SOME DAYS… WARNING TO THOSE RETURNING TO THE NHS

TODAY’S BLOG

SOME DAYS – WARNING TO THOSE RETURNING TO THE NHS

There are days when my heart sinks, today was one of those days. I came across a warning from HMRC about a scam being directed at people returning to work in the NHS to help in the fight against COVID-19. It is always depressing when crooks and lowlifes take advantage of others, but particularly so when they take advantage of those that are trying to quite literally save lives.

I better not add any more as it certainly would not convey a professional image, let’s leave it at “it makes me very angry”. So if you are returning to work in the NHS or know someone that is, please warn them not to sign documents without reading them and to have a look at this notice on the Government website.

Long story short – this is about a tax avoidance scheme, which will not work and likely to financially harm those that participate in it.

The link to the Government notice and website is here.

CRIMINALS LURKING

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

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SOME DAYS… WARNING TO THOSE RETURNING TO THE NHS2020-03-31T18:19:22+01:00

COMMUNICATING WITH YOU VIA OUR APP

TODAY’S BLOG

COMMUNICATING WITH YOU VIA OUR APP

Over the coming days we shall be releasing more information directly to your phone via our app. The aim will be to cut through the noise and cover essential information such as Government updates, tax and finance implications, loans and funding.

As a result, please check that you have downloaded our app to your smart phone, it works on both Android and IO (Apple) platforms.

  1. Head to the App store on your device and search for MyIFA. Click to download and wait for the App to install on your device.
  2. Open the App and enter your email address on the first screen.
  3. Click the arrow below the entry field and on the next screen you will be prompted to enter an Access Code.
    1. In this box, enter code: SOLOMONS

You’ll then be taken through to create your own account, where you add your name, create a password, and click the bottom arrow to confirm your details. Once confirmed, you’ll then be in the App.

We want to reassure you we are here to work with you during this challenging time and are here if you have any questions. Here is a video we made a while back about the app.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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COMMUNICATING WITH YOU VIA OUR APP2020-03-27T10:29:21+00:00

PPI – ANOTHER PAYOUT?

TODAY’S BLOG

PPI – ANOTHER PAYOUT?

Just when you thought you had seen the last of PPI, I am here to tell you that it’s not over until the tax taken is repaid… If you’re one of the millions of people who’ve shared in the £34billion of PPI repaid (so far), you may have paid tax unnecessarily. If so, and your payout happened in the last four tax years, you are due money back. The money you get paid back for PPI can have up to three main elements:

  • A refund of the PPI you paid.
  • If the bank (outrageously) added an extra loan to your original loan just to pay for the PPI you get back any interest you were charged on this extra loan.
  • You get Statutory Interest (at eight per cent a year) on the total of both those sums, for each year since you got the PPI.

Only the third element is taxable. Any tax taken is usually shown on your payout statement. Tax is due because this Statutory Interest is designed to return you to the position you’d have been in if you hadn’t had PPI. If tax is due on PPI payouts, most firms deduct it automatically, at 20 per cent, before you get the money. That has always been an issue for non-taxpayers. However, since April 6, 2016, far more people have been owed tax back, as that’s when the personal savings allowance launched. It allows most taxpayers to earn £1,000 a year of savings interest, tax-free. Since then, while most savings interest has been paid without any tax taken off, PPI still has 20 per cent automatically deducted. Therefore, oversimplifying somewhat, it counts as savings interest, as if you’d earned it on that saved cash.

PPI AGAIN

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

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PPI – ANOTHER PAYOUT?2020-01-23T19:23:58+00:00

970 BOTTLES OF BEER ON THE WALL

TODAY’S BLOG

970 BOTTLES OF BEER ON THE WALL…

I’ve been trying to think of ways to explain the benefit of long-term investing. I’m not a big beer drinker, but given that when I do go to a pub, I’m always shocked at how much a pint of beer is. According to the ONS, the average pint of beer in the UK was £3.67 in January this year. Clearly a  national average, because that wouldn’t buy much in London.

