Happy New Tax Year 2012/2013

We have now moved into the new tax year and this provides the opportunity to use your new tax allowances where appropriate, such as your ISA allowance (new limit of £11,280 maximum Stocks & Shares ISA or £5,340 into a cash ISA), Capital Gains Tax allowance (£10,600) and gift allowances for inheritance tax savings, amongst others, such as pension allowances.

As a point of interest, it was reported at the end of February 2012 by the Office of National Statistics (ONS) that contribution input to ISAs (Individual Savings Accounts) outstripped contributions to pensions in the tax year 2010/2011 (the last tax year) for the first time. With around £15.8bn going into ISAs and (only) £14.2bn going into pensions (excluding stakeholder plans) the margin was quite significant at this crossover point.

If you would like to review your annual tax allowances for this new tax year, in conjunction with your financial planning, then please contact us at the office by telephone on 01483 578800 or by email.

No individual advice has been provided in the text of this blog and you should seek individual independent financial advice for your own circumstances.

Chapters Financial Limited is Authorised and Regulated by the Financial Services Authority. Number 402899

All change in the delivery of UK Financial Services

The delivery of UK retail financial services will change at the end of this year, with the implementation of the Financial Services Authority’s (FSA) Retail Distribution Review, or RDR for short from the start of 2013.

There are also many changes planned for the FSA itself, including parts of its structure changing to the Financial Conduct Authority (FCA), with control being maintained by the Bank of England.

I am now writing on the additional important changes for this subject in this blog because the final details have now been firmly set.

The changes

The highlights of the changes are detailed as follows:

• As before, the Financial Adviser will agree the remuneration for their services (both initial work and on-going advice) with you in advance. However, services will be paid for on a fee basis, either via an initial fee or by a deduction from the plan being established (or a combination).

• Future financial advice will be offered on an Independent, Restricted or Simplified basis. For independent advice, an Adviser must consider all relevant options for you and do so free from any restrictions or product/provider bias. This makes sure that the advice offered to you is truly independent.

• That the consumer will receive advice from qualified, competent, trained professionals who subscribe to a code of ethics (renewed each year) ensuring they act with integrity and treat their customers fairly.

How will Chapters Financial Limited meet these new requirements?

Having moved to a comparable financial advice system to the one detailed above to achieve these outcomes in May 2007, we hope that you have seen the benefit of using our service over the last five years. As we approach the end of this year, and the full implementation of these new requirements, we are delighted that we have the appropriate systems in place to be able to continue to offer independent financial advice into 2013 and beyond.

Powerful proposition

We also believe that maintaining our independent status will make our financial planning proposition even more powerful, with the numbers of other independent advice providers expected to reduce because of the new requirements being made.

We have seen the number of new enquirers and referrals from existing clients rise in recent years (as Chapters Financial Limited and formerly Churchouse Financial Planning Limited) because of the standards in financial planning that we have set and maintained and this is evidenced by the recent industry awards we have detailed in our last newsletters.

Referrals are always very welcome and we thank you, our clients and Blog visitors, for your continued support.

If you would like to consider your future financial planning further then please contact Chapters Financial Limited through this website or by telephone on 01483 578800.

No individual advice has been provided in the text of this blog and you should seek individual independent financial advice for your own circumstances.

Chapters Financial Limited is Authorised and Regulated by the Financial Services Authority. Number 402899

ISAs overtake pensions as the savers choice

It was reported at the end of February 2012 by the Office of National Statistics (ONS) that contribution input to ISAs (Individual Savings Accounts) outstripped contributions to pensions in the tax year 2010/2011 ( the last tax year) for the first time. With around £15.8bn going into ISAs and (only) £14.2bn going into pensions (excluding stakeholder plans) the margin was quite significant at this crossover point.

Why this tax efficient savings preference change has happened could be for a number of reasons, with many citing the ever growing complexities of pension rules and the relatively simple (but less tax efficient) ISA rules, which allow accessibility to the capital invested. With many family budgets squeezed in the last few years, it may be this flexibility which has increased the desirability of this savings option.

