As we approach the end of the tax year, there’s still time for you to support your family finances, and ensure you use your allowances in an efficient manner.

Kick start your child’s financial future

Saving for your children’s future is a huge responsibility, although a rewarding one. To give your child a head start in life, you can open a child’s pension or a Junior ISA.

Both can be opened and managed on behalf of the child by a parent or guardian until the child’s 18th birthday. The pension limit is currently set at 100% of the child’s earnings (if applicable) or £3,600, whichever is the lower amount, but funds cannot be used until retirement, whereas the Junior ISA funds can be accessed after the age of 18 and could be used for things like university education or first home deposit.

The gift that keeps on giving

Gifts can be a great way to express love, appreciation, and support to your loved ones, but you can also use them to your tax advantage. As of 2023/2024, you’re entitled to an annual tax-free gift allowance of £3,000. This is also known as your annual exemption. With your annual gift allowance, you can give away assets or money up to a total of £3,000 without them being added to the value of your estate.

If you don’t use the full £3,000 gift allowance in one year, you’re allowed to roll it over to the following year. However, you’re only allowed to do this once, so you can’t roll any allowance you haven’t used over for a second year. If you use an unused allowance as well as this years, it  would allow married couples or those in civil partnerships to gift up to £12,000 in one tax year.

If you die within seven years of making cash gifts of more than £3,000 in any one tax year, it may be included in the value of your estate and therefore potentially liable to inheritance tax. This is known as a potentially exempt transfer, or PET.

Additional gifts exempt from inheritance tax

Individuals are allowed to make additional gifts for special events such as Christmas, weddings, and birthdays. You can make gifts to family members, if you can prove the gift comes from your income and doesn’t affect your standard of living. In other words, to remain exempt from inheritance tax, once you’ve given the gift, you must still be able to maintain your usual standard of living.

Charitable donations and gifts to institutions such as art galleries, museums and heritage funds are also exempt from gift tax. In fact, giving to a registered charity may be a good way to reduce your income tax liability, particularly if you’re a higher rate or additional rate taxpayer.

Even if you don’t need to pay inheritance tax on gifts from parents, bear in mind that there may be other tax implications to consider. Income or gains arising from the gift could result in a capital gains tax charge for example. Whereas If you sell your assets gradually over several years, instead of all at once, you can keep the gains just within the annual allowance and reduce capital gains tax liability.

In a nutshell

There is still time to use your tax and pension allowances efficiently before the end of the tax year. Reach out to us today for guidance on building a financially strong future for you and your family.

 

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 12-2-2024.

Retirement isn’t just about sipping cocktails on a beach; it’s about having the financial security to do so. Fortunately, there are plenty of ways to pave your way to financial freedom when it comes to your time to retire. However, it requires you to put in the work as the amount of money you need, will depend on the type of lifestyle you are picturing for yourself.

Start with a private pension

A private pension is a separate plan you can set up for yourself, where you contribute from your earnings, which pays you a pension after retirement. It is an alternative to the state pension.

Each private pension contribution you make is automatically increased by the basic rate of tax, which is 20% in the UK, including Scotland whose income tax is 19%. This means for every £80 you contribute, an additional £20 is added by the government.

If you pay a higher rate of income tax, you can reclaim this tax through self-assessment.

Set up a workplace pension

A workplace pension scheme is a way of saving for your retirement through contributions deducted directly from your wages. Your employer can also make contributions to your pension through the scheme.

Maximising your pension allowance

While there is no limit on the amount that can be saved in your pension each tax year, there is a limit on the total amount that can be saved each tax year with tax relief applying and before a tax charge might apply. Your annual pension allowance in the 2023/2024 tax year is your total salary or £60,000, whichever is the lesser amount, down to £3,600.

If in a previous year you had a pension, not a state pension, and made contributions below the maximum allowed level, then you could potentially fund these missing payments in this tax year, by carrying forward these allowances. This is known as pension carry forward.

Set up a child’s pension

To pave the way to financial freedom for your children, you can open a child’s pension. This can be opened and managed on behalf of the child by a parent or guardian until the child’s 18th birthday, however anyone can contribute to the account.

The pension limit is currently set at 100% of the child’s earnings (if applicable) or £3,600, whichever is the lower amount.

Build up a pension fund

It’s crucial to build up your pension, not only so you have financial freedom when you retire, but if you were to die, you can nominate someone to inherit your pension fund.

If you die before your 75th birthday, all pension funds can be paid to your beneficiaries tax-free. If you were to die after the age of 75, beneficiaries will be taxed at their marginal rates of income tax.

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.

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 12-2-2024.

At 12.30pm today, Chancellor of the Exchequer Jeremy Hunt announced the UK Spring Budget, as well as the economic and fiscal forecast by the Office of Budget Responsibility.

These legislative announcements are game-changers for Britain’s economy, and Hunt’s announcements included a number of sweeping changes that could potentially affect the personal finances of everyone living and working in the United Kingdom.

In laying out the Spring Budget, Hunt reinforced the government’s dedication to building the British economy while also helping working families.

Hunt’s last announcement, made back in November, included boosts to minimum wages, an increase in State Pension, and a reduction to the headline rate for National Insurance. As of today, the government is maintaining their low-tax strategy by decreasing National Insurance even further, alongside major initiatives aimed at helping drivers, families, those in debt, and other crucial economic groups.

So, ultimately, who wins and loses? Who will benefit? Who will miss out? We’re breaking it all down in this post.

The Winners

Employees

Perhaps the most notable development from the Spring Budget announcement was the continuing drop in the main rate of National Insurance.

Referring to the tax increases for higher-income individuals, Chancellor Hunt stated that: “because we’ve asked those with the broadest shoulders to pay a bit more, today I go further. From April 6th, employee National Insurance will be reduced by another 2p, from 10% to 8%.” This is in addition to the reductions from November’s Autumn Statement, when the rate was brought down from 12% to 10%.

The cut is primarily aimed to benefit employees instead of employers. For example, today’s reduction would be worth around £450 for someone on a full-time salary of £35,000. However, think tanks warn that tax cuts that lack a highly specific target may do more harm than good.

The Institute for Public Policy Research (IPPR) says the cut would cost the government around £10.4 billion, and although that money would then be divided amongst taxpayers, it’s unlikely to end up in the hands of those that need it most. Since high-income individuals benefit most from National Insurance cuts, almost half of the money would go to the richest 20% of households, while only 3% would benefit the poorest 20% of families.

While a National Insurance cut would increase annual household disposable income, the IPPR warns that the negative impact on public services negates this benefit.

Families claiming child benefit

Around 500,000 families will gain almost £1,300 from an increase in the high-income threshold for child benefit. Hunt says he will change the way child benefit is paid. At present, high-income thresholds only apply to individuals as opposed to households, which is set to change.

However, as the transition would take a significant amount of time to enact, the Chancellor announced an immediate solution by increasing the higher income threshold from £50,000 to £60,000.

First-time home buyers

Hunt claimed that the government is on track to deliver over a million homes, opening up the property market and helping young people get onto the property ladder. More than £188 million has already been allocated to building new homes, and over £242 million is still to be spent on building homes across London.

In addition, Hunt stated that a higher rate of property capital gains tax is to be reduced from 28% to 24%, in a bid to increase revenues by increasing the rate of transactions.

Drivers

Fuel duty has been frozen at 52.95 pence per litre since 2011. When the Ukraine War threatened to send prices skyrocketing, a temporary 5-pence reduction to fuel duty was introduced in 2022 to balance things out.

That reduction was extended in 2023. But it has now been extended yet again by Jeremy Hunt in today’s budget announcement, preventing a 13% increase in fuel duty according to the chancellor. Scrapping the increase could cost the government around £2 billion, according to independent think tank Resolution Foundation. While obviously benefiting drivers and the UK industry in general, the plan could have notable climate consequences.

Arts, the media, and the film industry

To help maintain creative sector growth in the UK, the Chancellor has announced a wave of tax relief measures for the British film industry. For example, the rate of tax credits for visual effects studios will be increased, and a 40% tax relief on gross business rates for eligible film studios in England until 2034 was announced. Additionally, the budget included a new tax credit for UK independent films made with a budget under £15 million.

Hunt also announced £26 million in maintenance funding to the National Theatre, and stated that the tax relief for theatres will be made permanent. The relief rate now sits at 45% for touring and orchestral productions, and at 40% for non-touring productions.

Households on universal credit

The Chancellor also announced plans to assist households currently living on universal credit, by making loans easier to repay.

Hunt stated: “Nearly one million households on Universal Credit take out budgeting advance loans to pay for more expensive emergencies like boiler repairs or help getting a job. To help make such loans more affordable, I have today decided to increase the repayment period for new loans from 12 months to 24 months.”

Hunt also announced that he would also abolish the £90 Debt Relief Order charge, and extend the Household Support Fund — aimed at supporting local councils in helping families with food banks and vouchers — for an additional six months.

The Losers

Holiday home landlords

The chancellor claimed that he intends to scrap tax breaks that make it more profitable for second homeowners to let out their properties to vacationers, rather than those who let their properties to long-term tenants. As such, the government is set to abolish the furnished holiday lettings regime.

Vapers and Smokers

The Chancellor also announced a new tax on smoke-free heated tobacco products — set to take effect from October 2026 — following on from the government’s proposed vaping crackdown announced in the autumn. Hunt also announced a one-off increase in tobacco duty. This means that taxes on tobacco products will rise further, making the habit far more expensive.

Oil and Gas Companies

Chancellor Hunt has announced an extension of the windfall tax on oil and gas companies. This means the government will apply the tax for another year beyond the previous end date. Instead of concluding in March 2028, it will continue on into March 2029, raising £1.5 billion.

The windfall tax (more accurately known as the 2022 Energy Profits Levy) is a response to the soaring profits oil and gas companies began making after the combined impact of the lifting of COVID-19 restrictions and price increases due to Russia’s war in Ukraine. The 35% tax (originally 25% but raised in January 2023) applies to any profits made from the extraction of UK oil and gas.

Non-Domiciled Residents

The Chancellor also announced that rules over the taxation of non-dom residents — those who live in the UK but keep their permanent, registered place of residence abroad — are set to change. Hunt stated that the existing system will be replaced by a: “modern, simpler and fairer” one, as of April 2025. From then on, non-domiciled residents living in the UK will face the same taxes as other UK residents after four years.

What’s Next?

As you can see, the 2024 Spring Budget statement has unveiled a number of key initiatives aimed at growing the economy, supporting business, and boosting industry across the nation.

It’s clear that these new initiatives will have a major impact on the finances of British people, and businesses operating in the country. It’s vital, therefore, to seek sound financial advice based on the adaptations laid out by the budget. Indeed, it can be tricky to understand exactly how the Spring budget will affect you or your enterprise without consulting qualified financial advisors first.

So, if you want more information on how the Autumn budget could affect your finances, don’t hesitate to get in touch now.

The value of investments and any income from them can fall as well as rise, so 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 06/03/2024

As we approach the end of the tax year, it’s a good time to start thinking about how to make the most of the tax reliefs and allowances you’re entitled to, before they are lost. We’ve put together a checklist to ensure you’re aware of all the ways to make sure you don’t miss out.

1. Open or top up your ISA

You can hold up to £20,000 in your ISA in the 2023/2024 tax year and split the contribution, between either a Cash ISA or Stocks and Shares ISA.

2. Use your pension allowance

Usually if you’re under 75 can contribute to a pension and receive income tax relief, up to 45%. You can contribute your total salary or £60,000, whichever is the lesser amount, down to £3,600.

3. Review your State Pension National Insurance contributions

The amount of State Pension you’ll get depends on how many ‘qualifying’ years of National Insurance payments you have. Review your National Insurance contributions that you pay when you are working and see if you can top it up.

4. Open or top up a Junior ISA

You can add up to £9,000 into a Junior ISA in the 2023/2024 tax year, until the child turns 18. Like normal ISAs, you can choose between a Cash ISA or Stocks & Shares.

5. The capital gains tax allowance is £6,000 for the 2023/2024 tax year.

This means if you make gains on assets over the value of £6,000 annually, you’ll be required to pay capital gains tax on the excess amount at their marginal tax rate.

6. Match Capital Gains and Losses in the same tax year to reduce CGT liability.

Capital gains and losses incurred in the same tax year are offset against each other. This includes reducing gains down to zero even though some of the gain would otherwise have been covered by the annual exemption.

7. Consider VCTs and EISs

VCTs are sophisticated, long-term investments offering the chance to invest in small, fast growing UK companies. In return for the extra risk, you can receive a tax relief of up to 30%.

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong.

8. Reduce your Inheritance Tax liability

You can gift up to £3,000, known as the annual allowance, and use previous unused annual allowance once. Gifts over £3,000 are known as Potentially Exempt Transfers (PET) and free of inheritance tax if the individual survives seven years.

Planning now allows you to make smart decisions throughout the year that will benefit you and your family’s financial future.

 

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.

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 12-2-2024

Welcome to the Downton and Ali Investment Insights Newsletter for February 2024.

In this edition, we’re talking about the latest news in Junior ISAs, busting some investment myths, investment strategies to consider approaching retirement and the effect of psychology on investors.

Click here to read the newsletter.

Finance and business concept. Investment graph and rows growth

As a new year begins you may want a fresh start for you and your families’ health. Did you know that many insurance policies offer access to a range of health and wellbeing services that can help? You also don’t need to make a claim to use them as your protection policies aren’t just there for when things go wrong.

Often called added value benefits, these services can help you and your family start or maintain good health and make your lives easier, providing advice, assistance and information to keep you and your family healthy throughout the year.

The types of services typically available with protection insurance fall into three areas:

Medical:

  • Access to an online GP
  • Second medical opinion service
  • Prescription services
  • Medical care abroad

Support:

  • Mental health support
  • Physical rehabilitation
  • Counselling services
  • Return to work support
  • Bereavement support
  • Legal support

Preventative:

  • Health MOTs
  • Nutritional support
  • Fitness services
  • Online physiotherapy
  • Nurse healthlines

Please note that not all insurers include all of these, so speak to us to make sure you have the right cover in place for you and your family.

You can use your protection policy to help you stay in good shape with these added health services and here’s why:

  • Many of the services are free – You don’t need to claim on your policy to use them and they can be used throughout the life of your plan and regardless of pre-existing conditions.
  • They can often be used by your family too – most services are also available for a partner or children to use at no cost.
  • They are easy to use – You can book many of these services online and they’re accessible, via an online consultation, an app, or by phone with a professional.
  • They are provided by medical and health experts.
  • They are good for your health and wellbeing – From serious illness to everyday healthcare support, fast access to expert advice and support can be included in your protection policy.

Many clients have seen the benefits, for example, one of our insurers reported that 99% of GP appointments were offered within 2 hours of a customer contacting them. They also saw the demand for these appointments increase by 126% from the previous year showing that wider emotional, health and family support services can really make a difference in people’s lives.

We can discuss health and wellbeing services with you when you’re considering a protection policy. By looking at the needs of you and your family, we can help you get the right protection in place.

Ready to start a healthy new year?

Call Downton and Ali on 020 3021 0075 or drop them an email on info@downtonandali.co.uk.

Approved by The Openwork Partnership on 18/01/2024

Investing in a Stocks and Shares Individual Savings Account (ISA) can be an excellent way of growing your wealth over the long term, providing the potential for higher returns compared to other forms of savings.

This post aims to demystify stocks and shares ISAs, explaining how they work, the risks involved, and the potential benefits. The goal is to provide a comprehensive guide to help you make informed decisions about your investments. If you need personalised advice or have specific questions, feel free to get in touch.

What are Stocks and Shares ISAs?

Stocks and Shares Individual Savings Accounts (ISAs) are a type of savings account that allows you to invest in a wide range of stocks, shares, and other investment vehicles while protecting any profits from capital gains tax. They offer a potentially higher return on investment compared to traditional savings accounts, and unlike cash ISAs, the value of your investment can fluctuate with the performance of the market.

Stocks and Shares ISAs can serve as an effective long-term investment strategy, especially given their tax-efficient nature. However, as with all investments, they come with risks, and the value of your savings can go down as well as up.

How do Stocks and Shares ISAs Work?

Investing in a Stocks and Shares ISA is not too dissimilar from investing in any other type of stocks and shares. You can choose to invest in a variety of assets, such as individual stocks, investment funds, trusts, and bonds, all within your ISA.

The significant difference lies in the tax treatment of your investments. Any increase in the value of your holdings, dividends, or interest received within the ISA will not be subject to capital gains tax or income tax. Each tax year, you are allowed to contribute up to a maximum limit to your ISA.

The funds within your ISA can be withdrawn at any time without incurring a tax penalty, providing a degree of flexibility. However, bear in mind that the aim of a Stocks and Shares ISA is to grow your investments over the long term, so frequent withdrawals may not be beneficial.

What are the Risks?

While Stocks and Shares ISAs offer potential benefits, they also come with risks that you need to consider. The most obvious risk is market volatility. The value of your investments can fluctuate based on the performance of the stock market. If the market takes a downturn, the value of your ISA can decrease, and you could end up with less money than you originally invested.

Another risk is associated with the specific investments you choose within your ISA. Not all stocks, shares, funds, trusts, and bonds perform the same way. Some may offer high growth potential but come with higher risk, while others may be more stable but offer lower returns. Therefore, it’s crucial to diversify your investments to manage this risk.

Inflation is another risk to consider. If the return on your investment is less than the rate of inflation, your savings could lose purchasing power over time.

Ready to Talk About ISA Investments?

Investing in a Stocks and Shares ISA can be one of the most effective ways to grow your wealth over the long term. If you’re ready to take the next step or if you have more questions, don’t hesitate to get in touch with us.

Our team of investment professionals is on hand to help you navigate this exciting journey. Reach out to us and let’s start the conversation about how ISA investments can work for you.

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.

Approved by The Openwork Partnership on 5th January 2024.

Whether investing for the first time or looking to improve your approach, a good place to start is with the people who do this for a living. Here are four techniques the professionals follow that could help you become a successful investor.

Think Long Term

History shows that patience and commitment tend to reward investors, which is why it’s best tackled as a long-term exercise over many years. Timing the markets is something that even professionals admit is virtually impossible.
Your investments will almost certainly suffer periods where they fall in value, but they are also likely to recover if you stick it out. If you think you’re going to need the money next year for something like a wedding or holiday, then investing probably isn’t the right choice. But if you’re looking to build a nest egg for the future, it could be a great approach.

Diversify

Diversification is essentially a strategy of spreading your investments across a range of assets rather
than putting all your money into a single investment. You’ve probably heard of the term – don’t put all your eggs in one basket? Many professional investors agree that a mixture of different investments is the best way to produce a balanced portfolio. Another route to diversify is by having exposure to different geographical regions around the world. The idea is that when some investments are struggling, others may be rising so you’ll get a smoother journey over the long term.

Invest regularly

Investing at regular intervals is referred to as ‘pound cost averaging’, which means investing small amounts of money regularly. It helps you become a little less emotional in your approach because you’re investing no matter what state the market is in. It’s also a way to avoid being indecisive if you’re attempting to time the market. For example, if you suddenly have £1,000 from a bonus or generous relative, instead of investing it all, make a plan to split it into four £250 investments at monthly intervals. This way, your money is less vulnerable to the ups and downs of the market.

Consider risk

There’s always some risk when you’re investing, as you might get back less than you invested. Risk is a personal issue for you, and it can be tricky to work out how much risk you’re willing and able to accept and what that means for the types of investments that are best for you. It’s a good idea not to check your investment too often even though it can be very tempting. A financial adviser can help here and may suggest you start by investing a small amount and see what happens.

“Timing the markets is something that even professionals admit is virtually impossible.”

Volatility is a feature of investing and markets have bad months, quarters and years. But the evidence still supports the argument that exposure to the markets can be an effective way to build wealth over time. Speak to your adviser and conduct some research to see which approach is right for you.

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.

Get in touch

Speak to us to learn more about how to make investing work for your financial goals. Please get in touch to arrange a time to chat.

Approved by The Openwork Partnership on 28.12.2023

As we say goodbye to 2023 and welcome 2024, now’s the perfect time to make sure you’re fully prepared for the financial year ahead. To make it easy, we’ve summarised the key financial dates to put in your diaries:

January

  • 1stNew Energy Price Cap – The new energy price cap for the next 3 months.
  • 6th National Insurance Tax Cut – The 12% NI rate will fall by 2 percentage points to 10% from 6 January, 2024.
  • 31st Self-Assessment Tax Deadline – You need to pay and submit your self-assessment tax return for the tax year ending 5th April 2023.

February

  • 1st First MPC Meeting of the year – The first interest rate announcement of the year for the Monetary Policy Committee to decide whether interest rates should be altered.

March

  • Spring Budget – An update on the overall health of the economy and progress made since the Autumn Statement on 22nd November 2023.
  • 5th – Rail Fares Rise – The Government are freezing all rail fares for January and February, meaning they are due to rise in March 2024.
  • 21st – MPC Meeting – The second Bank of England Base Rate announcement of the year.
  • 23rd Temporary Cut to Fuel Duty ends – The 5p fuel duty cut was announced in March 2022, then extended another 12 months in early 2023, it is due to end on 25th March 2024.

April

  • 15 hours free childcare for two-year-olds – The Government’s policy of 15 hours free childcare for working parents of two year olds comes into effect.
  • 1st – New Energy Price Cap – The energy price cap for the second quarter of the year will come into effect.
  • 1st – National living wage and minimum wage rise take affect – The hourly rate for people aged 21 and over will go from £10.42 to £11.44. Those aged 18 to 20 will see a £1.11 rise.
  • 1st – Changes to household bills – Changes to a range of household bills will take place from the start of April.
  • 5th End of the 2023/24 tax year – Ensure you have used all your allowances.
  • 6th – Start of the 2024/25 tax year
  • 6th – Pension rises – State Pension is expected to rise to 8.5%.
  • 6th – New tax changes
    • Lifetime allowance will be axed in April.
    • Minimum age to open an ISA will rise to 18.
    • Tax-free allowance for dividend income will be reduced from £1,000 to £500.
    • Threshold for paying capital gains tax will be reduced from £6,000 to £3,000.
    • IHT threshold will remain frozen until 2027/2028.
    • Tax-free personal allowance will remain frozen at £12,570.

May

  • 9th MPC Meeting – The next Bank of England Base Rate announcement.

June

  • Bank notes featuring King Charles are expected to circulate.
  • 20th MPC Meeting – The next Bank of England Base Rate announcement.

July

  • 1st – New Energy Price Cap – The new energy price cap for the third quarter will come into effect.
  • 31stDeadline for second payment on account for 2023/24 for those that pay self-assessed income tax.

August

  • 5th – MPC Meeting – The next Bank of England Base Rate announcement.
  • 14th – July Inflation released – The inflation figure for July is important as it is traditionally used to set the increase in rail fares, which takes place the following year.

September

  • 15 hours free childcare from nine months – Second stage of the Government’s roll out of free childcare from the age of nine months.
  • 19th – MPC Meeting – The next Bank of England Base Rate announcement.

October

  • 1st – New Energy Price Cap – The new energy price cap for the fourth quarter comes into effect.
  • 5thDeadline to register for self-assessment – If you’re new to self-assessment this is the deadline to register with HMRC.
  • 16th – September inflation released – The inflation figure for September is important as it is used when calculating changes to benefits, the state pension and tax credits.
  • 31stPaper income self-assessment deadline – Your 2023/24 returns to be with HMRC.

November

  • Potential Autumn Statement.
  • 7th – MPC Meeting – The penultimate Bank of England Base Rate announcement of the year.

December

  • 17th – Last possible day to call a general election.
  • 19th – Final MPC Meeting of the year – The final Bank of England Base Rate announcement of the year.

Your financial plan could be impacted by these key dates. Talk to us for advice on unused allowances, additional rate tax and dividends.

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

For specialist tax advice, please refer to an accountant or tax specialist.

Approved by The Openwork Partnership on 09/01/2024

The information a lender finds during a credit check is important – it could affect whether you’re able to borrow money, including through a mortgage, and the interest rate you’re offered. Yet, they can also seem perplexing.

Indeed, a Royal London survey found that a third of Brits had never looked at their credit report.

The good news is that we can help you cut through the jargon, so you feel more confident next time you apply for a loan.

Lenders usually carry out a credit check to assess how much risk you pose

Lenders carry out a credit check by looking at your credit report to understand how financially stable and reliable you are.

Your credit report includes:

  • Personal details, such as your name and address
  • Borrowing and payment history
  • Current borrowing and credit limits
  • Details of people you’re financially linked to, like your partner

If their check indicates that you are more likely to default on repayments, a lender may offer you a higher interest rate, which would affect your repayments and the total cost of borrowing, or even reject your application.

Hard v soft credit check

Two different types of credit searches can be carried out – a hard or soft credit check.A soft credit check happens when you review your credit report or a lender checks to see if you’re eligible for certain offers.

A soft credit check doesn’t show up on your report.

A hard credit check is usually carried out when you’ve made a finance application, such as a credit card or mortgage, and the lender wants to take an in-depth look at your report.

Hard credit checks may be noted on your credit report for up to two years and will be visible to other lenders.

Several hard credit checks in a short space of time may affect your ability to borrow as it could indicate you’re struggling to manage your finances. As a result, taking the time to understand which lenders are suitable for your needs could be useful as it may reduce the number of hard credit checks that are carried out.

A hard credit check can only be performed with your permission.

Don’t worry if you’re unsure about the two different types of credit searches and what they mean to you, we’re on hand to talk you through it all.

6 useful steps you could take to improve the outcome of a credit check

By reviewing your credit report and score before applying for credit, you may have a chance to improve how lenders view you.

Here are six steps you may be able to take:

  1. Search your credit report for any mistakes and contact the provider to fix them
  2. Register on the electoral register to demonstrate stability
  3. Reduce your outstanding credit
  4. Pay more than the minimum payment on a loan or credit card
  5. Avoid late payments by automating bills
  6. Be careful about applying for new forms of credit

Speak to your adviser if you have any questions.

If you have any questions about your credit report or are worried about what it means for your future, including the ability to secure a mortgage, please don’t worry. You can contact us here.

Approved by The Openwork Partnership on 20/12/2023.