30 Years Ago… 1989

Anyway, let’s suppose I am someone that likes to buy the occasional pint of beer. As I get older, like most people I tend to remember elements of the past fondly. Particularly this time of year as students return to University. 30 years ago, perhaps you were at University or had long since left. 1989 – the time when Nigel Lawson was replaced as Chancellor by John Major. Simply Red had a hit album “A New Flame”; Challenge Anneka had aired for the first time and Nick Faldo won the Open. A pint of beer back then was £1.03.

BOTTLES OF BEER

YOUR ANXIETY

Let’s suppose you had £1000 you wanted to do something with. The memory of Michael Fish and the great storm closely followed by Black Monday was fairly fresh in your memory. You didn’t fancy the stock market. So you found a decent deposit account, rates were high causing problems for borrowers but great for savers at 14%.

Thirty years later that £1000 had risen to £2,080 by January this year. You had forgotten about it except for when you sighed with relief as economic recessions came, Y2K, Dotcom bubble, Korean crisis, 9/11, credit crunch – you had avoided them all.

Yet there is a problem. In 1989 your £1000 would have bought a 30-year younger you 970 pints of beer. Today your £2,080 would only stretch to 566 pints.

Your Uni Friend John had a PEP

Your good friend John from University had put his money into the UK stock market, he put £1,000 into a Personal Equity Plan, some quirky idea brought in by Nigel Lawson. He bought a FTSE100 tracker fund (ok, maybe not, but stay with me). He had to live with the same economic stresses and saw the topsy turvy workings of the stock market. However, at the end of 30 years his £1000 was worth £11,494. He hadn’t touched it (neither had his adviser) and so all dividends were reinvested. This sort of money enables John to buy 3,131 pints of beer. That’s 5 times more than your 556 pints.

Julia also had a PEP

John is fairly happy, but his girlfriend Julia at the time also put £1,000 into a PEP, but she put it all into the FTSE250 tracker. She figured that slightly smaller companies might do a bit better than bigger ones. Lo and behold, Julia’s £1,000 has turned into £20,818. Julia can buy 5,672 pints of beer, that’s ten times (10x) TEN TIMES as much as your 556 pints.

OK – Smallprint (or not) Caveat Emptor…

Admittedly I have taken some liberties with costs, charges and the available funds in 1989. The biggest liberty I really took was suggesting that people leave their money alone. They/we don’t. We all tend to fiddle around, attempting to find a slightly or perhaps considerably “better” option.

Long story short, when considering investment for decades, what on earth does “risk” really mean? The risk of the power of the money in your pocket being worth less (or worthless) due to rising prices? The risk of seeing your money stagnate in cash? The risk of seeing the value of investments rise then fall?

30 Years £1000

Monsters grow

What ought to be blindingly clear…. don’t let your anxiety dictate your financial planning and investment strategy. It is a dreadful guide to future performance. The monster at your door is inflation, however small it seems today, feed it for 30 years and it’s still hungry and likely to eat you alive.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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970 BOTTLES OF BEER ON THE WALL2019-09-30T18:23:04+01:00

DOCTOR, DOCTOR… IN THE TELEGRAPH

TODAY’S BLOG

DOCTOR DOCTOR… IN THE TELEGRAPH

You may have come across my details in a piece in The Telegraph on Monday 10 September 2018 by financial journalist Laura Miller. Laura outlines a problem that is being observed in hospitals around the UK, in that some doctors are in the ludicrous position of effectively being forced to reduce their available hours due to the additional taxes that they will suffer for additional income. This has the inevitable potential to create longer waiting lists.

Before we go any further, let me say that Laura asked me to check some sums from a Consultant doctor who was making the point about the annual allowance excess taxes. I have made no secret of the fact that I believe the tapered annual allowance is an utterly stupid Government policy. It isn’t the first and of course will not be the last.

THIS IS GOING TO HURT

My only concern is that some may interpret the information as “greedy doctors worry about tax and so work less”. So I wish to make one point crystal clear. I have advised medics for over 25 years. I have met hundreds of them. I have never, NEVER, not even once met one that was motivated by money as a career choice. The early career of a junior doctor is particularly traumatic and frankly the NHS and Department of Health should be ashamed of the working pressures and timetables that they put them under. If you need any convincing, simply have a look at Adam Kay’s Book – “This is Going To Hurt”. Yet the system continues, because it is always under strain and there are not enough doctors to do the work within “normal” working hours or shifts.

