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  • There are lots of reasons people don’t want to give away a slice of their hard earned cake! However, it could help you reduce your estate and therefore your Inheritance Tax liability.

    1) I don’t know the rules, I don’t want to cause a problem with the tax man.
    2) Don’t you have to live 7 years for it to be tax free?
    3) I don’t know if I will need it myself.
    4) I don’t want to spoil my family, they should wait. I had to.

    There are perfectly legitimate ways to give money away every year regularly which very few people use.

    As long as  you can prove the gift is from surplus income and does not affect your living standards then this is immediately outside your estate. You do not have to wait seven years and there is no limit provided all conditions are met! The gift does have to be habitual though.

    If you want to give away cash (i.e. an asset that is not income/interest/dividends) you can still do that, but there is a £3000 limit. In addition to these gifts, possibly given on birthdays or Christmas, there are other situations where you can make a lump sum gift, such as up to £5000 for a child’s wedding, or up to £3000 to a charity. Even if you had two children marry in the same year (heaven forbid!) it is possible to make the total £10,000 gift in the same tax year. You can also carry £3000 forward from the previous year if you’ve got behind.

    The rules are a little complicated I grant you, but with a good financial plan showing income and expenditure, and a little record keeping it can be easily managed. We help our clients keep track of the gifts they make as well as provide the evidence for HMRC that they meet the requirements in the time period they were given.

    On point 2, yes we are agreed, if you make a substantial gift (over £3000 and from capital assets) generally you have to wait seven years until the gift is no longer eligible for Inheritance tax. There is no giving away everything on your death bed! Unfortunately people do tend to leave it rather late to think about these things, bringing me to point 3.

    The reason people tend not to address this until the 11th hour is because they don’t know how much money they will need for themselves. Here at FMB we use cashflow modelling with our clients to work out how long their money will last, what their needs will be and whether they are likely to have surplus funds towards the end of their life. We have enabled people to help their children with house deposits and university fees, in full knowledge that they CAN afford it. Obviously we don’t have a crystal ball, but we can make some common sense assumptions which will help you make decisions about how much money you can afford to gift. Giving gifts from income and using the allowances available each year can chip away at your IHT liability without giving too much away in one go.

    As to point 4, this is a very personal decision but I would say this:-

    Why not enjoy watching your family enjoy the fruits of you labour?
    Often children receive an inheritance when they are financially established themselves why not give them some money when it could have really made a difference?
    You can suggest the money is for a specific purpose such as a home improvement or new car. Or the money can be placed in a trust or pension to delay the gift.

    I have explained the rules simply here, you need to take advice from a financial planner or accountant to ensure you have complied correctly with gifting. To look further at the rules HMRC have a page on their website which explains it all. Cick here.

    This advice is not regulated by the Financial Conduct Authority. FMB always suggests clients use a tax advisor to submit tax returns.

  • Liz taking part in the St Begas Ultra Trail Race in 2014
    Caption: Liz taking part in the St Begas Ultra Trail Race in 2014

    For years I have looked on with awe and envy at the people who have participated in the Brathay 10in10. The first time I learned of this event was on the day that I took part in my first marathon; The Brathay Windermere Marathon back in 2010. The 10in10 eventers set off about an hour before us, and I remember watching them, struggling to get my head around the fact that they had already completed 9 of these in the nine days before the main Windermere Marathon day – and still looked rather enthusiastic!

    In years to follow, whenever I have driven through the Lakes when the 10in10 has been on, I have always beeped encouragement to the participants and have felt complete admiration and astonishment for what these people were achieving. Over the next few years I built up to doing some, I suppose, slightly more hardcore events myself but nothing on that scale.

    I have got to know the team at Brathay a little better over the last seven years, mainly thanks to my husband, Wayne. Not only have I been able to see how much hard work and determination goes into holding these events, but also the amazing things they do at Brathay and the positive changes they make to young people’s lives within the community. There is a magic at Brathay that I have never felt anywhere else and you can see how passionate everyone is that is involved with their fantastic charity!

