Category: News

Did you know the amount of waste generated in the UK increases by around 30% over the festive period? While it’s the season for joy and giving, being more mindful about how you celebrate Christmas this year could help you enjoy a more sustainable celebration.

If you want to reduce the environmental impact your family has this year, without compromising on fun, here are five practical tips you could implement.

1. Switch to digital or sustainable cards

The government estimates more than 1 billion Christmas cards are sent every year, only to be thrown away – it takes the equivalent of 33 million trees to make this amount of cards. So, not only is sending cards creating more waste, but it could lead to far fewer trees too.

Sending out digital cards could be a simple way to reduce your environmental impact this year. There are plenty of different options online, many of which you can add a personal touch to so they remain thoughtful.

Plus, you don’t have to worry about it not arriving in time due to postal delays.

If you enjoy sending cards and displaying them, there are ways to make them more sustainable. Choosing a Forest Stewardship Council (FSC) card means the product comes from a well-managed and sustainable forest and is recyclable.

2. Be conscious of the gifts you’re giving

A YouGov poll found that the average Brit spent more than £600 on Christmas in 2022. The biggest expense was presents and gifts, totalling £300 each.

Handing over a present you know the recipient will love is part of what makes Christmas so special, but it can lead to waste, especially if you’re unsure what to buy someone. 

According to the Guardian, half a billion cheap electrical items go to UK landfills every year. So, this year, before you buy a gift, spend some time considering if it’s something the recipient will really value or use.

If they don’t want specific items, gifting an experience could be a great way to make their day without adding more waste. Whether you buy them a spa day to relax or an adrenaline-fuelled adventure, it’s a great way to help them create memories too.

3. Choose a real Christmas tree

If you already have an artificial Christmas tree that’s in good condition, don’t throw it away to buy a more sustainable option. But, if you’re looking to refresh your home’s decorations this year, selecting a real Christmas tree could support the environment.

Check the farm you’re buying from grows the trees responsibly and plants for future generations to maximise your positive impact. Better yet, some farms will take your tree back at the end of the festive period and replant it so you can pick it up for next year’s celebrations.

Don’t forget about your other festive decorations either. Simple switches, like opting for LED lights, could shrink your environmental footprint this year.

4. Be mindful of food waste

Indulging in festive treats might be one Christmas tradition you’re looking forward to. Whether the thought of a turkey dinner has your mouth watering or you want to dig into a box of chocolates, you don’t have to give it up.

Yet, being conscious of the food you might end up throwing away over the festive season could be useful.

Last year, the Waste and Resources Action Programme (WRAP) estimated that more than 70% of the UK’s total food waste comes from homes, collectively costing families an eye-watering £14 billion a year.

The amount of poultry thrown away in one year could be enough to make 800 million Boxing Day curries, while enough potatoes are binned to make enough roasties for Christmas Day for the whole country for 48 years.

So, when you’re doing your Christmas grocery shop (and your regular shopping), consider what you’ll use and how to make the most out of what you’re buying.

As well as cutting waste, you might also want to purchase local produce. It could be a great way to support local farmers and reduce the carbon footprint of your Christmas dinner as it won’t have to travel as far.

5. Give back to your local community

It’s the season for giving, so what better time to support your local community? There are plenty of ways you can help organisations, from giving your time to a financial donation.

You could also make material donations, such as furniture that you’re replacing or unwanted clothing, rather than throwing them away. It could help you clean up your home ready for the new year while benefiting others. The items could go to charity shops to raise much-needed funds for good causes or families that are struggling.

Eccentric Willy Wonka boasts a lot of enviable skills as a businessman – he’s innovative, understands his target audience, and inspires loyalty from his employees. But his skills at succession planning left a lot to be desired.

Over the years many actors have taken up the role of Roald Dahl’s iconic chocolatier Willy Wonka. The character is getting a new lease of life in December when Wonka releases in cinemas.  

While the new movie looks at how Wonka became the owner of a successful business selling fantastical sweets, the original novel, Charlie and the Chocolate Factory, focuses on his succession plan.

With no children to leave his business to, Wonka hides five golden tickets in chocolate bars to win a tour of his world-famous chocolate factory. He plans to pass on his company to one of the lucky winners.

Despite the risky approach, the competition pays off when Charlie Bucket secures one of the golden tickets.

While Wonka’s method might be perilous, research suggests some business owners could also be taking a risk when it comes to their firm’s future.

According to a report in FTAdviser, more than a third of businesses have no succession plan in place, and a further 10% haven’t thought about it.

Yet, what will happen to their business is a concern for many business owners. 21% said they were most worried about seeing their business fail and 18% were concerned about their employees’ prospects.

