A BUDGET WITH PROMISE AND PROMISES!

The Chancellor’s March Budget was aimed primarily at helping UK businesses increase their production but it also includes a number of new measures affecting savings and pensions – some effective immediately and some promised for April 2015.

Pension Changes

The most revolutionary announcements relate to personal pensions. With immediate

effect those who are aged 60 and over can cash-in small pension pots – up to 3 different

pots and to a maximum of £10,000 in each pot. 25% of the pot can be taken as tax-free

cash with the balance being taxed as if it were earned income. The Chancellor has also

increased the “Triviality” limit whereby a pension fund of up to £30,000 can be taken as

cash (25% tax free) if that is the only pension benefit a person has. The promise is that by

April 2015 this freedom to access the money in your pension pot will apply to the whole

pension for those aged 55 and over. Here again 25% of what you take out will be tax-free

and the balance will be treated as earned income.

The Chancellor wants to enable everyone to be able to access their pension savings at any

time after age 55 and without having to purchase an annuity – although an annuity may

well still be the best choice for many. With immediate effect he is increasing the level of

income a person with an Income Drawdown Pension can take each year. Those who have

a guaranteed pension income of at least £12,000 will be able to access all of the money in

their pension fund.

ACT TODAY - MAKE SURE YOU USE YOUR TAX ALLOWANCES

In the run up to the end of the tax year, it's important that you consider all the tax-relief/exemptions and allowances that the Government offer. Please remember, many of these will be lost if you don't act before the tax year ends, on 5th April 2014.


You can manage your finances in a more tax-efficient way through:


- Savings - using tax efficient ISAs;
- Pensions - carrying forward any unused allowances;
- Investments - using up capital gains tax (CGT) exemptions and income tax personal allowances;
- Estate planning - inheritance tax (IHT) allowances and exemptions.


Do get in touch with us.

Income Please

Income please


After you have taken your tax-free cash

Option 1 Take a guaranteed income for life (Annuity).

Option 2 Receive a higher guaranteed income for life due to an adverse medical condition or medical history or history of smoking (Enhanced Annuity).

Option 3 Take a fixed income for a period of time (usually 5 years) and have a guaranteed amount left at the end so you can then review your options (Temporary Annuity).

Option 4 Get an income which can possibly increase depending on the underlying investments (Investment Based Annuity).

Option 5 Leave your monies invested with the option to draw an income from the fund itself (Drawdown). There are two possibilities here.

The first is called Capped Drawdown. With this one the maximum you can take is based on your age and the value of the pension fund. The second is called Flexible Drawdown. This allows you to take out as much as you want from your pension fund – but only if you already have a guaranteed pension income of at least £20,000 per annum (this can be made up of the State Pension and Private Pension income but cannot be made up of other earned income or investment income).

All as cash please !

If you are aged 60 or older and the total value of all your pensions is less than

£18,000, you can take it all as cash. 25% is tax free and the balance is taxed as

if it were income you had earned in that tax year. If you cannot take advantage

of that option, but have a couple of very small pension pots (£2,000 or less),

you can do the same with them – up to two such small pots per person.

RETIREMENT MENU

RETIREMENT MENU
Minimum age: 55


Cash please


You can have a maximum of 25% of the value of your pension funds (This refers to personal pensions; the rules are different for a Final Salary Scheme where the benefit is based on the salary and years of service.). So, if your pension funds total up to £20,000, you can get £5,000 as tax-free cash. If they are worth £100,000, you can have £25,000 tax free.






More 'Menu' to follow next week

Attack the Plastic

One of the unhappy after-Christmas and New Year “surprises” is the arrival of the credit card bills for the Christmas spending. Of the various financial tools available, the one we find most misused and most destructive are the credit card and store cards. A credit card used properly can be a very useful way to make purchases on-line, or when you are abroad, or to take advantage of a special offer. If you then pay the credit card balance off in full, you will have had 4 to 6 weeks free credit and will have avoided the “honey trap”. If you do not pay it off in full, it is all too easy to fall into the habit of just paying minimum payments. Paying minimum payments of 2% or 3% of the balance is an invitation into NeverNeverLand, as it will not pay off the debt and you will end up having paid an enormous amount of interest, while the credit card balances remain unpaid. If you need credit and are not going to be able to pay it off in full, use a loan. They are structured to ensure that the amount owed does really get paid off.

EXPERIENCE AND EXPERTISE

Although no longer as young as we would wish, over 3 decades of experience does give us the know-how and expertise to use in assisting our clients. We aim to achieve maximum customer satisfaction and responses such as these recent ones: “Thank you for all your help and advice.” (Mrs LW of East Grinstead) and “It was a pleasure dealing with you.” (Mr MH of Kent).