Wealth Management Update – May 2017

10 May 2017 | Wealth Management Update |

Probate fees – late U-Turn…..for how long?

As so many of you contacted us to check if the item in April’s Wealth Management Update about increases in Probate fees was an April Fool’s joke, we thought we would confirm that this was definitely not the case.

However, it has been announced that the increases are to be put on hold, as there will be no time to have them approved before the election on 8th June. This is not to say that they will not be introduced after the election – in fact, we are fairly confident that these fees will proceed, no matter which political party ends up in power.

To prepare for their eventual introduction it is worth thinking about what you can do to reduce their impact. Obviously, you do not want to create any unnecessary expense, just in case the government makes a U-turn and the whole idea is abolished … that would not be surprising, nor unheard of.

The cheapest and easiest way to reduce Probate fees would be by gifting. Once you have made a gift to an individual then this falls outside of your estate – maybe not for IHT, but definitely for the consideration of Probate fees.

The following gifting allowances are for IHT purposes, but they will also help in reducing your estate. You may:

  • give £3,000 per person per tax year. This can be carried forward one year
  • give wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great-grandchild, £5,000 for a child)
  • give normal gifts out of your income, for example Christmas or birthday presents; you must be able to maintain your standard of living after making the gift
  • make payments to help with another person’s living costs, such as an elderly relative or a child under 18 years
  • make gifts to charities and political parties

These gifts will reduce your estate in relation to IHT and Probate fees. However, if your concern is not IHT but rather the upfront and inflated fees to grant Probate, then perhaps larger gifts are the right choice for you.

If you have estate planning in place with us, then it is best to discuss with us any large gifts to see if your existing planning can be incorporated into the gift.

If the increases are approved, there are other ways to make provision for or reduce Probate fees. This is something that we will share with you if you want to come in to discuss this area of your planning.

Please do contact Rhianydd – rhianydd@penguinwealth.com – if you want to come in and discuss probate and/or IHT planning.


The LISA has been launched

The Lifetime ISA has been introduced and is being offered by some providers. The benefits of the LISA are recapped below.

  1. Lifetime ISAs are opened by individuals – you cannot open them jointly with someone else.
  2. You can open more than one Lifetime ISA during your life, but you can only open one per tax year and put money into one per tax year. Each time you apply for a new Lifetime ISA you will still need to meet the eligibility criteria for opening an account.
  3. Providing you open an account before you turn 40, you can pay into a Lifetime ISA up until the day before you turn 50.
  4. You can save up to £4,000 into a Lifetime ISA during each tax year, providing you are not saving more than the annual ISA limit.
  5. The annual ISA limit is the maximum total amount you can save into all of your ISAs combined each tax year, and any contribution to a Lifetime ISA counts towards this. The limit for the 2017 to 2018 tax year is £20,000.
  6. The government will give you a 25% bonus on the total amount you pay into your Lifetime ISA, not including investment interest or investment growth. (That means if you pay in the maximum amount of £4,000 in a year, you will receive a tax-free bonus of £1,000 that year.)
  7. Your Lifetime ISA manager will claim the bonus for you and it will be added automatically to your Lifetime ISA account. Your Lifetime ISA manager is the bank, building society or asset manager where you open your Lifetime ISA. You will receive your first bonus payment in April 2018. From April 2018 any bonus will be added to your account monthly.
  8. You can withdraw your funds including the government bonus, without charge, to help buy a first home worth up to £450,000 at any time from 12 months after you first save into the account
  9. After you turn 60, money you withdraw from your Lifetime ISA account is restriction-free and does not incur a charge.

If you have investments with us and would like to open a LISA for your children or grandchildren, then do please get in touch, again via Rhianydd, to discuss the pro’s and con’s of this offering.


Snap election

After categorically denying that there would be an election before 2020, Theresa May has called a snap election, and many are questioning this decision to change her mind.

In some ways, she was backed into a corner, as having her hands tied by other party leaders at every turn when making any decision has surely made Brexit negotiations difficult. But, in other ways, she has gone back on her word and her conviction, and this could cause trust in her to waver.

However, it would seem that trust has not been lost completely, as the election polls are indicating that Mrs May will win by a landslide. A big win would be good news for investments, as we are likely to see a surge directly after the results, but general advice is not to make any hasty decisions!

