Mantle Financial Planning ® Chartered Financial Planners & Tax Advisers 2018-09-19T10:41:26Z http://www.mantlefp.com/feed/atom/ WordPress Charlie Browning <![CDATA[State Pension Age]]> http://www.mantlefp.com/?p=6888 2018-09-17T10:42:14Z 2018-09-19T10:41:26Z When will you reach SPA ?

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The UK State Pension changed on 6 April 2016 for people who reached State Pension age on or after that date.

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This means that men born on or after 6 April 1951 and women born on or after 6 April 1953 now qualify for the new State Pension(assuming they have built up an entitlement). Anyone who reached State Pension age before 6 April 2016 falls under the old system.

How the State Pension age will rise in the future:

As life expectancy has continued to increase, the government has been reviewing the age at which the State Pension is paid to men and women. As such, the State Pension age for women has been rising to 65 since 2010 and this process will be complete by November 2018. It is then rising for both men and women as follows:

■ Rising to age 66 between December 2018 and October 2020
■ Rising to age 67 between 2026 and 2028
■ Rising to age 68 between 2044 and 2046.

The government has announced plans to bring this timetable forward which will see the increase to 68 happen between 2037 and 2039 – and there are plans to change State Pension ages further.

You can check your State Pension age by clicking here: www.gov.uk/state-pension-age

 

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Investment Committee <![CDATA[Weekly Market Update]]> http://www.mantlefp.com/?p=6890 2018-09-17T10:54:34Z 2018-09-17T10:54:34Z Last week prospects for US-China trade talks emerged...

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Last week prospects for US-China trade talks emerged and action by Turkey to support its currency fostered a positive mood. It also marked a decade since Lehman Brothers’ collapse, which thrust financial markets into free-fall and gave way to the longest bull run in history.

Discussions surrounding trade wars continued as US companies in China say they are already feeling the pain from the trade war. In a survey by two American chambers of commerce in China, almost two-thirds of US companies that responded said the waves of new tariffs had harmed their business.

The Turkish currency crisis took a dramatic turn last week as authorities abandoned their hostility to raising interest rates. After a year-long rout in the lira and with inflation running close to 18 per cent, the Central Bank of Turkey raised its benchmark rate by 6.25 per cent last Thursday, to 24 per cent. The effects of the decision were soon felt in the markets. The lira initially gained, and Turkish and other emerging market stocks rallied.

Argentina held its interest rates at 60 per cent, the highest in the world, following a surprise hike two weeks ago after the peso plunged. Russia raised its benchmark lending rate by 0.25 percentage points to 7.5 per cent, its first rate rise since December 2014. Inflation risks are mounting, with a slumping currency and threats of US sanctions.

The European Central Bank kept its interest rate policy unchanged as expected, staying on track to end bond purchases this year and raise interest rates next autumn. In a subtle shift, the ECB said it would halve its monthly bond purchases to €15bn from October, firming up its previous language, which said only that such a move was anticipated.

Bank of England governor Mark Carney extended his tenure until the end of January 2020, with the objective of supporting a smooth exit from Europe. The BoE left interest rates untouched at 0.75 per cent. Unemployment remains low and wages have outstripped inflation for four consecutive months, making a text book case for further increasing the base rate. But uncertainty around Brexit negotiations is causing the Bank of England to pursue a dovish policy, holding off on rising rates any time soon.

Brexit is never far from investors mind and there were several stories last week highlighting the negative effect of a no-deal outcome. Rating agency Moody’s warned a no-deal Brexit could tip the UK into recession, while Mark Carney warned the cabinet that a chaotic no-deal Brexit could crash house prices and send another financial shock through the economy.

There was however, some good news from the UK economy. At the start of last week, GDP growth came in at 0.6 per cent, the highest rate for more than a year. There was positive news from the jobs market too as wage growth accelerated in the three months to July, up to 2.9 per cent from 2.7 per cent for the three months to June.

If you would like more information on the above article or advice on your personal financial circumstances, please contact us >>

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Investment Committee <![CDATA[Weekly Market Update]]> http://www.mantlefp.com/?p=6884 2018-09-10T13:04:26Z 2018-09-10T13:04:26Z Investors kept a watchful eye on trade talks between the US and Canada and any developments in terms of relations with China...

