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Well, what a year. A new government, unexpected and somewhat controversial policies, a much-anticipated budget and no doubt lots of changes ahead. Whatever the next few years bring, we will be here to help and guide you plan ahead, and ensure your money is invested appropriately and working for you as tax efficiently as possible.

In this issue we reiterate the importance of having or updating your Will, we look at the evolution of the ISA over the past 25 years and why it is still so important to use your allowance each year, and on a light hearted but somewhat serious note, we have a little quiz to test your ability to detect whether you can identify AI or ‘the real thing’ whilst you’re online.

We hope you find the articles useful.

Wishing you and yours a joyful Christmas and a prosperous New Year.

In this issue:-

• Spot the AI
• Wills: Why control doesn’t have to stop on death
• ISAs: 25 years on and still an essential tax saving vehicle
• Lost Pension pots valued at £31bn

We hope you enjoy the articles and find them useful.

PLEASE NOTE:

These articles do not constitute any form of personal advice or recommendation and are not intended to be relied upon in making (or refraining from making) any investment or financial planning decisions.

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Spot the AI

Artificial Intelligence, or AI, is now firmly established in all areas of our everyday life. From social media to news sites, to satnav, to booking a restaurant, AI is often working behind the scenes to ensure that you get what you want out of the technology, and that businesses also obtain optimum benefit. AI has many benefits, enabling substantial advances in healthcare, manufacturing, transportation, finance and many other sectors.

However, there are also negative aspects of AI and it is increasingly being used in online scams.

The informative website www.getsafeonline.org has a fun, if not eye-opening, quiz to help you identify AI generated content. Once completed, you can click on a link to read more about AI and the risks to be aware of.

Take the quiz: Spot the AI

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Wills: Why control doesn’t have to stop on death

Conversations around death and financial planning are never easy but they are an essential part of financial planning and should not be ignored.

Your Will is a legal document that records how you want your wealth, possessions and assets dealt with on your death. If you have no Will, the law of intestacy will apply, depending on your residency within the UK.

The law of intestacy is based on the family line and whether at the time of passing the individual was married, had children and whether there were other relatives still alive at that time. Click here to view and download our straightforward graphic illustrating the rules of intestacy.

Leaving your wealth to be passed on via intestacy can have serious adverse consequences such as increased taxation down the line especially if there are already inheritance tax concerns within the family, but also, allowing people to benefit from your wealth whom you may not have wanted to.

There is nothing like money that can start a family argument, especially when dealing with complex families due to divorce and second marriages. Not all families are harmonious, and it may be that someone you are no longer on the best terms with benefits from your wealth by default.

“if you get married, your existing Will immediately becomes void and a new one needs to be written”

Wills give control and instruction as to who can benefit, by how much and can be used to add contingencies so that beneficiaries can only receive the benefit after they reach a certain age.

Even if you have a Will, it needs to be reviewed regularly, especially on certain life events such as the birth of children or grandchildren, death of a spouse or beneficiary, or on divorce. In fact, if you get married, your existing Will immediately becomes void and a new one needs to be written.

For additional longevity planning, trusts can also be established via a Will, for example giving a qualifying life interest in property or income or both for the lifetime of the intended beneficiary, and once they have died or they give up their life interest, the remaining assets go to another set of beneficiaries.

It’s a common perception that making a Will is expensive or complicated but often this is not the case. It does, however, depend on the complexity of the estate and the assets involved. Some 69% of Wills written were done so by professionals, according to the National Will Register and collaborating with a professional can remove any ambiguity and give you peace of mind that your wishes have been set out exactly.

The National Will Register conducted a survey in March 2023 which highlighted the following:

• Only 44% of respondents had a Will
• Of those who didn’t, nearly 40% stated it was because they had not got around to it
• Of those who had, 66% of those were over 55
• 50% of men had a Will compared to 39% of women
• This correlates to relationship status and having a Will. More than 55% of those married or divorced had Wills, while only 27% of single people did and about 50% of those who had a Will also had children.

Many solicitors and Will writing professionals offer a storage service to keep important documents safe, which is paramount if the personal representatives cannot find a copy of the Will/house deeds etc. Some 42% of those surveyed have not discussed with their loved ones where their Will or important documents are.

Planning for your own passing is not easy but if you are to control who benefits from your lifetime of hard work, it’s a conversation that needs to be had. Please get in touch with us for more information or for assistance on the options available. If you need to write or update your Will we have connections with trusted professionals with whom we can put you in touch.

For more information please get in touch with your usual JJFS contact or email us on justask@jjfsltd.com.

Source: Professional Adviser Sept 2024

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ISAs: 25 years on and still an essential tax saving vehicle

This year the ISA turned 25 and over the years they have proved a huge success with savers. The value of adult ISAs stands at over £725 billion, with approximately 60% held in stocks and shares and 40% in cash.

Given the recent cuts in CGT allowances and the dividend allowance together with the frozen tax bands and personal allowances in recent years, the attraction of ISAs will continue to grow as a way of protecting your savings from tax.

