It is too early to know how everything will pan out, indeed it's only been three days since the UK electorate voted to leave the European Union, yet it has been the catalyst for some highly unpredictable political dynamics and for a fall in sterling to its lowest level for three decades.  But above all we have had the media full of speculation and emotional commentary, talking of carnage, turmoil, negative territory and tanking in the "markets", falling house prices and rising mortgages.
Two things that effect our ability to make decisions are emotions and uncertainty
So how can we deal with the emotional bias and uncertainty and make the best decisions we can.  I take a look at two important areas interest rates and investments.

Investments 

By the close of business on Friday the FTSE 100 stood at 6138 or -3.15% from the previous day's close at 6338.  The media called this carnage, given the fact that we have been experiencing volatility in the markets since last July and indeed during the last year the FTSE 100 lowest point was 5,499.50.  In fact the FTSE 100 stood at 5,800 only last week.

The drop in the FTSE 100 was less than the German Dax -6.82% and less than the French CAC -8.04 and less than the Spanish IBEX -12.35 %

The FTSE 100 is made up of predominantly UK registered companies that trade globally and these companies will perform better than domestically focussed UK businesses.   The pound's fall in value will not be without disadvantage as companies with oversea's earnings translate some of their profits back into sterling.

Many speculative investors had assumed that the UK would stay in and had taken positions in their portfolios to reflect this.  When the result came in on Friday morning that the UK had voted to leave the EU, they were "caught with their pants down" and panic ensued.  Stock was sold that would fare less favourably under a Brexit and a potential recession as a result of short term re-entrenchment of consumer and corporate spending. For example, some of the shares that came off worse were house builders on the back of fears of a recession and no longer being able to rely on a free flowing source of migrant workers needed to achieve the housebuilding targets.  As the markets opened Redrow's shares fell 77% - this is not down to a sudden change in the management of Redrow as a company and interestingly a few hours later the shares recovered 57% of the fall.  
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I'm sure there were city traders shorting the market and making huge profits but in  personal financial planning we don't operate in the same way.   We leave that to the hedge fund managers and concentrate on the bigger picture, sustainable growth over the long term.

Investment principles remain the same : 

1.  Know what your financial goals are, how much you need and when you need it by and why you need it - then remain confident in your goals adjusting them to suit your needs not to fit in with circumstances.

2.  Be clear on how much volatility you can personally deal with and what will keep you awake at night. Don't exceed your limits.

3.  Ensure your investments are not in shares of one or two companies but  in a fully diversified portfolio across geographic regions and across asset classes.  Invest in well managed multi asset funds or in the services of a discretionary fund manager and you will be well positioned to see through any short term market volatility.

4. Volatility can also be your friend, if you are investing regular sums of money.  Invest little and often, sometimes you will be buying "units" at a lower price and when prices move up, these are the ones that will make a significant difference to your overall wealth.  You can't time the markets but you have more of an opportunity to benefit from up turns if you are continually investing small sums. 

5.  A loss is only a loss if you cash in your investments.

Fund managers that I speak to aim to make returns over the long term, in a world where investment returns are driven by the top down impact of global macroeconomic conditions as well as the bottom up factors of enterprise, innovation, management and profitability of companies.  At the moment we are experiencing a higher amount of political influence or top down impact but their reasons for  investing in selected companies will be based on deep analysis and conversations with the company directors.  If the conviction was there in the first place any changes made in the underlying fund investments will not be as a result of a knee jerk reaction to a Brexit result. 

Mortgages 

For the of us not concentrating on saving and investing, Brexit will effect borrowers.  So what's going to happen to my mortgage, should I get a fixed rate now?  

Interest rates have been held at all time low by the Bank of England in order to allow time for the banks to build up their reserves and as a consequence of their concern over the total debt that each household currently runs.   It is only a matter of time before interest rates increase but the time being it seems that the drop in the value of the pound has meant that interest rates may well be cut, even to zero! 

The Bank of England has said it has stress tested worse case scenarios than a Brexit and will do all it can to support the economy.  If the pound falls it makes UK goods and services cheaper to buy but puts pressure on exporters and creates inflationary pressure internally.  Methods to counter this could be to reduce interest rates.  There is speculation that rates could be cut by 0.25% by August and potentially go as low as 0%.  The bank has also said it will consider monetary intervention with another programme of quantative easing if needs be. Interest rates could reduce.

