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  • My daughter started nursery this week. It was a little sooner than planned but we are confident that some extra help with childcare will be a positive step. After some nail biting and tears (hers, not mine…yet), she got through her first day.

    My mind then turned to paying for the childcare. Grandparents are a lot cheaper! When I had my first child, childcare vouchers didn’t exist. They are a tax efficient way of paying for registered childcare. You sacrifice some of your salary for an amount of childcare vouchers. You save the income tax and the National Insurance on this amount, which effectively means that the part of your salary you exchange for childcare vouchers is tax free. The cost of these vouchers is then paid directly to the childcare provider.

    A basic rate taxpayer can exchange up to £243 each month; which is £124 for a high rate taxpayer and £97 for an additional rate taxpayer.

    There are of course rules with the payments, such as it has to be a registered nursery or child-minder, so although Grandparents are definitely less expensive, you cannot use the scheme to pay family members or friends to look after the children.

    Although it is a very tax efficient system, you would also have to consider any benefits that you may lose or may be affected because you are in affect ‘losing’ some of your income. For example, you might lose some entitlement to tax credits or National Insurance accrual, depending on your circumstances.

    All in all I found it very straightforward to set up (partly because our company is very focussed on helping working parents) and I am glad I did it.

  • We are now (scarily) in to August and every year at this time I always hope that the heat of summer will return, as today it is my birthday and I always look forward to spending some quality time with my family.

    Whilst for me this year is not a “special birthday” such as a 30th..... or 40th (that one’s still a couple of years away thankfully!) it got me thinking that in my role as a financial planner, I spend most of my time looking forward; planning for future birthdays and retirement, but, what would I find out about my birthday if I looked backwards?

    Most of us have “googled” ourselves to find out where our namesakes live, what they look like and what they do for a living, however, it struck me that I actually know very little about events that have actually happened on my birthday. Therefore today I decided to have a trawl back though history (through the medium that is Wikipedia) to find out about other significant things which happened on the 4th August.

    Well, it turns out that a lot of things have happened… I share a birthday with countless others including Mary Decker and Barack Obama. This day in 1870 saw the establishment of the British Red Cross Society, it also marks ‘Coast Guard Day’ in the States, Constitution Day in the Cook Islands, and Revolution Day in Burkina Faso. It is the 216th day of the year (217th in leap years) and it is now only 142 days until Christmas - so expect to see the advertising start soon!

    But my particular favourite is that I have found out that on this day in 1693, Champagne was “invented”, so it would seem to be rude not to celebrate an anniversary as well as my birthday so I think I will now go and enjoy a birthday drink.

    If it is your birthday soon, then I would like to wish you “Happy Birthday” but whilst you may be looking forward to the day, if you have five minutes then have a look back too – You may just find out a few more things about your birthday that you were unaware of.

  • At the end of my last blog of 29 April we left Arved Waterhouse in the spring of 1914, newly graduated from Oxford University and no doubt looking forward to the rather wealthy and privileged lifestyle in to which he had been born. He was a keen tennis player and being a member at both Kendal and Windermere golf clubs, he also enjoyed a round of golf – perhaps he used his motorcycle and sidecar to carry his clubs to and from the courses. He would have been a familiar sight in and around Kendal on one of those ‘new-fangled contraptions’ on roads otherwise the almost sole preserve of the horse and cart.

    As spring slipped into summer that year, a major European war was probably the last thing on his or anybody’s mind. In Europe there were the continuing squabbles between the posturing Hapsburg Empire of the twin states of Austria-Hungary and their smaller neighbours in the Balkans whilst the great powers of Germany, France and Russia did a bit of ‘sword rattling’ in support of or in opposition to each other in line with treaties signed years ago.

    On 28th June, in the Serbian city of Sarajevo, the heir to the throne of the Austro-Hungarian Empire, Archduke Franz Ferdinand and his wife Sophie, were assassinated by extremists whilst undertaking an official visit.

    In Austria and Hungary there was outrage – in London everyone consulted their atlas to see where Sarajevo and Serbia was - and then carried on as normal dismissing the murders as a minor and unfortunate incident in a faraway and troubled part of Europe.

    Austria-Hungary issued Serbia with an ultimatum, which demanded a response within 48 hours, and was intended to be so onerous that Serbia could not possibly comply and which would then ‘justify’ Austria-Hungary in responding with over-powering military might to bring an end to a long-running problem in the Balkan state.

    Throughout Europe the various great powers now began to respond according to the obligations of those old treaties, Germany firmly supporting if not encouraging Austria-Hungary, whilst Russia stood resolutely with its Slav neighbour and France was obliged to support Russia. When Serbia rejected the terms of the ultimatum the political temperature increased dramatically.

    Britain stood and watched – it was not a quarrel of its making and there was no desire to get involved. Arved, whilst being aware of what was happening in general terms, probably did not give it a second thought and carried on enjoying life.

