Retirement Planning: Are you avoiding the conversation?

/ , , Head of Financial Services / /by

By Dom Richmond, Head of Financial Services at Cullimore Dutton

I spend a lot of my time advising couples on their retirement planning.

Sometimes, couples arrive for their first meeting having given the subject plenty of thought and agree as to how they would like their later years to pan out.

It doesn’t follow that they have the means to fulfil their retirement dreams, but at least they have a joint plan.

But more often than you would think, couples have spent years avoiding the subject of retirement and what emerges at their first session with me or one of my colleagues can come as a surprise to one or both partners.

In fact, it is often the case that couples have invested more time in choosing their pet dog than how they would like to live between the ages of 65 and 90.

This can be as simple as one partner telling me that they would like to spend a few months of the year living abroad, only for the other partner to reveal that they would never countenance this because they would miss their social life at home.

The difference between getting your financial planning right for retirement or failing to plan can be stark.

People often make assumptions that they will be able to enjoy a certain lifestyle upon retirement, but that can be fraught with danger.

Clients will come to us for the first time at different ages, but commonly they will be in their 50s.

We will always spend time at the first meeting trying to understand what their retirement aspirations are and how they will be able to achieve these, whether that is from savings, pensions, property or other assets.

Our team has a range of tools that enable us to model what a couple’s retirement will look like based on the various elements outlined above. These are the same for most clients.

Sometimes, we will start the conversation about the ‘R-word’ at the first meeting and then ask our clients to do a little bit of homework before returning for the next meeting. Occasionally, if it is a clear a couple are not on the same page regarding the kind of retirement they want, we will have separate discussions and then bring the couple back again to try and find common ground.

Our job is to help our clients put in place the right financial plan for them, one that is aspirational but achievable and that will enable them, at the right point, to enjoy the retirement that they want.

Every client’s retirement plan is different due to their means and also how they want to spend their later years. Some clients want to be able to enjoy multiple holidays abroad, while others prefer to be more UK based but have the financial freedom to be able to travel across the country seeing their children and grandchildren.

If you would like a free initial consultation with a member of the Financial Services team simply click on the “Speak to Our Experts” button on this page, call us on 01244 729 073 or email info@cullimoredutton.co.uk

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

Dominic Richmond

The Spring Budget 2023

/ , , Independent Financial Adviser/ /by

A “Budget for Growth” is how Jeremy Hunt chose to describe the Spring Budget. How much do you think it will help you?

Some of the announcements…

Pensions
The biggest headline was probably the changes announced to pensions with the annual pension input allowance being increased by 50% up to £60,000 per tax tear. Alongside this, in a move targeted mainly at high earning NHS staff, the Chancellor also abolished the pension lifetime allowance. Meaning that instead of the limit of a person being able to save just over £1M in their pension before facing some hefty tax charges, there is now no limit. It may not be time to crack open the Champagne just yet though, as Labour have suggested that they’ll look to reverse these measures if/when they get into power after the next General Election. A less talked about limit, the Money Purchase Annual Allowance is also increasing from £4,000 to £10,000 per year.

Corporation Tax
There were no new announcements in terms of tax rates or thresholds. The widely unpopular decision to increase Corporation Tax to 25% is still going ahead.

Energy Price Guarantee
The planned increase of the Energy Price Guarantee is being delayed until July, meaning that the based on current prices the energy cost for the “average home” will remain at the bargain price of £2,500 per year as opposed to £3,000.

Free childcare
Free childcare for 1 and 2 year olds will also be phased in over the next 2 years. The hope being that this will bolster the economy by allowing more parents of infants back into work if they no longer have to pay exorbitant childcare costs with up to 30 hours of free childcare being announced.

Fuel and alcohol duty
Good news for anybody driving to the off-licence as fuel duty and alcohol duty have both been frozen for the next 12 months.

Potholes
The wheels of our cars were no doubt delighted to hear of a further £200M being earmarked to tackle the potholes on our roads. By my reckoning, that’s £1 to fix each pothole in my home County of Shropshire.

