposit up to a yearly limit and pay no tax on the interest that you earn. There are three principal types of cash ISA: Instant Access, Regular Savings and Fixed rate. Anyone over the age of 16 can open one cash ISA in each tax year with as little as £1. Although Cash ISAs can be a good way to start your investment journey, they can have their drawbacks. If you find yourself with low interest rates and high inflation, this can lead to poor rates and therefore eroding value.

Stocks and Shares ISA
A stocks and shares ISA, also known as an investment ISA, is a tax-efficient investment account that can help make your money work harder. Unlike a cash ISA, a stocks and shares ISA gives your money more potential to grow by investing it in a range of places like shares, funds, investment trusts and bonds, instead of keeping it in cash. It’s a smart way to protect your money from being taxed, as you won’t pay a penny in capital gains, tax, or income tax on any profits you make in the future. So, whether you’re saving for a holiday of a lifetime, a property deposit, or simply for a rainy day, switching to a stocks & shares ISA could give your savings the boost they need to meet your financial goals.

Don’t forget to use your 2021-2022 allowance before the end of 5 April 2022.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

National Insurance contributions are set to increase by 1.25% in April this year, as part of the government’s plans to fund the health and social care sector in the UK.

The rise comes after the impact of the Covid-19 pandemic on the health and social care sector which has resulted in a substantial backlog. Therefore, to tackle this, the government has introduced the increase to be able to fund a catch-up programme to get the NHS back on track.

When will the increase in contributions occur?
From 6th April 2022 to 6th April 2023, national insurance will rise by 1.25%. However, from April 2023, the national insurance rate is due to drop back to its current rate with a 1.25% health and social care levy then applied to raise funds for improvements to care services.

Who will this affect and how?

• Employees
• Self-employed
• Employers
• The increase will apply to individuals who are over the state pension age with employment income or profits from self-employment above £9,568.

National insurance contributions will rise by 1.25% and depending on your current employment status and how much you earn:

Employed
If you are employed, you will pay the Class 1 National Insurance contribution of 12%, which is if you earn more than £184 to £967 a week (£797 to £4,189 a month). This is automatically deducted by your employer.

Self Employed
If you are self-employed earning profits of £6,515 or more a year, you will pay the Class 2 or Class 4 National Insurance contribution. If you’re earning less than this, you can choose to pay voluntary contributions to fill or avoid gaps in your National Insurance record.

Employers
If you are an employer, you will pay the Class 1, 1A and 1B National Insurance contribution of 13.8%.

You can apply to HMRC to check your national insurance record and claim a refund if you think you have been overpaid.

New research from The Openwork Partnership, one of the UK’s largest and longest established financial advice and investment networks, shows more than 11.6 million are keeping all their money in cash despite ongoing low rates.

Its nationwide study found 22% of adults prefer to keep all their money in cash while the same number will not consider stock market investments despite potentially higher returns as they don’t understand it.

The Openwork Partnership is warning about the risks to savers of reckless caution – the cost of missing out on higher returns on their money because they stick to cash accounts. Despite the recent Bank of England base rate rise, rates on cash accounts remain below inflation while the FTSE-100 gained 14.3% last year – its best performance for five years.

Excess savings in the UK – the extra amount people have saved because of restrictions during the COVID-19 pandemic – is estimated to be around £163 billion compared with £112 billion a year ago.

Just 15% of those questioned said they had a healthy balance between savings and investments while 14% said they were willing to miss out on higher returns by avoiding stock market investment.

One potential reason for avoiding the stock market highlighted by the research was lack of knowledge – around 11% said they did not know where to go for advice. However, nearly one in 10 (9%) said they had benefited from financial advice in terms of higher returns on their cash.

Claire Limon, Network Director at The Openwork Partnership, said: “It is good news that people have built up savings and the money will be very valuable given the looming rises in the cost of living.

“But there is a real risk of reckless caution costing people substantial amounts from ignoring stock market investment in favour of keeping money in cash when rates remain at very low levels – meaning savers are losing money after inflation is taken into account.

“It is understandable that people are worried about the risks of losing money on the stock market but advice from a professional adviser can help ensure their money works hard for them and any investments are tailored to their appetite for risk.”

The table below shows the picture across the country with people in Wales most worried about investing in the stock market and most likely to want to keep all their money in cash.

Now’s a good time to make sure your fully prepared for the financial year ahead. To make it easy we’ve summarised the key dates and facts and figures below.

1 April

National Living Wage (for age 23+) rises from £8.91 to £9.50

National Minimum Wage rises to £9.18 (for 21-22-year olds), £6.83 (for 18-20-year olds), £4.81 (for 16-17-year olds) and £4.81 (for apprentices under 19 or in the first year of their apprenticeship).

Council tax bills rise by up to 2.99% (including a 1% social care precept) although there may be some regional variations.

The Energy Price Cap increases by 54% as announced by Ofgem in February. Those on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 per year. Prepayment customers will see an increase of £708 from £1,309 to £2,017.

Households in Council Tax bands A-D in England will receive £150 Energy Bills Rebate on their council tax bill to help protect them from rising energy costs. Discretionary funding will also be provided to support those in Council Tax bands E-H or those on low incomes who don’t pay council tax.

Reduced VAT rate of 12.5% on suppliers of hospitality, holiday accommodation and attractions, reverts to the standard rate of 20%.

5 April

End of the 2021/22 tax year. Have you used all your allowances?

6 April

Start of the 2022/23 tax year

ISA allowance remains at £20,000 (if it’s a cash ISA, stocks and shares ISA or innovative finance ISA) and £4,000 (for a lifetime ISA)

Junior ISA allowance remains at £9,000 (for a cash JISA, stocks and shares JISA or a combination of the two)

National insurance contributions paid by workers increases by 1.25%.

11 April

State Pension and benefit rates rise by 3.1% in line with the Consumer Price Index. This means the basic State Pension increases to £141.85 per week and the full rate of new State Pension increases to £185.15.

Standard Lifetime allowance for tax free pension saving remains at £1,073,100 until the 2025-26 tax year.

Personal tax allowance remains at £12,570. The basic rate threshold remains at £37,700 and higher rate at £50,270.

31 July

Working Tax Credit and Child Tax Credit claims for 2021/22 must be confirmed and renewed for 2022/23 if required.

Deadline for second payment on account for 2021/22 for those that pay self-assessed income tax.

1 October

All domestic electricity customers will receive a £200 discount on their energy bill from October. However, this discount will be automatically recovered from people’s bills in equal £40 instalments over the next 5 years, beginning in 2023.

30 September

Old £20 and £50 notes can no longer be used after 30 September. Although some banks and the Post Office may still allow withdrawn notes to be paid into customers accounts.

31 October

Paper income tax self-assessment deadline for 2021/22 returns to be with HMRC.

December

The government scheme that guaranteed 95% mortgages with selected lenders ends. This scheme was launched in April 2021 to help first time buyers after lockdown.

Your financial plan could be impacted by these key dates. Talk to us for advice.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Key Takeaways:

• The new tax year is upon us making it a good time to make sure your fully prepared for the financial year ahead.
• Your financial plan could be impacted by these key dates, talk to us for advice.
• HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

They chatted about making a will a few times, but somehow life always got in the way. Until one day, 10 years after moving in together, Pete got a call that would change his life forever – Tom had been killed in a car accident.

The intestacy trap

On top of grieving for his partner, Pete found he was also facing an uncertain financial future. UK intestacy laws meant he wasn’t entitled to inherit any of Tom’s property or financial assets unless he had joint ownership. Pete knew that Tom would have wanted him to inherit everything but, without a will, that didn’t matter.

Pete and Tom had owned their property as joint tenants, meaning Tom’s share automatically passed to Pete according to the rights of survivorship. However, without children or any surviving parents or siblings, the remainder of Tom’s assets ended up being passed onto a distant uncle he had scarcely known.

Without Tom’s savings and investments, life insurance policy or even the car that Tom owned but they both used, Pete now struggles to pay his bills.

How a will could have helped

Had Tom got around to writing a will, he would have been able to specify exactly who would receive what from his estate, including his savings, investments, car and other belongings. As well as writing a will, Tom could have made his wishes known by nominating beneficiaries to his pension and writing life policies under trust. By taking these steps, he would have given Pete the extra financial support he now so desperately needs.

