Independent Financial Advisers

Well, they said it would be a Rambo budget, but perhaps they were managing our expectations, because some of it wasn't as bad as we had feared. The commentators I have heard and read don't seem to be sure if it's a kill or a cure, but time will tell.

It is in many ways a budget which is kind to businesses, which I think will help as it should enable entrepreneurs to generate more jobs and wealth in due course.

We are often asked to confirm minor but very important details concerning the NHS pension scheme to many of our clients. So in this newsletter we will endeavour to cover the main areas that we are most commonly asked for information on, and this will hopefully clear up some of the confusions that exist. If this information does not apply to you directly, it may well apply to a friend or member of your family. In which case, please do feel free to pass this on.

As a high earner we need to ask ourselves some important questions when it comes to investing monies into pensions. Presuming you have created a full financial planning cash flow model and established a need and quantified that need the interesting bit starts.

Previously if there was a shortfall you could bridge that shortfall by contributing up to 100% of your income up to the annual allowance of £255,000 (09/10) and receive the full 40% relief. Once we had made sure there was a positive tax shift (i.e. 40% relief now but with only basic rate tax to be paid in retirement) it was simple.

The rules have changed some what since then and this article is to give you an insight so that you maximise the relief's available and as importantly do not over contribute and increase the possibility of creating a negative tax shift (i.e. 20% relief now but 40% rate tax to be paid in retirement).

From 7th October 2009, anyone aged 50 or over before April 2010, will be allowed to save up to £10,200 in the tax free savings account. No worries for everyone else though - they can do it from the new tax year next April.

From 6th April 2010, all savers will therefore be able to deposit £10,200 into their 2010-11 ISA, up to £5,100 of which can be saved in cash.

Don't forget, you can now transfer money from cash to stocks and shares ISAs. If you move money from an existing cash ISA to a stocks and shares ISA it will not count as part of your annual allowance.

As some of you may know, the minimum pension age for drawing a private pension will rise from age 50 to age 55, from April 2010. For example, someone born on the 7th April 1960, could have taken pension benefits at age 50 in April next year but now they have to wait until they are 55 - in 2015.

However, anyone who will turn 50 before April next year or is already in this age range, still has a chance to take action before the changes take effect.

Ernst & Young said the main stay of financial services distribution - the IFA - would come under increasing pressure throughout 2009 as a result of the FSA Retail Distribution Review. In 2005 the FSA representation to the Treasury Select Committee showed that IFA's generated 80% of financial service distribution and yet in 2008 the Financial Ombudsman's complaint statistics showed this same body had only 3% of their complaints compared with the banks at 59%.

Addressing;

•  The types of risk you face with your money
•  Balancing the risk you need to take -v- the risk you
   are willing to take
•  The value of guarantees

What we are going to look at today are ideas relating to student loans, bank accounts, overdrafts, buying student property, and employing your child, insurance and getting around, and we hope you'll find some tips to ease the pain of them going away.

Hopefully, your loved ones will have received the 'A' Level results that they needed and you will be packing them off to university and further education this month. It's a traumatic time for some - parents - yet an exciting opportunity for others - your children. This may be the first time that your son or daughter has considered the daily living responsibilities that parents take for granted, but there is still a lot of help and direction that you can give them. We've had a look at a few of the financial issues to mull over.

As you are no doubt aware, the financial services industry has suffered some pretty hard times over the last couple of years resulting in many weaker firms, unable to meet their responsibilities, having to close their doors. The message, it seems, is evolve or die.

In order to ensure ongoing strength and quality of service, we are delighted to announce that NW Brown & Company Ltd, a Cambridge based financial services company, will shortly acquire a majority shareholding in KT Financial Services.

This merger will benefit enormously both the companies and their clients, allowing a wider range of services to be available whilst also allowing both firms to continue to develop their competitive edge.

A client of mine told me a disturbing story the other day, and I would like to know if this situation is common.

Her husband is in a care home because he has Altzheimer's disease, and is not very aware of what is going on around him.

My client said that since the beginning of this year, she has spent £800 on clothes, toiletries and bits and pieces, which she has taken to him. These things keep going missing, and she is becoming very upset about it.

In the budget the chancellor announced the introduction of a 50% tax rate for those with taxable earnings above £150,000. However the position is more complicated than this, as what was not made quite so clear was that there will in fact be an increased tax take between 40% and 42.29% for anyone earning above £100,000.

The additional tax will work as follows:-

For every £2 you earn above £100,000 you will lose £1 off your annual personal allowance. The current personal allowance stands at £6,475 (assuming no benefits in kind and ignoring any additional allowances for pension contributions) thus if you earn £112,950 (£100,000 + 2 x Personal allowance @ £6,475) you will lose your personal allowance altogether.

