What financial goals have you set yourself for 2012 and how successful were you in achieving your financial goals in 2011? How did your investments perform? Did your advisers manage positive returns by heeding the warning signs of a likely market correction back in April/May or did they just follow the market down and hope that things would eventually recover?
Why not take the opportunity to sit down with an adviser and carry out a full review of your financial situation. Some of the important areas you might need to consider are as follows:
Insurance: have I got the right level of cover in place to protect myself and my family in the event that I die or suffer serious illness? Most of us seriously under estimate the value of a lifetime’s earnings or the important financial role a non working spouse plays in regard to family finances. How much capital will be available to maintain your family’s standard of living once a mortgage and other debts have been cleared? There are other important insurances you may want to consider as well such as critical illness and income protection. To find out more and get an online quote why not visit our specialist website www.allyourinsurances.com.
Retirement Planning: what plans have I in place to provide income when I have stopped working? How much income am I going to need to maintain an appropriate standard of living? One thing is for certain the state is not going to provide anything more than a basic income and the difference between an enjoyable retirement, free of financial worries and having to make significant adjustments to your lifestyle will very much depend on the personal provision you have made for your retirement. Why not take the opportunity to discuss your plans with an adviser and make sure they are on track.
If you have already retired what decisions have you made in respect of your pension. Are you considering purchasing an annuity or are you drawing down income from a pension fund? Have you moved away from the UK but left your pension behind to be taxed at your highest rate whilst you are alive and to suffer further tax when you die? Visit our dedicated retirement planning website www.financialplanningspain.com to find out more.
Inheritance Tax: what have I done to mitigate my inheritance tax liability? We all want to pass our wealth on to future generations but the taxman doesn’t quite see it that way and wants to have a slice of the cake. In some cases this can be a big slice, for example, if you were born in the UK you are likely to remain UK domiciled and liable to inheritance tax even if you move to another country and for UK domiciled individuals inheritance tax is payable at 40% on most assets above £650,000 (allowance for a married couple). Think about it, a house worth £1,000,000, savings and investments worth £400,000, non financial assets worth £250,000 and you are talking about a tax bill of £400,000. Do you really want your beneficiaries to be paying this amount of tax on your accumulated wealth? Shouldn’t you do something about it before it’s too late? Dependent on your circumstances there are a number of strategies that can be implemented to protect your estate from this tax. Have a look at our website and arrange an appointment to discuss your personal requirements further.
These are just a few key areas that need constant reviewing but there are others as well. Financial planning only works if your plans are reviewed, adjusted and amended as your circumstances change. Have a look at our main website www.fiduciarywealth.eu and arrange an appointment to discuss your personal requirements further.
QROPS UNDER THREAT
The draft finance bill recently issued by the government signaled some potentially far reaching changes to QROPS legislation. A brief consultation period has been agreed and new regulations will come into force on 6th April 2012.
We have been warning for some time that the practice of “pension busting” by some advisers offering full encashment of a UK pension fund would ultimately lead to HMRc carrying out a full review of QROPS. Their publication actually states “The government has found that QROPS are being marketed extensively as a way of paying amounts or the enabling of amounts that are not allowed under UK rules (in particular 100% lump sums) once the UK tax rules no longer apply.”
The stance adopted by some so called experts and many unregulated advisers in using New Zealand QROPS, which were primarily designed for those moving to that country, and offering them to unsuspecting UK expatriates living in Spain as a way to access 100% of their accumulated pension fund, in clear violation of HMRc regulations, whilst at the same time evading local taxes on those funds brought into Spain, will at long last be a thing of the past. Whether HMRc and the Spanish tax authorities choose to follow through and take action remains to be seen. Hopefully we will now see an end to the often misleading and sometimes downright illegal promotion of “the way to unlock your UK pension fund”.
What is clear is that more stringent regulations will be put in place and the rules changed to ensure that pension busting is a thing of the past. One specific recommendation is that the reporting period to HMRc which currently lasts for five years is extended to ten and that payments to members are reported within 60 days rather than annually.