In the face of an economic downturn, many individuals are left questioning the wisdom of investing. The declining market values and financial uncertainties can make the investment landscape seem fraught with danger. However, building an investment portfolio during such times may not be as counterintuitive as it first appears.

This article aims to shed light on the unique opportunities and the potential downsides for prospective investors and how a strategic approach can pave the way for potential long-term financial success.

Why a Portfolio is Important for Future Financial Stability

Building an investment portfolio, even during a downturn, helps instil a disciplined savings habit and fosters a long-term perspective, both of which are critical for achieving financial stability and accumulating wealth. The act of regular investing can turn into a disciplined habit, encouraging financial responsibility and forward planning.

Furthermore, developing a portfolio with a long-term view can help investors ride out market volatility and realise the potential of their investments as the economy recovers. By staying invested and sticking to a well-thought-out investment strategy, investors can potentially enjoy the fruits of economic recovery and hopefully grow their investments over time.

This underscores the potential benefits of portfolio construction during economic downturns, highlighting that it may indeed be a strategic move for long-term financial success.

Building Your Portfolio in an Economic Downturn

The potential disadvantages

Investing during an economic downturn presents several notable disadvantages. One primary concern is the difficulty in accurately pinpointing the market’s bottom. Investors often face the challenge of entering the market too early, which can lead to further losses if the downturn continues. This timing uncertainty adds a layer of risk, as it’s challenging to predict when the market will start recovering.

There is also a significant time factor involved. Investments made during a downturn may require a prolonged period to yield any growth or return to their pre-downturn values. This extended timeframe can be particularly challenging for investors who require liquidity or are not prepared for long-term commitments.

The overall economic uncertainty during a downturn can lead to heightened market volatility, making investments riskier and potentially leading to more significant short-term losses before any signs of recovery. Therefore, while investing during a downturn can offer opportunities, it requires careful consideration of these potential drawbacks.

The potential advantages

While economic downturns can be risky periods for investment, they can offer unique opportunities for building a robust investment portfolio. By taking advantage of lowered asset prices, fostering a disciplined savings habit, and maintaining a long-term investment perspective, investors can strategically position themselves for potential growth and financial success in the long run.

If you’re considering exploring this avenue, remember that every investment decision is an individual one that requires careful consideration of your financial circumstances and risk tolerance. We at Downton & Ali are here to guide you through the process. Get in touch with us today to discuss how we can help you strategically build your investment portfolio during economic downturns and set the stage for your future financial success.

Approved by The Openwork Partnership on 5th January 2024.

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.

While the cost of living crisis may be putting a strain on your finances, read why cancelling your financial protection could be a dangerous way to save money

Centuries ago, Benjamin Franklin said that…

“By failing to prepare you are preparing to fail.”

This is especially true when it comes to ensuring your personal finances are protected from the rainiest of days. If the rising cost of living is likely putting pressure on your spending, you may be considering cancelling your cover, even when this could leave you more vulnerable than before. Read on to discover some of the reasons you should consider prioritising your financial protection over other cost of living worries.

Rising costs should highlight the necessity of financial protection

A recent survey by Which? has revealed that 59%of households have resorted to cutting back on essentials, selling items, or dipping into savings to pay their rapidly rising bills. Financial protection products such as life insurance, income protection, and critical illness cover are sometimes the first things that people decide to cancel when things are tight. However, without financial protection, one unexpected event or serious illness could plunge you into having to deal with a real crisis with no financial support in place.

If you were to die

Keeping your life insurance policy can ensure your family benefit from financial support if you were to die. It’s often said who are we to determine what the worst event is for a client, they will all be different. For some their worst may be permanent injury or a critical illness.

Without protection in place, your family could perhaps no longer afford their regular outgoings, leaving them in a difficult financial position at what will already be a stressful time. Cancelling your policy could jeopardise the financial security of your loved ones. If you’re the main breadwinner, without your contribution to the household your family may struggle to meet their regular financial commitments.

You could receive cover during a critical illness

If you cancel your critical illness cover to save money, you could find yourself out of pocket if you’re diagnosed with a serious condition. You may have to take an extended period off work on a significantly reduced income. Critical illness provides a lump sum if you are diagnosed with a specified illness such as Heart attack, Stroke, Cancer or Multiple Sclerosis. Conditions may vary between providers.

While it’s unpleasant to think about, you should consider your own circumstances and whether you might be vulnerable if you cancel. Having protection to offset unexpected healthcare expenses, mortgage costs and everyday bills could be essential to preserving your financial wellbeing.

Income protection could support you while you’re unable to work

Injury, illness, or an accident could prevent you from working and earning your living at any time, making it hard to meet everyday expenses. Even if you receive Statutory Sick Pay (SSP), paid at £109.40 a week in 2023, it is unlikely to be enough to cover your usual expenses and could force you (and your family) to adapt your lifestyle while you recover.

Moreover, if you’re self-employed, you aren’t eligible for SSP. Income protection could save you from such stress. If illness or injury prevent you from working, you can expect to receive up to around 60% of your wages. Just as important as a payout, an income protection plan could give you access to rehabilitation services that can help you get better and return to work more quickly. As an example, 82% of Aviva customers who had rehabilitation support returned to work.

Potential consequences

If you cancel your protection now with the intention of taking out cover again when your finances permit, you may find the premiums are significantly higher – especially if your health has deteriorated since you took out your original protection. You may also find there are exclusions based on pre-existing conditions. The short-term savings often may not be worth the potential long-term vulnerability you cause yourself.

You may not feel you need insurance in all the areas discussed here.

For example, some employee benefit packages include life insurance, so it’s worth checking to see if this is something you already have through your work. The type and level of protection that is most suited to you will depend on your circumstances. We can help you decide what would provide you and your family with the most benefit and help you understand which policy is right for you, too.

Life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Get in touch

We can help to assess your financial wellbeing and assist in finding the right protection for you. This can help to safeguard your finances when confronted with unexpected circumstances. Please get in touch to arrange a time to chat.

Approved by The Openwork Partnership on 16.10.2023

With inflation at its highest level in 41 years and energy prices skyrocketing, the cost of living crisis has dominated headlines since inflation began to creep up from historic lows in mid-2021. 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. So, here are five ways to protect your finances during the cost of living crisis.

1. Review your budget and personal inflation rate

Reviewing your spending will clarify where your money is going and highlight potential areas to cut costs and make savings. Despite a lot of noise about inflation and its impact on UK households, the good news is that your personal rate of inflation depends on how you spend your money. It won’t necessarily match the official inflation rate and so changing your spending habits can help bring it down. For example, since much of the rise in prices has been caused by soaring fuel prices, your personal inflation rate may be lower than the average if you don’t drive or own a car. Recently, energy prices have also risen significantly. However, if your home is especially energy-efficient, you may use less energy than an average household.

This could bring your personal inflation rate below the average. You can use an online calculator – such as this one from the ONS website – to help you work out your personal inflation rate online.

2. Manage debt

Higher interest rates mean increased borrowing costs. So, check the rates and see if you can reduce the interest you’re paying. Focus on repaying credit card debt first. Credit cards typically charge high levels of interest and the negative compounding effects can be difficult to escape.

If you have high credit card debt, transferring to a limited-period nil-interest rate account could help you repay the debt sooner.

3. Ensure your savings are working hard for you

Around £160 billion in savings accounts pay less than 0.5% interest, so it’s worth shopping around for higher interest rates on your savings. Alternatively, the Insignis cash management solution can help you secure some of the best cash savings rates. As interest rates change, our cash management solution moves your money to secure optimal rates. The one-time sign-up is quick and easy to set up, plus you’ll never need to open or close another account again.

4. Resist the temptation to dip into your investments or stop saving for your future

You may be tempted to dip into your pension or investments to tide you over but consider the long-term effect on your retirement plans. Selling investments or drawing from your pension could leave you worse off in the long run, so assess every option before you act. It’s important to continue to pay your future self first, too; be sure to maintain regular, tax-efficient contributions to your pension and ISAs.

5. Remember your long-term financial plan

Making rash financial decisions during the current crisis could jeopardise your long-term financial security. If you’re worried about the rising costs of living and what you can do to protect your short and long-term financial plans, we can help.

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.

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

Figures quoted correct as of 02.10.2023

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.

Approved by The Openwork Partnership on 04.04.2023

When it comes to safeguarding your family’s financial future, life insurance can be a valuable tool. It’s a subject that might seem complex and even intimidating at first glance, but don’t worry, we’re here to make it easier for you. In this guide, we at Downton & Ali aim to break down the basics oflife insurance, explaining what it is and what it typically covers.

Why You Might Want Life Insurance

Life insurance is crucial because it can provide financial security to your loved ones when you’reno longer around to take care of them. If you are the primary breadwinner, consider how your absence might impact your family’s lifestyle. They could face difficulties in meeting daily expenses, paying for education, clearing debts, or even dealing with mortgages or other bills.

Life insurance can act as a financial safety net in these scenarios, helping to replace your income and ensure your family maintains their standard of living. It’s a way of saying, “Even though I’m not here, I’ve got you covered.” Life insurance is not about anticipating the worst but rather aboutbeing prepared for it. It’s about providing your family with a financial cushion that helps them cope during a challenging time.

What Are The Basic Things Life Insurance Covers?

Life insurance policies can vary greatly in terms of the coverage they provide. However, here are the key elements that most life insurance plans typically cover in the UK:

  • Outstanding Debts: This includes any mortgages, loans, or credit card debts that the policyholder had at the time of their death.
  • Funeral Expenses: Many policies pay out a lump sum to cover the costs associated with a funeral and other related expenses.
  • Income Replacement: Life insurance can provide a financial buffer for families who relyon the income of the deceased, allowing them to maintain their standard of living.
  • Inheritance Tax: Some policies offer coverage to handle any inheritance tax that might be due on the deceased’s estate.
  • Children’s Expenses: Some policies also offer coverage for childcare costs or education expenses for dependent children.

Remember, not all life insurance policies are the same, so it’s crucial to understand what your plan covers. Always read the policy documents thoroughly, ask questions if anything is unclear,and make sure you’re comfortable with the terms before committing.

Should You Take Life Insurance?

Life insurance is a beneficial financial planning tool for almost anyone, but it may prove particularly valuable if you havedependents or significant debts. Parents, homeowners with mortgages, business owners, and even young adults who want to lock in low premiums can all find value in life insurance.

It’s a great way to offer your loved ones financial security and peace of mind. However, remember that everyone’s situation is unique. Life insurance isn’t a one-size-fits-all solution, and there’s no ‘right’ answer that applies to everyone.

The decision to take out a policy should be based on individual circumstances, such as your financial situation, age, health, and your dependents’ needs. It’s important to evaluate all these factors before making a decision. 

If you’re unsure whether life insurance is right for you or what type of coverage you need, we at Downton & Ali are here to                                                                             help find the right provider and cover for you. Our team can provide expert advice on the right products based on your unique needs, giving you the confidence that your family’s future is well protected.

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

Approved by The Openwork Partnership on DD-MM-YY

UK Chancellor Jeremy Hunt’s 2023 Autumn Statement outlined, in his words, “eight months of hard work” and no fewer than 110 measures to help grow the British economy. Contained within are a raft of measures set to overhaul everything from minimum wage and benefit payments to tax, business investment, and more.

The Winners

Young and low-paid staff

Although the news was released ahead of the main statement, the announcement confirmed a large-scale increase to the national living wage, bringing the hourly rate from £10.42 to £11.44 (an improvement of almost 10%). The new rates will come into effect from April 2024 and impact just under 3 million workers across the UK.

Eligibility for the new rate will also expand to 21 and 22-year-olds from the first time: A 21-year-old will get a 12.4% increase, from £10.18 this year to £11.44 next year, worth almost £2,300 a year for a full-time worker.

Additionally, the minimum wage for apprentices is also to rise considerably, from £5.28 to £6.40. This 21% increase is also set to take effect in April 2024.

Pensioners

The state pension will increase by 8.5%, in line with the triple-lock system. The move comes after rumours that he would opt for a slightly lower inflationary figure. However, the announcement delivers an increase to the State Pension, boosting it to £11,500.

Also announced was a consultation on a “pot for life” scheme. These proposed reforms will give workers the legal right to nominate a single pension scheme across their entire working career that employers pay into. The programme aims to end the difficulties of workers who, after moving jobs, accrue multiple, separate retirement funds, and sometimes lose access to pension entitlements.

This builds upon other recent work from Hunt’s Mansion House reforms to drive market innovation. The latest measures could provide an extra £1,000 for average earners saving from 18 and help combat the ongoing cost of living crisis.

Workers

27 million people in the UK will benefit from the National Insurance cuts announced today. The Government will reduce the headline rate of National Insurance from 12% (to 10% for employees. The cut will also be enforced from 6 January 2024 instead of the new financial year.

The 2% cut will be worth £760 a year to someone earning more than £50,000 — however, even a 2% cut multiplied across every worker paying National Insurance could cost the Government somewhere in the region of £10bn.

Growing businesses

The Chancellor again confirmed a £4.5bn fund to support the UK’s manufacturing sector. The package is aimed at eight sectors deemed “key to economic growth,” with the car industry in particular set to be one of the biggest beneficiaries, receiving around £2bn.

There was also a range of pro-investment measures, including a £1bn scheme to create 12 investment zones (similar but separate to Sunak’s freeports), and the indefinite extension of the Full Expensing system. Under the system, for every £1 of investment in IT, machinery and equipment, businesses can claim back 25p in corporation tax, making it one of the most generous capital allowances in the world.

Benefits claimants

Welfare benefits are set to rise by 6.7% under the 2023 Autumn statement, in line with the 6.9% inflation rate recorded in September, which equates to an extra £470 a year for the lowest-income households. Prior to today’s statement, it was thought the Government would use the October inflation rate of 4.6%, as this would mean a smaller benefits increase and therefore preserve approximately £2bn in funds.

This news comes alongside further details of the Back To Work plan, designed to help over 1 million UK residents get off benefits and move into gainful employment.

The hospitality industry

The Autumn Statement has promised a host of benefits for hospitality businesses in the coming year, specifically pubs and pubgoers.

Alcohol duty will be frozen until August 2024, which means no increase in duty for beer, cider, wine or spirits. The Chancellor also confirmed the Government’s ‘Brexit pubs guarantee’, which ensures that pints poured in pubs and restaurants stay cheaper than alcohol bought in a supermarket.

Finally, Mr Hunt said he would extend the 75% discount on business rates up to £110,000 for another year. While this discount applies to retail and leisure businesses as well as the hospitality industry, the Chancellor specifically mentioned that the measures will save the average independent pub over £12,800 over the year.

The self-employed

Some of the most notable updates in the UK Autumn Statement were changes to self-employed National Insurance payments. Namely, abolishing Class 2 contributions which are currently compulsory along with a 1% reduction of Class 4 contributions from 9% to 8%.

When combined, Hunt said, “these reforms will save around two million self-employed people an average of £350 a year from April.”

The Losers

Public services spending

Mr Hunt focused on the idea of a “more productive state, not a bigger state”. As such, the Chancellor gave targets rather than promises of investment: the public sector is tasked with increasing productivity growth by 0.5% per year. One measure to help achieve this is the reduction of the size of the Civil Service to pre-pandemic levels, as well as a review to see how “bureaucracy is holding [police, fire and ambulance services] back”.

Through these tactics, Mr Hunt hopes to keep the growth in public spending lower than the growth in the economy, while also protecting essential public services.

Fossil fuel companies

Fossil fuel companies stand to lose out on the new subsidiaries offered by Mr Hunt. Of the £4.5 bn investment package to the UK manufacturing sector, £960 million is earmarked for clean energy.

With the funds set to become available in 2025, the fossil fuel industry will soon feel added pressure to transition away from carbon-intensive energy sources.

Long-term unemployed

The Chancellor also announced reforms to benefit entitlements. Specifically, if a claimant is still without employment after seeking a job for 18 months, they must undertake mandatory work placements “to increase their skills and improve their employability.”

Continuing, Mr Hunt said that if they “choose not to engage with the work search process for six months, we will close their case and stop their benefits”.

Smokers

The House also heard Hunt’s plan to increase hand-rolling tobacco duty an additional 10% above the existing tobacco duty escalator.

The move continues the Government’s work to support the long-term sustainability of the health service. Notably, the Prime Minister’s October announcement of a “smoke-free generation,” that has the potential to prevent up to 115,000 cases of strokes, heart disease, lung cancer and other lung diseases.

What’s Next?

The 2023 Autumn statement contained a variety of measures aimed at growing the economy, supporting business, and levelling up regions across the country.

Yet, with changes set to affect both business and personal finances, it’s important to seek financial advice based on the economic changes laid out by the Statement. With National Insurance contributions changing along with billions in business support announced, there’s a lot to grapple with. What’s more, it can be difficult to understand how the Autumn Statement affects you without expert financial advice.

So, if you want more information on how the Autumn Statement could affect your finances, don’t hesitate to get in touch.

The value of investments and any income from them can fall as well as rise, so 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 22/11/2023

Value-added services are benefits included in an insurance policy that you might not be aware of – but could help improve your overall health and wellbeing.

When you take out an insurance plan like life insurance, critical illness, or income protection, you get the financial protection in the form of a payout, but there are also other services available to you as parts of those plans.

These ‘value-added services’ or ‘wellbeing services’ are designed to provide customers with a range of emotional and practical support services throughout the life of the plan, not just when you may need to claim. Most services are included within the price of the plan and can often be accessed by family members too.

It’s a good idea to check your policy first (and contact your provider to see if any of their services carry a charge) but you may find some of the following value-added services are part of your policy:

Annual health check

A range of tests to check various health markers such as cholesterol and blood sugar levels. This may be followed by a consultation with a nurse or GP to discuss the results, depending on how your policy works.

Bereavement counselling

Giving you access to emotional and practical support at a difficult time, if you have been affected by bereavement.

Mental health support

Being mindful of mental health is more important than ever. These value-added services help those facing mental health challenges, with counselling through various health providers.

GP services

Ability to see or speak to a medical professional from your home or face-to-face, without facing long waiting times, and at a time that suits you.

Second medical opinions

Second medical opinion services give you the chance to check with a second medical professional about the course of treatment or a diagnosis you’ve received.

Nutritional support

Gives you access to a nutritionist to help improve your diet, which could boost your overall health.

Fitness services

These services give you access to fitness services to enhance your overall health and wellbeing.

These are just some of the extra-value services that your insurance plan could offer, covering a wide range of needs.
If you’re unsure about how to find out more information from your policy, our advisers are here to look at the small print and help you make the most of any value-added benefits available to you.

Approved by The Openwork Partnership on 24/05/2023
Expiry date – 22 May 2024

Critical illness cover, an insurance policy that provides financial support should you be diagnosed with a specified illness or medical condition, can be a financial lifeline for families during challenging times.The unpredictability of life makes it worth considering, as it provides a sense of certainty in an otherwise uncertain situation. This article will break down the basics of critical illness cover, helping you decide whether it is the right choice for you and your family.

What is Critical Illness Cover?

Critical illness cover is an insurance policy designed to provide financial assistance if you’re diagnosed with a specific type of serious illness listed in the policy. These illnesses typically include life-altering conditions such as heart attacks, strokes, or certain cancers.

The policy pays out a tax-free lump sum upon diagnosis, which can be used at your discretion to covereveryday expenses, pay off debts, or even fund necessary lifestyle changes caused by the illness.

It’s important to note that coverage, terms, and conditions vary by provider, so it’s crucial tounderstand precisely what your policy covers. It alleviates financial stress during a difficult time, allowing you to focus on recovery and healing.

What Expenses Can Critical Illness Insurance Cover?

The financial payout from a critical illness cover can be used to support various expenses, depending on your specific needs and circumstances.

One of the primary uses is to offset the loss of income, particularly if the illness prevents you from working for an extended period. It can serve as a buffer, covering regular household expenses like mortgage payments, utility bills, and groceries, ensuring that your lifestyle remains relatively unaffected during your recovery period.

In some scenarios, a critical illness diagnosis might necessitate major lifestyle changes, such as home modifications for accessibility or specialised transportation. Critical illness cover can help fund these changes, relieving you of the financial burden at a time when your focus should be on recovery.

Remember, how you choose to use the lump sum payout from your critical illness cover is entirely up to you. Its purpose is to provide financial security and ease the financial stress often accompanying critical illness.

How to Find the Right Critical Illness Cover?

Searching for the right critical illness cover can seem daunting, given the multitude of options availablein the market. The key lies in understanding and aligning your unique needs with a policy that offers the most suitable cover.

Navigating the ins and outs of critical illness cover can be complex, and that’s where we come in. AtDownton & Ali, our dedicated insurance professionals are here to guide you through the process. We take the time to understand your unique needs and help you find a cover that fits your situation.

We offer a no obligation consultation service where we can answer all your questions and provide expert advice tailored to your circumstances. This can be invaluable in making an informed decision aboutcritical illness cover. Contact us today and let us alleviate the stress of finding the right cover for you.

Traditionally, the value of financial advice has been measured by monetary results of investment performance and returns. Today, the cost of living crisis is causing many to re-evaluate the benefits of financial advice.

These days, financial planning is about more than simply looking after your money and protecting your wealth. As well as helping you see results in pounds and pence growth, we can also help ensure you are prepared to meet the challenges you may face in life.

Used as a trusted and impartial sounding board, we can help by:

  • Encouraging you to recognise your goals and establish a clear financial road map to help you attain them
  • Providing you with someone to listen to you and to help you to arrive at the right financial outcomes – taking an objective view and a way forward
  • Managing your investments to maximise returns, while controlling risk, and reducing potential tax charges
  • Preparing you to deal with unpredictable outcomes you may not have considered, such as premature death, being diagnosed with critical illness or other unexpected life events that change income, savings, or retirement dates that could have a detrimental impact on your desired lifestyle
  • Offering emotional support and guidance to provide peace of mind And the value of financial planning doesn’t stop there.

And the value of financial planning doesn’t stop there.

Financial advice is more than just your money; it covers every aspect of your life

A great financial adviser can serve as an objective ear and help you to prioritise your future spending, helping you to deploy the money that you have in a more meaningful way. Longevity and the ability to live your best life are inherent to great financial advice. So, helping you to understand how a healthier lifestyle can help you to achieve your goals is another important aspect of our role.

With a wealth of knowledge about healthy choices now available, small changes can improve your quality of life and help you live longer and in better health. The ripple effect of living a good life means adjusting your plan to ensure you have enough money to last for a comfortable future.

The unseen value of free support services you can access

If something unexpected were to happen, insurance products and policies can provide valuable peace of mind to you and your family. This could include being too sick to work, suffering a life-threatening illness, or death.

In addition, insurance products often also include a wide range of practical and emotional support services. Many of these additional benefits are available at no extra cost and can be used by your family members too. These extra benefits are usually available as soon as your policy starts and remain open to you and your family until the policy ends. This kind of added value is automatically built into your insurance policies but can often be forgotten about or overlooked.

Although the type of complementary services will depend on both the policy and the insurance provider, they tend to be fairly similar and could include:

  1. Medical related services
    • 24/7 access to a doctor through a virtual consultation
    • An expert second medical opinion on your diagnosis
    • Private prescription services
    • Medical care while abroad
  2. Counselling services
    • Mental health and other support services – usually remote and without a long wait
    • Physical rehabilitation
    • Support to help you get back to work
  3. Preventative services
    • Nutritional support
    • Health checks

Structuring a sustainable income

Trust is one of the primary drivers of a successful client/adviser relationship. We proactively monitor your needs and investment portfolios. This means we’re well-positioned and able to recognise when changes are needed. Knowing that life can get in the way of even the best-laid plans, we have annual review meetings to help you stay on track. These regular reviews will help make sure your actions and investments remain aligned with your goals. Shockingly, the Financial Conduct Authority (FCA) revealed that only 8% of the population use a financial planner.

At your review, we’ll often use cashflow planning tools to explore the financial impact of various scenarios. This helps ensure that you’ve thought about all aspects of your financial future, including inflation, so that whatever the future holds, you can be better prepared for whatever life might have in store for you.

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.

Get in touch

If you’re worried about the rising cost of living and want to reap the financial and emotional benefits that speaking to a financial planner can bring, we’re here to help. Please get in touch to arrange a time to chat.

Approved by The Openwork Partnership on 04.10.2023

As a parent, providing for your children is a top priority – from making sure they have food on the table, to ensuring they have the extras they need in life.

Putting income protection in place means you’ll always be able to support your children with a regular income if the unthinkable should happen and you’re unable to work because of serious illness or injury.

Keeping your family financially healthy

In the past two years, 13% of workers have had two months or more off work due to either illness, injury or a mental-health event1. As a parent, your children depend on you financially. But should you become ill or injured and unable to work, would your family be able to manage without your income?

Would your family be able to cover all the essential monthly outgoings – not to mention the extras you’re used to having?

In a two-parent family, even with a safety-net of sick pay and savings, you might struggle to keep up with your regular outgoings on one income, especially if you’re not well enough to go back to work for a substantial amount of time.

Financial struggle for your family is the last thing you need when you’re trying to recover from a medical condition.

Are you a one-income family?

It’s also worth bearing in mind that becoming a parent may mean you now only have one income if one parent is staying at home for childcare purposes. Protecting this main source of income is essential, as is the case with one-parent families. With the rising cost of childcare and bills, the need to protect your family against financial difficulty is more important than ever.

Income protection can give you the support you need, when you need it most

By protecting your family this way, you can get help with mortgage payments, bills and food, as well as clothes, transport and leisure – protecting not just your essential outgoings, but your family’s lifestyle too. Putting income protection in place alleviates the risk of financial instability by providing your family with a regular source of income, so you have the peace of mind that your children will be provided for until you get better.

Find out what works for you with an adviser from Downton and Ali

Income protection can be discussed with your adviser – so you can make sure you have the right protection in place to protect you and your family’s financial future. Contact us here.

 

Approved by The Openwork Partnership on 03/07/2023

Expiry date – 04/06/2024

If you’re a homeowner, your mortgage payments are likely to take up a large part of your income each month. But if you became seriously ill or injured, and unable to work, would you be able to keep up your mortgage repayments? As buying a home is likely to be your biggest investment, it pays to protect yourself, so you’re covered should a life changing event occur.

