Image courtesy of John&Fish, Flickr

Christmas opening hours

Our offices close for Christmas on Friday 23 December and reopen on Tuesday 3rd January.

Please refer to your policy documentation or in the unfortunate event of an emergency insurance claim call Amit Patel on 07947 152 018. For urgent wealth management queries please email jonathan@pkpartnership.co.uk

Wishing you a Merry Christmas and we look forward to speaking in 2017.

Image courtesy of Flickr_Sheila Sund

Make writing a Will and your Lasting Power of Attorney one of your New Year Resolutions

It is at Christmas we spend most time with our loved ones and reflect on the year that has passed. Sadly we are seeing a trend of many individuals who haven’t got a Will in place to provide future security for loved ones. By writing a Will and making sure you review it when your circumstances change, you are safeguarding loved ones in the event of your premature death.

It’s a common misconception that assets automatically pass to a spouse or registered civil partner on death, but if you don’t have a Will in place your estate will be distributed under the UK rules of intestacy, which means the law decides who inherits your estate and in what proportions. During the Christmas break please take a moment to read our Guide to Estate Planning.

Wishing you a Merry Christmas.

We look forward to speaking in 2017.

Image courtesy of Flickr_Sheila Sund

Income tax saving for couples

Income over £150,000 is taxed at 45%, and the personal allowance is withdrawn where income (less certain deductions) is more than £100,000. You and your partner might be able to reorganise your financial affairs to avoid exceeding one of these limits. However, there might be capital gains tax (CGT) to pay on switching ownership of an investment if you are not married or in a civil partnership.

In 2016/17, you will be able to receive £1,000 of savings income tax-free if you are a basic rate taxpayer, and £500 if paying tax at the higher rate. If you or your partner has little or no earnings or pension income, you may also be able to benefit from a 0% tax rate on up to a further £5,000 of savings income. You might be able to shift assets between you to make the best use of these limits, minimising tax on your savings income.

In 2016/17, £5,000 of your dividend income will be tax-free regardless of your tax status, so there again could be scope for tax saving by reorganising your shareholdings.

Child benefit – Child benefit is, in effect, withdrawn where either partner has income of £50,000 or more.

Withdrawal is total if income is over £60,000, and partial for income between £50,000 and £60,000. You may be able to keep some or all of your child benefit by switching income between you and your partner, or by taking other steps to bring your income below one of these limits.

Partner’s salary – If you are in business, you could pay a non-earning partner a salary, on which you will get tax relief. You normally have to keep PAYE records even if the salary is below the national insurance contributions (NICs) limit, which is £486 a month in 2015/16. If, however, the salary is between £487 and £672 a month, your partner will avoid paying any NICs, but will still qualify for state benefits.

As well as salary, you can pay an employer’s contribution to your partner’s personal pension plan. There is no tax or NICs on the payment itself, and it should be an allowable business expense. Be warned that the total value of your partner’s salary, benefits and pension contributions must be justifiable in relation to the work performed. Alternatively, you could plan ahead to share the profits of your business by operating as a partnership in 2016/17. You both need to be genuinely involved as business partners, though not necessarily equally.

You might be able to save tax by switching income from one spouse or partner to the other. From the start of the next tax year, you should aim to use up both individuals’ personal allowances (£10,600 in 2015/16 and £11,000 in 2016/17) and minimise any higher and additional rate tax.

PK Partnership cost of financial advice

Understanding income protection gaps: awareness, behaviour and choices

Failure to protect income in the event of disability or illness poses a significant challenge, both in traditional and emerging economies. For families, the impact of illness or disability on income can be devastating.

But not only individuals and households suffer. Income protection gaps can also profoundly affect businesses, governments, and the economy as a whole, undermining productivity and eroding social ties.

The need for such protection is acute and rising. In the developed world, demand for government support – the traditional source of relief – is rapidly outpacing supply. At the same time, disability levels are rising due to an aging population, tighter labour markets and improved medical diagnosis, which can confirm illnesses and disabilities such as mental health problems that were not recognized, let alone treatable, in the past.

Mindful of the challenges, Zurich Insurance Group, the global insurer, and the Smith School of Enterprise and Environment at the University of Oxford embarked in 2015 on a longer-term project to study income protection gaps.

