Pension Advice Allowance of £500

Pension Advice Allowance of £500

Closing the ‘advice gap’

A new government scheme is offering a £500 tax-free allowance to pay for professional pensions advice allowance.

“Individuals approaching retirement have a plethora of options available to them. The best way to achieve this and get peace of mind and reassurance about retirement choices is to see a professional adviser” – Richard Freeman, chief distribution officer at Old Mutual Wealth

Pensions Advice Allowance

Financial Advice Market Review (FAMR) found that there is an ‘advice gap’ for retirement advice for people without “significant wealth”, calling on the treasury to introduce a tax free stipend from pensions to make financial advice more affordable and easily accessible. The pensions advice allowance will come into force from April 2017 and will allow people below age 55 to take up to £500 out of their pension plans tax free to put towards the cost of financial advice. It is possible that people as young as 45 could be eligible for the scheme, which will be in addition to the normal 25% tax-free lump sum you can take out of your pot from age 55.

Do I just get one allowance?

The government is considering letting people use the pensions advice allowance more than once. That is very useful as it means you could use it to help pay for more advice if your circumstances change a few years down the line.

What sort of advice can I get for £500?

According to the government, face-to-face financial advice costs on average £150 per hour, and for pension/retirement planning, you might be looking at up to 9 hours, which could add up to £1,350.

The pensions advice service provided by Financial Advisers will vary from firm to firm, however as an example at Heritage we provide a detailed recommendation report, which will be produced after we have fully accessed your current pension arrangements. This will include analysing the current risk of your portfolio, the performance, the structure, along with the features and benefits of the current plan.
In addition we can also produce a cash flow model report, which will consider the potential future income that your pension plan (s) will generate versus your goals and objectives in retirement. The report will help to tell you if you are on track for your retirement aspirations, or if you need to adjust your savings / targets.

Why should I seek advice via the Pensions Advice Allowance?

Professional adviser search website Unbiased claims that people who take professional advice save on average £98 more every month and receive an additional income of £3,654 every year of their retirement, based on a pot of £100,000.

More to be done!

Freeman believes that there is still more to be done and predicts more proposals for change from within the FAMR recommendations following its launch last year. “We hope it will be the first of many measures introduced to help people access”.

Contact one of the team to find out more about the Pensions Advice Allowance.

Our Financial Education Employee Workshops

Our Financial Education Employee Workshops

Our Workshops

We pride ourselves on creating original, engaging and independent presentations that can deliver understanding on a range of topics.

A popular programme has been our ‘Five Pillars of Financial Planning’ that covers a wide range of topics. We tailor this to reflect the unique workforce of any given business, along with specific benefits packages including sick pay arrangements and pension schemes.

We are experienced at delivering these presentations to a diverse audience, across different age ranges and life cycles.

Our service includes:

  • Qualified presenters who are Independent Financial Advisers with a minimum of 10 years’ experience
  • Location anywhere across the UK
  • 5 hours of presentation time per day
  • Printed and bound notebooks
  • Bespoke online access to a private web portal where presentations can be downloaded (minimum 12 month support)
  • Dedicated contact form online to submit questions
  • Online library of FAQ’s

The Structure

The typical structure would be to provide 2 presentations a day, each lasting for 2:30 hours (with Q&A’s this typically runs over by 10mins per session). The morning sessions would typically start at 10:00 running until 12:30, with the afternoon sessions starting at 13:30 running until 16:00.

The Benefits

More than 8 in 10 employees feel anxious over their personal finances, with 1.4 million Britons taking time off work in the past 12 months as they struggle to cope. The study from AXA PPP healthcare reveals 24.6 million employees feel some degree of anxiety over their financial position, and more than 10 million admit their financial worries are affecting their performance.

7 in 10 admit they spend time at work worrying about their finances, with almost a third (31%) spending up to 15 minutes thinking about the problem. More than 10 million (35%) believe financial concerns are preventing them from performing at their best.

The survey also reveals 1.2 million employees (4%) spend more than four hours a day feeling anxious and the most pressing concern for most is repaying debt or bills. A fifth of 18-24 year-olds drink alcohol to take their mind off their financial concerns.

If you would like to know more, please get in touch with a member of the Heritage Team.