 

Did anything in the budget, particularly around pensions raise any questions for you?
If so why not book a free initial consultation with one of our truly independent Financial Services team, simply click on the “Speak to Our Experts” button on this page, call us on 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This article is provided for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions.

Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

The value of your investment can go down as well as up and you may get back less than you have invested.

The Financial Conduct Authority does not regulate Taxation advice.

 

Dominic Richmond

Tax year end – five ways to make the most use of your annual allowances

/ , , Independent Financial Adviser/ /by

One of the foundations of financial planning is to make use of your annual tax allowances. It’s even more important now as these allowances seem to be getting squeezed more and more, increasing our tax burden.

As tax year end (5th April) approaches, there are still opportunities for some prudent financial housekeeping, here we share our best five strategies.

 

ISAs can be a great way of making your money work harder for you, as any money you put in to them is free of any further liability to Income Tax or Capital Gains Tax – so no tax on your interest, no tax on withdrawals and no tax on the profits. You can put up to £20,000 per person into an ISA this tax year (ending 5 April).

One of the few downsides is you can’t carry forwards any ISA allowance you don’t use in a single tax year – so use it or lose it before 5 April.

Generally speaking, a pension is a tax-efficient way of saving for your retirement and due to greater choice and flexibility, it’s a more attractive option for retirement savers than ever before.

It’s worth thinking about topping up your pension as much as you can before the end of this tax year (5 April) and making use of any unused allowances from previous tax years. It is possible the Government might change the tax allowances available to you – so use them whilst you can.

Inheritance tax is a whopping 40%. As there is going to be the biggest ever intergenerational transfer of wealth over the coming years, it’s likely that the Treasury will be rubbing its hands. One of the easiest, and potentially most rewarding, ways to reduce a future Inheritance Tax (IHT) bill, is to give some of your wealth away during your lifetime and use your gifting allowance before 5 April.

Both you and your partner or spouse can each pay your children or grandchildren up to £3,000 a year and it will be deducted from your total estate if you die. As an added bonus, if you didn’t use your entire allowance last year you would be allowed to carry it forward and gift a maximum of £6,000 each (presuming you didn’t use any of your allowance last tax year).

Capital Gains Tax (or CGT) is one of the most complex taxes to understand, so it’s no wonder that people fall into the trap of paying unnecessarily or end up being fined for not paying when they should. This is also made worse by the myth that only the very wealthy are likely to have to pay it.

You’re liable for CGT when you sell an asset at a profit. This could be anything from a second home to stocks and shares. There’s a tax-free allowance of £12,300 for this year, then after that the rate is dependent on the level of income tax you pay – 10% for basic-rate taxpayers and 20% for higher-rate payers (and 18% and 28% respectively if you’re selling a property).

The Government has already reduced the tax-free allowance for individuals to £6,000 for tax year 23/24, reducing further to £3,000 in 24/25 – so it’s worth making the most of this year’s allowances and current rates if you can.

Pension contributions are a hugely tax efficient method of extracting money from your business. If you make an Employer contribution to your pension, they are treated as an expense to your business. So not only are you benefitting your future self by putting aside money for your retirement, you will also save on Corporation tax. Of course, your own company year end may not be aligned with tax year end so please be aware of this. Similarly, it is also very tax friendly to make pension contributions if you are self employed as you will also receive tax relief on your contributions.

For a free initial consultation to discuss making the most use of your annual tax allowances, simply click on the “Speak to Our Experts” button on this page, call us on 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This article is provided for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions.

Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

The value of your investment can go down as well as up and you may get back less than you have invested.

The Financial Conduct Authority does not regulate Taxation advice.

Dominic Richmond

Five life events when you should seek financial advice

/ , , Independent Financial Adviser/ /by

Even if you’re usually comfortable managing your own finances, there are many circumstances and life-changing events when expert financial advice could make a huge difference to your finances.

In the article we look at some examples of when you should seriously consider seeking independent financial advice.

1. Thinking of or planning for retirement
Retirement is a significant life event. It’s a crucial turning point for your finances so it is worthwhile taking some time to focus more on your pension.