Background
The ISA was introduced in April 1999, aimed at encouraging individual savings, offering simplicity, easy access and tax-free growth. The current annual subscription limit, indeed for the last eight years, is £20,000.

Changes
ISA rules have evolved over the years with different types of ISA introduced, including the Junior ISA and Lifetime ISAs, each with their own individual rules. Generally, the move has been towards providing savers with a lot more flexibility and opportunity for maximising tax free savings. For example:

Flexible ISAs
The introduction of flexible ISAs enables you to withdraw funds and then fully or partly replace them in the same ISA in the same tax year without counting towards the annual subscription limit. This is really useful if you need money in an emergency but not all providers offer this so you need to check first before you withdraw the funds or when you’re researching options for a new ISA account.

Continuing ISA on death
For deaths after April 2018, income and gains will continue to be protected from tax until the earliest of either three years have elapsed, the estate probate administration has been completed or the ISA is closed. This gives the executors and beneficiaries some space to decide what to do with the proceeds.

Increased allowance over the normal limit
On the death of your spouse, you can also claim a one-off subscription limit equal to the value of your deceased partner’s ISA as at date of death. This can be significant in protecting assets from income and gains beyond the probate administration period.

“you have until 5th April next year to maximise your current ISA allowance of £20,000”

Your annual allowances are not affected
Income generated from ISAs doesn’t count towards any of the income definitions that determine your personal allowance, pensions tapered annual allowance or child benefit tax charge.

IHT Planning Opportunity
Any income produced in your ISA that is not reinvested can be included in income with regards to the ‘normal expenditure out of income’ exemption in IHT planning. If this income adds to, or creates ‘surplus’ income, it can be given away and will be immediately outside your estate.

Retirement Planning Opportunities
If you’re close to, or at retirement it may make sense to consider maximising pension funding from ISA savings if you don’t have other resources to use. This will, of course, depend on whether you have sufficient pensionable earnings and annual allowance.

Further changes came into play from April this year which, in the main, provide even more flexibility for savers:

• Multiple ISA subscriptions – The ‘one ISA of each type per tax year’ restriction has been removed which means you can subscribe to multiple cash or stocks and shares ISAs in a year without the fear of invalidating your subscriptions and losing the tax-free status on your savings.
• Partial Transfers – You can now do a partial transfer of ISA funds without having to distinguish if the transfer is from the current year’s subscriptions, previous years, or a mixture of both.
• Adult ISA minimum age – effective 6th April this year, the minimum age for opening an adult ISA was raised to 18 across all ISA types. This means it is no longer possible to open an adult Cash ISA at age 16, removing the ability for 16 and 17 year olds to pay £29,000 into ISAs by combining the subscription limits into both a Cash ISA and a Junior ISA. Instead, they will be limited to just the £9,000 junior ISA limit.

Clearly, ISAs are still a very tax efficient investment and it’s important that you fully utilise your annual ISA allowance where possible, as once the ISA deadline passes you lose any unused allowance forever.

Remember you have until April 5th next year to maximise your current ISA allowance of £20,000. Contact us if you would like more information or assistance. You can also download and read our ISA fact sheet.

For more information please get in touch with your usual JJFS contact or email us on justask@jjfsltd.com.

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Lost Pension pots estimated to be £31.1bn

The total value of ‘lost’ pension pots is now estimated to be £31.1bn, according to data published by the Pensions Policy Institute (PPI). This has risen by £4.5bn, from £26.6bn back in 2022.

Almost 3.3 million pension pots are now considered lost, containing an average sum of £9,470.
This rises to £13,620 among people aged 55 to 75.

PPI said a combination of people switching jobs and automatic enrolment into workplace pensions is behind the increasing number of lost pensions.

The govt has pledged its commitment to developing Pension Dashboards, which aims to make it easier for savers to locate old pots and combine pensions, whilst the Department for Work and Pensions (DWP) is currently working on plans to automatically consolidate small pension pots of less than £1,000.

Automatic enrolment could be considered as one of the most successful public policies of our time, enrolling over 11 million people into a workplace pension since 2012, creating many new pension savers. However with people switching jobs regularly – around 11 times over the course of a lifetime according to some estimates – it’s easy to see how some people end up losing track of the pension pots they have built up.

Savers need to know how much they have saved into a pension and where that money is invested if they are to maintain a level of control over their future retirement. Only by having this overall picture can pension savers work out how close they are to achieving their financial goals, and what action they may need to take to get their desired income and standard of living in later life.

The pension dashboards will certainly help to achieve this and, once launched, will allow savers to see all their pensions in one place online, reuniting them with their lost pension wealth.

But while we wait for dashboards to launch, there are important steps you can take today to track down lost pensions and boost the overall value of your pension savings. This handy online guide from moneyhelper.org.uk will take you through the process of tracking down a lost pension.

For further information or assistance, please get in touch with your usual JJFS contact or email us on justask@jjfsltd.com.

Source: MoneyMarketing Oct 2024

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