Gaining better insights into key challenges

To better understand people’s attitudes toward income protection, this latest study by Zurich and the Smith School, the second in a three part series, examined many of the factors contributing to IPGs. Surveys done with individuals in Australia, Brazil, Germany, Hong Kong, Italy, Malaysia, Mexico, Spain, Switzerland, the UK, and the U.S., in March and April 2016, and later in the United Arab Emirates (UAE), aimed to learn about people’s awareness, knowledge, and experiences of income protection insurance.

The information has relevance both for those seeking to protect themselves, and in many cases their employers, as well as providers of income protection products and services. Ultimately, the information obtained in this study points the way toward possible improvements in the approach, and general issues of relevance to public policymakers and others.

Experience plays a greater role than financial literacy

One of the most important and surprising findings of the survey was that having first-hand experience, or (to a lesser extent) knowing someone who has had such experience with income protection gaps, was one of the biggest factors influencing demand. Experience trumps formal or abstract knowledge of insurance. Moreover, this holds true across all income levels. This is confirmed by behavioural research demonstrating that ‘subjective knowledge’ gained through life experience has a much more significant influence on people’s actions and decision-making than ‘objective knowledge,’ which is abstract and formally learned. People who have income protection insurance are not necessarily more financially literate. A potential area for future investigation would be how to replicate experience before something bad happens, including using technology-based solutions.

Misperceptions about the cost of income protection

The main reason people cited for lack of income protection insurance was a perceived high cost. But how much they would be willing to pay for such insurance – on average, remarkably consistent at 5 percent of respondents’ monthly income – was considerably higher than the average cost of income protection insurance for most people. Clearly, people’s perceptions about the cost of income protection need to be examined and, where it makes sense, addressed.

Men and full-time workers are more likely to be insured

Men are more likely than women to have income protection, but household status as primary or secondary wage earner is more important than gender.

Gender gaps existed in about half of the countries surveyed, particularly those where overall demand for insurance was lower. Men are more likely to have insurance overall. But in some countries, an individual’s position in the household as a primary or secondary wage earner played a greater role determining demand for insurance: sole or primary wage earners are more likely than secondary earners to have insurance.

Income Protection solutions and advice: the perceived and preferred role for employers and governments

Appetite for income protection may reflect a reliance on public programs in countries where a relatively high level of security has traditionally been available. This could become problematic in countries with high levels of state support as access to benefits is curtailed, and claims periods are shortened.

Governments have an important role to play. For example, for many, they are the preferred provider of income protection cover. In today’s world of constrained public budgets, most likely this role will be realized in the form of public-private partnerships, or ‘PPPs.’ For those who do not work for large companies or sharing platforms, other avenues must be found to form partnerships to close the income protection gap. Pooling such groups together, perhaps across industries or even geographies, would help to diversify risk, thus stabilizing prices for such individuals.

Work status plays a major role: the rise of the ‘gig’ economy is putting more individuals at risk.

The fact that a majority of people would prefer income protection cover as part of a benefits package, even if this means slightly lower take-home pay, shows the potential value of offering income protection insurance through the workplace. Workplace solutions typically involve income protection-related insurance coverage as well as rehabilitation services and prevention and well-being initiatives. But, in practice, employees may not know much about income protection, and may not be aware of its availability; they may fail to understand its importance to them. In addition, such arrangements tend to be most prevalent amongst large employers and multinational companies, meaning they are not currently an option for the majority of workers.

The diversity of preferred sources of income protection coverage and advice, from banks to employers to insurers and insurance brokers, points to a need for multiple-solution models that include both the public and private sectors.

A changing workforce

The changing nature of labour markets already has major implications for the way workers access income protection. An increase in short-term contracts and part-time positions is leaving many workers exposed to risk. There is an urgent need to design new channels for income protection solutions that are both ‘portable’ (across jobs and borders) and appropriate to different country contexts.

 

Image Courtesy of Flickr_Ishan Manjrekar

Autumn Statement Snapshot 2016

The Autumn Statement speech was delivered today at 12.30pm today by the new Chancellor of the Exchequer, Phillip Hammond, and is the first set of official economic forecasts since the UK referendum vote to leave the European Union.

Autumn Statement

The government updates their plans for the economy twice a year (in the Budget and Autumn Statement) and we have highlighted below the key points arising from the Chancellor’s speech.

PLEASE NOTE: This snapshot is not intended as an in-depth analysis of the Chancellor’s speech (we will leave that to the industry commentators and experts) but we hope this brief summary helps you gain a quick grasp on the key points delivered by the Chancellor from the dispatch box.