It is also clear that with the introduction of changes to allowances for pension contributions, such as the Lifetime Allowance (falling from £1.8m to £1.5m next tax year), Fixed Protection, the annual allowance limit of £50,000 in a Pension Input Period / PIP, amongst others, the planned 'simplification' of pensions in 2006 has not been achieved. Also, with pension Auto-Enrolment for many employers and employees on the imminent horizon, an additional set of requirements will be introduced. Further details of these issues are detailed in our webpage ‘National Employers Savings Trust/ Auto-Enrolment/Workplace Pensions’ here.

It is good to see the annual contribution allowance limit climbing for ISAs rising from the current limit of £10,680 in this tax year (£5,340 into Cash ISA/ £5,340 into Stocks & Shares ISA) to £11,280 in the coming tax year (2012/2013). Further benefit has also been seen by recent rises in fixed rate ISA deposit terms provided by some providers, as they endeavour to maintain market share in this busy sector. Also, with recent rises in many equity markets, some have seen encouraging rises in their capital values.

Past performance is not a reliable indicator of future performance and fund values can fall as well as rise.

If you would like to consider your savings, investment and pension planning further then please contact Chapters Financial Limited through this website or by telephone on 01483 578800. No individual advice has been provided in the text of this Blog and you should seek individual advice for your own circumstances.

Chapters Financial Limited is Authorised and Regulated by the Financial Services Authority. Number 402899

We know you are working hard, but what about your business cash?

There has been much focus in recent years about the savings rates available to personal deposit holders as base rates have fallen to record lows for a sustainable period. With the recent additional introduction of further quantitative easing, and the prospect of additional capital being pumped into the UK fiscal system during the course of 2012, the likelihood of base rates rising during the course of the next 12 months, if not longer, is considered to be unlikely as confirmed by the Bank of England in their recent report dated February 2012.

However, it could be argued that there could be contradiction in the form of improving deposit returns, certainly for personal accounts, with fixed rates now available at around 3-4% over shorter periods of time as confirmed in my previous February blog headed “Savings rates 2012/2013? What are the possibilities?”

Moving away from the subject of personal deposits savings, raises the question as to what can be achieved for business owners who have accumulated cash during the recession, possibly in preparation for expansion where the appropriate opportunities have not manifest themselves and this cash is held at the bank, as an example, earning minimal interest because of current low base rates. We have experienced and seen in the last few months increasing interest rates both with personal accounts, as already indicated, and also with business accounts. There are few opportunities that are available to business owners to try to achieve reasonable returns to get their money working harder in line with the extra hours that they have had to put in during this recession.

Examples of deposit rates available from well-known deposit takers as follows:

Provider	Name of account	% Gross PA	Comment
Santander	Business Reward Saver	2.0% AER	Instant Access, minimum deposit amount £5,000.
Clydesdale	12 months Business Term Deposit	3.0% AER	12 months’ notice, minimum deposit amount £5,000
Investec Bank	Business High 5 Account	2.25% AER	Minimum deposit £50,000. 3 months’ notice required
Bath Building Society	Business Direct 100	2.4% AER	Minimum deposit £2,500. 100 days’ notice required

Please note that terms and conditions can apply to these rates and deposit rates can fall as well as rise and are not guaranteed.

Another opportunity for businesses who may not be prepared to tie up money for a long time are Money Market Accounts. These are accounts normally offered by the banks. However, we have noted in our experience that they are not widely marketed and are usually for sums in excess of £25,000. One easy way to find the details of the Money Market Accounts is to type “Money Market” into the search box of your bank’s website and this will normally provide you with the contact details of the Money Market Department. This may also provide you with some of the rates that they will currently offer. In our experience, you will find that the rates offered under Money Markets are lower than those of Deposit Accounts, however it does provide the opportunity for short-term interest gains which may be important if a business requires flexibility for its cash when seeking capital opportunities.