But again, stick to your goals, if you are buying a property now with a mortgage and a fixed rate is right for you because it gives you stability of payments then it is right for you regardless.  A lot has happened in the last three days let along the next two - five years.  

We need to try and equip ourselves to counter emotional bias and uncertainty as best as possible so that we don't remain in a state of stasis.  It is predicted that the UK will be in a state of limbo for the next two years whilst legislation is re written and the terms of a Brexit are agreed - don't let it become a personal limbo that denies you two years in progressing your own goals. 

....and finally as I write it appears that we may have a constitutional crisis on our hands as the overall percentage of eligible voters who voted to leave the EU was 37% .  This may have given a political mandate to leave but I understand it may not have the legal standing that is required,  as it is less than the 40% trigger, which requires our  Representatives of the House of Commons, our MP's to make up their own minds.  Parliament has to protect the greater interests of the country and with the majority of MP's wanting a remain outcome......  yet more uncertainty lies ahead.  So for now I won't look at pension legislation, not just yet. 

What questions have you got about how Brexit may effect your financial planning?   Let me know I'd love to hear from you.  Please leave your questions in the comments section and lets get some conversations going.
​
Jill Turner  - 26th June 2016 

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5. Attitude to Investment Risk App - Intrinsic 

Attitude to  investment risk isn't the sole focus when working out financial plans and the right type of investment funds or portfolios for our clients.   It allows financial planners to work within a regulatory framework but it is just a starting point to much broader discussions.

Where this app excels is enabling us to engage with clients quite quickly in discussions around what may originally appear to be quite complex subjects. Investment experience to date ,  their own appetite for investment risk, capacity for loss,  appropriate asset allocations  all of which are combined with goals based planning, all during a client meeting, without having to go back and forth to the office. 

Financial Plans are built around changing circumstances, needs and aspirations and these will vary from client to client.  This app allows some of the initial concerns, goals and understandings to be worked out during a client meeting, allowing us to reach a  draft proposal stage in  a shorter time frame.  The report can be emailed there and then from my iPad to my server for safe storage and to my client's inbox  if I wish to leave a "takeaway" from our initial meeting.
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The Chancellor's Autumn Statement focused, in their words,  on "protecting economic and national security".  

One of the most talked about highlights was the rebuttal by the House of Lords of the tax credit reforms which in effect forced the Chancellor to hold back his plans in this area.  Commentators believe that the proposed tax credit cuts will somehow be clawed back with the implementation of universal credit.  Whilst the income threshold for tax credit taper remains unchanged at  £6,420 , one wonders how this taper will be effected with the  new digital proposals for collection of taxes , designed to  bring tax receipts forward but could also trigger the implementation of the taper before a complete trading/ reporting  year.

There were no details from the pension tax relief consultation so we suspect a late night on Budget Day in 2016.

There were of course many other highlights  for financial planning and wealth management.   A full copy of the HM Treasury Spending Review and  Autumn statement is available to download at the bottom of this article.

But for now...

Income Tax   

• No changes to personal tax allowances.   
• The band of savings income that is subject to the 0% starting rate will remain the same for 2016/17

Capital Gains Tax 

• No announcement on rates but expect it to be £11,100 if increased in line with CPI 
• CGT on residential property is currently falls due from 10 -22 months after a disposal which is out of step for other taxpayers, such as those paying income tax through P.A.Y.E.   From April 2019 capital gains will fall be payable within 30 days of completion of any disposal of a residential property.

NISAs

• Annual subscription limits - ISA subscription limits won’t be changed in 2016-17. The ISA limit will be kept at £15,240. The Junior ISA and Child Trust Fund limits will be kept at £4,080.
• ISAs: qualifying investments - The list of qualifying investments for the new Innovative Finance ISA will be extended in Autumn 2016 to include debt securities offered via crowd-funding platforms.
• ISAs: tax advantages during the administration of an estate - As part of the Additional Permitted Subscription rules, the Government has announced that it will allow the ISA savings of a deceased person to continue to benefit from tax advantages during the administration of their estate.  This will be introduced in 2016 after consulting with the industry.