Your retirement is unique to you, so even if you’re financially savvy, it may prove beneficial to access professional advice when dealing with something as complicated as accessing your pension.

You may have lots of different pension pots which can make it much harder to plan for retirement. Often, it is easier and clearer to consolidate your pensions.

This is not something to rush into though and it is vital to know what you hold, where it is invested and any hidden benefits and guarantees you may give up by transferring. There may also be exit charges on some pensions.

We can review all your pensions and produce a tailored plan based on your retirement goals. We’ll also help you avoid the pitfalls and make the most of any historic benefits you may not be aware of.

2. Bereavement
Losing a loved one is hard enough. It can be even harder if you must then deal with their finances or if your financial situation changes as a result.

When dealing with a bereavement, support from a trusted financial professional can be of great comfort.
If you’re not sure what to do with any assets you’ve inherited, we can review your situation and give personal recommendations on:

  • Understanding your new financial situation
  • Making the most of what your loved ones left you
  • Ensuring any investments match your needs and goals
  • Dealing with inheritance tax and making the most of your allowances

3. Estate planning
As Benjamin Franklin once said, “nothing is certain except death and taxes”, so the last thing you want is for your loved ones to struggle to unravel your finances and wishes when you pass away.

Talking to an adviser could make things easier for you, and clearer for your family. By taking financial advice alongside legal advice, you can make sure that your finances line up with any legal arrangements detailed in your Will.

We can also provide advice on your inheritance tax status. It’s a complicated area, but we can help you navigate the rules, and you could leave more behind for the ones you love.

4. Divorce
A divorce is a significant life event which could see your finances change dramatically.

We can support you during divorce proceedings by explaining the various financial assets on the table. Being informed means you’ll have a clearer picture of what you’ve got and what you’re giving up.

We’ll be able to help you rebuild your finances afterwards. Your budget, needs and goals are all likely to have changed, and we can help you create a financial plan that ties everything together.

5. Property sale proceeds
You may have chosen to downsize or maybe considering the sale of a rental property to gain more liquidity. It can be difficult to decide what to do with the residual funds if you do not have any immediate plans.

We can discuss your goals and provide advice around the options available to you. We can ensure that these funds are invested well, working hard for you and are well managed.

Within Cullimore Dutton our Financial Services team work closely with our legal teams including Family Law, Property and Wills &Probate to provide a bespoke, convenient and comprehensive service.

For a free initial consultation to discuss how we may be able to help you plan your finances for the future simply click on the “Speak to Our Experts” button on this page, call us on 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This article is provided for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions.

Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

The value of your investment can go down as well as up and you may get back less than you have invested.

The Financial Conduct Authority does not regulate Taxation advice.

 

 

Dominic Richmond

Retirement: The cost of living or existing crisis?

/ , , Independent Financial Adviser/ /by

We’re all well acquainted with the cost-of-living crisis by now. Whether it’s filling up the car or your shopping trolley, the cost of the basics has rocketed lately with inflation levels higher than any seen in my lifetime.

The interesting part is that inflation is a year-on-year measure so for example your bottle of milk may have risen by circa 27% in the past 12 months compared with this time last year.

Will the price ever go back down now we’re used to paying it? Even if inflation on your milk is zero over the next 12 months, you’ll still be paying the inflated price this time next year. Then there’s energy, when we will see stability in the energy market is anyone’s guess. Will we see a return to “normal” living costs?

My question is this: Based on your current pension planning, would your retirement be best described as “on the beach” or “on the breadline” or do you simply not know?

State pension: The full new State Pension (35 years National Insurance contributions) is currently £185.15 per week (£9,627.80 per annum). This is due for a 10.1% uplift next tax year due to the triple lock which is good news. That said, if you feel that the triple lock will be retained in the long term, you’re more optimistic than I.

Final Salary/Defined Benefit pensions: These pensions also have an element of inflation proofing built in but again I wouldn’t be holding my breath waiting for good news on the future generosity of these schemes whether they be public or private sector.

Defined contribution pensions: How much will you have saved in your pot by the time you retire? The main variables here are how much do you wish to spend per year from your pot and how long will you live? Of course, the latter is a bit of a tricky one which only further demonstrates the need to plan as early as possible to reduce the chance of running out of money.

