close
Get Started Today

Please fill out the form below and a member of our
team will be in touch with you soon.

    Tag: pensions

    Financial planning considerations for the new tax year

    Posted on by Laura Boyd

    With the new tax year underway, it could be a perfect time to review your finances and consider how to make the most of your allowances and investments for the year ahead to gain optimum benefit. Below we consider some of the areas where utilising the allowances available could make a huge difference and potentially save you a substantial amount of money.

    ISA Allowance

    The new tax year means a fresh ISA allowance of £20,000. ISAs can provide tax free benefits for your savings and investments, allowing you to benefit from higher returns over the long term. Maximising your allowance early can allow more time for your investments to grow, free from capital gains and income tax.

    Pension Contributions

    Most pension savers can contribute up to £60,000 per annum into their pension, however, advice should always be taken as an individual’s allowance can be restricted to an amount less than £60,000 due to complexities with the rules. Similar to the ISAs, pensions are tax efficient savings vehicles which can be accessed from the minimum pension age. Your pension can be used to invest in various different investments including cash savings, investment portfolios and commercial property.

    Also, if you haven’t utilised your allowance from the previous three years, it is possible to carry it forward and boost your pension pot further, subject to certain criteria.

    Capital gains tax allowance

    From April 6 2024, the capital gains tax allowance was reduced from £6,000 to £3,000 per person. If find yourself in a position where you have maximised both your pension and your ISA allowance, you could consider investing into a General Investment Account and crystallise your gains on an annual basis using your capital gains tax allowance.

    Dividend allowance

    Rather than investing in growth assets, there is the option to invest into income distributing funds. Any dividend received on unwrapped investments can be claimed tax free if it falls within your Dividend Allowance, the allowance fell from £1,000 to £500 on the 6 April 2024.

    Inheritance Tax

    You are able to give up to £3,000 each year completely free of any inheritance tax (IHT) liability, this can be a useful way to reduce a potential inheritance tax bill, as well as helping out your family with a financial gift.

    The tax-free inheritance threshold is £325,000 per person, above which 40% rate of tax is due (subject to other allowances).

    You can gift more should you wish but if you died within seven years of the gift, the recipient could be subject to a large IHT bill. You are also able to carry over your allowance to the following tax year so if you haven’t used any of your allowance during the previous tax year, you could potentially gift up to £6,000 without any tax liability.

    Get in touch

    For further information or advice on how you can plan ahead to make the most of your finances and maximise the tax allowances available to you, contact a member of our financial planning team today to talk through your personal circumstances by emailing financialplanning@pmm.co.uk or call 01254 679131.

    The information contained within this article is purely for information purposes and does not constitute financial advice.

    Celebrating Financial Planning Week

    Posted on by Helen Buchan

    As part of Financial Planning Week 2024, we take a closer look at the PM+M financial planning team and the types of things they can provide advice on.

    Our financial planning team are here to help you make the most of your money. Headed up by partners, Antony Keen and James McIntyre, the team also consists of a director, three further financial advisers and a wider support team.

    The team works collaboratively with our specialists across the firm within our tax, corporate finance, accountancy and payroll functions to help you and your family plan for the future in a way that best suits you. No matter what your requirements are, our expert team will work closely with you to provide a tailored solution that not only enhances your financial position but provides peace of mind that your hard-earned money is achieving more in every way possible.

    Areas of expertise which the team would typically provide advice on include pensions, investments, tax and estate planning, lifetime cashflow planning, financial protection (life cover and illness cover) and services to court of protection clients.

    Some of the common questions our clients typically ask regarding their finances include:

    • I would like to retire at a certain age, how do I ensure I’m in a financial situation to achieve this?
    • Am I on track financially for my retirement?
    • Will my family and/or businesses be ok if I die or become ill?
    • Are my investments and pension investments appropriate in this economic climate?
    • How can I plan to minimise the Inheritance Tax I pay?
    • How much do I need to sell my business for and retire comfortably?

    Once we have spent time getting to know our clients and understanding their needs and objectives, we can then test different scenarios using our cashflow forecast software to understand the best plan of action for the individual circumstances and objectives.

