• Child benefit is a tax-free payment that is aimed at helping parents cope with the cost of bringing up children
• One parent can claim £20.30 a week for an eldest or only child and £13.40 a week for each of their other children
• The payments apply to all children aged under 16 and in some cases until they are 20 years old
• The system is administered by HM Revenue and Customs (HMRC) which pays out to nearly 7.9 million families, with 13.7 million children

From January families where one parent is earning more than £50,000 a year, will no longer be able to claim the total amount of child benefit.  How these rules are put into action is still being worked out by the UK tax authority. However, this will include an expectation of couples to disclose to each other whether they claim child benefit, or earn above £50,000 a year. The amount received will be withdrawn gradually as one parent’s income rises above £50,000, with the child benefit being eroded completely once someone’s income is £60,000 or more.

If one of the parents earns more than £60,000, they may choose to stop claiming child benefit and save the tax authority the trouble of getting it back. But if they keep claiming it, then they will have to declare this in a self-assessment tax form.  This is expected to force half a million people to start completing tax returns.

We advise that clients should address this matter early, rather than suffering what can be seen as a double taxation of earned income, and the inconvenience and perhaps accountancy costs of completing a self-assessment return.  We have already advised a number of clients who’s income may exceed the £50,000 threshold.  As well as paying tax on this income they are now likely to lose what has been a valuable benefit.  Through financial planning there are legitimate ways of reducing income such as making contributions to a Personal Pension.   As ever if clients don’t plan for these matters the tax man will benefit.

*Source Legal & General

2. You could get tax relief on your pension savings – For every 80p paid into your pension plan, as a basic rate tax payer, the Government will currently pay in an additional 20p.

3. Your employer may make payments into your plan -  If you pay some of your annual salary into a company pension plan, your employer may match your contributions, which helps build your pension fund.

4. Your pension plan is yours to keep, even if you move jobs -  If you leave your employer before you retire, you can take your pension plan with you – it doesn’t tie you down.

5. On average, we’re all living longer so you’ll want more in your pension fund - As life expectancy increases you’re likely to have a longer retirement.  And that means you’re likely to need more in your pension fund.

Feel free to contact us to help you get the reirement you deserve.

You can get a free credit score by ordering a report from Equifax, Experian or CallCredit.  Equifax and Experian will require you to set up a DD but both have a “free 30 day trial”.  Go on, get your score, and make sure you cancel your membership within the 30 days unless you want to continue using the service.

If you have a low score there are things you can do to improve it, such as:

• Get registered on the electoral role
• Space out applications, not just for credit but for car insurance, mobile phones and others, as all can leave searches on your file.
• Get Credit – if you have never borrowed you probably won’t have a score.  Get a credit card, spend on it and pay off the balance in a timely manner.  This will prove that you can be trusted by lenders.

‘Cash back websites’ pay you when you click to other websites through them.  If you click through sites such as Topcashback and Quidco you will actually get paid for checking your credit score.

This news coupled with the fact that many already claiming incapacity benefit will not be deemed eligible under the new criteria is very saddening.  Whilst there would be nothing that we in the Financial Services industry can do for those affected now we are advocates of having a back up plan.  Do you have something in place already that will provide you with an income or pay your bills should you become unable to work because of accident or illness?

There is a vast array of products out there that can provide a replacement income on either a long or short – term basis.   There are variations that can suit everyone’s budget and tailored products for the self employed, taxi-drivers and professionals.  There are products available where you don’t have to declare your earnings in order to claim.

More and more of the insurance providers are promoting their income protection products.  Aviva caused uproar recently by launching their income protection campaign during primetime Sunday evening viewing.  The media backlash about people being upset by Gary’s story whilst watching Downton Abbey was phenomenal.  I wonder did the same people stop and consider the message that Aviva were trying to get across?  Gary is real a person and it is a true and real life example of how being prepared has helped him on his long journey to recovery.

Key man insurance protects business against the financial loss it would incur from the death or extended incapacity of a key individual within the business, and in turn would ensure the continuity of the business.

Key man insurance policies compensate with a fixed monetary sum as specified in the policy.

What does a key man insurance policy cover?

You can generally cover three categories of loss with a key man insurance policy:

1. Compensation for losses related to an extended period where a key person is unable to work. Compensation to find a temporary replacement, and cover the cost of recruitment and training of that replacement individual.
2. Protection of profits and compensation for the loss of income, sales or other losses from the delay or cancellation of a project the key person was involved in, loss of specialist skills, loss of knowledge or loss of opportunity.
3. Protect anyone guaranteeing business loans or banking facilities. Insurance cover arranged is equal to the guarantee given by that key person.

How do I identify a key person?

A key man can be anyone directly associated with a business whose loss can cause a strain financially. They could be a director, partner, manager, or someone with specialist skills or knowledge that is particularly valuable to the company

INCOME TAX

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

Personal income tax allowance raised to £9,205 from April 2013 – a move the government says will make 24 million people £220 a year better off.

But 300,000 more people will be drawn into the higher rate – 40% – tax band from 2013/14 as the threshold is reduced from £42,475 to £41,450.