As it stands, Pete still has the legal right to claim against Tom’s estate as they had been cohabiting for more than two years - but this will be a costly and time-consuming process and a positive outcome isn’t guaranteed. If Tom had made a will, this added stress could have been avoided.

Don’t put it off

In the UK, the number of cohabiting-couple families is growing faster than the number of married-couple and lone-parent families. However, cohabiting couples have none of the legal protections afforded by marriage. A will is one way to ensure your partner inherits according to your wishes. Despite this, three in five UK adults do not have one.

Let us help

Any will must be drawn up accurately without ambiguities and executed correctly for it to be valid and effective. So, it makes sense to use an experienced professional.

A consultation with a will-writing expert will allow you to explore ways in which to reflect your wishes and protect the financial future of your loved ones in the most tax-efficient way possible.

If you’d like to find out more about how to arrange a will, we’re here to help.

Will writing is not part of The Openwork Partnership’s services and is offered in our own right.

The Openwork Partnership accepts no responsibility for this aspect of our business. Will writing and Trusts are not regulated by the Financial Conduct Authority.

Key takeaways:

• If you’re cohabiting with your partner (but you’re not married or in a civil partnership), it’s important you both make a will. This can ensure that if one of you dies, the surviving partner inherits according to the other’s wishes.
• An expert can help ensure your will is drawn up accurately and executed correctly so that it is valid and effective.

Soon afterwards, their eldest grandchild passed his driving test. They decided they’d like to buy him a car, so they made a withdrawal. Being able to do this so easily cemented their trust in the investment company. Over the next year, they made several more deposits.

Paul and Mary then agreed they’d like to help one of their children with a deposit for a house. However, when they tried to withdraw the majority of their original investment, they couldn’t access their money or get through to the company by phone, email or any other means. It was at this point, they realised they’d been scammed.

On top of wiping out most of their life savings, the scam took a toll on the couple’s mental health. They both suffer from feelings of embarrassment and guilt, and Paul has developed severe depression.

Anyone can fall victim to a financial scam

Although Paul and Mary feel foolish, financial scams can be extremely sophisticated and trick the savviest of us. We’re used to hearing stories about elderly and vulnerable people being conned but recent research by Lloyds Bank found 18 to 24 years olds are most likely to fall victim to investment scams, making up approximately 25% of all cases. And, in fact, victims aged under 45 account for 70% of all reported investment scams.

Types of financial scam

Financial scams take many forms including high-return investment opportunities, like the one Paul and Mary fell for, pensions transfers and health insurance supplements. Criminals use phishing (emails) or smishing (texts) to impersonate trusted organisations and trick people into giving away their personal information or money.

Top tips to avoid being scammed

1) Follow the advice of UK Finance’s Take Five to Stop Fraud campaign:

• Stop: Take time to stop and think before parting with money or personal information

• Challenge: It’s ok to refuse or ignore requests that make you feel uncomfortable. Only criminals will try to rush or panic you

• Protect: Tell your bank immediately if you think you’ve fallen for a scam and report it to Action Fraud

2) Great deals don’t come looking for you. Scammers often advertise on social media and the internet. They may also send ‘deals’ by email, phone or direct message.

3) Make sure it’s genuine. As in Paul and Mary’s case, scammers can easily set up fake companies, profiles and websites. Don’t underestimate the lengths a fraudster will go to in order to convince you they’re genuine. Before parting with any money, it’s a good idea to seek professional advice. You can also use the FCA website to check the details of financial services companies.

4) Protect your payments. Consider your payment method. It’s very hard to get money back if you pay by bank transfer. Paying by card offers the greatest protection.

If you’d like help with any aspect of your finances, we’re here to help.

Key takeaways:

• If something seems too good to be true, it probably is.
• Give yourself time to think before parting with personal information or money.
• Speak to a professional before making big decisions about your finances.

What is remortgaging?

Remortgaging involves taking out a new mortgage on a property you’ve already bought. You might do this to replace an existing mortgage deal or to borrow money against your home.

Is remortgaging right for Mike?

After Mike’s last mortgage came to an end, he didn’t look for a new deal so he was switched onto his lender’s standard variable rate (SVR). An SVR is usually much higher than fixed and tracker rates, and it can go up at any time. Research by Habito found 27% of mortgage holders in the UK are currently on their lender’s SVR, and they worked out - on an average mortgage - this translates to an extra £340 a month. This means Mike could almost certainly benefit from remortgaging.

Other reasons to remortgage

Even if you’re not on your lender’s SVR, there are a variety of reasons you might want to remortgage:

• To beat interest rate hikes. As inflation goes up, interest rates are starting to follow suit, so it may make sense to lock into a low rate now.
• You’re coming to the end of a deal. Mortgage advisers generally agree you should start looking for a new deal around three to six months before your current rate ends. However, the research by Habito found 46% of mortgage holders are unaware of this.
• The value of your home has gone up. A significant rise in the value of your home may have moved you into a lower loan-to-value band, meaning remortgaging may give you access to reduced rates.
• You want to borrow against your home. Remortgaging may allow you to raise money cheaply on low rates. Before doing this, it’s worth getting financial advice to make sure this really is the cheapest way for you to borrow.
• You want to overpay, and you can’t on your current deal. If you’ve come into some money recently, remortgaging will allow you to reduce the size of your loan and possibly get a better rate. You’ll need to take into account any exit fees or early repayment charges to weigh up whether remortgaging makes financial sense.

Where to start

It’s not always clear cut whether you’ll benefit from remortgaging. A qualified mortgage adviser will look at your circumstances and find out exactly what you want to achieve by remortgaging. For example, are you simply looking to reduce your monthly payments or do you want a more flexible mortgage that allows payment holidays? The adviser will then set out the best options available. Regular mortgage reviews can help ensure you’re never overpaying unnecessarily.

If you’d like to speak to someone about your mortgage, we’re here to help.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Key takeaways:

• Remortgaging can be useful in a variety of situations from reducing your monthly payments to borrowing money against your home.
• It’s not always clear cut whether you’ll benefit from remortgaging – talking to a qualified mortgage adviser can help you decide whether it’s right for you.
• Regular reviews with a professional can make sure you’re not overpaying unnecessarily on your mortgage.

What is an SVR mortgage and why might you end up with one?

Angela was looking at ways she could reduce her inheritance tax. After spending some time researching, she realised she could make small gifts to as many people as she likes, and these gifts will be exempt from IHT. Wanting to help her grandchildren out, she gifted them £1000 each.

Isabella, Harrison, and Ava were thrilled to receive the generous gift from their grandma and were quick to discuss what they wanted to do with it. After listening to their ambitious ideas, Angela sat the children down and told them that the best thing to do, was to put it into savings and investments to make more out of the money and eventually carry out their future goals.

The surprises of savings accounts
After listening to her grandma, Ava being the youngest of the 3, wasn’t too clued up on savings, so deposited the £1000 into a regular savings account. Regular savings accounts can be great, easy ways to save securely and access money easily, however, they do not make a lot of interest.

With average interest rates for a savings account at 0.06%, Ava looked back into the savings account after a year to discover it had only made £0.60 in interest. The little interest added meant that Ava couldn’t afford the new laptop that she so desperately wanted and had to settle for an older version instead.

Are Cash ISAs still effective?
With the desire to buy a new car, Harrison chose to put his money into a cash ISA after reading about the tax-free, easy to access advantages that they had.

However, Cash ISAs also have a very low interest rate due to the fact they are affected by the rise of the cost of living and high inflation, meaning you make little to no interest on the money that is in there.

The average cash ISA interest rate being 0.63%, Harrison went back to check on his investment after a year and found that it had made £6.32 in interest. Although this interest earned meant that he was unable to put the deposit down for the car he wanted.

Why Stocks & Shares ISAs would’ve been better
Isabella the oldest of the 3 was saving for a deposit on her first home. She found that a stocks and shares ISA was the most appropriate way to invest her money.

Stocks and shares ISAs are a good way to start investing your money as you can invest up to £20,000 a year, any income is protected from tax, and they can offer considerably higher returns over time.

With an average return on stocks and shares ISA being 13.55% if paid yearly, Isabella reviewed her account after a year and was surprised to see that she had made £144.24 of interest on the £1000 she inputted into the ISA. Using this way of investing now means Isabella has the money to be able to pursue her dreams of home ownership.