It will be interesting to see how the announcements made in this years Budget will filter through over the coming years, especially if there is a change in government.

Apart from the usual increases to fuel, alcohol and tobacco duties, there were a few surprises

The most popular way to release equity from a property is a 'Lifetime Mortgage', where you borrow money against the value of your home. You do not pay any interest as it rolls up until the property is sold - normally if you go into care, or on your death. If you did pay interest, your monthly outgoings would increase.

It is estimated that 10,000 people who have taken out these mortgages could re-mortgage now and reduce the amount owing when the property is sold. This is because interest rates have fallen: 7-9 years ago, the interest rate was typically 7.5%-8.25% p.a., and now it is about 6%-6.5%.

Just a few months ago, inflation was the spectre that stalked us all. By September, inflation had soared to 5.2%, fuelled by high prices for food and energy. However, following sharp falls in commodity prices and declining demand for goods and services, inflation no longer appears to be a problem and deflation is the new threat.

Deflation is defined as a persistent and sustained decline in prices. A sustained deflationary spiral can help to exacerbate recession as, although some people might welcome an environment of falling prices – particularly after a period of high inflation – a sustained period of deflation could have very negative consequences for the struggling UK economy.

If you are approaching retirement (and indeed if you have already retired), there are several legal and financial issues that should be considered. Some of them apply at almost any time, but most people don’t think about them until they are at retirement age.

For example, making a Will is important for anyone who has assets that they want to go to a particular person or organisation when they die. It is especially relevant in later life if you have married, or divorced and re-married, and if you have enough assets to be concerned about Inheritance Tax on your estate.

Since the banking crisis began, we have had many conversations with clients advising which banks were part of which group and which counted as one institution and which for two in order to establish the level of protection eligible under the Financial Services Compensation Scheme.

Remember cash deposits are protected up to £50,000 per institution and Building Societies have not been listed in full as they are owned by its members.

To help keep you in the picture, we thought that you may appreciate a summary:

Is your pension at risk? Modern day employment trends mean most of you who have not yet retired and drawn their pension, will have moved jobs on at least one occasion. (The impact of the current economic climate is likely to have this effect on many more). On life’s journey, you may well have had the benefit of being a member of a Final Salary pension scheme, (this being a scheme where your ultimate benefits are determined by your pension-able salary and length of service).

If this applies to you and you no longer work for the employer who provided the scheme, the rules applying to the benefits you have accrued are not the same as those applying to active members, (I.E. those still working for the employer).

I am pleased to announce that I am teaming up with well-known local solicitors, D’Angibau LLP, to give a free seminar to people who are in or approaching retirement.

The purpose will be to explain a number of issues, and there will be no selling of any financial or other products.

Interest Rates have been cut by a further 0.50% today so now stand at 1.50% - the lowest it's ever been in the UK in attempt to curb the current downturn.

This is great news for you all with tracker mortgages (without collars) but perhaps not so great for those who are relying on their savings for capital growth or to supplement your income.

The last few months have been full of doom and gloom, with very few words of financial comfort. Instead, we have seen global economies weakening, banks going bust, and companies having severe trading difficulties. So where do we go from here?

You may believe that this is the end of capitalism, and the input of billions of Pounds, Euros, Dollars, Renminbi etc. from Governments all over the world will not have any effect.

If so, you probably have all your money in bank accounts, with no more than £50,000 in any one account. That way, you won't lose any money, but you may be disappointed with the return in a few years' time.

The shockwaves from the collapse of the US sub-prime mortgage market continue to reverberate around the world and have now claimed a further two high-profile victims. In a single September weekend, Merrill Lynch was unexpectedly taken over by Bank of America, while beleaguered Lehman Brothers shocked the financial community by filing for Chapter 11 bankruptcy protection after talks with potential buyers broke down. Interested parties had included Barclays and Bank of America, but both walked away when the US Treasury refused to underwrite the deal.

When you realise that you can’t look after yourself, the situation is very sad and stressful. You are ill or frail, your family is very worried, and there are lots of complicated new things to deal with.

The Local Authority will be assessing your health, your care needs and your finances. You may have to give someone else the power to act on your behalf and deal with your money. You may be adjusting to the idea of living in a residential care home, and your house may be on the market.

Your first priority will be to pay for care for as long as it’s needed. After that, leaving as much as possible to your family (or other beneficiaries) will be a major concern.

Specialist advice on getting all the State benefits you’re entitled to, minimising tax and helping your money to last as long as possible, can take a load off your mind.

• You could sell the property, and move to rented accommodation, so that you can spend the money from the property sale.
• You could move to a cheaper property, and spend the difference.
• You can stay where you are, and release equity from your property.