1. Your business logo (printed in full-colour), photograph (if required) & business name here. To place an order, or to find out more information, call our sales team on:(0845) 686 0055or email sales@goldminemedia.co.ukJANUARY/FEBRUARY 2013Tax-saving ideas Autumnto beat the endStatementof tax year2012Now is the time you should be Key announcements from thereviewing your financial affairs Chancellor at a glance Do you need growth,Incomeor both? Preparing forwhatever economicWhat ups and downs might be aheadchallengeslie aheadfor investors KEEPING AWATCHFULin 2013?Navigating your way aroundEYE ON YOUR MONEYa wide range of investment Taxing times for theproducts and strategiesaverage 50-year old Your contact details & regulator details here.

2. Wealth creation Editorial Although making resolutions to improve Happy ISA tax year your financial situation is good whatever the time of year, many people find it easierDont get bitten - talk to us at the beginning of a New Year. Regardless of when you begin, the basics remain theThis tax year you canshelter up to 11,280 from tax by investing in an Individual Savings same. So its with this in mind that we Account (ISA). During his Autumn Statement last December, the Chancellor, George have provided a number of ideas insideOsborne, announced plans to increase the ISA limit to 11,520 from 6 April this year. this issue to get you ahead financially. In a period of slow global growth,ISA allowance aggressive central bank actions and nearEach tax year you have an ISA allowance. For the Discuss your paralysis on the part of many fiscal policy makers, investors enter 2013 facing a plethora tax year 2012/2013 (6 April 2012 until 5 April 2013) you can save up to 5,640 in a Cash ISAwith theISA options - dont delay of challenges. On page 6 we look at the three remainder in a Stocks & Shares ISA, or you can investWhether youre new to investing or lookingto grow your portfolio, we can help please main hot topics that are likely to impact onyour full allowance in a Stocks & Shares ISA. Yourecontact us to find out more. making investment decisions over the next only permitted to invest with one Cash ISA provider 12 months: China, the US and the Eurozone.in each tax year and the same, or another, Stocks & With the end of the tax year rapidlyShares ISA provider. approaching on 5 April, now is the time to focus on ways to mitigate any tax liability.Make up any unused shortfall To make the most of the opportunities If you havent already used up your full ISA allowance available, if youve not already done so, you cant retrospectively make up any unused shortfall you should start putting plans in place later its lost forever. UK residents aged 16 and over now. On page 10 we consider some of the can choose to save in a Cash ISA or, if they are 18 or areas you may need to review to minimiseover, a Stocks & Shares ISA or a combination of both. a potential tax liability.Parents or guardians can also open a Junior ISA for This tax year 2012/13, you canshelterchildren under 18. up to 11,280 from tax by investing in an The interest on a Cash ISA isnt taxed, so all the Individual Savings Account (ISA), and interest you earn you keep. With a Stocks & Shares ISA, the good news is that the Chancellor, all gains are free from Capital Gains Tax and you dont George Osborne, announced during hisneed to declare your ISA investments to the taxman. n Autumn Statement last December plans to increase the ISA limit to 11,520 fromThe value of investments and the income from 6 April this year. To make the most of the them can go down as well as up, and you may not get current tax years allowance, you need toback the full amount invested. The tax benefits and act before the fast-approaching deadline.liabilities will depend on individual circumstances and Read the full article on this page. A full may change in the future. Past performance is not a list of all the articles featured in this guide to the future. edition appears on page 3. n The content of the articles featured in this publication is for your general information and use only and is not intended to address Inheritance tax, one your particular requirements. Articles should not be relied upon in their entirety of lifes unpleasant facts and shall not be deemed to be, or constitute, advice. Although endeavours have been Helping you to protect and preserve your estate made to provide accurate and timely Inheritance tax (IHT) is generally payable uponwill be worth much more as debt is being paid off. information, there can be no guarantee that such information is accurate as of the death and during the life of someone where they give Over the IHT tax-free allowance band, IHT is paid at date it is received or that it will continue to away assets. IHT can be reduced significantly by tax 40 per cent and so it is a significant tax charge levied be accurate in the future. No individual or planning in advance. on your assets. n company should act upon such information without receiving appropriate professional Everyone is entitled to an IHT-free allowance of advice after a thorough examination of325,000 in the current 2012/13 tax year. A marriedDont leave your their particular situation. We cannot accept couple or registered civil partnership would therefore family with a tax bill responsibility for any loss as a result of acts or omissions taken in respect of any generally have no IHT to pay if their estate on second If you have significant wealth you need to articles. Thresholds, percentage rates anddeath is less than 650,000. The IHT allowance consider IHT at an early stage. To discuss the tax legislation may change in subsequent options available to you, please contact us for threshold which has been frozen at 325,000 since Finance Acts. Levels and bases of, and 2009 is set to increase to 329,000 in 2015/16.further information. reliefs from taxation are subject to change and their value depends on the individualWhile net estate values might be less than 650,000 circumstances of the investor. The