    All of the above have made the urge to enter the 10in10 get stronger and stronger. This year’s application had been sat on my desk for weeks while the deadline crept closer and closer. My running hasn’t been great of late, as I have been suffering from calf pain when running and walking which I have been receiving treatment for. Doubting myself (and my legs), I decided that I wasn’t going to enter this year; what if they don’t improve, what if I can't do it, what if I let everyone down, what if I don’t get selected? But then an email popped into my inbox from Ally, the events coordinator, with the clear message “you won't know if you don’t try!” How true. So now they have my application, and the waiting begins.

    I know it will be a tough challenge and I will have to put in hours and hours of training, come rain or shine. I know I will have to juggle my training with my already manic schedule, and I’m going to have to work even harder on the fundraising, but I am really excited for the challenge.

    So what exactly is the Brathay 10 in 10?

    The Brathay 10in10 has been described as the UK's ultimate endurance running event. 10 laps of Windermere, 262 miles, in 10 days.

    When: 11th May 2018
    Where: Brathay Hall, Ambleside, LA22 0HP

    Back in 2007, Sir Christopher Ball suggested that the ASICS Windermere Marathon incorporated a '10 marathons in 10 days' endurance running event. Ten years later the event is known as one of the "UK's toughest running events".

    "The event itself is fantastic. It's amazing. It's painful. It's scary. It's wonderful. It's dreadful. It's my proudest achievement ever. You just don't know what you can do until you try. When I first heard about the 10in10, I couldn't get my head round it. Why on earth would you want to do it? But a tiny seed was planted, and by 2012 it was an unstoppable force. Who would have thought that a middle-aged, slightly overweight, not very fast woman would be able to complete such an event?

    I remember turning up at the January training weekend for the 10in10 and being in total awe of the other runners in the room. I felt enveloped by optimism. We were called "athletes"; there was a team to support us. No-one ever doubted we would succeed and because of that you start to believe it yourself." Eleanor Tillotson, 10in10 runner

    If you would like to find out more about The Brathay Trust, you can visit their website here.

  • Every year, around this time in my village of Kirkby in Furness, there is what has become a traditional fun event aimed at families, but much loved by all. This year it involves 96 households, placing an unusual article ‘on show’ in their garden, for the curious to wander around, peering into hedges and bushes to spot the object. The results are duly logged on a competition sheet that has been purchased for 50p each and the proceeds go towards the Gala, with the winner being announced on Gala Day.

    On Sunday, we visited friends for a bite to eat and as we entered their drive a Money Tree was in plain view, each branch sporting a splendid little bag containing some loose change. I enquired if they were growing it for the leader of a well-known political party!

    The idiom of a money tree is said to have its roots (sorry!) in Chinese culture and was something often quoted to me as a child.

    This led me to think of other sayings or superstitions linked to money. Here are just a few:

    • According to Palmistry and Hand Analysis, an itchy right palm is said to be a sign that you are about to receive money. It is also said that if you scratch it, it will stop the money from coming into your life. On the other hand, (sorry again!) an itchy left palm is said that you are about to lose money. If however, you rub your left palm with a piece of wood, this is said to protect your assets.
    • According to the Greeks, it is considered bad luck to completely empty your pockets, wallet or bank account, which could explain a lot, given what was said to be a reluctance of the Greeks to pay tax in the Global crisis!
    • A superstition thought to be bad Feng Shui advises that you should not place your purse or wallet on the floor, as this is said to be a disregard and disrespect of money. Practically, it also makes it easier for a sneak thief to steal a bag containing a purse or wallet from the floor.
    • Finally, and one that causes the most humour, is the superstition that says money will come your way if a bird poops on your head! This has happened to me on more than one occasion, leaving me to be very grateful that cows don’t fly!
  • Brian Tandy with Directors Ruth Power (L) and Liz Beavis (R)
    Caption: Brian Tandy with Directors Ruth Power (L) and Liz Beavis (R)

    When we are creating a financial plan for our clients, we take into account the current state benefits they might receive. When we project into the future there is no guarantee they will still apply, as women born in the 1950’s are unfortunately finding out. However, at the moment there is no reason to think for example anyone retiring in the next 20 years won’t receive some kind of state pension.