Pensions

• Pension Tax Relief - As expected, there were no surprise announcements on pension tax relief, with the Government reconfirming that it will respond to the Pension tax relief consultation at the Budget 2016.
• Automatic Enrolment - The minimum contributions needed for a scheme to meet the minimum requirements under automatic enrolment have been delayed. Minimum contributions were to have risen from 2% of qualifying earnings to 5% from October 2017, and 8% from October 2018. But now the rise to 5% will occur from April 2018 and 8% from April 2019. The Government are doing this to reduce some of the complexity that smaller employers would have faced.
• Inheritance tax on undrawn pension funds in drawdown - Currently, IHT may arise where the member transfers between registered pension schemes where the member knew their life expectancy was impaired and subsequently dies within the following two years. The Government confirms that inheritance tax will not arise when a pension scheme member designates funds for drawdown but does not draw all of the funds before death. Further details will appear in the Finance Bill 2016.
• Secondary market for annuities - This December the Government will provide further detail on the creation of a secondary market for annuities, including the consumer protection package.
• State Pension - The basic State Pension will once again be increased by the triple lock to £119.30 a week from April 2016. The new single tier pension introduced from April 2016 will be set at a maximum of £155.65 a week.

Buy to Let 

In addition to the changes in the taxation of  the rental income from buy to let properties, anyone wishing to purchase a residential property for investment or a second home will need to pay additional stamp duty at 3% above the current Stamp Duty Land Tax rates.  This comes into effect on 1st April 2016.

The higher rates will not apply to companies or funds making significant investments in residential property.   The government will issue a consultation on the policy detail.  


Inheritance Tax 

• Residence nil rate band -  Nothing new announced today on this which comes into force from 6 April 2017.  However, it is important to note that the Finance (No.2) Act 2015 received Royal Assent on 18 November 2015 so the final details of this are now available. Part 2 of the Act introduces new sections 8D to 8M into the Inheritance Tax Act 1984.
• Disclosure of tax avoidance schemes - In the Summer of 2015 HMRC produced a consultative document proposing certain changes to the Disclosure of Tax Avoidance Scheme regulations. One of the areas of proposed change concerned inheritance tax schemes. Representations were invited before the end of September. However, no announcement has been made following the close of the consultation period.

• Deeds of Variation -  Following a consultation document earlier this year, the Government have confirmed that they won’t be making any changes to rules around Deeds of Variation.
  
  

Tax Avoidance Evasion and Compliance 

The government will introduce a new penalty of 60% of the tax due to be charged in all cases successfully tackled by the General Anti Abuse Rule (GAAR) and will make small changes to the GAAR’s procedure to improve its ability to tackle marketed avoidance schemes.

• A reduction in the opportunities for income to be converted to capital in order to gain a tax advantage.  The government will shortly publish a consultation on the company distributions rules, and will amend the Transactions in Securities rules and introduce a Targeted Anti-Avoidance Rule.
• Tax planning around the intangible fixed assets regime, can be used to obtain more generous corporation tax relief than is intended by the legislation. The government are aware of this and  will therefore amend the regime to stop arrangements that use partnerships to obtain relief that was not intended.
• A new criminal offence for tax evasion will be introduced which removes the need to prove intent for the most serious cases of failing to declare offshore income and gains.   
• Civil penalties for deliberate offshore tax evaders will be increased.  A new penalty linked to the value of the asset on which tax was evaded will be introduced as well as penalties for those who enable offshore tax evasion.

Tax administration - Making tax digital 
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The government will invest £1.3 billion to transform HMRC into one of the most digitally advanced tax administrations in the world. Most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account, reducing errors through record keeping. HMRC will ensure the availability of free apps and software that link securely to HMRC systems and provide support to those who need help using digital technology.

This will not apply to individuals in employment, or pensioners, unless they have secondary incomes of more than £10,000 per year. The government will publish its plans to transform the tax system shortly and will consult on the details in 2016.

This will also bring the receipts of tax forward but one wonders how this will impact the self employed in receipt of tax credits.  Will it bring the level of income for tax credit taper, currently £6,240,  forward meaning that self employed people could loose their tax credit mid accountancy period. 


And finally .....  more details are expected soon on a number of measures that were announced by the Chancellor in the July Summer Budget, but which were not mentioned in this Spending Review.

