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And finally… Photos finished

As Kodak’s recent slide into bankruptcy suggested, the camera-film business has known better days. This week, the Office of National Statistics (ONS) delivered the final insult to celluloid by removing charges for processing colour films from the shopping basket of goods it uses to measure inflation. iPads are in; Kodachrome is out. Fair enough, you might think. Elsewhere, however; there was a distinctly retro feeling to some of the items that the ONS tossed into its basket, which now includes cans of stout, nanny fees and trade union subscriptions. What next? Based on recent trends, analysts are looking for the ONS to include Spangles, Austin Allegros and space hoppers in future revisions!

ISA Limits

Late last year, HM Treasury announced that subscription limits for Individual Savings Accounts (ISAs) from April 2012 will increase to £11,280. Half of this  amount can be saved in cash.  Junior ISAs (JISAs) are now also available from 1 November with a limit of £3,600 for each eligible child per year, as part of the Government’s commitment to encourage saving for children. 

With the new tax year just about to start, you may want to think about using this valuable tax efficient investment vehicle. Fortunately, many of the deposit providers reserve their best rates for just this type of plan. If you need instant access to the funds then Marks and Spencer’s Money are offering a rate of 3% gross per annum on their advantage cash ISA option. If you are prepared to lock up the fund for a period of time, then Birmingham Midshires are offering a rate of 4.05% gross for their 2 year fixed rate Cash ISA.   

Budget Summary - 2012

Headline Items

Firstly, some the headline items from yesterday’s budget.

With effect from April 2013, the 50p top rate of tax will be cut to 45p.

The personal income tax allowance will be raised to £9,205 from April 2013. This is a move that the government says will make 24 million people £220 a year better off. However, 300,000 more people will be drawn into paying higher rate tax - 40% tax band - from 2013/14 as the threshold is to be reduced from £42,475 to £41,450.

The Office for Budget Responsibility (OBR) has revised the UK growth forecast for 2012 to 0.8% - from 0.7% - a very small change but in the right direction and hopefully will dispel some of the rumours about a double dip recession.  

The growth forecast for 2013 is 2%, for 2014 2.7%, and in each of the two years after that 3%.

Inflation in the UK is forecast to fall from 2.8% this year to 1.9% next year. 

There are no changes to the current Capital Gains and Inheritance Tax thresholds, although there is a reduction to 36%, on the top rate of Inheritance Tax payable for estates which leave 10% of their value to charity.

Click here to read our budget summary in full on our website.   

Tax raid on pensioners?

Pensioners will no longer receive a larger personal income tax allowance than people of working age.

At present, those over the age of 65 can earn £10,500 before tax, while those over 75 can earn 10,660. However, those age-related allowances will be removed for new pensioners from April 2013.

Allowances for those already of pension age will be frozen until the personal allowance for the rest of the population catches up.

George Osborne said "no pensioner will lose in cash terms", but HM Revenue and Customs have estimated that in 2013-14 more than 4 million people could be worse off in real terms due to inflation.  

Universal State Pension

It was announced yesterday that there will be a single tier, non-means tested state pension, which will be based on contributions.

This is expected to be around £140 per week but more details will be revealed about this later in the spring.

As previously announced, the current Basic State Pension will increase by £5.30 per week on 6 April 2012.

With regards to the Universal State Pension, the Chancellor stated that this should not cost any more than the present system.

Importantly, it should also reduce the perceived "disincentive to save". This is due to private pension’s income affecting state pension credits and this should disappear. At present, pension income could mean a loss of some pension credits.

Also, many studies have shown that many pensioners do not claim all of the benefits they are entitled too because the process was found to be a too complex procedure. 

State Pension Age and Longevity

The link between State Pension Age and longevity has been confirmed, which means that in future there will be an automatic review of the state pension age.

The State Pension Age is already scheduled to increase to age 67 by 2026 for both men and women. This new link will mean that the state pension age could keep increasing if longevity increases.

This automatic review of state pension age will make retirement planning a little more complicated, as it means that there will be no definite State Pension Age to prepare for. It will effectively become a moving goalpost.

This does highlight the fact that the younger generation will be working for longer than those currently retiring and this will become the norm. The only way for an individual to avoid working until their late 60s or even early 70s is to properly plan and prepare for their own retirement and not rely on the State Pension. This gives an individual control of the date when they want to retire. 

Pension Tax Relief

What has been announced regarding pension tax relief? Nothing!

A limit on uncapped income tax relief will be introduced for anyone claiming more than £50,000 of relief. This limit will be set at 25% of income. However, this DOES NOT affect pension’s tax relief. After a great deal of speculation, there has been no change to either the operation of pension’s tax relief or to the Annual Allowance.

Mansion tax by another name?

From midnight on Budget day, a new stamp duty level of 7% for homes worth more than £2m was announced. This is up from 5%.