For full details of the following headlines (and more) you may wish to visit the HM Treasury website.

Budget Changes

• The Spring budget in 2017 will be the last

• The budget will only take place in the Autumn with effect from Autumn 2017

• From 2018 there will be a ‘Spring Statement’ but no major fiscal announcements

Forecasts

• The Chancellor announced adjustments to previous growth forecasts from those previously announced in the 2016 Budget Statement.

  • Growth forecast for 2016 – revised up from 2.0% to 2.1%
  • Growth forecast for 2017 – revised down from 2.2% to 1.4% in part due to uncertainty following the Brexit vote
  • OBR borrowing forecast revised up from £55.5bn to £68.2bn for 2016/17
  • OBR borrowing forecast revised up from £38bn to £59bn for 2017/18
  • OBR states national debt now 87.3% of GDP for 2016/17 up from 82.6%
  • OBR states national debt now 90.2% of GDP for 2017/18 up from 81.3%
  • The Government no longer seek to deliver a surplus in 2019/20
  • Public finances should be returned to balance as early as possible within the next parliament
  • Departmental spending plans set out in the 2015 spending review to remain
  • No change to overseas aid budget – currently 0.7% of GDP

Taxation / Welfare / Finance

• Personal allowance to rise to £11,500 from 2017 / £12,500 by the next parliament

• Higher rate of tax threshold to increase to £45,000 from 2017 / £50,000 by the next parliament

• Corporation Tax to be cut to 17% by April 2020 as planned

• Insurance Premium Tax to rise from 10% to 12% in June 2017

• National living wage to increase in April 2017 from £7.20 to £7.50

• Universal credit taper rate to be cut from 65% to 63% from April 2017

• Rural rate relief will increase to 100%

• April 2017 – Salary sacrifice schemes to fall in line with normal taxation rules (with certain exclusions and certain areas protected for a period)

• Government commits to maintain the ‘triple lock’ on state pensions

• Government to shut down inappropriate use of VAT

• Employee shareholder status to be removed

• £102m from Libor fines to be allocated to armed forces and emergency services charities

Productivity Gap

• Raising productivity is essential for a high wage, high skill economy

• New national productivity investment fund of £23bn to be introduced over five years

Infrastructure/Transport

• Ambition for UK to be a world leader in 5G – £1bn to be invested in digital infrastructure

• £400m venture capital fund made available to support technology firms

• Additional £1.1bn for English local transport network

• Major projects to continue to be implemented across the Northern Powerhouse

• £390m made available for low emission and driverless car technology

Housing

• £2.3bn housing infrastructure fund to support building of up to 100,000 homes in high demand areas

• £1.4bn to deliver 40,000 additional affordable homes

• £3bn homebuilder’s fund for 200,000 new homes and £2bn to build on public sector land

• £3.15bn to build 90,000 affordable new homes in London

• Private rental – letting fees applied to tenants to be banned as soon as possible

Health / Education / Child Welfare

• 2017 will see the introduction of tax free childcare

Excise Duty

• Fuel duty frozen for seventh year in a row

Devolution

£1.8bn allocation from the local growth fund to English regions

Should you have any queries please do not hesitate to contact PK Partnership on 020 8681 4994.

 

Image Courtesy of Patrícia Almeida on Flickr

Flooding advice for businesses

 

Flooding is one of the most common and widespread natural source of damage to properties in the UK. The effect of a flood is devastating and distressing for a business.

Flooding can cause serious damage

Flooding can not only cause serious damage to property, contents, production and ability to trade, it may also impact on employees, as well as deliveries that may need to travel through flood affected areas to reach you. Equally, it will affect the ability to supply your customers. Business turnover may not recover to pre-loss levels for many months, if not years. Indeed, some businesses fail to recover at all.

Other than moving location, you cannot always stop a property at risk of flooding from being deluged. But there are measures that can be put in place to minimise the damage and speed up the repair time.

Leading UK insurer Aviva has put together a commercial flood guide which will help you prepare for a flood as well as what to do and during a flood.

 

 

 

Image courtesy of Flickr_Pink Sherbert Photography

The Three D’s: Death, Divorce and Dementia

 

On his way to a recent appointment our Director Prakash listened to a an interview on Radio 5 between Adrian Chiles and money expert Martin Lewis on what they called ‘The Three D’s’.