value of now because of a mortgage or some other liability or IThe Financial Services Authority does not regulate your investments can go down as well as up and you may get back less than you invested.loan, it is possible that at the time of death the estateestate planning, wills or trusts.02 3. IN THIS ISSUETo yo u r d i s c u s s04f i na n pl c ia lr e q ua n n i n g i o r t or e m e n t s obf u rt h ta i nIn thisi n f or ma er 07 p l e a st i o n ,issuec o n ta e ct us02Happy ISA tax yearDont get bitten - talk to us08Bad news can impact on any one of us at any time Safeguarding and protecting your familys02Inheritance tax, one of lifesunpleasant facts standard of livingHelping you to protect and preserveyour estate09KEEPING A WATCHFUL EYE ON YOUR MONEY Taxing times for the average 50-year old04Autumn Statement 2012Key announcements from the 09Could you beChancellor at a glance short-changed from your 10 future pension income?04Outlook for the NewCentenarians Reaching retirement is the catalyst for seeking professional financial adviceFinancial pressures to snowball forfuture generation 10Tax-saving ideas to beat the end of tax year06What challenges lie aheadfor investors in 2013? Now is the time you should be reviewing your financial affairsNavigating your way around a wide range ofinvestment products and strategies 12Do you need growth, income or both?0712FLEXIBLE RETIREMENTPreparing for whatever economicPLANNING SOLUTIONS ups and downs might be aheadTake the legwork out of yourretirement planning want to make more For more information please tick the of your money IN 2013? appropriate box or boxes below, include your personal details and return this information directly to us. nArranging a financial wealth check Name nBuilding an investment portfolioAddress nGenerating a bigger retirement income nOff-shore investments nTax-efficient investments nFamily protection in the event of premature death nProtection against the loss of regular income nProviding a capital sum if Im diagnosed with serious illnessPostcode nProvision for long-term health careTel. (home) nSchool fees/further education funding nProtecting my estate from inheritance taxTel. (work) nCapital gains tax planning Mobile nCorporation tax/income tax planningEmail nDirector and employee benefit schemes nOther (please specify) You voluntarily choose to provide your personal details. Personal information will be treated as confidential by us and held in accordance with the Data Protection Act. You agree that such personal information may be used to provide you with details and products or services in writing or by telephone or email. 03 4. AUTUMN STATEMENT 2012AUTUMNSTATEMENT2012 Outlook Key announcements from the Chancellor at a glancefor the NewEconomic Growthn Forecasts for the next few years are:1.2% in 2013, 2% in 2014, 2.3% in2015, 2.7% in 2016 and 2.8% in 2017. CentenariansPensions and BenefitsFinancial pressures to snowball for future generationn Most working-age benefits to rise by1% for each of the next three years. A generation of New Centenarians will be forced to work well into their 70s to stay afloat, according ton From 2014/15 lifetime pension relief new research from Scottish Widows. In addition to working longer, they will face a hat-trick of financialallowance to fall from 1.5m to 1.25m pressures as early as their mid-twenties, with the stresses of saving for their first home, paying back their annual allowance cut from 50,000to 40,000.student loans and starting a retirement fund impacting on them much earlier than other generations. Tn Capped drawdown limit increasedfor pensioners of all ages with thesehe Office for National Statistics believes New Centenarians who complete higher educationarrangements from 100% to 120% ofthat one in three babies born in 2012 in could be paying off their student debts of 73,000 untilthe value of an equivalent annuity.the United Kingdom will live to be 100.they are 52 years old.n Basic state pension to rise byThis unsurpassed average life expectancy, Couples will increasingly delay having their first child2.5% to 110.15 a week.combined with the rising costs of living, education anduntil they are in their early 30s, compared to their laten Child benefit to rise by 1% for twohousing, means that our children and grandchildren 20s now. An increasing proportion of people will eitheryears from April 2014. will need to plan much earlier for their future andhave no children or just one child. After the purchase work for longer than ever of their home, consideringTaxes and Allowances before. the financial burden of havingn ersonal basic income tax allowance forP The Scottish Widowschildren is probably the mostthose aged under 65 increasing by 1,335 survey of 1,000 parents withimportant financial decision theyin cash terms to 9,440 in 2013/14.children under the age ofThe Office for Nationalwill face in their lives.n Higher rate threshold to rise to 41,450five reveals that nearly Statistics believes that one in Financial products are likelyin 2013/14, to 41,865 in 2014/15, and 78 per cent are concernedthree babies born in 2012 in to change to allow for mortgagesin 2015/16 it will be 42,285. that their children may need the United Kingdom will live to be paid over a longer periodn Main rate of corporation tax to be cutto work well into their 70s. to be 100. This unsurpassedof time due to people workingby extra 1% to 21% from April 2014.n Capital gains annual exempt willLeading economist and trend forecaster Steve Lucasaverage life expectancy, longer and increased life expectancy. New Centenariansincrease to 11,000 in 2014/15 and of Development Economicscombined with rising costs ofare likely to be paying off their11,100 in 2015/16.analysed the financial and lifeliving, education and housing, mortgage until they are at leastn Temporary doubling of small businessmilestones that babies bornmeans that our children and61, four years later than theirrate relief scheme to be extended by in 2012 will reach beforegrandchildren will need to parents