We know the little things in life can be life-changing. It could be a phone call from the doctor with serious news about your health, or a stepladder that wobbled once too often when you were standing on it – serious illness and injury can happen when we’re least expecting it.

In fact, each year, one million workers find themselves unable to work due to serious illness or injury. And while many people would say they would rely on their savings to get by, on average UK households would only be able to survive on their savings for 19 days.

Have you ever thought how you would pay your mortgage if you became ill or injured and unable to work?

Buying a home is likely to be your biggest investment, so there is a need to safeguard it against loss of income because if you can’t work and pay your mortgage it could mean losing your family home.

There are several different types of insurance available which can provide financial protection. These include income protection which provides a monthly income if you’re too ill to work and critical illness which pays out a tax-free lump sum if you’re diagnosed with a specific serious illness or injury.

Protecting yourself with either income protection or critical illness insurance provides you with a crucial safety net to fall back on if you are unable to work because of illness or injury.

It will be a huge relief to you and your loved-ones to know that you will still be able to pay your mortgage and other essential bills if you are too ill to work, leaving you to focus on what’s important – getting better.

Here’s one little thing you can do to protect your financial future, so get in touch with an adviser from Downton and Ali today.

Your different options can be discussed with your adviser – so you can make sure you have the right protection in place for you and your family. Contact us here.

Approved by The Openwork Partnership on 04/07/2023.

Expiry date – 04/07/2024

In an unpredictable world, it is crucial to safeguard our financial future against unforeseen circumstances. Income protection is instrumental in ensuring you and your family aren’t left in the lurch if you’re unable to work due to illness or injury. Let’s take a look at the basics of income protection and why you might need it.

What if you were injured and unable to work?

Imagine a situation where injury or illness leaves you unable to work and you lose your regular income. The consequences can be dire and can put a significant strain on you and your family. You may find it challenging to meet your essential expenses, such as mortgage repayments, utility bills, and grocery costs.

How would you and your family cope financially if you were incapacitated and unable to earn an income? Would you have sufficient savings to cover your living expenses and financial obligations? It’s a daunting prospect and one that many people aren’t adequately prepared for. In these scenarios, income protection comes into play.

How can income protection help?

Income protection insurance is designed to provide a regular income if you are unable to work due to long-term illness or injury. Essentially, it’s a safety net that covers a proportion of your salary, ensuring you can continue to cover your bills, repayments, and everyday living expenses.

The beauty of income protection is its flexibility; you can tailor the policy to suit your specific needs, choosing the proportion of your salary you (usually up to a maximum of around 70%) and the duration of the policy. This form of insurance offers peace of mind, knowing that you and your family are financially secure if the unexpected happens.

  • Mortgage Payments: One of the most significant expenses for most individuals, income protection insurance can help you continue to meet your mortgage repayments and secure your home.
  • Utility Bills: You can continue to pay your electricity, water, gas, internet, and other utility bills, ensuring your household runs smoothly.
  • Regular Debt Repayments: Whether it’s a car loan, credit card debt, or personal loan, income protection can help ensure you have the funds to continue managing your debt repayments.
  • Daily Living Expenses: From grocery bills to your children’s school fees, income protection ensures that your daily life continues with minimal disruption.

Getting the right protection

Securing the right income protection policy is essential to ensure financial stability in the face of uncertainty. It acts as a safety net, providing a portion of your salary in the event of an illness or injury that prevents you from working.

The flexibility of these policies allows them to be tailored to individual needs, covering selected proportions of your income for specific durations. This means you can take the maximum cover, or adjust to what you can afford, to get the right cover for you.

With the advice of Downton and Ali, you can find the right income protection product for you, bringing you the peace of mind that comes with knowing that the financial future of your family is secure. We can help you balance the financial outlay with the benefits so you get the right income protection for your needs.

Protection policies aren’t just there for when things go wrong. Many protection insurers include access to a range of health and wellbeing support services – and you don’t need to claim to be able to use them.

These services can make everyday life that little bit easier. From knowing you can have immediate professional support if your child falls ill, to having the tools to keep tabs on your health, these services provide advice, assistance and information to keep you and your family healthy.

Which types of services could you get with your cover?

Here are some of the health and wellbeing services you could get with your policy. Please be aware that not all insurers include these, so it’s well worth making sure you speak to your adviser to make sure you have the right cover in place for you and your family.

  • Access to an online GP
  • Nutrition consultants
  • Mental health consultants
  • Online physiotherapy
  • Health MOTs
  • Nurse healthlines
  • Fitness apps
  • Second medical opinion service
  • Bereavement support
  • Legal support 

A few good reasons to use these health services:

  • The majority of services are free
    You don’t need to claim on your policy to use them and they can be used regardless of pre-existing conditions.
  • They are easy to use and convenient
    Many of these services are available for you to book online at a date and time to suit you. They are also easily accessible, whether via an online consultation, an app, or a helpful professional on the end of the phone.
  • They are provided by experts
    The support you receive is provided by medical and health experts.
  • They are good for your health and wellbeing
    From serious illness to everyday healthcare support, fast access to expert advice and support can be included in your protection policy.*

Many customers have seen the benefits, for example, one of our insurers reported that in 2022, 99% of GP appointments were offered within 2 hours of a customer contacting them. They also saw the demand for these appointments increase by 126% from the previous year showing that wider emotional, health and family support services can really make a difference in people’s lives.

With the NHS feeling pressure like never before, knowing your family’s health is covered can give you extra peace of mind.

Here’s one little thing you can do today, talk to an adviser from Downton and Ali to discuss the healthy extras available for you and your family.

Health and wellbeing services can be discussed with your adviser when you’re considering a protection policy. By looking at the needs of you and your family, we can help you get the right protection in place.

Ready to get started? Contact us here.

 

Approved by The Openwork Partnership on 27/06/2023
Expiry date – 25/06/2024

Since the government introduced pension auto-enrolment in 2012, millions more workers have started saving for their retirement. Now, the government has confirmed plans to extend auto-enrolment to encourage a savings boost. The changes could have implications for both employees and business owners.

Following a review of auto-enrolment the government has revealed key reforms forecast to increase pension contributions by £2 billion a year.

Key auto-enrolment changes to be aware of

The minimum age of auto-enrolment will fall from 22 to 18

Young workers could start saving into a pension much sooner. The government intends to lower the minimum auto-enrolment age from 22 to 18.

For employees, this could be a positive step. Saving for retirement from the outset of their careers could help establish positive money habits among workers. In addition, compound growth means early contributions have the potential to grow significantly.

For business owners, it could mean their outgoings will increase as they’ll also need to make pension contributions on behalf of eligible workers.

The lower earnings limit will be removed

Currently workers must earn at least £6,240 to be eligible for auto-enrolment. The government plans to remove this lower earnings limit, so workers will receive contributions from the first pound they earn.

This will boost pension contributions among those that are already paying into a pension. It will also mean low-income workers that haven’t previously benefited from a pension, such as those who work part-time while caring for children or older relatives, will automatically start paying into a pension and receive employer contributions too.

From an employer’s perspective, this change could, increase the amount they are contributing to employees’ pensions.

There could be a maximum limit on pension pots

As most employees are entitled to a pension through their employer, frequent job hopping could lead to individuals holding numerous small pensions. This may make it difficult to manage pensions effectively and understand if you’re on track to reach your retirement goals.

The government has set out initial plans to help savers manage multiple pots. Among the proposals is a maximum limit on the number of pensions a person can have. The report also suggests a ‘central clearing house’ to make it simpler to consolidate pensions.

There is no timescale for the proposed changes

The official document does not set out a timescale to implement any of the changes. So, while young and low-income workers are set to benefit from auto-enrolment, it could be several years before they start contributing to pensions.

The minimum pension contribution will not be increased

The government has not made plans to change the current rules for contributions. Currently, the minimum contribution is 8% of qualifying earnings, made up of 5% from employees and 3% from employers.

Research suggests that minimum contribution levels are not enough to afford a comfortable lifestyle in retirement. There have been calls for the government to increase the minimum pension contribution level to help close the gap.

Auto-enrolment won’t be extended to cover self-employed workers

Some organisations have called on the government to extend auto-enrolment to encourage self-employed workers to save for their retirement. However, support for the self-employed has been overlooked in the latest report.

Research from the Institute for Fiscal Studies suggests the number of self-employed workers paying into a pension has fallen over the last decade.

It also found self-employed workers that pay into a pension rarely change the amount they contribute. The analysis suggested a form of auto-escalation, such as a direct debit that increases in line with inflation, could help self-employed workers save more for their retirement.

Take control of your pension and retirement

While the change to auto-enrolment could mean more people are on track for a financially secure retirement, there are still challenges. If you want to reach your retirement goals, engaging with your pension sooner, rather than later, could allow you to identify the steps you need to take.

Please contact us to discuss your retirement aspirations and how we could help you create a tailored financial plan.

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 07/09/23

OW4631
Expiring 5 April 2024

Being self-employed can be a rewarding and fulfilling career choice, allowing freedom to work to your terms and pursuing passions. However, it also comes with its challenges, one being financial insecurity. Unlike those working within a company, if you’re self-employed you are responsible for your own financial stability. This means taking the necessary steps to protect yourselves from unexpected events.

While it may seem like an added expense, the cost of financial security is a small price to pay for the security it provides. Most of us don’t think twice when it comes to protecting our vehicles or mobiles phones and pets, so why not do the same when it comes to your source of income. Here are some ways you can protect yourself if you’re self-employed:

Income Protection

Being self-employed means your income is directly tied with your ability to work. This means if you’re unable to work due to illness or injury you could suffer significant loss of pay. Income protection pays out a regular tax-free income, on a short or long-term basis, to cover expenses such as your rent or mortgage, bills and other living costs if you are unable to work.

This valuable insurance could help reduce stress, prevent your family suffering financial hardship, and give you the breathing space to help you get back on your feet when you most need it.

Critical Illness Cover

If you were to be diagnosed with a serious illness such as heart disease, it would have a significant impact on your ability to work. Critical illness cover usually pays out a tax-free lump sum if you’re diagnosed with a serious illness covered by your policy. These usually include, cancers, heart attacks and strokes.

Life Insurance

If you were to pass away unexpectedly, your family could be left in a difficult financial situation. Life insurance pays out either a lump sum or regular payments on your death, giving your dependants financial support after you’re gone. This can help them to cover expenses such as funeral costs, mortgages, bills and provide them with financial security during a difficult time.

If you’d like advice on how to protect your finances, or you’d like to review your protection needs, please get in touch.

Approved by The Openwork Partnership on 18/05/2023.

In today’s competitive business landscape, offering a comprehensive employee benefits package is crucial to attracting and retaining top talent. One such benefit that has gained significant traction among UK business owners is the Vitality health plan.

This unique health insurance option not only provides employees with extensive Vitality health cover but also encourages a healthier lifestyle through its innovative reward system. In this blog post, we will delve into the world of Vitality health insurance and explore how implementing these plans as part of your employee benefits strategy can positively impact your company’s success.

What is Vitality health insurance?

Vitality health insurance is a comprehensive health cover solution designed to promote overall well-being among employees. It offers a wide range of benefits, including access to private healthcare, preventive care services, and mental health support.

What sets Vitality health plans apart from traditional insurance options is their focus on rewarding employees for maintaining a healthy lifestyle. By participating in various wellness activities, such as meeting fitness goals, attending health screenings, and engaging in mental well-being initiatives, employees can earn points that can be redeemed for rewards and discounts.

This proactive approach to employee health not only fosters a positive work environment but also helps reduce absenteeism and healthcare costs for employers.

What kind of situations does it cover?

Vitality Insurance offers a comprehensive and customizable health insurance plan that caters to an individual’s unique needs.

Their most popular option is the Out-patient Cover, which provides coverage for tests and treatments without requiring hospital admission. To further personalize your plan, you can select from a list of hospitals where you’d prefer to receive treatment.

Additionally, Vitality Insurance offers Therapies Cover for alternative treatments such as acupuncture and homoeopathy. For those seeking extra support, Mental Health Cover is available to provide additional coverage for mental health conditions.

To ensure overall well-being, Vitality Insurance also includes Optical, Dental, and Hearing insurance, taking care of your eyesight, teeth, and hearing.

Lastly, for individuals who love to travel or work abroad, Worldwide Travel Insurance offers coverage while you’re away from home, ensuring peace of mind wherever you go.

What are the benefits for a business to offer this type of insurance to employees?

Offering health insurance like Vitality Insurance to employees can yield numerous benefits for a business.

It helps attract and retain top talent, as comprehensive health coverage is often considered a valuable employee benefit. This can give the company a competitive edge in the job market.

Providing health insurance promotes a healthier workforce. With access to preventive care, treatments, and alternative therapies, employees are more likely to address health issues early on, reducing the likelihood of serious illnesses and long-term absences. This leads to improved productivity and reduces sick leave costs.

Offering mental health coverage can contribute to a positive work environment by supporting employees’ emotional well-being. This helps reduce stress and burnout, boosting overall morale and job satisfaction.

Overall, providing a comprehensive health insurance plan like Vitality Insurance demonstrates a company’s commitment to its employees’ well-being, fostering a positive work culture and contributing to long-term success.

If you want to know more about offering private health insurance for your employees, contact Downton and Ali today for expert advice.

Approved by The Openwork Partnership on 8th August 2023

Traditionally, the value of financial advice has been measured by monetary results of investment performance and returns. Today, the cost of living crisis is causing many to re-evaluate the benefits of financial advice.

These days, financial planning is about more than simply looking after your money and protecting your wealth. As well as helping you see results in pounds and pence growth, we can also help ensure you are prepared to meet the challenges you may face in life.

Used as a trusted sounding board, we can help by:

  • Encouraging you to recognise your goals and establish a clear financial road map to help you attain them
  • Providing you with someone to listen to you and to help you to arrive at the right financial outcomes – taking an objective view and a way forward
  • Managing your investments to maximise returns, while controlling risk, and reducing potential tax charges
  • Preparing you to deal with unpredictable outcomes you may not have considered, such as premature death, being diagnosed with critical illness or other unexpected life events that change income, savings, or retirement dates that could have a detrimental impact on your desired lifestyle
  • Offering emotional support and guidance to provide peace of mind

Financial advice isn’t just about your money, it’s about your life

A great financial adviser can serve as an objective ear and help you to prioritise your future spending, helping you to deploy the money that you have in a more meaningful way.

Longevity and the ability to live your best life are inherent to great financial advice. So, helping you to understand how a healthier lifestyle can help you to achieve your goals is another important aspect of our role.

With a wealth of knowledge about healthy choices now available, small changes can improve your quality of life and help you live longer and in better health. The ripple effect of living a good life means adjusting your plan to ensure you have enough money to last for a comfortable future.

The unseen value of free support services you can access

If something unexpected were to happen, insurance products and policies can provide valuable peace of mind to you and your family. This could include being too sick to work, suffering a life-threatening illness, or death.

In addition, insurance products often also include a wide range of practical and emotional support services. Many of these additional benefits are available at no extra cost and can be used by your family members too. These extra benefits are usually available as soon as your policy starts and remain open to you and your family until the policy ends. This kind of added value is automatically built into your insurance policies but can often be forgotten about or overlooked.

Although the type of complementary services will depend on both the policy and the insurance provider, they tend to be fairly similar and could include:

Medical related services

  • 24/7 access to a doctor through a virtual consultation
  • An expert second medical opinion on your diagnosis
  • Private prescription services
  • Medical care while abroad

Counselling services

  • Mental health and other support services – usually remote and without a long wait
  • Physical rehabilitation
  • Support to help you get back to work

Preventative services

  • Nutritional support
  • Health checks

Structuring a sustainable income

Trust is one of the primary drivers of a successful client/adviser relationship. We proactively monitor your needs and investment portfolios. This means we’re well-positioned and able to recognise when changes are needed. Knowing that life can get in the way of even the best-laid plans, we have annual review meetings to help you stay on track. These regular reviews will help make sure your actions and investments remain aligned with your goals.

At your review, we’ll often use cashflow planning tools to explore the financial impact of various scenarios. This helps ensure that you’ve thought about all aspects of your financial future, including inflation, so that whatever the future holds, you can be better prepared for whatever life might have in store for you.

Get in touch

If you’re worried about the rising cost of living and want to reap the financial and emotional benefits that speaking to a financial planner can bring, we can help.

Approved by The Openwork Partnership on 28/03/2023

In today’s competitive business landscape, the success and growth of a company often hinge on the contributions of key individuals. These indispensable team members can make all the difference in driving innovation, generating revenue, and keeping operations running smoothly.

But what happens when the unexpected occurs and you suddenly lose one of these crucial assets? Safeguarding your business with key person protection is a vital strategy to mitigate potential risks and maintain stability in the face of uncertainty.
In this post, we’ll explore the importance of key person protection, how it works, and why every business should consider investing in this essential safety net.

What is Key Person Protection?

Key person protection, also known as key man insurance or key employee insurance, is a specialized form of business protection insurance designed to protect companies from the financial impact of losing a key individual within the organization. These key individuals are crucial to the success and stability of the business, contributing significantly to its growth, profitability, and overall operations.

Safeguarding your business with key person protection is essential, as the sudden loss or incapacitation of a key person can have severe consequences for a company, potentially leading to disruptions in daily operations, loss of revenue, and even business failure. By investing in key person protection, businesses can mitigate these risks, ensure continuity, and maintain a stable financial footing in the face of adversity.

Identifying Key Persons in Your Business

A key person is an individual whose knowledge, skills, or expertise are critical to the success and continuity of a business. They play a significant role in contributing to the company’s growth, profitability, and overall operations.

Examples of key persons within various industries:

  • Tech industry: Lead software developers, chief technology officers
  • Healthcare: Top surgeons, medical directors, research scientists
  • Finance: Chief financial officers, investment managers, risk analysts
  • Manufacturing: Plant managers, supply chain directors, head engineers
  • Retail: Store managers, regional directors, merchandising experts
  • Marketing: Creative directors, brand strategists, account executives

The impact of losing a key person on business operations can be varied but some of the most common examples can be:

  • Disruptions in daily operations due to the absence of their expertise
  • Loss of revenue resulting from decreased productivity or halted projects
  • Increased costs for recruiting, hiring, and training a suitable replacement
  • Decreased morale among remaining employees, potentially leading to further turnover
  • Potential loss of clients or customers who had strong relationships with the key person

Coverage Offered by Key Person Protection

Key person protection offers a range of coverage options to help businesses navigate the challenges that may arise from the loss of a crucial team member. Life and critical illness coverage provide a financial safety net in the event of a key person’s death or diagnosis of a severe medical condition, ensuring that the company has the necessary funds to stay afloat during difficult times.

Income protection offers a source of financial support to help maintain the business’s cash flow and meet ongoing expenses, such as payroll and rent, while the company adjusts to the loss. In addition, key person protection contributes to business continuity and financial stability by providing the resources needed to recruit and train a suitable replacement for the key individual.

This coverage allows businesses to minimize disruptions and maintain their competitive edge even in the face of adversity.
Important Business Protection

In conclusion, safeguarding your business with key person protection is a critical strategy for mitigating potential risks and maintaining stability in the face of uncertainty. Losing a key individual within the organization can have severe consequences for a company, including disruptions in daily operations, loss of revenue, and even business failure.

If you are ready to have a key person cover for your business, contact Downton & Ali today to discuss a bespoke quotation.

Approved by The Openwork Partnership on 8th August 2023

The cost of living crisis has dominated the headlines since inflation began to creep up from historic lows in mid-2021.

While the Covid pandemic began the inflationary increase, the situation was made worse by the war in Ukraine, which pushed 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. If you want to understand how you can tweak your expenses and finances to best protect your wealth through the cost of living crisis, read on for three practical tips.

1. Keep calm and carry on protecting yourself

It can be easier said than done, but even when your bills are rising and things are looking a bit worrying, staying calm and thinking objectively about your finances really is the best way to approach the challenge.

You might be tempted to start cutting down on your expenses, but one thing it’s really important not to cut is your financial protection.

Research has revealed that 1 in 7 people in the UK are considering cancelling their life insurance policies to save money during the cost of living crisis.

Removing a monthly expense such as a life insurance or income protection premium might feel like a smart move in the short term. But things could become even more challenging if you were to fall ill and not be able to work for a few months or longer. If this were to happen when you’d cancelled your cover, you might struggle even more without the potential pay out from your policy.

If you are struggling to pay your monthly expenses, it’s important to reach out and talk to an expert. We can help you to see your finances more clearly and to create a plan of action that takes you from worrying about money to feeling in control.

2. Reducing debt might be the best place to start

If you want to boost your financial wellbeing, it might be best to begin by reducing your debts to lenders.

If you have high levels of debt, your monthly payments could be one of your most costly expenses. If you have some savings, reducing or eliminating the amount you owe could help free up money to be deployed more usefully elsewhere.

High-interest debt is often tied to credit card debt. If you’re carrying a long-standing balance from month to month it could be costing you dearly every month.

To illustrate the potentially damaging effects of interest on debt, if you have £1,000 sitting in a savings account earning 1% interest, you’re only making £10 a year. If you have £1,000 on a credit card at 18% interest, you’ll be paying £180 a year. Using your savings to pay off the debt will mean you are £170 a year better off.

In short, the sooner you can cancel out debt the better.

If you have debt in multiple places, you might want to consider consolidating them.

There are various options for consolidating debt, but the right solution will depend on your individual circumstances. We can help you understand which course of action might be most suitable for you.

3. There might be some easy cost savings that will reduce your monthly bills

Once these bigger things are taken care of, you can look for some smaller actions you could take to reduce your monthly expenses. Review your bank statement to identify anything that you no longer need. Things to look out for include:

  • Streaming services that you rarely or never use
  • Subscriptions that you don’t get value from
  • Gym memberships that you don’t use
  • Delivery fees for online shopping.

Given the sharp rise in energy costs this year, it may also be helpful to consider how you could use energy more efficiently in your home to save costs.

The Energy Saving Trust reports that the average UK household spends £65 a year powering appliances on standby mode. So, remaining vigilant about turning off appliances like TVs or games consoles when you aren’t using them could help to save money across the year.

Additional savings could be made by installing and fully utilising the features of a smart thermostat; the average installment cost is £215. The Energy Saving Trust estimates that a typical household could save £180 a year by using a smart thermostat so that your heating only comes on when you need it.

By identifying and plugging these “money leaks”, you may be able to reduce your monthly expenses without having to slash spending on the things you enjoy.

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 and rising energy prices, we’re here to help. Please get in touch to arrange a time to chat.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Approved by The Openwork Partnership on 18/05/2023

Being self-employed can be a rewarding and fulfilling career choice, allowing freedom to work to your terms and pursuing passions. However, it also comes with its challenges, one being financial insecurity. Unlike those working within a company, if you’re self-employed you are responsible for your own financial stability. This means taking the necessary steps to protect yourselves from unexpected events.

While it may seem like an added expense, the cost of financial security is a small price to pay for the security it provides. Most of us don’t think twice when it comes to protecting our vehicles or mobiles phones and pets, so why not do the same when it comes to your source of income. Here are some ways you can protect yourself if you’re self-employed:

Income Protection

Being self-employed means your income is directly tied with your ability to work. This means if you’re unable to work due to illness or injury you could suffer significant loss of pay. Income protection pays out a regular tax-free income, on a short or long-term basis, to cover expenses such as your rent or mortgage, bills and other living costs if you are unable to work.

This valuable insurance could help reduce stress, prevent your family suffering financial hardship, and give you the breathing space to help you get back on your feet when you most need it.

Critical Illness Cover

If you were to be diagnosed with a serious illness such as heart disease, it would have a significant impact on your ability to work. Critical illness cover usually pays out a tax-free lump sum if you’re diagnosed with a serious illness covered by your policy. These usually include, cancers, heart attacks and strokes.

Life Insurance

If you were to pass away unexpectedly, your family could be left in a difficult financial situation. Life insurance pays out either a lump sum or regular payments on your death, giving your dependants financial support after you’re gone. This can help them to cover expenses such as funeral costs, mortgages, bills and provide them with financial security during a difficult time.

If you’d like advice on how to protect your finances, or you’d like to review your protection needs, please get in touch.

Approved by The Openwork Partnership on 18/05/2023.

Staying with your current lender may feel like the saftest option when your mortgage comes to an end, but that’s no guarantee that you’ll be getting the best deal. That’s why we recommend shopping around to get a mortgage that’s fits you.

When there is such uncertainty in the housing market at the moment, you might be thinking that staying put is the right thing to do. It may feel like the easiest, but unless you search the mortgage market thoroughly, you won’t know for certain that you’re on a mortgage deal that is the right deal for you. And staying with your lender doesn’t automatically guarantee this either.

Remortgaging – stick or twist?

If you’re looking to remortage, it will have been a few years since you last went through the process. Your circumstances may have changed during this time, not to mention the changes that have happened to the mortgage market. We all know nothing stays the same, so why should your mortgage? It’s fine for something that worked a few years ago, to not fit quite so perfectly now.

We suggest seeking the help of an experienced mortgage adviser to help with your next remortgaging steps. We have access to a huge variety of mortgage options as well as an extensive panel of lenders. We’ll be able to access specialist search tools to help with the process. We can even find exclusive mortgage options with lenders that you may not have access to.

Take the weight off your shoulders with specialist help.

An adviser can be an invaluable guide to the variety of mortgage options out there, protecting your time and energy.

As well as using our in-depth knowledge of the mortgage market to search the thousands of deals out there, we can protect your time and energy, doing the legwork to find your mortgage match.

It might seem daunting looking at the mortgage market now, particularly against a less-than-positive financial climate. It may feel especially tricky if a change in your personal circumstances make you feel like your options are limited – such as a credit blip or redundancy. But it’s important to remember that there are thousands of mortgage choices out there – whatever your situation. And with an expert by your side, you’ll find one that suits you.

We know things may change, and we’ll be right by your side if they do.

If your mortgage expiry date is under six months away, you can secure a new deal now. This means you can spend your time finding the right deal, without rushing to meet the deadline of your mortgage expiring.

One final thing to remember when it comes to remortgaging, is that it isn’t just about comparing the mortgage interest rate, but the mortgage fees that your current lender will charge. If you’re looking to pay less in the long term, then it’s vital to look at the two of these together.

See what mortgage is right for you with an adviser from Downton and Ali.

