The way we see it

The importance of Lasting Powers of Attorney

LPA background:

There are two types of LPA. Firstly, there is a ‘property and financial affairs’ LPA, which gives the attorney(s) the power to make decisions in relation to the donors finances etc. This LPA can take effect as soon as it has been completed and registered, or it can be used at a later date. The second type of LPA is ‘health and welfare’, this gives the attorney(s) powers to make decisions relating to the donors medical and care decisions. This type of LPA can only be used once it has been registered and the donor has lost mental capacity and as such is unable to make decisions.

What are the benefits to me of setting up an LPA? What will happen if I don`t?

If, at some point in the future, you were to lose mental capacity, you would no longer be able to make and act on a particular decision, such as, altering the required income from your pension account. If you have in place an LPA, the attorney(s) chosen by you, can make those decisions on your behalf and have a duty of care to act in your best interests. Therefore, the decision to alter your pension income can be taken immediately by your chosen attorney.

If you do not have an LPA in place, the only alternative is an application to the Court of Protection for the appointment of a ‘deputy’. The initial and ongoing costs associated with a deputyship are very high and often amount to thousands of pounds. You also do not have control over who is appointed as your deputy (although it would normally be someone from among friends and family), and the application to the Court can be complex and time-consuming. Typically these applications can take up to a year to complete, during this time you will not be able to access your financial accounts or alter any existing instructions.

Making an LPA gives you control over the question of who is to look after your finances and/or welfare if you become unable to make decisions for yourself. It is significantly more economical in both cost and time, and it will ease the burden on you and your family if you need to be looked after in the future.

Making an LPA

There are a number of elements to consider when making an LPA and we strongly suggest you seek professional advice. We have over the years worked with a number of legal professionals and are very happy to refer you to someone whom we know and trust. Please contact us to discuss.


Pension funding tips

Saving for a comfortable retirement is important for all of us, here are a few tips on how you can get even more value from your pension savings:

The ‘couples’ annual allowance of up to £80,000:

1. Pay contributions into your partners pension up to the limit of their earnings, not just to £3,600 as many people believe. Paying into your partners pension will mean they also receive the tax relief.

Helping children or grandchildren save for the future:

2. Start to build a pension fund for your children or grandchildren. There is no minimum age to start a pension plan, though for children under the age of 18, a parent or legal guardian would need to establish the contract on the child`s behalf. Where minor children are involved, they will benefit from basic rate tax relief on contributions up to £3,600 each tax year while a UK resident. For adult children higher rates of tax relief are available depending on earnings.

Pension contributions can help with more than just retirement benefits:

3. There are times when making a pension contribution can cost less than you may think. A contribution could restore your income tax personal allowance or child benefit.

A large personal contribution can help avoid the tapered annual allowance:

4. The tapered annual allowance can be a problem for high earners. At worse, an allowance of only £10,000 could either restrict how much can be paid into a pension, or potentially create a tax charge. It is possible for you to make a large pension contribution which can alleviate this situation.

For a product with an initial simple purpose - to provide an income in retirement, pensions have many other aspects that can touch on different areas of your financial life.

Speak to us to see how we can help you.


Summary of the 2018 Budget

Here are the key points from yesterday`s Budget and from measures already announced:

Income Tax:

  • The personal allowance and higher rate threshold will increase earlier than expected to £12,500 and £50,000 respectively from April 2019. These thresholds will remain at the same levels in 2020-2021 and then increase by CPI. The income tax thresholds for Scottish taxpayers will be announced in the Scottish Budget on 12 December.

Pensions:

  • The pension lifetime allowance (LTA) will rise to £1,055,000 from April 2019.
  • There are no changes to the pension annual allowance (AA). The standard AA remains at £40,000, money purchase AA stays at £4,000 (with no carry forward) and there are no changes to the higher income AA taper rules.

Capital Gains Tax:

  • The capital gains allowance will increase by £300 to £12,000 from April 2019.
  • To better target private residence relief at owner occupiers. From April 2020 the government will reform lettings relief so it only applies where the owner of the property is in shared occupancy with the tenant. The final period exemption will also be reduced from 18 to 9 months.

Inheritance Tax:

  • As expected, the IHT nil rate band will remain frozen at £325,000 until April 2021.
  • The residence nil rate band will increase from £125,000 to £150,000 from April 2019, allowing some couples to leave up to £950,000 to future generations IHT free.

ISA`s

  • The annual ISA limits will stay at £20,000 per person, with no reduction in the range of ISA options available to meet different needs.
  • The annual subscription for Junior ISAs and Child Trust Funds for 2019-20 will be increased in line with CPI to £4,368

Entrepreneurs Relief:

  • To support long-term business  investments from 6 April 2019 the minimum period throughout which the qualifying conditions for relief must be met will be extended from 12 to 24 months. In addition to the current requirements to share capital and voting rights, from 29 October 2018 shareholders must also be entitled to at least 5% of the distributable profits and net assets of a company to claim relief.

Digital Services Tax:

  • From April 2020 the government will introduce a new 2% tax on the revenue of certain digital businesses to ensure that the amount of tax paid in the UK is reflective of the value they derive from their UK users.

Stamp Duty Land Tax (SDLT) and first time buyers relief:

  • First time buyers relief in England and Northern Ireland will be extended so that all qualifying shared ownership property purchases can benefit, whether or not the purchaser elects to pay SDLT on the market value of the property. The change will apply to relevant transactions on or after 29 October 2018 and will be backdated to 22 November 2017, so those who have not claimed the relief can do so.