DOCTORS EARNINGS

It is true that some doctors can earn very good incomes. The £10,000 annual allowance only applies to those with income over £210,000 – which is a lot of money by most standards. However, these are people that are highly skilled and at the top of their profession, have given way more than their pound of flesh and are constantly scrutinised for errors and lambasted by politicians and media whenever it suits. For the record, this is not Laura’s intent.

The rather ludicrous rules also impact any doctor whose pension income improves by more than £2,106 in a year. This too would push them over the standard annual allowance and potentially suffer excess tax charges. The tax charge is treated effectively as income tax at the highest rate, despite the fact that the pension has not actually been paid to them, conceivably might never be paid to them if they were to die before retirement. In essence a tax on future, yet to be received income. This sort of rise in pension benefit could come from something as innocuous as moving up the grades, or perhaps for impressive work in the form of Clinical Excellence Awards – or even returning to a full-time post.

HEARING PROBLEM

This is all to do with the way in which the Annual Allowance is calculated for those in final salary schemes. I wrote to the previous Chancellor, twice, without reply on this subject when he presided over the introduced rules. Perhaps Laura will have more success.

Suffice to say this is a complex piece of pension planning, a headache that neither the doctor, nor the NHS really should have to waste time on. Yet my advice is to all doctors is to request a Pension Annual Savings Statement as well as their Total Rewards Statement and ensure all payslips are carefully retained – as well as information about any and every form of income they receive from all possible sources. This is more unpaid work, increased stress and bureaucracy to satisfy some utterly numpty thinking at HM Treasury…. Nothing new in that though is there.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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DOCTOR, DOCTOR… IN THE TELEGRAPH2018-10-10T16:44:32+01:00

A Case of Cops and Robbers?

A Case of Cops and Robbers?

There is an undeniable strange fascination with a story about bank robbery. Butch Cassidy and the Sundance Kid, The Great Train Robbery, The Italian Job, Bank Job, The Lavender Hill Mob, to name just a few. Perhaps there is something played out in the story that we might wish we could do, yet clearly do not. Perhaps the daring, cunning or planned deception appeals. Perhaps we admire something about “sticking it to the man” which in this instance is the large, faceless, corporate Banks, who we might tend to believe are the real robbers (anyone think their bank charges are fair?). This is of course nothing but escapism, a reality that thankfully we do not have to live with personally.

The new movie Baby Driver is on many levels another heist movie, a car chase, a gang and the inevitable show-down. Throw in a small romance and the ingredients are set another summer blockbuster. However, with the British Director Edgar Wright at the helm, who made comedy such as “Hot Fuzz”, “Shaun of the Dead” and there is arguably a more subtle nuance to the plot.

A Virtual Reality

In the days of computer games like Grand Theft Auto where players can commit all manner of crimes in the “safety” of a game without consequence, there are many that might ask questions about the impact on the player. Baby Driver attempts to draw from this conversation and whilst the first heist is very much like a clean version of a game of no consequence, each subsequent event gathers the reality of pain, suffering and ultimately the reality of loss. That said, I’m not too convinced that guns and violence are still not stylized and glorified within the film, there is still not enough consequence, but perhaps I am a little numb to violence within films.

Are you Being Served?

Consequences are of course something of a hot topic. Whatever your political views, the devastating fire at Grenfell Tower has triggered some significant discussion about the consequences of a divided society, divided on the grounds of have and have not. We have heard allegations about money being the motivation for almost every shortcut. Indeed the £1bn deal that Mrs May has struck with the DUP to many is an act of bribery and of course many now make the case that austerity has not worked and must cease, a policy that was the consequence of the financial collapse and the subsequent propping up of the system, which largely went to the balance sheets of the very Banks that created and manipulated the chaos. So we are back to robbing banks because of the belief that the banks are the bigger villains.

