iWealth Ltd

30/10/2024

Farmers and businesses hit with 20% inheritance tax, pensions now part of your estate for the inheritance tax calculation and capital gains tax up and income taxes frozen to 2030.

11/04/2024

BACKGROUND
Colin and Jean were about to retire and wanted to know the best way to take income from their pensions. Ideally, they wanted a household income of £40,000 per year.

Neither Colin nor Jean would receive their full State Pensions for another couple of years due to the recent changes in pension age legislation. Colin was nevertheless about to receive £4,000 per annum from an occupational Final Salary pension.

The couple had £1 million in pensions and savings; they wanted their income to be as structured and as tax-efficient as possible.

WHAT DID WE DO?
We discovered that is was possible to withdraw £15,800 each per year from their pension, tax-free. If they withdrew the rest of their required income from investment bonds and ISAs, all their £40,000 of required income per year would be tax-free.

We then ran some cash flow projections and were able to show Colin and Jean that if they reduced their income withdrawals by the same amount they will receive from their State pensions, they will run out of money at age 100; after which point, they will be solely reliant on State Benefits. Given the current mortality rates, there is a 17% chance that they will still be alive.

We explained that the projections built in a 2% rise in income each year, in order to offset the effects of inflation. We also discussed the couple’s requirements for long-term care and the costs which may or may not arise in later life.

21/03/2024

SECURING BETTER INTEREST RATES FOR A CASH DEPOSIT
BACKGROUND

Stephanie had just sold her house and had £400,000 in her bank account, earning no interest.

She had yet to find another property to buy and therefore had moved into rented accommodation temporarily. However, Stephanie did not want to invest her savings for fear of them falling in value, nor did she want to keep the cash in her bank, seeing as she was only covered by the Financial Service Compensation Scheme (FSCS) up to £85,000.

WHAT DID WE DO?
After getting to know Stephanie and her situation, we recommended a Cash Management Account which automatically spread her money across several savings accounts to get better rates of interest.

The account was paying 1.72% and, seeing as her money was spread across several different banks, she also benefitted from up to £425,000 of FSCS protection.

THE RESULTS
All of Stephanie’s cash is now held in one account, making management as straightforward and easy as possible.

She earned much more interest with this new arrangement, and also benefitted from compensation protection.

06/03/2024

Ben's Story - Part two

For any more income Ben would like to withdraw from his business, we suggested that he might want to consider a dividend and Venture Capital Trust (VCT) strategy. Any dividends over and above £46,000 would be taxed at 32.5%, which is significantly more than 7.5%. However, if this money was then invested into a VCT, Ben would be entitled to claim a 30% tax credit. This would mean that these dividends would effectively suffer a 2.5% dividend tax, however this comes at the expense of having to retain the VCT investment for a minimum of five years.

THE RESULTS
We suggested to Ben that he might want to use this strategy every year. Then, in five years’ time, his first VCT will mature.

Each year another VCT will mature, providing additional income at a very low rate of tax.

29/02/2024

Ben's Story - First Part

WITHDRAWING BUSINESS PROFITS TAX-EFFICIENTLY
BACKGROUND
Ben is a director of his own limited liability company. He contacted us in order to understand how to withdraw profits from his business tax-efficiently.

Ben had only been paying himself a salary since setting up the company a couple of years ago. However, the company had started to make decent profits and Ben wanted to understand what else he could do.

WHAT DID WE DO?
We recommended that Ben should consider reducing his salary and instead use dividends, seeing as his company is now making profits. If he paid himself a salary of £680 per month, at this level his salary would be below the taxable threshold for National Insurance; which would save National Insurance for both the business and him personally. More importantly, however, Ben would also qualify for a State Pension.

We suggested that Ben should instead use dividends to make up the rest of his remuneration. If his total earnings are below £46,000, then his dividends would be taxed at 7.5%.

Next, we recommended that Ben replace his existing Life Insurance policy with a relevant life policy; under these type of plans, the Life Insurance premium can be paid by the company, yet any claim is paid tax-free to his beneficiaries. The monthly premium would then become a tax-deductible business expense, saving Ben the cost of paying the premium personally.