It should be noted that it is possible for businesses to invest into other areas such as stocks and shares, property and other investment derivatives. Chapters Financial can help you with your business investment planning, if this is of interest.

As you can see from the above many companies are working very hard at the moment to achieve their overall objectives in this continuing time of austerity. It is also important that their money works as hard as they do and if there are opportunities to receive returns on capital whilst deciding how to utilise this for their businesses future gain then this is usually worthwhile considering.

Please note that any interest earned is subject to Corporation Tax at your highest marginal rate.

The details above are for information only and should not be seen as specific advice. If you would like to receive specific advice for your business investment planning then please contact Chapters Financial on 01483 578800.

Keith Churchouse FPFS

Director

Chartered Financial Planner

Certified Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Services Authority.

Savings rates in 2012/2013? What are the possibilities?

Following my last blog, I have been looking at the current market for deposit savings rates and the possible investment alternatives available.

With what appears to be some greater ' stability' in the expectations of very low base rates (currently 0.5%) and the significant likelihood of additional Quantitative Easing to help UK cash flow further. I am sure many mortgage borrowers will be delighted at this potential prospect. The Bank of England also suggests that there will be no further expectation of the UK falling into recession, although other fiscal think-tanks currently think otherwise.

But what could this mean for savers over the next 12-24 months?

Savings rates

We have seen savings rates climbing over the last year, which is good news for deposit savers. This is not a guarantee of a future trend. However, I have provided some examples below to reference this:

1 year Fixed

AA	3.60% Gross AER	12months Interest paid annually
Post Office	3.25% Gross AER	12months Interest paid at maturity

3 year Fixed

Saga

4.00% Gross AER

36months Interest paid annually

These rates are correct at the time of writing this Blog (February 2012). Other offers are available.

• Deposit interest earned (outside an ISA allowance) is taxable at your highest marginal income tax rates. Please check the terms and conditions of each plan/offer before investing.

• Please remember the Deposit Protection Limit of £85,000 for a single investor when planning your savings strategy.

To check current rates, I would recommend that you check the Financial Services Authority Website, Money Made Clear here:

http://tables.moneyadviceservice.org.uk/Comparison-tables-home/Savings-accounts/Compare-savings-accounts/

Chapters Financial Limited is not responsible for the content of external websites.

Cash ISAs

Many will know that you can invest £5,340 in a Cash ISA in a tax year and receive interest from the investment in a tax efficient manner. This is usually worthwhile if you have not used your ISA allowance elsewhere (see below). However, it should be noted that most 'deals' are time bound and revert to a low return rate after a period of time, such as a fixed rate for 1 or 2 years.

ISA Transfers

It is possible to transfer ISA arrangements whilst keeping the tax efficient wrapper. If you are in the position, then it may well be worth taking financial planning advice to investigate alternatives and the options available.

Alternatives?

For those investors who are prepared to take greater investment risk, it is possible to consider alternative investment medians, such as a portfolio of Stocks & Shares/Unit Trust/ Open Ended Investments Companies (OEICS) designed to provide a dividend income stream. It should be noted that dividend income can be variable, being received at different times of the year.

It would not be unreasonable for a UK Equity dividend (average) return to provide approximately 2-4% pa gross.

Dividend income is taxable at 10% for basic rate taxpayers, 32.5% for higher rate taxpayers and 42.5% for additional rate taxpayers (tax year 2011/2012).

Capital Gains & Stocks and Shares ISAs

There is also the potential of the investment making capital gain. This gain can be tax efficient in using the annual capital gains tax allowance (currently £10,600). If you select this route, you could also use your ISA allowance of £10,680 (or £5,340 if you use your Cash ISA allowance in the same tax year).

Any capital gain achieved by individuals above the allowance ceiling of £10,600 is taxed at flat rates of 18% for basic rate taxpayers and 28% for higher rate taxpayers.

Seeking Financial Planning Advice

Clearly there are a lot of issues to be considered in this article and no individual advice has been provided in this text. If you wish to consider your end of tax year financial planning then please contact Keith Churchouse at Chapters Financial Limited in Guildford (Independent Financial Advisers/ IFA) on 01483 578800 or at info@chaptersfinancial.com.