Let us help
Don’t let what happened to Harrison and Ava, happen to you. Whether you are taking your first steps in investment or a seasoned saver we’re here to guide you through the most suitable ways to invest your money, ensuring your future and you are protected.

The value of your investment and any income from it can fall as well as rise and you may not get back the amount you invested.

Key takeaways:

• You can reduce IHT by gifting money to family members.
• Savings accounts are good and easy short-term ways of saving, but don’t offer good interest.
• Cash ISAs are tax-free, easy ways of saving money but can interest rates can easily be affected by rise in the cost of living and higher inflation.
• Stocks and shares ISA are tax-free ways of saving with considerably higher returns over time.

Tina is a fit and vibrant 59-year-old who expected retirement to offer a whole new lease of life. She was looking forward to using her increased leisure time to explore Europe while indulging her passion for climbing. However, after going through her finances, she’s now concerned she won’t be able to afford her monthly bills let alone pay for trips abroad.

Tina has always managed her day-to-day finances really well, but she never sat down and worked out how much she’d need for a comfortable retirement. A 2021 Which survey found that a retiree in a single-person household spends an average of £19,000 a year and needs £31,000 a year to enjoy luxuries such as long-haul trips and a new car every five years. When you compare this figure with the current maximum state pension of approximately £9,627 a year, it becomes clear relying on that income alone can cause problems.

Why is money going to be so tight for Tina?

There are a number of reasons for this:

Career breaks have affected her state pension entitlement

Tina was a stay-at-home mum throughout most of her 20s and into her mid-30s, when she split up with the father of her children. They were never married so Tina isn’t entitled to any of his pension.

After working full-time for a few years, Tina moved in with another partner and splitting the bills meant she could afford to drop down to part-time hours. She began working full time again when that relationship ended a few years ago and she moved into her own place.

Despite working on and off, Tina hasn’t made anywhere near the 35 years’ worth of National Insurance contributions that guarantee a full state pension. As she’s made more than ten years’ worth of contributions, she’ll get something but nowhere near as much as she expected.

If Tina had checked her state pension forecast regularly, she could have avoided a nasty shock and taken steps to increase her pension pot.

She’s only made minimum contributions to her workplace pensions

Tina’s been enrolled in a couple of workplace pension schemes, but she’s only ever made the minimum contributions required.

There are no fixed rules about how much you should pay into a private pension, but one rule of thumb is to take the age you start saving and divide it by two to give you the percentage of your salary you should put away each year. So, if you start saving at 30, you should pay in 15% of your salary.

It’s worth bearing in mind that the government tops up private pension contributions in the form of tax relief at your highest rate of income tax. Basic rate taxpayers receive tax relief of 20%, while higher rate and additional rate taxpayers can claim back 20% and 25% respectively through their tax returns.

What can you do to boost your pension pot?

There isn’t one simple answer when it comes to saving for your retirement. It’s complicated! So it makes sense to get help from a financial adviser.

If you’d like to make sure you’re doing all the right things to enjoy a comfortable retirement, we’re here to help.

Key takeaways

• Whatever your age, it’s worth reviewing your pension arrangements.
• Get a state pension forecast to check how much you’re likely to get.
• Make sure you’re taking full advantage of any government and employer incentives.
• Check that you’re making the most of tax relief and employer contributions.
• Get help from a financial adviser.

Matt was delighted when he landed his dream job as a football coach. He got to do what he loved every day. Life was good until, one day, he fell down the stairs and everything changed. Matt seriously hurt his back in the fall and now struggles to stand for any length of time. As a result, he needs regular physio and hasn’t been able to work since the accident. Managing the pain and being unable to do the job he loves is hard enough but his situation is made worse by the fact he is now constantly worrying about how he’s going to make ends meet.

Unfortunately, Matt’s experience isn’t as uncommon as you might think. Home may be where the heart is but it’s also where you’re most likely to have an accident, according to the Royal Society for the Prevention of Accidents (Rospa).

Figures from Rospa show children under the age of five and those over the age of 65 are at the highest risk of having an accident at home, with falls being the most common type of mishap. To give you an idea of the extent of the problem, the annual cost of home accidents in the UK is a staggering £45.63 billion. More mishaps happen in the lounge than any other room and, tragically, there are around 6,000 deaths every year in the UK as a result of accidents at home.

Preventing accidents in the home

Although you can’t remove the risk of accidents in the home altogether, there are some sensible precautions you can take. For example, if you’re trying to reach something high up, don’t use a chair; it’s always better to use a stable step-stool. It’s also worth bearing in mind that a lot of accidents happen when we’re rushing so, no matter how busy you are, try to take your time.

There are also steps you can take to provide a little more financial security if you’re ever unlucky enough to find yourself in Matt’s position.

Accident protection

Accident protection can provide a cash lump sum to help you and/or your family should you have a similar experience to Matt, meaning at least you won’t have to worry about your finances. It can provide cover for:

• Broken bones
• Hospitalisation due to either an accident or sickness
• Permanent injuries
• Permanent disablement
• Death

A professional adviser will be able to help you find the most suitable policy for your needs. If you’d like to talk about accident protection for you and your family, we’ll be happy to help.

Key takeaways:

• You’re more likely to have an accident at home than anywhere else.
• Falls are the most common type of accident in the home – reduce your risk by using a stable step-stool to access hard-to-reach areas, and taking your time when carrying out chores around the house.
• Accident protection can provide a lump sum to help with the expenses you may face in the event of a mishap in the home – speak to an adviser to find the most suitable policy for you.

Are Rachel and Samantha right to be concerned?

The short answer to this is yes! Research by Civitas has indeed found that a quarter of 20-to-34 year olds still live with their parents – a million more than two decades ago.

Even in the areas of the country where it’s cheapest to buy property, the rise in the number of adults living with their parents since 1998 is significant – 14% in north-east England and 17% in Yorkshire and the Humber. In London, the figure is a whopping 41%.

Research from Barclays points to a clear contributing factor to this trend. The bank revealed the average deposit for a first-time buyer in the UK in 2021 was approximately £61,000. More than half of those surveyed by the bank admitted they wouldn’t have been able to get a foot on the property ladder without financial help from their families.

And buying property isn’t the only expense future young adults may need help with: a university education costs approximately £57,000, an average wedding will set you back about £30,000, and even in retirement there’s less security now final salary pension schemes are largely a thing of the past.

So what can Rachel and Samantha do to help their kids?

Happily, there are plenty of options for Rachel and Samantha to consider if they want to start saving for their children’s future.

The two key principles to bear in mind when it comes to investing for your children are:

• The earlier you start saving, the better your potential returns
• Getting professional advice will help ensure you make the right investment decision for your circumstances and avoid potential pitfalls

What kind of investment opportunities are available to Rachel and Samantha?

There are a number of different products that may be suitable for people in Rachel and Samantha’s position. The main ones are:

• Collective funds – a fund manager invests money from lots of individuals into a wide variety of assets. As your money is invested in multiple assets, it helps spread the risk.
• Investment bonds – these can be useful for managing lump sums placed into trust. The underlying investments are usually collective funds but the overall tax treatment is different. A key benefit is that they allow tax to be carefully managed during the investment term and when the investment is redeemed.
• ISA/Junior ISA – Any child under 18, living in the UK, can have a Junior ISA (JISA). The maximum investment into a JISA in 2022/23 is £9,000 a year. Children aged 16 and 17 can also own a cash ISA. The maximum investment for the 2022/23 tax year is £20,000.
• National Savings and Investments (NS&I) – NS&I has a limited range of accounts suitable for children, with varying tax advantages.
• Personal pension - There is no minimum age for a personal pension. Total contributions to a child’s plan for the 2022/23 tax year are limited to a maximum of £3,600.

If you’d like to discuss making investments for your children, we’re happy to help.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Key takeaways:

• The earlier you start saving, the better. This opens up the possibility of long-term investments offering potentially higher returns.
• Get advice from a professional to help ensure you make the right investment choice first time.
• There are a number of investment options that are particularly suitable for those looking to save for their children’s future, including collective funds, investment bonds, ISA/Junior ISAs, NS&I accounts and personal pensions.
• The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
• HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Why is budgeting so important?

