Lloyd O Sullivan http://www.lloydosullivan.co.uk/blog Our Blog Tue, 13 Mar 2018 09:00:55 +0000 en-US hourly 1 Financial freedom http://www.lloydosullivan.co.uk/blog/financial-freedom/ http://www.lloydosullivan.co.uk/blog/financial-freedom/#comments Tue, 13 Mar 2018 09:00:55 +0000 http://www.lloydosullivan.co.uk/blog/?p=935 Creating and maintaining the right investment strategy

Our life is an endless series of daily choices, and how we manage those choices determines the outcome of our life. We all want financial freedom, but how will we achieve it? Financial goal-setting is the key to building wealth.

There are always going to be bumps in the road on every journey, which is why it’s essential to be flexible enough to adjust your plans when the unexpected happens. Your wealth creation objectives need to be able to adapt to whatever’s going on in your life. Nothing should stand between you and your long-term goals.

Creating and maintaining the right investment strategy plays a vital role in helping to secure your financial future. Whether you are looking to invest for income, growth or both, we can provide you with professional expert advice to help you achieve your financial goals. So what do you need to consider?

Set a goal and start early

Short term, ultra specific goals are generally very easy to achieve as they don’t really involve any planning, but longer-term goals on the other hand require you to actually plan out how you are going to achieve the goal. Remember that wealth creation is about creating a lifestyle of your choosing, and the earlier you start to invest, the sooner you can enjoy the benefits of compound growth working for you to build value and make your money work harder for you.

By taking the time to step into your future, you can look back and visualise what needs to happen today for you to enjoy the lifestyle you want tomorrow. Ask yourself these three questions to help you visualise your future needs: what do I have? What do I want? When do I want it?

Develop an investment habit

If you think that investing a few hundred pounds every month will offer little in return, you should change your mindset. To start your investment strategy, you should adopt a stable and organised investment routine that will help you achieve your goals. Compound growth is the central pillar of investing. It is why investing works so well over the long term.

The more you invest and the earlier you start will mean your investments have that much more time and potential to grow. By investing early and staying invested, you’ll also be able to take advantage of compound earnings. Making money on your money is the concept behind compounding. Compounding is when the money you earn from your investments is reinvested for the opportunity to earn even more. However, you need to keep in mind that while compounding can make an impact over many years, there may be periods where your money won’t grow.

Be consistent

Many people stop their investment planning particularly during market downturns, as we’ve seen in recent weeks. By doing this, they often miss out on opportunities to invest at lower prices. If you keep to your investment strategy and keep moving ahead consistently, this helps spread risk and enables you to grow your wealth for the long-term through pound-cost averaging and careful asset allocation.

It’s important to remember that investing is an ongoing process, not a one-time activity. The right way to begin your investment strategy is by establishing goals that need to be achieved over the short, medium and long term. Secondly, it is necessary to assess your current position in the financial lifecycle. Thirdly, you must ascertain your risk profile, as that decides how much risk you should take while investing. This is particularly important as different financial objectives require different investments approaches.

Maintain a well-diversified portfolio with regular reviews

Regular reviews of your portfolio enable you to adjust your portfolio to meet your changing needs and risk appetite at different stages of your life and in different market conditions. This helps you keep up your investing momentum towards achieving your long-term financial goals. It’s also important not to put all your investment eggs into one basket.

Investing randomly into different asset classes without ascertaining their asset allocation, not following a disciplined approach to investing, exiting abruptly from an asset class and investing without a clear time horizon are some of the most apparent inconsistencies in any investment process.

Create the right investment strategy

We recognise that choosing how to invest your money can seem daunting. When it comes to planning for your future and that of your family, you’ll want to be sure that you have everything covered. We help our clients set goals and then create the right investment strategy to achieve them, whether it’s growing family wealth or leaving a legacy. We know everyone is unique and has different priorities. To discuss your future dreams, please contact us.




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Crypto currencies http://www.lloydosullivan.co.uk/blog/crypto-currencies/ http://www.lloydosullivan.co.uk/blog/crypto-currencies/#comments Mon, 12 Mar 2018 09:19:36 +0000 http://www.lloydosullivan.co.uk/blog/?p=933 Don’t believe the hype

Digital or crypto currencies such as Bitcoin, Ethereum and Ripple have been causing a financial frenzy over the past months. Bitcoin is the oldest and most well-known crypto currency created in 2009 by an unknown person using the alias Satoshi Nakamoto.

Transactions are made with no middle men – this means there’s no bank, regardless of the hype around getting rich by trading it. The frenzy was sparked by bitcoin soaring to more than 1,900% in 2017 to around $20,000, before falling to around $14,000 in February this year at the time of writing this article.