Your time and energy is precious, so why not let an adviser from Downton and Ali do the remortgaging legwork for you? We’ll search and compare products on your behalf to find the right deal for you.

Not only that, but once we’ve found it, we’ll help you through the whole remortgaging process – from scrutinizing the small print, to making sure all your paperwork is in order, saving you unnecessary hours spent searching and mortgage comparison headaches.

Our expert advice will make your mortgage search and application process pain-free, and our inside knowledge will protect you from any nasty surprises. So are you ready to find a mortgage that’s right for you? Get in touch with us today.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Approved by The Openwork Partnership on 27/04/2023

The short answer? Yes. If you don’t remortgage at the end of your term, you will be automatically transferred to your lender’s standard variable rate, which tends to be higher than the rates on most other mortgage options.*

So if you’re coming to the end of your fixed rate mortgage deal, it’s worth shopping around to see which remortgage option suits you and your unique needs – it may not be the one you think!

To fix your rate or not, that is the question.

If you’re currently on a fixed rate mortgage (unsurprisingly, as they are the most popular mortgage at the moment)* you might be thinking that another fixed rate mortgage is the obvious choice when your current one ends.

It’s understandable to see why. Fixed rate mortgages give borrowers stability – you know exactly how much you’re paying each month, for a set period of time, and can budget accordingly.

And after over a decade of low interest rates, fixed-term mortgage deals have become the go-to for many homeowners. However, this doesn’t necessarily mean they are the right choice for everyone.

There are plenty of other mortgages on the market, such as life-time trackers, green mortgages, or offset mortgages. And until you delve a little deeper, you might not be able to make an informed choice. An expert mortgage adviser can help you do just that.

Spotlight on the tracker mortgage: the flexible option

One of the mortgage options on the market is a tracker mortgage – a mortgage that follows the Bank of England Base Rate, usually with a fixed percentage added on top. If the Base Rate drops, so will the mortgage rate, and vice versa.

A key benefit of a tracker mortgage is flexibility. When it comes to fixed rate mortgages, lenders will review the lending market over a specific timeframe. Then they’ll work out what they believe will be the average lending rate over that period. After they have acquired that fixed price, they will pass it onto fixed rate products.

However, tracker products cut out the need to predict, as they follow the Bank of England Base Rate in real time. Unlike a fixed rate mortgage, the amount you pay per month could change, as the mortgage ‘tracks’ the Base Rate over two or three years. As a result of this, we sometimes see lenders price their tracker products much more competitively than their fixed rate options.

The pros and cons of a variable rate

The competitive pricing on tracker mortgages may make them cheaper than their fixed rate counterparts, especially if you’re coming to the end of your fixed rate term and you’re faced with a higher interest rate than you were expecting.

Tempting as this is to switch to a tracker with a lower rate, it’s crucial to make sure you can afford to pay your monthly repayments if the rate goes up in future!

It’s also worth bearing in mind that there are some tracker mortgages that don’t have an early repayment charge, so you are free to leave without penalty. However, this is not the case for all of them, so consider which product you choose carefully, as you may have to pay a penalty fee for leaving early.

Plan your next remortgage steps with an adviser from Downton and Ali.

If you are unsure about remortgaging, seek mortgage advice from an expert. We have our fingers on the pulse of the mortgage market and are equipped with in-depth knowledge of the different mortgage products on offer. Our insider knowledge can make your remortgaging process simple, so are you ready to find the right mortgage for you? Speak to us today.

Approved by The Openwork Partnership on 27/04/23

It’s no secret that the bank of mum and dad is a popular source of financial help for young people buying their first home. A recent study by Legal & General showed that a whopping 71% of millennials receive support from their parents when buying property. Let’s examine the pros and cons of relying on your parents for financial assistance.

What is the bank of mum and dad?

The Bank of Mum and Dad refers to a modern phenomenon where parents or family members generously contribute to their children’s or relatives’ financial needs, often as a vital lifeline in times of need. This monetary support can come in various forms, such as loans, gifts, or even a place to live rent-free temporarily.

With the escalating costs of housing, education and general living expenses, the role of the Bank of Mum and Dad has become ever more significant. In many cases, it has emerged as the go-to solution for young people striving to secure their first home in a challenging property market or pursuing higher education without being burdened with massive student loans.

Why might the bank of mum and dad not be a good idea?

Relying on the bank of mum and dad for financial support may seem like an easy solution in the short term, but it may not be sustainable in the long run.

Tapping into this source of funds can create an unhealthy dependency that, in turn, may prevent individuals from developing essential financial skills, such as budgeting, saving, and investing. Moreover, it can strain relationships within the family when parents find themselves in a position where they cannot provide ongoing assistance, either due to their own financial challenges or the need to save for their retirement.

Both parents and young adults must recognise the importance of individual financial responsibility, steering clear of relying too heavily on the Bank of Mum and Dad for long-term financial stability and well-being.

What are the other options for first-time buyers?

First-time home buyers who cannot rely on the Bank of Mum and Dad have a range of options they can consider to get their foot onto the property ladder. Here are a few:

  1. Taking out a mortgage – this is probably the most common option for first-time buyers, but borrowers should be aware of how much they can realistically afford ahead of time and factor in extra costs like stamp duty and solicitor/conveyancer fees.
  2. Government help – various government schemes, such as Shared Ownership schemes, are available to aid first-time buyers in purchasing their first home. Do your research or consult an adviser to determine your best choice.
  3. Unusual arrangements – with some creative thinking, there may be other solutions for financing your purchase which might suit you better than sticking to conventional methods, such as considering joint purchases with family or friends.

Get financial advice to find the right option for you

Here at Downton & Ali, we are experts in mortgages and other financing options. We can review the options available and see how you can get on the property ladder without putting financial pressure on your parents or other family members. Book a chat today with one of our experts to get the right options for your situation!

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

Approved by The Openwork Partnership on 26th May 2023.

If the end of your fixed rate mortgage is on the horizon (even if it’s months away), then it’s a good idea to start looking at your options today.

If you haven’t got a new deal in place when your fixed rate mortgage ends, your lender will put you onto their standard variable rate, which tends to be higher than the rates on most other mortgage options. So it pays to get the right mortgage for you in place.

When it comes to remortgaging, some people prefer to search the market themselves. This could be time consuming, and the right deals for you might not be that easy to find. Others leave it to the last minute (or even worse forget about it altogether) which can leave them paying more than they need to.

But did you know there’s another way?

By seeking advice from a mortgage adviser now, you could get the right deal for you sooner.

We can search an extensive panel of lenders for you, finding deals and options that you may not have even considered. And by planning your next remortgage steps today, you’ll cut down on the risk of missing your mortgage expiry date.

No one wants to pay more than they need to, so it helps to plan ahead with the support of an expert.

We can expertly find the right mortgage for you – whatever your circumstances.

It’s a myth that you have to wait until your current mortgage plan expires before you can remortgage. In fact, most lenders will allow us to secure a new fixed rate for you months in advance. Plus you can often change your mind after you’ve secured the mortgage, before you renew.

There are plenty of mortgages out there to consider. A green mortgage may work for you if you have a more energy-efficient home, or a long-term mortgage may help if you’re looking to reduce your monthly payments. We will consider your overall financial situation and needs in depth to help find the right fit for you.

We know new doesn’t always mean better and it may make more sense to stay with your current lender. If your current lender is the right option for you, we will tell you.

What if you’re not in the same boat as before?

Everyone’s circumstances change over time! Don’t worry if you’ve had a credit blip, you’re earning less or your property has dropped in value, because that doesn’t mean you’re automatically stuck for choice. Your options are out there, and with an experienced adviser at your side, you’ll be able to find them.

Protect your future by planning ahead with an adviser from Downton and Ali.

With thousands of mortgage deals and options on the market, it can be difficult to compare products and feel secure in the knowledge that you’re making the right choice.

But help is at hand – our experienced advisers can protect your time and energy, as well as your mortgage payments! With access to a wide range of lenders and the right search tools at our fingertips, we can find the right deal for you. We’ll also be saving you hours of searching time and mortgage comparison headaches.

Our expert advice will make your mortgage search and application process pain-free, and our inside knowledge will protect you from any nasty surprises. So are you ready to get ahead of the game? Then speak to us today.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Approved by The Openwork Partnership on 15th May 2023.

Have you ever heard of a green mortgage? They’re steadily becoming a popular option for property owners, as many lenders are adding them to their portfolios. If you’re due to remortgage soon and you have an energy efficient home, it’s well worth considering them as a remortgage option. We explore what they are and how they could work for you.

As the UK housing market steps up its efforts to reduce carbon emissions, the ripple effect is being felt throughout the whole housing industry – including the mortgage market.

Step forward the green mortgage – a mortgage that rewards you for either owning an energy efficient home or making improvements to your home to make it “greener”.

Are you eligible for a green mortgage?

If you’re ready to remortgage soon, be aware that you have to fulfil certain criteria to be considered for a green mortgage. First check your property’s energy performance certificate (EPC). If it has an EPC rating of A or B, you may be a prime candidate for a green mortgage.

If your property doesn’t sit in this bracket, you could still make yourself eligible by making some simple improvements or renovations:

– Swap your single glazed windows for double glazed
– Trade your heating system for a more energy-efficient one
– Raise the eco-friendly credentials of your property by installing solar panels

What are the benefits of a green mortgage?

Lower monthly payments

Green mortgage lenders will incentivise their mortgages with lower interest rates because they see an eco-friendly property holding its value in the long run – meaning lower monthly payments for you.

Lower energy bills

As energy bills are soaring, an energy-efficient home can help you keep costs down.

From a lender’s perspective, this makes you a safer bet, as you’ll be more able to pay your mortgage with lower energy bills.

Cashback incentives

Some green mortgage products are offering cashback incentives of between £250 and £750 for buying energy efficient homes.

Cheaper borrowing rates for improvements

Looking to make home improvements or renovations to make your property greener? Some lenders are offering loans at a reduced interest rate as part of their green mortgage deals.

Increased property value

Your green mortgage could actually help to increase the value of your home, as homes with an A or B EPC rating are considered to be worth more than their less energy-efficient counterparts.

Are there any cons?

While green mortgages seem like an easy win, bear in mind that despite their competitive rates, they’re not always the cheapest option on the market. Everyone’s circumstances are different, which is why we recommend speaking to an expert mortgage adviser. We will be able to review your mortgage options in depth before recommending the right option for you.

Interested in going green? Speak to an adviser from Downton and Ali today.

Whatever remortgaging queries you might have, we can expertly guide you through the whole process. We’ll compare a wide range of mortgage options on your behalf and find a solution that’s completely tailored to your needs.

Ready to plan your next remortgaging steps? Speak to an expert adviser today.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Approved by The Openwork Partnership on 09/05/23.

When preparing to buy your first home, saving for a deposit can be a difficult process. As house prices, inflation and the cost of living increases, it can be challenging trying to save a large sum of money. It’s also important to consider all the other costs that are involved in buying a property – conveyancing, legal fees, insurance policies and moving to name a few.

How much do I need to save?

A 5% deposit of the property value is the minimum amount you are able put down, however your options may be limited. The larger deposit you can provide, the less risk you will be considered to lenders and better rates will be available to you.

Where do I start?

Set a savings goal, which you can break down into easier amounts and a time frame to achieve it. Regular saving is most effective and it’s important to be realistic about how much you can save monthly so that it’s more attainable and doesn’t feel like such a chore or impact your life severely. Researching house prices in the area you would like to buy your property and using mortgage borrowing calculators online can help you work out how much you may need to save.

Savings accounts options

There are many ways of saving for your deposit. Look around and think about what you want to achieve and how quickly. With a Lifetime ISA (LISA), if you’re a first-time buyer under 40, you get a 25% bonus on your savings. For example, you can deposit up to £4,000 each tax year and receive a government bonus of £1,000 on top, meaning you would have £5,000 at the end of the tax year. It could help you reach your deposit goal quicker.

Top tips on how to build your savings:

  • Set up a savings account – Look into a suitable ISA and consider a Lifetime ISA.
  • Look at your current spending habits –See where you can possibly reduce your monthly bills and expenditure (e.g. minimise unused subscriptions/gym membership, change energy or network providers, eating out, daily coffees etc.) to save money.
  • Create a budget and stick to it – Make the budget realistic so it’s easier to stick to and when you struggle, remember the goal in mind. Set up standing orders so the money is automatically allocated to savings before you have chance to spend it.
  • Reduce your rent/living costs – If possible, consider moving in with family, friends or find cheaper/shared accommodation which can allow you to save money quicker.
  • Make extra money – Sell clothes or items online that you don’t need, or if you have a skill/talent/craft that you can turn into a business, this can help you earn extra cash.
  • Make use of discounts, vouchers and online deals – Every little saving helps.
  • Try “no spend” months or weekends” – Only pay your bills, regular outgoings and necessities and move the money you save to your savings. Consider alternative free activities.
  • Set limits – If it helps, take out a certain amount of money in cash for the week or month and leave your cards at home.
  • Consider investing options – Including saving accounts with higher interest rates such as stocks and shares ISAs.
  • Ask for help and advice – From friends and family for support and we’re here for any financial advice you may need.

We’re here to help you save or invest your money to build your deposit. We will make sure your savings and investments are working for you and advise you on how much you can borrow for a mortgage. We’ll also be here to help find the right mortgage deal when you are ready to buy your first home!

If you would like to find out more, please get in touch with us.

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

A stocks and shares Lifetime 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.

Approved by The Openwork Partnership on 17/03/2023.

Key Takeaways:

  • A 5% deposit of the property value is the minimum you can put down.
  • Set yourself a savings goal, which you can break down into easier amounts and a time frame to achieve it.
  • With a Lifetime ISA (LISA) as a first-time buyer under 40, you get a 25% bonus on your savings.

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

Shared ownership is a government scheme introduced to help people get onto the property ladder. It can be an affordable way for people to buy a home, and potentially a great option for those who cannot afford a property outright. In this blog post, we will look at what shared ownership is, how it works, and whether or not it might be the right option for you.

What is shared ownership?

Shared ownership is a great way to help you get onto the property ladder without purchasing a home outright. With shared ownership, you buy a share of the house between 10% and 75%, with the remainder owned by your landlord, e.g. a housing association.

You will then pay rent to your landlord for the share they own, as well as monthly ground rent and service charges towards any communal areas. It’s an affordable way of owning a property and provides some financial security. This makes it one of many routes worth considering when buying your first home.

How do you buy your share?

Depending on the company selling the shared ownership, you can buy between 10% and 75% of the property. To purchase your desired share, you may need a 5-10% deposit up front to secure the property. To buy the rest of your share you can use savings, or get a mortgage.

Additionally, there’s always the option for ‘staircasing’, which means that you can purchase more shares in the future. If you do this, your rent payment will be based on the landlord’s remaining share, so the payment will reduce the bigger the share you own.

What type of homes can you buy?

Through shared ownership, you can purchase a new-build home or an existing property through a shared ownership resale scheme. If you have specific needs, such as a long term disability, these can be accommodated, e.g. if you need a ground floor flat.

Housing associations, local councils, and other organisations provide these homes, always on a ‘leasehold’ basis.

Who is eligible for shared ownership?

If you’re considering buying a property using the Shared Ownership scheme, then it’s important to know the eligibility requirements first. To be eligible for Shared Ownership, you must be at least 18 years old and have an annual household income of less than £80,000 outside of London or £90,000 in London.

Buyers are usually first-time buyers, but if not, you will need to demonstrate that you are in the process of selling your original home, as well as being unable to buy a suitable property on the open market.

Additionally, you will also need to provide evidence that there is no history of mortgage arrears or bad credit, plus that you can afford the regular payments and associated costs involved with buying a home.

Getting help with shared ownership

Here at Downton and Ali, we are experts in shared ownership and regularly help eligible customers to take advantage of it. If you are considering this option, contact us today to chat about how it works or if you have found a property you would like to buy and want to know if you’re eligible.

Approved by The Openwork Partnership on 17th April 2023.

Harry and Sam have been staying with Harry’s dad in his two-bedroomed terrace for just over a year while they save up a deposit for their first house. The lack of space and privacy has proved challenging to say the least and would now like to start searching for their own house.

Despite having saved up a good deposit, friends have warned the couple they would have no chance of getting a mortgage due to their working situation. Sam is a self-employed, successful roofer, but has only been working for himself for two years. His friends have told him, he’ll need at least three years of accounts before a lender will go anywhere near him. They say any mortgage the couple can get will be based on Harry’s income alone. Harry works as a hairdresser and his salary is nowhere near enough to secure the kind of mortgage they’re hoping for.

The value of mortgage advice

Harry and Sam should resign from listening to their friends as when making such an important financial commitment like this, the only guidance they need is from a qualified mortgage adviser. Here are five ways they can make a difference to a mortgage search:

They know the market

If, like Harry and Sam, your needs or circumstances are ‘out of the ordinary’, your options may indeed be more limited than those of other buyers. However, this doesn’t mean you don’t have options. They know the lenders who are willing to consider buyers in your situation and will check you’re likely to meet their specific lending criteria before submitting a formal application. This will save you time and avoid unnecessary searches on your credit file.

They know what a good deal looks like

An attractive rate may seem like your best bet when choosing a mortgage but you also need to factor in things like fees, loan conditions and the mortgage term. They look beyond the headline rate and can help you understand how the length and type of loan will affect how much you pay in the long term. They’ll also highlight any additional expenses like administration and booking fees, and valuation costs.

They do the hard work for you

As well as helping you select the right mortgage, they’ll work with you to complete all of the necessary application forms and liaise on your behalf with solicitors, valuers and surveyors. They can also recommend products that provide financial protection should the unexpected happen.

They’re professionally qualified

They’re fully qualified to advise you on a wide range of lenders and products unlike high street banks and lenders. This way you’ll gain from genuine choice coupled with quality advice.

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

Approved by The Openwork Partnership on 17/03/2023.

Key takeaways:

  • Get help from a professional. Don’t rely on friends’ advice. The market is constantly evolving. Things that may have been true when your friends bought a house may not be true now.
  • Look beyond the headline rate when choosing a mortgage deal.
  • When making such an important financial commitment like this, the only guidance you need is from a qualified mortgage adviser.
  • A mortgage adviser can help with more than just choosing the right deal, they can ensure the whole house-buying process runs as smoothly as possible.

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

With over 10 years of record low interest rates, fixed rate mortgages offer borrowers the stability of knowing what the mortgage payment will be for a set period, which helps with budgeting.

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

Approved by The Openwork Partnership on 27/03/2023

Getting on the housing ladder can feel like one of the hardest and longest processes in the world and the cost of living crisis is probably not helping. You need to come across as attractive buyers for lenders to consider you, but there are many factors that can reduce how much lenders are willing to let you borrow for your home.

How do lenders decide whether to offer you a mortgage?

If you’re applying for a new mortgage, remortgaging or increasing your current mortgage, lenders are required to carry out an affordability assessment. This involves a variety of checks designed to make sure you can afford to repay what you borrow. According to the Independent, some two thirds of first-time buyers are rejected for a mortgage at their initial attempt. So, what can you do to boost your chances of passing an affordability assessment?

Evidence stable employment

Many lenders ask for three years’ proof on income, although some will accept less. Even simply switching from one employed position to another can affect your chances of success. Some lenders like to see that you’ve been with an employer for at least three to six months before they’ll consider you.

Reduce your debts

Lenders will look at your total income and then work out how much you need to maintain a basic standard of living. This will give them an idea of how much you can afford to spend on a mortgage. Reducing the amount you owe on things like credit cards and loans will increase the amount you have available and boost your chances of passing an affordability assessment.

Check your credit report

Before offering you a mortgage, lenders check your credit report. A poor credit history could affect the amount they’re prepared to offer or cause them to turn you away altogether. However, there are simple ways to improve your credit rating. Before applying for a mortgage, check your credit report for errors, , avoid applying for new credit in the six months leading up to the application and make sure you’re well within any existing credit limits.

Get professional advice

Finding the right mortgage is important so we can assess your circumstances and get the right deal for you. We can save you the headaches and ensure you’re less likely to be turned down for a mortgage.

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

Approved by The Openwork Partnership on 16/03/2023.

Key takeaways:

  • Lenders like to see that you have a stable income so it’s best to avoid changing your work situation in the time leading up to a mortgage application.
  • Reducing the amount you owe on credit cards and loans can help improve your chances of securing a good mortgage deal.
  • Lenders will check your credit report before offering you a deal so make sure yours is up to scratch before submitting a mortgage application.
  • Professional advice could boost your chances of passing an affordability assessment.

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

If you have a mortgage rate coming up for renewal this year, it is essential to start planning early. Don’t let yourself get blindsided by the rate increases. Having a mortgage review is a key part of ensuring you are in control of your finances when your current mortgage deal is ending. A financial adviser can help you evaluate your options and make the best decision.

What is a mortgage rate review?

A mortgage rate review is a process that helps borrowers review and compare different available mortgage rates. To help you find the most suitable deal from a lender, your financial adviser will consider various factors that can affect the rate offered, such as your credit score and the amount you have for a down payment.

An experienced mortgage broker or financial adviser will typically ask multiple questions about a borrower’s financial situation before providing potential rates and terms. This method can help borrowers make an informed decision when selecting a mortgage rate, potentially saving them both time and money in the long run.

What are the benefits of having a mortgage rate review?

There are two main benefits to having a review of your mortgage rate when your current deal is coming to an end.

You could save money

Comparing rates between lenders is a great way to find the lowest possible interest rate and potentially save hundreds or even thousands of pounds over the lifetime of your mortgage.

Plus, if your credit has improved since taking out your original mortgage, you may be able to secure better terms with a different lender. A mortgage rate review could ultimately be invaluable in securing lower monthly payments and bigger home-owning budgets in the future.

You might be able to borrow more

A mortgage rate review can be an excellent opportunity to explore the potential of getting a lower rate, potentially enabling you to borrow more and secure a better property. Through an analysis of current market trends and your individual financial situation, a mortgage professional can provide advice for exploiting favourable conditions.

Benefits of having a mortgage review with a financial adviser

When it comes to making a significant financial decision like taking out a mortgage, it pays to have an expert review your situation. Seeking the help of a financial adviser can give you the confidence that you are on the right track; they will be able to provide valuable advice and answer any questions that arise.

An experienced professional can provide important information on different mortgage options, allowing you to make the most suitable decision for your needs. A mortgage review by an adviser is also helpful if you are already in the process of purchasing a house, as they can ensure that all paperwork is in order and that your finances are in good shape.

In addition, they may be able to find areas where you could save money, reduce costs associated with taking out a mortgage, or simply find a better interest rate than your current mortgage.

If your current deal is coming to an end, or you want to review your mortgage rate, contact Downton and Ali today to discuss how we can help you.

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

Approved by The Openwork Partnership on 14th April 2023.

The new tax year on 6 April 2023 is a great time to review your finances.

The new tax year means annual allowances are reset and ready to be reused – to help you make the most of your money. This year more than ever, with interest rates and inflation on the rise, it’s a great time to review your pensions and investments.

Note: The following figures apply to the 2023/2024 tax year, which starts on 6 April 2023 and ends on 5 April 2024.

ISAs

The maximum you can invest across your ISAs is £20,000 (if it’s a cash ISA, stocks and shares ISA or innovative finance ISA). For a lifetime ISA, the annual allowance is £4,000.

Junior ISAs

If you’re looking to put some cash aside for your children, Junior ISAs (JISAs) are a great option and often come with higher interest rates when compared to high street savings accounts. In the new tax year, you can save or invest up to £9,000 in a cash JISA, a stocks and shares JISA, or a combination of the two.

Pension allowance

Your personal pension contribution allowance is £60,000, although it can be lower for higher earners and where pension savings have been flexibly accessed already. Any contributions you (or your employer) make receive tax relief from the government (based on your income tax band) of 20% or more – and the money in your pension pot will grow tax free.

Child’s pension

A child’s pension can be set up by a parent or guardian, but anyone can contribute. You can pay up to £2,880 in the new tax year into a pension on behalf of a child and the government automatically tops this up with 20% tax relief on the total amount contributed, taking the figure up to £3,600.

Gift allowances

A financial gift is a great way of using tax-free allowances.

Making a cash gift can help a loved one (and help with your estate planning). Everyone has an annual gifting limit of £3,000 that is exempt from inheritance tax (IHT). This is known as your annual exemption. If you fail to use it one year, you can carry it over to the next tax year.

It’s worth remembering that any gift you give, even to family members, could be subject to capital gains tax (CGT). CGT is the tax you pay on any profit or gain you make when you dispose of an asset, such as a second home or shares. If you gift an asset and it has risen in value compared to what you have paid for it, you could be liable to CGT. The CGT allowance for the new tax year is £6,000. This is the amount of profit you can make before CGT is applied.

Marriage allowance

Married couples or those in civil partnerships may be able to share their personal tax allowances. To be eligible, one partner must earn less than the Personal Allowance threshold of £12,570, and the other must be a basic rate taxpayer. The lower earner can transfer £1,260 of their tax-free allowance to their partner, reducing the tax paid by up to £252 a year.

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.

Key Takeaways:

  • A new tax year means annual allowances are back to zero and ready to be filled or topped up, to make the most of your money.
  • The maximum you can invest across your ISAs is £20,000.
  • Your pension contribution allowance for the new tax year is £60,000.
  • The Capital Gains Tax allowance is £6,000 for the 2023/2024 tax year.
  • A financial gift is a great way of using tax-free allowances.
  • Married couples or those in civil partnerships may be able to share their personal tax allowances.

Having ready cash on hand is an essential part of any successful financial plan.

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

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.

One of the worst things about earning money is that you have to pay tax. Whether it’s your salary or the interest you’ve earned on your investments, the taxman will almost always take a chunk. If you sell stocks or bonds for a profit, you may need to pay capital gains tax (CGT). The good news is that if you put your investments in a tax wrapper you can shield them from the taxman. Popular wrappers include Individual Savings Accounts (ISAs), Self-Invested Personal Pensions (SIPPs) and investment bonds

What is CGT?

Investments like shares and bonds that don’t sit inside a tax wrapper are subject to CGT. It’s a tax on the profit you make when something you sell increases in value, such as a second home or shares. The amount you pay will depend on your tax band. Basic rate taxpayers pay 10% in CGT, while higher rate taxpayers pay 20%. It’s important to note that it’s the profit that incurs the tax and not the total price you sell the investment for. Therefore, you only have to pay CGT on your overall gains above your tax-free allowance – known as the annual exempt amount.

