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February 2018

Don’t miss the ISA deadline for tax-efficient investing

Each tax year, we are each given an annual Individual Savings Account (ISA) allowance. The deadline to add to the account is midnight, Thursday 5 April 2018 and it’s a ‘use it or lose it’ allowance. If you don’t use all or part of it in one tax year, you cannot carry that allowance over to the next year.

The ISA limit for 2017/18 is £20,000 which is remaining the same for 2018/19.

Tax Efficient Savings – Income and growth within an ISA are completely tax free. Any withdrawals from the ISA are also tax free.

Support Your Retirement Plans or Future Objectives – Building up an ISA portfolio can be a very effective addition to your future retirement pot, or to provide a sum of money to support other future financial plans. To support other retirement income, regular withdrawals can be made from ISA’s to provide additional income tax free.

Types of ISAs and allowances

Cash ISA – Anyone over the age of 16 can put their cash savings into a Cash ISA. Accounts can be either instant access, have notice periods or have fixed terms.

Stocks & Shares ISA – Anyone over the age of 18 can put individual shares or managed funds into a Stocks & Shares ISA.

Innovative Finance ISA – This ISA is for investments in peer-to-peer lending platforms. You must be over the age of 18 to invest.

Help to Buy ISA – To help first-time buyers over the age of 18 get on the property ladder. You can start with a lump sum deposit of up to £1,200, then save up to £200 a month. For every £200 you save, the Government will add 25% up to a maximum bonus of £3,000. It’s available per buyer, not household, so if you are saving with a partner, the bonus potential is up to £6,000 towards your house deposit.

Lifetime ISA – Designed for your first home or retirement, it allows you to save up to £4,000 annually to receive a 25% government bonus. You are only allowed to invest into a LISA between the age of 18-39. You must buy a home for £450,000 or less, or to withdraw the cash for retirement you must be 60 plus.

Junior ISA – Cash or investments can be wrapped in this ISA on behalf of children under the age of 18. The Junior ISA has an annual allowance of £4,128 increasing to £4,260 in 2018/19.

ISAs are becoming an integral part of financial planning. However, it is important to remember that an ISA is just a way of sheltering your money from tax. It’s not an investment in its own right although they offer a unique range of benefits.

Whatever your age or personal situation, it is vital to consider your saving strategy as early as possible, and reassess regularly on an ongoing basis. Any savings plan needs to be specific to personal circumstances and objectives, and needs linking to all aspects of your personal finances.

At Clarke Nicklin Financial Planning, we will always assess each clients’ circumstances in detail to arrive at a savings strategy that meets personal objectives. For every client, we will review and revise this with you on an ongoing basis as circumstances and objectives evolve due to your personal and family circumstances changing.

If you wish to discuss this further with one of our advisors please do not hesitate to call Kath Arnold on 0161 495 4700 or email kathrynarnold@cnfp.co.uk.

Important information

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.

The value of investments and income from them may go down. You may not get back the original amount invested.

Past performance is not a reliable indicator of future performance.

 

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Auto enrolment increase – 6 April 2018

On 6th April 2018 both employer and employee regulatory increases will be applied to all pension schemes for auto enrolment, with further increases to be made in April 2019.

It is the employers obligation to inform employees of this increase as they will be automatically applied by your pension provider.

The amount that you and your staff pay into your pension scheme will vary depending on the type of scheme you have chosen and the rules of that scheme, for example if you have opted for a basic salary scheme the contributions differ.

Most employers use the schemes that currently require a total minimum of 2% contribution to be paid. The scheme contributions are calculated on a range of qualifying earnings between the proposed lower limit of £6,032 and upper limit of £46,350 (2018/19 tax year).

 

Date

Employer minimum contribution  Employee contribution Total minimum contribution
Up to 5 April 2018 1% 1% 2%
6 April 2018 2% 3% 5%
6 April 2019 3% 5% 8%

 

You do not need to take any further action if you don’t have any staff in a pension scheme for automatic enrolment or you are already paying above the increased minimum amounts.

If any of your employees do not want to increase their contribution they must opt out of the scheme by April 5, 2018. As an employer though you cannot be seen to be offering advice on this, you need to remain impartial.

Clarke Nicklin’s IFAs have achieved the ‘Certificate in Pensions Automatic Enrolment’ designed to specifically meet the needs of those advising on, or implementing the requirements of Auto Enrolment. We will always assess each clients’ circumstances in detail to arrive at the best scheme for both employers and staff on an ongoing basis as circumstances and objectives of the company evolve.

If you wish to discuss this further with one of our advisors please do not hesitate to call Kath Arnold on 0161 495 4700 or email kathrynarnold@cnfp.co.uk who will make an appointment on their behalf.

Differing generations – Are you a stereotypical saver?

There are many differing statistics around attitudes to saving and investing, suggesting as we mature our focus and mind set will shift.

According to statistics*, Millennials (age 21-34) focus on working in a fulfilling career and making money, whilst as we move into Generation X (age 35-49) we focus more on health, keeping fit and family time.

Across generations, a common theme is the feeling that they are not saving enough. Only one third of Generation Z (age 15-20) and Millennials feel they are saving enough for their financial future, but about half are not confident in their saving strategies. Half of Generation X respondents, and about four in ten Baby Boomers (age 50-72) and the Silent Generation (age 73 upwards) respondents are saving some money, but are not confident in their financial futures.

Whatever your age or personal situation, it is vital to consider your saving strategy as early as possible, and reassess regularly on an ongoing basis. Any savings plan needs to be specific to personal circumstances and objectives, and needs linking to all aspects of your personal finances.

At Clarke Nicklin Financial Planning, we will always assess each clients’ circumstances in detail to arrive at a savings strategy that meets personal objectives. For every client, we will review and revise this with you on an ongoing basis as circumstances and objectives evolve due to your personal and family circumstances changing.
If you wish to discuss this further with one of our advisors please do not hesitate to call Kath Arnold on 0161 495 4700 or email kathrynarnold@cnfp.co.uk.

Important information

The value of investments and income from them may go down. you may not get back the original amount invested. Past performance is not a reliable indicator of future performance.

*The Neilsen generational lifestyle survey 2015 an online survey of 30,000 consumers in 60 countries. Neilsen is a leading global information & measurement company.

 

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