You might think that it’s not worth to spend that much time with counting all your income and expenses. But if you use apps or spreadsheets to make it visible how much you earn and spend on average every month, it will pay off.

In case of the unexpected or just having a big expense, it’s important to have some savings not to become indebted.

How to start budgeting?

First you will need to count how much money you bring home on average. Don’t forget to take your benefits into consideration as well so that you can put down the precise number.

After you became aware of how much you earn every month, it’s necessary to count your monthly average expenditure too. Don’t forget to look at at least three months of your expenses to be able to see some trends.

If you know your income and your expenses, you can compare them in order to see whether you spend more than you earn or not. If there is some money which remains every month then it’s easier for you to make a savings account. If you earn less than you spend, try to cut back on your expenses not to get into a debt spiral (spending and borrowing in turn).

In case of having debts and savings at the same time it may be a good idea to pay off the one with the other, because for loans the interest rates are higher so you earn less with the saving’s interests than you have to pay for the loan’s interests.

What kind of costs do you have to count with?

If you know how much money you spend every month, you can set up categories to see the amount of your needs and wants. First count the essential spending, for example the rent, utility bills and mortgage. These are your needs which you can’t leave out of your expenses. Although there are some tips to cut back on utility bills what you can also include in your budgeting.

In order to set budgeting goals you also need to know how much you spend on nice-to-have items like meals or holiday. You can save more if you tackle the biggest costs, for example eat outs. From a financial aspect it’s better to cook for yourself and your family than having meal in a restaurant. When cutting back on costs don’t forget to remain the things in your budget you really love within your means. It’s also important that you don’t concentrate on a typical month to work out the amount of your disposable income and set your financial goal according to this.

After you have set your financial goals, you can concentrate on the third main category of where your income gets into. It’s necessary to build some emergency savings in case of the unexpected. Experts recommend to have at least 3 to 6 months living expenses as a backup, but to have £1000 is already a good start.

How to set your budgeting goals?

When you set your budgeting goals it’s good to use the 50/30/20 rule where the biggest category is the essentials, the next one is the fun stuffs and the last one is the savings. So try to split your income according to the percentages each category gets.

Try to set realistic financial goals, so don’t forget to build in a buffer to be able to adapt to the rising prices as well. Make the plan together with your family so that it will be easier to stick to the plan. Don’t forget to review your budget from time to time. With this checking you’ll see whether you need to change your goals and where you could still cut back on your expenses.

You can also use piggybanking to automate spending. You can set spending categories, create a jar/piggy bank/account for each one and don’t exceed the amount of money you have there while paying for items within these categories.

If you’d like to discuss your budgeting goals, we’ll be happy to help.

Key takeaways

• Budgeting and saving is important to be able to cover the unexpected expenses.
• First count your monthly average income and expenses and compare them.
• Cut back on your expenditures to earn more than you spend. Next set a savings account as well to have some backup.
• Set realistic financial goals to be able to stick to the plan.
• Use budget planner or spreadsheet to make your finances more visible.
• Professional advice can help increase your savings and improve your budgeting.

Home Insurance - What you need to know

Can you afford to die?

First time buyers guide to saving for a deposit

Pocket money

Archie is nearly seven - the age when most parents start giving their children pocket money, according to research by Barclays. And the bank says this is a great time to start teaching youngsters about the value of money. By getting Archie to earn his dough by doing household chores, Liz and Dan will help Archie appreciate the effort that goes into earning money and encourage him to develop a strong work ethic.

Pocket money can be paid in cash or using a prepaid card. There are a number of cards available that are designed specifically for youngsters from companies including GoHenry, Osper and HyperJar. A pre-paid card could also be a gentle way for Liz and Dan to introduce Archie to electronic payments and the world of online banking.

Talking about money

By talking to Archie about money and what they spend it on each month, Liz and Dan can help him to appreciate the kind of ongoing financial commitment involved in buying something like a Saint Bernard puppy or a horse. Archie’s probably too young for them to go through their entire household finances with him. But they can start with a large sum and show him how quickly the figure falls as they tick off all their monthly bills.

Showing Archie how they budget provides a good opportunity to talk about the difference between wanting something and needing something. This will also allow Liz and Dan to introduce the benefits of saving as a way of affording treats and luxuries, after paying for essentials.

Making saving visual

Barclays suggests that making it easy for children to visualise how it’s possible for money to grow can help get them excited about saving. Liz and Dan could do this by giving Archie a clear jar to turn into a homemade piggy bank. Alternatively, they could set up a savings account so Archie can go online to see how additional deposits and interest add up over time.

Budgeting for a big day out

Research by the Bank of England found only a quarter (27%) of youngsters in the UK enjoy school lessons about money. The study revealed kids thought using real money in real situations would help make learning more fun.

Archie wants to take a couple of friends to the zoo for his birthday. This offers a great opportunity for him to use money in the real world. Putting Archie in charge of the budget for the trip may help to increase his appreciation of the value of money. Liz and Dan should agree an amount Archie has to spend and ask him to think about how he’d like to use that money. They’ll need to remind him of all the things that will have to be paid for including fuel, entry tickets, food and drink etc. Allowing Archie to take the lead as much as possible during the trip – by handing over cash or holding up cards to make payments – will help boost his financial awareness and hopefully make learning about money more engaging.

Key takeaways:

• Giving children pocket money for doing household chores can help them appreciate the effort that goes into earning cash and encourage a strong work ethic.
• Talking to children about money helps them to understand budgeting and the difference between essentials and luxuries.
• Making it easy for children to visualise how their money can grow may encourage them to save.
• Putting children in charge of budgeting for a big day out can boost their financial awareness and make them more comfortable handling money.

Market performance in July was strong, as a ‘bad news is good news’ dynamic appeared to take hold.

Many investors are reflecting on the year so far, which saw the largest falls for the S&P 500 index over the first six months since 1970. The MSCI All Country World Index (which tracks the largest companies around the world) also suffered falls and its worst opening six months since its creation in 1990.

However, not all industries have performed in the same way. For example, the energy sector held up relatively well due to high crude oil and gas prices. The war in Ukraine also continued to influence markets, due largely to the uncertainty as well as higher commodity prices. In particular, energy and food costs remained elevated owing to supply disruptions.

Markets rally in July but inflation surges again
There were gains during most of the month for markets in the US and Europe, as investors looked to balance their assessment of the risk of a global slowdown with the prospect that central banks may scale back their plans for interest rate rises. The S&P 500 and tech-heavy NASDAQ indices had their best months since 2020.

A stronger-than-expected US employment report for June eased recession fears slightly, as did stronger consumer spending figures.

However, US inflation figures for June came in higher than expected at 9.1%, putting a further focus on the Federal Reserve (Fed), the US central bank, and what it may decide to do next. The Fed raised interest rates towards the end of the month by 0.75 percentage points, the second such hike in as many months, though this had been widely expected. Data showed the US economy shrank in the period between April and July, and while an economic contraction is not good news, markets rallied on the view that the Fed may be able to slow the pace of its interest rate hikes.

UK economic growth surpasses expectations
There was some positive news in the UK, as figures showed economic growth of 0.5% for the economy in May – exceeding many forecasts – after two consecutive months of contraction. The news followed a Bank of England financial stability report released early in July, stating that global economic conditions have worsened due to rising inflation – which crept up to 9.4% in June. Higher prices are putting pressure on the finances of UK businesses and households, deteriorating the country’s economic outlook. The Bank added that the volatility in global markets in recent months is likely to continue.

The inflation rate in the euro area rose to 8.6% in June, prompting the European Central Bank to raise interest rates for the first time since 2011, taking it from a negative rate of -0.5% to zero. The European Commission also cut its growth expectations and increased its inflation forecast for the region.

Fears of a recession are more intense in the euro area, as investors stay alert to cuts in energy supply from Russia, and EU members have agreed to cut their natural gas use by 15% over the winter. These fears also led to the euro falling to its lowest point against the US dollar in 20 years. Despite these fears, the euro area economy expanded 0.7% in the period between April and June, which led to markets recovering and ending the month in positive territory.

