Congratulations to all you quitters! 
If you quit smoking more than 12 months ago then read on…

Along with the many benefits quitting smoking has on your health it may also have additional finanical benefits you may not have thought of.

If you have a life insurance policy that was set up when you were a smoker, you will be paying ‘smoker rates’.

If you quit smoking more than 12 months ago you may be able to reduce the monthly premiums you are currently paying by taking out a new policy based on ‘non-smoker rates’. Once the new policy is in place you can simply cancel your existing policy.

Here’s a typical example:

James took out a 20-year, level term, life insurance policy when he was a 40 year old smoker, two years ago. He is currently paying a premium of £19.68 a month.

He quit smoking 18 months ago and even though he is now two years older, he can get the same cover for the remaining 18 years, for just £12.29 a month... a saving of £7.39 a month (£1,596 over the remaining term!).

If you would like us to provide you with a no obligations quote based on your current circumstances please contact us.

For further information on life insurance visit our life insurance page.

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Your 2009/2010 Cash ISA allowance - Use it or lose it! 
Have you checked the interest rate you are earning on your savings accounts lately? You could be earning as little as 0.1%!

Make sure you earn a good return on your savings and make sure you protect this money from the taxman by placing it into an easy access Cash ISA.

Some of the best rates on easy access Cash ISAs are currently offered by Alliance & Leicester (3.5%), and Barclays (3.1%). These accounts include bonuses for the first year so make sure you review your Cash ISA regularly, at least once a year. These accounts do not allow transfers from previous years’ ISAs.

If you are looking to transfer Cash ISA funds that you have built up over previous years, you may wish to consider First Direct (2.75%) or Nationwide (2.75%). You must open, or have, a current account open with these banks in order to qualify for these top rates, which are available online.

Alternatively if you have more than £9,000 of previous years’ Cash ISA funds you may consider Alliance & Leicester who currently offer 2.75%AER for an online-only Direct ISA.

For more information on ISAs please see our ISA page.

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What is Business Protection? 
Research suggests that just 4% of business owners have Business Protection cover in place even though:

* 69% say losing a key individual would have the biggest impact on their business.
* 29% say they would cease trading within 3 months – and 44% within a year.
* 47% have nothing in place to establish what would happen in the event of the death of a business owner.

Death of a Business Partner

On the death of one of the partners in a firm, the beneficiaries of that partner (usually a spouse or family member) may wish to withdraw his/her share of the partnership’s value. This can cause problems for the remaining partners because it might mean that they will have to sell partnership assets to pay the deceased partners family. One solution would be for the partners to insure against the death of each partner – in order to buy out their share.

Death of a Key Employee

The death of an important employee, especially in a small company, may have a devastating effect on a company’s profits. A company may wish to insure against the death of such key employees.

Death of a small Business Shareholder

Small businesses usually have a small number of share holders (often family members, relatives or friends). Surviving shareholders in a small business will probably thus want to buy shares of a deceased shareholder to prevent the shares from going out of the close circle of existing shareholders.

Business Protection helps businesses carry on trading if a key member of staff, shareholder or director dies or contracts a critical illness during the term of the plan.

Contact us if you want to ensure that your business is fully protected.

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Inheritance Tax – A little planning can save you a lot of money - Don’t put it off until its too late! 

Richard & Hayley’s Story

Richard and Hayley had been married for many years and each had estates which, when valued together, were worth £780,000 in 2007. Hayley and Richard were both UK domiciled.

Richard died in May 2007 having made no lifetime transfers, so all of his assets passed across to Hayley. As the transfer of assets were between spouses, they were exempt from IHT.

Hayley died in June 2009 with an estate valued at £1.3m, again having made no lifetime transfers. Because of transferable nil rate bands, Hayley’s executors can now claim an increase to Hayley’s nil rate band (the nil rate band is £325,000 for the 2009/10 tax year). Since Richard hadn’t used any of his nil rate band the increase would be 100%. Hayley’s estate therefore has a total nil rate band of £650,000.

When this is applied to the value of her estate of £1.3m, the liability to IHT reduces

£1,300,000 - £325,000 = £975,000
40% of £975,000 = £390,000

£1,300,000 - £650,000 = £650,000
40% of £650,000 = £260,000

In this example, even when making use of the transferable nil rate band an IHT liability of £260,000 arises.

Unfortunately Richard and Hayley had not looked into IHT mitigation and as a result their heirs were faced with a rather large IHT bill.

A simple Whole-of-Life Protection Plan, written in Trust, could have provided the necessary funds to cover the IHT bill.

Various other IHT mitigation strategies could have removed the bulk of their assets from their estate, either immediately or over a seven year period, without depriving them and their beneficiaries of flexible access.