    As Financial Planners it is our job to be aware of the state benefits that our clients may be eligible for. We recently had training from an expert in this field, Brian Tandy.

    This is a very complex area, unfortunately not many people are well informed, including the people manning the helplines! Did you know there are over 50 different state benefits at the moment?

    Here is what I learned!

    There are three types of benefit

    1. Dependent on National Insurance Contributions
    2. Means tested
    3. Non means tested

    Contributory benefits include state pension, job seekers allowance and maternity benefit amongst others.

    Means tested benefits are dependent on level of income and savings on a sliding scale from £6,000 to £16,000 after which you are not eligible. This includes benefits such as universal credit and housing benefit

    Non means tested benefits are not dependent on NI contributions or financial criteria, they are decided upon very specific criteria including age or disability. Such benefits include the winter fuel payment (for now!) and attendance allowance.

    So where do people come unstuck?

    Firstly paying NI is not straightforward. If you have ever been a student, unemployed, had an earning break to bring up children or worked part time you may have not paid the correct amount of NI for the right number of weeks and years.

    It is imperative you ask for a pension forecast every five years or so no matter how young you are. Why? Because you can go back 6 years and make changes or pay additional contributions which can be difficult to do later on. You may not know that you can claim credits for years whilst in education- worth pointing out to your children!

    A little known handy tip for Baby Boomers, if you are looking after grandchildren for 20 hours a week or more you can claim NI credits

    Form filling is another major hurdle. For example when applying for attendance allowance, which we recommend many clients do for their spouses and family members, most people underplay their needs. The questions ask about the personal abilities and many people over estimate the amount of support being provided by loved ones. Just because you are not paying for care, it does not mean someone is not caring for you! The forms are onerous and don’t assume the questions are evenly weighted – they are not.

    Another pitfall is confusion with the pension system which has changed many times, so depending on when you have been paying NI different rules apply. It’s almost impossible to work this out for yourself- another reason to get that forecast!

    If you do one thing today, call the Government pension forecast department today. You can get a forecast online but it might not be as detailed. All the phone numbers you need are in this link

    This is a very quick overview, we've got years of experience here especially when it comes to pensions so if you have any questions give us a call at FMB.


    Any figures stated are correct at June 2017

  • I recently read with interest in the news that a leaked draft of Labour's election manifesto had rejected increases in the state pension age above the age of 66.

    That would rule out a rise to 67, to be implemented by 2028, as well as further rises to 68 and possibly 69 or 70. However, the cost of scrapping these changes could cost £30bn by 2050. Is this realistic for a government already struggling to fund the State pension and other costs as it is?

    Whatever happens, it is becoming clearer and clearer that if you want to retire at an age young enough to enjoy your retirement and do all the things you plan to do, you will have to rely on more than the State Pension, and private provision will become more important than ever before.

    When I undertake retirement planning for my clients, I start by trying to get an idea of the lifestyle they want to have during their retirement and what the likely cost of this will be. Many people are resigned to the fact that they will have to reduce spending, or downsize their homes, but if they start to plan and save for their retirement early enough, this may not be the case.

    Once we have a target income in mind, I can look at the existing provision they have towards this. This may be a collection of various personal pensions they have set up over the years, or non-traditional pension savings such as ISAs – it can all be included towards retirement planning. I will also order a State Pension forecast for them so we can check they will be entitled to the full State Pension, or whether they will receive a reduced amount due to gaps in their National Insurance record. This will also confirm the age they can claim their State Pension. I then use cash flow modelling software to calculate the likely shortfall, or surplus, they will have in retirement.

    If it turns out there is a shortfall, we can then look at ways to reduce this, perhaps by increasing monthly savings if there is room for this in their budget, or by working a few years longer perhaps.

    There are also other considerations – if a plan is based heavily around saving towards retirement but then the client is unable to work due to illness for example, this could impact on their retirement as well as their current standard of living. To solve this issue, income protection policies could be considered.

    In general, having a robust financial plan which takes into account all necessary factors and is reviewed at least annually is key when starting to plan your retirement, and this is where we can help.

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