Separate components

There are two separate components. You have bitcoin-the-token, a snippet of code that represents ownership of a digital concept – or a virtual IOU. Then you have bitcoin-the-protocol, a distributed network that maintains a ledger of balances of bitcoin-the-token. Both are referred to as ‘bitcoin’.

Crypto currencies can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Some people just buy crypto currencies as an investment, hoping that they’ll increase in value.

Private transactions

Though each transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs. While that keeps bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for some people online buying drugs or other illicit activities.

There are now hundreds of other such currencies that can be traded – and new ones are regularly being created. For some investors, one attraction of crypto currencies is the ability to participate in an initial coin offering, or ICO. Investors jump in, hoping to get the digital currency at a low price, and then profit as it rises. But ICOs are far riskier than stock IPOs – and have other key differences.

Imperfect information

Crypto currencies are very risky investments because the technology is new and unproven. Investing is a very high risk, as prices have been extremely volatile. Many experts are sceptical about bitcoin as an investment primarily because there is nothing for them to analyse, so people are investing with imperfect information and joining the herd of speculators.

Aside from the operational issues of trading in crypto currencies, there is also a high risk of fraud. There is still a good deal of misinformation and lack of clarity regarding bitcoin trading, and fraudsters have taken advantage of this to launch Ponzi schemes, which promise ‘guaranteed high returns’. Some companies claim to double the initial investment within a very short period of time. The growing use of virtual currencies in the global marketplace makes it easy for miscreants to lure investors into Ponzi schemes. Investors should be careful to steer clear of such unrealistic promises.

For any investor looking to take the plunge and buy crypto currencies, it is essential they make sure it’s a very small part of their diversified portfolio – and that they can afford to lose their investment.

Time to talk to Lloyd O’Sullivan?

For further information, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.




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Financial resilience http://www.lloydosullivan.co.uk/blog/financial-resilience-2/ http://www.lloydosullivan.co.uk/blog/financial-resilience-2/#comments Thu, 22 Feb 2018 12:53:13 +0000 http://www.lloydosullivan.co.uk/blog/?p=917 financialresiliance
How prepared are you for any financial shocks?

Over three million working couples are classed as ‘double income, no option’ (DINOs), which means they are potentially financially vulnerable if one of the two loses their earnings.

The typical household today looks very different from the traditional image of a working family made up of one primary breadwinner and one homemaker. Instead, nowadays many households rely on two incomes to maintain their lifestyle, or even just to get by. Of the two thirds of Britons who are living as part of a couple, half (51%) are both currently working. Yet, without adequate savings or protection insurance, millions could be at risk financially if one of the main earners was unable to work for a period of time.

Dependent on two incomes

Research by LV= has found that there are 3.2 million working couples in Britain that would be classed as DINOs. This means they are dependent on two incomes to make ends meet, and would struggle to cope if they lost one of their incomes. The Money Advice Service (MAS) recommends the provision of 90 days’ worth of outgoings in savings to protect against a financial shock.

The lack of savings may be down to people simply not being able to afford to put money aside. A quarter (27%) of working couples surveyed say their double wage isn’t stretching as far as it did this time last year. However, not having a back-up source of money leaves many couples at a high risk of financial difficulty if one person couldn’t work for a period of time.

Level of financial pressure

The level of financial pressure is also clear in the numbers who anticipate they’ll be working for many years to come. Of couples who both work, three in five (58%) wouldn’t choose to work if they didn’t have to, while over half (54%) say the same of their partner. Three in ten (30%) people in a working couple expect that both they and their partner will have to work until retirement to make ends meet, while one in five (21%) think both of them will actually need to work throughout retirement.

Millions of couples need both incomes to pay the bills, with a significant proportion saying they’d have to make major changes if they had to rely on one income. Yet, the impact of losing an income is also not just financial. Two in five (42%) people in a couple say that if one of them couldn’t work, it would strain their relationship.

Few have income protection

Despite the reliance so many households have on both incomes, worryingly few have income protection, leaving them vulnerable if one member of the household was unable to work for a period of time. Three in five (59%) say that neither they nor their partner has any form of income protection.

If your household is reliant on two incomes to make ends meet, it’s important to consider how you would survive financially and emotionally if you were forced to live off one income. With so many households now relying on two salaries to get by, it has never been more important for couples to protect their joint incomes.

Help to support you financially

Income Protection (also known as ‘IP insurance’) is a form of insurance that helps support you financially if you have time off work and suffer a loss of earnings because of injury or illness. However, it is important to remember that Income Protection only covers you if you’re unable to work due to illness or injury – it does not pay out if you are made redundant.