For further information see our Inheritance Tax Issues page .

If you would like us to calculate your potential IHT liabilty and discuss what options are best suited for your particular circumstances please contact us .

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21 million people in the UK are eligible to shelter an additional £3,000 of savings from tax as from 6th October 2009 

From 6th October 2009 anyone aged 50 or over this tax year can save an additional £3,000 in their Individual Savings Accout ( ISA ).

Up until now consumers have been able to invest a total of £7,200 each tax year within the tax shelter of an ISA .

As from 6th October 2009, anyone over the age of 50 can invest a total of £10,200 in an ISA (with up to £5,100 in a Cash ISA).

From 6th April 2010 this new allowance is extended to anyone aged 18 or over.

With 21 million eligible people in the UK and at a time of record low interest rates, this opportunity to shelter an additional £3,000 of savings from tax should not be ignored!

Remember you can hold up to two ISAs each year. One cash ISA and one equity ISA , which is used as a tax free wrapper for stocks and shares and fund investments.

Under the new rules and from the dates stated above, you can put up to £10,200 into an equity ISA , minus the amount you have put in a cash ISA. The most you can put in a cash ISA is £5,100.

For further information see our ISA page or contact us.

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Minimum Pension Age to increase from 50 to 55 as from April 2010 
Since April 2006, the minimum age from which you could take benefits from a registered pension scheme was age 50.

As from 6th April 2010 the minimum age will increase to 55.

How will this change affect you?

The effect of this change will depend on your age and whether or not you have started to take benefits from the pension. The categories are as follows:

1) If on 5th April 2010 you are aged 49 or below, the earliest you will be able to take benefits will be age 55.

2) If you are between age 50 and 54 on 5th April 2010 and you have not yet taken benefits, you could draw benefits immediately (provided you are aged 50) or at any time up to 5th April 2010. However, if you decide not to take your benefits before 6th April 2010, the earliest you will be able to take benefits after 5th April 2010 will be on your 55th birthday.

3) If you are between age 50 and 54 on 5th April 2010 and you have partially or fully taken benefits and/or you continue to contribute to your pension policy, any benefits not drawn by 6th April 2010 will not be able to be taken until you reach age 55. This does not affect your pension income already in payment, just new lump sums and the corresponding income.

What if you don’t need an income from your pension just yet but would like to get hold of your Tax Free Cash entitlement?

If you are aged 50 or above there are ways of taking your Tax Free Cash lump sum now and taking the income at a later date when required. This may prove invaluable if you need your Tax Free Cash now. Remember after 6th April 2010 you will not be able to take any benefits from your pension until you reach age 55.
If you would like to learn more about your options at retirement click here .

Please contact us for further details and personalised illustrations.

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Personal Accounts/NEST – The story so far… 
The Pensions Commission found that between 9.6 and 12 million people were undersaving based on the benchmarks they set out. In order to deal with this issue, the Government will be introducing a national pension savings scheme as from April 2012. The scheme was initally known as the ‘personal accounts’ scheme but is now called the ‘National Employment Savings Trust’ or simply ‘NEST’

Employees and employers will be forced to contribute to a NEST account on behalf of the employee, unless the employee chooses to opt out.

Under this new scheme, all employees will be automatically included in a NEST scheme unless their employer already offers a suitable alternative pension scheme. Importantly employees will be forced to contribute 4% of band earnings and employers will have to contribute 3%. A further 1% will be paid in the form of tax relief meaning that a total contribution of 8% of band earnings will need to be paid into the NEST scheme.

Employers must contribute 3% of band earnings, currently described as 3% of employee earnings between £5,000 and £33,500. Employers will be able to phase this in, starting at 1% in 2012, 2% between 2016 - 2017, and 3% by October 2017. In addition, each employer will need to offer an auto-enrolment facility for all members of staff which will need to be in place by the beginning of the 2012 tax year.

Employees will need to contribute 4% of salary, unless they elect to opt-out of the scheme, while HMRC will contribute a further 1% by way of tax relief.

Small employers with fewer than 50 workers will not have to take part in the scheme until sometime between March 2014 and February 2016.

Employers must give new staff basic information about the scheme and staff must be enrolled within a month of starting work. Employees will then be given a further month to decide whether to opt-out.

Employers who already offer employees a pension scheme will have to ensure that their existing scheme is a Qualifying Workplace Pension.

Employers that do not currently offer employees a pension scheme, or those whose schemes do not pass the scheme exempt test and are therefore not considered to be qualifying workplace pension schemes will have to act to comply.

Many details regarding NEST accounts are yet to be finalised and we will aim to keep you posted with the latest developments.

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