When do I need to pay CGT?

If you make a profit when selling investments, you may have to pay CGT. You don’t usually have to pay CGT if you give them as a gift to your husband, wife, civil partner or a charity. You also won’t have to pay CGT when you dispose of:

  • Investments you’ve put into an ISA or SIPP
  • Shares in employer share incentive plans (SIPs)
  • UK government bonds
  • NS&I Premium Bonds
  • Qualifying corporate bonds
  • Employee shareholder shares (depending on when you received them)

How can I save on my tax bill?

Tax will impact the amount you get back from your investments. So if you want to get the highest return possible taking advantage of tax-efficient wrappers is crucial. A tax wrapper is a vehicle that can be put around a portfolio of assets to protect your investments from tax, providing the money stays within the wrapper.

There are different types of tax wrapper, with ISAs and pensions being the two of the most common you will come across. Both offer generous tax benefits that everyone is entitled to. Money put into an ISA account can grow free from tax, meaning you don’t pay tax on capital gains, dividends or income made on any gains from your investments. A self-invested personal pension (SIPP) is a wrapper that allows you to control the specific investments you make in the fund. Just like ISAs, with a SIPP your investments can grow free from capital gains, dividend and income tax.

Insurance bonds

What are the options after you’ve maxed out your ISA and pension contributions? With the CGT allowance shrinking and the tax on dividends increasing, insurance bonds are becoming popular again. They are investments that use insurance policy law. What this means is that the equivalent to CGT is paid within them for you and dividends are untaxed.

The investments that you can hold within them are the same as those that you would have in your ISA or pension. After the 2022 Autumn Statement, the tax case for many people is more in favour of an investment bond than an unwrapped investment (the latter being subject to higher rates of CGT and dividend tax).

How much CGT do you have to pay?

In the 2022/23 tax year you can make £12,300 in capital gains before you have to pay CGT and £6,150 for trusts. Couples can double this by combining their allowances. This means that if you earn profits below this level across the tax year, you don’t have to pay CGT.

However, the capital gains threshold will fall to £6,000 from 6 April 2023. This lower threshold will be in place for a year before being halved to £3,000 in April 2024. As a result, more people will have to pay tax on their investment gains.

Next steps

With the changing CGT rules over the next few years, it is important that any investments you have that aren’t within an ISA, pension or investment bond are reassessed. You can use a tax wrapper calculation tool to work out what is the best route for you, in terms of CGT and dividends.

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.

Higher interest rates and the rapid increase in the cost of living are likely to be affecting many areas of your finances. The start of the year is the perfect time to think about any concerns you may have and to ensure you’re making the most of your money.

Savings

After many years of low rates, savings accounts have made a substantial comeback following a series of interest rate rises from the Bank of England throughout 2022. Yet with inflation rocketing, the value of your money is shrinking in real terms so it’s important to maximise every penny of interest in order to mitigate the impact. There are a few things you can do. For example, you could make your savings work even harder by paying more into an ISA. Investing is another route if you have longer-term goals and you don’t need to access the money for at least the next few years.

Loans and credit cards

Rising interest rates can also push up the repayments on any debts, including bank loans, car finance and credit cards. If you have a personal loan or car finance agreement, you probably agreed a fixed deal – so the latest rate rise is unlikely to affect you until the term of the agreement comes to an end.

Investments

When it comes to your investments, it’s important not to react to any ups and downs in your portfolio and avoid making emotional decisions that could cost you in the long run. Staying invested and having a diverse portfolio spread across a variety of assets (likes stocks and bonds) and geographical regions can help soften the blow if one area suffers in uncertain times. Whenever possible, you should remain focused on your long-term financial goals.

Pensions

Your annual tax-free pension contribution allowance is £40,000, although it can be lower for higher earners and if you’ve already accessed your pension savings. Any contributions by you (or your employer) receive tax relief from the government of 20% or more – and the money in your pension pot will grow tax free. You may be eligible if you are still registered with the pension scheme and have earned in the current tax year the amount you (or your employer) would like to contribute.

Mortgages

If you have a fixed-rate mortgage then your rate of interest is set until the initial fixed term ends. After this, you could end up paying more if you have a tracker mortgage – which tracks the Bank of England base rate – or standard variable rate (SVR) mortgage set by your lender. You may also want to review or change your product, which could save you money however there may be fees involved when changing your mortgage product. If your finances allow, you may want to start making overpayments on your mortgage. It could help bring down your overall mortgage amount, which means you’d be paying less interest on it. This is another area where you can decide whether it’s a beneficial move and can check the small print in your mortgage agreement to see if it’s allowed.

Here are some other things to consider when giving your finances a spring clean:

  • Estate planning: Have you written a will or thought about how you’d like to pass on your assets? Are you interested in income protection, reviewing your life insurance or putting a health or financial power of attorney agreement in place?
  • Insurance: When your car and home insurance policies are up for renewal this year, you may be able to save on your premiums by switching providers.

ISA transfer rules can be confusing for savers. In this blog post, we will break down these rules and explain how they work. We will also discuss what you need to know before transferring your ISA to another provider.

What is an ISA transfer?

Moving your savings with an ISA transfer is a great way to take advantage of the tax-free savings wrapper. Transfers can be done on both cash and stocks & shares accounts and can help you benefit from different products or providers.

However, it’s important to remember that funds must not physically move between banks or other organisations – you must contact them yourself to ensure the money stays in its tax-free status.

An ISA transfer can be a simple way to get more out of your savings but always check with the new provider before making any decisions.

What are the main ISA transfer rules?

There are four main rules to consider when transferring an ISA:

  1. You are never restricted by time when transferring your Individual Savings Account (ISA) from one provider to another – you have the freedom to do it anytime.
  2. If you’re looking for a change, you can transfer your savings to an alternate type of ISA or reuse the same type.
  3. If you want to move the money that you have invested in an ISA this financial year, you have to transfer all of it.
  4. You can opt to transfer all or just a portion of your past investments from previous financial years for the money you have saved.

If you are considering transferring your cash and assets from a Lifetime ISA to a different account, it’s important to be aware of the consequences. There is a withdrawal fee of 25% if this move takes place before you turn 60. This is something that you’ll want to take into consideration when making the decision.

Restrictions on what you can transfer

Making changes to an ISA is easy but there are some restrictions. You can move cash from your innovative finance ISA to another provider, however, not all investments may be eligible for the switch.

To make sure all of your investments can move too, it’s always best to check with your current or prospective ISA provider that they don’t have any specialist, individual limits on transferring from their platform. They may also charge a fee which is worth taking into consideration if you plan to switch providers often.

How to transfer your ISA

Switching to a different ISA provider is easy! All you need to do is complete an ISA Transfer Form with the provider you want to move your investment to. It is important to note that if you withdraw funds from your account without completing the transfer form, then those allowances become taxable and cannot be reinvested according to tax regulations.

To ensure a seamless process, transfers between cash ISAs should take a maximum of 15 working days while other types of transfers should conclude within 30 calendar days.

It is worth following up frequently with either the issuing or receiving provider during an ISA transfer in case any issues crop up. By doing this, investors can rest assured that their investments will be securely transferred.

If you need help, or just some advice, get in touch.


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.

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 13th March 2023

With inflation at its highest level in 41 years and energy prices skyrocketing, the cost of living crisis has dominated headlines since inflation began to creep up from historic lows in mid-2021.

Following such an extended period of price rises, you may be concerned about your household finances and long-term plans.

What is inflation?

Inflation measures how the average price of goods and services changes annually, and is the main driver of the cost of living crisis.

Each month, the Office for National Statistics (ONS) monitors the price of 700 goods and services to determine how much an average household’s shopping basket changed in the preceding 12 months. This provides the Consumer Prices Index (CPI), which is one of the key ways we measure inflation.

The Bank of England (BoE) is tasked by the government to keep inflation to 2%.

A small level of inflation each year is good for the economy. However, when inflation rises above the 2% target, it can put more pressure on consumer finances and lead to problems in the economy.

Inflation could soon start to fall

In response to rising inflation, the BoE has raised the base interest rate several times throughout 2022, most recently to 3.5% on 15 December 2022. This is expected to encourage more people to save, reducing demand for goods and services, so slowing the pace of price increases.

However, experts predict that inflation will remain high for some time, not returning to the 2% target until 2024. Interest rates are expected to continue to rise into 2023, which could lead to higher mortgage rates and monthly repayments for borrowers.

Your experience of inflation may be different

The ONS makes certain assumptions when calculating UK inflation, such as that the average household allocates 9.8% of their monthly budget to personal travel costs like owning a car. If you do not own a car, your personal inflation rate might be lower than average.

Using an online calculator to understand your personal inflation rate will make it easier to focus on the facts that affect you rather than noisy, often sensationalist, headlines.

A combination of world events raised inflation

Several events in recent years have led to the sharp rise in inflation.

The Covid pandemic

During Covid lockdowns many workplaces closed, so normal manufacturing stopped temporarily. This led to a shortage of products. So, when the lockdowns ended, and we resumed our day-to-day lives, demand outstripped supply and prices rose.

The war in Ukraine

Food prices – specifically animal feed, fertiliser and vegetable oil – have risen directly because of the war, which had a knock-on effect on the price of everyday products such as sugar.

Energy prices have also soared to the highest level in 10 years as many European countries rely on Russia for imported natural gas.

The weakened pound reduces buying power

The value of the pound against the dollar has slowly dropped throughout 2022 from $1.335 on 4 January to $1.146 on 1 November.

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.

Approved by The Openwork Partnership on 31.01.2023

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.

At this time of year, one of the most beneficial things you can do for your money is to review your annual allowances. Make sure you’re using those that are available to you so you don’t pay more tax than necessary. The end of the tax year is on 5 April 2023 and it’s not possible to roll over most of these allowances to the following year, so if you don’t use them, you lose them.

Personal allowance

The standard personal allowance is £12,570 – the amount of income you can earn without having to pay tax on it.

Marriage allowance

If you’re married, you might be able to take advantage of the marriage tax allowance. It allows one half of a couple who earns less than the income tax threshold to transfer up to £1,260 to their higher-earning spouse – who must be a basic rate taxpayer.

Pensions

Your annual pension allowance is £40,000, although it can be lower for higher earners and where pension savings have been flexibly accessed. Any contributions you (or your employer) make receive tax relief (based on your income tax band) of 20% or more – and the money in your pension pot will grow tax free. Setting up a junior pension for your children or grandchildren could also be a tax efficient option. The fund will transfer to them when they turn 18 but they won’t be able to access the money until they’re much older. The allowance for a junior pension is £3,600 for the current tax year.

Personal savings

You’re entitled to receive some interest on your savings tax-free every year, depending on your income tax band. For non tax-payers or basic rate taxpayers, you’re allowed up to £1,000 each year; for higher rate taxpayers you get £500. If you have savings with a spouse or partner, you can each use your allowances against your joint savings.

ISAs

An ISA allows you to save or invest up to £20,000 tax free annually, whether it’s in a cash ISA or stocks and shares ISA – and also comes with the benefit of being exempt from dividend tax and capital gains tax on all growth. 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. The maximum you can put in each year is £4,000, which comes out of your £20,000 ISA allowance. The LISA can be opened by anyone aged 18–39, but you can keep saving into it until you are 50. You can also invest up to £9,000 in a Junior ISA (JISA) and save for your child either in a cash JISA, a stocks and shares JISA or a combination of the two.

Dividends

You are allowed to receive up to £2,000 a year in dividends, tax-free. This allowance can be particularly useful if you own shares or you’re a company owner or director.

Capital gains

Profits or gains you make on the sale of an asset – like a property where it’s not your main home and investments that are not in an ISA – are exempt from tax up to the annual allowance of £12,300. For married couples or those in civil partnerships who own joint assets, the allowance is doubled to £24,600.
Charitable donations

You can donate to charity tax-free and claim back the tax on your donation through gift aid. If you are a higher or additional income taxpayer, you can also claim back the difference to the basic rate on your gift aid donations. Just remember to keep hold of all records of your donations in order to claim tax relief when the time comes to submit your tax return.

Gifts

Gifting comes with the benefit of being exempt from inheritance tax up to an annual gift limit of £3,000 for each person you give to. Other tax-exempt gifts include money towards a wedding or a grandchild’s education. You can give a tax free gift of up to £5,000 to a child, £2,500 to a grandchild or great-grandchild or £1,000 to any other person. No inheritance tax is due if you live for seven years after making the gift to someone who is not your spouse (for example, gifting your children a property).

For more information, or if you’d like to talk to an expert, contact us.

Now’s the perfect time to make sure you’re fully prepared for the financial year ahead. To make it easy, we’ve summarised the key financial dates to put in your diaries:

March

  • Potential Spring Statement
  • 31st End of the Help to Buy Scheme – Buyers who applied for the loan have until this date to complete the purchase of the property.

April

  • 1stEnergy Price Guarantee increases – The guarantee will rise meaning a typical household will pay around £3,000 for their annual energy bill, until the April 2024.
  • 5thEnd of the 2022/23 tax year – Ensure you have used all your allowances.
  • 6thStart of the 2023/24 tax year
  • 6th New tax changes – The top 45% tax rate will now apply to anyone earning over £125,000 instead of £150,000 (excluding Scotland). Tax-free allowance for dividend income is reduced to £1,000.

July

  • 31st – Deadline for second payment on account for 2022/23 for those that pay self-assessed income tax.

October

  • 5th Deadline to register for self-assessment – If you’re new to self-assessment this is the deadline to register with HMRC.
  • 31stPaper income self-assessment deadline – Your 2022/2023 returns to be with HMRC.

November

  • Potential Autumn Budget

January 2024

  • 31st Self-Assessment Tax Deadline – You need to pay and submit your self-assessment tax return for the tax year ending 5th April 2022.

Your financial plan could be impacted by these key dates. Talk to us for advice on unused allowances, additional rate tax and dividends.

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

For specialist tax advice, please refer to an accountant or tax specialist.

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 on unused allowances, additional rate tax and dividends.
  • HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
  • For specialist tax advice, please refer to an accountant or tax specialist.

You are unable to carry any unused allowances over into the 2023-2024 tax year. If you are unsure on what ISAs are available to you and what they could do for you and your money, here’s how you can make the most of them.

ISA

An ISA is an individual savings account that allows you to save money tax-free 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 2022-2023 allowance before the end of 5 April 2023.

2021-2022 2022-2023
Total ISA Limit £20,000 £20,000
Lifetime ISA £4,000 £4,000
Junior ISA & Child Trust Fund £9,000 £9,000

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

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.

Key Takeaways:

  • Use your ISA allowances for 2022-2023 tax year before you lose them.
  • You are unable to carry any unused allowances over into the 2023-2024 tax year.
  • Don’t forget to use your 2022-2023 allowance before the end of 5 April 2023.
  • HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
  • 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.

In the 2022 Autumn Budget, it was revealed that the Junior ISA (JISA) spending limits would remain at £9,000 for the 2023/2024 tax year. The JISA limit was last changed in early 2020, when it was doubled from £4,500 to its current level.

JISA and CTFs both benefit

JISAs replaced Child Trust Funds (CTF) in 2011, but those who still hold CTF will continue to benefit from the increased allowance. Both JISA and CTF are a tax efficient way to build up savings for a child. It is not possible to have both a JISA and a CTF.

Savings for children

A junior ISA can be opened for any child under 18 living in the UK and the money can be held in cash and/or invested in stocks and shares. Once the person who has parental responsibility for a child has opened the account, anyone can contribute to it. The child can manage the account from age 16 and at age 18 they can withdraw the money if they want, when the account otherwise becomes a normal cash or stocks and shares Individual Savings Account (ISA). Alternatively, they can keep saving into it as a standard ISA.

The tax benefits for JISAs and CTFs are the same as for an adult ISA. So, there is no Capital Gains Tax and no tax on income.

Investing for their future

Following the Budget, it was reported: ‘By saving towards their future, families can give children a significant financial asset when they reach adulthood – helping them into further education, training, or work.

Junior ISAs and Child Trust Funds are tax-advantaged accounts for children, designed to encourage a long-term savings habit.’

Two principles which apply to many aspects of financial planning are particularly relevant when planning for your child’s financial future:

  • The longer the timescale, the more scope there is for your investments to grow
  • Taking expert advice can help you avoid potential pitfalls

The potential of a JISA

It is estimated that if £9,000 was invested every year from birth and assuming a net 2% return, which is obviously by no means guaranteed, the JISA would be worth around £194,000 at age 18. Saving such a large amount is obviously out of the question for most people, but whatever amount you can afford to save for your child’s future, a JISA can be a great choice.

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

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.

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 25/01/2023

Key takeaways:

  • The JISA allowance will remain at £9,000 for the 2023/2024 tax year.
  • Junior ISAs are long-term, tax-free savings accounts for children.
  • JISAs replaced Child Trust Funds (CTFs) in 2011.
  • Both benefit from the increased allowance of £9,000 per tax year.
  • JISAs can be opened for any child under 18 living in the UK.
  • Once the person who has parental responsibility for a child has opened the account, anyone can contribute to it.
  • The child can manage the account from age 16 and at age 18 they can withdraw the money.
  • There is no Capital Gains Tax and no tax on income.
  • The ISA allowance will remain at £20,000 for 2023-2024 tax year.
  • HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
  • 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.

Tax concessions are not guaranteed and may change in the future. Tax free means the investor pays no tax.

A pension plan is an important part of saving for retirement. It can provide you with a regular income in retirement, which can be used to supplement other forms of retirement income such as private pensions and state pensions. In this blog post, we will discuss the different types of pension plans available and how to create a pension plan that is right for you.

What is a pension plan?

A pension plan is a retirement savings plan that provides a lump sum which can be used to provide a regular income in retirement.

If you are employed, contributions to your pension plan are made by you and your employer. If you’re self-employed, it’s even more important to think carefully about your pension planning, as you will have no contributions from employers.

However you save, the money in your pension pot is invested, and upon retirement you can take lump sums as and when you need them, pay yourself a regular income, or a mix of both.

Pension plans can provide a valuable source of income during retirement, but there are some things to watch out for. For example, if you change jobs, you may not be able to take your pension with you. Additionally, pension plans may not keep up with the rising cost of living, leaving you struggling to make ends meet.

How to know how much to save in a pension plan

How much you decide to save will depend on your retirement goals.

The Pensions and Lifetime Savings Association (PLSA) has identified three different retirement living standards: minimum, moderate, and comfortable:

  • The minimum standard is for those who just want to cover essentials and have all their needs met.
  • The moderate standard is for those who want financial security and some flexibility.
  • The comfortable standard is for those who want financial freedom and some luxuries.

To figure out how much you need to save each month to achieve your desired retirement standard, you’ll need to consider things like how many holidays you see yourself taking a year and whether or not you’ll have a car. If you do have a car, how often would you want to replace it? And how much home maintenance do you think you’ll need to do?

Keep in mind that these are just estimates – no one knows exactly what their future holds. But by planning ahead and saving accordingly, you can give yourself the best chance at achieving your retirement goals.

How to boost your pension plan

Once you have an idea of how much your pension plan is going to give you and how much you will need as a minimum, you may find you need to add to it.

There are lots of ways to do this but some of the most popular include:

  1. Increasing your pension contributions as an employee and see if your employer will match this
  2. Look at a salary sacrifice system
  3. Consolidate pensions from various places into one single pension with potentially better returns
  4. Add money from windfalls such as bonuses at work or even a small lottery win

Managing your pension is an important step in your financial planning. If you need help deciding what the best path is for your pension, contact Downton & Ali Associates. We are pension specialists and can help you with individual recommendations based on your situation and needs.

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.

Approved by The Openwork Partnership on 2nd February 2023.

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.

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

  • 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.
  • 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.

Rachel is a 35-year-old charity administrator. When she started her current job nearly six years ago, she was automatically enrolled into her workplace pension. Auto-enrolment for workplace pensions was introduced in the UK to encourage more people to save for retirement. It means employers have to enrol into a pension any workers who are:

  • Not already in a pension
  • Between the ages of 22 and the state pension age
  • Earning more than £10,000 a year
  • Working in the UK

Rachel was happy to be enrolled into her workplace pension when she joined the charity but, now the cost of living crisis is starting to bite, she’s considering opting out in order to maximise her take-home pay. So, would this be a wise move or a false economy?

What will Rachel get out of her workplace pension?

In 2019, the government increased the minimum contribution to workplace pensions to 8% – at least 3% from employers with employees making up the balance. It’s important for Rachel to remember that her contribution comes from her pre-tax earnings, so opting out of her workplace pension may not boost her take-home pay as much as she expects.

The government is also contributing to Rachel’s workplace pension in the form of tax relief. As a basic-rate taxpayer, Rachel only needs to pay in £80 to increase her pension savings to £100 because the taxman contributes £20.

So effectively, Rachel is contributing 4% of her qualifying earnings (any pre-tax employment income between £6,396 and £50,270) to her workplace pension. The government then adds 1% tax relief and the charity tops this up with a 3% contribution. This means, in effect, Rachel’s net contribution is being doubled. In other words, for every £100 Rachel contributes, £200 is landing in her pension pot.

But does Rachel really need another pension on top of her state pension?

The short answer to this is yes! Many people overestimate how much they’ll get from their state pension. Currently, a full state pension provides an annual income of just over £9,600. Rachel will definitely get a proportion of this, as she’s already made ten years’ worth of National Insurance contributions. However, to get the full amount, she’ll need to make 35 years’ worth of contributions. Even if she manages this, according to Which, a single person needs £19,000 a year to enjoy a comfortable retirement and closer to £31,000 a year to be able to afford luxuries like exotic holidays and a new car every five years.

Why should Rachel get advice?

With costs rising left, right and centre, it’s understandable that Rachel wants to make savings wherever she can. However, by opting out of her workplace pension, she would essentially be throwing away free money from her employer and the Government. If possible, it would make sense for her to continue paying into her workplace pension while looking to make savings elsewhere.

Probably the best thing Rachel can do is seek advice from a professional. They’ll be able to explore options that allow her to enjoy the best possible standard of living both now and in the future.

If you’d like to discuss pension planning or any aspect of your finances, we’re here 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:

  • A workplace pension helps you to boost your retirement savings with contributions from your employer and the government.
  • The state pension alone is unlikely to be sufficient to fund your retirement.
  • Get professional advice to make sure you get the retirement you deserve.

There are 4.8 million self-employed people in the UK and only a third have any kind of pension arrangement. A shocking statistic when you consider that State support is shrinking and we’re all living longer.

Of course, saving for a pension when you’re self-employed is not as straightforward as it is for an employed person, who might automatically benefit from a workplace scheme and employer contributions. We’ve outlined some key points below for you to consider:

Don’t rely on the State Pension

Whether you’re employed or self-employed you’re entitled to the full basic State Pension (currently £141.85 a week) if you’ve paid in 30 years of National Insurance Contributions.

If you’re self-employed you can only claim the additional State Pension if you’ve had periods of employment.

On its own then, State support is unlikely to enable you to continue your current standard of living into retirement. That’s why it’s imperative for the self-employed to find other ways to provide the additional income needed in retirement.

Start saving early

It’s stating the obvious, but the sooner you start saving into a pension the bigger your potential retirement fund. You’ll also have more time to benefit from the tax relief that’s available.

To highlight the importance of saving early, a 25-year-old male looking to retire at 68 would need to contribute £236.25 per month in order to achieve a retirement income of £17,500 a year. If the same man had waited until he was 45 before he started saving, he would need to contribute £495.83 to achieve the same level of income, an additional £259.58 per month.

Minimise the amount of tax you pay

One of the main benefits of paying into a pension is the tax relief the savings attract. If you want to make a pension contribution of £100 a month, this will only cost you £80 a month, as HMRC will add an extra 20% in tax relief. HMRC will contribute to your pension the amount you would have paid in income tax on £100 gross earnings. Higher and additional rate taxpayers can claim higher rates of relief via their annual tax return.

The maximum amount you can save each year that attracts tax relief (otherwise known as the annual allowance) is £40,000.

Importantly, if your income is low and you’re not able to save the full £40,000 in one tax year, you can carry forward any unused allowance, and use it against earnings in the next tax year. Please note:

  • You must have been a member of a registered pension scheme during the years you want to carry forward
  • Your tax relief is limited by your annual earnings in the year you want to carry forward
  • You can only carry forward unused allowance from the three previous tax years

What type of pension is right?

The self-employed can choose from a range of different pension products, including stakeholder pensions, personal pensions and Self Invested Personal Pensions (SIPPs). Each has its advantages and disadvantages – we can advise on which is best for you.

Perhaps the most flexible pensions are stakeholder schemes. They allow you to save as little as £20 per month and the charges are relatively low, which is helpful if you have irregular income levels.

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.

Key takeaways:

  • A state pension alone is unlikely to be sufficient to fund your retirement.
  • Make your money go further by taking advantage of the tax relief available on your pension savings.
  • There are a lot of factors to take into account when choosing a pension, so it makes sense to get professional 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.
  • 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.

In his 2021 Budget, the Chancellor announced a five-year freeze on the lifetime pension allowance. What does this mean for you and your retirement fund?

What is the lifetime pension allowance?

The lifetime pension allowance sets a limit on how much you can save in your pension before you start paying tax on anything over the limit. For a few years before the 2021 announcement, the limit had been tied to inflation, meaning that it rose in line with the cost of living.

With the global pandemic and surge in inflation over the past couple of years, the decision was made to freeze the limit – at £1.073 million – until 2026. It’s hoped that the freeze will generate additional revenue as savers slow down or stop contributing to their pensions and don’t claim tax relief from the government.

How are my pensions affected by the lifetime allowance?

The lifetime allowance applies to all types of non-state pensions in your name – so that includes any defined benefit (final salary or career average) schemes you have along with any defined contribution pensions.

The limit of £1.073 million might seem like a huge amount. But if you’re a medium-to-high earner, have saved into pensions from an early age and are approaching retirement, you could one of the millions who are affected (and caught unawares) by reaching the threshold.

As pensions are so complicated, seeking advice is important and we can help clarify the status of your pensions, discuss your retirement plans and how to proceed.