    The relationships we build with our clients are paramount and we are always here to provide ongoing support and advice as plans can often change during the journey of life.

    Looking after over 300 million pounds worth of assets for our clients, you can be sure our financial planning team is perfectly placed to offer the best advice on looking after and getting the most from your assets. For further information or advice, contact a member of the financial planning team today by emailing enquiries@pmm.co.uk or calling 01254 679131.

    Inherited pensions could be taxed under new proposed rules

    Posted on by Laura Bannan

    From 6 April 2024 inherited pensions may no longer be excluded from marginal rate income tax, following plans announced by the government to change income tax rules for inherited pensions and make them liable for marginal rate income tax.

    It is not yet fully understood exactly how the proposed tax change will work as it was only mentioned as part of new guidance in relation to the removal of the lifetime allowance, so further detail and clarity is needed.

    As part of the Spring Budget 2023, the lifetime allowance cap was abolished which removed tax liability on larger pension pots exceeding £1.07m. During the latest announcements it was stated that the government now intends to charge tax on pension benefits at marginal rates of tax.

    It is believed that the measure is being introduced as a way to offset the loss of tax from the removal of the lifetime allowance. However, as far as we are currently aware, all pension beneficiaries would be included.

    Who will be impacted?

    Under the current regime, if someone dies before age 75, their pension can be inherited completely tax-free if taken as income

    However, the government is considering new rules, where someone dies before age 75 and they choose to access as yet untouched inherited pension as income, the entire amount would be subject to income tax.

    By contrast, if the same person took the inherited pension as a lump sum and it was within the £1,073,100 lump sum limit, it would remain tax-free

    Therefore, these changes could potentially subject many more people to taxation and would affect beneficiaries of members who die before age 75 leaving unused funds in their pension pot.

    Summary

    The proposed changes could be huge for the way tax is treated in relation to beneficiary pensions and further clarity is certainly needed from the government before they come into force from 6 April 2024. However, it could be sensible to plan ahead where possible and think about how the changes might affect your personal circumstances.

    For further information or advice on how the potential changes could impact you, get in touch with a member of our financial planning team by emailing financialplanning@pmm.co.uk or calling 01254 679131.

    A comment to note that the article does not constitute personalised advice and that advice should be sought before taking any action.

     

    Could you boost your state pension?

    Posted on by Laura Bannan

    Could you boost your state pension?

    The state pension usually forms a large part of retirement planning, and it is important to check that you have made the necessary national insurance contributions to receive the full amount. If you find you have fallen short, there is the option to ‘top up’ with voluntary contributions but there are restrictions on this.

    The original deadline to plug any missing gaps dating back to 2006 was 31 July 2023, however following the massive number of calls received ahead of the deadline it has now been extended to April 2025. The extension means that individuals will have a longer period to fill any gaps to ensure they will be eligible to receive the full state pension at retirement. Filling in the gaps normally offers great value for money, as the break even point could be around 4 years in to receiving your state pension.

    To qualify for any state pension, you will require a minimum of 10 years national insurance contributions. As of the tax year 2022/23, the full state pension entitlement is £203.85 per week and to qualify for this, a full 35-year national insurance contributions is required.

    Presently state pension age is 66 for both males and females. Current legislation is for state pension age to increase to 67 in 2028, and it is being ratified for an additional increase to age 68 in 2039.

    Summary

    If you think you may fall short of receiving your full state pension because of gaps in your national insurance contributions, looking to top these up with voluntary contributions could be a great way to ensure you’re going to have sufficient funds to live the lifestyle you desire in retirement.

    Along with many other considerations, your state pension should be a key factor in your retirement planning. We can help you plan ahead by creating a personalised cashflow plan which is based upon your current circumstances and an agreed set of assumptions.

    Get in touch

    For further information or advice on your pension savings and planning for your retirement, get in touch with a member of our financial planning team by emailing financialplanning@pmm.co.uk or calling 01254 679131.

    A comment to note that the article does not constitute personalised advice and that advice should be sought before taking any action.  

