Financial Planning

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.



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.

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Why business protection could be crucial in 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).

Since March 2020 many businesses across the UK have struggled with staffing, revenue and customer engagement. The COVID-19 pandemic has forced many organisations to completely change strategy – perhaps even moving from “growth mode” to “survival mode”. Given the high stakes involved (e.g. lost jobs, suppliers and closure) it’s crucial for business owners to ensure that their interests enjoy maximum protection in 2020 and going into 2021.

Here at WMM, our Oxford-based financial planning team offers this short guide on business protection in 2020 – hopefully providing some ideas and inspiration about how to take your own business protection to the next level.


Key Man cover

One of the most important types of protection which all business types need to consider is Key Man Protection (or Key Person Protection). In simple terms, this is a policy which pays out a specific lump sum if a designated “key person” in your organisation dies. This could be the owner of the business or other crucial employee such as a senior sales person, chief technical officer or other vital staff member who you cannot afford to lose.

There are two main types of Key Person Protection to consider with your financial planner:

  • Life Cover / Critical Illness Cover (CIC). This provides financial assistance should a key person become diagnosed with a certain illness or condition such as cancer, a stroke or heart attack. Cover such as this is often “bolted onto” the second type, below.
  • Life insurance. The type of insurance described above – it pays a lump sum if the person covered by the policy dies or is diagnosed as terminally ill.


Share protection

For limited companies with shareholders, the sudden unexpected loss of a key shareholder can cause big issues. Not only can there be emotional trauma after a close friend has suddenly left your presence, there can also be disputes over how to continue the company. If no appropriate shareholder protection is in place, after all, then the shares of the deceased automatically go to their estate. This typically puts their ownership into the hands of family members – who may have little/no experience or interest in taking over their management. In worst case situations, this can even lead to family members engaging in disruptive behaviour over how to take your business forwards. This is not something you want in the best of times – let alone in a pandemic.


Do I need either option for my business?

It would be tempting for a financial adviser to simply recommend that a business owner just takes out both of the above types of protection. Yet it’s important to weigh up each option with an experienced professional. Sole traders, for instance, will not require the second type – since you do not have any shareholders!

Key Person Protection, however, is likely a much more serious consideration for all types of business. One study suggested that 52% of UK businesses would likely collapse within 12 months if they suddenly lost a key person in their organisation. With the increased financial constraints in 2020 brought about by COVID-19 and the subsequent lockdown, it is likely that the danger is now even more pronounced.

Finding the right kind of cover, however, is not always easy and the best deals are not always clear – especially since many providers have increased their premiums since March 2020. Here at WMM, our team can assist you in identifying a suitable set of candidate policies which may be most suitable for your business needs.


Conclusion & invitation

Are you a business owner in Oxford looking to increase your protection? 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


Why & how to hold cash during a crisis

By | Financial Planning

Many people are aware that having a decent cash reserve is important during the best of times, let alone during periods of financial volatility. According to some research, about 25m people in the UK (i.e. nearly 50% of the population) live each month “paycheque to paycheque”, leaving them very vulnerable to a sudden outlay of money. An unexpected boiler replacement, for instance, could plunge a household to thousands of pounds of debt without a sufficient “cash cushion”.

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6 financial plannings areas to review at summer

By | Financial Planning

The slower pace of life during the summertime can be a great opportunity to review your financial plan. Here at WMM, our Oxford-based financial planning team suggest 6 important areas which you may want to look over – especially if you are tempted to spend more money on a lavish holiday overseas following the months of lockdown we’ve all experienced!

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Who gets my estate if I die without a will?

By | Financial Planning

Did you know that nearly half of British adults do not have a will? Moreover, millions admit they would not even know where to start if they were to write one. As a financial planning firm here in Oxford, we recognise on a daily basis how important a will is when it comes to preserving your wealth after you die, and passing it down to loved ones according to your wishes.

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Update – April 6th, politics & IHT

By | Financial Planning

There are currently some interesting rumblings in the UK regarding inheritance tax (IHT). On the 28 January 2020, a cross-party group of MPs proposed reducing the 40% IHT rate down to 10%. The All-Party Parliamentary Group was set up over a year ago following a request by the Chancellor to review the IHT system, and also proposed that almost all tax reliefs (including the “seven-year gifting rule”) be abolished. Instead, the Group proposed that estates valued over the IHT threshold (£325,000 in 2019-20) face a 10% IHT rate, whilst estates worth over £2m would be taxed at 20% upon death.

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5 Ways a Financial Planner Adds Value

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.