The amount of income needed in retirement of course varies greatly from person to person depending on their circumstances and lifestyle. This is all without potential care costs of course but that’s a subject for another day. I think that one thing is for sure though, minimizing your reliance on the future generosity of the State is definitely a wise move.

It’s never too early or too late to get a plan in place for your finances, so, If you’re keen to get into a more informed position regarding your retirement and how the future may look, it may be worth speaking to our expert team to review your current pensions/retirement savings.

For a free initial consultation to discuss how we may be able to help you plan your finances for the future  simply click on the “Speak to Our Experts” button on this page, call us on 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This article is provided for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions.

Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

The value of your investment can go down as well as up and you may get back less than you have invested.

The Financial Conduct Authority does not regulate Taxation advice.

Bank of Mum & dad

The Bank of Mum and Dad

/ , , Head of Financial Services/ /by

With inflation at over 10% we are experiencing unprecedented financial pressure on our day to day lives. Our food and energy bills are rising and those of us with mortgages have seen a sharp increase in our monthly payments.

Against this backdrop how do we support our family members who are not yet financially established and enable them to achieve the goals that we had previously taken for granted.

As financial security is established it is common for parents to want to support their children and to help them through major life events. Indeed this often extends to grandchildren, potentially putting greater pressure on our own later life and retirement.

So, what questions should parents be asking?
The list below is not exhaustive but any parent looking to support their next generation should consider:

  • How best can I financially support my children’s future house purchases?
  • How do we pass our wealth down to our loved ones, and what are the barriers?
  • What can I do for my grandchildren, and is it worth it?
  • Having provided support how do I ensure that (in the event of a relationship breakdown) the family wealth is not diluted?
  • How do I know that I will have enough money for my retirement if I gift money to my children?

All of these questions and more will be addressed at our Bank of Mum & Dad Seminar on Thursday 15 December from 5:30pm.

Why not join us for this informal event where we will share how parents can best plan for and support their children and grandchildren through life’s major events.

To reserve your place simply click here and complete the form.

Dominic Richmond

Autumn Budget 2022

/ , , Independent Financial Adviser/ /by

It’s been a couple of months since the now notorious mini budget or “fiscal event” which hastened the path to the exit door for Kwasi Kwarteng and in turn Liz Truss.

The new Chancellor Jeremy Hunt has taken a somewhat different approach following the “eye-wateringly difficult decisions” that he had been warning we were faced with.

Of course, these decisions will affect us all differently depending on our own individual circumstances.

Some of the key points:

  • The income tax personal allowance remains unchanged for the Basic and Higher rate brackets. These have, however, been frozen for a further 2 years meaning that more people will be pulled into paying more tax as wages increase.
  • The additional rate threshold has been reduced from £150,000 to £125,140 meaning that more people will now be paying the 45% rate.
  • The main national insurance thresholds also remain unchanged.
  • The annual personal allowance for tax free Capital Gains will reduce from £12,300 to £6,000 in April 2023 and then reduce further to £3,000 in April 2024.
  • The Dividend allowance will also reduce from £2,000 to £1,000 from April 2023.
  • Some good news for those in receipt of State Pension as the triple lock remains intact and so there will be an inflation linked boost to the payments.
  • With regard to energy costs, it was announced that the price guarantee will be kept for a further 12 months albeit at the cost of £3,000 per annum for the average household rather than the current £2,500.

Some of the above may have given you cause to review your own finances. It may be that you’d like to explore how to make your savings work harder for you or maybe retirement is on the horizon, and you need to review your pension arrangements.

For a free initial consultation to discuss how we may be able to help you plan your finances for the future  simply click on the “Speak to Our Experts” button on this page, call us on 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This is not financial advice; it is intended to provide information of general interest about current issues.

Expansion of our in-house IFA team

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We’re delighted to introduce a new member of our IFA team.

David Gaweda joined us this month as an independent financial advisor. David, who lives in Ellesmere, Shropshire, has a wealth of experience and is the fourth IFA in our growing team.