Top Tips for Saving Money

Top Tips for Saving Money

  1. Look around for the cheapest household insurance policies

Home insurance is not mandatory – you don’t need insurance. However it is strongly advisable. Can you afford to pay the bill if your house catches fire or is smashed into by a 4×4 driver playing Angry Birds, who takes off from the scene like a sparrow in a catapult? Unlikely. Searching online is the quickest and best way of finding the household insurance policy that saves you the most £££. It will allow you to compare hundreds of policies in a matter of minutes.

Annual Savings: £100’s

  1. Change your approach towards your mortgage

Unless you’re planning on buying a private jet or a small island the most expensive purchase you are ever likely to make is your home. If taking out a loan to finance your future house, make it is the best available to you. For example, if you are paying your moneylender’s full standard variable rate (SVR) you are probably going to be paying hundreds of pounds a year more than you actually need to. There are literally thousands of deals out there to choose from however it is key to check the fine print for any hidden catches, this is a relatively straightforward way to you a lot of that hard earned money. Top tip: loyalty to your bank benefits your bank, not you.

Overpayments on your mortgage are an even better way of making massive savings. If you can afford to make overpayments, you could clear your debt several years early. For example, if you look to loan £150,000 at 6% over 25 years, you will pay it back at £966 a month. This results in a total charge of £139,000 for credit. However if you can afford to overpay by £150 a month you will clear the debt in under 19 years, giving you 6 years of mortgage-free living and saving a whopping £37,500 in interest.

Annual Savings: £1,000’s+

  1. Have another look at your life insurance policy

Ever since we started bathing regularly, humans have been getting healthier. As a result our life expectancy has gone through the roof – with the cost of insuring the unthinkable decreasing all the time. If you were sold a life insurance policy at the same time you took out your mortgage you may have been too distracted to shop around. You could be missing a trick.

Annual Savings: £100

  1. Make full use of your ISA allowances

If you didn’t already know, you can save up to £15,240 in an ISA which is a tax-free savings account (for the more financially savvy of you there’s also an investment ISA which deals in stocks and shares). It means that any interest accumulated in your account is tax free.

Annual Savings: £100’s+

  1. Consider installing a water meter

We take our tap water for granted. If you have a home with few occupants you may want to consider installing a meter instead of having an unlimited water plan. It may surprise you to hear this could halve your annual bill.

Annual Savings: £100’s

  1. Fight your parking tickets

If we don’t all love getting parking tickets. Those traffic wardens that cower behind the nation’s wheelie bins with their notepads and cameras waiting to pounce upon unexpecting motorists the second they set one tire out of line. In the event of being awarded a parking ticket you feel was unjust its simple… fight back.

Annual Savings: £100

Link: How to fight parking tickets



Why use a Mortgage Broker?

Why use a Mortgage Broker?

Why use a Mortgage Broker?

Before we consider how you should find a local mortgage broker, lets first consider the benefits of using one. Thanks to technology, namely the internet, it’s now possible to find hundreds of mortgage deals online. In addition we are always inundated with adverts on the TV and within our high street banks.

So with all this availability it may seem a strange idea to consider paying an extra fee to obtain advice from a mortgage broker, or commonly called mortgage advisers. But they can provide some important and valuable benefits:

  • A qualified mortgage adviser can search thousands of mortgage deals quickly and compare like with like.
  • Mortgage applications are becoming increasingly difficult and time consuming to complete, an adviser can take much of this burden away.
  • Their advice is insured via Professional Indemnity insurance and subject to them being regulated, you can make a claim if the advice given was not suitable for your needs.
  • Lenders criteria changes constantly, your circumstances may not meet their desired profile. Brokers have access to the mortgage underwriters and can find out if your circumstances will work before applying.
  • Some lenders charge an application fee which will not be refunded if they say no, its worth getting the application right first time.
  • Experience, it’s probably one of the most understated facts, but an experienced mortgage adviser can apply some ‘out of the box’ thinking when it really matters.
  • Wider financial planning, when taking out a mortgage it’s also important to look at your wider financial circumstances and consider if you need life assurance, or even income protection for example – advice can be valuable in these areas.
  • If you have irregular earnings, poor credit history or work abroad then high street lenders may not be the most suitable bet. Specialist lenders typically operate more in this area, which may only deal with a qualified and regulated mortgage broker.
  • Lastly most mortgage advisers are independent, which means they work for you and not a particular lender.