Despite positive market performance during the month for most Western stock markets, many countries are battling high inflation, slowing economic growth and an increasing probability of a global recession, which will continue to dominate financial markets over the next few months. When investment conditions are challenging, it’s even more important to remain focused on your long-term goals. We can expect periods of positive performance as we’ve seen in July, and history shows that when you try to time the markets, you risk missing out on these short bursts of recovery.

With announcements relating to energy bills, Income Tax, the State Pension, tax allowances, and Stamp Duty, there are plenty of ways your finances could be affected in 2023 and beyond.

Here are the key points of the autumn statement and what they mean for you.

You may pay more Income Tax in 2023/4

The chancellor’s announcements mean many millions of workers are likely to pay more Income Tax over the next few years, for two key reasons.

1. Personal Allowance and higher-rate threshold frozen

The Personal Allowance – the amount you can earn before you pay Income Tax – has been frozen at its current level of £12,570 until 2028.

Additionally, the threshold at which the higher rate of Income Tax begins (£50,270) has also been frozen until 2028. So, as your earnings rise, you’ll pay more tax than if these thresholds rose each year in line with inflation.

1. Reduction in the threshold at which individuals pay additional-rate tax

Additionally, Hunt reduced the threshold at which additional-rate Income Tax becomes payable.

You will now pay the 45% rate of tax on any earnings over £125,140 (it was previously £150,000). In simple terms, if you earn more than £150,000, this specific move means you’ll likely pay just over £1,200 a year in additional Income Tax.

You may pay more Dividend Tax and Capital Gains Tax from 2023

As part of his plan to increase tax revenue, the chancellor announced reductions to two key tax allowances.

Dividend Tax
The Dividend Allowance – the amount you can earn from dividends before you will pay Dividend Tax – will reduce from £2,000 to £1,000 in 2023, and then to £500 in 2024.

If you receive any income from dividends, it’s likely that you will pay more tax on these dividends from April 2023 onwards.

Capital Gains Tax
The Capital Gains Tax (CGT) annual exempt amount will fall from £12,300 to £6,000 in 2023, and to £3,000 in 2024.

This means that you will only be able to make profits of £6,000 on non-ISA investments (things like company shares or a second home) in the 2023/24 tax year before CGT becomes due.

Your State Pension will rise

Under the “triple lock”, brought in by the coalition government in 2010, the State Pension increases each year by the higher of:

• The average increase in wages across the UK
• Inflation, as measured by the Consumer Price Index (CPI)
• or 2.5%.

Hunt announced that he would increase the State Pension in line with September 2022’s inflation rate of 10.1%. So, if you’re in receipt of the State Pension, that means a significant boost to your payments from April 2023.

If you’re on the full, new State Pension, the BBC reports that you will receive £203.85 a week, up from £185.15.

Pension Credit and other benefits will also be uprated in line with inflation.

You’ll likely pay more for energy from April

One of Hunt’s initial moves on becoming chancellor was to scale back Liz Truss’s Energy Price Guarantee.

This guarantee ensures that, for six months from 1 October 2022, the average household will pay energy bills of around £2,500 a year.

In his speech, Hunt announced that, while support for energy bills will remain in place, it will become less generous from April 2023. The guarantee will rise to £3,000 for a further 12 months, meaning you could well see your gas and electricity bills rise again in the spring – although the government say their measures would save the typical household £500 in a year.

There will be additional support for more vulnerable households, such as pensioners and those on benefits.

Inheritance Tax thresholds frozen until at least 2028

At present, qualifying estates can pass on up to £500,000 with no Inheritance Tax (IHT) liability using the nil-rate and residence nil-rate bands.

The qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an IHT liability.

These two thresholds had already been frozen until 2026. The chancellor announced an extension to this freeze, meaning that the nil-rate bands will remain at these levels until at least 2028.

As house prices and asset values rise, it will become increasingly likely that the value of your estate exceeds the combined nil-rate bands, and that your family may face an IHT bill on your passing.

Stamp Duty changes become a “holiday”

In September, Kwasi Kwarteng announced some increases in the thresholds at which Stamp Duty is payable.

Stamp Duty in England and Northern Ireland is now only paid above £250,000 while first-time buyers only pay the tax on purchases over £425,000 (and discounted Stamp Duty on properties up to £625,000).

While these changes will remain, the chancellor said they will now be time-limited, ending on 31 March 2025.

Other key announcements at a glance

• The largest-ever rise in the UK’s national living wage. For workers aged 23 and over, it will rise by 9.7% to £10.42 an hour from April 2023.
• Confirmation that the main rate of Corporation Tax will increase to 25% for companies with over £250,000 in profits from April 2023.
• The lifetime cap on social care costs in England due to come into force in October 2023 will be delayed by two years.
• Electric cars, vans, and motorcycles will begin to pay Vehicle Excise Duty in the same way as petrol and diesel vehicles from April 2025.
• Councils will have more flexibility in raising Council Tax without asking voters.
• HS2 and the Northern Powerhouse Rail schemes will continue as planned.
• A £13.6 billion package of business rates support over the next five years.
• Spending of £2.8 billion in 2023/24 and £4.7 billion in 2024/25 for adult social care and an additional £3.3 billion in 2023/24 and a further £3.3 billion in 2024/25 to improve the performance of the NHS.
• A significant increase in windfall taxes. The oil and gas companies' tax rate will increase from 25% to 35% of profits on UK operations from January 2023 until March 2028, while there will also be a 45% tax on profits of older renewable and nuclear electricity generation.

Get in touch

If you have any questions about how the autumn statement could affect you, we can help. Please get in touch to arrange a time to chat.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Actively talking about money can be positive for both you and your loved ones, and research suggests it’s something younger generations are more likely to do. According to Royal London, 76% of 18 to 24-year-olds spoke to their parents about money matters when they were growing up. In contrast, this falls to 43% for those over 65.

If money wasn’t openly discussed during your childhood, it can be hard to change your mindset around the topic. Yet, when you’re planning a future with your partner, your finances will play a critical role. So, if you currently keep your financial planning separate, working together could be useful.

That doesn’t mean you have to share everything or combine finances completely if it’s not right for you. Instead, you could set out how you want to work together with a financial planner.

Bearing all this in mind, here are five reasons you should create a financial plan with your partner.

Understand what you both want to achieve
While you may have talked about your goals in your relationship, setting out a financial plan provides a good opportunity to talk about your priorities and understand if you’re on the same page as your partner. This may include when you’d like to retire, and what your lifestyle will look like when you give up work. Or it could be how you’ll support your wider family or bucket list destinations you want to visit.

Making these goals a clear part of your financial plan means you’re far more likely to achieve them. Without a plan, it can be all too easy for aspirations to fall to the wayside.

Discuss your attitudes to financial decisions
When dealing with finances, it’s important that you’re comfortable with the decisions you make. This applies to both you and your partner if you’re working towards shared goals.

For example, how does your partner feel about taking investment risk? Or what is their attitude to using credit? Talking about these issues can help you create a financial plan that you’re both comfortable with.

It could improve your wellbeing
Money is often linked to stress, and it can affect your overall wellbeing too. Research shows that financial stress can increase later in life. This is understandable as, on top of considering things like mortgage repayments and day-to-day costs, you may also be thinking about retirement or supporting other family members. According to Aviva research, more than 40% of 55 to 64-year-olds say they are “struggling financially”.

A long-term financial plan that incorporates you and your partner’s circumstances and goals can deliver peace of mind.

Have confidence in the future
One of the reasons that the topic of money can be stressful is that you may have questions about the future or wonder what will happen in some circumstances. For example, you might be concerned about the consequences of you or your partner losing your income, or how one of you would cope financially if the other passed away.

Financial planning helps you set out a blueprint, but it also considers how you’d cope if the unexpected happens. By doing this, you can take steps to provide security in these circumstances. By planning together, you can have confidence in both your and your partner’s long-term financial security.

It could help make your money go further
Planning as a couple can make financial sense. Working together could mean you’re able to make the most of tax breaks or allowances.

Which ones are right for you will depend on your circumstances and goals but may include using the Marriage Allowance to reduce Income Tax liability, making use of both of your annual ISA allowances, or contributing to your partner’s pension.

Contact us to create a financial plan for you and your partner
We are here to help you navigate the challenges of creating a tax efficient financial plan and understanding your goals. If you’d like to arrange a meeting with us, please get in touch.

If you have any questions about tax efficient financial planning, please contact us.