Without an effective succession plan, there’s a chance your business’s legacy doesn’t live up to your expectations or pass to the person you want to hand the reins to.

Creating a succession plan can seem daunting and involve a lot of work. However, if it’s something you’ve been putting off, here are seven reasons to make it a priority.

1. It provides a chance to think about your different options

There’s more than one way to step away from your business when you’re ready. You might plan to pass it on to your children, or you may want to sell it to fund your retirement.

Going through your preferences now provides an opportunity to explore the different options and consider which would be right for you.

2. The process could help you identify potential leaders and skill gaps

Handing over his business to someone with no experience might work well for Wonka, but it’s not advised.

As part of your succession plan, you may review the skills and expertise of your current team to identify where there could be gaps in the future. You might then create a training development programme to upskill existing employees or seek to hire someone who fits your needs.

It’s a step that may improve the long-term security of your business and give you peace of mind.

3. Preparing your business may be a lengthy process 

Depending on your plans, preparing your business to hand over could be a process that takes years. Perhaps you need to dedicate time to training existing employees to take over some of your tasks, or you might want to sell the business with an established customer base that you need to build.

Setting out your succession plan now could mean you have more options, reduce stress, and give you a chance to overcome potential obstacles.

4. It could improve processes in your business now

When creating a succession plan, you’ll often want to consider how the business would operate if you weren’t there and how to make processes as efficient as possible.

So, even if passing on your business is years away, a succession plan can be a useful exercise. You might find ways to increase productivity, cut costs, or help your team work more efficiently. It could improve your business now and mean it’s in a better position in the long term too.

5. A succession plan could boost confidence in your business

When Wonka announced he’d be handing over his business to an 11-year-old boy, we’re sure not everyone was thrilled about the decision or optimistic about the firm’s prospects.

A lack of a succession plan could harm confidence in your business. For instance, customers might worry about whether you’ll be able to fulfil orders over the long term. A succession plan could also give your employees more confidence in their security.

6. A succession plan may be useful if the unexpected happens

A succession plan isn’t just useful if everything goes according to plan, it might also be valuable if the unexpected happens.

If you fall ill, having processes and a leadership team in place that you can trust could make the difference between your business continuing to run smoothly or facing challenges. Knowing that your business is in safe hands might mean you’re able to focus on your recovery.

A robust succession plan could also make it easier to step back from your business sooner than initially planned if you decide to.

7. Your decision may influence your long-term plan

As a business owner, your firm is likely to affect your lifestyle and finances.

Your business plans and when you hope to move on might influence areas like your pension or investments. So, understanding how and when you want to move on from your business could mean you’re able to make informed decisions about your personal life and assets.

Contact us to talk about your succession plan and what it means for your future

If you’d like help with your succession plan, we may be able to offer support and could make your decisions part of your personal financial plan too.

Please contact us to arrange a meeting to talk about your aspirations.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Households are paying more in taxes, research suggests. At a time when high inflation may be affecting your outgoings, finding ways to reduce your tax bill could be valuable. If you’re married or in a civil partnership, planning with your partner could help you get more out of allowances.

According to the Institute for Fiscal Studies, at the time of the last general election in 2019, UK tax revenues amounted to around 33% of the national income. By the time of the next general election in 2024, the figure is predicted to have increased to 37%.

Only during the immediate aftermath of the two world wars have government revenues grown by as much.

The think tank notes the response to the Covid-19 pandemic explains some of the increased tax burden. However, it adds higher government spending on things that pre-date the pandemic also plays a role.

On average, the changes mean households are paying an extra £3,500 each year in tax. Yet, the tax rise isn’t shared equally and some families may have seen their tax bill rise much further.

HMRC collected £19.8 billion more in tax between April and August 2023 than a year earlier

Figures released by HMRC support the claim that taxes are rising.

Between April and August 2023, HMRC receipts were £331.1 billion – £19.8 billion higher than the same period in the previous year.

Some of the receipts in the HMRC data are paid by businesses, but others come from individuals. For example, the amount of Income Tax paid was £9.5 billion more than a year earlier.

So, how could planning with your partner potentially reduce your tax burden?

Many of the tax allowances available are for individuals. As a result, passing assets to your husband, wife, or civil partner to utilise both of your allowances could be useful.

Here are five allowances you might want to consider as part of your financial plan.

1. Personal Allowance

The Personal Allowance is the amount you can earn before you’re liable for Income Tax. For 2023/24, it is £12,570.

If your spouse or civil partner doesn’t earn above this threshold, they may be able to pass on some of their unused allowance to you under the Marriage Allowance.

