Our ...February Newsletter 2010
Welcome to the February 2010 edition of our newsletter.
I hope that you have settled into 2010 well and have a thriving year ahead of you. This edition of our Architects newsletter reminds you of certain important forthcoming dates and changes in the financial world which I believe may be of importance to you, and your employees.
In this issue:
- Use it or lose it…your ISA allowance that is. Read more..
- Take your pension benefits from 50 now or wait until 55 after April. Read more..
- Death in Service, a valuable inexpensive benefit. Read more..
- Mind the protection gap. Read more..
- The importance of Making a Will. Read more..
- Can we answer your question. Read More..
- Our next newsletter. Read more..
The new tax year is just around the corner and if you have any unused ISA allowance at that time it is simply lost forever. You can’t carry it over to the next tax year, so if you save regularly it is worth exploring the opportunity of making full use of this tax efficient way of building up funds for your future.
In the 2008 Budget, the Chancellor announced increases to the ISA investment limits. This has now been followed in the 2009 Budget by further increases to the limits, initially for the over 50s but from April 2010 for everyone.
Under the new simplified rules, there are now just two types of ISA – the cash ISA and the stocks and shares ISA – and your overall allowance for both in 2009/10 is £7,200 – or, if you are over 50, from October 2009 increased to £10,200.
Within this, the limit for cash ISAs – or for the cash element within a stocks and shares ISA – is £3,600 (or £5,100 for over 50s). But there is also some flexibility. You can, for example, now put the maximum £3,600 (£5,100) in a cash account and £3,600 (£5,100) in a stocks and shares account. Alternatively, if you place just £2,000 in cash, you can use the entire remaining balance – £5,200 (or £8,200) – to invest in stocks and shares. If you don’t need cash at all, you can put your full allowance into stocks and shares.
You can also transfer any existing cash ISA holdings to a stocks and shares ISA without affecting your current tax year allowance. So, if you have £10,000 already sitting in existing cash ISA plans then this amount can be moved to a stocks and shares ISA when and if you think the time is right.
On 6 April 2010, the overall limit for everyone increases to £10,200 and the limit for cash within that goes up to £5,100. It might be time for all of us to start planning where we are going to put it.
*Individual Savings Account
Are you aware that from this April, the minimum age you can take your pension benefits is increasing from 50 to 55.
For some people this may present an ideal opportunity to review their pension benefits and more importantly to reassess their financial objectives and decide whether they should take part/all of their benefits now whilst they have the option, or wait until 55 (or older).
This is not something to be considered lightly, as taking pension benefits at a younger age will generally result in lower benefits however it is important to at least be aware of the changes and know what your options are.
This is a valuable benefit – for employer and employee alike. It is essentially life cover, paid for by the company and often provided to employees as part of a balanced reward package.
Jackson Jeffrey Financial Services are pleased to have a special arrangement in place for small schemes with typically between 4 and 20 lives, whereby a substantial £500,000 cover per employee can be provided with NO lengthy individual applications or medical underwriting. If you would like further information regarding this special arrangement please do not hesitate to contact us.
More than four in 10 business owners say their companies would be forced to fold within a year of the death or critical illness of a key person, according to recent research.
The study from Legal & General found some two-fifths of those surveyed fear they would struggle to continue the business without the input of a vital employee.
However, according to the survey, only 4% of business owners have shareholder protection in place and half do not have any formal agreement to establish what would happen in the event of the death of a business owner.
The results come as the same research concludes the key person protection gap has edged over £400bn while the business protection gap, which also encompasses corporate debt and shareholder protection, has climbed above £1.1 trillion. Business protection provides peace of mind for company owners that if they or another key person falls terminally or critically ill, or dies, the business could still survive. It encompasses key person protection, partner/director share protection and business loan protection.
According to Legal & General, the figures show just how few businesses are prepared to handle an event such as the death or critical illness of a key person or business owner and the company went on to suggest it was the responsibility of the protection industry to get in front of corporate clients and make business owners aware of the importance and benefits of key person, shareholder and business loan protection.
Another finding of the research was that, while half of the businesses surveyed have corporate debt, just 46% of those businesses have life or critical illness policies in place to cover that money owed. Overall, the research estimates there is now a corporate debt gap of just under £300bn.
The survey, which was based on the responses of members of the British Chamber of Commerce, is the first time in four years any organisation has published an update to Swiss Re’s widely cited research from 2005. In that report, entitled Protection at what price?, the reinsurer concluded that, out of nearly 4.5 million businesses in the UK, 90% did not have any business protection in place.
The importance of Making a Will
Statistics show that some two thirds of us have not prepared a Will. This causes uncertainty, distress and often increased financial costs for those that we leave behind.
It is commonly believed that if you are married all of your assets will pass automatically to your spouse on your death, whether or not you have a Will. This is not the case and the lack of a Will can cause devastating problems for the surviving spouse. Under current legislation only the first £250,000 of your assets pass automatically to your spouse with anything in excess of that being left on trust arrangements for your spouse, children or possibly even your parents or brothers and sisters.
Unmarried couples are particularly vulnerable if you do not have a Will as the intestacy rules do not provide for partners at all. The surviving partner is forced to bring a claim against the estate in the Courts under the Inheritance Tax Act for reasonable provision. This is a lengthy and costly experience at a very distressing time.
By preparing a Will you can ensure that you have appointed people that you trust to deal with your estate in the event of your death; appointed suitable guardians to look after your minor children; made appropriate provision for non-family members from your estate, including charitable donations; given details of your funeral wishes and, most importantly, made appropriate provision for your loved ones.
If you have business interests it is essential that you provide for the running of that business, or its winding-up, in the event of your death and suitable provisions for this can and should be included in your Will. Inheritance tax considerations can play a large part in the preparation and planning of your Will in order to ensure that the tax bill on your family is minimised. If you have lump sum death-in-service benefits or life insurance policies that will pay out on your death these can often be for significant sums and the inheritance tax charge can be high. It is important to consider how and whether they should be placed into trust in order to minimise the tax bill for your family.
Sadly preparation of a Will is something that we all put off, assuming that we have plenty of time to put it in place but unfortunately all too often events overtake us. Where there is a Will there is the peace of mind of knowing that you have taken every step you possibly can to ensure that your loved ones will be adequately provided for in the event of your death.
Article provided by: Shirley Rabbetts, Partner at Needham & James LLP, The Assembly Rooms, Church Street, Shipston on Stour, Warwickshire, CV36 4AT
If you require any further information regarding making a Will, please do not hesitate to contact Helen Jeffrey at firstname.lastname@example.org.
We would like to invite recipients of our newsletter to ask personal or corporate financial planning questions that may be relevant to individuals or other architect practices. We will supply public answers to these questions in our next newsletter. You can email your question to me at email@example.com, and please remember to let me know if you would like your name and business name to be published alongside your question.
We will send our next newsletter at the beginning of May. If we can help you in the meantime please do not hesitate to contact us.
We would be pleased to assist you further with any of the topics covered in this newsletter. Please do not hesitate to contact me on 01926 651122 or firstname.lastname@example.org.
Please feel free to forward this newsletter to a friend or colleague who you think may benefit from its content.
With kind regards
Helen Jeffrey, FPFS
Chartered Financial Planner
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