Category Archives: Wealth Management

Two Wheels Of Business

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Life is short. We know this but often take it for granted – I’m being reminded that it can be shorter than we expect thanks to my father’s ill health at the moment and fundamentally this is one of the reasons that we should enjoy what we do and be passionate about it. I’m passionate about helping new and existing clients and contacts – I’m also passionate about cycling. Thankfully, since joining PM+M Wealth Management earlier in the year I’m finding that the corporate environment enables me to do both, or at the very least it did this last weekend.

For the uninitiated Colnago is an Italian bike brand, and one which carries the same qualities of prestige, pedigree, heritage, quality and premium as the Ferrari car brand. In actual fact the connection is a strong one as Colnago’s latest bike has been designed in collaboration with the carbon composite engineers within Ferrari to create one of the lightest and most aerodynamic bikes that you can buy today. With the recent growth in cycling popularity and the suggestion that cycling has become the new golf, there is a feel that board-rooms throughout the land have a Colnago (or its equivalent) propped against the desk.

With this in mind PM+M Wealth Management were quick to agree their support of this weekend’s Colnago weekend, organised by Richard Paige of The Green Jersey bike shop in Clitheroe. The event allowed guests to test-ride the latest Colnago range of bikes at the Steven Burke Sports Hub in Pendle on Saturday – this included the Campagnolo Super Record equipped Colnago C60 (a bike that would retail at close to £8,000) amongst others. Thereafter guests rode back to Clitheroe to partake in Italian themed culinary delights from the shop’s café kitchen and to take in the end of the day’s Tour of Italy (Giro D’Italia if you wish) stage on their big screen. Sunday saw the inaugural ride of the UK Colnago Owners’ Club, with a fantastic forty miles of Ribble Valley riding enjoyed by all.

The event brought together like-minded souls, happy in each other’s company and with shared stories of cycling exploits, their interest in Colnago, and the varied justifications used to self and significant others on why a purchase was needed (cyclists inevitably believe that want and need are the same thing). The openness of communication revealed further stories of successful businesses and opened the door to financial planning discussions that would never have happened without the two-wheeled conduit. In time I hope to play an active role in the Colnago Owners’ Club – this post alluding to the multiple benefits I will take from involvement.

I am loving life within PM+M and their desire to engage with, delight and have fun with clients old and new. If you see two smiling cyclists riding along they are just as likely to be talking about pensions as they are about lycra!
AAEAAQAAAAAAAAkRAAAAJGEyOTgyMmVlLWIzYmEtNGM1OC05YjI0LWRlOGM0MDhjZjI3MwNeil Welsh – Wealth Management IFA 

Pension ISAs

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In advance of the Chancellor’s 2016 Budget statement there was widespread expectation that tax relief on pension contributions would be reduced. However, with the EU debate raging, the Government decided against making any controversial changes – at least for the time being!

What did happen was that the Chancellor announced a new variant of the Individual Savings Account (‘ISA’) which some are suggesting could in the long term supplant pensions as the principal means of saving for retirement.

The Lifetime ISA (LISA) will be available from 6 April 2017 to people aged between 18 and 40 and will include a savings incentive which is not provided by standard ISAs. In contrast to pensions, where contributions can be made regardless of age, investment in LISAs can only be made to LISAs up to age 50.

The maximum permitted contribution will be £4,000 a year. The Government will add a 25% bonus meaning those investing the full £4,000 will receive a top-up of £1,000. Spouses could each contribute to their own LISA and qualify for the bonus.

Apart from providing a source of retirement income after age 60, the LISA is designed to assist first time buyers to purchase a home with a value of up to £450,000.

Penalty-free withdrawals will be permitted from age 60 onwards or at any time if used for a deposit to purchase a house. In any other circumstance, the Government bonus and any growth in its value will be lost and a 5% penalty imposed.

Concerns are already being expressed that the LISA may discourage the lower paid from contributing to workplace pensions.  There is also an apparent conflict with the ‘Right to Buy’ ISAs which were announced only a few months ago. ‘Right to buy’ ISAs do appear less attractive but transfers to LISAs will be permitted.