As has been detailed in great depth by the media this week, any such homes bought through companies will now pay 15%.

There is also to be further consultation on the introduction of "a large annual charge" on properties already held in so-called "corporate envelopes". 

And finally...

There is always one headline grabbing item in the budget and beyond the freezing of the age related income tax allowance, this year is no exception.

Widely reported in today’s papers is the "takeaway tax". This is the inclusion of VAT at the 20% rate of food which is "warmer than the ambient temperature". Not only can you expect to see the price of your supermarket rotisserie chicken to rise but also those trips to Greggs the Bakers will also become more expensive.

There is - sadly - no change to existing plans on fuel duty - a 3.02p per litre increase will go ahead on 1st August as reported previously. Vehicle excise duty is set to rise by inflation.

Duty on all tobacco products is to rise by 5% above inflation from 1800 GMT on Budget day - the equivalent of 37p on a packet of cigarettes. There is no change to existing plans on alcohol duty and this means that the duty will rise 2% above the rate of inflation, putting more than 5p on the price of a pint.

And Finally...

Have you heard of Generation V?

These are Britain's 60 and 70 year-olds and have been described in a new piece of research as the luckiest generation alive.

Born to a nation of heroes, following victory after the Second World War, this generation has lived through more than six decades of peace, prosperity and technological innovation.

This research has shown exactly why this generation is classed as the luckiest on the planet. It was in 1957 Prime Minister Harold Macmillan told the British people that most of them had “never had it so good".

For those people who can count themselves amongst Generation V, these words turned out to be very true. This generation grew up with Elvis and the Beatles , the Swinging Sixties, and the birth of Colour Television. They benefited from the booming housing market of the '80's and the research has shown in the early part of the first decade of the 21st Century they actually held 80% of the UK’s wealth.

Proving that age is not an issue for this generation almost half describe themselves as ‘younger than my years’ and less than 1% think of themselves as ‘old’. This generation is not only fit in mind, but in body too. Nearly half of Generation V regularly undertake physical exercise three times a week - more than the recommended average for people of their age.

As part of the generation which has seen NASA put men on the moon and the invention of smaller and smarter mobile phones, the members of Generation V are certainly not shy of new technology. Many of them are as active online as much as they are offline. Generation V spend a great deal of time, and money, on the internet.

Keeping up to date with modern society and trends is also very important to them with 40% having an active Facebook account and almost 30% using Skype to communicate with friends and family.

However it is the power of the grey pound which sums up the positivity and ambition of Generation V. One fifth is still working but for most, this is the time in life to enjoy the fruits of their labour, and many of them they certainly are! They indulge themselves by dining out and going to the theatre, going on holidays often two or three times per year, and making improvements to their homes.

Long may it continue!

Deposit Rates - Easy Access

Continuing with our theme of looking at the best deposit rates currently on offer this month we wanted to revisit the tricky area of easy access deposit accounts.

This could be the account in which you store your rainy day funds or money simply there for an emergency. Whatever it's use it tends to be the place where you keep savings which you are not prepared to tie up for any period such as a notice type account or even a longer term fixed rate bond.

This is traditionally the place where you receive the lowest of interest rates but it does not have to be this way. A little shopping around can find easy access accounts with a slightly higher rate of interest. With inflation starting to fall slightly it is very important to  make sure you do all you can to try and preserve the real value of your money over the longer term.

With this in mind we have taken a look at some of the best easy access accounts out there at present.

Allied Irish are offering an easy access reward account with interest payable annually. This offering has a very generous 3% gross per annum and the account can be managed by post or telephone.

If you would prefer to receive your interest more regularly then ING offer their account which pays montlhy interest at a rate of 2.90% gross per annum. This account can be managed online or by telephone.

Finally, are you looking for a more tax efficient offering? Then Virgin 's Easy Access Cash eISA is currently paying in interest rate of  2.85% per annum.

As always I hope this information is useful to you - if there is a specific area that you would like us to comment on then don't hesitate to let us know. 

Retail Distribution Review

The financial services sector is currently preparing for the Retail Distribution Review (RDR) – one of the biggest overhauls of financial regulation since the Financial Services Act was introduced in 1986.

Its aim is to improve service levels, transparency and ensure the interests of financial advisers and their clients are in line.

For the Financial Services Authority, the industry regulator, RDR is about establishing a “resilient, effective and attractive retail investment market that consumers can have confidence in and trust, at a time when they need more help and advice than ever with their retirement and investment planning”.

The good news for clients of RIS is that we have been working this way for many years. Our business is geared to providing excellent levels of client service, our remuneration is completely transparent   and both Pat and Steve are already qualified to the standard which will required by the industry from next year.   