£1,260 of the Personal Allowance can be transferred to the partner with the higher income, which could reduce your annual income Tax bill by up to £252 each year.

The higher-earner must be a basic-rate taxpayer to use the Marriage Allowance.

2. Personal Savings Allowance

The Personal Savings Allowance (PSA) is the amount you can earn in interest before it could become liable for Income Tax.

As interest rates have increased over 2022 and 2023, you might face an unexpected tax bill if you don’t review how much your savings are earning.

Crucially, your PSA depends on the rate of Income Tax you pay. Basic-rate taxpayers can earn up to £1,000 in interest before paying tax. The PSA falls to £500 for higher-rate taxpayers, and additional-rate taxpayers don’t benefit from a PSA at all.

So, if you could exceed your PSA or you’re an additional-rate taxpayer, transferring savings to your partner may help you get more out of your money.

3. ISA allowance

In addition to the PSA, the ISA allowance may be useful to avoid paying tax on your savings.

Each individual can contribute up to £20,000 in the 2023/24 tax year to ISAs. You can choose a Cash ISA, where the money would earn interest, or a Stocks and Shares ISA, where your money would be invested and potentially deliver returns.

The interest or returns earned on money held in an ISA aren’t liable for Income Tax or Capital Gains Tax (CGT). Using both your and your partner’s ISA allowance could help you save or invest more efficiently.

4. Dividend Allowance

Dividends may be a helpful way to boost your income.

You might take dividends if you own a company or you could receive them through some investments. In 2023/24, you can receive up to £1,000 in dividends before tax is due.

If you might exceed this threshold, transferring dividend-paying assets to your partner could effectively double the amount you could tax-efficiently receive as a couple.

The rate of tax you pay on dividends above the allowance depends on your Income Tax band. So, if your partner pays a lower rate of Income Tax, transferring dividend-paying assets to them could also mean you benefit from a reduced tax bill.

You should note that the Dividend Allowance will fall to £500 in the 2024/25 tax year.

5. Capital Gains Tax annual exempt amount

CGT may be due when you dispose of certain assets, including investments that aren’t held in a tax-efficient wrapper, second properties, and some material items.

The annual exempt amount means that in 2023/24, you can make profits of up to £6,000 before CGT is due.

Similar to dividends, transferring assets to your partner could mean you’re able to use both of your annual exempt amounts and potentially benefit from a lower rate of CGT as your tax band affects the rate you pay.

In 2024/25, the annual exempt amount will fall to £3,000 for individuals.

Arrange a meeting with us to discuss how you could potentially reduce your tax bill

If you want to make the most out of your money and reduce your tax bill, please get in touch. We could help you create a long-term financial plan that cuts how much tax you pay with your goals in mind.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

Annuities could provide you with income security in retirement. Despite this being a common goal among many thinking about their future, misconceptions may mean retirees are overlooking annuities.

According to a Standard Life study, almost half of over-50s who are aware of annuities say they don’t know how they work. Read on to discover why an annuity may be an option you want to consider.

Annuities provide you with a way to create a guaranteed income in retirement

If you have a defined contribution (DC) pension, one of the retirement challenges you may face is understanding how to turn it into an income. An annuity is one option.

You’d use a lump sum, often from your pension, to purchase an annuity. In return, you’ll typically receive a guaranteed income for the rest of your life. You could choose an annuity that would provide an income that increased each year, which may help preserve your spending power.

When you buy an annuity, your income isn’t affected by stock market volatility, as it may be with other options, and you don’t have to worry about running out of money. So, it could provide peace of mind.

With 87% of people taking financial advice saying income security in retirement is either “very” or “extremely” important to them, an annuity could be right for some retirees.

Yet, the Standard Life research indicates that annuity myths could mean some are disregarding the possible benefits.

1. 48% of people believe annuities offer poor value for money

When you purchase an annuity the rate a provider offers will affect the income you receive.

There’s a misconception that low annuity rates mean that it’s an option that offers poor value for money. However, since the start of 2022, according to Standard Life, annuity rates had improved by 48% by June 2023.

Calculations made in June 2023 reveal that an average 65-year-old woman purchasing an annuity with £100,000 could receive £158,000 over her lifetime. For men, in the same circumstances, the figure is £142,000.

So, if you’ve dismissed an annuity in the past, it may be worth re-evaluating the income it could provide.

Of course, it’s impossible to tell how much you’ll receive from an annuity when you first buy it. As well as the annuity rate, your lifespan will have an effect. However, the figures suggest many people opting for an annuity could benefit financially in the long run.

2. Almost half of people aren’t aware they can combine an annuity with drawdown

One of the reasons you might not want to consider an annuity is that it’s inflexible – you’ll usually receive a defined income each month, which you cannot change to suit your needs.