This type of insurance covers most illnesses that leave you unable to work. What that means, exactly, depends on your individual policy. For example, it may cover you if you are unable to work due to a stress-related illness or a serious heart condition.

Much-needed boost to your financial resilience

Income Protection is one way for people to equip themselves should they find themselves unable to work for a period of time. It can be an affordable and valuable safety net that can provide a much-needed boost to their financial resilience. If you have any concerns or would like to review your options, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.

Source data:

Research conducted by LV= published 17/01/2018

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Market matters http://www.lloydosullivan.co.uk/blog/market-matters/ http://www.lloydosullivan.co.uk/blog/market-matters/#comments Thu, 22 Feb 2018 12:50:44 +0000 http://www.lloydosullivan.co.uk/blog/?p=915 marketmatters
Don’t let current global uncertainties affect your financial planning

It’s important not to let current global uncertainties affect your financial planning for the years ahead. People that stop their investment planning, particularly during market downturns, often miss out on opportunities to invest at lower prices.

It’s important to keep to your strategy and keep moving ahead consistently by spreading risk and growing your wealth for the long term.

Higher inflation and faster interest rate rises

At the time of writing this article in February, markets had reacted to the signs of faster wage growth and a strengthening US economy that may lead to higher inflation and faster interest rate rises. The global sell-off began following a solid US jobs report that fuelled expectations that the Federal Reserve would need to raise interest rates faster than expected because of the strength of the economy. That concern prompted the pullback from stocks.

The Bank of England seemed to offer support for the view that rates in general are on an upward path with a strengthening UK economy, meaning interest rates are likely to rise sooner than the markets were expecting.

More attractive investment alternatives

A government budget proposal announced by US lawmakers to raise spending caps could also fan inflationary pressures. Rising US bond yields are another possible signal of higher rates to come, which could impact on corporate profits and curb economic activity. But at the same time, higher interest rates can make investment alternatives to stocks, such as bonds, more attractive.

In practice, everyone’s investment goals are different. By deciding on your long-term financial priorities – whether it’s funding your children’s education or saving enough to be able to retire early – you can avoid being blown off course by short-term events.

Investors should focus on long-term horizons

Trying to second-guess the impact of events such as Brexit or the recent stock market correction – or even attempting to make a bet on them – rarely pays off. Instead, investors who focus on long-term horizons – at least five to ten years –have historically fared much better.

Sensible diversification – owning a mix of assets, including shares, bonds and alternative investment such as property – can help protect investors over the long term. When one area of a portfolio underperforms, another part should provide important protection – and it’s never too early or too late to start taking this considered and strategic approach.

Media frenzy

Volatility, risk and market declines are a normal part of the investing cycle, but the media likes drama. Reports will use words that make these market fluctuations sound alarming, so be cautious about reacting to the unnerving 24/7 news cycle.

Stay strategic

If you have a well diversified portfolio, then it’s more important than ever to stay the course. You have a strategy in place that reflects your risk tolerance and timeline, so stay committed. However, if you reacted and sold in a previous market decline or have not implemented a strategic asset allocation, then now is the time to have a discussion about your investment options.

Stay calm

Be aware of the psychological affect this type of volatility has on you as an investor and resist the urge to be reactive. The recent decline was expected and is coming after financial markets as a whole have experienced a historic bull phase for close to ten years now.

Stay focused

No one knows how severe any market turbulence will be or what the market will do next. It could be over quickly or linger for a while. But no matter what lies ahead, proper diversification and perseverance over the long-term are what’s most important.

It’s about achieving a good balance

There are many ways that you can invest, and while we all want our money to grow, it’s important to think about the level of risk you might be willing to take with your hard-earned money. It’s about achieving a good balance. To discuss your future investment objectives or review your current portfolio, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.




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Avoiding hidden dangers in retirement http://www.lloydosullivan.co.uk/blog/avoiding-hidden-dangers-in-retirement/ http://www.lloydosullivan.co.uk/blog/avoiding-hidden-dangers-in-retirement/#comments Thu, 22 Feb 2018 12:48:21 +0000 http://www.lloydosullivan.co.uk/blog/?p=913 avoidinghidden
Make sure you don’t run out of money or face a reduced standard of living

Increasingly, more and more pensioners are keeping much of their pension invested after they retire. This means they’re faced with two very different risks when deciding what to do with their savings in retirement in a world of ‘pension freedoms’. Since April 2015, people who reach retirement have had much greater flexibility over how they use their pension funds to pay for their later years.

A recent report[1] identified savers in retirement are taking ‘too little’ risk (the ‘risk averse’ retiree) and taking ‘the wrong sort’ of risk (the ‘reckless’ retiree). Each of these approaches increases the danger of a saver either running out of money during their retirement or having to face a reduced standard of living.