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Investors kept a watchful eye on trade talks between the US and Canada and any developments in terms of relations with China. Nerves surrounding global trade, and emerging markets turbulence saw most markets end the week in negative territory.

US wages rose at their quickest pace in nine years in August, supporting the dollar and adding further pressure on emerging market economies. US fundamentals remain robust with the economy likely to grow more than 3 per cent again in 3Q18, fuelling the Fed to keep hiking interest rates with another move in September and a further increase in December.

German industrial orders fell unexpectedly in July on weak foreign demand, in a further sign that factories in Europe’s largest economy are feeling the bite of US President Donald Trump’s protectionist trade policies. In contrast, economic activity in the US manufacturing sector hit its highest level since May 2004.

The recent sell-off in emerging market equities continued last week. South Africa, Russia, Mexico, China and Indonesia have all suffered, and the broader MSCI Emerging Markets Index has fallen by almost a fifth since its 2018 high point back in January. Emerging market currencies have also been affected. While Argentina and Turkey have hit the headlines as the value of their currencies has slumped over the past few weeks, the anxieties are spreading to countries with current account deficits such as South Africa and India.

There were some signs of stabilisation towards the end of the week though, with the Turkish lira and Argentine peso staging a measure of recovery. Argentina’s economy minister Nicolas Dujovne sounded upbeat about clinching a new deal with the International Monetary Fund after two days of talks in Washington and stated he had sought US support for securing approval from the IMF’s board.

Sterling temporary moved ahead mid-week following reports that the UK and Germany had made progress on Brexit discussions. News agency Bloomberg reported that Germany was prepared to accept a less detailed agreement on the UK’s future economic and trade ties with the EU in order to get a deal done. `The European Union’s chief negotiator, Michel Barnier, also said that he was open to the idea of simplifying checks on the Irish border, which has proved a sticking point in the talks.

Amazon this week became the world’s second $1 trillion company by market capitalisation, having been pipped to the post by iPhone-maker Apple last month. After an extraordinary surge which has seen the price of its shares more than double in 12 months, Amazon has found its way into the trillionaire club from its humble beginnings back in 1994 as an online bookseller.

If you would like more information on the above article or advice on your personal financial circumstances, please contact us >>

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Colin Caulfield <![CDATA[Aretha Franklin Dies Intestate]]> http://www.mantlefp.com/?p=6879 2018-09-10T09:27:03Z 2018-09-10T09:27:03Z What are the implications of not having a Will ?

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Aretha Franklin, the queen of soul who died last month at the age of 76, had no Will in place when she died.

The estate is believed to be in the region of $80m, and is to be split equally between her four sons as per Michigan intestacy laws.

What happens in the UK when a person dies intestate (ie without leaving a Will) ?

  • The courts will appoint administrators, who take responsibility for the deceased’s assets, paying all debts, and eventually distributing the estate.
  • The surviving spouse may not automatically inherit everything from the deceased.
  • If the deceased and their partner were not married, then the surviving partner has no absolute right to inherit any assets, though they might be able to make a claim for limited maintenance funds.
  • If there are minor children in the family with no surviving guardians then they will become wards of social services while their guardianship is settled – the final decision may not match with their parents’ wishes.
  • The deceased’s estate will be divided amongst the closest blood relatives first, and to increasingly further relatives if no closer family members are living. These intestacy rules do not allow the deceased to increase the benefit to any one individual, or to exclude a particular person (e.g. an estranged child) if they have not written a Will.

On the face of it, the distribution of Aretha Franklin’s estate might seem fair. However, what might happen to people who have an estranged child or children. How would the other children feel, knowing that an unsupportive or distant sibling might inherit equally with themselves? The intestacy rules do not suit everyone.

A Will, on the other hand, should be a bespoke document, tailor-made to take a client’s personal and financial circumstances – as well as their wishes – into account.