PENSIONERS

Pensioners will no longer receive a larger personal income tax allowance than people of working age.At present, the over 65s can earn £10,500 before tax, while those over 75 can earn 10,660, but those age-related allowances will 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 estimates that in 2013-14, 4.41 million people will be worse off in real terms, thanks to inflation, with an average loss of £83.

Within that total, 360,000 individuals aged 65 will lose an average of £285, while 230,000 people will be brought into income tax for the first time.

Automatic review of state pension age to ensure it keeps pace with increasing lifespans.

New single-tier state pension for future pensioners to be set at about £140 and based on contributions.

CHILD BENEFIT

Will be reduced incrementally when someone in a household has an income of more than £50,000. It will fall by 1% for every £100 earned over £50,000. It will mean those affected will have to fill out self assessment tax forms.

Anyone earning more than £60,000 will lose the benefit completely.

ECONOMY

Independent Office for Budget Responsibility (OBR) revises up UK growth forecast for 2012 to 0.8% – from 0.7%.

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

Eurozone growth forecast for this year revised down from 0.5% to -0.3%.

UK inflation forecast to fall from 2.8% this year to 1.9% next year.

BORROWING

Borrowing this year to be £126bn – £1bn less than forecast in the autumn. Predicted to be £120bn in 2012-13 and £98bn in 2013-14. Forecast to fall to £21bn by 2016-17.

Consultation to be held on offering gilts – government bonds – with maturity terms of more than 50 years to take advantage of current low interest rates.

JOBS AND SKILLS

OBR forecasts unemployment to peak this year at 8.7% before falling each year to 6.3% by 2016-17.

One million more jobs to be created in the economy over five years, OBR says.

HOUSING

From midnight on Budget day, new stamp duty level of 7% for homes worth more than £2m – up from 5%. Any such homes bought through companies will pay 15%.

Consultation on the introduction of “a large annual charge” on properties already held in so-called “corporate envelopes”. Treasury sources have suggested up to £140,000 a year on any worth more than £20m, down to £15,000 a year on those worth £2m-£5m.

Extra funding to help construction firms building new homes.

BUSINESS TAXES

Corporation tax cut to 24% from next month. By 2014 it will fall to 22%.

Consultation on simplifying the tax system for small firms with a turnover of up to £77,000.

Tax relief for the video games, animation and high-end television production sectors.

“Above-the-line” tax credit – a credit against a company’s corporation tax – from next year for firms conducting research and development.

Government support for £150m of tax increment financing to help councils promote development

OTHER HELP FOR BUSINESS

Relaxation of Sunday trading laws on eight Sundays during Olympics and Paralympics, starting July 22.

Enhanced capital allowances for businesses setting up in new Scottish enterprise zones in Dundee, Irvine and Nigg. A Welsh enterprise zone to be created in Deeside.

Enterprise finance guarantee, in which the government guarantees bank loans to small business, to be expanded.

Government considering enterprise loans for young people to start their own business.

Extra £270m for the Growing Places fund, which aims to boost local economic growth and job creation.

ARMED FORCES

Cost of operations in Afghanistan to be £2.4bn less than expected.

Money saved will provide an extra £100m to improve military accommodation.

Personnel serving overseas will receive 100% relief on an average council tax bill.

Families welfare grant also doubled.

PUBLIC SECTOR

Government evidence to be published on the case for regional public sector pay.

Option for government departments to move to regional pay structures for civil servants when current freeze ends.

ENERGY

“Major package of tax changes” to boost oil and gas extraction in North Sea, along with £3bn new field allowance west of Shetland.

FUEL, CIGARETTES, ALCOHOL AND GAMBLING

No change to existing plans on fuel duty – a 3.02p per litre increase will go ahead on 1 August.

Vehicle excise duty to rise by inflation, but frozen for road hauliers.

Existing fair fuel stabiliser means above-inflation rises in fuel duty will return only if price of oil falls below £45 ($70) a barrel.

Duty on all tobacco products to rise by 5% above inflation from 1800 GMT on Budget day – the equivalent of 37p on a packet of cigarettes.

No change to existing plans on alcohol duty – meaning the duty will rise 2% above the rate of inflation, putting more than 5p on the price of a pint.

New duty on gaming machines at a standard rate of 20% and a lower rate for low-prize machines of 5% of net takings.

Shift in gambling taxation – will be levied where the customer is based not the company. The aim is to discourage firms from relocation overseas.

TRANSPORT AND INFRASTRUCTURE

Network Rail to upgrade the Transpennine route between Manchester and Sheffield. Further improvements to the lines between Manchester and Preston, and Manchester and Blackpool.

Report on the future of aviation in south-east England to be published in the summer.

Funding for superfast broadband and wi-fi for the UK’s 10 largest cities.

VAT

“Loopholes and anomalies” to be removed – including removing exemptions for sports nutrition drinks and hot takeaway products in supermarkets. Self-storage, static caravans and hairdressers’ chairs will also no longer be exempt.

Existing VAT exemptions will remain for food, children’s clothes, books and newspapers.