The risk-averse retiree – how can you take too little risk?

An example of taking ‘too little’ risk is the saver who takes their tax-free cash at retirement and invests the rest in an ultra-low risk investment such as a Cash ISA, believing this to be the safe approach. The report points out that ‘investing in retirement is still long-term investing’ and shows that decades of low-return saving can seriously damage the living standards of retirees.

It highlights the case of someone who retired ten years ago with an illustrative pension pot of £100,000 which they invested in cash. Assuming they withdrew money at £7,500 per year (in line with annuity rates at the time), they would now be down to £27,000 and likely to run out in around four years’ time, less than fifteen years into retirement. By contrast, if the same money had been invested in UK shares, there would still be around £48,000 left in the pot, despite the 2008 stock market crash.

The reckless retiree – what is ‘the wrong sort’ of risk?

In an era of low interest rates, some retired people may be tempted to seek out more unusual forms of investment with apparently high rates of return but accompanied by much greater risk to their capital. Examples could include peer-to-peer lending, investment in aircraft leasing or even crypto currencies such as bitcoin.

Concentrated exposure to a single, potentially volatile investment can produce very poor outcomes, particularly if bad returns come early in retirement. The pension pot in the previous example would still have £88,000 in it if the bad year for UK shares had happened at the end of the ten-year period we looked at and not at the start.

The rational retiree – what is the best way to handle risk in retirement?

Rather than invest in an ultra-low-risk way or chase individual high-risk investments, the report identifies a ‘third way’ of spreading risk across a range of assets, including company shares, bonds and property, both at home and abroad. This multi-asset approach can be expected to provide better returns over retirement than cautious investing in cash but also helps to smooth the ups and downs of individual investments.

Pension freedoms open up new possibilities for people in retirement, but they create new dangers as well. There is the danger of being too cautious and not making your money work hard enough – investing in retirement is still long-term investing. There is also the danger of taking the wrong sort of risk, chasing high returns but putting your capital at risk. Spreading money across a range of asset classes and in different markets at home and abroad is likely to deliver better returns in retirement – and a more sustainable income – than remaining in cash, without exposing you to the capital risks that can come from chasing after more exotic or risky types of investment.

Help to ensure your expectations are fulfilled

By understanding your retirement plans, we are able to help ensure your expectations are fulfilled by establishing tailored plans to preserve your capital, produce income and pass on wealth securely and efficiently. If you would like to review your current planning provision, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.

Source data:

[1] Research report published 13 January 2018 by mutual insurer Royal London




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New lease of life http://www.lloydosullivan.co.uk/blog/new-lease-of-life/ http://www.lloydosullivan.co.uk/blog/new-lease-of-life/#comments Thu, 22 Feb 2018 12:46:12 +0000 http://www.lloydosullivan.co.uk/blog/?p=910 newlease
Pensioners embracing the benefits of retirement and new-found time

As with any new life stage, planning often helps a smooth transition from the old to the new. Preparing properly for anything new requires planning and commitment. Spending time on planning now will ensure you enjoy the retirement you’ve worked hard to achieve.

For many pensioners, retirement has meant a new lease of life according to new research[1] for millions of people who have given up work in the last ten years, with more than one in four (26%) saying they are fitter and healthier since they stopped working. Far from winding down, nearly half of those who have retired since the height of the financial crisis (48%) say they are busier and more active than they anticipated.

Experience of retirement

Through embracing the benefits of retirement and making the most of the new-found time, more than one in three (35%) say they have more time to make their life more adventurous than they could have hoped while they were still at work.

When asked how else their experience of retirement was exceeding their expectations, many of those who have become pensioners in the last ten years pointed to improvements in their relationships. More than a quarter (26%) believe they now get on better with their partner, while 25% think that their relationship with their family is happier since stopping work. Meanwhile, just under one in four (23%) say their social life has improved more than they expected.

Professional financial advice

As people who plan to finish work in the next ten years begin to look forward to their retirement, there’s plenty they can still do to make sure they are as comfortable as the people who have become pensioners over the last decade. Most importantly, in the face of changing pension rules, many people will benefit from obtaining professional financial advice in the run-up to retirement.

Retirement will continue to change over the coming years, but for many people the desire to make the most of their new-found free time will remain. Reflecting on their retirement in general, the vast majority who gave up work in the last ten years (86%) said that it had met their expectations or they were happy with how it had panned out so far, while only one in eight (13%) said that it has been a disappointment.

Thoughts, feelings, emotions

Nearly two in five (37%) thought they would have missed work more than they have since retiring, and in fact one in four (26%) wish they had retired earlier. Meanwhile, on reflection, more than one in ten (11%) wish they had been more active or found a job in the early years of their retirement.

