Larger Pension Contributions/ Pension Input Periods (PIPs)

Many clients and enquirers are aware that the tax year 2013/2014 has seen changes to the tax regime being applied to their income and allowances. A good example of this is the fall in the highest tax charge rate of 50% to a new lower level of 45%. More changes to the tax regime are due in the tax year 2014/2015 and one of these points, namely the Pension Input Period, or PIP for short may affect your pension planning in this tax year (2013/2014).

The Annual Allowance (the amount you can put into your pension without a penal tax charge being applied) is dropping to £40,000 in the 2014/2015 tax year from £50,000. It is important that you know the Pension Input Period (PIP) end dates for each of your pension plans to ensure that you do not exceed the limits, attracting a tax charge at your highest marginal income tax rate accordingly.

If the PIP end date for your pension falls in the new tax year 2014/2015, then any contributions will be tested against the reduced Annual Allowance of £40,000, rather than the current Annual Allowance of £50,000.

Remember that not all plans will have the same PIP dates and this should be checked on each plan that you hold.

It is also worth noting that Defined Benefit schemes (such as a Final Salary scheme) are valued using a factor of 16, plus lump sum where applicable, over the Consumer Prices Index (CPI). Therefore any increase in benefits increasing by approximately £2,500 for the year over CPI will breach the new reduced £40,000 Annual Allowance (2014/2015).  

If you would like to know more about this pension planning and your tax allowances then please contact the team at Chapters Financial Limited on 01483 578800.

No individual advice has been provided in the text of this blog. You should seek independent financial advice (IFA) in your own circumstances.

Keith G. Churchouse FPFS

ISO22222 Certified Financial Planner

Director and Financial Planner

Wedding Season Gifting / Allowances

As the summer approaches, so does the wedding season, usually at great expense to those involved, including parents.

As the big day arrives, many arrangements and expenses will need to be catered for and it usually a time when parents and grandparents, along with others think about making financial gifts to the happy couple.

Many of our clients and Blog readers will know that thy can gift away £3,000 in a tax year and for this gift to fall outside the donors estate from day one. If they did not use this allowance in the previous tax year, they can go back on year (£6,000 total).

For gifts on marriage, there are additional inheritance tax (IHT) allowances, as follows:

·         From a parent to a child on marriage: £5,000

·         From a grandparent (or great grandparent) to a grandchild on marriage: £2,500

·         Gifts from others as a single amount: £1,000

Further details are available on the HMRC website here: http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm#1

(Chapters Financial is not responsible for the content of external webpages)

You may want to take these gifts into account if a family member is getting married this summer.

You may also want to update your will to reflect this addition to your family and for future offspring. We do recommend that you keep your wills up to date and can recommend a local solicitor if you do not have your own contact/ arrangements.

I hope the day goes well!

If you would like to know more about this planning or your inheritance tax allowances then please contact the team at Chapters Financial Limited on 01483 578800.

No individual advice has been provided in the text of this blog. You should seek independent financial advice (IFA) in your own circumstances.

Keith G Churchouse, FPFS

Director
ISO 22222 Certified Financial Planner
Chapters Financial Limited

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899. The Financial Conduct Authority does not regulate legal advice.

Investment Performance & Review 2013

2013 has started with many clients seeing positive returns on their investments, pensions and other holdings. It is always good to report such positive news, with many clients that we have undertaken reviews for being pleased with the progress made. This does not mean that we will not see additional volatility into the future. However is it encouraging to see fund values increasing in many instances. 

We gather information on investments from many sources to ensure and maintain a robust advice process. One source is our colleague, Stephen Williams, Managing Director at Cormorant Capital Strategies Ltd, who notes: 

Output and employment have sustained a curious push-me-pull-me trend in recent months. The first quarter of 2013 was no different. On the ILO* measure (perhaps the most credible of all the different measures); unemployment has drifted higher from 7.8% of the available workforce to 7.9%. At the same time the year-on-year increase in average earnings continued to slow; it now stands at just 0.8%, a full 2% lower than general inflation. In contrast to this increasingly gloomy backdrop came a surprisingly upbeat initial estimate for economic growth at 0.3% compared with the previous quarter (or 0.6% compared with a year earlier).

According to the Office for National Statistics the first quarter, it seems, was witness to a higher rate of growth than most had come to expect. Sensible observers were expecting a marginal gain (or decline) in the order of 0.1% to 0.2%. Both the Bank of England and the Office for Budget Responsibility were predicting that a triple-dip recession would be narrowly avoided. It was broad-based expansion in the service sector that led the growth, again (0.6% contributing 0.5%). Meanwhile production was flat and construction contracted, again (-2.5% contributing -0.2%).

Of course, that we describe growth in the region of 0.3% as ‘upbeat’ is testament to the duration of the current economic malaise. A full five years on, GDP remains 2.6% below the pre-recession level. Nevertheless, there are positive signs; equity markets are buoyant and eased credit conditions has inflated house prices a little. But both of these will need to be sustained if, in the absence of a sudden and somewhat unlikely rebalanced economy, we are to see any kind of momentum toward a real recovery.

Stephen Williams

Managing Director
Cormorant Capital Strategies Ltd

*International Labour Organization

The team at Chapters Financial has spent much time over the last years with existing clients and new enquirers viewing existing holdings and making changes where appropriate to meet both their attitude to investment risk and the objective of their plan, such as capital growth or income.

If you would welcome a review then please let us know and we can arrange to meet at a suitable time to undertake any agreed changes that may be appropriate in your circumstances. 

Past performance is not a guarantee of future performance. Fund values can fall as well as rise.

This Blog provides general information and should not be used as individual advice.
If you, your business or charity would like to receive individual advice on the issues of investment or pension planning , then please contact the team at Chapters Financial Limited on 01483 578800.

Keith G. Churchouse FPFS
ISO22222 Certified Financial Planner
Director and Financial Planner 

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899.

The Financial Conduct Authority does not regulate Tax advice