In contrast, other options allow you to adjust your income. For example, through flexi-access drawdown, you may increase or decrease how much you withdraw from your pension to match your lifestyle.

When you’re reviewing your pension options, it’s important to note you don’t have to choose just one – you can mix and match them.

So, you could use a portion of your pension to purchase an annuity to provide a secure base income. The rest of your retirement savings could remain in your pension for you to access flexibly when you choose.

3. 24% of people incorrectly believe annuities must be bought at the point of retirement

Purchasing an annuity isn’t a decision you need to make at the start of retirement either.

During the start of the next chapter of your life, you might benefit from a flexible income. Perhaps you want the opportunity to withdraw lump sums to pay for one-off costs like updating your home or travelling.

In the future, an annuity could be more suitable. Regularly reviewing your retirement plan and income could help ensure it continues to align with your lifestyle, and you might decide to purchase an annuity years after you retire.

4. 31% believe they need to be healthy to access the best annuity rates

Health issues can negatively affect some financial decisions, so it’s not surprising that 3 in 10 people receiving financial advice believe they must be healthy to access the best annuity rates. Often, the opposite is true.

If you have a health condition you may be able to purchase an “enhanced annuity”. This considers how health may affect your life expectancy and could pay out a higher regular income as a result.

Contact us if you’d like to talk about your retirement income

Understanding how to use your pension and other assets in retirement to provide a reliable income can be difficult. Whether you want support finding an annuity that’s right for you, or you’d like to explore other options, we could help.

Please contact us to arrange a meeting to talk about your retirement finances.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.

Regular financial reviews may help keep you on track to meet your goals and give you confidence in the steps you’re taking. As well as reviewing your assets, you might also want to make changes to your plan.

Last month, you read about why you shouldn’t skip your financial reviews and how they could help you reach your goals. Now, read on to discover two reasons why you might want to make changes to your financial plan during a review.

Updating your plan in response to short-term movements could harm your goals

While there are times when it’s appropriate to update your financial plan, you should be aware of the risks of responding to short-term movements or bias.

Stock market volatility can be nerve-wracking. If you’ve read about the value of shares falling, it can be tempting to withdraw money from the market to preserve your wealth. However, it could have a negative effect on your progress towards your long-term goals.

Historically, markets have delivered returns over the long term, and investors who weather the ups and downs have benefited in the long run. By taking money out of investments during a downturn, you turn paper losses into actual ones.

Of course, investment returns cannot be guaranteed and do carry risks. Understanding which investments align with your circumstances and objectives may help you take an appropriate level of risk.

Similarly, after speaking to a friend about how they’re investing in a certain asset that’s going to deliver “great returns”, you might want to follow suit. Behavioural biases, like following the crowd, could lead to you making unnecessary changes to your plan, which could harm the projected outcomes.

Remember, your goals and circumstances should be at the centre of your financial plan. If changes are tempting, taking a step back to calculate what’s driving the decisions could be useful.

So, following a financial review, why might you make changes? There are several reasons why it may be appropriate, including these two.

1. Your goals or circumstances have changed

Your financial plan should be built around your goals and circumstances. Over time, these may change, and altering your plan may ensure it continues to reflect your lifestyle.

Perhaps you want to bring forward your retirement date, so you increase pension contributions as a result to provide you with financial security? Or becoming a parent might mean taking out life insurance would provide peace of mind, or you’d like to build a nest egg for your child.

A financial review is a chance to let your financial planner know about changes in your life.

It means they can offer advice that’s suitable for you and your aspirations. In some cases, it could mean altering your plan so that it continues to align with your life.

2. Government changes will affect your plans

Sometimes government announcements will affect what’s suitable for you. Changes to allowances, tax hikes, and more could mean adjusting your financial plan would help you get more out of your assets.

The recent announcement that the government will abolish the pension Lifetime Allowance is a good example.

From 2024, there’s expected to be no limit on how much you can save into your pension over your lifetime. It might mean it’s appropriate to increase your pension contributions or it could alter your retirement date.

Keeping on top of the latest news and then understanding what it means for you can be difficult.

Your financial reviews provide an opportunity for your financial planner to explain what announcements mean for you. Tailored advice can help you identify potential risks or opportunities that may lead to changes in your long-term plan.

Contact us to discuss your financial plan

If you have any questions about your financial plan or would like to understand how we could support you, please get in touch.

Next month, read our blog to find out why financial reviews may help you reduce impulsive financial decisions and focus on your long-term aims.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Economies around the world continue to struggle with high inflation and weakening demand affecting GDP. Read on to discover some of the factors that may have affected your investment portfolio in September 2023.