and seven years laterfurther year to April 2014.they turn 100. Looking plan much earlier for theirthan their grandparents.n Inheritance tax threshold to beincreased to 329,000 in 2015/16. backwards from 2112, the research paints a picture offuture and work for longerIn order for New Centenarians to provide ann Bank levy rate to be increased towhat life might look like forthan ever before.acceptable standard of living for0.130%.these babies and examines themselves in old age, a pensionn 5bn over six years expected fromthe steps an averagepot of 2.4m in retirementtreaty with Switzerland to deal with New Centenarian will have taken throughout life in savings will need to start sooner.undisclosed bank accounts. comparison to his or her parents and grandparents.The cost of social care is likely to be anothern ISA contribution limit to be raised to major concern for this future generation. Many New11,520 from 6 April.The personal financial landscape Centenarians will need to contribute financially to then Prosecutions for tax evasions up100 years in the futurecare costs of their parents generation, as well as try to80%, with anti-abuse rule to come in.Changes to ways that student loans (and, for manyput some funds aside for their own care costs in their people, high tuition fees) are provided mean that thosefinal years.04 5. Financial planningNature of work is likely to changecent are pleased to think their children will commencement of working lives and ages ofThe state retirement age will be at least 70 by accomplish more in life because they will be retirement. ONS data was also used to estimatethe turn of the next century and an increasinghealthier longer. n expected future trends for financial mattersproportion of people will continue working wellincluding earnings, rents, house prices, mortgageinto their 70s, either because they cant afford to costs and retirement incomes. A range of otherretire or because they feel it is in their best interestSaving enough information sources published and unpublishedto continue working.for a retirement were utilised to obtain insights into recent and However, the nature of their work is likely to of 30 years or more expected future social trends.change. According to Lucas, In the future, olderThe dramatic speed at which life expectancyworkers especially in the professional and business is increasing means we need to radicallyEstimates of future financial costs includingservices sector are likely to stay working longer rethink our perceptions of life, especially forearnings, housing costs, student debt and retirementinto their 70s, but the nature of this work willour children. Most workers today expect their savings were calculated using bespoke economicbecome more flexible and probably more part-pension to fund a retirement of up to 20 yearsand financial models developed by the authors of thebut increased life expectancy means Newtime. Workers in manual or vocational careers are research. These figures were estimated by projected-Centenarians may have to save enough for aalso likely to look to extend their working lives byretirement of 30 years or more. To discuss howforward underlying trends evident in existingundertaking a less strenuous, more part-time role. we could help you plan for your childrens anddatasets, coupled as appropriate with trend-based However, this means that New Centenarians could be grandchildrens future, please contact us for inflation assumptions.supporting themselves with a potentially limited income further information. Dont leave it to chance.for up to 30 years of retirement. In order to properlyThe main exception is in the area of futureprepare for prolonged retirement and counter the effectsThis research was undertaken based on past student debt, where a new system is currentlyof the collision of financial pressures, Lucas explains thatand expected future demographic trends usingbeing introduced and for which current dataNew Centenarians will need to begin saving for their published research and data from the Office for cannot be used to construct forward estimates.retirement from at least age 25 and that parents should National Statistics (ONS); this included trendIn this case future estimates were based on aencourage their children to start understanding finances data on life expectancy, healthy life expectancy,literature review of estimated future student debtand the importance of saving from a young age.fertility, marriage, divorce, having children,liabilities, using sources including the Department for Education, the National Union of Students andIt isnt all doom and student loan companies.gloom for this generationAlmost 45 per cent are concerned that theirchildren will not be able to save enough moneyfor a longer retirement. Yet almost 40 per cent ofparents are not considering their childs long-termfuture as part of their financial planning and halfof all parents would not consider starting a pensionfor their child on their first birthday. However, it isnt all doom and gloom forthis generation, as 41 per cent of parents areexcited about the potential for long-lastingfamily relationships and a further 37 per 2.4mThe pension pCenten ot New ar i an sto provwill nei d e an eds t an d a accepta rd of liblet h e ms ev i n g folves in r old age . 