At Fiduciary Wealth we have always advocated that QROPS strictly followed the current guidelines and fundamentally provided clients with an income for life. We would never allow clients to be put into a position where a 55% unauthorised tax charge might apply maybe years after their QROPS has been established or their assets frozen as has been the case in some QROPS jurisdictions.
If you are eligible to transfer your pension to QROPS (that is you are tax resident outside of the UK or intend to exit UK within the next twelve months) or indeed unhappy with your current arrangement, then it would make sense to consider your options now rather than wait until a new set of rules are in place. Of course legislation might be retrospective but you will be confident in knowing that your QROPS will meet the rules as currently set out, that your QROPS is an approved scheme and listed by HMRc as such and that the advice you will be receiving is ethical, regulated and with your best interests paramount.
As you might expect our service doesn’t end when your QROPS is established. On an ongoing basis you will benefit from our first class investment service to ensure that your pension assets are pro actively managed in line with your individual risk profile and expectations.
Who Cares Where You Live? (well the taxman does and so should you!)
Unless you want to live as a financial nomad dodging the taxman and probably ending up paying more tax than you would if your financial affairs were in order you need to seriously consider your residency status. The UK has deferred introducing a formal residency test for at least the next twelve months but just using Spain as an example there is a clear requirement for expatriates who spend more than 183 days a year in that country to register as a tax resident. Whilst the Spanish authorities have previously been fairly lax in following this through they are now obtaining reports from electricity companies to establish patterns of residency and the whole emphasis has changed to proving why you shouldn’t be treated as a tax resident rather than allowing you to carry on breaking the law.
Whilst changing to a new tax regime can seem quite daunting you may find yourself pleasantly surprised at the outcome. In Spain for example whilst you will no longer benefit from tax free savings such as ISA’s you will be able to take advantage of tax deferral on lump sum investments and only end up paying tax at the lower capital gains tax rate on any gains made within your investment. The news is even better when it comes to retirement planning, whilst you will pay tax in the UK at your highest rate on any income you draw from a retirement plan by transferring your pension to a QROPS you will be able to draw the same income at a tax rate of less than 5% and what’s more your beneficiaries might escape paying a punitive 55% tax charge that could apply to the remainder of your pension fund when you die. Furthermore if you have investable assets that you can commit to a new retirement scheme we can establish a QNUPS for you and you could enjoy the same remarkably low tax rate on income drawn from this fund whilst at the same time protect these assets from UK inheritance tax.
Don’t bury your head in the sand, make sure that you not only regularise your tax affairs but that you engage with an adviser who can provide you with cross border, tax led financial solutions to ensure that your investments, savings and pensions are arranged in the most appropriate way. call +350 200 50982 to arrange an appointment now or email firstname.lastname@example.org.
Tax Efficient Investments At What Cost?
Pick up any newspaper or magazine and you will see a stream of adverts emphasising the benefits of investing in this company or that company’s tax free or tax efficient products. let’s face it there is no rocket science in recommending a product that carries a specific tax benefit but what is the advantage of having a tax efficient investment or retirement plan when the underlying investments are not managed properly or in some cases not managed at all and the client ends up with a tax free loss!
At Fiduciary Wealth we not only provide the structures but also in house carry out the asset allocation assessment and the ongoing management of the underlying assets. These are not outsourced to a third party as with so many advisers who can then abdicate responsibility if things start to go wrong, rather investments are managed on a pro active basis from day one. Using our wealth of experience we were able to identify the additional risk factors that appeared within equity markets during the late Spring in 2011 and on this basis recommended to clients that they exit the market. By re entering in the late Summer clients avoided the significant correction that took place in world markets between May and August last year.
We won’t always get it right but wouldn’t you rather invest with a company that takes responsibility for its own decisions rather than outsources them to a third party. Think about it and if you are dissatisfied with the returns you have been receiving on your investments call +350 200 50982 or email email@example.com.