Has anyone ever given you advice which you look back on and recognise as having benefited you in a life-changing way? Perhaps your parent or grandparent imparted a word of wisdom to you which you have clung to over the years, helping you prosper and grow as a person? If so, what kind of price would you put on that?

It’s hard to quantify the value of great advice and wisdom, but we intuitively recognise that it is immensely precious. Here at WMM, our financial planning team has the privilege of working in this realm every day. It’s one of the most rewarding experiences in life to offer wisdom to clients about their financial affairs, which then often transforms their quality of life and future prospects. It’s also hard to quantify in pounds sterling.

What are the precise ways a financial planner benefits you? In this digital world of increasing “self-help” financial coaches and “robo-advisers”, what value can a human financial planner really offer you? In this short guide, we’ll be sharing just five of many possible ways they add value.


#1 Simplifying financial affairs

Many people have highly complex finances. Perhaps you have multiple pensions, and possibly some of them are lost. Maybe you have several old protection policies which are meant to cover you in the event of serious illness, but aren’t sure how they relate to each other or where they need bringing up to date. Or, it could be that you have a complex set of investments which don’t really work well together, are not organised in a tax-efficient manner and which face high fees.

One of the benefits of working with a financial planner is that they can help you sift through all of these various elements. He/she can then start to group everything together in an organised, clear way; identifying areas which can be consolidated to make everything simpler. If you have ten pensions, for instance, a financial planner can help you track them all down and possibly bring them all into fewer more cost-efficient pots.


#2 Illuminating & correcting blind spots

No financial adviser can predict the future, yet they can leverage their qualifications and experience to help you address weak areas in your portfolio. In 2019, there have been a number of funds which have been suspended and have even collapsed, due to terrible investment performance caused by poor fundamentals. One prominent example was the collapse of the Woodford UK Equity Fund, which declined from a high point of £10bn to around £3bn. More recently, we’ve had the M&G Property fund which has had two trading suspensions and delivered weak returns (despite clients paying £100m in fees since 2016). Liquidity problems such as these cannot always be fully spotted beforehand, yet having a financial planner to assist you can go a long way to helping you allocate your investments more strategically – eliminating unnecessary risk.


#3 Giving reassurance

Are you worried about how the economy might affect your investments? Do you currently suffer from anxiety about what will happen to your home if, one day, you need to go into long term care? A financial planner can bring a calm, rational voice and list of facts to these fears. Together, you can then work to put appropriate measures in place which address them. For instance, to help you prepare for the possible costs of your care you might consult your planner about how to build up a sufficient nest egg to carry you through this time. You could also talk through other options you may not even be aware of, such as an immediate needs annuity.


#4 Preventing errors

The United Kingdom has a lot of consumer protections enshrined in law and ways to make an appeal if things go wrong (e.g. the Financial Conduct Authority and Financial Ombudsman). Nonetheless, many people across the country are still vulnerable to sophisticated scams seeking to cheat you out of your savings, pension or investments. Some of these occur during unsolicited calls about a “hot stock” with “guaranteed returns”, but many are increasingly happening online. A good financial planner will be familiar with all of these tactics and can act as a vital information source to help protect yourself. If you are at all unsure about an investment offer presented to you over a cold call, you can run this past your adviser. They can then tell you whether it is legitimate or not, potentially helping you dodge many bullets over the years.


#5 Acting as an impartial sounding board

For many big decisions in life, we often turn to trusted friends and family to “air out” our thinking, to gain their counsel. Perhaps you’re not sure about moving to another part of the country for work and need a second opinion. As precious as these people are, they’re not usually the best to talk to about your pension, inheritance tax planning or investment strategy!

If a decision is weighing heavily on your mind about your longer-term financial affairs, then one of the best things you can do is consult an impartial, experienced professional who understands the intricacies of what you’re talking about. Sometimes it helps just to voice your concerns as they carefully listen. In specific moments, they can ask focused questions which you might not have thought about, often shedding new light on the situation and giving you pause for thought. As you do this over many years with the same financial planner, the better they get to know you, the more you gain a trusted guide. This person could then help other members of your family facing similar worries or questions.


Final thoughts

Here at WMM, we believe there are many benefits to working with a financial planner. However, you still need to ensure that you pick the right professional for your needs. Lots of businesses can look good on paper, but it’s important to also meet different financial planners to establish trust and chemistry.

When it comes to your investments, also make sure you ask for the firm’s Investment Policy Statement. This should set out the types of funds or assets they invest in and why. This will give you more insight into their investment approach and philosophy, allowing you to get a better sense of how they would help to manage and grow your wealth.

If you are interested in starting a conversation about your financial plan, then we’d love to hear from you. Get in touch today to arrange a free, no-commitment consultation with a member of our friendly team here at WMM.