05 6. Wealth creationWhat challengeslie ahead forinvestors in 2013?Navigating your way around a wide range of investment products and strategiesIn a period of slow global growth, aggressive central bank actions and near paralysis on the partof many fiscal policy makers, investors enter 2013 facing a plethora of challenges.T here are three main hot topics that areview and see their capital fluctuate in value could2000 many investors who were over-exposed to likely to impact on making investmentconsider taking more risk to try and achieve anthese areas suffered heavy losses. Diversification decisions over the next 12 months: inflation-beating return.mitigates risk, as different areas perform well at China, the US and the Eurozone.Shares are different from most goods in that different times. Paradoxically, though, its also Chinese monetary policy-making bydemand often increases as prices rise. If an important not to be too diversified.the new leadership needs to tread a fine line between investment area is fashionable, it could be a sign that One of the biggest dilemmas investors face isslowing economic growth, which could cause social it is overvalued. Traditional areas, such as blue chip market timing. Jumping in and out of markets on aunrest, and creating asset bubbles. A US debt ceiling companies, often generate the best long-term returns,regular basis not only requires constant monitoringbreach around March 2013 could lead to draconianso it makes sense for most investors to avoid the latest of daily events but also requires the skill to act onconsequences if an agreement is not reached. Finally, fad. However, it is important to remember that all such events.The return from a lump sum investmentthe on-going Eurozone sovereign debt crisis althoughstock market investments will fluctuate in value, so can depend heavily on the entry point. One way tosteps have been taken in the right direction, Europe is you could get back less than you invest. achieve this is to spread or drip-feed a lump sumstill not fixed. into the market as opposed to investing it all in oneMaximum use of tax sheltersgo. In fact, during volatile times this strategy allowsGood financial planning Investors also need to make the maximum use of tax you to benefit from what is known as pound costNavigating your way around the plethora ofshelters as tax can eat away at your returns. These canaveraging.Regular investing provides an alternativeinvestment options out there can be very daunting include pensions and Individual Savings Accounts method of building positions over time. nand requires professional financial advice. Before(ISAs) at one end of the spectrum to Enterpriseinvesting, you need to ask yourself a basic question. Investment Schemes and Venture Capital Trusts atWhat are you investing for? Good investment the other, higher-risk end.Improved returnsrequires good financial planning first of all. You mustEven following the proposals announced by the within yourdecide what your objectives are, what return you needto achieve that objective and what risk you are willingChancellor, George Osborne, concerning pension taxrelief in his Autumn Statement, pensions still offer investment strategyto take to achieve that return. very attractive tax benefits through the income taxOur services cover a wide range of Deciding how much to invest in equities, fixed relief you receive on the contributions. investment products and strategies. Ourinterest (gilts and corporate bonds), property and In the current 2012/13 tax year, there is no tax to pay dedication to flexibility and innovation ensures we are able to secure new andcash is the first step in constructing a portfolio. Manywithin an ISA on any capital gains and no further tax to tactical opportunities for improvedinvestors are understandably nervous about taking pay on any income and you can shelter up to 11,280, returns within your investment strategy.risks with their hard-earned capital during thiswhich is set to rise to 11,520 from 6 April this year. To discuss what you need to do next,current period but not taking enough risk can be justHaving said this, making an investmentplease contact us for further information.as damaging as taking too much. decision based on a tax saving alone should notbe the main consideration at the expense of theTaking a long-term view other rules of investing. Information is based on our current understandingAll asset classes carry risk including cash, which of taxation legislation and regulations. Levels andcan lose its spending power over time because ofDifferent areas perform bases of and reliefs from taxation are subject toinflation. Most investors see risk as the risk of short-well at different times legislative change and their value depends on theterm price falls but fail to consider the risk that their An undiversified portfolio will only perform well individual circumstances of the investor. The value ofinvestments will not grow fast enough to meet their some of the time. Good examples of this are theyour investments can go down as well as up and youobjectives. Those who can afford to take a long-termbanking crisis of 2008 and the technology crash ofmay get back less than you invested.06 7. RetirementFLEXIBLE retirementThe SIPP wrapper is separate from the contents and, as such, has distinct, often fixed charges.PLANNING SOLUTIONS Because you can now accumulate a number of pensions over your working life, consolidating them all into a SIPP means that you have one company carrying out your pension administration.Take the legwork out of your retirement planning This could reduce your reporting and paperwork; however, you should ensure that the additional investment options a SIPP provides are required,People are living longer and the number of retirees is growing. Longevity should as it can cost more to administer than a normalbe a blessing but many investors are worried they will outlive their savings. So it is personal pension plan.essential to consider saving for retirement as early as possible and to decide whereSIPPs are appropriate for people comfortable with making their own investment decisions andbest to invest for your requirements. are not a risk-free product. The capital may be at risk due to the investments held within thisDeciding how to planInvestment choicepension arrangement; the value of investmentsThere is a bewildering choice when deciding how You can invest in a wide range of investments andcan go down as well as up and you could getto plan for your retirement, and it is importantthis includes any number of approved funds. Most back less than you invested. Tax reliefs will alsoto weigh up the cost and complexity against the SIPP providers allow you to select from a range of depend on your personal circumstances