What happens if you exceed the lifetime allowance?

Many of us have more than one pension, usually accumulated through different jobs over the years. Keeping track of them and how much they contain can be tricky and time consuming, as you’ll need to look at their expected value when the time comes. Your adviser is best placed to gather this information and help with your next steps.

If your total exceeds the lifetime allowance, the excess amount will be taxed as follows:

  • 55% if you receive the amount as a lump sum from your provider
  • 25% if your payments are gradual or are cash withdrawals

These are large penalties on your savings, so it’s worth acting now to find a way to protect your hard-earned pension.

Seek help to protect your pension

Protecting your pension and making sure you’re able to live comfortably in retirement and keep up with the cost of living is something we can help with. So, if it looks like your pensions could be affected by reaching and exceeding the lifetime allowance, there are some options you can discuss with your financial adviser:

Divert savings into an ISA

You can earn tax-free and make withdrawals in most cases. Our advisers can help you calculate how much you will need to live comfortably in retirement and help plan your investment strategy to achieve that goal.

Combine pensions with your spouse

Consolidating your pensions can be an effective way to grow your retirement savings in one place. It can also save time on the administration involved, cut down on fees and create a more streamlined investment strategy.

Claim pension credit

Many pensioners are eligible for pension credit but fail to make a claim. It’s available if you are over the state pension age and on a low income, are a carer, severely disabled or responsible for a child. It could boost your retirement income up to £182.60 a week if you’re single, or £278.70 for couples. It’s separate to the state pension, and we can help calculate whether you and your partner are eligible.

Pension allowance protection

Your adviser will be able to assess whether your pension could benefit from protections that help avoid the tax charge by offering a higher lifetime allowance. But there are several conditions and criteria you’ll need to meet. Our experts can advise whether it would be applicable to your situation.

Your adviser is ready to help you navigate the complex area of pension and ensure you move forward in the strongest position for you and your loved ones.

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.

Key takeaways

  • The lifetime pension allowance sets a limit on how much you can accumulate in all of your pensions before you start paying tax on your funds.
  • The government has frozen the limit at £1.073 million until 2026.
  • The allowance applies to all types of non-state pensions in your name, and any amount exceeding it will be taxed.

Money and financial goals are still sometimes viewed as taboo subjects, even within relationships. If you’ve been putting off conversations about finances, creating a plan together could have many benefits.

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

The cost of living is rising. Reviewing your finances now is crucial for understanding what effect inflation could have on your lifestyle and long-term plans.

Inflation was at an almost 40-year high. In the 12 months to August 2022, it was 9.9%.

There are several factors contributing to rising inflation, including the conflict in Ukraine, which has disrupted energy and food supplies.

Rising inflation means now is the ideal time to review your budget

Keeping track of your finances during the cost of living crisis is crucial. In the short term, you should review your budget. Can your budget absorb the higher costs, or do you need to make lifestyle changes?

The Bank of England expects inflation to peak at around 13%. It’s also said it doesn’t expect the rate to fall to its target of 2% for several years.

So, you should look at what that means for you in the coming years. Will rising energy prices mean you need to be more mindful of energy use or cut back expenses in other areas?

While the headline inflation figure can give you an idea of how prices are changing, your personal inflation rate may be very different. If you commute long distances, for instance, the steep rise in fuel costs may mean your outgoings rise more than you expect.

Going through your budget and calculating how your regular costs have changed in the last year can help you better manage your finances.

In some cases, you may decide to draw on savings or other assets to bridge a gap if your expenses rise. You should ensure this is sustainable.

The steps you take could affect your long-term plans

While it’s important to focus on how the cost of living crisis is affecting your finances now, don’t forget to consider the long-term effects too. Decisions you make now could affect your income and financial security for years to come.

If you’re using assets to create an income, such as your pension, you need to be aware of how increased withdrawals may affect you. Could taking a higher income from your pension now to cover costs mean that you deplete your savings faster than you expect? If so, it could mean you face an income shortfall later in life.

Research also suggests that some people are cutting back outgoings that could improve long-term financial security. According to Canada Life, 5% of adults have already stopped contributing to their workplace pension due to budget pressures. A further 6% are actively thinking about pausing their pension contributions.

While pausing contributions for a few months may seem like it will have little effect on your retirement, it can be larger than you think. The power of compounding means that pausing pension contributions for just a year could reduce the value of your pension at retirement by 4%.

It’s not just stopping pension contributions that could affect your long-term plans. Things like reducing how much you add to your savings account or investment portfolio could affect whether you can reach your goals in the future, whether that’s to support children through university or retire early.

Contact us to review your finances

Amid the current economic uncertainty, reviewing your financial plan can give you peace of mind and confidence. We’ll help you understand how your current budget has been affected and the steps you can take now to create long-term financial security.

Please contact us to arrange a meeting to discuss your goals and the effect the cost of living crisis could have.

Reducing your energy consumption can be a great way to cut your carbon footprint, lessening your personal impact on the environment and potentially helping to limit the devastating effects of climate change.

As living costs and the price of energy are soaring, taking action to lessen your usage can also be an effective tool to save money on your bills.

1 in 8 UK consumers think they’re already doing enough.

Interestingly, when compared globally, the UK has the highest proportion of consumers – 17% – who think they already do enough to prevent climate change, according to a MarketScreener report.

However, by better understanding your consumption habits, you might realise there’s more you can do.

According to the report, Jaap Ham, associate professor at the Eindhoven University of Technology, argues that our mindset is the biggest problem to tackle when trying to take action to curb energy consumption.

Echoing this, Schneider Electric’s vice-president of home and distribution, Nico van der Merwe, says that “it is encouraging to see the public recognise that real change starts at home”. He puts emphasis on the use of smart tools to help consumers understand their own usage, allowing you to take targeted action from there.

With 8 in 10 UK consumers believing that climate change will lead to higher energy bills, conditioning yourself to make the most of your energy consumption could kill two birds with one stone – saving money and the planet.

Here are 10 useful ways to reduce your carbon footprint while saving on your energy bills.

1. Understand your carbon footprint

A useful first step in reducing your carbon footprint is to understand it.

Visualising where you’re being excessive with your energy consumption can often be the wake-up call that people need to shock them into action. Online calculators are a great way to find this information and help you track your energy habits.

For instance, seeing how much energy you use through your dishwasher may inspire you to pack loads more tightly, making better use of your appliances.

Carbon footprint calculators are available from organisations such as WWF, the Carbon Trust, and the UN among others.

2. Switch to renewables

Next, you could consider switching to renewable sources of energy in your home.

Switching to a supplier that generates energy from sustainable sources can be a good way to reduce bills as well as reassuring yourself that the energy you’re using is “clean”.

As well as this, you could generate your own renewable energy by installing solar panels on your home. While this upfront cost can be expensive, this can offset your energy bill by using less of your supplier’s energy and generating your own from the power of the sun.

3. Use less hot water

Limiting how much hot water you use at home is another useful way to control your bills while lending the environment a helping hand.

Keeping tabs on how long you take in the shower, monitoring the number of baths you have, or being conservative with the hot tap are all examples of ways you can reduce your energy use.

Heating water is an expensive process as well as an energy-intensive one, so limiting how much you’re using could help to offset your bills.

4. Turn off idle appliances and chargers at the plug

TVs, chargers, and any other appliance plugged into the mains could be soaking up your precious energy. When switched on, chargers will use electricity even if nothing is connected.

So, getting into the habit of checking plugs throughout the day, or before you leave the house, can help you to waste less money on unused electricity while reducing your carbon footprint.

As well as this, TVs, radios, and consoles all use energy when on standby, so make sure you fully turn them off!

5. Consider an electric vehicle

Swapping your petrol or diesel car for a battery-powered, electric vehicle can reduce your costs and can also have environmental benefits.

Emissions you personally produce while driving can be drastically reduced by going electric instead of using fuel. As well as this, powering your vehicle with electricity is often cheaper over time compared to regularly filling a petrol or diesel tank.

Increasingly, you can even come across free charging points that are available for public use – according to Zap-Map, supermarkets such as Aldi, Lidl, Sainsbury’s, and Tesco are great places to find them.

6. Buy energy-efficient appliances

Kitting out your home with low-consumption appliances is a simple way to lower your energy consumption and, as a result, your bills.

Good examples of these include bulbs, showerheads, kettles, plugs, and hoovers to name a few.

The compromise in performance is generally negligible and well worth the switch. For example, a low-energy bulb may take a few extra minutes to reach full brightness but save a worthwhile amount of energy over time.

7. Use “smart” home appliances

Making use of smart devices that can remotely alter your home’s use of energy offers an easy way to reduce the size of your bills along with your carbon footprint.

According to research reported by MarketScreener, smart lighting and thermostat devices are now among the top three most purchased smart devices, proving how people are waking up to their utility.

Installing these in your home allows you to easily monitor your consumption and readily adjust how your home is using energy. Even better, you can change your home’s settings remotely so you can stick to your low-energy habits even if you leave the lights on after you go out.

8. Replace or service kitchen appliances

If you have any older models of kitchen appliances, it could be worth replacing them with newer, energy-efficient versions.

Culprits of high energy use could include your dishwasher, fridge, freezer, tumble dryer, or washing machine. Thankfully, technological advances mean newer appliances can complete tasks to the same standards while using less energy.

Through constant use over many years, these marginal savings can add up to be well worth the investment.

9. Improve your home’s insulation

If you’re already paying to heat your home, you should want to make the most of what you get – especially with energy prices being so high.

One of the best ways to do this is to make sure your home is appropriately insulated. You can draught-proof your home by:

  • Plugging holes and cracks
  • Insulating vulnerable areas like windows, doors, and floorboards
  • Utilising draught excluders or fitting a suitable carpet to prevent heat loss.

According to Energy Saving Trust, draught-proofing your home could save you up to £45 a year, or £65 if your home has a chimney.

10. Turn down the thermostat

With winter approaching, limiting your use of central heating can offer a great way to keep your energy bill down.

When you can, opt instead for an extra layer and wrap yourself up inside a warm blanket. Some nights are colder than others, but keeping windows closed and updating your home’s insulation can reduce the need to crank up the heating.

Installing thick curtains can stop some of your precious heat from escaping through the cold windows and keeps you warmer for less.

In turn, this additional energy efficiency will see you require less energy, helping to reduce your carbon footprint.

After several months of economic and political uncertainty the new chancellor, Jeremy Hunt, has delivered his autumn statement.

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 2023/4The chancellor’s announcements mean many millions of workers are likely to pay more Income Tax over the next few years, for two key reasons.

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.

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.

Sarah has never overstretched herself when it comes to money. After paying her monthly bills, she’s always had a bit left over. So, when her mortgage lender wrote to her to remind her that her five-year fixed-rate deal was coming to an end and that she needed to find a new deal or she’d be switched to their standard variable rate (SVR), she simply let them make the switch. She wasn’t worried about money and thought looking for a new deal would be too much hassle.

The interest rate on an SVR mortgage is set by the bank or building society and they can put it up at any time. It is usually higher than the rate you’d get with a mortgage deal and can significantly increase your monthly payments.

As the cost-of-living crisis starts to bite, times are tight for Sarah. Her energy bills have skyrocketed. Filling up the car costs a fortune. In fact, she seems to be paying more for everything these days, even her TV subscriptions are getting more expensive. She’s struggling to cover her monthly bills but, with interest rates rising, Sarah’s worried she’s missed the boat when it comes to securing a competitive mortgage deal.

Has Sarah left it too late to switch from her SVR mortgage?

Although the interest rates on both tracker and fixed-rate deals are creeping up, it still makes sense for Sarah to switch away from her SVR mortgage. According to Moneyfacts, in March 2022 the average SVR was 4.61%, while the average rate on a two-year tracker was 2.03% and on a two-year fixed was 2.65%. This means Sarah should be able to make significant savings by switching. And she’s not the only one who could save money. 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.

How can Sarah make sure she secures the best deal possible?

Sarah would almost certainly benefit from speaking to a qualified mortgage adviser. They understand the market and know where to find the best deals. Sarah may have to pay a penalty to switch from her SVR mortgage. Sometimes, you have to spend a year or more on an SVR before switching without a penalty. A professional will be able to advise Sarah whether it makes sense to wait or to pay any penalty and remortgage straight away.

But Sarah is nervous about speaking to an adviser; she finds mortgages confusing.

Mortgages can be complicated but a qualified adviser will be able to explain them simply and answer any questions Sarah has. Mortgage advisers are there to take the effort out of finding the right deal and it’s got to be a lot less stressful than worrying about whether you’re going to be able to pay your bills each month.

If you’re on an SVR mortgage or your current deal is coming to an end and you want to avoid being switched to an SVR mortgage, we’ll be happy to help.

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

Key takeaways:

  • Switching from an SVR mortgage could save you serious money.
  • Speak to a qualified mortgage adviser to make sure you switch to the best deal at the right time.
  • If your current deal is coming to an end, speak to a mortgage adviser before you’re switched onto your lender’s SVR.

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

The Bank of England has raised interest rates and warned further hikes are likely in the coming months. This will mean bigger bills for some homeowners.

On 3 November 2022, the Bank of England raised interest rates from 2.25% to 3% – the eighth hike since December 2021 – in a bid to combat soaring inflation. And, the Bank’s Governor, Andrew Bailey, has warned people to expect further rises in the coming months.

It is now widely anticipated that rates will rise to over 5% by Spring next year. This has had a huge impact on the mortgage market – with some lenders pulling deals altogether and others replacing their offerings with more expensive alternatives.

What does a rise in interest rates mean for your mortgage?

If you don’t have a fixed-rate mortgage, you’re likely to see your borrowing costs rise, although how they are affected will depend on the type of product you have. Your adviser can help you assess your mortgage deal and figure out ways to make savings.

Only borrowers with a mortgage that moves up or down with the base rate will be immediately affected by the interest rate change.

This includes tracker mortgages and standard variable rate mortgages (which you revert to when a mortgage deal ends).

Fixed-rate mortgages

If you’re on a fixed-rate mortgage deal, you won’t see any change in your monthly payments. This is because the interest rate you pay stays the same for the length of your mortgage deal.

But with further interest rate rises expected, if you’re close to the end of your current term, it may make sense to look for a new deal sooner rather than later. You can generally lock in a new mortgage deal three to six months before an existing deal comes to an end.

If you’ve got more than six months to the end of your current deal, you’ll either need to wait for a while or pay the early exit fee (A fee you may have to pay your current lender if you end your mortgage deal prior to the ‘official end date’) We can advise you on the best way forward.

Standard variable rate mortgages

You end up on a standard variable rate (SVR) when a tracker or fixed-rate mortgage deal ends, and you don’t remortgage.

If you’re currently on your lender’s SVR, you may well see your monthly payments increase following the rise in the base rate. You may not be hit with the full increase though, as these rates go up at a lender’s discretion.

Tracker mortgages

Tracker mortgages follow the Bank of England’s interest rate. So, payments on your tracker mortgage will rise as a direct result of any increase in the base rate. Exactly when this happens will depend on your lender.

As a rule, tracker mortgages do not exactly match the base rate but are set at a level just above it. For example, if your lender’s rate is the base rate +1%, the interest you’ll pay in total on your loan will be 4% (based on the base rate of 3% – 3 Nov 2022).

Whatever type of mortgage you have, we can advise you about how the interest rate rise might affect you and address any questions or concerns you have.

How to save on your mortgage costs

The best thing you can do is to speak to your financial adviser. If you’re on a tracker mortgage, they’ll be able to advise whether changing to a fixed-rate deal to protect yourself from any further rises is a good idea. They’ll also let you know about the fees involved when making changes to your mortgage. If you’re on an SVR, the interest rate you will switch to when your initial mortgage deal ends, you can switch to a new mortgage deal at any time. With interest rates rising, your adviser can help you look at available fixed-rate deals.

If you’re already on a fixed-rate deal, your mortgage payments won’t increase until your current term ends. With many lenders letting you lock into a new deal six months before your existing one finishes, it’s a good idea to plan ahead.

Whether you’re looking to remortgage or you’re a first-time buyer, we can help you find the right deal for your circumstances.

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

Your current home may well be the place where some of your happiest memories were created. Realistically, however, downsizing may be an excellent way of financing many more. Here are some points you should consider on the topic.

Why should I downsize my home?

Home may be where the heart is, but property has a financial value. There are various schemes which make it possible to release equity in property while you continue to live in it. These each have their advantages and disadvantages and you would need to do your research thoroughly to decide if one of them was right for you.

Downsizing simply means moving from a more expensive property to a more affordable one. This may be a smaller property and/or one in a different area. This turns home equity into cash, which can be used for other purposes. For example it can be used to help your children get on the property ladder themselves.

This is a lifetime mortgage/Home Reversion Plan. To understand the features and risks, ask for a personalised illustration.

The practicalities of downsizing

Downsizing is essentially selling a home and buying another one. This means that you will have to go through the home-selling and home-buying processes again. It also means that you will have to pack up and move your worldly goods.

You will also have to be realistic about whether or not all your current possessions will actually fit into your new home. Instead of feeling sad or stressed about this, it may help to think about it as an opportunity to adjust to your new situation. It may also be appropriate to think about giving inheritances in advance. For example if you have some furniture you love and wanted to pass on, you could pass it on now.

You could look at storage as a temporary option. For example if you’re downsizing to help your children with a deposit, you could store larger items until they have bought their own homes.

You could also find new and possibly better ways of storing and accessing familiar items. Younger people may be able to help with this. For example photo albums can be turned into collections of digital photos. All your precious memories will still be saved – and in a fraction of the space.

You might also like to consider selling some of your excess possessions. This can mean anything from listing them on eBay to selling items through a specialist channel, e.g. an auction. Before disposing of anything for free, you may wish to check to see if it is worth selling. Perhaps some of your memorabilia has historic value, and would be of interest to a local museum.

Downsizing and the family finance

Your main reason for downsizing may be to help your children, but hopefully there will be some money left over for you too. This means that you need to think about how to make best use of it.

Of course, this will depend on your individual situation. For example, you may want to think about how likely it is that you will need to access this money in the near future. If it is important that you can withdraw it quickly, then you will need to keep it somewhere which allows that, such as an instant-access savings account.

If you are confident that you can live without the money for some time, then you have a wider range of options. For example you could put some of it into bonds or invest some of it in stocks and shares. Whatever you do, it should be in line with your plans for retirement and your overall financial goals.

The covid pandemic put things into perspective for Deborah. Before hand-sanitizer and facemasks became the norm, she and her boyfriend were living in a pokey flat while they saved up to buy a place of their own. As the pandemic took hold, they were both furloughed and – for the first time in years – had lots of free time together. This ultimately spelt the end for their relationship. Deborah moved back in with her parents and, to distract herself from this depressing development, got out her old sewing machine and starting upcycling second-hand clothes. Intrigued to know if there might be a market for her designs, she set up a simple online shop. Her clothes were a huge hit and, before she knew it, Deborah had a viable business on her hands.

Since going back into the office, Deborah’s realised how unfulfilling she finds her nine-to-five and is seriously considering quitting to focus on her upcycling business. However, she’s also determined to buy a place of her own within the next six months and doesn’t want anything to jeopardise her chances of passing a mortgage affordability assessment.

So how do lenders decide whether to offer you a mortgage?

If you’re applying for a new mortgage, remortgaging or increasing your current mortgage, lenders are required to carry out an affordability assessment. This involves a variety of checks designed to make sure you can afford to repay what you borrow. According to the Independent, some two thirds of first-time buyers are rejected for a mortgage at their initial attempt, so clearly these checks aren’t just for show. So what can Deborah do to boost her chances passing an affordability assessment.

  1. Demonstrate stable employment

    Lenders are reluctant to offer mortgage deals to people who have recently become self-employed. Many ask for three years of accounts, although some will accept two and a few will even consider you with only one. Even simply switching from one employed position to another can affect your chances of success. Most lenders like to see that you’ve been with an employer for at least three to six months before they’ll consider you. With this in mind, it would make sense for Deborah to secure a mortgage first and then think about what she wants to do career-wise.

  2. Reduce her debts

    Lenders will look at Deborah’s total income and then work out how much she needs to maintain a basic standard of living. This will give them an idea of how much she can afford to spend on a mortgage. Reducing the amount she owes on things like credit cards and loans will increase the amount she has available and boost her chances of passing an affordability assessment.

  3. Check her credit report

    Before offering you a mortgage, lenders check your credit report. A poor credit history could affect the amount they’re prepared to offer or cause them to turn you away altogether. However, there are simple ways to improve your credit rating. Before applying for a mortgage, Deborah should check her credit report for errors, make sure she’s registered to vote at her mum and dad’s address, avoid applying for new credit in the six months leading up to her application and make sure she’s well within any existing credit limits.

  4. Get professional advice

A mortgage adviser will be able to assess Deborah’s circumstances and point her in the direction of the right lenders.

If you want advice on passing a mortgage affordability assessment, we’ll be happy to help.

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

Key takeaways:

  • Lenders like to see that you have a stable income so it’s best to avoid changing your work situation in the time leading up to a mortgage application.
  • Reducing the amount you owe on credit cards and loans can help improve your chances of securing a good mortgage deal.
  • Lenders will check your credit report before offering you a deal so make sure yours is up to scratch before submitting a mortgage application.
  • Professional advice could boost your chances of passing an affordability assessment.

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

Pete has just inherited £35,000 from his grandma and he’s thinking about investing in a buy-to-let property but has no idea where to start. So, what are the key things Pete needs to know?

Is the buy-to-let market a good investment?

Some of Pete’s friends have warned him that the buy-to-let market is still reeling from the effects of the covid pandemic. They claim, with more people working from home, there has been a population shift away from major towns and cities – reducing the demand for rental properties.

However, figures from Zoopla suggest that the buy-to-let market is enjoying something of a resurgence since covid restrictions eased. Demand for rental properties was reportedly up 76% in January 2022 compared to the same month in the previous four years. In addition to this, the stock of rental properties was down 39% on the five-year average, with rents rising sharply. All of this suggests that a buy-to-let property may well be a wise investment for Pete.

Is Pete likely to be accepted for a buy-to-let mortgage?

To be accepted for a buy-to-let mortgage, Pete needs to:

  • Own his own home (outright or with a mortgage)
  • Have a good credit report
  • Earn over £25,000 a year
  • Be young enough to pay off the buy-to-let mortgage before he reaches the lender’s upper age limit (generally between 70 and 75 years old)

Pete meets all of these requirements so, in theory, there’s nothing stopping him getting a buy-to-let mortgage.

So what else does Pete need to know about buy-to-let mortgages?

Buy-to-let mortgages are very similar to standard mortgages but there are some key differences Pete needs to be aware of:

  • The minimum deposit is typically 25% of the property’s value
  • Fees and interest rates on a buy-to-let mortgage tend to be higher
  • Most buy-to-let mortgages are interest only, although there are repayment ones available. With an interest-only mortgage, you don’t repay the capital until the end of the mortgage term.

How much will Pete be able to borrow?

The amount Pete will be able to borrow is linked to the rental income he expects to achieve. Lenders usually ask that the rent you receive each month is 25-30% higher than your mortgage payment.

Other considerations for buy-to-let landlords

Pete shouldn’t assume that he’ll always have tenants. It’s important that he’s able to make his mortgage payments during periods the property is unoccupied or rent goes unpaid. He will also need savings for unexpected repair bills such as a broken boiler.

As well as these considerations, Pete needs to make sure he’s thought about how he’ll repay the mortgage. He shouldn’t assume he’ll be able to do this in full by simply selling the property. If house prices go down, there may be a shortfall for him to make up.

Buy-to-let and tax

Pete also needs to consider the tax he’ll have to pay as a buy-to-let landlord. As well as income tax on rent, Pete will be looking at paying capital gains tax on the sale of the property. It’s important that he factors this into his calculations when deciding if a buy-to-let investment is right for him.

The importance of professional advice

If Pete’s still keen to go ahead with a buy-to-let investment, the wisest thing he can do is speak to a professional mortgage adviser. They’ll be able to assess his particular circumstances and explain the options that are open to him.

If you’d like advice on buy-to-let mortgages, we’re here to help.

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

Some Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority.

Key takeaways:

  • To qualify for a buy-to-let mortgage, you generally need to own your own home, have a good credit report, earn over £25,000 a year and be able to pay off the mortgage before you reach the lender’s upper age limit.
  • Buy-to-let mortgages tend to have higher fees and interest rates than standard mortgages.
  • Most buy-to-let mortgages are interest only.
  • It’s important to consider the tax implications of a buy-to-let investment.
  • There are a lot of factors to consider before entering the buy-to-let market – a professional adviser can help you decide if it’s a wise investment for you.

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

Some Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority.

With so many mortgage lenders offering their products on the high street and online, it can be tempting to cut out the middleman and ‘go direct’.

When you’re making such a huge financial commitment, the guidance you can get from a qualified mortgage adviser can be invaluable.

Here are five reasons we can make a difference:

  1. We know what a good deal looks like

It’s easy to underestimate the costs involved when buying a property or remortgaging. An attractive rate may appear good value, but this could change once you factor in things like fees and loan conditions.

We will compare a wide range of lenders and thousands of mortgages on your behalf looking beyond the headline rate so that you understand how the length and type of loan will affect how much you pay over the longer term. We’ll highlight any additional costs you should be aware of (like administration fees, booking fees and valuation costs).

  1. We know the market

If your mortgage needs or circumstances are ‘out of the ordinary’, you may find it more difficult to find a mortgage. We have knowledge of lenders’ criteria and can save you time and hassle as you search for a suitable lender.

  1. We can do the hard work for you

Selecting the right mortgage is just the start. We will work with you to complete the necessary paperwork, liaise with solicitors, valuers and surveyors on your behalf, and help make the process as smooth as possible.

  1. We are professionally qualified

Unlike many branch and telephone-based mortgage sellers in banks and building societies, we are able to advise you on a broad range of lenders and products. This means you benefit from genuine choice coupled with quality advice.

  1. We look beyond the mortgage

We consider the bigger picture when it comes to advising you on your mortgage. For example, we can help you safeguard your home by recommending products that can financially protect you and your family, should the unexpected happen. We can also recommend providers that can help with other elements of the home-buying process, including solicitors, surveyors and insurance providers.