When reviewing short-term market movements, remember to focus on your long-term investment goals.

UK

Official data shows the UK economy contracted by 0.5% in July. The Office for National Statistics (ONS) attributed the poor performance to strike action and poor weather.

However, there was some good GDP data. The ONS said the UK economy reached pre-pandemic levels earlier than thought in the final quarter of 2021. The revision is good news as economists previously believed the UK was lagging behind other countries.

Inflation is falling but remains above the Bank of England’s (BoE) 2% target. In the 12 months to August 2023, it was 6.7%.

Despite high inflation, the BoE’s Monetary Policy Committee voted to hold its base interest rate of 5.25%. The Bank’s governor, Andrew Bailey, said he believes inflation will fall “quite markedly” by the end of the year. However, he added, it would be premature to cut interest rates now.

Quarterly data from the central bank shows the public is dissatisfied with the strategy for controlling inflation. Public satisfaction was at its lowest since records began in 1999.

While interest rates didn’t rise in September, households are struggling.

The Resolution Foundation warned average working household incomes are on course to be 4% lower in 2024/25 in real terms when compared to 2019/20 thanks to high interest rates, steep tax rises, and a stagnant economy.

The number of mortgages in arrears also demonstrates the pressure some families are facing. According to the BoE, the number of mortgages in arrears hit the highest level in almost seven years.

Businesses are feeling the strain from rising interest rates too. Think tank Cebr predicts that 7,000 businesses will fail every quarter in 2024.

Statistics from the Insolvency Service indicate some businesses are already struggling to balance costs.

Company insolvencies jumped by almost a fifth in England and Wales in August when compared to a year earlier. However, it’s important to note that insolvencies were at a historic low during the pandemic as businesses benefited from government support.

Despite some negative statistics, the FTSE 100 recorded its best day of 2023 so far – the index gained 1.95% on 14 September.

Europe

GDP data for the eurozone was revised downwards. Statistics show GDP expanded by only 0.3% in the second quarter of 2023, which has led to concerns that the bloc could fall into a recession in the second half of the year.

Inflation in the eurozone fell to 5.2% in the 12 months to August. However, there’s a big difference between economies across the bloc. Hungary had the highest rate of inflation at 14.2%, while Spain and Belgium saw prices increase by 2.4% when compared to a year earlier.

In response, the European Central Bank raised its three key interest rates by 25 basis points.

Purchasing Managers’ Index (PMI) data indicated that business output is still contracting as new orders fell and firms were forced to pay more for raw materials and other costs. Germany and Austria were among the worst-performing nations in the eurozone.

As the largest economy in the eurozone, Germany is often used as a barometer for the economic area.

Unfortunately, signs suggest Germany’s economy could be faltering. The European Commission said it expects the country’s GDP to fall by 0.4% this year as energy price shocks due to the war in Ukraine hit the country hard.

Sentix’s index for the eurozone also suggests Germany’s performance is leading to pessimism among investors.

While many countries are struggling to manage soaring inflation, Turkey’s is among the highest. In the 12 months to September 2023, inflation was 61.5% and its base interest rate was 25% in September.

US

Inflation in the US is lower than in some other developed economies. However, at 3.7% in the 12 months to August 2023, the figure is higher than it was a month earlier.

Similar to countries in Europe, PMI data suggests business productivity flatlined in September. S&P Global said the service sector lost momentum in August, while manufacturers reported a drop in sales.

Towards the end of the month, there was a risk that the US government could partially shut down. A group of Republican members of the House of Representatives refused to compromise with their own party’s leadership.

Credit rating agency Moody’s warned a shutdown could threaten the US’s triple-A rating and cause market volatility.

It would follow Fitch downgrading the US government’s credit rating in August due to a “deterioration of standards”.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

When you’re facing big life decisions, it can be difficult to know which choice to take. Read on to learn some simple tips that could improve your decision-making.

According to Eva Krockow, a lecturer at the University of Leicester, the average person makes a staggering 35,000 decisions every day.

Of course, many of these decisions will be unconscious. You probably give little thought to how quickly to walk when you’re heading to the shop or whether to smile at a stranger you meet on the way.

A lot of the decisions you make you will do on autopilot rather than deliberating the different options. Even those that you make consciously, many will be relatively unimportant in the grand scheme of things.

Yet, everyone will face decisions that they need to carefully weigh up and could have a long-lasting effect on their life. You might be deciding whether you should take a new job offer, or if you should invest a lump sum you’ve received rather than place it in a cash account.

At these times, you might worry about making the wrong choice. So, here are five simple tips that could help you.