    How to spend your pension savings sustainably

    Posted on by Laura Bannan

    HOW TO SPEND YOUR PENSION SAVINGS SUSTAINABLY

    For many, saving into your pension is something that has formed a huge part of your life and although it may seem like a very long time before you will be able to access your pension savings, it often comes around quicker than you think. Building up the pension fund (accumulation) is often the part of the process which comes naturally, but one area that is sometimes overlooked is thinking about the process of how you are going to extract that money (decumulation).

    Very few have the luxury of a defined benefit or final salary pension these days, where your pension income is a defined amount for life, rather than being determined by the amount of money you have actually contributed to the pension. Therefore, the majority of us have to decide when and how to withdraw funds. The last thing you would want would be to save into your pension for your entire life and then run out prematurely because you have spent too much, too quickly.

    HOW SHOULD I PLAN?

    Exactly what your plan should look like will vary dramatically based on your individual circumstances and there are many external factors that will need to be taken into account, some of which will be completely out of your control. For example, you have no way of accurately predicting your life expectancy, market performance or levels of inflation – however, you could think about how you may cope with such scenarios should they happen.

    KEY CONSIDERATIONS

    • Where is your money?

    You may have a mix of workplace, private and state pensions which all kick in at different ages. You would also need to find out what state pension you will be entitled to. Perhaps you are lucky enough to hold some money outside of pensions, maybe in savings, the stock market or rent from property. This would all need to be considered as part of your plan.

    • When do you want to retire?

    The earlier you begin your retirement, the longer your money will need to last you. You will need to ensure that you have enough money to live the lifestyle you desire and this could have an impact on what age you are realistically able to do that. Obviously, no one can accurately predict their life expectancy so it’s difficult to know how long you will need your money to last but there are tools we can use to help you plan accordingly for different situations, along with the correct expert advice.

    • How much retirement income would you like?

    A very general guide that is often worked to is that it’s a good idea to aim for a retirement income which is two thirds of your current salary, but there are many outside factors which would also need to be considered. There are tools available to help estimate what a minimum, moderate and comfortable retirement might look like for your personal circumstances and we would be able to advise the best course of action to get you there. You could even create an expected budget further to a review of what you currently spend.

    • How much retirement income do you have?

    Although it’s wise to spend time thinking about the kind of retirement you would like, it is obviously heavily determined by the reality of the retirement income you have available and how long it needs to last. We can help demonstrate a number of different scenarios and find one that will balance your desired income with the reality of what is actually achievable, by looking closely at your individual circumstances and discussing all the possible options in detail with you.

    • How can I structure my retirement income?

    Alongside your state pension, there is the option to secure an annuity with part or all of your retirement fund. This would provide you with a guaranteed income for life, providing you with a solid income underpin. An alternative, or something that can work alongside an annuity is the option of accessing your pension flexibly via Flexi Access Drawdown. Funds remain invested, can rise and fall in value, but you have the option to elect how much you draw from your pot each year. However, you have to remain mindful the drawdown pot is exhaustible.

    SUMMARY

    As the above highlights, it is a great idea to look into your pension savings and how you plan to use them in retirement way in advance. This can help you to plan if there are any measures you may need to consider to help you achieve the retirement you desire. It will also help to give you the peace of mind that your retirement is going to be everything you want before getting there and realising it’s too late.

    At PM+M, we can help answer all of the above questions. We do this by creating a personalised cashflow plan which is based upon your current circumstances and an agreed set of assumptions. A cashflow forecast can help you to answer the following:

    • How much do I need to save?
    • How much does my fund need to grow each year?
    • When do I need to retire?
    • How much can I afford to spend during retirement?
    • What is my income underpin requirement?

    GET IN TOUCH

    For further information or advice on your pension savings and how best to plan for your retirement, get in touch with a member of our financial planning team by emailing financialplanning@pmm.co.uk or calling 01254 679131.

    A comment to note that the article does not constitute personalised advice and that advice should be sought before taking any action.  

    What can I do now to plan for my retirement?

    Posted on by Laura Boyd

    In our latest blog, PM+M financial planning director, James McIntyre, explores what you can do to ensure you have sufficient funds available for the lifestyle you require when you retire.