It’s important to prepare your thoughts, feelings and emotions for the next phase in your life: a time to look forward to and welcome as a chance to do the things you have been dreaming about, as well as a rest after a long career. There is likely to be a mixture of feelings and thoughts as you start on this new venture into uncharted territory.

Any concerns about your retirement?

If you have any concerns about your retirement provision or would like to assess your personal circumstances to see what type of retirement income your current planning will give you once you’ve retired, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk. If your goals are out of reach, or you’re taking undue levels of risk, we’ll let you know.

Source Data:

[1] Consumer Intelligence conducted an independent online survey for Prudential between 26 May and 5 June 2017 among 751 adults in the UK who had retired within the last 10 years.

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Wealth preservation http://www.lloydosullivan.co.uk/blog/wealth-preservation/ http://www.lloydosullivan.co.uk/blog/wealth-preservation/#comments Tue, 20 Feb 2018 09:00:32 +0000 http://www.lloydosullivan.co.uk/blog/?p=907 wealthpres
Reducing Inheritance Tax means taking action now

Without professional advice and careful financial planning, HM Revenue & Customs (HMRC) can become the single largest beneficiary of your estate following your death. A recent survey about Inheritance Tax (IHT)[1] shows that wealthy Britons over the age of 45 are either ignoring estate planning solutions or they have forgotten about the benefits these can provide. Only 27% of those surveyed have taken financial advice on IHT planning, despite all of them having a potential IHT liability.

60% of people surveyed want to leave assets to their spouse or registered civil partner, and 29% would like to leave an inheritance to younger relatives such as nieces, nephews and grandchildren, but the largest single beneficiary from peoples’ estates is still HMRC. To highlight this point, HMRC revealed they received IHT payments to the value of £4,670,000,000 (that’s £4.67 billion) in the 2015/16 tax year alone.

How much could your estate pay?

The level of IHT your estate will pay depends on the amount your estate is worth and the tax allowances in place at the time. The current IHT allowance is £325,000 each tax year until 5 April 2021. Your estate will normally pay IHT on anything above that at 40%. If you leave any assets to your spouse or registered civil partner, they won’t have to pay IHT – it can be added to their estate and settled on their death. In the event your full IHT allowance isn’t used on your death, the remaining proportion will pass to your spouse or registered civil partner to increase their IHT.

From 6 April 2017, on top of the £325,000 allowance, a new allowance was introduced for people owning their own home. This Residence Nil Rate Band (RNRB) provides an additional £100,000 allowance to be applied against the deceased’s main residence, as long as it is left to a direct descendant and the estate is valued at less than £2,000,000. Beyond that figure, the RNRB (and any transferred RNRB) will be gradually withdrawn. Like the main nil rate band, any unused proportion can be taken on by the surviving spouse or registered civil partner.

Reduce IHT and maximise the wealth you pass on

Make a Will

Having a Will is arguably one of the most important things you can do for yourself and your family. Not only can a Will legally protect your spouse, children and assets, but it can also spell out exactly how you would like things handled after you have passed on.

If your estate is worth more than the current IHT threshold, when you die and it passes to a non-exempt beneficiary (such as a child) or doesn’t qualify for relief as an agricultural or business asset, then IHT at currently 40% will have to be paid on the excess.

Appraise your assets

IHT is a tax payable on the value of your assets when you die. It covers your estate, which can include your home, savings and investments, jewellery, cars, art, other properties (including holiday homes abroad), and proceeds from life insurance policies not written in an appropriate trust.

Potentially exempt transfers

If you’re in reasonably good health, you could think about making an outright gift to someone you love. If you live for seven years after making the gift, it will usually be free of IHT.

Think about giving

You can give away up to £3,000 each year as either a single gift or several small amounts.
If you haven’t used this in any tax year, you can carry it forward for one year. This will give you an annual exemption of £6,000 in the next tax year. For a couple, this could add up to £12,000 in one tax year, all free of IHT.

Consider establishing a trust

Another way you can reduce your IHT is to put your money into a trust. This enables you to make a gift without losing control of the money, although care is needed if you still need to be able to access the money for yourself.

Some trusts still attract IHT but are worth considering nonetheless. There are three main types of trust in relation to IHT planning: bare (absolute) trusts, discretionary trusts and interest in possession trusts.

Take out life insurance

If you don’t want to give your money away while you are still alive, you could take out life insurance. You can set up a policy to pay out an amount equal to your estimated IHT bill.

It’s possible to set up the policy in the form of an appropriate trust to remain outside your estate. It will pay out to the trustees to pass on to your nominated beneficiaries, giving them the money to pay the IHT due.

You can choose from two types of life insurance: a term policy (this runs for a fixed number of years) or a whole of life policy (this pays out when you die, regardless of how many years you live).