OTHER TAXES AND ALLOWANCES

Bank levy to be increased to 0.105% from January 2013 “to ensure that corporation tax cuts do not benefit the banks”. The levy will raise £2.5bn a year.

New cap on tax reliefs set at 25% of total income for anyone claiming more than £50,000 in a year, but no significant change to pensions relief.

Personal tax statement to be sent to 20 million taxpayers from 2014. It will detail an individual’s income tax and National Insurance payments and how those contribute to public spending.

New general anti-tax avoidance rule to be introduced.

Consultation on integrating income tax with National Insurance.

WELFARE

George Osborne said that if reductions in departmental spending continue as they have, further savings of £10bn will be needed by 2016.

Treasury officials say it is “very early days”, and the chancellor’s remarks simply “set out the scale of the challenge”.

GREEN MEASURES

Government to seek “major savings” in the administrative cost of the Carbon Reduction Commitment, and bring forward an alternative environment tax this autumn if such savings cannot be found.

It’s not just working mums who need life insurance. Despite the fact that many women bring home the bacon, there are still as many who are at home cooking it. The value of the work a mum does around the home could be as much as £30,000 a year. This includes the cost of household chores such as cooking, cleaning, ironing, and shopping, as well as the cost of bringing up the children.

The day-to-day costs of looking after the little ones have gone up 8% over the last 2 years, from £132 a week to £143. Even those mums who have part-time jobs don’t hugely reduce the amount of time dedicated to parenting – the value of part-time working mums comes to £28,664. At the moment, over 50% of mums don’t have life insurance. With the government’s austerity measures hitting families hardest, and the cost of living continuing to rise, it has never been more important to review your family’s level of protection

You have up until 5^th April to maximise your tax break by using your full ISA allowance.

What is an ISA (Individual Savings Account)?

ISA’s were launched in 1999 to encourage people to save, with the intention of increasing the value of the money invested, and for many is an integral part of their retirement plan.  There are good ones and bad one’s, so don’t fall into the trap of assuming they’re all the same.

In short it is a savings vehicle that allows you to earn interest or income without paying UK Income Tax and you do not have to pay UK Capital Gains Tax on any growth.

What does that actually mean for you I hear you ask……….Everyone’s circumstances are different but if for example you are a basic rate tax payer and your savings are NOT in an ISA then usually you would have to pay 20% tax on your savings interest.  If you are a higher rate tax payer, outside an ISA you would usually pay tax at 40% on your savings interest.

They are flexible in the sense that you have easy access to draw on your savings for life’s little emergencies, which let’s face it do happen.

Here is a very brief overview of the types of ISA currently available.

Cash ISA – classed as low risk, and because they are tax efficient you are likely to get a higher return than you would from a standard deposit savings account.  The maximum contribution for the tax year 2011/2012 is £5,340.  This allowance increases on an annual basis generally.  Current returns are poor because bank interest rates are poor.

Stocks and Shares – exactly as the name describes this allows you to put money into funds that invest in stocks and shares in a tax efficient way.  You can choose the fund and the aim is for long term growth.  They are classed as a higher risk and therefore have potential for higher return than the Cash ISA.  The day to day management is done by an experienced fund manager who is an expert in this field and will work hard to get the best returns. We endeavour to pick the cream of the crop taking into account your needs.

Junior ISA’s – these are long term tax free savings accounts for children. They are available to UK residents under the age of 18 and who DO NOT have a child trust fund account.  Many parents are using these to save for university costs, a deposit for a house or just a great start in life for their kids.  Anyone can pay into a Junior ISA up to a maximum of £3,600 in each tax year.

All ISA’s have strict rules to adhere to and each individual has an allowance each year.  For example for this tax year 2011/2012 if you invest £5,340 in a cash ISA and the remainder in a stocks and shares ISA up to your full allowance of £10,680 and then later withdraw £5,000 in the same tax year, you cannot replace that money until you have a new allowance in the following tax year.

As with all investments you may get back less than your original investment and a word of warning to those generous, parents, grandparents, aunties and uncles who are considering setting up a Junior ISA.  Once little Johnny or Rebbecca hits 18 years of age they are the legal owners of that Junior ISA which will automatically convert to an adult ISA if no withdrawal is made.

We would be pleased to discuss how you may wish to use up this year’s allowance and/or review your existing ISA’s?

• Are you clear what you have?
• Do you have them reviewed regularly?
• Are you clear how your money is invested?
• Who invests it, and is the same fund manger running the fund as when you selected the fund?
• How much are you being charged?

Speaking with us could be time well spent!

Depending on the type of pension scheme the money is coming from, you will generally be able to boost your retirement income significantly. The easy thing to do when the paperwork lands on your doorstep is to tick a few options and sign on the dotted line. The majority of us are guilty of doing this for various reasons. By accepting the first offer laid on the table you are potentially locking yourself into a poor deal for the rest of your life. Take your time, understand all the paperwork, ask any questions you might have and make a few phone calls.

The number one annuity provider in the UK changes virtually on a daily basis and the income quoted from number 1 in the rankings and number 6 could be as much as £500 per year. Over 20 years that equates to £10,000.

Why would you not shop around?