• Dividend Tax Credit will be abolished and replaced by a new Dividend Tax Allowance of £5,000.
• The ability for savers to withdraw and replace money from a cash or stocks-and-shares ISA without it counting towards the annual ISA subscription.
• Changes to the domicile rules. The Government has consulted on this but we are still awaiting the final legislation to confirm the changes.

If you would like a review of your personal circumstances and weather you are investing in a tax efficient way  (  and I emphasise  tax efficient  not tax avoidance ) ensuring you are utilising your reliefs, your investments are performing as expected and your financial plans underpinned with adequate protection - please do not hesitate to get in touch.  You can use all the contact methods at the top of the web page or just complete and enquiry form below.

 And don't forget your free downloads

As we approach the fireworks season here, I've been reflecting on some fond memories of times spent in Malta and in particular at the village festivals.  These events would be dominated by rival marching bands, who would start their journeys at opposite ends of the village.  Their eventual  union in the village square would trigger mayhem, celebrations and of course fireworks.  Except the fireworks were a real disappointment, one huge seismic upfront bang with a trail of smoke and then nothing .... finished.  

That was a good couple of decades ago.   Valetta, the capital of Malta, now hosts a two day International Firework Festival every April.  The the rivalry is amongst local firework producers with the aim to create a memorable, noisy but importantly adding colour and sparkle to the experience.


So what's all this got to do with financial planning.....


Here are five ways in which the life insurance companies have used rivalry to evolve and give you more bang for your buck.
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1.    Full corporation tax relief.  Jerry Bayman former head of Business Protection at Bright Grey are credited with developing "relevant life policies".  By exploiting legislation  from the 2003 Income Tax Earnings and Pension Act, small limited companies can now provide life assurance to directors and key employees by way of death in service benefits, with full corporation tax relief, no interference with the pensions lifetime allowance and without inclusion as a P11D benefit in kind.

2.  Free weekly cinema tickets, coffee and iTunes.  Vitality Life,  the rebranded collaboration of PruProtect and Discovery Life  in South Africa, rewards its policy holders who engage in their health.  Discounts on bikes, discounted health checks, free weekly cinema tickets, coffee and iTunes are some of the rewards available in return for exercising and getting regular health checks.  Full use of the rewards may be greater than the actual premiums you pay.

3.  Children's cover   I can't be sure, but I believe BUPA were the first company to offer children's critical illness cover as an additional definition, warranting a payment under a critical illness policy.  Payment is a percentage of the overall cover, is paid as an extra which leaves the policy owners cover intact. BUPA subsequently merged with AXA Life who then merged with Friends Life.  We've recently had a successful payment for a client, who's daughter is now recovering from hydrocephalus.

4.   24/7  Health Support Line  In conjunction with my network we are very proud to offer this service from Red Arc for free, at the point a client needs it and for as long as they need it.  Losing someone you love, being diagnosed with a critical illness or suffering an injury that prevents you from working can be made easier to bear when there is expert advice and a listening ear.  As well as taking care of financial aspects we want our clients other worries looked after.  The service is run by Red Arc for all clients,  independently from the insurance companies.

5.  Rehabilitation Cover  It was possibly Friends Life who first offered this as an integral part of their income protection cover.   Its not often published but it makes sense really for an insurance company to do everything they can to help get someone back into work after an illness or injury.  It reduces their claims payment but importantly lets clients get back to work and enjoy life.  


The price rivalry with life assurance, critical illness and income protection is over and all companies now publish their claims statistics online.  

What counts now are the "add ons"  to the policies.   I haven't mentioned them all and I haven't even mentioned the importance of trust documents ( that can be saved for a later post ) but this is where an adviser with enthusiasm and knowledge of the different policies out there, can really make a difference.  

An adviser will  listen to your needs and goals and help you navigate the various company propositions and importantly will be around to help any clients through a claims process.
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Its not about price anymore,  it's about quality of experience and securing our clients financial future in the best way possible. So
So,  if you've got a policy in a drawer,  a carrier bag or shoe box in the cupboard and you are not sure if it is a banger or a damp squib please don't hesitate to get in touch and take advantage of a review "on us".  

Enjoy your fireworks
​Jill

Sheffield 41st Beer and Cider Festival 22nd October - Kelham Island Museum 18:30.