    I don’t know about you, but the weeks and months seem to be flying by!? The consequence of this being that it can be hard to find time to prioritise your own personal financial planning needs or find time to consider your future. This is where your financial adviser can step in and assist.

    What do I want from retirement?

    The first step, prior to implementing a plan, is to consider what you want from your retirement. If you know when you plan to retire and have a general sense of how much income will be required to fuel the desired lifestyle and necessary standard of living, you can work backwards and determine how much you need to save.

    Cashflow Planning

    A cashflow analysis can help give you a sense of direction i.e., to understand how much you should be investing, for how long and the required growth rate (pre and post retirement) to ensure sustainability throughout retirement.

    We can also provide some “what if analysis” to test various scenarios e.g., what if I want to retire earlier, what if there was a market crash or what if I didn’t achieve the required growth rate.

    This will then enable you to start saving the right amount, have a sense of when you might be able to retire and understand what growth rate is required.

    Investments

    As we all know, inflation is not our friend, and we are all feeling these pressures. According to the Bank of England, the cost of a loaf of bread has more than doubled over the last 30 years. Therefore, investment growth is going to be essential to maintain the value of your wealth in real terms, as well as to build it ahead of inflation.

    If you invest £100,000 and achieve a net growth rate of 4% pa., it would be worth c. £148,000 after 10 years, but c. £163,000 if a growth rate of 5% pa. is achieved. Your cashflow analysis will help indicate what growth rate you need to achieve to meet the retirement needs you require.  But remember, there is a trade-off between risk and reward. Higher risk investments have great growth potential but could also be subject to greater volatility.

    It’s important to ensure that your investments are also fit for purpose; your financial adviser can help ensure that they are invested in the right way.

    Allowances

    You can potentially contribute up to £20,000 per annum into an ISA and potentially up to £40,000 pa. into a pension. It’s important that you are making the most of your allowances and benefiting from tax efficiency wherever possible.

    But it’s important to speak to your financial adviser as there are certain stipulations and pitfalls when it comes to allowances, for example:

    • The pension annual allowance tapers downwards for high earners
    • If you have already accessed your pension, you may be restricted
    • Employees need to have relevant earnings to back up any pension contribution

    State Pension

    It’s worthwhile using the Gov.uk online tool to see whether you are on track to receive a full state pension, click here. If you aren’t, you may be able make additional voluntary national insurance contributions to fill any gaps you may have in your record. These generally represent great value for money and the break-even point in retirement could be around 4 years.

    Do you need some help?

    If you want to understand what is required to ensure that you have sufficient funds to enjoy the retirement you want, and deserve, please get in touch by clicking the button below.

    Important changes to your allowances and pensions in 2022

    Posted on by Laura Boyd

    A new year means changes to pensions and allowances may be on the horizon.  Keep on top of any forthcoming adjustments by reading our latest blog as we highlight some of confirmed changes to   allowances and pensions this year.

     State Pension increase from April 2022

    The 2021 Autumn Budget confirmed that the State Pension will rise by 3.1% from April 2022. This rise will affect those who are eligible for the new flat rate State Pension (introduced in April 2016) or the older basic State Pension.

    State Pensions will rise as follows:

    • The full rate of new State Pension will increase to £185.15 a week, which is up from £179.60.
    • The basic State Pension will increase to £141.85 (up from £137.60)

    If you are unsure of how much State Pension you are likely to receive, check your State Pension forecast on the Gov.uk website by clicking here.

    Keep in mind that, received on its own, the increased State Pension may not guarantee a secure retirement because it amounts to less than a minimum wage salary. Contact our financial planning team to find out how you can boost your pension savings or read our blog here.

    Your pension allowances are staying put…

    The standard pension Annual Allowance (which includes money paid into your pension plans every tax year by you, your employer and any third party) is currently £40,000 – it will remain the same for the 2022/23 tax year, so you have plenty of time to take advantage. Remember, if you make pension payments over the £40,000 limit, they will be subject to income tax at the highest rate which you pay.