05/04/2023

PRACTICAL REASONS YOU SHOULD CREATE A FINANCIAL PLAN WITH YOUR PARTNER

1. UNDERSTAND WHAT YOU BOTH WANT TO ACHIEVE
While you may have talked about your goals in your relationship, setting out a financial plan provides a good opportunity to talk about your priorities and understand if you’re on the same page as your partner.

This may include when you’d like to retire, and what your lifestyle will look like when you give up work. Or it could be how you’ll support your wider family or bucket list destinations you want to visit.

Making these goals a clear part of your financial plan means you’re far more likely to achieve them. Without a plan, it can be all too easy for aspirations to fall to the wayside.

2. DISCUSS YOUR ATTITUDES TO FINANCIAL DECISIONS
When dealing with finances, it’s important that you’re comfortable with the decisions you make. This applies to both you and your partner if you’re working towards shared goals.

For example, how does your partner feel about taking investment risk? Or what is their attitude to using credit? Talking about these issues can help you create a financial plan that you’re both comfortable with.

3. IT COULD IMPROVE YOUR WELLBEING
Money is often linked to stress, and it can affect your overall wellbeing too.

A long-term financial plan that incorporates your and your partner’s circumstances and goals can deliver peace of mind.

CONTACT US TO CREATE A FINANCIAL PLAN FOR YOU AND YOUR PARTNER

iWealth is an independent, regulated Financial Planner, Leeds, that provides tailored advice for a range of clients to suit their goals.

01/03/2023

WHAT IS A “SALARY SACRIFICE” PENSION?
In simple terms, salary sacrifice means that an employee gives up some of their salary in exchange for a benefit. In this case, that benefit would involve you, as their employer, making higher contributions to their pension.

From the employee’s perspective, a salary sacrifice has two key benefits:

1. It increases their pension savings. As you will contribute more to their pension each month, their pension pot will grow faster.

2. It could reduce tax liability. As their income will be lower, Income Tax and National Insurance could deductions fall. In some cases, the income difference is negligible due to the savings.

As a result, employees choosing a salary sacrifice pension are often financially better off in the long term, while giving up relatively little now.

THE FINANCIAL BENEFITS OF PROVIDING A SALARY SACRIFICE PENSION
From an employee’s perspective, the additional pension benefits could outweigh the salary sacrifice they’re making. In some cases, they may be better off financially day-to-day too, as their Income Tax and National Insurance contributions will fall.

DO YOU WANT TO LEARN MORE ABOUT SALARY SACRIFICE AND EMPLOYEE FINANCIAL EDUCATION?
Whether you want to discuss the pros and cons of salary sacrifice with an expert or arrange for a financial adviser to talk to your team, we can help. Please contact us to discuss your business needs and how we can work together.

iWealth is an independent, regulated Financial Planner, Leeds, that provides tailored advice for a range of clients to suit their goals.

20/01/2023

More people are choosing to gift wealth during their lifetime rather than leaving assets as an inheritance. There are benefits to choosing a living legacy, but there are things you need to consider too, including your long-term financial security and the potential tax implications.

According to an Aviva survey, more than half of those over 55 want to give a living legacy. It’s a trend that suggests a move away from leaving money to your family when you pass away.

There are many reasons why you may want to create a living legacy, including:

1. You can see the benefit of your gift

One of the key benefits of a living legacy is that you can see the joy and security that your gift brings to loved ones. For some people, this may be a motivation for creating a living legacy.

2. Help family members when they need it most

Longer life expectancy means that many people won’t receive an inheritance until they’re retired. As younger generations face financial security challenges, like struggling to buy their first home, a living legacy can have a much larger effect. A gift earlier in life can help your family reach their goals.

While there are benefits to a living legacy, there are some key areas you need to consider first.

iWealth is an independent, regulated Financial Planner, Leeds, that provides tailored advice for a range of clients to suit their goals.

16/07/2022

Great client feedback to start the weekend.