Retirement Options Seminar

Just a reminder about our upcoming Retirement Options Seminar. If you, or anyone you know, is coming up to retirement in the near future and would like a comprehensive overview of what your options are and how you can plan to make the most of them, this free seminar is the ideal opportunity.

Following on from our extremely successful ‘7 Essential Steps for Everyone Facing Retirement’ seminar the message from this seminar is "Don't go into retirement ill prepared".

We want to help take the worry and guesswork out of planning for retirement by holding this free seminar about the options available at retirement.

At the seminar you will learn:

  •  What options are available to you at retirement
  •  How to cut through the pension jargon
  •  See if you could boost your retirement income at no extra cost
  •  The importance of keeping your options open throughout your retirement to handle any unforeseen expenses that may occur
  •  How to find out what the State will pay you and when
  •  The value of independent advice at this crucial time
If getting on top of your retirement options is on your "to-do" list, we would be delighted if you could join us at the Solent Hotel & Spa, Whiteley on Thursday 29th March 2012 at 6.30pm. To book your free place, please contact us on 01489 878300 and speak to one of our friendly team or register on our website.

Places are limited so book early to avoid disappointment. If you know of someone else who may benefit from this informal but informative event, please feel free to pass on the details.

Thank You

We have now had the opportunity to fully review the responses to our recent client survey and we would like to say thank you once again to all of those who took the time to get involved and for your kind and constructive comments.

One of the resounding sentiments to come from the research is how many of you would be prepared to refer our services to a friend, relative or colleague.

At RIS many of our clients are referred by friends and colleagues and this is our preferred method of conducting business.

This type of client endorsement is very valuable to us and to show our appreciation we want to ensure this loyalty is rewarded. With this in mind, we wanted to inform you of our referral scheme.

For each person that is referred to us by you who then goes on to become a client in their own right, we will give you the choice of a luxury gift. It is just as our way of saying thank you. This could be a meal at a beautiful restaurant, a luxury hamper or even gift vouchers, the choice is yours.

Many of you have said how keen you would be to support us and we wanted to remind you that if you do then that support is well rewarded.

March 2012 - a Budget packed with surprises?

The Chancellor is under serious pressure to produce a growth Budget on 21 March. But where will the money come from for tax cuts for entrepreneurs and businesses generally, not to mention other good causes? Increased borrowing is probably not the answer, if Mr Osborne has been influenced by Moody's shot over his bows when the ratings agency recently designated a negative outlook for the UK economy.

One answer, according to commentators, would be to raid the higher rate tax relief on pension contributions - there have been several stories to that effect in the Financial Times and elsewhere. Of course, this has been threatened many times in the past. But this time could be different.

For a start there are people in the Coalition Government - the Lib Dems - who favour the policy. And discussions about the possibility of abolishing higher rate tax relief have been reported as taking place at the highest levels. The practicalities have been an inhibiting factor in the past, but now the legislators know exactly how to do it from their recent experience under the previous occupants of Downing Street. What's more, it would look as if we really were "all in it together".

Of course, there would be a lot of squealing - and quite right too. Yet what is the alternative political home for those who don't like the idea? It is unlikely that most would be tempted into voting for Mr Miliband. David Cameron and George Osborne can blame Clegg and co. And there's no getting away from the fact that it would raise billions.

So the Budget really could contain some major surprises this year - and pensions tax relief might only be one of them.

Here at RIS we will be watching the budget closely to see what impact it has on our clients. Shortly afterwards we will be issuing a budget summary newsletter detailing how we think this affects you.

Protecting the Family Jewels

Most of our clients have spent many years growing their wealth through property and investments and we are proud to have played our part in helping them to achieve their goals.

However we find that most people fail to consider how they can protect that wealth both for themselves and for future generations. Maybe you have never considered how easy it could be for your wealth to be quickly eroded by the cost of residential nursing care or inheritance tax.

If you have children from a previous marriage, you may want to ensure that some of your wealth will eventually pass to your own children. This may also be the case if your spouse decided to remarry after your death.

Once your wealth passes to the next generation it could be at risk from more threats;

  • If one of your children has a shaky marriage which ends in separation and divorce, then your wealth could find its way into the hands of your ex-son or daughter-in-law.
  • Your wealth could be taken by creditors if your children cannot repay their personal or business debts.
  • In an extreme case it may even be life threatening to give a large sum of money to a beneficiary who is addicted to drink or drugs.

 However, the good news is that we have developed a solution for our clients who have the foresight and desire to protect their property and investments from these risks.

This solution would allow you to leave a Family Legacy Fund to help future generations with their education, buying a house and retirement planning.

 Obviously you will want to know more, so we have prepared a factsheet which is freely available on request.

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Contact us

Retirement and Investment Solutions
5 Lancer House, Hussar Court
Hampshire, PO7 7SE

T: 01489 878300
F: 0870 0104883