The value of your investment can go down as well as up and you may not get back the full amount you invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen

What is remortgaging?

Remortgaging involves taking out a new mortgage on a property you’ve already bought. You might do this to replace an existing mortgage deal or to borrow money against your home.

Is remortgaging right for Mike?

After Mike’s last mortgage came to an end, he didn’t look for a new deal so he was switched onto his lender’s standard variable rate (SVR). An SVR is usually much higher than fixed and tracker rates, and it can go up at any time. Research by Habito found 27% of mortgage holders in the UK are currently on their lender’s SVR, and they worked out - on an average mortgage - this translates to an extra £340 a month. This means Mike could almost certainly benefit from remortgaging.

Other reasons to remortgage

Even if you’re not on your lender’s SVR, there are a variety of reasons you might want to remortgage:

• To beat interest rate hikes. As inflation goes up, interest rates are starting to follow suit, so it may make sense to lock into a low rate now.
• You’re coming to the end of a deal. Mortgage advisers generally agree you should start looking for a new deal around three to six months before your current rate ends. However, the research by Habito found 46% of mortgage holders are unaware of this.
• The value of your home has gone up. A significant rise in the value of your home may have moved you into a lower loan-to-value band, meaning remortgaging may give you access to reduced rates.
• You want to borrow against your home. Remortgaging may allow you to raise money cheaply on low rates. Before doing this, it’s worth getting financial advice to make sure this really is the cheapest way for you to borrow.
• You want to overpay, and you can’t on your current deal. If you’ve come into some money recently, remortgaging will allow you to reduce the size of your loan and possibly get a better rate. You’ll need to take into account any exit fees or early repayment charges to weigh up whether remortgaging makes financial sense.

Where to start

It’s not always clear cut whether you’ll benefit from remortgaging. A qualified mortgage adviser will look at your circumstances and find out exactly what you want to achieve by remortgaging. For example, are you simply looking to reduce your monthly payments or do you want a more flexible mortgage that allows payment holidays? The adviser will then set out the best options available. Regular mortgage reviews can help ensure you’re never overpaying unnecessarily.

If you’d like to speak to someone about your mortgage, we’re here to help.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Key takeaways:

• Remortgaging can be useful in a variety of situations from reducing your monthly payments to borrowing money against your home.
• It’s not always clear cut whether you’ll benefit from remortgaging – talking to a qualified mortgage adviser can help you decide whether it’s right for you.
• Regular reviews with a professional can make sure you’re not overpaying unnecessarily on your mortgage.
• YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Everything was going great until, after a busy night shift, Megan came home and decided to run a bath. While the tub was filling up, she went downstairs to wait on the sofa where she promptly fell asleep. Megan was woken to the sound of water bringing down part of the living room ceiling. When Sue rang her home insurance provider to make a claim, she was informed they weren’t covered as they didn’t have landlord insurance.

What is landlord insurance?

Landlord insurance is designed to protect you, your property and your tenant(s). Basically, it covers all the same things as standard home insurance, plus various tenant-related issues.

Landlord insurance usually provides as standard:

• Buildings insurance
• Contents insurance - your belongings not those of the tenant(s)
• Property owner’s liability cover – this covers any damage, injury or illness caused by the property that you may be deemed liable for e.g. a tenant tripping down a poorly maintained set of stairs and hurting themselves
• Loss of rent cover – this protects you in the event that your tenants don’t pay their rent or they have to move out after an insured event such as a fire or flood

Optional extras may include:

• Accidental damage cover – this covers accidental damage to the building and its fixtures and fittings e.g. if a tenant accidentally smashes a window
• Emergency assistance cover – this provides help for your tenant(s) in the event of an emergency e.g. if there’s a burst pipe
• Legal cover – this covers your legal expenses e.g. if there’s a contract dispute

Who needs landlord insurance?

You’re not breaking the law if you don’t take out landlord insurance but, if you’re renting your property and something goes wrong, you’re unlikely to be covered by standard home insurance. Also, if you have a mortgage, you’ll probably find your lender will insist on you having landlord insurance before you take on any tenants.

Even if you’re renting to family members, as Sue and Jim discovered to their cost, standard home insurance may not be adequate. The same applies if you’re renting out part of your property, even if you’re still living there too.

What your insurer will want to know

You’ll be asked what kind of tenant(s) you have. Your answer to this question will impact how much you pay for your insurance. You tend to pay more if you rent to students or those receiving housing benefit. Not every insurer will cover every type of tenant. If you fail to disclose who you’re renting to, you may invalidate your policy.

You’ll also need to confirm that the property is safe. This will mean fitting smoke and carbon monoxide alarms and making sure all gas and electrical equipment meets safety standards. Failing to do this may invalidate your policy. Your tenants could then take you to court and you wouldn’t be able to use the legal cover from your landlord insurance to pay your costs.

Ask an expert

If you’re a new or prospective landlord and you’d like advice on insurance, or any aspect of managing your finances, we’d be delighted to help.

Key takeaways:

• Although landlord insurance isn’t a legal requirement, if you rent out your property and something goes wrong, you’re unlikely to be covered by standard home insurance.
• Most mortgage lenders will insist on landlord insurance.
• You’ll probably need landlord insurance if you’re renting your property in any capacity, even if you’re still living in the property or you’re renting to a family member.
• Your insurer will need to know the type of tenant you’re renting to and you’ll be required to make sure the property meets certain safety standards.
• If you need advice about landlord insurance, ask an expert.

Offset mortgages can help you save money over the course of your deal as there’s less interest to pay over the longer term. Interest rates on offset products can be higher than on an equivalent standard repayment deal, but thanks to the savings placed aside, these are charged on a smaller loan amount. This means you will pay less mortgage interest while the savings are offset.

An offset mortgage can help to lower your monthly repayments or lead to earlier repayment of your balance. There is also no tax to pay on the benefit received from an offset mortgage.

We can help guide you through all your mortgage options including whether an offset mortgage is right for you.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

https://home.openworksmarthub.com/assets/uploads/images/Non-offset-and-offset-rate-examples.pdf

Many lenders allow us to secure a new fixed rate for you months in advance of your current rate ending. It’s important to start early and we can help you navigate everything you need to, to ensure your needs are met.

We can help guide you through all your mortgage options so please get in touch soon.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Because of the way many lenders decide what rates to offer, we’re currently seeing tracker products priced a lot more competitively than fixed rate products.

Unlike a fixed rate, the monthly payment of a tracker mortgage fluctuates and the rate charged on the mortgage ‘tracks’ the Bank Rate usually for a set period. Whilst you may have to pay a penalty to leave your lender, especially during the tracker period, there are tracker products that have no early repayment charge, so you are free to leave without penalty.

If you’re coming up to the end of your fixed-rate and you’re faced with a higher interest rate than you were expecting, switching to a tracker at a lower rate may be tempting. Although you may find there are cheaper tracker products on offer than current fixed rates, you must be confident that you’ll be able to afford your repayments if the rate goes up.

We can help guide you through all your mortgage options including advice on whether a fixed rate or tracker product is more suitable.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Overpaying on your mortgage now could save you more on interest down the line and help reduce your mortgage payments. It could also make sense to overpay on your mortgage rather than keep your money in a savings account, because you’ll earn more in interest savings on your mortgage than you could earn in a typical savings account.

An overpayment is any additional payment you make over your usual monthly mortgage payment. Overpayments can either be a one-off lump sum or a regular overpayment made throughout the year. Overpaying on your mortgage means you can potentially clear your mortgage balance quicker.

Lenders will offer you better rates if you have a lower loan to value. The more you can pay to reduce your mortgage, the potentially lower interest rates you’ll have when you come to remortgage to a new deal.

Overpaying on your mortgage might not be right for everyone. Using savings to overpay on your mortgage could leave you with less cash to fall back on in an emergency.

Not all lenders have the same rules for overpaying and there may be a penalty fee called an Early Repayment Charge if you overpay too much.

You should only make overpayments if you’re sure you can afford them. It’s a good idea to make overpayments if you already have an emergency fund, and you don’t have any other, more pressing debts that need to be repaid.

We can help guide you through all your mortgage options including advice on making overpayments.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Read ''A better year ahead for gilts'' here.