Please remember to always check your mortgage adviser is qualified, regulated and is suitably experienced. Heritage Financial Solutions Ltd offer an independent mortgage service, our experienced team can help search the whole of the mortgage market and find you the most suitable recommendation.

What Brexit means for the UK and the EU

What Brexit means for the UK and the EU

The UK’s surprise decision at the Polls – Brexit

The end of polling in the UK’s referendum on continued participation in the European Union (EU) at 10pm London time on Thursday proved to be the high point in the expectations that a ‘remain’ vote would prevail.  At that moment a well-known betting organisation placed a 90%+ probability on the continuation of the political and economic bloc’s status quo.  A little over six hours later such hopes were completely dashed.

The 52%/48% victory for the ‘leave’ campaign reflects a widespread distrust of Europe-wide policy-making and regulatory intervention in the UK as well as a scepticism about immigration and a nationalism which prefers more complete rule from the UK’s Parliament.  The rejection of the preferred choice of the favoured choice of most of the UK’s political leadership and almost all countries of note has implications far beyond the UK.

Given the unanticipated nature of this decision it is not too surprising that the British Pound fell sharply – briefly to a 30+ year low against the US dollar – and the UK equity market followed suit.  Financial market volatility was augmented by the resignation of the UK Prime Minister who will stay in office just to oversee the election of his successor.  Fears that rating agencies will downgrade their AAA ratings on UK debt and that the Bank of England would have to enact some support mechanisms to help the Pound completed the scene.

The UK has a two year period of grace to negotiate its exit from the European Union and much uncertainty surrounds the practicalities around this move.  Leading European Union politicians have generally been quite coy on next steps so far although more clarity is expected over the weekend.  The UK will leave the European Union though and will have to strike new, bilateral trade deals.  There is inevitability uncertainty around this and the scope to have a direct impact on economic growth rates over the next few years is clear – after all most formal economic studies on the impact of a “Brexit” identified clear economic growth declines.

The decision will also impact European politics and potentially even the structure of the euro single currency zone.  Nationalist politicians across the European Continent are starting to demand their own referendums and the upcoming Spanish election this weekend could reflect a continuation of the electoral disquiet via a large vote for the anti-austerity party on the bill.  These are difficult times for Europe and policy-makers need to re-engage on a broader European vision for the future blending economic flexibility reforms and greater cross-border support.   We can not rule out more economic policy stimulus.

The same is true for the UK.  The country cannot just rely on a sharp fall in the value of the Pound to come to their aid.  If the UK wishes to take full advantage of exiting the European Union then it too must boost flexibility further – but how to do this without such a direct flow of immigrant labour (if tighter restrictions are imposed on entry which is likely) and also countering the feeling of anti-austerity disquiet at a time that fiscal and trade deficits are already high is not clear.  Now comes the harder part of policy implementation.

As today’s financial market moves show it is hard not to conclude that Europe (including the UK) has scored an old goal today with unclear repercussions over time.  The best companies will still prove able investments but for most international investors the general European markets have become that little bit harder to invest in.

This article is for information purposes only and should not be taken as advice.

6 Reasons why you should look at a Final Salary transfer

6 Reasons why you should look at a Final Salary transfer

Final Salary Pensions or Defined Benefit plans have had the historic view that “it’s always wrong to come out of a defined benefit pension scheme”. This is no longer the case and to redress the balance here are six good reasons to consider the transfer option.

  1. A final salary benefit can be a significant family financial asset, a transfer capitalises and gives you control of this asset, which can now be passed down through the generations without inheritance tax.
  2. Transfer values are so high at present that a good deal of the investment risk associated with transfers can be removed. On most transfer values a 2% real investment return, after fees and inflation, will provide the same level of pension plus potential for residual value to be passed on.
  3. Transfers offer you complete flexibility over when and how much you draw on your pension account and are in complete contrast to a fixed monthly pension income. It’s inconceivable that 60 year old retiring now with the prospect of potentially 30 years or more of retirement will have the same cash needs year in year out until they die.
  4. This flexibility extends to taking the cash as early as age 55 and deferring the taxed pension until it’s needed. The potential uses of this early cash sum are extensive, from paying down mortgages early, to investing in ISAs to generate tax free income, or helping the next generation on to the property ladder.
  5. A final salary transfer takes away the life expectancy gamble implicit in a lifetime income. It capitalises the benefit once and for all based on normal life expectancy, irrespective of your personal health now and in the future.
  6. With flexibility comes the ability to be tax efficient. In virtually all the cases where we have recommended a transfer there has been the ability to save tax as compared to the rigid final salary pension benefits. These can include:
  • A higher tax free cash sum following the transfer
  • The ability to limit pension income to specific income tax bands
  • The opportunity to defer and minimise the impact of lifetime allowance (LTA) penalty tax charges