The moral of the story is to ensure you have a suitable Will written by a Solicitor or Will-Writer. If you would like us to provide you with suitable contact details or more information, please click here: contact us >>

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Gill Hollis <![CDATA[Overpaid Pensions]]> http://www.mantlefp.com/?p=6867 2018-09-03T13:54:17Z 2018-09-05T13:40:11Z Some schemes may have overpaid pensioners

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Neil Barton of Trustee Solutions believes that some pensioners who are in receipt of an income from a Defined Benefit (‘final salary’) pension scheme could find that they have been overpaid by their occupational scheme as HMRC carries out a clean-up of its older pension records.

The problem has occurred as a result of people contracting out of SERPs (the ‘State Earnings Related Pension Scheme’, also known from 2002 as the ‘State Second Pension’) from 1978 onwards.

Schemes had to commit to matching the additional state pension their employee would have received had they remained contracted in – the Guaranteed Minimum Pension (GMP). In 1988, the government extended this option to include personal pensions – although this was eventually scrapped in 2016 (2012 for personal pensions).

It is a complicated state of affairs (when are pensions not ?!) which is why last year HMRC decided to launch a two-year reconciliation service – in other words to ensure that employment histories and employees’ pension savings actually matched.

The problem is that records go back 40 years and so inevitably some schemes are likely to find they have overpaid/underpaid GMP pensions to thousands of their scheme members – in which case, pensioners could also see a change in their state pension entitlement.

The reconciliation won’t be completed until December 2018 but some believe tens of thousands could be affected. Although some members won’t be asked to pay back overpayments (the Civil Service Pension Scheme had overpaid its members by £22m, but these were written off) it is possible that many schemes will look to reclaim overpayments.

Sadly, some pensioners could also see their state pension reduced going forward. However the former Pensions Minister, Sir Steve Webb, has suggested that any changes will be modest and only extreme cases will see major changes to their pension.

For now, people are going to have to wait until they are contacted by HMRC, or their company pension scheme, later this year or early next. Time will tell whether or not there a pension storm is on its way.

If you would like more information on end of year tax planning opportunities centred on your personal circumstances, please contact us >>

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Colin Caulfield <![CDATA[Is The Policing Of Independence Working ?]]> http://www.mantlefp.com/?p=6871 2018-09-04T13:45:12Z 2018-09-04T13:45:12Z Not as well as we'd hope......

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There are strict rules in financial services about who can – and can’t – describe themselves as providing ‘Independent’ advice.  At Mantles, we firmly believe in offering an independent service to our clients – how can we offer best advice if we are restricted in the providers that we can use/analyse ?

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However, we understand some company’s business models are different and they wish to provide a restricted service. The key is, we believe, it is imperative that clients know the service they are receiving. It seems this is not the case with at least one St James’s Place (SJP) sales consultant.

Money Marketing reports that restricted national firm St James’s Place is looking into why one of its consultants told a prospective client he provides independent advice.

In an email to a business owner seen by Money Marketing, an SJP adviser offers his advice services, and states he has a long history of being an independent financial planner. He states he has helped similar organisations with “bespoke independent financial advice…for more than 18 years.”

However, his FCA Register record, shows he has been with SJP, and therefore restricted, since 2014.

An SJP spokesman says: “We have strict checks and balances in place to ensure compliance with our regulatory duties across all parts of the business. This includes communications to clients and potential clients, which are required to be reviewed by the business prior to being sent out.”

Last year consumer champion Which? ran an undercover investigation looking into how clear SJP advisers are about their restricted status with prospective clients. Three of the 12 advisers in the investigation did not say they were restricted and some who did confirm their status played down the restricted/independent difference as a “technicality”.

SJP told Which? last year it does not believe “being restricted is in any way inferior to being independent”.

It said its advisers were trying to explain its “distinct approach to investment management” and that if advisers’ explanations dismissed the value of independent advice it was “regrettable”.

 

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Investment Committee <![CDATA[Weekly Market Update]]> http://www.mantlefp.com/?p=6869 2018-09-04T07:41:32Z 2018-09-04T07:21:56Z US trade deals were again in the spotlight, powering US equities to new highs...

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US trade deals were again in the spotlight, powering US equities to new highs. The US and Mexico finally signed a revised free trade agreement potentially ending an acrimonious impasse in relations between the countries since Donald Trump became president. The two sides agreed to stricter rules for Mexican car exports to the US, while the deal maintains tariff-free trade for farm products, but with new measures on labelling and health standards.

