Category

Financial Planning

A short guide to critical illness cover

By | Financial Planning

Serious illness or injury can strike at any age – regardless of health – and change your life completely. We see it in the news all the time. One recent story tells of how Maria O’Neill, aged 28, was diagnosed with an aggressive form of breast cancer. 5 weeks later, her mother was diagnosed with ovarian cancer. From November, Maria’s sick pay will be halved and she will stop getting paid entirely from April 2022 – leaving her financially vulnerable, as well as sick.

Read More

How a financial planner helps business owners

By | Financial Planning

Most business owners are aware of their need for an accountant. After all, taxes need to be filed each year and most limited companies recognise that it mitigates risk by getting a professional to look over everything. Yet why use a financial planner? To use an analogy, an accountant is like a mechanic for your car. They check that everything passes the legally required tests. Your financial planner, however, is like an experienced guide for a long, cross-continent road trip where you will encounter many challenges and opportunities that need navigating effectively.

Read More

A short guide to Lasting Power of Attorney

By | Financial Planning

What is a Lasting Power of Attorney? In short, it’s a very useful and powerful legal document which specifies to whom you give authority to act on your behalf, should you become “incapacitated”. This refers to events which affect your physical and mental wellbeing, removing your ability to manage your personal affairs effectively and independently. As such, a LPA document comes into effect during your lifetime – not at the end of it, like a will does (which is a separate legal document). Below, our financial planning team at WMM explains how LPA works, the different types and how it can play a key role in your financial plan.

Read More

A short guide to better money management

By | Financial Planning

You have your monthly spending and bills. Birthday and Christmas gifts. One-off, unexpected costs (e.g. a broken boiler). Pension contributions. Holidays. Rare, big purchases like a new car. Savings and investments. The list goes on. Money management is difficult, to say the least. Yet doing it well is certainly possible. Here at WMM, in light of the financial hardships many people have experienced with COVID-19, we wanted to offer this 2021 guide below.

Read More

March 2021 Budget & preparing your financial plan

By | Financial Planning

The March 2021 Budget took many people by surprise. Several pundits had expected a sweep of tax rises to help pay down the public debt caused by COVID-19 (e.g. rises in fuel duty and Capital Gains Tax). Yet the only clear tax rise concerns Corporation Tax, which we will examine in more detail below. Although it may appear that little has changed in this Budget, there are still important aspects to consider for your financial planning in 2021. We address some of the highlights below.

Read More

The tax efficiency of a well written will

By | Financial Planning

Many people think that a will’s main purpose is to ensure that your possessions go to the right people upon your death. This is partly right, but a will also holds immense power to help reduce a future inheritance tax (IHT) bill if you plan it carefully. In 2019-20, the UK government collected £5.13bn in IHT receipts – much of which was needlessly paid. How, then, can you ensure that you keep as much as your hard-earned wealth as possible within the family?

Read More

How to avoid a disjointed financial plan

By | Financial Planning

Many people in the UK have a tendency to deal with isolated areas of their financial plan, in a reactive way. For instance, suppose a couple in their mid-30s suddenly has their first child. At this point, they may quickly realise that they need a life insurance policy (e.g. to pay off the mortgage). Yet this reactive approach may not come at the best timing. In 2020, for instance, the COVID-19 pandemic has led many insurers to restrict their products and even raise prices.

Read More

Little-known tax tips to consider in Autumn 2020

By | Financial Planning

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxford).

Chancellor Rishi Sunak was expected to deliver a new Budget in the Autumn, yet this has now been officially called off. Many pundits were speculating a large tax raid – especially upon higher earners – in an attempt to start balancing the books in light of large coronavirus spending earlier in the year. It’s important to note the significance of this delay. Holding a budget in the autumn allows civil servants, accountants and the wider public time to implement large changes to the UK tax regime before the end of the financial year in April.

As such, a budget in the spring of 2020 could leave many people with insufficient time to make adjustments to their financial plan (to optimise their tax position). In light of this, our financial planning team here at WMM in Oxford wish to stress the importance of taking advantage of the existing rules to put your wealth and finances in the best position. Below, we offer some ideas on how to do that for you to discuss with your financial planner.

 

Plan your estate carefully

There are many misconceptions about inheritance tax (IHT) – which is understandable, since it’s such a complex area. One myth that’s important to bust straight away is the idea that IHT is only payable when you die. Bear in mind that transfers into a trust can also incur a 20% charge when above the available nil rate band. Moreover, be careful not to assume that shares on alternative investments (AIM shares) are exempt from IHT. Check these areas with your financial adviser.

Regarding gifts, the “7-year-rule” is currently still in place during the 2020-21 year. Some are suggesting that this rule could be axed in the coming months (which is possible). Yet it’s crucial to not simply make a gift now in an attempt to leverage the rule before it possibly changes. Bear in mind that taper relief applies on gifts applies at 20% after three years. Unless the gift exceeds your nil rate band (i.e. £325,000) it is unlikely that you will save any IHT.

Also, be careful with ISAs (individual savings accounts). Unlike pensions, these are not exempt from IHT. Assets outside of the UK can also be subject to IHT!  Finally, make sure your executors are aware of some of the nuanced IHT rules which might catch you both out. For instance, your unused nil rate band is not automatically transferred to your spouse/civil partner. Rather, this must be claimed by your executors using the relevant forms. Also, remember that executors are personally liable to pay IHT. As such, it’s crucial to make sure they have access to the funds they need to do this in the future.

 

Other thoughts

A number of measures introduced by the UK government earlier in 2020 are set to expire at some point soon. The Stamp Duty holiday, for example, is currently set to conclude in March 2021. Many landlords with Buy To Let properties are thinking about taking advantage of this window, but should remember that CGT has to be paid much earlier now on residential property sales.

Finally, investors with property investments should consider ways to optimise their tax position in the coming months. For instance, it might make sense to transfer ownership of a property to a spouse/civil partner so that rental income is charged at their lower, marginal rate of tax. Bear in mind that property transfers in 2020 can still be done between members of such couples without a tax charge. This is a decision with important implications, however, so seek advice first.

 

Invitation

Interested in finding out how we can optimise your financial plan? Get in touch today to arrange a free, no-commitment consultation with a member of our team here at WMM.

You can call us on 01869 331469

 

Capital gains tax: a 2020 update

By | Financial Planning

A review of capital gains tax (CGT) was ordered by the Chancellor in July 2020. Many believe that an increase could be on the horizon as the government seeks to plug the hole in the public finances – which has widening following the COVID-19 lockdown and generous policies such as the recent stamp duty holiday and VAT cut. In this article, our Oxford-based financial planning team here at WMM offer a brief recap on how CGT works in 2020-21, and what possibilities may be in store for the system in coming months.

Read More