Within the first few days of the announcement we saw markets fall quickly. The FTSE 100 lost all the growth made so far this year, and similar movements were seen in the 250 and the All Share. This demonstrates, once again, how badly markets react to uncertainty. However, the initial impact on our average managed portfolio was just −0.5%, which we can most definitely attribute to the way the portfolio is diversified.

We cannot predict what will happen and we cannot rely heavily on the polls – as we have seen, they are sometimes not the best indicators! So we must set up our portfolios as best as we can and then accept the outcome and the fluctuations that come with it.

Rest assured, we will keep a very close eye on proceedings and do everything we can to make sure you are as protected as possible.


New NS&I bond – is it worth it?

We haven’t heard a lot about the new bond that NS&I have somehow sprung upon us.

The bond is available to all those over the age of 16 and requires a minimum investment of £100 and a maximum investment of £3,000. If you were to invest the maximum, you would earn approximately £202 over the bond’s three-year term.

So is it worth it?

At the moment, the Bond is offering 2.2% – a market leader compared with what is currently on offer. But, with inflation currently at 2.3%, are you actually getting any returns at all? Many critics claim not.

With having to lock cash away for three years and a maximum contribution of £3,000, many people are instead opting to take their chances with the equity market, in search of higher returns than what has been labelled a ‘scant return’ from NS&I.

However, for those more cautious investors who want a guaranteed return and do not need access to the money over the next three years, then this may be for you.

Each investment should be considered carefully and checked with your adviser, so if you have any doubt that this is the right thing for you, please get in touch.


Notes on Brexit

Into the Brexit abyss that has appeared whilst the EU settle on their principles of negotiation, Theresa May has launched a General Election. The surprisingly close date of the election means that the results will be coming in shortly before the UK is due back at the negotiation table, and the press will therefore be suitably distracted from the EU’s silence on the progress of Brexit. Whilst we can’t help but wonder if it is really necessary to hold an election right now (Mrs May has never had a Brexit-related policy fail to pass through Parliament), a politician wouldn’t be a politician if they weren’t able to make the best of any situation and deflect attention from somewhere it is not wanted – not that we’re cynical!

So we will be interested to see if David Davis heads back to Brussels in his role as Secretary for exiting the EU, or if he will have a new coalition sidekick (or perhaps even be replaced altogether…).

Book of the month

Half of this month’s book is not relevant and is pointless reading. BUT, the other half is absolute gold. Unshakeable: Your Guide to Financial Freedom by Tony Robbins, is the second book on financial theory and investments written by this loud American speaker.

Of course, there is a hidden agenda, and the fact that Mr Robbins is now on the board of a firm of financial advisers might indicate what that agenda is. Nonetheless, there is a great deal of good information in this book about how to invest and in particular on asset allocation strategies.

If you want to know more about how to invest and want to do some of that investing yourself, this is a good place to start.


Best Savings Selections

Top Three No Notice Accounts without Bonus

Name Contact £1 Gross % £500 Gross % £1k Gross %
RCI Bank UK www.rcibank.co
1.10 (min £100) 1.10 1.10
Yorkshire BS Via branch 1.15 (min £100) 1.15 1.15
 AA www.theaa.com 0.85 0.85 0.85


Top Three Monthly Interest Accounts

Name Contact £1k Gross % £5k Gross % £25K Gross %
National Counties BS www.ncbs.co.uk 1.25 1.25 1.25
Yorkshire BS  Via branch


1.14 1.14 1.14
 Paragon Bank  www.paragonbank.co.uk


 1.29 1.29 1.29


Top Three Cash ISA’s

Name Contact £1 Gross % £10 Gross % £100 Gross %
Hinckley & Rugby BS 0800 774 499 n/a n/a 1.20 (min £1,000 & fixed rate)
Paragon Bank www.paragonbank.co.uk n/a n/a 1.75 (min £500 and fixed rate)
RB of Scotland 0808 100 9510 n/a n/a 1.05 (min £20,000)


Please check with the terms and conditions before opening any account. If in doubt consult with your financial adviser directly as the above are for information only.

Source: Moneyfacts Magazine May 2017 Edition

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