and thepotential returns. If appropriate, one option toassets, including: pension and tax rules are subject to change byconsider is a Self-Invested Personal Pension the government. n(SIPP). Originally designed for people with n stocks and shares quoted on a recognised UK orhigher-value pension funds, theyve become more overseas stock exchangeprevalent since the UK pension simplification n government securitiesBUILDING A BIGGER PENSIONlegislation of 2006.n unit trusts Before applying for a SIPP, you should seek SIPPs are tax-efficient wrappers within which youn investment companies professional financial advice. To find outcan select your own pension investments from a wide n insurance company funds how much you should be saving to helpvariety of sources and choose how to spread yourn traded endowment policiesachieve your desired retirement income,money among a whole range of different investment n deposit accounts with banks and building societiescontact us for further information.types subject to both HM Revenue & Customs rulesn National Savings productsand any limits set by the SIPP provider.n commercial property (such as offices, shops orfactory premises)Information is based on our current understandingTax-efficiencyof taxation legislation and regulations. A SIPP isA SIPP offers the same tax benefits as otherRetirement FLEXIBILITYa long-term investment, and the fund value maypersonal pension plans, with personal A SIPP allows you to choose from the full range fluctuate and can go down. Your eventual incomecontributions eligible for Income Tax relief andof options at retirement, from purchasing an may depend upon the size of the fund at retirement,investments within the SIPP able to grow free ofannuity to taking a managed income withdrawal future interest rates and tax legislation.Capital Gains Tax.from your fund. SIPPs are tax-efficient wrappers within which you can select your own pension investmentsfrom a wide variety of sources and choose how to spread your money among a whole range ofdifferent investment types .07 8. ProtectionBad news can impacton any one of us at any timeSafeguarding and protecting your familys standard of livingBad news can impact on any one of us at any time, in the form of an illness or sudden death. We dont like to think aboutit but we do have to plan for it. So having the correct protection strategy in place will enable you to protect your familyslifestyle if your income suddenly changes due to premature death or illness. However, choosing the right options can bedifficult without obtaining professional advice to ensure you protect your family from financial hardship.Obtaining advice is essential toYour life assurance premiums will vary according to aThe other type of protection available is amaking an informed decision number of different factors, including the sum assuredwhole-of-life assurance policy designed toabout the most suitable sum and the length of your policy (its term), plus individual provide you with cover throughout your entireassured, premium, terms and lifestyle factors such as your age, occupation, gender, lifetime. The policy only pays out once thepayment provisions. We work state of health and whether or not you smoke. policyholder dies, providing the policyholderswith our clients to create tailored protection If you have a spouse, partner or children, you dependants with a lump sum, usually tax-strategies that meet their financial goals and needsshould have sufficient protection to pay off your free. Depending on the individual policy,and were committed to ensuring that our clientsmortgage and any other liabilities. After that, you policyholders may have to continue contributingenjoy the best financial planning service available.may need life assurance to replace at least some of right up until they die, or they may be able to Whether youre wanting to provide a financialyour income. How much money a family needs will stop paying in once they reach a stated age, evensafety net for your loved ones, moving house or a vary from household to household so, ultimately, its though the cover continues until they die. nfirst-time buyer looking to arrange your mortgage up to you to decide how much money you wouldlife insurance or simply wishing to add somelike to leave your family that would enable them tocover to what youve already got youll want to maintain their current standard of living.ADDED PEACE OF MINDmake sure you choose the right type of cover. Thats There are two basic types of life assurance, termWe can help make sure you and yourwhy obtaining the right advice and knowing whichand whole-of-life, but within those categories therefamily is financially protected, whichproducts to chooseis essential.are different variations. means added peace of mind for you Life assurance helps your dependants to copeThe cheapest, simplest form of life assurance is and protection for them. Contact usfinancially in the event of your prematureterm assurance. It is straightforward protection, today to discuss your requirements.death. When you take out life assurance, youthere is no investment element and it pays out aset the amount you want the policy to pay out lump sum if you die within a specified period. Thereshould you die this is called the sum assured.are several types of term assurance.Even if you consider that currently you havesufficient life assurance, youll probably needmore later on if your circumstances change.If you dont update your policy as key eventshappen throughout your life, you may risk beingseriously under-insured. As you reach different stages in your life, theneed for protection will inevitably change. Theseare typical events when you should review your lifeassurance requirements:n Buying your first home with a partnern Having other debts and dependantsn Getting married or entering into a registeredcivil partnershipn Starting a familyn Becoming a stay-at-home parentn Having more childrenn Moving to a bigger propertyn Salary increasesn Changing your jobn Reaching retirementn Relying