Gifts from monthly income

You can make regular gifts from your income after tax without paying IHT. This is the money you use for normal living expenses. You must make sure you only pay money from your income and not any savings or investments you have.

Gifts to qualifying charities

One way you can instantly reduce your tax rate to 36% is by leaving at least 10% of your estate to charity.

All gifts to qualifying charities and political parties are free of IHT.

Protect your pension

Maintaining your money purchase pension pot is another way to protect your family’s inheritance. Unlike Individual Savings Accounts (ISAs) and other savings vehicles, pensions are not normally subject to IHT and can be passed to loved ones on death. Spending down other taxable areas of your estate before calling on your pension makes sense.

Have you preserved and protected your legacy?

There are many things to consider when looking to protect your family and assets. Whatever your priorities are, the sooner you start thinking about IHT planning, the more you can do. To arrange a meeting to review your situation or discuss how we can help guide you through this highly complicated area of wealth preservation, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

Source data:

[1] Survey conducted by Canada Life of 1,001 UK consumers aged 45 or over with total assets exceeding the individual inheritance tax threshold of £325,000 carried out in September 2016.

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Tips to minimise the tax you pay http://www.lloydosullivan.co.uk/blog/tips-to-minimise-the-tax-you-pay/ http://www.lloydosullivan.co.uk/blog/tips-to-minimise-the-tax-you-pay/#comments Mon, 19 Feb 2018 09:00:29 +0000 http://www.lloydosullivan.co.uk/blog/?p=905 tipstomini
Have you utilised all your year end tax planning deadline opportunities?

As we near the 2017/18 tax year end on 5 April, if appropriate to your particular situation, we’ve provided some tax planning tips to help you maximise the use of your various tax allowances and minimise the tax you pay.

We take a personal approach to your tax needs. Informed by our detailed knowledge of your affairs, we explore the best options to help manage your tax obligations most effectively.

Income Tax

Ensure income-producing investments are held by the spouse who has the lowest tax rate.

Make use of the transferable married couples allowance where one spouse is not fully using their personal allowance.

If your income is around the £100,000 figure, look at ways of preserving the personal allowance. You could consider making Gift Aid payments or pension payments to help minimise loss of this allowance.

Consider topping up any Individual Savings Accounts (ISAs) you or your spouse have to the maximum limits, which is £20,000 each.

Consider making personal pension contributions to preserve personal allowances and child benefit entitlement.

Make use of any unused annual pension allowance brought forward before it is lost.

Make use of the £5,000 dividend allowance available when considering salary and dividend options.

If your company car arrangement is coming up for renewal, consider opting for cars with lower emissions and list prices to help minimise an Income Tax charge.

Inheritance Tax (IHT) planning tips

Use your annual exemption for gifts of up to £3,000 per tax year; this exemption can be carried forward to the next tax year.

Regular (qualifying) gifts out of net income are exempt from IHT – consider establishing a pattern of regular gifting to take advantage of this tax break.

Wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great-grandchild, or £5,000 for a child) are exempt from IHT.

Small gifts exemption up to £250 – you can give as many gifts of up to £250 per person as you like during the tax year, providing you haven’t used another exemption on the same person.

Capital Gains Tax planning tips

Make use of the annual exemption – currently £11,300 – and remember that assets can be transferred between spouses and registered civil partners tax-free.

Help to optimise your tax position

The UK tax system continues to grow ever more complex, with a greater responsibility being placed on the individual to get their tax right. If you pay tax, we can help to optimise your tax position. To review your situation, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.




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Year End Tax Planning http://www.lloydosullivan.co.uk/blog/year-end-tax-planning/ http://www.lloydosullivan.co.uk/blog/year-end-tax-planning/#comments Tue, 13 Feb 2018 09:00:46 +0000 http://www.lloydosullivan.co.uk/blog/?p=903 Don’t miss the chance to make the most of valuable tax-efficiencies and allowances

It’s important to take the time to give your finances a year-end check-up. The 2017/18 tax year ends on 5 April 2018, with the new tax year beginning the following day, on 6 April. These are important dates for financial planning, so it’s important you don’t miss the chance to make the most of valuable tax-efficiencies and allowances.

Time is running out to make important planning moves before this tax year’s end, so don’t delay – we provided some of the key areas that could help you make the most of your money.

Maximise your Individual Savings Account (ISA) allowance

The tax-efficient ISA allowance for the current tax year is £20,000 per person. Therefore, a married couple could put away £40,000 before the end of the tax year on 5 April. There is no Capital Gains Tax (CGT) and no tax on UK income, and also no need to declare this on your tax return. If you do not make use of your ISA allowances, they cannot be carried forward to the new tax year.