Sheffield Life & Pensions Society and The Insurance Institute of Sheffield are hosting an informal evening at the Steel City Beer & Cider Festival on Thursday 22nd October 2015. 

The plan is that we meet at The Harlequin pub and on Nursery Street at about 6.30pm and then at 7.00pm walk the short distance to Kelham Island Museum venue.

The cost of entry to the Festival is £1.00, plus, of course, the cost of the ale!!!  There will be around 200 beers from over 70 breweries and a selection of real cider.  Stalls will offer food, pub games and other entertainment.                                                                         

This is not a formal event; just PFS & CII members, friends and family having a few beers together in a venue that commemorates the industrial heritage of Sheffield.  Further details can be found at steelcitybeerfestival.co.uk

Harlequin Nursery Street Sheffield 6.30pm Thursday 22nd October and then at Kelham Island Museum

Yorkshire Business Festival - Tankersley Manor, S75 3DQ 1st October 9:30 - 4pm free

Yorkshire Ladies Links is a non membership women's networking and business support group, bringing together and supporting professional women from all sectors both online and offline through networking events. Welcoming. professional women, working mums, ladies returning to work or setting up a business, female business owners and those who simply want to support local organisations and charities.

Full details of speakers, exhibitors and booking go to the Eventbrite.

The event is free to attend.

Made,  City Hall, Sheffield  22nd October 9am - 6pm . The annual festival of Entrepreneurship held in Sheffield attracts participants not only locally but across country.  Plenty of opportunity to network and  get motivated by people who have been there and done it.

Tickets for the event are £50 with concessions at £12.  Full details at the Made Wesbite

Fringe Events are also timetabled through the week include Doing Business with China  ways in which to Develop Networking Skills  some of which are free and some are delivered as webinars.

Business Peak District offers free membership to all businesses between Manchester,            Sheffield, Stafford and Derby.   They run ad hoc events to help bring businesses together around issues of funding, development and promoting the Peak District as a place to do business.

South Derbyshire Business Breakfast - September 29th 7:30am - 9:30 am The Boardwalk Bar and Dining, Willington DE65 6DW

Funding for Business Breakfast - September 30th 8:45 - 11:30am  The Old Hall Hotel, Buxton SK17 6BD

Derbyshire and Peak District Business and Towns Forum - Thornbridge Hall, DE45 1NZ _ October 7th followed by a tour and tasting at Thornbridge Brewery.

For full details visit Peak District for Business Website

BNI - Business Network International hold weekly meetings across Derbyshire and South Yorkshire, nationally and globally, all  following the same  principles and format.

A franchised business referral and membership organisation,  BNI teaches how to market your business by word of mouth.  With extensive libraries, podcasts, education material and weekly meetings, this is the perhaps the most demanding of all network organisations.  A one seat per profession policy and a set format that is the same wherever you are in the world, BNI sticks to a road tested formula.   For those prepared to make the commitment the benefits of the BNI framework and the rewards can be huge.

If you would like to visit my local chapter that meets in Matlock every Friday at 9:30 am please get in touch.   
 Venue : Auldey St Elphins Retirement Village, Darley Road South, Matlock DE4 2RH
Fee:   £12 refreshments included.

​Monthly Networking at Cromford Mill in Derbyshire. 

MBC meets regularly on third Tuesday of the month from 7.30am - 9am. There are a few exceptions to this -  January lunch, July netwalking along the river  - so please subscribe to the newsletter for invitations and check meeting dates on the Events Calendar. Online booking for all events is required.

Venue: Wharf Building, Cromford Mills, Mill Rd, Cromford, Derbyshire, DE4 3RQ
Fee: £5 pay at the door.   Next events 20th Oct / 17th Nov.

Inevitably the budget will have an impact on financial planning and in an effort to get the facts out to you as quickly as possible I  hope you find the following commentary helpful.  It has been put together by the technical team at Standard Life and is just one of the many excellent technical papers they produce throughout the year.

You can find the speech in full along with budget documents at the government website.

I'm pleased to read that the government are starting a consultation on simplifying the tax on pensions to increase engagement and aid retirement planning, its something I commented on in the First For Business magazine recently.    So here we go..... 


Two bites at Annual allowance as PIPs are aligned with tax years from 2016

As a small step towards re-simplification of the pension rules, from 6 April 2016 all pension input periods (PIPs) will be aligned to the tax year. And it won't be possible to change them.