1. Imagine yourself in the future

If you find yourself unable to make a decision or you keep changing your mind, visualising yourself in the future can be effective.

Go through each of your options and consider how the choice would affect your life in one or five years. It can be valuable for a few key reasons.

First, it can identify the decisions that aren’t going to have a long-term effect on your life that you might be needlessly worrying about.

Second, it could help you get away from the immediate results of your decisions and focus on the bigger picture. You might find that when the long-term outcomes are weighed up, your decision is more straightforward than you initially thought. 

2. Write down your goals

Your goals should be at the centre of your decisions. So, being clear about what you want to achieve can give you a sense of direction and something to balance “good” or “bad” decisions against.

Writing down your aspirations might be useful when you’re defining what’s important to you. It also provides you with something to refer back to when you’re making a decision.

3. Set yourself a deadline

Timing is important when you’re making a decision, so give yourself a deadline.

On the one hand, you don’t want to be pushed into making potentially life-changing decisions quickly. You might benefit from taking a step away to gain some perspective or to allow yourself to think through the options carefully.

On the other hand, it can be all too easy to procrastinate and put off important decisions when you’re struggling.

Giving yourself a deadline can help you make decisions in a timely manner.

4. Figure out what you don’t know

For some decisions, you might benefit from extra information. So, figuring out what you don’t know is an important skill that could improve the outcomes.

Noting down what you need to find out could help direct your research. In some cases, a quick search online will yield the answers you want and help you make an informed decision.

Don’t be afraid to seek help either. Sometimes speaking to a professional could be right for you. For instance, if you’re deciding which mortgage suits your needs, a mortgage broker might be able to explain the different options to you.

5. Learn from your mistakes

Finally, use your mistakes to your advantage.

Everyone makes errors, and there will be times when you look back with the benefit of hindsight and wish you’d done some things differently. While you might regret some of the decisions you’ve made, learn from them to improve in the future.

Ask yourself what led to you making the “wrong” decision. You might have been led by other people or maybe you simply didn’t have the experience you do today.

Understanding what led to certain decisions can help improve your judgement and allow you to create a process that works for you.

When your current mortgage deal comes to an end, your lender will usually offer you a new interest rate to encourage you to remain with them. This is often called a “product transfer”.

While choosing this option does have some advantages, you could be missing out on a more competitive deal that may save you money. Read on to discover the pros and cons of a product transfer.

Mortgage deals will typically last for two, three, or five years. Once the deal ends, you’ll normally have three options:

1. Stay with your current lender using a product transfer: If you’re up to date with your monthly repayments and aren’t looking to borrow more against your home, your lender may offer you a new mortgage deal, which is known as a “product transfer”.
2. Remortgage your home: You can take out a new mortgage on your home, either with your existing lender or a new one. You’ll need to go through the mortgage application process.
3. Do nothing: You don’t have to use a product transfer or remortgage. If you do nothing, you can continue to make mortgage repayments. However, your lender will usually move you on to their standard variable rate (SVR), which is often higher than comparable deals.

According to This Is Money, soaring interest rates and uncertainty around affordability have led to product transfers gaining popularity.

During the first half of 2023, data suggests half of mortgage borrowers used a product transfer when their deal ends. In comparison, just a quarter remained with their current lender in the first half of 2022.

3 practical reasons homeowners are choosing a product transfer

1. A product transfer usually involves fewer checks

When you take out a new mortgage, the lender will assess how likely you are to maintain your mortgage repayments by carrying out affordability tests. Often, they will consider how you’d cope financially if interest rates increased.

As interest rates are already higher than they were two years ago, some homeowners may be worried they’ll no longer pass affordability tests even if they’ve kept up with repayments.

A product transfer usually involves fewer checks. So, if you’re worried about meeting lenders’ criteria, a product transfer could be a useful option.

2. There will typically be less paperwork if you choose a product transfer

If you take out a new mortgage deal, you’ll need to go through the application process. This will include filling out paperwork and providing evidence that you can meet the repayments.

In contrast, a product transfer will typically be a quicker process as your lender will already have the key information, along with your repayment history.

3. A product transfer could help you avoid fees

Taking out a new mortgage could mean you face additional charges, such as an arrangement fee. By opting for a product transfer, you could avoid these costs – although there may still be fees associated with a deal you take out through your existing lender.

A product transfer could mean you pay a higher rate of interest

While a product transfer may be an attractive option, it’s a decision that could mean you pay more in interest. Over a full mortgage term, a higher interest rate could add up to thousands of pounds, so shopping around might be valuable.

 There are two key reasons why switching your mortgage to a new lender may reduce your outgoings.