Chapters Financial Limited is authorised and regulated by the Financial Services Authority, Number 402899.

The Financial Services Authority does not regulate tax advice.

What does the UK economy look like in 2012?

I was fortunate to attend a very interesting Bank of England (BOE) update presentation by the BOE South East Agency in mid-January. For reference, there are 12 regional agencies across the UK. Their purpose, amongst others, is to consult, share and interact with business across the UK as a barometer of views and economic conditions to feed back to the Monetary Policy Committee (MPC).

Further details can be found here: http://www.bankofengland.co.uk/publications/agentssummary/index.htm

(We are not responsible for the content of external websites)

The update and presentation revealed and consider many economic expectations forecast over the next 12 months. Please bear in mind that forecasts are just that, forecasts, and should not be seen as anything else. I have listed these below:

• Inflation will continue to fall with the potential of reaching and falling below the MPC’s inflation target of 2.0% by the end of 2012.
• Growth was largely flat in the last 6 months of 2011 and is expected to be the same in the first 6 months of 2012.
• GDP growth subdued with the expectation that this will start to move positively at the end of 2012.
• Base rates are expected to remain unchanged until the end of 2013, unless anything significant occurs.
  
• Further Quantative Easing (QE) is expected in 2012, where needed.
• Unemployment has reached about 8%, with public sector jobs falling and private sector roles increasing. Both are expected to level off although the fears for higher unemployment remain.
• Consumer consumption has fallen and is expected to fall further.
• Business lending still falling and likely to continue.
• No expectation of recession, as long as there is no further shocks.

This is not an exhaustive list, but certainly provides a flavour of the expectations for the UK economy over the next 12 months.

This blog is for information only and should not be seen or used as individual advice. Seek independent financial advice (IFA) for your own circumstances.

Chapters Financial Planning Limited can help you with your own investment, pension, retirement and inheritance tax planning. Please feel free to contact us by email or on our telephone number, 01483 578800.

Keith Churchouse FPFS
Director of Chapters Financial Limited, Guildford, Surrey

Chartered Financial Planner
ISO22222 Certified Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Services Authority, number: 402899.

Chapters Financial Limited to build on Churchouse Financial Planning’s award winning service in 2012

Churchouse Financial Planning is changing its name to Chapters Financial Limited on 1^st January 2012. The rebrand of the Surrey-based Chartered Financial Planners follows the settling of a trademark issue.

Keith Churchouse, who founded Churchouse Financial Planning, said: “I’m excited about our new name; it really does represent a new chapter for our business. Choosing it wasn’t easy, but we settled on Chapters Financial because it reflects the traditional values of the sound professional financial advice that we uphold, which is so crucial in the current economic climate.”

Esther Dadswell, co-Director of Chapters Financial planning, said: “The last eighteen months have shown us the importance of protecting our intellectual property and brand. The name change has also given us the opportunity to alter the description of our service from ‘Financial Planning’ to simply ‘Financial’ to reflect the breadth of the advice we offer on many aspects of wealth management. But whatever we’re titled, we’ll always be a stalwart supporter of independent financial advice, which our clients have come to rely on.”

Keith added: “This has been the best year ever for Churchouse, culminating in winning a Gold Standards Award for independent financial advice in November. I’m confident that our new name, along with new staff joining in January, will be a springboard for our continued success in providing expert advice to clients across Surrey, London and the Home Counties.”

This blog is for information only and should not be seen or used as individual advice. Seek independent financial advice (IFA) for your own circumstances.

Chapters Financial Planning Limited can help you with your own investment, pension, retirement and inheritance tax planning. Please feel free to contact us by email at info@chaptersfinancial.com or on our telephone number, 01483 578800.

Keith Churchouse FPFS
Director of Chapters Financial Limited, Guildford, Surrey

Chartered Financial Planner
ISO22222 Certified Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Services Authority, number: 402899.