Get even – save more tax (Churchill IFA)

Sunday Times columnist Ian Cowie tells readers who are angry about the rich paying so little tax: don’t get mad, get even. He points out that using the annual ISA allowance (currently £15,240 per year, but rising to £20,000 in 2017) every year, a couple can soon accumulate £250,000 in tax-free capital from which they can draw tax-free income.

Client categories: Employee, Saver/Investor

 Consolidate those pension pots

There are many reasons why you could be better off consolidating a number of small pension pots into one, says the Sunday Times. You may pay less in charges, get better customer service or get a better choice of investments. This can often make sense for defined contribution pension schemes, but ‘final salary’ benefits should usually stay where they are because you give up valuable benefits if you move. People near retirement will benefit most from consolidation because they can more easily draw tax-free cash and regular income from a single plan.

Client category:  Parent

 Back-to-work mums left out of pocket

Mothers of young children returning to work face huge financial penalties, says the Sunday Times. The cost of childcare is so high that a mother of two youngsters needing full-day nursery care needs to earn over £40,000 a year to be left with a surplus after all the bills – including tax – have been paid. However, those childcare costs should fall next year when a new system will provide a subsidy of up to £2,000 per year per child.

Check the ingredients in family protection package 

A mother who had planned her family’s protection used the Sunday Times to check out her recipe. It included pure life assurance to pay off the mortgage, family income benefit that would pay a fixed monthly sum until the children were independent, critical illness to produce a lump sum if she or her husband contracted a life-threatening illness and income protection insurance in case either couldn’t work because of chronic illness. Experts said she had all the bases covered but advised her to set up trusts for the life insurance benefits to ensure they could be used flexibly for the benefit of the children until they reached age 18.

Pension cash-ins shrink

The number of people cashing in some or all of their pensions dropped to 127,000 in the last quarter of 2016 compared with 220,000 in the first three months of the year, reports the Herald. Large pension providers said that under 5% of their policyholders were cashing in pension plans completely, with the vast majority of complete encashments being worth less than £15,000.  Surveys suggest that almost half of employees surveyed about the ‘pension freedom’ changes were positive about them.

(IFA Compliance Newsletter, April 2016)

Churchill IFA

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About Us: Churchill Wealth Management is a team of independent financial advisors/financial advisers (IFAs) based in Clifton, Bristol. We provide independent financial advice, including pension advice, investment advice, inheritance tax planning and protection/insurance advice.