1. A different lender may offer a lower interest rate than your current provider

Interest rates have increased over the last two years. Yet, they are starting to fall and there is a substantial difference in the rates offered by different lenders.

You may find that the rate you’re offered through a product transfer isn’t as competitive as the rate you’d receive if you switched to a new lender.

2. A product transfer may not include a re-valuation of your home

The value of your home may have a direct effect on the interest rate you can access.

Lenders will calculate your loan-to-value (LTV) ratio when assessing your mortgage application. The LTV measures how much money you’re borrowing compared to the value of your home.

If your home was worth £300,000 and you were borrowing £200,000 through a mortgage, your LTV would be 66%.

Typically, the lower your LTV the more competitive the interest rate a lender will offer you as you pose less of a risk.

If you have a repayment mortgage, your LTV will gradually fall as you make repayments. The value of your home rising would also reduce your LTV.

When choosing a product transfer, your existing lender may not re-value your home. So, your lender could place you in a higher LTV bracket than you would be in if you decided to remortgage with a different provider. This may mean you don’t benefit from lower interest rates available elsewhere.

Is your current mortgage deal ending? Contact us to discuss your options

If your current mortgage deal expires soon, the decision you make could affect your budget and long-term finances. We can help you understand your options and provide expert guidance, whether you decide to stay with your current lender or take out a new mortgage deal with another provider.

Please contact us to speak to one of our team.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Figures suggest more families are gifting to avoid Inheritance Tax (IHT). While passing on assets to loved ones may seem like a clear solution, it isn’t always so simple.

More estates are becoming liable for IHT as thresholds for paying the tax are frozen. The Office for Budget Responsibility predicts HMRC will collect £8.4 billion from IHT receipts in 2027/28, compared to £7 billion in 2022/23.

The portion of your estate that exceeds IHT thresholds could be taxed at a standard rate of 40%. So, it’s not surprising that families are looking for ways to mitigate a potential bill.

According to a Telegraph report, the number of people who have gifted assets that would become exempt from IHT if they survived a further seven years increased by 48% between 2009/10 and 2019/20.

If the value of your estate exceeds the nil-rate band, which is £325,000 in 2023/24, your estate may be liable for IHT. You might also be able to use the residence nil-rate band, which is £175,000 in 2023/24, if you leave your main home to direct descendants.

You can pass on unused allowances to your spouse or civil partner.

Both the nil-rate band and residence nil-rate band are frozen until April 2028. So, if the value of your estate is nearing the threshold, you may find your estate could become liable for IHT as the value of your assets could rise. 

Gifting assets to your beneficiaries now can be advantageous. It may allow you to help loved ones reach life milestones.

However, if you’re gifting for IHT purposes, there are some things you may want to keep in mind.

1. Gifting may affect your financial security later in life

Before you hand over a gift, assessing the effect it could have on your later life may provide peace of mind. Could gifting leave you financially vulnerable in your later years? Could it affect your ability to overcome a financial shock?

Making gifts part of your wider financial plan means you can understand how your decision may affect your wealth over the short and long term.

Understanding the potential implications before you make a gift might help you to feel more confident about your finances.

2. Not all gifts are considered immediately outside of your estate for Inheritance Tax purposes

When you’re gifting to minimise an IHT bill, considering longevity may be important.

Gifts might be considered “potentially exempt transfers” (PETs) and included as part of your estate when calculating IHT for up to seven years after they were given.

As a result, if the entire value of your estate exceeds IHT thresholds, your estate could be liable for IHT on assets you’ve already passed on.

Once seven years have passed, gifts will not be included when calculating IHT liability.

3. There are gifting allowances you may want to make use of

If you want to gift assets to reduce an IHT bill, there are some allowances you could make use of.

These gifts would be considered immediately outside of your estate for IHT purposes:

• The annual exemption, which is £3,000 in 2023/24
• £1,000 to someone getting married, rising to £5,000 for your children and £2,500 for grandchildren
• Unlimited gifts of up to £250 to any individual who has not received a gift using another allowance.

Regular gifts that are made from your income may also be exempt from IHT. These gifts must be made regularly. For instance, you may pay the rent on your child’s home or your grandchild’s school fees.

Making use of these allowances and exemptions could provide a tax-efficient way to pass on wealth during your lifetime.

There are others steps you could take to reduce a potential Inheritance Tax bill

Gifting isn’t the only option if you want to reduce a potential IHT bill. Other solutions might include:

• Leaving 10% or more of your estate to charity, which would reduce the IHT rate from 40% to 36%
• Passing on wealth through your pension, which is usually considered outside of your estate
• Using a trust to pass on assets tax-efficiently.