Bank Robbers…

The UK regulator (the FCA) has today issued a paper on how they would like to reform the investment banking community (like those that you probably see on billboards or sponsored events). Many have very high charges, most of which appear to be somewhat difficult to justify based upon performance. Indeed advisers such as myself that use evidence based investing as the basis for wealth management, combined with low cost techniques, have been calling for reform for quite some time. However, there is also the issue of extra charges and the regulator would like to see one all-inclusive charge. I don’t have a problem with the sentiment, however invariably complex problems are rarely easily solved with a simple answer. There always needs to be a context. None of us would actually rob a bank, let alone approve of it, our motivations for watching and loving such stories are clearly more complex.

The Good, The Bad and The Ugly?

Life would be pretty easy if the lines of “good” and “bad” were so easy to define, arguably the biggest flaw of all religions. Most Politicians seem yet to learn that most ideology is bereft of complex thought for the reality of life. The polarization of opinion is decidedly unhelpful. There are no magic money trees, but there are obviously ways to create money and to grow it. Taxing the rich is all well and good if you don’t drive them away. Keeping the poor in miserable conditions, where they feel powerless, unrepresented and ignored will eventually lead to inevitable calls to take power. Squeezing the middle classes until they feel bled dry whilst we celebrate and reward psychopathic bullies, be they CEOs or Heads of State (or party) isn’t going to help to establish a sense of fairness either. We live in complex times (as we always have). There are very few easy solutions to our complex problems.

Escape to the…

We in turn, escape to the sun, the country, the movies, our mobile devices and use stories to tell ourselves that good will triumph, that injustice will be exposed and punished. There is presumably a place between Utopia and Dystopia that most of us manage to call home, where we really live our lives that are full of complexity and a healthy degree of compromise.

A New Reality

As the Brexit negotiations are under way, we are certainly going to need to compromise. Posturing the EU as pure evil or pure heaven, will not help our understanding of the complex. I expect nothing other than unhelpful reporting from most of the media and social media, yet we must sift through it to garner the occasional nugget of wisdom. To pretend that feelings will not be hurt or damaged seems somewhat naïve, indeed even Bats, a character from Baby Driver says:

The moment you catch feelings is the moment you catch a bullet.

Anyway, here is the trailer.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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A Case of Cops and Robbers?2017-06-28T12:56:28+01:00

Is HMRC watching you?

Is HMRC watching you?

In an ever connected world, it should come as no surprise that HMRC are using technology to catch those that do not properly declare their income. In essence they are watching you (and me). I am informed that a new “snooper computer” is being rolled out this month, in time for those that are submitting information about their income for 2015/16. Whilst Government departments have rarely bought or invested wisely in computers (I guess suppliers see them coming… in fact I know they do)… this represents a £100m project.

Why is this important? well…. failing to accurately report and pay your taxes is one of those crimes for which you can expect a custodial sentence. Indeed HMRC powers have increased so much over the last 10 years that they can take money from your bank account until you can demonstrate that you don’t owe it to them (I kid you not).

Declaring Your Income

Under self-assessment we are all responsible for reporting and declaring our income. As everyone has observed, the UK, like most countries, has rather a lot of debt and is currently living beyond its means. The basic reality of maths is that either more income (taxes) has to be generated or less has to be spent and debts renegotiated. So as 31st January 2017 looms as the deadline for declaring and paying income from the 2015/16 tax year (ended April 5th 2016) expect little sympathy from the Government, HMRC or indeed most voters.

The new computer system is a way for HMRC to focus attention on those that appear to declare modest income, whilst also having involvement with organisations where money is clearly involved. So if you’ve bought a house (as I did in 2016) then you had to pay stamp duty… where did this come from? (data triggered from the Land Registry) or you are fairly active on e-bay, do some Airbnb, or rent a property, perhaps sold some things at a car boot sale, or have a Paypal account, bought a car… and, and, and… in short they are looking proactively for various sources of income that you are not declaring.

So what income have you forgotten about?