Meanwhile international trade relations remain extremely fraught, with the US poised to impose a further $200bn in tariffs on Chinese products as early as next month, after the latest round of negotiations between Beijing and Washington ended without much progress.

Meanwhile there are traditional disputes between Russia, China and the west that go well beyond arguments over tariffs. There are continuing trade sanctions against Russia for past misconduct, and western concerns about some of the ways China is flexing her new-found power. These also have an impact on world trade and markets. For now, Trump has claimed a win with Mexico and it may be that he sees no urgency to do the same with China.

Elsewhere, recent action by Argentina’s central bank failed to halt a plunge in the peso. The central bank ratcheted up interest rates to 60 per cent, aimed at arresting a currency collapse. It comes amid mounting concerns across multiple emerging markets, as a strengthening dollar buoyed by a fast-growing US economy and a Federal Reserve committed to a series of rate increases has raised questions over whether companies and governments in the developing world will be able to pay off their dollar-denominated debt.

The Turkish lira has been the other hardest-hit emerging market currency. Turkey’s inflation rate climbed to almost 18 per cent last month with rapid price gains reported across a wide swath of categories, marking the latest sign of mounting imbalances in the economy.

If you would like more information on the above article or advice on your personal financial circumstances, please contact us >>

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Colin Caulfield <![CDATA[Unmarried Mum Wins At Supreme Court]]> http://www.mantlefp.com/?p=6861 2018-08-30T12:15:00Z 2018-08-31T11:59:10Z She will now receive widow's benefit allowance

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An unmarried mother-of-four whose partner of 23 years died of cancer has won her Supreme Court battle to access the widowed parent’s allowance. Siobhan McLaughlin, from Co. Antrim, took her fight to the highest court in the UK after being refused the allowance because she and John Adams had not been married or in a civil partnership.

Mr Adams, the father of her children Rebecca, now 15, Billy, 16, Lisa, 21, and Stuart, 23, died in January 2014. Following his death, Ms McLaughlin was refused widowed parent’s allowance by the Northern Ireland Department for Communities.

Ms McLaughlin, 46, initially won a case after claiming unlawful discrimination based on her marital status, but that ruling was later overturned by the Court of Appeal. But, by a majority of four justices to one, the Supreme Court ruled the current law on the allowance is “incompatible” with Human Rights legislation.

Giving the lead judgement, the court’s president Lady Hale said: “The allowance exists because of the responsibilities of the deceased and the survivor towards their children. Those responsibilities are the same whether or not they are married to or in a civil partnership with one another. The purpose of the allowance is to diminish the financial loss caused to families with children by the death of a parent.

That loss is the same whether or not the parents are married or in a civil partnership with one another.”

However, Lady Hale said not every case where an unmarried parent is denied the allowance after the death of their partner will be unlawful. The court also said it is up to the government to decide whether or how to change the law.

The current maximum widowed parent’s allowance is £117.10 a week.

A DWP spokesman said: “We will consider the court’s ruling carefully”.

Ms McLaughlin said: “For me, this case was always about the rights of bereaved children. I am so delighted that the Supreme Court shared our view that the law as it stands has discriminated against my children.

If you would like more information, please contact us >>

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Colin Caulfield <![CDATA[Planning For The Perfect Tax Rate]]> http://www.mantlefp.com/?p=6853 2018-08-28T16:43:12Z 2018-08-30T16:19:33Z Not too much, not too little......

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Tony Wickenden writes in Money Marketing about the basic principles of taxation and behaviour – prompted by Prime Minister Theresa May’s decision to fund a £20bn NHS boost with a range of tax rises, including lifting the eight-year freeze on fuel duties.

There’s a strong argument that raising taxes is not necessarily the best way to bring down public sector debt and boost Treasury income. Nigel Lawson cut the top rate of tax from 60 to 40 per cent in 1988 and, within a decade, the amount of total tax paid by the UK’s top 1 per cent of earners had risen from 14 to 21 per cent.