Click here to listen to the interview which is well worth a listen! I am sure you will agree that the clear message is how important it is to get the correct financial planning in place, as stories featured in the interview are unfortunately all too common and something that you experienced.

For more information and advice on financial planning please contact PK Partnership on 020 8681 4994

 

 

 

 

 

 

 

Image courtesy of Flickr_Pink Sherbert Photography

Auto-enrol fines spike as firms miss deadlines

The Pensions Regulator issued 576 escalating penalty notices to employers that failed to comply with auto-enrolment rules between July and September, more than 15 times the amount in the previous three months.

Between April and June, TPR handed out 38 escalating penalty notices. Employers that receive such a notice will receive a penalty of between £50 and £10,000 per day, depending on their size.

The number of fixed penalty notices given out, where employers are fined £400, increased more than four times on the previous quarter’s amount.

Between July and September 3,728 fixed penalty notices were issued compared to 861 between April and June.

TPR says the increase in penalties comes as there was a 50 per cent increase in employers reaching their deadline to comply with auto-enrolment rules.

The latest compliance and enforcement bulletin from the regulator says many reasons employers give for non-compliance, for example illness or being short-staffed, are not “reasonable”.

TPR auto-enrolment executive director Charles Counsell says: “We recognise that employers have unique circumstances and challenges, but the law is still the law. Employers who are struggling should contact us, we are here to help – do not wait for a fine.

“The vast majority of employers are successfully meeting their auto-enrolment duties and are doing the right thing for their staff. A small minority do leave plans too late but in most cases the nudge of a compliance notice is enough to get them back on track and avoid a fine.”

Pensions minister Richard Harrington adds: “So far, more than 250,000 employers are helping more than 6.7 million people save into a workplace pension. The duty is being extended to all UK employers and they must ensure they enrol their staff into a scheme by the deadline for their firm, it’s the law.”

 

PK Partnership cost of financial advice

5 tips to ensure your jewellery is correctly insured during Diwali

Banks are no longer storing jewellery. In the house there are only so many places one can hide jewellery and thieves know the obvious places, typically under the bed and between the floor boards. Gold is highly desirable to criminals due to the speed that it can be exchanged for large sums of cash.

Amit Patel, Director of Croydon based chartered insurance brokers PK Partnership said, “with the majority of banks no longer storing jewellery, people have little option but to keep their items at home but they are not always adequately protected. This is not by any stretch just affecting high net worth individuals.”

9 out of 10 items are underinsured and it is not just the material value of the possessions, many are passed down through generations and hold a huge sentimental value.

Amit added, “With a lot of jewellery being handed down through generations of families it is often hard to prove the value of items as people do not have valuation certificates, something we would strongly recommend. Jewellery is often their life savings.”

5 tips to ensure your jewellery is correctly insured 

1. Ensure that there is adequate safe protection in your home

Safes provide a secure environment within the home for your jewellery, precious metals, sentimental items and money. There are various types and designs of safe, all of which are suitable for different needs. The physical size of a safe does not always relate to the level of protection it can provide. Safes are rated in cash values, which is a method of classifying security safes by their security level. Manufacturers design their safes to meet various levels of security and these are designated by a cash rating from £1,000 up to £150,000. The jewellery rating of a safe can be calculated from its cash rating and indicates the value of jewellery that can be kept in it.

2. Have a professional valuation for all high value items

It is important that regular valuations of jewellery are carried out to ensure that items or collections are not underinsured and we recommend that these items are revalued at least every five years. It is important to remember that items should be valued for insurance purposes and not using auction or probate values.

A professional valuation should include a full description of the item including details of the stones and metals used, the stone’s carat, colour, clarity and cut and details of the settings.

3. Photograph all items of jewellery

4. Avoid wearing an accumulation of high-value pieces in areas or places that you don’t know

5. Turn rings around to conceal diamonds and stones and cover high-value watches with long-sleeved clothing when in busy, public areas

For more information please contact PK Partnership Private Clients Division on 020 8681 4994.

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A business loss you may not have considered

Do you run a business as a partnership or company along with other shareholder-directors? If so, have you considered what would happen if one of your fellow business owners was struck by a serious illness or died? You could find yourself having to accept a new – and unknown – partner/shareholder or even having to sell up at the worst moment. The key to avoiding such a situation is to have cash and the correct structure of agreement to buy out your colleague’s business interest.

If you already have one in place, make sure it is regularly reviewed, as values change.

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