Children with a Child Trust Fund can also save up to £4,128 in the current tax year, or if they’d prefer to, transfer their savings to a Junior ISA (JISA), which are a tax-efficient way to build up savings for a child.

Any adult under 40 is able to open a new Lifetime ISA (LISA) with a 25% annual bonus paid by the Government on every £1 invested up to an annual contribution limit of £4,000. LISA Contributions can continue up to the age of 50, and funds can be withdrawn tax-efficiently from age 60, or earlier for the purpose of buying a first home or for use in retirement. If you are buying a home with someone else, you can both take advantage of separate Lifetime ISAs.

Don’t overlook pension contributions

The rules around how much you can pay into a pension have become more complex. But the standard annual allowance is £40,000 per person in the current tax year. The standard allowance can be reduced if you earn above a certain limit or have taken pension benefits previously. You pay contributions net of basic-rate Income Tax and your pension provider collects the tax relief from HM Revenue & Customs (HMRC).

Basic-rate tax relief is currently 20%. So, if you contribute £80 a month, £100 will be invested automatically in your plan – that’s an additional £20 at no extra cost to you. If you’re a higher-rate or additional-rate taxpayer, you can claim the extra relief from HMRC on your yearly tax return or by asking your tax office to adjust your tax code. The value of any tax relief depends on your individual circumstances. This is essentially free money, so don’t miss out.

Take your pension to the max

Carry forward allows you to make use of any annual allowance that you may not have used during the three previous tax years, provided that you were a member of a registered pension scheme. This may be particularly useful if you are self-employed and your earnings change significantly each year, or if you’re looking to make large pension contributions.

To use carry forward, you must make the maximum allowable contribution in the current tax year (£40,000 in 2017/18), and you can then use unused annual allowances from the three previous tax years, starting with the tax year three years ago. You can’t receive tax relief on contributions in excess of your earnings in a tax year, and you only receive higher-rate tax relief to the extent that you have paid it.

Capital Gains Tax (CGT) allowances

Every individual has an annual CGT allowance which currently enables them to make gains on investments of up to £11,300 free of tax. Any gains in excess of the allowance are charged to CGT at either 18% or 28%, depending on the individual’s other total taxable income in the year the gain arises.

If unused, the allowance cannot be carried forward into the next tax year, so it is advisable to use this tax-free allowance each year in order to reduce the risk of incurring a significant CGT bill in subsequent years. Married couples can also make use of each other’s allowances via a transfer to maximise the tax-efficiency.

By checking your CGT exposure each year, you could reduce future liabilities. If appropriate, consider what’s known as a ‘Bed and ISA’ transaction. This is useful for investments held outside a tax-efficient ISA or pension, where there might be a CGT bill in future. By selling some or all your assets this year and then immediately buying them back within an ISA, you can use this year’s CGT allowance to move your investments into a tax-efficient environment. It’s important not to realise a profit above the CGT allowance, or to sell more of the investment than you can buy back within your ISA allowance – £20,000 in 2017/18, assuming you haven’t used any of it for other purposes.

New rules on Inheritance Tax (IHT)

The new ‘residence nil-rate band’ (RNRB) now enables a ‘family home’ to be passed wholly or partially tax-free on death to direct descendants. The amount of relief will be phased in over four years and will initially be £100,000 in 2017/18, rising each year thereafter to reach £175,000 in 2020/21. The RNRB is in addition to an individual’s own nil-rate band, and any unused nil-rate band may be transferred to a surviving spouse or registered civil partner.

In order to qualify, you must own a property or a share in a property, which you have lived in at some stage and which you leave to your direct descendants (including children, grandchildren or step-children). For estates over £2 million, the RNRB is reduced at the rate of £1 for every £2 over £2 million. In addition, it only applies on death and not on gifts or any other lifetime transfers.

Small gifts are exempt from Inheritance Tax (IHT)

Take advantage of exemptions. You can give away up to £3,000 a year, which is known as your ‘annual allowance’, and this will be immediately exempt from IHT. This exemption can be carried forward for one tax year if unused. Therefore, it is possible for a married couple to gift away as much as £12,000 using the annual exemption, on the basis neither of them have used the exemption already in the current or previous tax year.

In addition, lifetime gifts to any person that do not exceed £250 in a tax year are exempt.
Furthermore, lifetime gifts in consideration of marriage are also exempt – for example, parents can gift £5,000, grandparents can gift £2,500 and gifts of up to £1,000 can be paid from others.

Additional-rate taxpayers

If you earn £100,000 or more, your tax-free personal allowance falls by £1 for every £2 you earn over £100,000. So if you earn £121,200 or more, you won’t receive a tax-free personal allowance at all. The additional rate income tax (45%) is also charged on earnings over £150,000.