And, if you want us to, we can stay in touch with you to make sure your mortgage and protection arrangements remain appropriate for your needs. Just ask.

Conveyancing and Surveying are not part of The Openwork Partnership offering and are offered in our own right. The Openwork Partnership accept no responsibility for this aspect of our business. These products are not regulated by the Financial Conduct Authority.

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

Whether you’re looking for a mortgage on your first home or dream home, we can help.

At 6.00 am on Monday 17 October, the Treasury issued a press release announcing that the (new) Chancellor, Jeremy Hunt, would making a statement “bringing forward measures from the Medium-Term Fiscal Plan”. The timing of the press release suggested that the Treasury was concerned it had not done enough the previous Friday to calm markets ahead of the end of Bank of England gilt purchase support.

The Chancellor’s statement was in two parts: firstly, a pre-emptive media statement in the morning, then an official statement to the House of Commons in the afternoon. He announced what amounts to a near total unwinding of Kwasi Kwarteng’s ‘fiscal event’ of 23 September.

Measures revoked

  • The cut to 19% in the basic rate of tax (outside Scotland) from 2023/24 will not take place. Instead, basic rate will remain at 20% “indefinitely”, meaning that even Rishi Sunak’s 2024/25 scheduled timing has been dropped.
  • The off payroll working rules in the public and private sectors (often referred to as IR35) will remain in place, reversing their removal at the start of the next tax year.
  • The 1.25 percentage points reduction in dividend tax rates, due from 2023/24, will be scrapped.
  • VAT-free shopping for overseas visitors will not be re-introduced.
  • There will now be no freeze on alcohol duty for one year from February 2023.

Under review

The Energy Price Guarantee (EPG), which was due to cap average domestic bills at £2,500 a year for two years from the start of October, will be scaled back to last only until April 2023. In the meantime, the Treasury will design “a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need”. Any support for businesses from April 2023 “will be targeted to those most affected”

Measures retained

  • The reduction in national insurance contributions, which reached its third reading in the House of Lords on 17 October, will go ahead.
  • The stamp duty land tax cuts that took effect on 23 September will not be reversed.
  • The extension of the £1 million annual investment allowance beyond March 2023 remains, as do enhancements to the seed enterprise investment scheme (SEIS) and company share option plans.

Financing

The measures unwound on Monday account for about £11 billion of the extra £45 bn of borrowing by 2026/27 created by the 23 September ‘fiscal event’. The U-turn on abolishing the top 45% rate of tax (outside Scotland) and Friday’s decision to keep the already legislated for corporation tax increases were worth about £21 bn, implying that over 70% of Kwasi Kwarteng’s planned borrowing spree has now disappeared.

Based on recent analysis by the Institute for Fiscal Studies, the 2026/27 financing black hole that remains after all the unwinding is about £32 bn, although press rumours at the weekend suggested that the Office for Budget Responsibility (OBR) could add another £10 bn to the IFS’s debt projection.

The Chancellor stated that there will be “more difficult decisions” to come on both tax and spending. Government departments will be asked to find efficiencies within their budgets. In his initial statement Mr Hunt also said, “Some areas of spending will need to be cut.”

Further changes to fiscal policy to put the public finances on a sustainable footing will be announced on 31 October alongside the publication of the OBR’s Economic and Fiscal Outlook.

Taking Your First Steps Into Investing

There is no right time to begin investing but there are some decisions to make that could affect your returns. If you are 7 years old and saving your pocket money for a PS5, 17 saving the money from your first job for a car, 27 saving for your first house or 57 and finalising your retirement plans which include a dream holiday, we can provide personalised advice for you.

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.

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.

Practically every penny of Mike’s monthly salary is accounted for so, as the cost-of-living crisis starts to bite, he’s worried about making ends meet. He’s started shopping around for cheaper deals on his broadband, mobile-phone contract, and car insurance, and he’s also cancelled his gym membership and a couple of his TV subscriptions. But he’s overlooked the bill offering the largest potential saving – his mortgage.

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.

In a bid to tackle rising inflation, the Bank of England has increased the base rate for the seventh time since December 2021. The 0.5% hike takes the interest rate to 2.25% – the highest since November 2008, when the banking system faced collapse. So, what does this mean for you?

Mortgages

If you’re on a fixed-rate mortgage, you’ll be protected from the latest rise until your current deal runs out. If that happens any time soon, you may well find the cost of a new fixed-rate mortgage has shot up – with even the most competitive two-year deals currently priced at between 4 and 4.5% compared to less than 1% a year ago.

For those on tracker mortgages, you’ll almost certainly see your payments go up in the next few weeks to reflect the full increase in the base rate. In general, you can expect to pay an extra £23 a month on a £100,000 mortgage.

Homeowners on their lender’s standard variable rate (SVR) will also probably see their monthly payments go up. They may not be hit with the full increase though, as these rates go up at a lender’s discretion. Banks and building societies may take longer to decide on SVR changes, as they come under pressure to shield customers from the full impact of the latest base-rate hike.

Other debt

The base-rate increase will also more than likely see the cost of borrowing rise in other areas. Although often not explicitly linked to the base rate, credit card rates are generally expected to go up in response to the latest rise. This means they’ll almost certainly reach the dizzying heights of 30%.

It’s also widely anticipated that many lenders will pass on the increase to people taking out new personal loans and car finance.

Savings

The base-rate rise should be good news for savers, although it can take time for increases to be passed on to customers. Getting professional advice can help you make the most of your money.

Investments

Changes to interest rates can affect different types of investment in different ways. Your financial adviser can build a diverse portfolio which may minimise the effects of any rate fluctuations.

Budgeting

In light of the latest base-rate increase and changes announced by Kwasi Kwarteng in the government’s mini-budget, it makes sense to review your own budget. A financial adviser can help you weather these uncertain times and ensure you’re making more of your money.

Key takeaways:

  • Homeowners with tracker mortgages are likely to see their monthly payments go up in the next few weeks. People on their lender’s SVR will probably see an increase to the amount they have to pay too, although they may be shielded from the full impact. The cost of new fixed-rate deals is also set to rise.
  • The cost of credit card debt, along with new car finance and personal loans, will almost certainly increase in response to the change in the base rate.
  • The rise should be good news for savers, although it may be worth waiting before switching to see if rates increase further.
  • Making sure you have a diverse portfolio can protect investments from rate fluctuations.
  • A financial adviser can help ensure you’re making the most of your money in these uncertain times.

After seeing their six-year-old son’s birthday list, Liz and Dan have realised it’s high time they started teaching Archie about the value of money.

It’s true they both have reasonably well-paid jobs and only the one child but, even so, a Saint Bernard puppy, a quad bike, a horse and a life-size dalek don’t come cheap. So, what can Liz and Dan do to ensure Archie doesn’t end up bankrupting them before he goes to high school?

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 prepaid 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.

Lindsay and Sam have just found out they’re expecting their first baby. Although they’re excited at the prospect of starting a family, it’s come as a bit of a surprise and their current living situation is far from ideal. They’ve been staying with Lindsay’s dad in his two-bedroomed terrace for just over a year while they save up a deposit for their first house. The lack of space and privacy has proved challenging to say the least. Adding a baby into the mix seems like a terrible idea.

On the positive side, Lindsay and Sam now have a decent deposit to put down on a house. Despite this, friends have warned the couple they’ve no chance of getting a mortgage due to their working situation. Sam is a self-employed roofer and he’s pretty successful. However, he’s only been working for himself for two years. His friends have told him, he’ll need at least three years of accounts before a lender will go anywhere near him. They say any mortgage the couple can get will be based on Lindsay’s income alone. Lindsay works as a hairdresser and her salary is nowhere near enough to secure the kind of mortgage they’re hoping for.

What can Lindsay and Sam do?

Should they resign themselves to bringing up their baby in Lindsay’s dad’s spare room? Or maybe they should accept that, for now, renting is their only realistic option.

In fact, the best thing Lindsay and Sam can do is stop listening to their friends – no matter how well meaning – and seek help from a qualified mortgage adviser.

But why? What can we tell you that you can’t find out online?

  • We know the market

If, like Lindsay and Sam, your needs or circumstances are ‘out of the ordinary’, your options may indeed be more limited than those of other buyers. However, this doesn’t mean you don’t have options. We know the lenders who are willing to consider buyers in your situation and we’ll check you’re likely to meet their specific lending criteria before submitting a formal application. This will save you time and avoid unnecessary searches on your credit file.

  • We look beyond the headline rate

An attractive rate may seem like your best bet when choosing a mortgage but you also need to factor in things like fees, loan conditions and the mortgage term. We look beyond the headline rate and can help you understand how the length and type of loan will affect how much you pay in the long term. We’ll also highlight any additional expenses like administration and booking fees, and valuation costs.

  • We do the hard work for you

As well as helping you select the right mortgage, we’ll work with you to complete all of the necessary application forms and liaise on your behalf with solicitors, valuers and surveyors. We can also recommend products that provide financial protection should the unexpected happen.

  • We’re professionally qualified

We’re fully qualified to advise you on a wide range of lenders and products.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Key takeaways:

  • Get help from a professional. Don’t rely on friends’ advice. The market is constantly evolving. Things that may have been true when your friends bought a house may not be true now.
  • Look beyond the headline rate when choosing a mortgage deal.
  • A mortgage adviser can help with more than just choosing the right deal, they can ensure the whole house-buying process runs as smoothly as possible.

Your home may be repossessed if you do not keep up repayments on your mortgage.

When preparing to buy your first home, saving for a deposit can be a difficult process. As house prices, inflation, cost of living and mortgage rates increase, it can mean that some mortgage lenders may require larger deposits of the property value. This can be challenging trying to save a large sum of money and for some within a limited time. According to the Office for National Statistics, the average UK house price was £277,000 in February 2022, which is £27,000 higher than this time last year. It’s also important to consider all the other costs that are involved in buying a property – conveyancing, legal fees, insurance policies and moving costs to name a few.

How much do I need to save?

A 5% deposit of the property value is the minimum amount you are able put down and however with this your options may be limited. A 10% deposit will provide with more options, whilst a 25% deposit will enable you to get competitive mortgage rates. The larger deposit you can provide, the less risk you will be considered to lenders and better rates will be available to you.

Where do I start?

Set a savings goal, which you can break down into easier amounts and a time frame to achieve it. Regular saving is most effective and it’s important to be realistic on how much monthly you can save so that it’s more easily attainable and doesn’t feel like such a chore or impact your life severely. To decide on how much to save, researching house prices in the area you would like to buy your property and using mortgage borrowing calculators online can help you work out how much you may need to save.

Buying schemes and saving accounts options

There are various government buying schemes such as Help to Buy and Shared Ownership and mortgage deals which you may be able to use depending on how much deposit you can raise.

With a Lifetime ISA (LISA) as a first time buyer under 40, you get a 25% bonus on your savings. For example, if you put £1,000 into your Lifetime ISA, the government will add an extra £250. This would mean you have £1,250 at the end of the tax year. It could help you in reaching your deposit goal quicker.

Top tips on how to build your savings:

Set up a savings account – look into a suitable ISA and consider a Lifetime ISA
Look at your current spending habits – analyse and see where you can possibly reduce your monthly bills and expenditure (e.g. minimise unused subscriptions/gym membership, change energy or network providers, eating out, daily coffees etc.) to save money.
Create a budget and stick to it – make the budget realistic so it’s easier to stick to and when you struggle, remember the goal in mind. Set up standing orders so the money is automatically allocated to savings before you have chance to spend it.
Reduce your rent/living costs – If possible, consider moving in with family, friends or find cheaper/shared accommodation which can allow you to save money quicker.
Make extra money – sell clothes, items online that you don’t need, or if you have a skill/talent/craft that you can turn into a business, this can help you earn extra cash.
Make use of discounts, vouchers and online deals – every little saving helps.
Try “no spend” months or weekends” – only pay your bills and regular outgoings and necessities and move the money you save to your savings. Consider alternative free activities.
Set limits – If it helps, take out a certain amount of money in cash for the week or month and leave your cards at home.
Consider investing options – including saving accounts with higher interest rates, stocks and shares ISAs
Ask for help and advice – from friends and family for support and we’re here for any financial advice you may need.
We’re here to help you on where you can save and invest your money towards your deposit, provide you with financial advice to make sure your savings and investments are working for you and advise you on how much you can borrow for a mortgage. We’ll also be here to help find the right mortgage deal when you are ready to buy your first home!

If you would like to find out more, please get in touch with one of our advisers.

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

A stocks and shares Lifetime 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.

One wet and windy evening, Rachel and Nathan decided to take advantage of their newborn, Eli, falling asleep in his moses basket by getting an early night. Gently 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 Eli 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, Rachel and Nathan’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 is 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 and furniture.

Not all home insurance is equal

As Rachel and Nathan 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 to see 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.

Accidental damage cover is something else to think about. Rachel and Nathan decided to do without it. However, if they’d added it to their contents insurance, the cost of replacing their living room carpet may have been covered. According to MoneySuperMarket, mishaps account for over a quarter of all home insurance claims, so accidental damage cover may be worth prioritising.

Reading reviews of insurance providers can also be useful. Most events that result in a claim are pretty stressful, so you don’t need things like poor customer service making matters worse. According to the Association of British Insurers, home insurance prices fell to the lowest levels on record in the first quarter of 2022 meaning you shouldn’t have to pay a fortune for a good policy.

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.

As parents to four children ranging in age from three to 12 years old, Rachel and Samantha were horrified to hear on the news that a quarter of 20-to-34 year olds still live at home with their parents. As much as they love their kids, the idea they might still be a permanent fixture around the house into their 30s terrifies them.

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.

Funding your child’s university education
Sarah and Andrew’s 10-year-old twins, Isabelle and Isaac, couldn’t be more different. While Isabelle is boisterous and full of beans, Isaac is gentle and reserved. The children do have one thing in common though – they’re both extremely bright and they already know exactly what they want to do when they grow up. Isabelle loves animals and wants to be a vet; and Isaac is a very talented artist and has his heart set on art school.

When they found out they were getting two for one, Sarah and Andrew couldn’t have been happier. But bringing up twins hasn’t been cheap and the couple are aware that as the children grow so will the strain on their finances. Having heard stories about the ever-rising cost of higher education, Sarah and Andrew are particularly keen to start saving for the twin’s university education.

How much does university cost?

On average, it costs just under £57,000 to go to university in the UK, according to Save the Student. This figure is based on the fact that the cost of tuition for most students is about £9,250 a year, average living costs are £9,720 a year and the majority of undergraduate degrees last three years. However, the exact cost can vary quite a lot depending on where you study and the course you’re doing. If Isabelle still wants to become a vet after doing her A-levels, she’ll be looking at going to university for five or six years so her costs will be higher than average. As well as a tuition fee loan, students can get a maintenance loan to help cover living costs. However, the average maintenance loan is only about £5,640 a year so there is more than likely going to be a significant shortfall.

Where should Sarah and Andrew start?

The good news for Sarah and Andrew is that they’ve started thinking about saving early. With at least eight years before the twins go to university, if their parents start saving straight away there is plenty of scope for their investments to grow.

The first thing Sarah and Andrew should do is get advice from an expert. This will help to ensure they make the right investment decision for their particular circumstances and avoid potential pitfalls.

What will Sarah and Andrew need to consider?

There are three main points Sarah and Andrew will need to consider when deciding on the best way to save for Isabelle and Isaac’s future:

Ownership
Sarah and Andrew will need to decide whether to give ownership of the investments they make to Isabelle and Isaac. This is not generally recommended as it would mean the twins could cash that investment and blow the lot on their 18th birthday (16th if they were living in Scotland).

Type of investment
As Isabelle and Isaac are still quite young, Sarah and Andrew have the option of making long-term investments that will hopefully achieve better returns. Being able to invest over a long period will widen the range of investment types available to Sarah and Andrew. Once they’ve made their initial investments, they would be well advised to review them on a regular basis to make sure their money continues to work as hard as possible.

Tax
Sarah and Andrew shouldn’t choose their investment based on tax. However, once they’ve decided on the most suitable investment for their circumstances, it makes sense to invest via the most tax-efficient route.

If you’d like to discuss investment options for your child’s university education, we’ll be 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.

Whether you want to go on holiday or just want to save some money for the future, budgeting is a good way to put aside some money for reaching this goal. Here you can find some tips to help you take control of your finances.

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.

Value-added services are benefits included in an insurance policy that you might not be aware of – but could help improve your overall health and wellbeing.

When you take out an insurance plan like life insurance, critical illness, or income protection, you get the financial protection in the form of a payout, but there are also other services available to you as parts of those plans.

These ‘value-added services’ or ‘wellbeing services’ are designed to provide customers with a range of emotional and practical support services throughout the life of the plan, not just when you may need to claim. Most services are included within the price of the plan and can often be accessed by family members too.

It’s a good idea to check your policy first (and contact your provider to see if any of their services carry a charge) but you may find some of the following value-added services are part of your policy:

Annual health check
A range of tests to check various health markers such as cholesterol and blood sugar levels. This may be followed by a consultation with a nurse or GP to discuss the results, depending on how your policy works.

Bereavement counselling
Giving you access to emotional and practical support at a difficult time, if you have been affected by bereavement.

Mental health support
Being mindful of mental health is more important than ever. These value-added services help those facing mental health challenges, with counselling through various health providers.

GP services
Ability to see or speak to a medical professional from your home or face-to-face, without facing long waiting times, and at a time that suits you.

Second medical opinions
Second medical opinion services give you the chance to check with a second medical professional about the course of treatment or a diagnosis you’ve received.

Nutritional support
Gives you access to a nutritionist to help improve your diet, which could boost your overall health.

Fitness services
These services give you access to fitness services to enhance your overall health and wellbeing.

These are just some of the extra-value services that your insurance plan could offer, covering a wide range of needs.

If you’re unsure about how to find out more information from your policy, our advisers are here to look at the small print and help you make the most of any value-added benefits available to you.

Markets experienced some June gloom in the wake of further interest rate hikes and lower economic growth forecasts.

Global growth is set to slow to 3% this year and 2.8% in 2023, according to the organisation for economic development (OECD). [1] The ongoing war in Ukraine has added to the slowdown, along with high inflation following the pandemic.

Supply chain issues caused by lockdowns in China are also having an effect on the global economy’s ability to bounce back and are predicted to continue into 2023. The World Bank echoed the OECD’s sentiment by lowering its forecast for global growth to 2.9% from 4.1% for the rest of 2022. [2]

Markets fall in June

At its June meeting, the US Federal Reserve (Fed) announced the largest hike in interest rates since 1994, raising the rate by 0.75% to 1.5%. It added that further increases are likely in the coming months.[3]

Stock markets in the run-up to the Fed’s decision fell in June, as concerns mounted over the likely rise in rates in a more aggressive move to tackle surging inflation. The S&P 500 dropped to its lowest point since March 2021, as investors felt uncertain about the Fed’s decision, and fell further after the Fed’s decision. Overall, global stocks hit their lowest point since November 2020.

Europe braces for late summer rate rises

In Europe, markets were affected by the European Central Bank’s (ECB) plan to curb inflation across the single currency region. As well as cutting its growth forecast, the ECB revealed plans to make its first interest rate rise since 2011 in July, as well as a potential follow-up rate rise in September.

Although economic pressures linked to the pandemic have declined, the war in Ukraine as well as further disruption to energy supplies to Europe adds a substantial risk to growth.

UK growth forecast slows

The UK’s economic growth is expected to slow towards the end of this year and into 2023, according to the British Chambers of Commerce, with a possibility of inflation hitting double figures by the end of 2022. The forecasts for economic growth are at 3.5% for 2022, which is less than half of the recorded growth in 2021. [4]

The Bank of England raised the interest rate again in June, by 0.25% taking it to 1.25%. [5] It predicts inflation will reach 11% by October. This led to the FTSE 100 dropping 3% on the day of the rate rise, as markets continued to show concerns about growth both in the UK and abroad.

China shows some positive signs

China’s economy showed some signs of recovery in June, as its industrial output grew during May having fallen the month before. The country’s exports also grew in May, as some of the country’s covid restrictions were lifted. However, China’s zero-covid approach is still affecting consumer spending – with many cities affected by strict lockdowns as new outbreaks in some parts raised fears of fresh lockdowns.

Being tax smart means knowing the basics about how tax affects your life and money. Here are 10 ways to reduce your tax bill, which could make your money go further for you and your loved ones.

Personal savings allowance
You’re entitled to receive some interest on your savings tax-free every year, depending on your income tax band. For non-taxpayers or basic rate taxpayers you’re allowed up to £1,000 per year; for higher rate taxpayers you get £500. If you have savings with a spouse or partner, you can each use your allowances against your joint savings.

Marriage allowance
If you are married, you might be able to take advantage of the marriage tax allowance. It allows one half of a couple who earns less than the income tax threshold (£12,570) to transfer up to £1,260 to their higher-earning spouse (who must be a basic rate taxpayer).

ISA allowances
An ISA account allows you to save or invest up to £20,000 tax free annually, whether it’s in a cash ISA or stocks and shares ISA – which also comes with the benefit of being exempt from dividend tax and capital gains tax on all growth.

Dividend allowance
You are allowed to receive up to £2,000 a year in dividends, tax-free. This allowance can be particularly useful if you own shares or you’re a company owner or director.

Capital gains allowances
Profits (or ‘gains’) you make on the sale or disposal of an asset (like a property where it’s not the main home, investments and shares not in an ISA or even personal possessions worth more than £6,000 (apart from your car) are exempt from tax up to the annual allowance of £12,300. For married couples or those in civil partnerships who own joint assets, the allowance is doubled – to £24,600.

Pension allowance
Your pension allowance annually is £40,000, although it can be lower for higher earners and where pension savings have been flexibly accessed. Any contributions you (or your employer) make receive tax relief from the government (based on your income tax band) of 20% or more – and the money in your pension pot will grow tax free.

Pension carry forward
If you don’t use up your annual pension allowance, you can ‘carry forward’ the previous three years’ worth of unused allowances providing you are still registered with the pension and have earned in the current tax year the amount you (or your employer) would like to contribute.

Charitable donations
You can donate to charity tax free and claim back the tax on your donation through gift aid. If you are a higher or additional income taxpayer, you can also claim back the difference to the basic rate on your gift aid donations. Just remember to keep hold of all records of your donations to claim tax relief when the time comes to submit your tax return.

Gift giving exemptions
Gifting comes with the benefit of being exempt from inheritance tax, for an annual gift amount of £3,000. Other tax-exempt gifts include money towards a wedding or grandchild’s education. No inheritance tax is due if you live for seven years after making the gift to someone who is not your spouse (for example, gifting your children a property).

Knowing your tax code
This one is important because your tax code tells HMRC how much of your salary they will collect. It’s a good idea to check your tax code each time you change jobs or at the start of the tax year. Being on the wrong code could mean you’ve overpaid tax and are due a refund.

These are just some of the ways you can ensure you’re making the most of your money and not paying more tax than is necessary. Speak to your adviser to learn more about your money, estate, and taxes. Please not that Openwork advisers are not able to provide specific tax 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.

For specific tax advice please speak to an accountant or tax specialist.

What is business protection insurance and how does it work? Find out why it could be right for your business.

If you own or run a small business, protecting it is always a priority, especially if something were to happen to a key member, which could affect the financial health of the company. In this situation, business protection insurance could provide some peace of mind.

What is business protection?

Business protection provides coverage in the event that a director, business partner or other key employee of your business suffers a critical illness or long-term disability or passes away. It’s a way of protecting the business and ensuring continuity. Business protection can help support forward planning in terms of succession and gives you ways to provide stability during what could be an uncertain time, especially if the company is small.

What are the types of business protection?
Business protection insurance usually offers cover in three ways:

  • Key person protection
    This protection provides cover to replace key staff and cover income lost by their absence that could affect the business. It can cover any key employee from a head of department to the CEO.
  • Business loan protection
    This protects the business by helping to repay business debts like a loan or bank overdraft if the owner or a key member (like a partner) dies or suffers a critical illness.
  • Shareholder protection
    This cover is also known as ‘ownership’ or ‘partnership’ protection. It specifically covers the business owners if a shareholder dies, or suffers a critical illness, by ensuring that funds will be available to buy shares from the deceased shareholder’s estate.

These three forms of business protection also come with the option to add critical illness cover if you think it necessary. You could also get coverage for more than one person within the business. It’s always important to speak to an adviser who can help you figure out the right type of business protection for your business and any extra coverage (like critical illness) your business and employees could benefit from.

What are the benefits of business protection?
One of the benefits of business protection is the knowledge that should anything happen to a crucial member of the business, or someone with a financial commitment within the company, there would be some protection financially. It also gives other members of the business some peace of mind knowing this. Business protection can protect any loans or mortgages tied to your business, too, meaning lenders (knowing that you have business loan protection in place) are less likely to refuse a future loan, and will not approach the guarantor of a loan or their estate to recoup any existing loans.

In a small business that relies on a few key employees, the risk to the business from a financial point of view might increase if one of the team were unable to contribute because they die or are critically ill. In that situation, business protection is a wise plan to have in place.

An adviser can help you find out which type of business protection plan works for you and your company.

A remortgage is the process of moving your home’s existing mortgage to one with a new lender. Remortgaging could help you save money if you weigh up the fees involved with the savings you could make. Here’s how it works.

People remortgage for many different reasons, including:

  • Finding a better deal elsewhere – you might be on a standard variable rate (SVR) and want to move to a fixed-term rate.
  • Coming to the end of a fixed-term deal on your current mortgage and wanting to lock in a lower rate with a new lender.
  • The loan-to-value on the home is lower (as more of the mortgage has been repaid).
  • Wanting to get ahead of a rise in interest rates, which would affect mortgage rates.

How a remortgage could help you save
One of the big reasons people remortgage is to save money on their monthly payments. If you’re on a standard variable rate that is higher than the fixed-rate deals currently available, you could save by switching – either to a fixed-rate mortgage or one that ‘tracks’ the Bank of England’s base rate.

If your home has gone up in value and you’ve paid off enough of your mortgage to give you a lower loan-to-value, it means you own more of your home and have less to pay off. Remortgaging could result in lower monthly mortgage payments because you’re paying off less of a loan amount (and in turn, less interest on it too).