It’s important to weigh up the pros and cons of these options. It may also be useful to take both financial and legal advice in some cases, as estate planning can be complex.

You might also want to consider taking out a whole of life insurance policy. This wouldn’t reduce the amount of IHT your estate is liable for, but loved ones could use the money it pays out to settle the bill.

It’s essential that life insurance is written in trust. Otherwise, the payout could be considered part of your estate and result in a higher IHT bill.  

An estate plan can help you set your affairs in order and minimise Inheritance Tax

An estate plan can help you set out what you’d like to happen in your later years and how you’d like to pass on assets when you die. Setting your affairs in order can be emotional, but it’s an important task. 

We can help you create an estate plan that reflects your wishes and considers concerns you may have, such as whether IHT will affect the assets you leave behind. Please contact us to arrange a meeting.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate or tax planning.

Remember that taper relief only applies to gifts in excess of the nil-rate band. It follows that, if no tax is payable on the transfer because it does not exceed the nil-rate band (after cumulation), there can be no relief.

Taper relief does not reduce the value transferred; it reduces the tax payable as a consequence of that transfer.

Opening up about your finances can be difficult. Yet, talking about money could improve your financial security and boost your wellbeing.

Every year, the Money and Pension Service (MaPS) hosts Talk Money Week, an initiative encouraging more people to start financial conversations. This year, it takes place between 6 and 10 November, and it asks everyone to do one thing that could improve their financial wellbeing, and inspire others to do the same.

So, if you’ve been putting off financial discussions, now could be the perfect time to tackle them.

Money plays an essential role in your overall wellbeing. Indeed, a Financial Conduct Authority report found that more than half of adults feel more anxious or stressed due to the rising cost of living.

Despite this, money conversations can still be seen as taboo, and some people struggle to communicate effectively when discussing finances. It can be particularly difficult if you have different views on how to manage money.

In fact, 26% of people in a relationship said they argue with their partner about money at least once a week, an Aviva survey found.

Making finances a regular part of your conversations could ease some of the pressure you may feel and help you see a different perspective.

To mark Talk Money Week, here are five useful conversations you could have with people in your life.

1. Speak to your partner about your retirement plans

Have you had a serious conversation about your retirement plans with your partner? From when you’d like to retire to the kind of lifestyle you want to live, having a detailed plan for the next chapter of your life could mean your dream is more achievable.

A clear idea about retirement can also help you work towards shared goals.

So, if you’ve only made vague plans, sitting down to really talk about what you’re looking forward to in retirement might be valuable. With a clear idea about what you want your future to look like, you can start to understand how much you need in your pension or how to use other assets.

2. Discuss life goals with your children

If you have children, Talk Money Week is a great opportunity to pass on your knowledge and money lessons.

During your life, you’ve no doubt picked up tips from both positive and negative money experiences. Sharing these with your family could help them embrace good money habits and avoid pitfalls.

As well as day-to-day finances, ask them about their long-term plans. You might be able to offer guidance as to how they could achieve their goals, or point them in the direction of professional advice if it may be beneficial to them.

Their response might also affect your financial plan. For example, if your child hopes to buy a home soon, would you want to lend some financial support?

3. Chat with your co-workers about your employer’s perks

Money can be a difficult topic to talk about at work, but discussing how to make the most of your employer’s perks could be a good way to start. Plus, you might discover some workplace benefits you’ve overlooked.

Perhaps your workplace offers discount shopping vouchers that could help reduce grocery bills? Or maybe your employer matches pension contributions to make saving for retirement even more efficient?

A quick chat about how you use workplace benefits could help you and your co-workers get more out of them.

4. Ask elderly relatives about how they manage their finances

Some people struggle to manage their finances as they get older. So, checking in with elderly relatives could provide you with peace of mind.

Some challenges could be simple to solve, such as if they find it difficult to manage online utility accounts. Others might benefit from professional advice, for instance, if they don’t feel confident using assets they’ve built up to create an income or worry they’ll run out.

Scammers are more likely to target the elderly too. Helping loved ones get to grips with their finances or taking over certain tasks could reduce the risk of them falling victim to fraud.

In addition, you may want to ask if they’ve taken steps like naming a Lasting Power of Attorney, which could provide security if they’re unable to make decisions in the future.

5. Talk to your financial planner about your concerns for the future

Even when you have a financial plan in place, it’s normal to worry about the future sometimes. If you have concerns about your long-term finances, discussing them with your financial planner could put your mind at ease.

You might have already taken steps that could calm your fears after a conversation. Or your financial planner could help you identify how to reduce risks in a way that suits your overall financial plan.

If you’d like to talk to us about your financial plan, or you want to understand how a financial planner could support you, please get in touch.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.