One wet and windy evening, Alex and Megan decided to take advantage of their newborn, Ellie, falling asleep in her moses basket by getting an early night. Picking up the basket from its regular spot in front of the fireplace, they crept upstairs. No sooner had they settled in bed when they heard a massive crash from the living room. They ran back downstairs to find a pile of rubble in the exact spot Ellie had been sleeping just minutes earlier.

Aware the incident could have been much worse, the couple were still left with an enormous mess to sort out. High winds had caused the inside of the chimney to collapse. However, Alex and Megan’s home insurance provider refused to pay for the structural damage because, according to their terms and conditions, the wind hadn’t been strong enough to constitute a storm. They also refused to replace the living room carpet because the couple’s contents insurance didn’t include accidental damage cover.

So, what can you do to make sure your home insurance provides you with the protection you’d expect when the unexpected happens?

Let’s start at the beginning - what exactly is home insurance?

Home insurance financially protects your home against damage or theft but is typically split into two parts – buildings and contents.

Buildings insurance – this covers the building itself, including walls, floors, doors, windows and the roof. It also covers permanent fixtures such as baths, toilets, fitted kitchens and even wallpaper.

Contents insurance – This typically covers anything that can be taken with you if you move e.g. kitchen appliances, furniture and valuables.

Not all home insurance is equal

As Alex and Megan discovered to their cost, not all home insurance is equal. Although tempting to simply go with the cheapest option, it’s always best to check the details of any policy you’re considering seeing exactly what’s included. For example, some buildings insurance covers garages, greenhouses and garden sheds but some policies don’t.

It's also a good idea to check for exclusions. You may find some insurers won’t pay out for anything considered to be the result of general wear and tear or damage that happens over time, such as damp or rot.

Meanwhile, contents insurance generally has a single-item limit, meaning high-value possessions may need to be named separately. You may also have to pay extra to cover belongings when they are taken outside your home.

Add Ons

There are also certain add ons that are worth thinking about to provide a way to get cover without paying for a more expensive policy with features you may not need. These include:

• Accidental damage cover – This provides cover for accidents that occur around your home.
• Home emergency cover – This protects your home against emergency call outs or repairs like a burst water pipe.
• Personal possessions – This covers items that are used away from home such as handbags and mobile phones.
• Legal expenses – This covers the cost of legal proceedings if you need to take action or defend a claim.

Do you really need home insurance?

Homeowners – although buildings insurance isn’t a legal requirement, most mortgage lenders insist on it. No one is going to force you to buy contents insurance but it can provide valuable peace of mind and combining it with your buildings insurance may save you money.

Renters – you don’t need to worry about buildings insurance – this is your landlord’s responsibility. However, contents insurance may be a sensible idea.

Approved by The Openwork Partnership on 25/01/2023.

Key takeaways:

• What’s covered by home insurance varies from policy to policy, so you should check what’s included before making a purchase.
• Check the terms and conditions for any exclusions to make sure you’re getting the cover you need.
• Read reviews before choosing an insurance provider – good customer service can be just as important as cost.

On a capital repayment mortgage, the quicker you pay off your balance, the bigger your monthly payments will be. By having a longer term, you may benefit from a lower monthly payment, but you will also pay more interest.

Whether you’re taking out a new mortgage to buy your first home or have had a mortgage for several years and want to remortgage, it’s important to consider how soon you want to be ‘mortgage free’. You should weigh this up against a mortgage term that makes your monthly repayments affordable.

We can help guide you through all your mortgage options including advice on the term of your mortgage.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Approved by The Openwork Partnership on 30/01/2023

Are you making the most of your ISAs?

 

Winners

Over-50s returning to work
In his speech, the Chancellor said that “older people are the most skilled and experienced people we have”. So, he announced steps to make it easier for those over 50 to work for longer.

Firstly, the government announced an enhancement to the “midlife MOT” strategy – offering reviews to help individuals take stock of their finances and wellbeing to prepare for a more secure retirement.

Hunt also introduced a new kind of apprenticeship – called a “returnership” – aimed at over-50s who want to return to work.

The Chancellor also announced some significant pension reforms aimed at encouraging more over-50s to remain in work, or to return to work. This brings us to…

Pension saver
The Lifetime Allowance (LTA) restricts the amount of tax-efficient pension savings an individual can accrue in their lifetime.

Having reached a peak in 2012, the LTA has been frozen at £1,073,100 since 2020.

To encourage people to remain in work, rather than retiring to avoid punitive tax charges for exceeding the lifetime limit, Hunt made the unexpected decision to abolish the LTA. The government will remove the LTA tax charge from April 2023, and completely abolish it in a future Finance Bill.

In addition, the Annual Allowance that restricts the amount that you can save tax-efficiently in any one year will also rise, from £40,000 to £60,000 in April 2023. You will also continue to be able to carry forward unused Annual Allowances from the three previous tax years.

Finally, many high earners are also affected by the Tapered Annual Allowance. The Chancellor announced that the minimum Tapered Annual Allowance will increase from £4,000 to £10,000 from 6 April 2023. The adjusted income threshold for the Tapered Annual Allowance will also be increased from £240,000 to £260,000 from the same date.

These are major steps that will allow pension savers to accumulate significantly more tax-efficient pension savings over their lifetime, and reduce some tax disincentives to work.

In addition, once an individual flexibly accesses their defined contribution pension savings, the total tax-relieved pension savings they can make each year is restricted to the level of the Money Purchase Annual Allowance (MPAA). To support those who have left the labour market to return and supplement their income, or build up their retirement savings, the government will also increase the MPAA to £10,000 from April 2023.

Parents with young children
In an attempt to boost growth and get more people into work, working families will have access to 30 hours of free childcare each week for children aged between nine months and four years.

This is alongside boosts to subsidised childcare for parents on Universal Credit including upfront support.

Support will be phased in until every single eligible working parent of an under-five gets this support by September 2025.

Households with high energy bills
Back in November, Hunt announced that the government’s Energy Price Guarantee – an initiative of the Truss administration – would continue in its present guise until April 2023.

Under the guarantee, for six months from 1 October 2022, the average household has been paying energy bills equivalent to around £2,500 a year.

In April 2023, the guarantee was set to rise to £3,000, however the Chancellor announced that the Energy Price Guarantee would be extended by a further three months.

This is designed to keep bills at £2,500 on average and the Treasury says this will save the average family £160 on top of the energy support measures already announced.

Drivers
With inflation remaining high, the Chancellor argued that now is not the right time to uprate fuel duty with inflation, or increase the duty.

So, he announced a one-year extension of the 5p cut in fuel duty, saving the average driver £100 on top of the £100 saved so far since last year’s cut.

In addition, the Chancellor announced an increase of £200 million to the “potholes fund”, taking the annual amount allocated to £700 million. The increase is expected to fix the equivalent of up to 4 million additional potholes across the country.

Pubgoers
While duty rates of all alcoholic products produced in, or imported into, the UK will increase in line with inflation, from 1 August, draught relief in pubs will be up to 11p lower than the relief for supermarkets. This is in addition to changes already due to come into effect in August.

Swimmers
Hunt talked about the risk to swimming pools and other community facilities due to rising costs. In response, he announced a £63 million to fund public leisure centres and pools.

Losers

Businesses with larger profits
Back in 2021, when he was Chancellor of the Exchequer, Rishi Sunak announced that Corporation Tax would rise in April 2023 for businesses making more than £250,000 in profits.

The Budget confirmed that this increase will proceed in April as planned – with around 10% of companies paying the top rate.

Companies with profits of less than £50,000 will continue to pay Corporation Tax at 19%.

However, businesses will be able to offset 100% of their UK investment in IT equipment, plant, and machinery against profits to reduce their tax bills. This is an effective cut to Corporation Tax of £9 billion a year, and the government aim to make the scheme permanent when it is responsible to do so.

Taxpayers
In his November statement, the Chancellor reduced the Income Tax additional rate threshold from £150,000 to £125,140, increasing taxes for those on high incomes.

He also announced that Income tax, National Insurance, and Inheritance Tax (IHT) thresholds would be maintained at their current levels for a further two years, to April 2028.

Over the next five years, this is likely to see many people pay more Income Tax, as rising earnings push them into a higher tax bracket.

In addition, as house prices and asset values rise, it is likely that more and more estates will face an IHT bill over the next five years.