How long does the remortgage application take?
The process can take between four to eight weeks from the time you apply so it’s good to start planning early. If you’re coming to the end of a fixed-rate or tracker term, your lender should tell you that your mortgage will move onto their standard variable rate1. This could be an ideal time to move if you find a better deal elsewhere, or you may even find an attractive deal with the same lender and go through a ‘product transfer’ (see below).

How much does a remortgage cost?

  • Existing lender fees
    Your existing lender could charge you a fee if you’re leaving them early into a fixed period in your mortgage. This is known as an ‘early repayment charge’ and could be in the range of 1% to 5% of your outstanding mortgage balance. They will also charge you an ‘exit’ fee of around £50 to £100 to cover their administration costs.
  • New lender fees
    Your new lender could charge you a range of fees, so before you commit it’s important to check what you will pay. This will help you calculate whether a move is financially beneficial overall.

    • Their fees could include:
      Application fee to set up your new mortgage. Could also be called an ‘arrangement’, ‘product’ or ‘booking’ fee. This could be around £1,000.
    • Valuation and conveyancing fees. Some providers won’t charge for these, but it’s worth checking if you are moving to a new lender.
    • Solicitor’s fee covering the legal paperwork to do with managing the transfer of your mortgage.

Is a remortgage right for you?
Whether or not you remortgage all depends on your situation and the type of mortgage plan you’re currently on. You may want a mortgage that lets you make overpayments, or you could be coming to the end of your current deal’s fixed term and think the lender’s SVR will be too high. One of the most important things you can do before you decide is gather your current mortgage paperwork, look at the fees and get some expert advice on your next steps.

What about product transfers?
If your mortgage is coming to its maturity date but you’d prefer to stay with your current lender, you could consider a product transfer. Switching to a new mortgage product with the same lender could save you money and time.

Our financial advisers can help guide you through choosing the option for you.

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

We explore how Omnis appoints third-party managers to run funds to provide access the best investment talent in the market.

Omnis Investments (Omnis) offers clients of The Openwork Partnership and 2plan Wealth Management a range of 26 funds. They appoint third-party investment managers, allowing investors access to the best talent in the market. No matter how big you are as an investment house, you can’t have the best investment managers for every single asset class – it is Omnis’ job to find the best managers out there.

Investment managers move firms and retire. The Omnis model means the team can decide if and when they need to find a new investment manager and then manage the transition without investors having to buy and sell funds. In other models, if your fund manager leaves, you would sell the fund and switch manually to another one, which can be a lengthy process. It would leave investors uninvested during the period and could sometimes lead to taxation events and charges.

Omnis has the responsibility for making sure investors always know what’s going on in the funds. The team can provide detailed information because they are able to monitor each fund manager, and make sure they are always investing in line with the funds’ investment objectives.

Manager selection

Omnis works with external specialist research firm Fundhouse to make sure it can identify the best investment managers.

There are more than 100,000 funds globally, which is more than the number of listed stocks, so Omnis distils these into a more manageable list and contacts managers to discuss their processes and capabilities.

That list then gets further refined to a shortlist of about five managers. Omnis then asks for more detailed information in writing and meets each team in person to gain an understanding of their investment approach. Omnis now manages more than £10 billion on behalf of its investors, and this size provides the level of access needed to fully assess managers.

Omnis tests each manager’s investment process with the data on other funds they manage to verify the information. A shortlist of investment managers then present to the Omnis Investment, Performance and Risk Committee, which will recommend its preferred investment manager to the Omnis board.

Sustainable investing

Omnis assesses whether the managers are incorporating environmental, social and governance (ESG) factors into their investment decisions. The team sends each potential manager an ESG questionnaire at the start of the selection process. If they don’t pass our ESG requirements, they don’t progress any further. Omnis looks for examples of how they’re incorporating these sustainability factors, as well as getting a feel for their culture internally.

Incorporating ESG factors into investment decisions is not as straightforward as you might think, and once they are appointed as managers Omnis continually reviews their approach to ESG and reports back to investors.

Ongoing monitoring

Once a manager is appointed, the ongoing monitoring kicks in. Omnis has regular meetings with the managers in person, and access to the portfolios so that the team can see all individual holdings at all times, allowing Omnis to make sure the funds are being run appropriately.

Omnis has launched many new funds over the past few years and the range of high quality, third-party fund managers that it can access continues to expand on performance, they aim to align their funds with the time horizons of investors, focussing on five-year rolling performance. Short-term performance over one week, one month or three months is considered as largely irrelevant in the context of meeting the stated five-year performance target set out in the objectives of the funds.

Although the performance of each underlying fund is important, Omnis does not recommend buying them individually. They should form part of a diversified portfolio to reduce risk and provide exposure to a diverse range of opportunities across asset classes, geographical regions, and industry sectors.

Your adviser will work with you to establish what the correct portfolio of Omnis funds is most suitable to you.

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.

There are 4.8 million self-employed people in the UK and only a third have any kind of pension arrangement. A shocking statistic when you consider that State support is shrinking and we’re all living longer.

Of course, saving for a pension when you’re self-employed is not as straightforward as it is for an employed person, who might automatically benefit from a workplace scheme and employer contributions. We’ve outlined some key points below for you to consider:

Don’t rely on the State Pension

Whether you’re employed or self-employed you’re entitled to the full basic State Pension (currently £129.20 a week) if you’ve paid in 30 years of National Insurance Contributions.

If you’re self-employed you can only claim the additional State Pension if you’ve had periods of employment.

On its own then, State support is unlikely to enable you to continue your current standard of living into retirement. That’s why it’s imperative for the self-employed to find other ways to provide the additional income needed in retirement.

Start saving early

It’s stating the obvious, but the sooner you start saving into a pension the bigger your potential retirement fund. You’ll also have more time to benefit from the tax relief that’s available.

To highlight the importance of saving early, a 25-year-old male looking to retire at 68 would need to contribute £236.25 per month in order to achieve a retirement income of £17,500 a year. If the same man had waited until he was 45 before he started saving, he would need to contribute £495.83 to achieve the same level of income, an additional £259.58 per month.

Minimise the amount of tax you pay

One of the main benefits of paying into a pension is the tax relief the savings attract. For example, if you’re a basic rate taxpayer paying £100 into your pension each month, HMRC will effectively add an extra £20 in tax relief.

The maximum amount you can save each year that attracts tax relief (otherwise known as the annual allowance) is £40,000.

Importantly, if your income is low and you’re not able to save the full £40,000 in one tax year, you can carry forward any unused allowance, and use it against earnings in the next tax year. Please note:

  • You must have been a member of a registered pension scheme during the years you want to carry forward
  • Your tax relief is limited by your annual earnings in the year you want to carry forward
  • You can only carry forward unused allowance from the three previous tax years

What type of pension is right?

The self-employed can choose from a range of different pension products, including stakeholder pensions, personal pensions and Self Invested Personal Pensions (SIPPs). Each has its advantages and disadvantages – we can advise on which is best for you.

Perhaps the most flexible pensions are stakeholder schemes. They allow you to save as little as £20 per month and the charges are relatively low, which is helpful if you have irregular income levels.

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 have a partnership business or one with multiple business shareholders (e.g. a private Ltd Company), have you thought about what might happen if something happened to one of you?

This is where a Shareholder or Partnership Assurance Protection plan can help.

If a shareholder in your private Ltd company or partner in your partnership were to die or be diagnosed with a critical or terminal illness then their share would automatically go to their beneficiaries or next of kin.

This could have a hugely destabilising effect on your business, especially if the beneficiary or spouse wanted to sell their shares to someone else who did not align with your business values. Alternatively, if the other party wanted to play an active role when perhaps they did not understand the business’ needs and vision, the remaining shareholders would need to take this input onboard.

Why get Shareholder/Partnership Protection?
Shareholder or Partnership protection is a protective safety net that provides a lump sum that is automatically available to buy back shares from the deceased or terminally ill co-shareholder (where critical illness cover has also been incorporated into the policy). This helps the remaining shareholders to maintain control and minimise disruption at a challenging time as well as avoiding the unexpected need to find buy-out capital or dip into the company’s savings.
In addition to protecting the surviving shareholders, it provides clarity and transparency for the beneficiaries and a smoother transition of assets thereby helping both parties.

An example scenario…
Imagine a Ltd or partnership business which has 3 directors and is worth £300,000. The directors are not related and therefore it is not a family business. Each director owns one-third of the business equating to £100,000 each.

If one director were to die (or be diagnosed with a critical illness and could no longer work), then their shares would automatically go to their spouse or beneficiaries to manage or hold.

If the directors have set up Shareholder/Partnership life protection for each director then, when one is incapacitated or dies, the policy would payout for their share of the business. In this case, the business would receive £100,000 and would not need to find this large sum unexpectedly through savings or buy-out finance.

Instead, the business receives the money tax-free, and in a timely manner, and the money is directly used to buy out the deceased director. Such an arrangement with a cross option means the business can transition ownership much more smoothly and with much less stress as not only is the money automatically available, but the deceased director’s estate has to sell the shares to the remaining shareholders.

The business ownership would automatically transition to the remaining directors so each had 50% and they did not need to work around an additional business partner they didn’t choose and instead could maintain continuity.

Although an untimely exit from your business is not something any of us want to dwell on too long, you can see how ensuring you have Shareholder/Partnership life and critical illness protection can be beneficial to all and really help those who remain transition as smoothly as possible. Wouldn’t you want that for your business partners and family?

We consider each individual situation to determine the best benefits for you so contact us here at Downton & Ali to discuss how you can protect your business and your beneficiaries.

Financial markets were unsettled in May as the effects of the war in Ukraine along with concerns over inflation and growth dominated investor sentiment.

The International Monetary Fund (IMF) cautioned global finance leaders to expect multiple inflationary shocks in 2022 as markets continued to be unsettled in May amid fears of an economic downturn and potential recessions. There was a continuation of energy and food supply issues caused in part by the war in Ukraine and supply chain disruption in China, which is still mired in zero-Covid policies.

Recession fears also affected financial markets, with rising inflation and supply chain problems driving up the cost of living and putting pressure on company profits. There are concerns that economic growth could slow as central bankers look to raise interest rates to stem the surge in inflation.

Inflation and recession worry markets

In the US, the S&P 500 fell sharply early in the month, and at one point was down by as much as 4%, which marked its largest fall since June 2020. The NASDAQ also fell and the sense of nervousness on Wall Street affected markets in Europe and Asia too. Household names in the tech sector suffered losses during May, with drops not seen since 2008 for some of the largest companies.

Along with inflationary worries and disappointing earnings reports from retailers in the US, investors were also concerned about signs of a Chinese slowdown and Russian gas flows to Europe. However, the S&P and other leading stock market indices recovered some of their losses towards the end of the month.

Fed increases interest rate

The US Federal Reserve (Fed) raised its benchmark interest rate by 0.5% for the first time since 2000 and revealed plans to shrink its $9 trillion balance sheet in an effort to tackle high inflation. Policymakers also hinted that they may implement further multiple 0.5% rate rises this year.

The energy price rise pushed up the UK’s inflation rate to a 40-year high of 9%, fuelling concerns about a cost-of-living crisis. The Bank of England – which again raised interest rates in May by 0.25% to 1% – said it expects inflation to hit 10% before the end of the year.

The Bank also warned that the economy could slide into a recession as higher energy prices continue to squeeze household finances. There was some brighter news, however, as the UK’s unemployment rate fell to its lowest level in nearly half a century in the first three months of 2022.

Inflation in Germany is at a record high too, pushed up by food and energy prices and the effects of the war in Ukraine. The European Central Bank (ECB) suggested it would raise interest rates in July, and that it expects to abandon negative interest rates by the end of September. Any rise in rates would be the first from the ECB in more than a decade.

In an effort to inject stimulus into its property market, China cut its benchmark mortgage lending rate in May. The country’s property sector has seen a decline in the last year, amplified by its lockdown measures to curb coronavirus outbreaks.

To keep your investments from losing value or slowing the growth of your assets, 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.

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.

Stocks and shares ISAs
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.

Chancellor Rishi Sunak used the Autumn Budget 2021 to invest taxpayer money in long-term plans he says will secure the economic future of the country.

Everything from the NHS, schools, local transport and the culture and leisure sector appear set to benefit from the better-than-expected economic outlook from the Office for Budget Responsibility. But immediate changes to improve the finances of households and businesses increasingly worried about rising costs over the next 12 months were thin on the ground.

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

• Capital gains tax change – From 27 October 2021, the deadline for residents to report and pay capital gains tax after selling UK residential property will increase from 30 to 60 days after the completion date. For non-UK residents disposing of property in the UK, this deadline will also increase from 30 to 60 days.

• Business rates cut – Up to 400,000 retail, hospitality and leisure properties will be eligible for a temporary new £1.7 billion of business rates relief from April 2022. The business rates multiplier will be frozen in 2022/23, which will mean business rates bills will be 3% lower than without the freeze.
From 2023, under a new business rates relief no business will face higher business rates bills for 12 months after making qualifying improvements to a property they occupy.

• National Living Wage increase confirmed – 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 National Minimum Wage rates.

• Annual Investment Allowance extended – The Annual Investment Allowance will remain at £1 million until 31 March 2023.

• Alcohol duties reforms – Drinks will be taxed according to their alcohol content, with higher strength products incurring proportionately more duty with a standardised set of bands.

• Air passenger duty – A new domestic band for air passenger duty for 2023 will be set at £6.50 for flights between airports in England, Scotland, Wales and Northern Ireland (excluding private jets).

• Universal Credit – While not the U-turn some had hoped for, the taper on Universal Credit, which has meant 63p of every £1 of benefit could end up being lost to claimants, will be cut to 55p by 1 December.

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

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.

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. There is 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.

When you see your child dressed up for school for the first time, it’s a stark reminder how quickly time flies. It might feel like only yesterday you were bringing them home from hospital or struggling through their first tooth, but when they walk through the school gates with their backpack and shiny shoes, you can’t deny that they’re growing up fast.

The sooner you start thinking about their financial future, the better. The earlier you start, even with a small regular investment, the more rewards they’ll reap in the future. And getting into the habit of talking about money from an early age and showing them how savings and investments work is the best way to grow financially smart adults.

So, while your little one is learning their letters and numbers, you can start learning too! Find out the most efficient ways to safeguard your child’s financial future.

Savings accounts for children

Many parents set up savings accounts for children. These are a simple way for you to make sure money they get for birthdays and celebrations is safe, and you can add regular contributions to grow their savings if you like.

Children’s savings accounts can be easy access, regular or fixed rate. Generally, the easier the access, the lower the interest rate. If you intend to grow your child’s money in a savings account, a regular or fixed rate account is usually a better option.

Savings accounts are a great way to teach children about savings, but if the parent pays money in, and the interest exceeds £100, the interest earned will be added to their tax bill.

It’s also important to remember that regular savings accounts often have withdrawal and maximum deposit limits.

Junior ISA

A Junior ISA works in a similar way to an adult ISA. All funds are tax free, so you don’t have to worry about the £100 rule that applies to savings accounts.

Interest rates are generally higher than an adult ISA and you can choose between cash ISAs or stocks and shares.

Children can’t take cash out of an ISA so it isn’t as good for teaching them about money, but at least you know the money is safe until they reach adulthood! The maximum annual deposit was £9000 in 2021-2.

Investing on behalf of your child

There are two options for making investments on your child’s behalf, a “bare trust” or a “designated account.”

A designated account is in your name and treated as your investment for tax purposes. A bare trust is in your child’s name.

If you make investments on behalf of your children, the pros and cons are similar to investing as an adult. You can potentially make more money from stocks and shares as interest rates on savings accounts are most unlikely to offer the same return. However, any gains or losses are subject to the market so it’s important to remember, if the market goes down you might not get back the money you invested.

A professional advisor can help you find investment funds that are in line with the amount of risk you are comfortable with. Higher risk investments may offer higher potential returns, but you might choose to invest in lower risk funds that feel like a safer place to grow your child’s money.

Setting up a pension for your child

If your little one has just started school it might sound crazy to think about setting up a pension just yet, but there are advantages to getting started early.

Children get an extra 20% tax relief on contributions, for example, and when they draw the pension after they reach 55 there’s a 25% tax-free lump sum.

You can only contribute up to £2880 per year, however, and they will have to pay income tax when they draw on the pension, apart from the tax-free lump sum.

A reason for setting up a pension that often appeals to parents is their child can take over the contributions when they are 18, which is likely to encourage them to start paying into a pension earlier than they would if they’re left to their own devices. But you must accept the fact that your children won’t be able to access the money for a very long time.

Trust funds

Trust funds aren’t just for people you might consider to be extremely wealthy. They are often set up in order to protect assets on behalf of children because money or property held in trust are legally protected and as they no longer belong to you, they usually aren’t subject to inheritance tax.

A big advantage of a trust over other sorts of investment is you can choose how and when the assets in the trust will be given to your children. This means you can avoid handing over large sums of money or property until they reach the age you feel they will be able to make sound decisions about them. The trustees will take care of the trust until they reach that age.

There are a number of different types of trust, so you can choose the type that meets your needs. A bare trust is relatively simple, for instance, your children would get all the assets when they reach the age of 18. There are other kinds of trust where your children can receive an income, but not touch the assets that generate the income, or trusts for vulnerable people or for non-residents.

Seeking independent, expert and professional advice from a financial adviser as your family grows can ensure you maximise every penny both now and, in the future, giving you peace of mind that your loved ones will always be financially protected. If you have any questions, please get in touch. We’d love to help.

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.

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.

Most economists expect inflation to pick up over the next few months as lockdown restrictions ease and shops and restaurants reopen. But is this a cause for concern?

As lockdown measures begin to lift, financial markets are making their adjustments in anticipation of a rise in inflation, with bond yields picking up (meaning prices have fallen) and stock markets rotating from defensive sectors into cyclicals.

What is inflation?

Put simply, inflation measures the change in the prices of goods and services. If it rises then it takes more of our cash to buy things. We all experience inflation in our daily lives, from filling up our cars with fuel, buying groceries or using public transport.

In the UK, the official measure of inflation is the Consumer Prices Index. It’s published by the Office for National Statistics (ONS), which monitors what people are spending their money on, using a basket of everyday goods and services.

The ONS adjusts the basket from time to time to reflect our changing spending habits. During lockdown, there was a shift with products like hand sanitiser and hand wipes being added, and items like white chocolate and ground coffee dropping off the list.

Inflation is all an illusion… or is it?

It’s easy to ignore the impact of inflation on your finances. Most people’s spending habits this month compared with the same time a year ago would probably stick to the same patterns – regardless of inflation at the time – because the differences seem small and therefore wouldn’t affect the way they spend.

If you’re trying to save money though, it’s worth remembering that with interest rates currently lower than the rate of inflation, the real value of any cash savings is falling. In other words, the cost of living is increasing at a faster rate than your savings are growing, which means the spending power of your money is actually falling.

How will inflation affect investments?

Many people in the UK are preparing to spend the cash they’ve saved over the past year when the lockdown ends and shops, restaurants and entertainment venues reopen. Activity is likely to return to pre-pandemic levels and the expectation is that inflation is likely to pick up. Some economists are worried about inflationary pressures. In addition to this is the effect of government stimulus packages on the economy, which would provide another tailwind.

However, experts believe it’s likely to be a short-lived phase and should not pose a longer-term challenge to fixed income or equity markets. The Bank of England does foresee inflation rising towards the 2% mark but believes it will be a temporary phenomenon. Continuing deflationary forces like ageing demographics, technological innovation and global supply chains cast doubt over predictions of a new era of inflation.

Ultimately if you want to beat inflation in terms of finding some good returns on your savings, investing is the best option at the moment – due to cash savings rates being at such low levels.

One of the best ways to ensure your investments are given the strongest opportunity to navigate the effects of inflation on financial markets is through a global, multi- asset portfolio that’s actively managed by a professional team of investors. Speak to a financial adviser to find out more

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.

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.

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.

Lenders are now offering a government-backed 95% mortgage scheme to help more first-time buyers onto the property ladder.

The government is hoping to turn ‘generation rent’ into ‘generation buy’ with the help of a 5% mortgage deposit scheme launched on 19 April.

Following the outbreak of the coronavirus pandemic, many lenders withdrew low-deposit mortgages. In just under a year, the number of 95% mortgages available to first-time buyers fell from 391 to just three. It’s hoped the scheme will give lenders the confidence to offer low-deposit mortgages again by taking on some of the risks involved.

What is the 5% deposit scheme?

First announced in this year’s Budget, the programme offers first-time buyers or current homeowners the chance to secure a 95% loan-to-value mortgage on homes worth up to £600,000. It’s available on both new-build and existing properties.

The government hopes the scheme will provide an affordable route to home ownership by helping people who may be renting but are unable to save for a deposit.

Buyers will still only be able to borrow in proportion to their income, typically a multiple of 4.5. As a result, the scheme will particularly benefit buyers in lower-value housing markets such as northern England and Scotland.

There are also a number of lenders offering 95% loan to value mortgages without using the government guarantee. With an ever increasing range of options to consider, speak to your financial adviser about the current range of 95% loan to value mortgages.

What’s the catch?

There are a few conditions that you’ll have to meet under the scheme. You’ll need to:

• Buy a property to live in – second homes and buy-to-let properties aren’t eligible.
• Apply for a repayment (not interest-only) mortgage
• Pass standard affordability checks, including a loan-to-income test and credit score assessment.

It’s worth considering the fact that the higher proportion of the property price you borrow, the higher the amount of interest you’ll repay on your mortgage. So it might be good to take a step back and figure out if you can save for a little longer and borrow less.

Speak to your financial adviser about how the 5% mortgage deposit scheme could help you get on the property ladder.

What does loan to value mean?

Loan to value is the percentage of the property value you’re loaned as a mortgage – in other words, the proportion you’re borrowing. For example, if you have a 95% mortgage on a house worth £200,000, you would put down £10,000 (5%) of your own money as a deposit and borrow the rest (£190,000).

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

Following the news that thousands more people are expected to pay the standard 40% inheritance tax this year because of the effects of the pandemic, we explore some of the ways to navigate the complexities of inheritance tax.

The complex laws around inheritance tax (IHT) caught many people off guard during the Covid-19 pandemic. Along with the often-sudden loss of a loved one came the issues arising from IHT on gifts passed down to children and grandchildren.

This tax year marks the latest in a series where the number of people being charged IHT on gifts has increased. Since 2009, beneficiaries have paid 40% IHT on estates worth more than £325,000.

Gift your way to less inheritance tax

• There are ways to avoid passing on a large IHT bill to your family, whether it’s through gifting or charitable donations:
• You can give away assets or cash worth up to £3,000 a year (known as the annual exemption) with no IHT to pay regardless of the total value of your estate when you die.
• You can 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.
• If you are married or in a civil partnership, you can pass on your entire estate to your surviving spouse, tax free, when you pass away. Things could become more complicated, however, if your spouse was born in a different country.
• If you give a gift – of any amount – and live for a further seven years after the gift has been given, the beneficiaries will not have to pay any IHT if you pass away after that seven-year period.
• Leaving money to a charity means it’s free of IHT and could cut the tax rate on the remaining amount in your estate.
Transferring to a trust or pension

Setting up a trust to transfer some of your estate into for the benefit of your grandchildren is another way to reduce the IHT liability on your assets. However, the trustees could still encounter some income or capital gains tax.

While it may not be the most obvious choice, setting up a pension for your children or grandchildren could be a tax-efficient option. The fund will transfer to them when they turn 18 but they won’t be able to access the money until they’re much older.

As with anything tax-related, the rules are especially complex when it comes to where your inheritance goes and how much your beneficiaries will end up receiving.

That’s why it’s so important to speak with your financial adviser to review all your options and find the most efficient ways to pass on your wealth.

Inheritance tax facts

Following the Budget in March, it was announced that thresholds will remain the same for IHT until 2026:

• For single people, the threshold is £325,000.
• For those who are married or in a civil partnership, the threshold is £650,000.
• Couples can also pass on their assets (like an owned home) worth up to £1 million in total if they leave it to children or grandchildren.

To learn more about how to make the most of your money this tax year and for more information about inheritance tax and 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

Employer pensions can accumulate as we change jobs, and it’s easy to lose track of how much each one contains. We explore what you need to know if you’re thinking about consolidating your pensions.

When you leave a job, it’s easy to forget about the workplace pension you might have had there. With the average person having several jobs during their lives, along with the 2012 introduction of auto-enrolment for employer-based pensions, it’s not surprising that many of us have more than one pension to our name.
Tracking down your old pensions

All pension providers are obliged to send members of their schemes annual statements to keep them updated on how much their pension contains.
The Association of British Insurers (ABI) estimates 1.6 million pension pots worth billions of pounds are forgotten about due to people just moving home. So it’s vital to write to your old pension providers to let them know if your address changes.

The government is in the process of launching a dashboard where all pension providers will be able to input member details, giving customers the ability to see their pensions in one place. But the process will take some years for all providers to supply their data.

Consolidating your pensions

As to whether you should consolidate your pensions into one pot, the first step should be to check the small print. If you have an older pension (around 20 years or older), you could lose some of its benefits if you transfer and be left with steep exit fees taken out of your pension amount.

Unlike older pension schemes, the newer ‘defined contribution’ pensions are more common and less likely to be affected by exit penalties if you want to transfer them into one place. The funds are invested, which makes consolidation an attractive option.

It’s worth noting that if you’re still paying into a defined contribution scheme and want to withdraw from it, the amount you can pay in and claim tax relief on could reduce.

On average, management fees for workplace pensions are around 1%. Newer pensions could benefit from tax benefits that older ones don’t come with, so it’s always worth checking each policy individually and get some advice from a financial adviser.

Leaving older pensions where they are

Along with exit fees and tax privileges, pre-2006 pensions (that were not affected by tax changes established in 2006) could have benefits like guaranteed annuity rates (promising a guaranteed income after retirement), which could be lost if transferred to another pension pot.

Final salary scheme pensions are probably best where they are, too, due to the nature of their payouts when you retire (based on what you earn at retirement.)

Some people opt to create a self-invested personal pension (SIPP), which lets them choose where their pension money is invested. This is beneficial to those who want to put their money into sustainable funds and make ethical investment choices.

Whatever the situation with your workplace pensions, the first thing to do if you’re thinking about consolidation is to speak to a financial adviser. We can help you figure out the best solution for your individual needs.

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