But related transitional rules potentially create an extra £40k annual allowance (AA) for the 2015/16 tax year, giving some savers two bites at the AA cherry this year.

As ever, the devil is in the detail. We'll need to look out for a further discussion paper on this and perhaps a worked cased study.

AA cut for high earners from 2016 - get it while you can

Those with ‘adjusted income' over £150k will have their annual allowance (AA) cut from the 2016/17 tax year, creating a ‘get it while you can' pension funding window this tax year.

The standard £40k AA will be cut by £1 for every £2 of ‘adjusted income' over £150k in a tax year. The maximum AA reduction is £30k, giving those with income of £210k or above a £10k AA. Carry forward of unused AA will still be available, but only the balance of the reduced AA can be carried forward from any year where a reduced AA applied.

The ‘adjusted income' the £150k test is based on is broadly the total of:

• the individual's income (without deducting their own pension contributions); plus
• the value of any employer pension contributions made for them.

The reduced AA won't however apply where an individual's net income for the tax year plus the value of any income given up for an employer pension contribution via a salary sacrifice arrangement entered into after 8 July 2015, is £110k or less.

Pension tax framework under review

The Government has kicked off a fundamental review of the pension tax framework to ensure it remains fit for purpose, and sustainable, for a changing society. In a consultation launched today, HM Treasury is seeking views on a range of very open questions around what changes (if any) would: 

• reduce complexity and increase transparency;
• make best use of available tax reliefs;
• increase engagement and aid retirement planning.

This welcome consultation raises the prospect of radical reform to restore the vision of a genuinely ‘simplified' retirement saving framework. The consultation closes on 30 September.

Jamie Jenkins, Head of Pensions Strategy, comments ‘Pensions tax relief was ripe for review.
Despite some suggesting that the industry was resistant to any change in this area, quite the contrary, we have been calling for a more fundamental review rather than constant tinkering. This consultation provides us with a great opportunity to simplify the pensions tax system once and for all.'

Other pension news

• Lifetime allowance: The proposed reduction in the lifetime allowance from £1.25M to £1M will go ahead as planned from the 2016/17 tax year. It will be indexed in line with CPI from 2018/19. Details are awaited of a new transitional protection option for those with existing pension savings already over £1M who would otherwise face a retrospective tax hit.
• Death tax: As promised as part of the ‘freedom and choice' reforms, all pension lump sum death benefits paid after 5 April 2016 in relation to a death at age 75 or above will be taxed as the recipient's income (removing the flat 45% tax that applies in the 2015/16 tax year).
• Salary sacrifice: Despite wide pre-Budget rumours, there are no changes to salary sacrifice rules. The Government will, however, be monitoring the growth of such schemes and their impact on tax take.
• Transfers: To improve consumer access to ‘freedom and choice', the Government will consult about how to improve the pension transfer process and, potentially, cap charges for over 55s.
• Annuities: The ability for pensioners to sell their annuities will be delayed until 2017. This allows more time to ensure the related consumer safeguards are in place. More details will be announced in the autumn.
• State Pensions: The Chancellor has reaffirmed the Government's commitment to retaining the ‘triple lock' State pension increase promise, giving more security to older people.

Individual tax allowances

Both the personal allowance and higher rate income tax thresholds will increase over the next two years as follows:

2016/17:

• Personal Allowance increases to £11,000;
• Higher rate threshold increases to £43,000.

A basic rate taxpayer will be better off by £80. Higher rate taxpayers will be better off by £203.

2017/18:

• Personal Allowance increases to £11,200;
• Higher rate threshold increases to £43,600.

A basic rate taxpayer will be better off by a further £40, and higher rate taxpayers by £160.

These increases are on the way to meeting government pledges to raise the personal allowance to £12,500 and the higher rate threshold to £50,000 during this Parliament.

New dividend allowance

The system of dividend tax credits will be abolished from April 2016. It will be replaced by a new tax free dividend allowance of £5,000. Dividends in excess of this allowance will be taxed at the following rates, depending on which tax band they fall in:

• Basic rate - 7.5%;
• Higher rate - 32.5%;
• Additional rate - 38.1%.