Pension contributions and other tax planning options, such as putting income producing assets into a lower-rate tax paying spouse’s name, could be used to reduce this.

Tax-efficient investments

The Enterprise Investment Scheme (EIS), Venture Capital Trusts (VCT) and the Seed Enterprise Investment Scheme are worth a thought. EIS investments offer CGT deferral. With the reduction in most CGT rates, an election to carry back the EIS investment could reduce your tax bill on gains made during 2016/17.

Utilise your spouse’s personal allowance

If your spouse is a lower or even non-taxpayer and you have income producing assets (for example, buy-to-let property or even saving accounts), you could put these in their name to lower your overall Income Tax liability.

Married couples and registered civil partners who are basic rate tax payers and have not fully utilised their personal allowance can transfer 10% of the basic personal allowance to their other half. The wife / husband / partner receiving the transferred allowance will benefit from a tax reduction of 20% of the transferred amount. Assets can be passed between couples without any CGT liabilities. Transferring assets to joint names can also ensure that both spouses’ annual CGT exemptions are fully utilised in a sale.

No matter what kind of taxpayer you are, you need to plan ahead

The 2017/18 tax year is coming to a close, and if appropriate to your particular situation there are some important tax planning issues and opportunities you may wish consider. No matter what kind of taxpayer you are, you need to plan ahead. Once the tax year has already ended, you’ve lost virtually any flexibility available to you to manage your tax affairs. To find out more or to discuss your situation, please call Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.




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‘Miss List’ http://www.lloydosullivan.co.uk/blog/miss-list/ http://www.lloydosullivan.co.uk/blog/miss-list/#comments Mon, 12 Feb 2018 09:00:43 +0000 http://www.lloydosullivan.co.uk/blog/?p=899 With retirement in your sights, what do you think you’ll miss?

Spending time with family, easily having a shower or bath and driving a car are the top day-to-day moments that most people would miss if they could no longer do them. However, seven in ten (69%) people – over 36 million[1] people – fail to associate good health with being able to do activities like these, according to research released by Bupa Health Clinics which surveyed over 4,000 people across the UK.

Other pursuits which made the ‘Miss List’ include eating out, sport and exercising, and cooking. However, the role health plays in enjoying these everyday things and achieving goals in life is taken for granted by many adults.

Good social circle

Two fifths, or 20 million people[2], have never considered how good health helps them achieve their ambitions in life. Meanwhile, almost half (49%) have never considered the impact that being fit and well has on professional success; forty-four per cent overlook the role health has in maintaining a good social circle; and over a quarter (27%) don’t think about it in relation to simply feeling confident and being independent (27%).

Appreciate life more

Despite the findings, 91% of people admit they’ve had an experience which has made them reassess and appreciate life more. Top moments which sparked a new sense of gratitude are having a health issue[3] (44%), losing someone close (42%), becoming a parent (30%), witnessing world events on the news (23%) and getting married (22%). And yet results also found that two thirds of Britons admit they take their health for granted. Additionally, four in five think they could appreciate their daily moments like walking the dog or taking part in sport more – activities that may seem mundane, but which we’d miss if we could no longer do them.

Top 10 everyday moments people would miss if they could no longer do them

• Socialising (56%)

• Showering and bathing comfortably (55%)

• Driving (43%)

• Eating and drinking in a restaurant (34%)

• Sport and exercise (27%)

• Playing with kids (26%)

• Cooking (23%)

• Entertaining friends and family (22%)

• Working (16%)

• Food shopping (15%)

Maintaining positive well-being

Small things can make a real difference to our well-being. Whether it’s building time into the day to get out for a walk or spending time connecting with friends and family, maintaining positive well-being can help us live the lives we want to.

We all have mental health as well as physical health, and each can fluctuate over time. The two are closely linked, and changes in our physical health (such as a long-term illness) can impact on our mental health. Equally, mental health problems (such as depression or anxiety) can also affect our physical health, so it is important that we look after both to maintain our overall well-being.

Taking care of the little things

Being more aware of the great things health allows us to do means we’re more likely to take care of the little things. Whether it’s an injury that needs a physio’s once over, an annoying cough that won’t go away or a health concern that is keeping us awake with worry, these are all things that can, mostly temporarily, stop you enjoying the everyday activities if ignored. For more information, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.

Source data:

[1] 36,468,015.2 adults.

[2] 40% of UK adults.

[3] A health issue is defined as anything from an injury like a twisted ankle to more serious illnesses that need long-term medical treatment.

The research surveyed 4,062 people over the age of 16 and was commissioned by Bupa Health Clinics and carried out by Censuswide in June 2017.

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