    It is also important to note that your annual allowance can taper down to £4,000 and is potentially limited by some relevant earnings:

    • From 6 April 2020, individuals who have adjusted income for a tax year of greater than £240,000, will have their annual allowance for that tax year restricted.
    • For every £2 of income that exceeds £240,000, £1 of the annual allowance is lost. There will be a £36,000 cap on the reduction, so anyone with adjusted income of or above £312,000 will have a minimum annual allowance of £4,000.

    NOTE: The standard annual allowance is currently £40,000 per annum. Within this allowance, tax relief on members’ gross contributions is restricted to the higher tax rate of £3,600, or 100% of relevant UK earnings (the earnings attract tax relief). Contact our team to find out more.

    Work out your tapered annual allowance by clicking here.

    A handy tip is to make use of any ‘carry forward’ unused allowances from the previous three years to avoid exceeding the limit.

    The pension Lifetime Allowance (this is the total amount of funds you can build in your pension plans before additional tax charges) will remain frozen at £1,073,100 until April 2026, as confirmed in the 2021 March Budget.

    Tax-free allowances will remain the same

    • For the 2021-2022 tax year, the standard Personal Tax allowance went up from £12,500 to £12,570 – this will remain the same until April 2026
    • Limits on the nil and residential rate bands for inheritance tax, and capitals gains tax allowances are also frozen until April 2026
    • The ISA (Individual Savings Account) allowances continue at £20,000 in 2022/23 which means that you can save up to £20,000 in a Cash or Stocks & Shares ISA (or a combination).
    • Similarly, the Junior ISA (JISA) allowance will stay put at £9,000
    • The Lifetime ISA limit of £4000 (counting towards your annual ISA limit of £20,000) will continue this tax year – the government will add a 25% bonus to your savings, up to a maximum of £1,000 per tax year.

    Get in touch

    Are you making the most of your allowances? It is more important than ever to seek professional and independent advice to ensure you are making the right decisions for your future.

    Contact our financial planning team (financialplanning@pmm.co.uk) who will happily arrange a meeting at no cost to help you achieve more from your long-term financial plans.

    New Year’s Resolutions – how we can help you achieve your financial planning goals

    Posted on by Laura Boyd

    In our latest blog, financial planning director James McIntyre discusses new year’s resolutions and how we can help you with your financial planning goals.

    Hopefully you have had a well-deserved break over the Christmas period and have enjoyed spending time with your loved ones.

    Now that the festivities are over for another year, our minds start to focus on our plans for the new year. Each year passes by quickly, so it is important to spend time focussing on yourself. New year’s resolutions are a great way to give yourself some deserved attention. For example, they can help us get back to the gym, start a new hobby or they could be used to get your financial planning needs in shape.

    Now may be the time to think about your pension…

    Often when I meet up with clients, the first thing that they say to me is “I have been meaning to sort out my pension for a while.”

    By modelling a cashflow forecast, we can make sure that you are on track to have sufficient funds in place to ensure that you can retire when you want with a suitable amount of personal funds to sustain your retirement. We can offer a sense of direction to ensure that you know what is required to reach your retirement goals.

    If you don’t understand how your pension will work from a practical perspective when you retire, we are happy to offer our advice and support to ease any worries you may have and help you put a plan in action.

    What would happen if?

    The New Year is a great time to implement a will to ensure that assets are smoothly passed to the individuals you desire upon death. It is also important that you have nominated someone to benefit from your pension funds in the event of death. We can help you do this through an expression of wish form.

    You also have a great opportunity to make sure your family is able to cope financially in the event of death or ill health. We can use our cashflow planning model to help you understand what you, and your family, would need financially in the event of the unknown.

    Personal contingency planning is something which may have crossed your mind, but you haven’t been able to do anything about it because of the bustle of life. If you would like to enquire about ways you can optimise your safety net for your loved ones, please get in touch.

    Henry Ford was famously quoted as saying “whether you think you can or think you can’t, you’re right.” With your finances, the best place to start is with a plan. If you have a destination in mind, we can map out your financial journey and help you get where you want to be.

    Get in touch

    If your new year’s resolution is to make the most out of your financial planning, please don’t hesitate to get in touch using the button below.