Income is paid on dividends from shares, invariably these are taxed at 10% automatically, but higher rate taxpayers will need to pay more. Have you declared all the income from those privatisation shares you’ve had for years? how about from non-ISA accounts? Auto enrolment (or workplace pensions) has begun for most firms, so this is yet another opportunity to see data about income. Interest from savings (don’t laugh!) is also income and taxable – except for the first £1,000 – which means most people will not pay tax on it.

For what its worth, you are likely to be the sort of person that is worried about not paying your tax properly. The threat or fear of possibly going to prison is more than sufficient to keep most people “on the straight and narrow” yet there will be some, for whom prison is no real “threat” – frankly that’s probably the very rich, who can afford to live outside of the country and legally avoid UK laws… such as top sportstars, business people that you’ve actually heard of or those that are the beneficiaries of mega Trust Funds (so dont own the assets – the Trust does) such as the Duke of Westminster. Perhaps I’m being a little cynical, but doubt that my remark is far off the mark.

Of course our app (which is free to download) has a load of calculators and tools, loads of tax tables and useful information which is designed to help you to not forget to report your income properly. You can get it on either the Android or itunes platforms, just search for Solomons Financial Planning.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Is HMRC watching you?2017-01-10T17:06:35+00:00

Panama Papers

Panama Papers

I imagine that you will have picked up on the current big story – the Panama Papers. I imagine that this will rumble on for some time. There are lots of issues to discuss, the ability for the very wealthy to hide their wealth, those that facilitate this to happen, laws about secrecy, laws about laws, political corruption, money laundering, what is ethical, the difference between tax avoidance and tax evasion… not to mention data security.

I don’t know if my thoughts will add much to the discussion, suffice to say that “the system” (by which I mean global tax system) is so complicated that it is little wonder that it is exploited, or some may say “used to advantage”.

It is a sad state of affairs when the wealthy believe that they require such secrecy and the better questions will ask why it is really required. As for the tax system – nobody really likes paying tax, but of course if we want any sort of welfare state or viable social system, we need to combine resources collectively. I don’t know if the debate can be reduced to a matter of “vast wasted taxes spent by bureaucrats” or perhaps “we pay too much tax”.

The other Black List

Fairness is very difficult to define. The vast majority of people in the UK pay very little in direct taxes. The reality is that we are all, quite obviously, interconnected. Billionaires paying less tax than their staff simply does not seem fair in any form. I’m reminded of a line from “The Black List” in which the main character, Raymond Reddington, says “if I paid any tax I’d be furious at how it is wasted” or words to that effect.

Tax is one of those deeply divisive issues and of course is enmeshed with political ideology. Part of my job is to help clients minimise tax payments and use tax allowances properly. So I’m acutely aware that I’m part of the problem… essentially taking tax receipts off the table, so that more needs to be found. Nobody likes to see public money wasted, which merely compounds feelings of frustration. The Panama papers imply that those in charge of deciding how public finances are spent, don’t like the way they do it for their own nations.

Daring to think simply?

Does life have to be so complicated? If there was one rate of tax, would there be any need to hide money? (currently taxed at very different rates). If the very rich could declare their wealth properly, would more tax be collected? Is anyone immune from financial corruption as the numbers get larger and larger? Does the reality that the Offshore market exists confirm the suggestion that the very rich would leave, if tax rates are increased? Or have they effectively already left? Is it possible to have fair taxes when certain countries exist purely to defy such reasoning (Monaco). Certainly rather more is to be revealed by the #PanamaPapers and one thing that is certain to me…. this is not new news.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Panama Papers2017-01-06T14:39:18+00:00

Would that it were so simple

Would that it were so simple

There’s a new film “Hail Caesar” by the Coen brothers. A line which I keep finding myself repeating is spoken by Laurence Lorenz, a character played by Ralph Fiennes. He is trying to coach a stuntman with his acting – repeating the line “would that it were so simple”. It’s a funny scene, which I won’t spoil for you, but it is a phrase that I find appropriate with great regularity.

In a matter of weekends between broadsheets, the Chancellor appears to have done a U-Turn on changes to pensions. Of course had we not had all the speculation, leaks and reactions we would have been “none the wiser” of his apparent “flexibility is a strength”.