on someone else to support youn Personal guarantee for business loans08 9. TaxationRetirement Could you be short-changed from your future pension income? Reaching retirement is the catalyst for seeking professional financial advice There is a world of choices and decisions to be made when reaching retirement, and thats before you even look at whether you should take an enhanced annuity. For many individuals, reaching retirement is the catalyst for seeking professional financial advice. Suddenly you can be faced with a pension pot be it large with myriad options, or small and needing to be stretched as far as possible. According to the National Association of Pension Funds (NAPF), nearly two- thirds of us could be eligible for higher pensions when we retire. Thousands of people are missing out because they do not realise that having certain medical or lifestyle conditions could significantly boost their retirement incomes whenKEEPING A WATCHFUL buying an annuity or annual pension. The NAPF estimates that about half aEYE ON YOUR MONEY million people retiring each year are being short-changed by up to 1bn from their total future pension income. If you or your partner suffers fromTaxing times for the average 50-year-old medical and/or lifestyle conditions, you may qualify for enhanced terms on your annuity option, which could increase yourThe average 50-year-old has paid 190,400 in direct taxes by the time they retirement income. Enhanced annuitiestake into consideration detailed informationcelebrate their 50th birthday equivalent to around three-and-a-half times more about yourhealth and lifestyleto providethan theyve invested in their pension, new analysis from MetLife [1] shows. you with a more personal annuity.T Typically, when an annuityhis study of the finances of 50-year-olds last 16 years of their working lives when their focusproviderquotes for an enhanced annuity,shows they have an average of 54,300 will be on retirement planning.they will pay close attention to all the factorssaved in pension funds but have paid out Men working from 21 to 66 will pay a total of that will affect your life expectancy. Thismore than three-and-a-half times that in316,950 in tax and National Insurance during theirincludes where you live, whether you smoketax and National Insurance. working lives, while women will pay 247,350, theand drink, your lifestyle and your medical People on median earnings starting work at 21 will figures show. nhistory. They can then build a more accuratehave paid out 114,148 in income tax with the otherpicture of your life expectancy, on which76,000 going on National Insurance during the course of they base their calculations.their working lives, figures show. For men the total direct Concerned about yourtax bill by 50 comes in at 205,000, while women pay anaverage 167,370 in income tax and National Insurance.retirement provision?Securing a bigger The amount paid in tax is another illustration ofIf you are concerned about your retirement retirement incomethe financial pressures on the group born between provision, please contact us to review yourYou need to bear in mind that oncecurrent situation its always better to do you commit to an annuity, you1961 and 1981. While the tax bill appears high, thesomething rather than nothing. The problem willwill be stuck with it for life, so itgood news is that pension saving continues to attractnot go away and over time will only get worse. is essential to obtain professionalsignificant tax relief and is a good way to maximise taxefficiency while planning for retirement.financial advice. Contact us today According to the analysis, people working on to [1] MetLife analysis of HMRC and ASHE data to discuss how you could secure a bigger retirement income.66 from age 50 on median earnings will find their totalpublished 07/11/12.tax bill rising to 290,560 another 100,000 in the09 10. Wealth protectionTax-saving ideas tobeat the end of tax yearNow is the time you should be reviewing your financial affairsWith the end of the tax year rapidly approaching on 5 April, now is theTax credits on dividends are not repayable so non-taxpayers should ensure that they have other sourcestime to focus on ways to mitigate any tax liability. To make the most ofof income to utilise their personal allowances.the opportunities available, if youve not already done so, you should startputting plans in place now. Here we look at some of the areas you may needPension contributionsto consider to minimise a potential tax liability.There are many opportunities for pension planningIbut the rules can be complicated. f your partner pays a lower rate of tax than Children also have their own Capital Gains TaxThe rules include a single lifetime limit, currently you, you could consider transferring assets (CGT) annual exemption of 10,600 (2012/13). If1.5m in 2012/13 but reducing to 1.25m in into their name. This makes particularappropriate, it may be more effective for parents to 2014/15, on the amount of pension saving that can sense if one of you is a non-taxpayer, as invest for capital growth rather than income.benefit from tax relief. There is also an annual limityour taxable income will be lower than your tax The government introduced the Child Trust on the maximum level of pension contributions,allowances, which means you wont have to pay anyFund (CTF) for children born on or after currently 50,000 for 2012/13 reducing to 40,000tax on savings interest. Interest on savings accounts1 September 2002. The idea was to promote tax- in 2014/15. The annual limit includes employeris usually paid after 20 per cent has been deductedefficient savings by family and friends and included pension contributions as well as contributions byby the provider. Higher rate tax payers pay 40 per government contributions as an incentive. Allthe individual. Any contributions in excess of thecent interest. government contributions have now ceased and annual limit are taxable on the individual. To receive your interest paid tax free, you will need children