    As the armies of Austria-Hungary mobilised to fight Serbia, Russia mobilised to support Serbia, Germany mobilised to support Austria-Hungary and to pre-empt any French action. France mobilised in support of Russia and to pre-empt any action by Germany. Everything was now moving inexorably towards war.

    Still, Britain did not think it would come to anything – and had no intention of becoming embroiled in any case.
    On 28th July the first shots were fired on Belgrade by Austro-Hungarian forces and the First World War had begun.

    Even London could now see the grave danger facing the whole continent.

    Germany launched its famous Schlieffen plan, which involved a lightning strike at France through the neutral territories of Luxembourg and Belgium, the intention being to knock France out of the conflict within just a few weeks thus allowing Germany to concentrate its forces against Russia.

    The problem for Britain was that this country had guaranteed the sovereignty of Belgium and following the refusal of Germany to withdraw from Belgian territory, Great Britain declared war on Germany on 4th August 1914.

    At home the small regular British Army was immediately called to a war footing and despatched to support France and Belgium by 14th August. An immediate call went out for all able-bodied men to rally to the colours and enlist for a war that was widely expected to be ‘over by Christmas’.

    Arved had been a member of the Officer Training Corps whilst at Oxford and on leaving he had enlisted as a 2nd Lieutenant in a reserve battalion of the King’s Own Royal Lancaster Regiment. On the general mobilisation of 4th August he was called up and sent to Dover in readiness to go to France with the 4th Division of the British Expeditionary Force.

    On the night of 22nd August the battalion embarked on the SS Saturnia in Dover and arrived in Boulogne the following morning.

    At least part of the 4th Division was in action almost immediately during the retreat from Mons and the subsequent fierce action at Le Cateau where the German advance was held up for long enough to take the impetus out of their advance and, arguably, to be one of the decisive actions which ultimately determined the final outcome of the entire war.

    Whilst Arved’s battalion was certainly heavily involved in a series of actions throughout September there is no evidence that he took part in any fighting at this stage.

    His turn would soon come - as we will see in just a few short weeks from now...

  • Last week my fellow director, Gill Forrester, and I headed to London to attend a reception at the Houses of Parliament, hosted by Metlife. The reception was to launch a report commissioned by Metlife on Flexibility in Retirement, written by Dr Ros Altmann CBE, following the major changes to pensions announced by the Government in this year’s Budget.

    One of the special guests at the event was Andrea Leadsom MP, Economic Secretary to the Treasury. Also in attendance were the Pensions Minister, Steve Webb MP and MP for Cardiff North, Jonathan Evans. These MPs are all directly involved in changing and drafting new legislation that will have a huge impact on our clients and their retirements.

    The messages from the speakers painted a very positive picture - they believe Government is working hard with the Financial Services Industry to make sure the new legislation has a positive effect for consumers. However, whilst flexibility in pensions is a step in the right direction, extreme care still needs to be taken. The need for proper bespoke advice remains extremely important.

    It’s not just about recommending a pension product – people need to be asked the “right questions” in order that they can be given the “right answer”. Every single person has different hopes and dreams. We all look forward to our retirement as a time when we are free to be able to enjoy life without the constraints of having a day job to go to, but the detail looks very different from person to person. Good advice involves a discussion about goals and objectives, how much retirement will cost and how will it be paid for. What is the pension solution, how much risk will/can be taken and most importantly – will they run out of money?

    This is something the Government desperately needs to get right, not just for consumers but for the Country as a whole. For many, their pensions are the only source of income in retirement, so making sure this lasts a lifetime is the top priority or the government could be picking up some very large bills in the future.

  • 10 July 2014

    The new NISA

    Pink piggy bank on a pile of coins

    The Government likes to keep us on our toes, and yet again there are major changes in the financial industry.

    From 1st July the Individual Savings Account (ISA) will become known as the New Individual Savings Account (NISA).

    As well as the name change, you’ll also be able to put more of your savings into an account where the taxman can’t get his hands on your interest! The increase is from £11,880 per person, per tax year, to £15,000.

    You can put the whole amount into a cash product or a stocks and shares product if you want to or alternatively you can split the allowance however you like between a cash NISA or a stocks and shares NISA.

    The potential returns that you can receive from investing in a stocks and shares NISA are much higher than with a cash NISA, as shown below, however it is important to remember that there is also additional risk.

    Value today of £5,000 invested 10 years ago in cash at an interest rate of 4%Value today of £5,000 invested 10 years ago in a stocks and shares ISA in a UK mid cap fund

    £7,401

    £19,970

    Source Moneycomms.co.uk

    Stock markets can be volatile and impact the value of your investment. This is much less of an issue for younger investors as over time there’s a good chance that the market will recover and they will get their money back.

    However, if you are nearing retirement, may not wish to risk taking a big hit on your savings at a time when your potential to earn money by working is coming to an end.

    What this highlights, is that it’s essential you get good financial advice to ensure that you are investing in the right products and funds for the long-term.

    Contact FMB today. Call: 01539 725855

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