The truth is of course that we will not know what is in the Budget on 16th March until, well… 16th March and as they say a week in politics is a long time. The Chancellor is determined to control State spending and this has created a significant amount of ire and assessment in the media – as well as around dining tables in homes throughout the country.

Reshuffling the deck?

Whatever you think of Mr Osborne, as with all Chancellors, pain is delivered as discipline, where possible made to appear as a progressive change. Most of the time, there is little more being done than a reshuffling of the cards, hoping that this time, the hand will be sufficient to take home the equivalent of the jackpot.

The truth is that running the finances for the UK is not an easy task (and I am not attempting to make excuses for him). Tax revenues are based on assumptions about the future, costs are too – but there is inevitably the odd “unforeseen event” such as a plague, war or famine… which in practice aren’t really that unforeseen, because they occur regularly.

Nobody is really going to be pleased much of the time, whatever politicians tell us, we know that they have ambitions based on a concept that 4 years is the long-term, which is, as we all know, full of flaws. Would that it were so simple.

As for Hail Caesar – it is a film for our time about a film about another time, but the eternal golden rule – he that has the gold makes the rules.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Would that it were so simple2017-01-27T10:59:40+00:00

How does HMRC know about gifts?

How does HMRC know about gifts?

You may have been very generous with your wealth and given lots of money to your beneficiaries or charity prior to your death, but how on earth does HMRC or the Executors of your estate know to correctly offset these gifts (if appropriate) against your estate?

Probably the simple answer is that if it isn’t recorded, it would seem difficult to prove a gift was made. There are a variety of issues – the annual giving allowance (£3,000) does not need to be reported, but frankly it would seem wise to record the fact that the amount is actually gifted… all helping to demonstrate the accuracy of the story behind the information.

IHT403

Here’s the link to take a look at form IHT403 – which is essentially a list of gifts and transfers that you have made within the last 7 years. In short, you really need to know the dates of the gift (within a tax year), the beneficiary, a description and the value of the gift.

Inheritance tax can get rather complicated with terms like “Pre Owned Assets” “Gifts with Reservation” “Lifetime Transfers” and more. So it’s rather important that the source of gifts is documented. To my mind it makes sense that you provide a brief written, dated document to the recipient of your gift and ideally your financial planner and possibly Accountant if you have one. Certainly retain a copy within your records – but remember passwords are all well and good when you are alive, but when you aren’t here to tell anyone what they are…

Gifts from Income

I don’t wish to drown you with detail, but it is possible to make gifts from income, provided that this is not to your detriment or deliberately reduce the value of your estate for IHT planning. If that sounds like an oxymoron… well, that’s the state of the tax system.

How do you demonstrate legitimate regular gifts from income? without a summary of your tax year income and expenditure I’d suggest that it will be fairly “difficult”. A business doesn’t have this problem – there are obvious accounts, or at least there should be, but as individuals perhaps the rule of thumb ought to be – think of yourself as a business – which means keep details carefully.

Taking a look at the last page of the form IHT403, you will observe that HMRC will request details of income and expenditure for the last 7 years. Could you provide this for yourself today? if not, how on earth will your Executors?…. hence one of the reasons we ask clients to update us with income and expenditure information every tax year… enabling us to help them build up a record – but also to do all the other sensible financial planning stuff – like helping reduce income taxes, checking that our assumptions about future lifestyle costs are broadly right and where it’s all going… and ideally to help them catch rather more of it than they otherwise would. So yes, those forms are rather important both whilst you are alive or deceased.

In practice, it is possible that HMRC might even wish to go even further back in time, perhaps as much as 14 tax years prior to death…. so my advice is to get your “ducks in a row” – which has several important positive by-products.

  1. Better budgeting
  2. Better financial planning
  3. Lower income taxes
  4. Reduced costs
  5. Longer-lasting wealth…

You heard it here – make an HMRC form your best financial planning tool!

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

How does HMRC know about gifts?2017-01-06T14:39:23+00:00
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