A final salary transfer allows you to swap a future pension entitlement in a final salary, or defined pension scheme for a cash sum that must in the first instance be put into a registered, or HMRC recognised pension scheme. The cash sum value is the ‘cash equivalent ’ of the pension income you leave behind, or put another way the amount of money today that would be notionally set aside in the scheme to meet your specific pension liabilities as they fall due.

This article is for information purposes only and should not be taken as advice. Also seek Independent Financial Adviser before making a decision on your pension benefits.

The Budget 2016 – The Highlights and Summary

The Budget 2016 – The Highlights and Summary

George Osborne has revised down the UK’s growth forecast in his 8th Budget and warns about a “dangerous cocktail” of global economic risks. However, he believes the UK is “well placed” to handle it. Mr Osborne will seek to save £3.5bn by 2020 through extra spending cuts.

  • He froze fuel duty but announced a 2% increase in tax on cigarettes, with 3% on rolling tobacco.
  • He said the £530m raised by a tax on the makers of sugary drinks would be spent on boosting school sports.

Mr Osborne said the Office for Budget Responsibility had made clear its forecasts were based on the assumption the UK would remain in the UK and had warned that “there appears to be a greater consensus that a vote to leave would result in a period of potentially disruptive uncertainty”.

Growth forecast to be 2% in 2016, down from 2.4% in November’s Autumn Statement and GDP predicted to grow 2.2% and 2.1% in 2017 and 2018, down from 2.4% and 2.5% forecast four months ago.

Key Announcements 

  • Mr Osborne confirmed that he has failed to meet a fall in debt as a proportion of GDP this year.
  • The UK is still on course to clear its deficit by 2019/20.
  • Corporation tax to be cut to 17% by April 2020 – great news for small business.
  • An extra £700m for flood defences – to be paid with a 0.5% increase on the tax on insurance premiums.
  • Reforms to business rates which will mean 6,000 small businesses pay no rates and 250,000 have their rates cuts from April 2017.
  • New action to tackle overseas retailers who who store goods in Britain and sell them online without paying VAT.
  • New tax free allowances for “micro entrepreneurs” who rent their homes or sell services through the internet.
  • Chancellor George Osborne has unveiled a tax on the makers of sugary soft drinks to tackle childhood obesity.

Savings, Allowances and Tax

  • A new lifetime ISA to be introduced allowing anyone under 40 to save £4,000 per annum till age 50 and receive tax relief at 25%.
  • ISA limit to increase from £15,240 to £20,000 in April 2017.
  • Personal allowance to increase to £11,500 by April 2017.
  • Capital Gains Tax to be cut from 28% to 20%, and from 18% to 10% for basic-rate taxpayers.
  • The threshold at which people pay 40% tax will rise from £42,385 to £45,000 in April 2017.
  • The Money Advice Service, which has provided financial advice to consumers since 2010, is to be abolished.


  • Headline rate of corporation tax – currently 20% – to fall to 17% by 2020.
  • Anti-tax avoidance and evasion measures to raise £12bn by 2020.
  • Annual threshold for small business tax relief to be raised from £6,000 to a maximum of £15,000, exempting thousands of firms.
  • Supplementary charge for oil and gas producers to be halved from 20% to 10%.
  • Petroleum revenue tax to be “effectively abolished”.
  • £9bn to be raised by closing corporate tax loopholes and tax minimisation schemes.
  • Use of “personal service companies” by public sector employees to reduce tax liabilities to end.
  • Commercial stamp duty 0% rate on purchases up to £150,000, 2% on next £100,000 and 5% top rate above £250,000. New 2% rate for high-value leases with net present value above £5m. Effective from midnight.
End of Tax Year Checklist

End of Tax Year Checklist

Make the most of the tax year end with these helpful tax allowance tips. Please note tax rules are subject to change over time and the benefits of these tax wrappers depend on individual circumstances.