Standard ISAs 

The annual ISA savings limit will rise to £20,000 for all adults from April 2017 but in 2016/17 will remain at £15,240 in 2016/17.

Antony Keen – Wealth Management 

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.

Investing – Are You Ready?

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With interest rates at an historic low, cash in the bank is currently earning next to nothing.  Meanwhile, life expectancy is continuously rising and the retirement window is growing, leaving many people with the need to maximise their savings and their retirement pots. You know you need to invest but these are uncertain times.  The threat of Brexit, a fall in oil prices, election time in the USA and economic difficulties in emerging markets all add up to a worrying and confusing picture.

The experienced team at PM+M have guided clients through a number of economic cycles and can give you tried and tested strategies to get your investment strategy right.

So join us at our seminar on Wednesday 26 March at Bertram’s Restaurant in Burnley and we’ll show you how you can efficiently plan your investments to create greater financial security and give you peace of mind. To book, please click the button below or call the marketing team on 01254 679131.

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PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.

Pre-Tax Year End – Things To Think About

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The tax year end is almost upon us, so the PM+M tax and wealth management teams have put together some useful tax, pension and investment tips for individuals.  Some of them are things you should be thinking about before 6 April some, such as pension contributions, need consideration before the Budget on 16 March.

Click on the buttons below to read through the help sheet and should you have any questions, please give us a call.

TAX PLANNING 1

TAX PLANNING 2

As regards the Budget on 16 March, we will be setting out a summary of the Chancellor’s announcements on our website.  We are also holding two free seminars on Thursday 17 March to explain the key points – breakfast in Blackburn and lunchtime in Burnley.  They are free to attend.  To book your place, please email seminars@pmm.co.uk 

Jane Parry – Managing Partner & Head of Tax

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.

Pensions – Good News And Bad News

Pension Tax

Over the last few years the Chancellor George Osborne has created a pension revolution that has been welcomed with open arms.  He has introduced freedoms that allow pensions to be accessed easily or passed down the generations free of inheritance tax. Higher and additional rate taxpayers continue to receive tax relief on contributions at 40% and 45%.

So what next? From April 2016 new regulations will be introduced restricting the amount high earners can pay into pensions to £10,000. And there is speculation that George is looking to further restrict the current tax relief system by introducing a flat rate of tax relief, possibly 25%, rather than the current system of claiming tax relief at the marginal rate.

We don’t know what the Chancellor will say on Budget Day but the advice is clear. Higher rate taxpayers planning on making pension contributions should do so before 16th March to make sure they maximise their tax reliefs and planning opportunities. And if cash flow is an issue, think about switching some ISAs or speaking to your friendly bank manager – it’s too good an opportunity to miss.

For help planning your retirement contact Tony Brierley (tony.brierley@pmm.co.uk), Antony Keen (antony.keen@pmm.co.uk) or Richard Hesketh (richard.hesketh@pmm.co.uk) for further information.

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.

Investing In Uncertain Times – Six Strategies To Help You Sleep At Night

shutterstock_210031072We’ve had a rocky start to the year on the investment front. Following a lacklustre 2015 markets are volatile. Concerns abound from the fall in the oil price to uncertainties over China’s growth rate and the level of public debt. Add to this the political dimension with the US election and a referendum on Britain’s membership of the EU and we have a potent mix.

So what should the investor do? We don’t possess a crystal ball but do believe that the positive economic outlook existing at the beginning of the year hasn’t changed. Markets simply reflect the prevailing sentiment and what we do need is a regular shot of optimism.

Here are 6 strategies to adopt for the next few months.

1. Hold sufficient cash – Work out how much you need for your immediate and foreseeable needs and keep that emergency fund on one side – whatever rate the bank or building society is offering.

2. Remember investing is for the long term – We don’t know when the next fall in the markets will occur or how quickly they will recover again.  We believe Warren Buffett has it right. Pick investments you believe will perform well in the long term and hold them.