born on or after 3 January 2011 no longerThis year and in the next tax year, carry-to complete form R85. This is available from banks,qualify for a CTF account. forward provision allows investors to contributebuilding societies orthe HM Revenue and CustomsExisting CTF accounts continue alongside a newup to a maximum of 200,000. You can carry(HMRC) website. If you are a non-taxpayer, but haveJunior Individual Savings Account (Junior ISA) forward any unused annual allowance from thepaid tax on your savings, make sure you claim it back. which has been introduced for those children who previous three years, which will give peopleYou need form R40 from HMRC. are not eligible for a CTF account. This includessome scope to catch up on contributions they Income from jointly owned assets is generally children born before 1 September 2002 as wellhave missed. You could potentially invest up toshared equally for tax purposes. This appliesas children born from 3 January 2011. Both CTF 200,000 (assuming a 50,000 allowance from theeven where the asset is owned in unequal sharesand Junior ISA accounts allow parents, other current year and an assumed 50,000 allowanceunless an election is made to split the income family members or friends to invest up to 3,600 from the previous three). If these are personalin proportion to the ownership of the asset. (2012/13) annually in a tax-efficient fund for a contributions they cannot exceed your earningsThe exception is dividend income from jointlychild. There are no government contributions and in the current tax year.owned shares in close companies, which is splitno access to the funds until the child reaches 18.Directors of family companies could, as anaccording to the actual ownership of the shares.alternative, consider the advantages of setting upClose companies are broadly those owned by the Taxpayersa company pension scheme or arrange for thedirectors or five or fewer people. The 50 per cent additional rate of income tax on company to make employer pension contributions. taxable incomes above 150,000 reduces to 45 per If a spouse is employed by the company, considerChildren cent on 6 April this year. This means that those who including them in the scheme or arranging forChildren have their own allowances and tax bands.are able to defer income from 2012/13 to 2013/14 the company to make reasonable contributions onTherefore it may be possible for tax savings to be could benefit from a 5 per cent or more reduction in their behalf.achieved by the transfer of income-producing the tax charged on the amount deferred.assets to a child. Generally this is ineffective if Employer-provided cars and fuelthe source of the asset is a parent and the child is Non-taxpayersIf applicable, you should also check that anunder 18. In this case the income remains taxableChildren or any other person whose personalemployer-provided car is still a worthwhile benefit.on the parent unless the income arising amounts to allowances exceed their income are not liable to It may be better to receive a tax-free mileageno more than 100 gross per annum. tax. Where income has suffered a tax deduction allowance of 45p per mile (up to 10,000 miles) You could consider transferring assets from at source a repayment claim should be made.for business travel in your own vehicle. If another relatives, for example, grandparents and/orIn the case of bank or building society interest,employer-provided car is still preferred, consideremploying teenage children in the family business to a declaration can be made by non-taxpayers tothe acquisition of a lower CO2 emission vehicle onuse personal allowances and the basic rate tax band. enable interest to be paid gross (form R85). replacement to minimise the tax cost.10 11. Wealth protection Where private fuel is provided, the benefit always consider the differing levels of risk and your shares at a profit will be CGT-free (a reduction ofcharge is also based on CO2 emissions. You shouldrequirements for income and capital in both the the current rate of 28 per cent to 0 per cent).review any such arrangements to ensure nolong and short term. An investment strategy basedAny size of capital gain made on the disposalunnecessary tax charges arise. purely on saving tax is not advisable.of any kind of asset can be deferred by re- investment into EIS-compliant companies. TheCapital Gains Tax (CGT)Individual Savings Accounts deferred gain is then due on the sale of the EISWith 5 April fast approaching, it is a good idea to be Individual Savings Accounts (ISAs) provide an shares unless the sale is to a spouse or on thethinking about using up your CGT exempt amount Income Tax and Capital Gains Tax investment death of the shareholder.to make the best use of tax advantages. For 2012/13wrapper. The maximum investment limits are set Investments in EIS-compliant shares can attractevery individual has a CGT exempt amount offor each tax year. Therefore to take advantage of Inheritance Tax business property relief (BPR)10,600 where no CGT is payable. Any capital gains the limits available for 2012/13 the investment(s)equal to 100 per cent of the investment value onon disposal of assets or investments are added tomust be made by 5 April 2013 (this tax year you gifting or on death.income and taxed at 18 per cent over this exempt canshelter up to 11,280).A Venture Capital Trust (VCT) invests in theamount to the basic rate limit of 34,370 for 2012/13 An individual aged 18 or over may invest in oneshares of unquoted trading companies. An investorand then at 28 per cent for any gains over this. Cash ISA and one Stocks & Shares ISA per tax year in the shares of a VCT will be exempt from tax Depending on your income from capital but limits apply. A Cash ISA allows you to invest on dividends (although the tax credits are notgains, timing can become an important issue. up to 5,640 (2012/13) with one provider only, in repayable) and on any capital gains arising fromIf appropriate, you should aim to use up yourany one tax year. disposal of shares in the VCT.personal exemption before 5 April but if your A Stocks & Shares ISA allows you the option toIncome Tax relief, currently at 30 per cent, isincome from capital gains is high enough then youinvest up to 11,280 in the current tax year with available on subscriptions for VCT shares up tocould wait until the 2013/14 tax year to possiblyone provider. 