  • Open an ISA (Individual Savings Account) – You can shelter upto £15,240 from income and capital gains tax this year. Remember if you dont lose your ISA allowance for the tax year, you lose it!
  • Open a Junior ISA – The junior ISA allowance is currently £4,080 and offer similar tax benefits to adult ISAs. All children are now eligible for these new tax wrappers.
  • Use your Personal Allowance – Reports are suggested that the Chancellor is considering cutting tax relief in an effort to reduce costs, this could mean higher rate and additional rate tax payers lose out.
  • Use your Capital Gains Tax Allowance (CGT) – This tax year you can realise £11,100 without paying tax, if you hold shares or funds outside of a tax wrapper it could be a good time to sell some.
  • Reduce your Inheritance Tax (IHT) – Make gifts of upto £3,000 from capital each tax year, which will be exempt from inheritance tax. You can also carry forward any unused allowance from last tax year.
  • Seek advice – if you need help in making the most of your tax shelters and allowances, speak to an Independent Financial Adviser who can assist you.
Our Market View – Volatility Feb 2016

Our Market View – Volatility Feb 2016

Financial markets are once again making newspaper and TV headlines with the FTSE-100 index falling from highs of over 7,000 index points in April last year to levels which nearly touched 5,500 index points earlier this week. This sharp fall reflects greater uncertainties about the global economy which have impacted investor confidence.

Heightened equity market volatility is naturally a worry for all investors. However unlike the last period of sustained stock market falls between 2007 and early 2009 the UK economy is not currently anticipated to move into a recession. Earlier in February the International Monetary Fund confirmed that their expectation is for above 2% economic growth in both this year and 2017, a view reiterated last week by the Bank of England. Looking globally economic growth is anticipated in all other major developed countries around the world too. There are certainly imbalances in the global economy but currently they are much less extreme than back in 2007.

Part of the reason for this has been the experiences Central Banks, governments and private sector companies have all accumulated in the last eight or nine years. Additionally the Governor of the Bank of England believes that UK interest rates are highly unlikely to be increased over the next few months. These low interest rates support consumer spending and job creation.

We anticipate stock markets to start to stabilise globally as investors start to acknowledge some of these positives and realise that future opportunities still outweigh threats. The world’s growing consumer population provides a good medium-term underpinning for global growth and the high international orientation of UK businesses means they are well placed to benefit from this. Comments from many leading corporations in recent weeks support this view.

Finally most investors are likely to have a balance of asset classes represented in their portfolios. For example most bond markets have performed with relative solidity over recent weeks and this significantly dampens any volatility. Such diversification remains highly sensible for most investors.

In conclusion the day to day fluctuations of an uncertain stock market can cause huge concerns. History shows us that bouts of such volatility do occur. History also indicates that the key decision for investors during such times is not to panic but at least to retain the current diversified shape of their portfolios as periods of lowered returns are typically followed by periods of higher ones. Given the global economic backdrop outlined above we believe such a scenario is likely to play out once more.

This article is for information purposes only and should not be taken as advice.

Benefits of a Mortgage Review

Benefits of a Mortgage Review

Benefits of a Mortgage Review

Reviewing your mortgage is very important in times when there is an interest rate change, when your mortgage deal comes to an end and also just a general annual review in order to determine how your existing mortgage compares to the new deals within the market.

You may be paying too much – If you haven’t reviewed your mortgage for a while, it is likely you will be paying much more than homebuyers are today. Therefore, searching for the new deals available could cut your monthly repayments dramatically.

Your term may be costing you – Within the allowed limits, you may find it beneficial to start making overpayments in order to reduce your term, this therefore means there is less time for interest to accrue, so you would pay less overall. The advantage to making overpayments rather than choosing to reduce your term is that you can stop these overpayments at any time should you need to.

Your credit score may have improved – If when you took out your mortgage, your credit history wasn’t the best, it is likely that your provider charged a higher interest rate in order to counteract this. If your credit scoring has since improved, it may be beneficial to review your mortgage in order to see whether a better deal with lower interest rates is available to you.

In summary, reviewing your mortgage can result in reduced monthly repayments however; it is also important to bear in mind there may be potential costs involved. These include costs such as valuation fees, arrangements fees, legal fees and early repayment charges. Therefore, you must ensure you have considered the possible costs involved as well as reviewing the potential cost savings.

Seeking help from an Independent Mortgage Adviser can allow you to explore the different deals in the market that are best suited to you.

This article is for information purposes only and should not be taken as advice.