Incentives

So, what impact does taxation have on financial decision making? At a consumer level, governments have long used tax incentives to influence behaviour.

In the UK, we currently have pension tax relief, a large range of ISAs, Enterprise Investment Schemes, Venture Capital Trusts, and Business Property Relief, to name just a few, all aimed at incentivising particular types of investment and spending decisions.

Does it cause more people to invest than would without the incentive? Most likely. The big question is whether the benefit to the economy of this additional investment is worth the cost to the Exchequer.

This consideration will continue to exercise the minds of the Treasury in relation to pension tax relief, costing over £30bn a year.

Optimal tax rates

Back to the tax rates themselves. To what extent do they influence behaviour? If we assume the goal would be to set rates that result in the optimum amount collected for the government to implement its economic and social plans, then what is that level for, say, income tax?

There are many theories on optimal tax rates but, as we get closer to the Autumn Budget let’s hope the Treasury is familiar with the work of former chief economist at the US Office of Management and Budget, Arthur Laffer.

Granted, the theory avoids being specific on the actual tax rate break points but the principle on which it is founded is definitely worth a look.

As the chart below shows, at 0 per cent the government collects zero tax revenue. Revenue increases to a point at C but falls with further rate rises.

The decrease in tax revenue arises because higher tax rates create disincentives for people to work harder and invest. At a 100 per cent tax rate, people will have no incentive to work at all.

What is clear is that economists do not agree on where the all-important point C lies. But many politicians use the concept behind the Laffer Curve to justify cuts nonetheless. The idea is that cuts would increase revenue because the current rates lie beyond point C.

Laffer himself said his theory does not guarantee whether a tax cut will raise or lower revenues. Those who believe any cut at all will raise revenue are wrong. If tax rates are actually at the optimum level then further cuts will not help. Just as merely raising rates will not raise revenue where the rate is at the optimum level.

If you would like more information on based on your own personal circumstances, please contact us >>

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Colin Caulfield <![CDATA[Pension Lifetime Allowance Tax Hits £110m]]> http://www.mantlefp.com/?p=6847 2018-08-24T08:43:22Z 2018-08-29T12:22:08Z More than 10x when it was first introduced in 2006

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Pension savers breaching the Lifetime Allowance (LTA) today are shelling out 10 times as much tax as they did in 2006 when the policy was first introduced.

The latest figures found that some £110m in tax was collected from individuals exceeding the allowance in 2016/17, up from less than £10m in 2006. Wealth at Work, a provider of financial education and guidance in the workplace, said taxpayers breaching the LTA typically fell into one of three categories.

‘Blissfully Unaware’

Many employees may be “blissfully unaware” their pension pot is valued at or above the current LTA limit of £1.03m.

It said this could particularly affect those who never check their pension value, or have not done so for some time.

There could be many employees in Defined Benefit (DB) pension schemes that are unaware their pot is valued at 20 times their annual pension for LTA purposes. An annual pension of £30,000 would, therefore, have a value of £600,000.

‘Long Way Off’ 

Those who mistakenly think they are a long way off from breaching the LTA is another potential scenario. This was a danger, in particular, for employees making healthy contributions into their scheme and perhaps receiving matching employer contributions. Positive pension fund growth, as well as a pay rise may easily push them over the LTA before they knew it.

‘Unprotected’

Thirdly, employees who have taken protection measures and opted out of their workplace pension scheme to safeguard their savings from an LTA charge could still be at risk due to auto-enrolment regulations stipulating workers must be re-enrolled every three years.

One month’s contributions could invalidate a previously applied for protection without employees possibly realising.

 

Director of Wealth at Work Jonathan Watts-Lay said: “Reaching the LTA could be closer than many employees think. For example, they may have a number of pension schemes that when combined with their current pension provision, could exceed the allowance. The tax implications could be drastic and could lead to potentially many being hit with unexpected and sometimes unnecessary tax bills.”

The good news is there are strategies available to avoid or reduce the impact of the LTA – particularly if you plan in advance. At Mantles we have helped numerous clients reduce potential LTA charges allowing more of their pension pots to be used for retirement income, or passed down after death to loved ones in a very tax efficient way.

If you would like to contact us, please click on the following link: contact us >>

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