3. Make sure your asset allocation is right – We still think that equities will outperform bonds but the current situation perhaps calls for some caution. So hold less risk assets in early 2016 than in 2015.

4. Increase the cash holding within your portfolio a little – This ties in with strategy 3. Returns on cash are still very poor but they will protect you in the event of a fall in riskier assets. Volatile markets create opportunity so holding more cash than normal now may give you the ability to purchase other investments at a low point during the year.

5. Invest in assets that provide an income –  The capital value of your asset is not important in the short term if you are investing for the long haul but at least you can see an income stream. Many equity income funds have stood investors in good stead over the recent past. Commercial property also looks more attractive than in recent years and provides a rental yield.

6. Phase your new investments – Setting out a regular investment programme means that you will buy additional assets at varying prices during the year. If you happen to buy when markets are down you get more for your money! It’s known as £ cost averaging and can significantly improve your overall return.

Our team at PM+M Wealth Management are here to help you achieve your long term financial goals and provide peace of mind. Contact Tony Brierley (tony.brierley@pmm.co.uk), Antony Keen (antony.keen@pmm.co.uk) or Richard Hesketh (richard.hesketh@pmm.co.uk) for further information.

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.

When Pension Freedom Isn’t Free – FCA To Consult On Scrapping Exit Charges

shutterstock_138231248Following the introduction of pension freedoms allowing people over the age of 55 to access their pension pots, many people have found that free means paying penalties or exit fees! On older style contracts it is not unusual to find that exit penalties apply up to the nominated retirement age Although modern contracts tend to be much more cost effective, these can be as much as 10% of the value of the fund, amounting to thousands of pounds.

The Treasury has confirmed that excessive exit charges enforced by some pension providers will be banned.  The precise level of the cap will be set by the Financial Conduct Authority (FCA), following a public consultation.

There is little doubt that the introduction of such a cap would be a positive step in the right direction in further restoring confidence in pensions and making them more transparent.

As the pension revolution continues full steam ahead, against the back drop of volatile world markets and further possible changes in tax relief, it has never been more important to review pension arrangements to make sure you are able to make full use of the financial and tax planning opportunities that exist.

For a free pension health check please contact Antony Keen, Director at PM+M Wealth Management, either by email at antony.keen@pmm.co.uk or by phone on 01254 604303.

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.

Private Education – Is It Affordable?

Private Education BlogIt’s no secret that the cost of private education tends to rise much faster than inflation in the longer term. In 2015, private school fees have risen by 3.5%, the lowest rate since 1994 according to the Independent Schools Council (ICS) 2015 Annual Census. However, despite rising costs, record numbers of pupils attend private schools.

Despite the common misconception that private education is just for Britain’s wealthy, there are some affordable ways parents can meet the cost of their children’s education.

The costs and bursaries/scholarships

Fee levels vary significantly by region from just over £3,000 per term for a typical day school in Wales to more than £5,000 per term in London. Many schools offer bursaries and/or scholarships to help less affluent families afford private education. Families whose disposable income is largely taken up by school fees are given the most support and many institutions actively canvas for these types of applicants. According to the ISC, over a third of pupils in private education now receive some form of financial assistance.

Start saving early

Work out the numbers for your preferred option and assess how much you need to save on a monthly basis. It helps to keep a budget. Starting to save, from the moment your child is born, could give you around 10 years to build up funds. Make sure that your investment strategy is sound. Proper investment can yield much better returns than the bank or building society in the early years, but don’t take too many risks when you need to draw down on the savings you have accumulated. If you are responsible for a child under the age of 16 you can make use of child benefits, and tax-free advantages of ISAs. But watch out! Junior ISAs can’t be withdrawn until the child is 18, so could only be used to fund university education.

State schooling until they move to secondary school

Starting a child’s private education later could save money – for a child entering school this year and leaving in 2028, sending a child to private school from age 11 could save you up to £100,000.

Both parents working

Having combined salaries with your partner can help you manage the costs of your child’s private education. This may increase the appeal of sending your child to boarding school. Whilst this is a more expensive option, it allows parents to continue to work without having to compromise family time during term time.