Savers
While it may now be possible to contribute more to your pension tax-efficiently, the subscription limits for tax-efficient ISAs were frozen at:

• £20,000 for an adult ISA
• £9,000 for a Junior ISA.

Smokers
In the Budget document, the Treasury confirmed that duty rates on all tobacco products will increase by RPI plus 2% from 6 pm on Budget day.

The rate on hand-rolling tobacco will increase by RPI plus 6% and the minimum excise tax will increase by RPI plus 3% this year.

Get in touch
If you have any questions about whether you are a winner or a loser from the spring Budget, and how it will affect you and your finances, please get in touch.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Approved by The Openwork Partnership on 15/03/2023.

Here’s a guide to your annual tax allowances, including ISAs, pension contributions and gifts – and why it’s important to make the most of them.

The start of a new year is a great time to review your finances – whether it’s your savings and investments, mortgages or insurance policies.

It’s a good idea to know how your investments are taxed when selling them. Here are some of the ways you can organise your assets to make them tax efficient.

Companies that are doing well pay out extra money, called dividends, to shareholders. However, the amount can be taxed depending on how much money you earn

Think twice: Why cancelling your financial protection during the current cost of living crisis could be a bad idea

When investing, it’s important to hold an emergency fund. This readily available cash will mean you’re prepared to protect yourself against the unexpected and also plays a vital role in maintaining your financial wellbeing.

It’s generally advised to keep between three and six months of household expenditure in an easy access account – more if you work in a particularly volatile sector. If you’re approaching retirement, you may want to keep even more of your wealth in cash.

An emergency fund and a retirement “buffer” are only two aspects of how to think about cash – it can also be integral to a diversified portfolio.

Cash tends to be the asset with the least associated risk. While cash offers the benefit of easy access, it also tends to provide lower long-term returns than other asset classes.

Over time, cash value can be eroded by inflation. So, any additional cash reserves should be placed in accounts that can earn you more interest.

Cash savings are protected
Cash savings are protected by the government’s Financial Services Compensation Scheme (FSCS). This provides protection for up to £85,000 for individuals and £170,000 for joint accounts per provider.

So, if you’re a single account holder, avoid having more than £85,000 with any single institution. If the savings provider holding your funds fails, you could lose everything over this threshold amount.

If you’re a single person with £170,000 in savings, you could protect the full amount by investing £85,000 in two separate accounts held by different savings providers.

Inertia is every saver’s worst enemy
Unfortunately, savers often fail to make the best choices about where to hold their cash.

UK savers could be missing out on more than £1.6 billion in interest every year.

There’s around £160 billion in savings accounts paying less than 0.5% interest and more than £246 billion sitting in savings accounts earning no interest at all.

So, it’s important to spend time considering the right places to hold cash reserves. Here are some of the main options and potential benefits and drawbacks.

High interest current accounts
These accounts often pay more than standard savings accounts. While they can be used as an easy access account, most high interest accounts will come with certain restrictions.

So, check the small print – the promise may not suit your needs. For example, you may have to save a set monthly amount into the account or there could be limits on how much of your balance will earn interest.

Earn more with fixed-rate accounts
Fixed-rate accounts typically offer higher rates of interest. However, to gain maximum benefit, you’ll need to lock your money away for a set amount of time.

If you have a healthy emergency fund and are comfortable with the commitment and timescale, these can be great for growing your balance.

The longer you’re prepared to tie your money up, the higher the interest you could gain.

The rate available on fixed savings has been creeping up in recent months. As of early November 2022, it’s possible to find two-year fixed-rate accounts paying up to 5% interest.

As the Bank of England continues to battle against rising inflation, the City expects more rate rises. So, we should see the rates on fixed savings continue to rise, too.

Consider Premium Bonds – Ernie (Electronic Random Number Indicator Equipment) could deliver big
Premium Bonds are one of the most popular UK savings options. In October 2022, more than 21 million people had a total of £119 billion of savings allocated to the National Savings & Investments(NS&I) monthly prize draw.

Instead of earning interest, each £1 bond is an entry into the prize draw. All prizes are tax-free and range from £25 to £1 million. Premium Bonds are also Treasury-backed and 100% secure.

The downside is that, with no interest being paid, if Ernie doesn’t draw your number you’ll effectively be losing money as your savings won’t be keeping up with inflation.

You can save from as little as £25 and the maximum you can hold is £50,000 – a couple can invest up to £100,000.

Cash can create additional leg work
Because interest rates and offers are constantly changing, ensuring your cash is working as hard as possible can take a lot of time.

Fortunately, there are services that can do all the work for you.

For example, Insignis removes the complication by securing optimal interest rates for your cash deposits across a variety of banks. The simple proposition helps you to reduce risk, increase potential returns on your cash, and save time.

Get In Touch
We can help you understand how much emergency cash to keep on hand and how best to allocate additional cash reserves alongside your diversified portfolio. To discuss your options, please get in touch to arrange a time to chat.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

Tax concessions are not guaranteed and may change in the future.
Tax free means the investor pays no tax.
Approved by The Openwork Partnership on 14.02.2023

While the Covid pandemic began the inflationary increase, this was further exacerbated by the war in Ukraine pushing up energy and food prices even further.

Following such an extended period of price rises, you may be concerned about your household finances and long-term plans.

Rising inflation affects everybody differently depending on their circumstances. If you are approaching retirement, or have already retired, here are a few points to help you understand what the cost of living crisis means for you and some practical tips to help weather the storm.

What’s happening to interest rates and how might your pension be affected?
The Bank of England (BoE) is tasked with keeping inflation at the government-set target of 2%. Whenever it falls more than one percentage point above or below that target, the BoE must explain how they will address the difference.

In December 2022, they increased the base rate to 3.5%, which, in turn, will push up interest rates on the high street.

Higher interest rates will affect your pension differently depending on how it is invested:

• If your pension is invested in the stock market, its value could drop since the stock market tends to go down when interest rates rise
• If your pension, or some of it, is invested in bonds, its value could go up, since bonds can increase in value when interest rates rise
• If you hold savings in cash, you are likely to get increased returns as high street banks pass on some of the increases in interest rates.

While current headlines are worrying, it’s best to tune out the noise and focus on your personal circumstances.

What is your personal inflation rate?
The UK inflation rate is measured by the Office for National Statistics (ONS), who monitor the fluctuating price of goods in an average shopping basket.

So, how you experience inflation depends on what you spend your money on.

For example, the ONS assumes that an average household allocates 9.8% of their monthly budget on a car or other vehicle. If you don’t own a vehicle, your personal inflation rate might be lower than average.

Understanding your personal inflation rate, by using an online calculator, allows you to make informed choices about how you allocate your monthly income and to locate possible savings.

In spite of inflation, here are three ways you can make your retirement income more sustainable.

Annuity rates have risen recently
If you’ve saved into a defined contribution (DC) pension scheme, you have a few different options for drawing an income. One is to buy an annuity that will guarantee you a certain level of income, usually for the rest of your life.

With yields on government bonds increasing, annuity rates have risen through 2022 and are currently enjoying a 14-year high. This means you can get a much higher income for the same level of initial investment than you might have before this year.

If you are approaching retirement or already in retirement and looking for ways to generate an income from your accumulated savings, annuities could be worth considering.

Maximising other savings accounts
If you’re about to retire, consider whether you have other savings that could provide an income before you start drawing from your pension. This would allow your pension to remain invested for longer, potentially generating bigger returns that, in turn, could provide a better income in the later years of retirement.

This could also help to reduce the Inheritance Tax bill after you die, since pensions usually fall outside of your estate.

Using cashflow modelling for greater understanding
We can help you forecast what your savings will look like throughout your retirement using cashflow modelling. When you know whether you’re likely to encounter a shortfall, you can create a strategy that will help protect you.

Ensure you also consult us on how best to invest your pension savings. Some pension providers automatically reduce the risk profile on your investments as you approach retirement. This is called “lifestyling” and isn’t suitable for everybody as it could harm your pension performance.

Get In Touch
If you’re worried about the rising cost of living and would like to discuss ways to protect your finances from the effects of inflation, we’re here to help. Please get in touch to arrange a time to chat.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

Past performance is not a guide to future performance and should not be relied upon.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
Approved by The Openwork Partnership on 01.02.2023

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