This means that from April 2016, a basic rate taxpayer could have tax free income of up to £17,000 pa when added to the personal allowance of £11,000 and the new ‘personal savings allowance' announced in the Spring Budget of £1,000. Higher rate taxpayers could have up to £16,500 (as the personal savings allowance is restricted to £500 for these individuals).

Certain individuals may also have savings income falling into the £5,000 savings rate ‘band', currently taxed at 0%. There is no mention of any change to this band, in which case certain individuals may have tax free income of up to £22,000, depending on the sources of their income.

Making full use of these new allowances can make savings last longer in retirement and potentially leave a larger legacy for loved ones. And strengthens the case for holistic multiple wrapper retirement income planning.

Inheritance Tax: family home nil rate band - but not yet

The Government will introduce a new IHT nil rate band of up to £175,000 where the family home is passed to children or grandchildren. This is in addition to the current nil rate band of £325,000 which has been frozen since 2009 and will remain frozen for the next 5 tax years, until the end of 2020/21.

Who will benefit
The extra nil rate band will be fully available to anyone who:

• passes the family home to their children or grandchildren on death; or
• or had a family home, then downsized (passing on assets of equivalent value to children/grandchildren); and
• has an estate below £2M.

However, the full £175,000 won't be available until 2020/21. The allowance will first become available in 2017/18 at £100,000 and increase to £125,000 in 2018/19, £150,000 in 2019/20 and £175,000 in 2020/21. It will then increase in line with the Consumer Price Index (CPI).

Like the existing nil rate band the new property nil rate band can be transferred between spouses or civil partners. This means a married couple could pass £1M in 2020/21 to their children tax free on death provided the family home is worth at least £350,000, saving £140,000 in IHT.

Who may miss out
But not everyone will benefit from the additional IHT free allowance. Anyone with a net estate over £2M will begin to see their property nil rate band reduced until it is completely lost once the estate is over £2.2m (2017/18) £2.25m (2018/19), £2.3m (2019/20) or £2.35m (2020/21).

It will only apply to transfers to children and grandchildren. Meaning those without children will miss out. And it is not possible to use the exemption for lifetime transfers which may discourage some clients from passing on their wealth during their lifetime.

Clients who could benefit from the property nil rate band may need to revisit their existing wills to ensure they continue to reflect their wishes and remain as tax efficient as possible.

ISA changes

Replacing withdrawals
The proposed changes to ISA, allowing savers to dip into the savings and replace them without it affecting their annual subscription limits, will go ahead from 6 April 2016.

The new contributions would have to be paid within the same tax year as the withdrawal for it not to be counted. These new flexible funding rules will only apply to cash ISAs and any cash element within a stocks and shares ISA. However, it is now possible to move ISA holdings between cash and stocks and shares without restriction, so clients in stocks and shares will be able to benefit provided they move into cash first.

Help to Buy ISA
First time home buyers will get help from the Government when saving to get their foot on the property ladder. The Help to Buy ISA will be available from 1 December 2015.

The scheme will provide 25% tax relief on savings up to £12,000. So someone saving the full £12,000 would see the government add a further £3,000 to their savings, giving them £15,000 towards the purchase of their first home. This tax relief isn't given at the point of saving in the same way as a pension contribution, but is instead added when the saver buys the home.

The new scheme will be a form of Cash ISA and, in line with current rules, it won't be possible to subscribe to two separate Cash ISAs (Cash & Help to Buy) in the same tax year.

Savings will be limited to a maximum single initial premium of £1,000 and regular savings of £200 each month. And to get the Government bonus, property values can be no more than £250,000 (£450,000 for properties in London).

Non Doms - deemed domicile after 15 tax years, applies to all taxes

‘Non-doms' are individuals who, although resident in the UK, can legally claim that another country is their home (‘domicile'). This means that they can access some tax benefits not available to those who are resident and domiciled in the UK.

New rules apply from April 2017 to restrict this. Individuals will become ‘deemed domicile' (taxed in the usual way that UK domiciled residents are taxed) more quickly - after 15 tax years spent in the UK instead of 17. And ‘deemed domicile' will apply to more taxes - income tax, CGT and IHT, instead of just IHT.

Excluded Property Trusts used with offshore bonds can continue to benefit from an advantageous IHT treatment. But individuals with their affairs set up to take advantage of the remittance basis may wish to review their investments to ensure this will still be tax efficient under the new regime.