Help from the grandparents

Many grandparents are starting to get more involved in supporting their family and contributing towards their grandchildren’s education. Gifts of capital and out of income can be a successful way of reducing any inheritance tax liability whilst providing for future generations. Trusts might also be a useful way of reducing tax liabilities overall.

In summary, remember the three basics of financial planning. Make the most of all the tax breaks available to you, manage your investment strategy carefully and most importantly – plan ahead and start early. For more information on planning for your child’s future, get in touch with our Wealth Management team by telephone on 01254 679131 or by email at wm@pmm.co.uk.

Inheritance Tax and Business Property Relief

Inheritance Tax & BPRA common objective for many of our clients is to pass on money to their families on their death. With house prices having escalated significantly, a greater number of estates have become subject to inheritance tax, reducing the amount their loved ones receive.

In response, the Chancellor has created an additional nil rate band relating to the family home which will be phased in over the next few years. Potentially for a couple with a home worth £500,000, they may be able to pass on a joint estate of £1 million not subject to inheritance tax. It should be noted that this only relates to homes passed on to direct descendants; it also doesn’t address the inheritance tax concerns of those who don’t own a property.

If after these additional measures you still have an inheritance tax liability, you may look to give away assets thus reducing the size of your estate. This can be problematic in that you can’t then use those assets, but often more importantly you need to survive a further seven years from the date of the gift for it not to be added back into your estate for IHT purposes.

There are however, investments that can be made that allow you to achieve 100% relief for inheritance tax purposes whilst remaining under your control and from which you can access funds if required. It’s a relief that owners of small family businesses will often use to pass on shares in their unquoted trading companies free of tax, and is known as Business Property Relief (“BPR”).

But if you don’t own a family business you can still take advantage of this relief. One of the simplest methods can be to acquire a portfolio of qualifying trading company shares quoted on the AIM share market. Provided you hold the shares and survive for 2 years from purchase, the value of those shares will be 100% relievable. It should be remembered that shares on the AIM market can be higher risk and will not be appropriate for everyone. You should take appropriate advice before investing.

If AIM shares sound too risky for you, there are other investments that make use of BPR by holding shares in unquoted companies that engage in trades such as asset finance, solar power, and property finance. They focus more on capital preservation producing predictable, modest returns rather than high growth. There is an increasing number of providers in the market and they are often complex in structure, and again taking advice is highly recommended.  These investments can, however, be highly effective in both individual and trust tax planning.

If you do need advice regarding investments that benefit from Business Property Relief or any aspect of Inheritance Tax, please call 01254 679131 or contact one of our advisers:

Richard Hesketh (richard.hesketh@pmm.co.uk) – Wealth Management and Investments

Jane Parry (jane.parry@pmm.co.uk) – Head of Tax

 

Auto Enrolment – Should I Be Preparing Now?

Auto Enrolment blogIn March 2015, a total of 5.2 million eligible job holders were automatically enrolled and around 35,000 employers had completed their declaration of compliance, according to The Pensions Regulator. This year, around 45,000 employers will reach their staging date, but that’s only the tip of the iceberg. Next year 45,000 businesses per month will be required to comply.

Most small owner-managed businesses with fewer than 30 employees will have little or no time to deal with the amount of administrative work that comes with auto enrolment, not to mention the payroll expertise.

It seems that many of the traditional pension providers, often large, well-known insurance companies, are being choosy about the smaller businesses and their schemes, deeming them not as profitable due to the smaller number of employees and contributions being paid.

So what can small businesses do now?

  • Start the process 9 to 12 months ahead of your staging date. Identify a suitable provider and discuss what you want from your scheme.
  • At least 6 months before your staging date start setting up your pension scheme with your chosen adviser. Don’t think that because you employ fewer than 30 people it will be quick and easy.
  • Don’t assume that you can use your existing pension scheme, if you have one. It may not meet the new requirements.

For more information or for a no obligation discussion, please email Antony Keen at antony.keen@pmm.co.uk or call 01254 679131.