Reach us on 01869 331469


Protecting Your Financial Plan: 5 Key Steps

By | Financial Planning

This content is for information and inspiration purposes only. It should not be taken as financial advice. To attain bespoke, regulated financial advice for your own affairs and financial goals please consult one of our independent financial planners.

What would happen to your loved ones if the worst were to happen? It isn’t a pleasant thought, of course, but it’s important to think about this seriously; especially if people are depending on you, such as young children.

Research suggests that as many as 8/10 mortgage holders have no insurance protection. That means that millions of working people are leaving their families vulnerable if they were to suddenly, tragically die. Moreover, as many as 1/3 people admit that if either they or their partner were to unexpectedly become seriously ill and could no longer work, then they would be unable to make ends meet on just one income. Less than half believed that their short term savings would carry them beyond two or three months in such circumstances.

It’s natural for many of us to think that horrible things only happen to “someone else”; not to us. Yet none of us know what life might bring, and it’s important to be as prepared as possible whilst aiming and hoping for the best. In this short guide, we at WMM will be sharing 5 key steps to consider with a financial adviser to help protect your family’s financial plan.


Emergency Funds

Whilst short-term savings are unlikely to carry you and your family through protracted, incapacitating illness, they can certainly act as an important “shock absorber” during difficult circumstances (e.g. sudden redundancy).

Generally speaking, financial advisers tend to recommend that it is sensible to try to accumulate between 3-6 months of living costs, and set these aside as an emergency fund. This can give you enough “breathing space” to find a new job, for instance, or cover a large unexpected bill (e.g. a major roof repair) without it crippling your finances.


Wills & Power of Attorney

A comprehensive financial plan will typically outline how your estate will be handled and distributed when you pass on. The primary way to deal with this is via a Will, which stipulates who should receive your possessions, assets and property, as well as the manner and timing of the handover. Failing to devise a will leaves your estate vulnerable to the UK’s “intestacy rules”, which might not divide your estate in accordance with your wishes.

Creating a will is especially important to think about if you have dependants who might benefit considerably from a meaningful inheritance in the future. Yet it’s also a good idea to consider going a step further and looking into power of attorney. This can enable another trusted person to make decisions about your estate for you, if you are no longer able/willing to make them.


Term/Whole-of-Life Insurance

A life insurance policy is designed to provide a much-needed lump sum to your family if the worst should happen to you. Broadly speaking there are two types: term life insurance and whole-of-life insurance.

The former covers you for a set period, whilst the latter provides cover indefinitely. Naturally, term life tends to be cheaper since whole-of-life insurance is guaranteed to pay out one day. However, the costs for both types of life insurance can vary quite widely depending on several important factors, particularly your state of health and the level of cover required.

There are many policies available on the market and it’s easy to feel overwhelmed, or end up paying more than you need to (sometimes for less cover). As independent financial planners WMM will be able to help you survey your options more widely, and find the ideal product for your needs.


Critical Illness Cover

For many people, critical illness cover (CIC) can feel excessive – especially if we are fit and healthy right now. It’s important to remember that health is not guaranteed, and serious illness can unexpectedly befall any of us, at any time. Having a financial plan which is prepared for this possibility is, therefore, certainly wise.

Even if you are single, CIC could help you cover your mortgage and other monthly commitments if you suddenly found yourself incapable of going to work. For couples (especially those with young children), the lump sum from a CIC policy can help relieve financial pressure from an already difficult situation.

Again, consider speaking to one of our financial planners if you feel that CIC could be an important part of your financial thinking. Sometimes this can be combined with income insurance, for instance, to cover multiple eventualities whilst keeping costs and administrative hassle to a minimum.


Income Protection

Critical illness cover and income protection are quite similar. However, one important area where they differ concerns the “pay out”. The former provides a single lump sum if the terms of the policy are met. Once this money is gone, however, then it’s gone and the policy often ends on pay out of a successful claim. Income protection, however, agrees to pay out a percentage of your salary (e.g. 2/3rds) each month for as long as you are unable to work, due to illness or injury.

Be aware, however, that there are different types of income protection. Some will only pay out for a limited period (e.g. 6-12 months), and many will only cover you up to a certain age.


Final Thoughts

Above, we have outlined some of the main strategies available to those seeking greater protection over their financial plans, and by extension, over the future welfare of their family. Many of these approaches can be combined to provide a bespoke solution for each person, depending on their individual needs and financial goals.

We recommend that you consult an experienced financial planner to help you with this, to ensure that you do not mistakenly “double up” the benefits of multiple insurance policies or fail to provide the level of cover you need. Contact us on 01869 331469 if you would like to discuss this aspect further.