200,000 per tax year so long as the shares are heldavoid paying tax at 28 per cent unnecessarily.If you want to invest in both a Cash ISA and a for at least five years. CGT liabilities are calculated with your Self-Stocks & Shares ISA, the overall amount is cappedFinally, review your borrowings. Full tax relief isAssessment Tax Return and tax payable is due byand you cannot exceed the 11,280 limit (2012/13).given on funds borrowed for business purposes.31 January 2013 for the tax year ending 5 April 16 to 17-year-olds are able to open an adult Cash2012. Therefore part of your planning may be toISA in 2012/13 and can also have a new Junior ISAleave disposals until after the year end to give you account. This means that a combined maximum Isnt it time youanother 12 months to pay the tax liability.investment of 9,240 (5,640 Cash ISA + 3,600took advantage of If you have two homes you could considerJunior ISA) is possible for 2012/13.any tax breaks?making an election, so that future gains on your Its important to take advantage ofmain residence are exempt from CGT.Other investments timely tax breaks. To investigate the A capital gain can also be deferred if theNational Savings & Investment bank (NS&I) opportunities available to you, pleasegain is reinvested in the shares of a qualifying products are taxed in a variety of ways. Some, such contact us today.unquoted trading company through the Enterpriseas National Savings Certificates, are tax-free.Investment Scheme.Single premium life assurance bonds and roll No CGT planning should be undertaken in up funds can provide a useful means of deferringThe value of investments can go down as wellisolation. Other tax and non-tax factors may beincome into a subsequent period when it may be as up and you may not get back your originalrelevant, particularly Inheritance Tax, in relation to taxed at a lower rate.investment. Past performance is not an indicationcapital assets. The Enterprise Investment Scheme (EIS) allowsof future performance. Tax benefits may vary as income tax relief at 30 per cent on new equity a result of statutory change and their value willInvestmentsinvestment (in qualifying unquoted tradingdepend on individual circumstances. Thresholds,There is a wide range of investments with varyingcompanies) of up to 1m in 2012/13. As long aspercentage rates and tax legislation may change intax treatments. When choosing investments, shares held for at least three years, the sale of thesubsequent Finance Acts. 11 12. Wealth creationDo you needgrowth, incomeor both?Preparing for whatever economic ups and downs might be aheadThe volatility in global markets over the past four years has tested the nerves of even the most experienced investors,making it a difficult time for individuals who rely on income from investments for some or all of their needs. The searchfor inflation-beating income is forcing many investors to move money out of cash accounts and into investment funds,with the aim of achieving a rising level of income.H ow should you decide between Balance between investment portfolio and switch from growth assets growth and income investments? the different asset types to income as your investment needs change. n Much will depend on your Wealthier investors, who can cope with a little investment time frame and what fluctuation in their income and capital, could lookyou need the investment to provide for you. to include corporate bonds, property and dividend-What is yourWhen considering the answer, its important paying shares. Bonds and property traditionally pay financial personality?not to ignore the concept of total return. Totalhigher yields than equity income shares, but equitiesThere are many facets to your financialreturn looks to combine income with capital have provided the greatest opportunity for capitalpersonality and many ways to generategrowth to achieve the best overall return. Onegrowth and growth of income. A balance betweenboth growth and income from yourway of achieving this is with equity income the different asset types should provide the best investments. To discuss the optionsfunds, where investors saving for retirementchance for a reasonable and growing income. available to you or to review your currentprovision, please contact us.could reinvest the income until the day theyIncome-paying equity, bond and property fundsretire and then elect to have it paid to them can be a good investment for those investing forinstead, producing an income without the costscapital growth too, as its simple to arrange forLevels and bases of and reliefs from taxationof completely overhauling their portfolio.income to be reinvested.are subject to legislative change and their valueIndex-linked investments, such as certain gilts and Whatever your preference, if you hold a variety of depends on the individual circumstances of theNational Savings certificates, can protect againstinvestments, both growth and income, you should investor. The value of your investments and incomeinflation eroding capital and income, but in todaysbe better prepared for whatever economic ups and can go down as well as up and you may get backlow-inflation world investors need to compare the downs might be ahead of you. As your financial less than you invested.total return to that available from an ordinary gilt or situation changes over time, you should also besavings account.prepared to make the necessary adjustments to yourPublished by Goldmine Media Limited,Basepoint Innovation Centre, 110 Butterfield, Great Marlings, Luton, Bedfordshire LU2 8DLArticles are copyright protected by Goldmine Media Limited 2013.Unauthorised duplication or distribution is strictly forbidden.