Headed up by Dom Richmond, our in-house Cullimore Dutton financial services team offers support, guidance and expert financial advice.

Dom said: “We’re delighted to welcome David to our growing team of independent financial advisors. The combination of our legal and financial services enables us to provide a more comprehensive offering to our clients.”

David said: “It’s great to join the Cullimore Dutton team at such an exciting time with the new city centre office and the continuing expansion of the services the firm is able to offer clients.”

Friendly girl explaining some documentation to parent

Book a place at our December seminar – The Bank of Mum & Dad

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Our December seminar will offer advice and tips on how parents can plan for and support the financial future of their children and grandchildren – and we’d love you to come along.

Led by our Financial Services and Family Law teams, we will be discussing key life events and things to bear in mind to ensure your support is best placed and well protected.

We will look at a range of topics including how to fund going to university, how to help a child to get on to or move up the property ladder, protecting a deposit in the event of a relationship break-up and how to finance a wedding.

There will also be inheritance planning tips plus advice about the passing on of pension pots.

Clients are welcome to bring their (adult) children along to the event and there will be plenty of opportunities to ask questions or have a one-to-one session with our team after the event.

This is the second in our newly launched series of seminars. Hosted by our Financial Services and Wills, Trusts and Estates teams, last month we offered advice and answered questions on how to manage your wealth and the benefits of lasting power of attorney.

December’s seminar will take place on Thursday, December 15 between 5.30pm-7.30pm.

To register your place at this free event, taking place in our new office (27 Newgate Street, Chester CH1 1DE) please email visit our website and complete the form or email events@cullimoredutton.co.uk

If you are coming to the seminar, please ring the top doorbell at our main door for access to the building.

  • If you would like to be kept in touch about future seminars please get in touch.
  • If you can’t make the seminar but would like more information about any of the topics, please drop us an email.

The Mini-Budget: What did it mean?

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It has been quite a week since the Chancellor Kwasi Kwarteng delivered his so-called Mini-Budget.

While some of the measures were broadly welcomed, they were completely overshadowed by the response to the announcement that the 45% top rate of tax would be scrapped, benefiting only those earning more than £150,000 a year.

Overall, the package of measures unveiled by the new Chancellor amounted to the biggest tax-cutting package since 1972.

Following a turbulent few days, the Government had to beat a hasty retreat, leaving the 45% rate of tax as it is to avoid it “distracting” from the wider objective of growing the UK economy.

The initial reaction of the markets to the U-turn were mildly favourable, but this was from a low base with sterling having fallen to its lowest ever level against the US dollar and bonds and equities also falling sharply in the immediate aftermath of the Mini-Budget.

By way of a reminder, the key announcements included:

Personal tax

There is to be a cut in the basic rate of tax from 20% to 19% which means a tax cut for over 31 million of us. The 45% rate of income tax remains the same following the backlash over the decision to scrap it.

Corporation Tax

The proposed increase in Corporation Tax to 25% has also been abandoned in a move to attract investment into the UK.

Energy

The Energy Bill Relief Scheme is to support all non-domestic customers, a move to mirror the Energy Price Guarantee that is available to households.

Investment Zones

New Investment Zones have been created, including Cheshire West and Chester Council, in a bid to accelerate growth in these recently identified areas.

IR35

Rules introduced in 2017 and 2021 for how contractors are engaged are to be relaxed with responsibility resting with the company which hires an individual.

Stamp Duty Land Tax

This is to be increased from £125,000 to £250,000 with first time buyers benefitting from an increase to £425,000.

 

Growing the economy by taking bold steps in how we are taxed is at the heart of the Government’s plans.

What is clear is that the financial landscape for us all, whether employed, self-employed or business owners is changing.

Now, more than ever, the need to take financial planning guidance is critical to ensure that our goals are achieved, our tax managed professionally and our money works as hard as it possibly can.

At Cullimore Dutton we aim to Change Lives by working with clients to support them in everything they want to achieve at every step of the journey. If you would like to speak someone from our specialist finance and estate team, please do not hesitate to contact us on 01244 729073.