Wealth Management Update – April 2016

SMiShing Scam

Well this is a new one!

It seems that to protect ourselves from opportunistic cyberthiefs, there is a never-ending, and growing, list of scams we all need to be aware of.

We all know to be wary of suspicious-looking emails and that we must not give out financial details to strangers. However, this new SMiShing technique uses text messages as a less threatening way to direct you to a website or ask you to call a phone number that looks legitimate.

The media recently reported an incident where scammers latched on to a genuine text message thread between a customer and his bank Santander (much as they may do with emails). They managed to convince him to disclose his banking password and then withdrew £23,000 from his account. The worst thing is that Santander will not refund the customer because he gave his details to the scammers voluntarily.

Scammers normally target sensitive details, such as your bank account numbers or credit card information, rather than cash payments. So if you get a text message asking you to visit a website or call a certain phone number, do not do it. Use the numbers or websites you trust and call the bank directly to verify that the message is legitimate.

Better to be safe than sorry, and better to be overly cautious than lose out to the ever-evolving techniques of the scam artists.

April – be tax return aware!

By the time you read this we will be in a new tax year, which means – for those of you who are the chosen ones – you will be receiving a notification to complete Self-Assessment Tax Returns. This may be either for your personal circumstances or for any trusts on which you are named as a trustee.

For personal returns, you have until October to file a paper return and the end of January to file online.

For Trust and Estate returns, it is not possible to complete your return online – dedicated software must be used. Therefore, if you or one of your trustees receives a notice to complete a Trust tax return, please contact us immediately and we can inform you about the few areas on the document that must be completed. It really is a 3 minute task. Do not leave it until later in the year, as it can be forgotten and you will be fined £100 per trust for not filing on time!

The Budget – a summary

Despite our concerns and speculation that pensions would be changed yet again, George Osborne steered clear of meddling any further in the already bewildering world of pensions, and focused instead on what he calls the “putting the next generation first”.

The key financial announcements are listed below; this is not an exhaustive list, simply the ones that are most likely to affect you:

• Personal Allowance increase to £11,000 as of 6th April, with a further increase to £11,500 in April 2017.
• Higher rate tax threshold increase from £42,385 to £43,000 in April 2016, with a further increase to £45,000 in April 2017.
• National Insurance Class 2 (self-employed) to be discarded as of 2018.
• Capital Gains Tax rates reduced from 28% to 20% for those with gains in the higher rate tax bracket and from 18% to 10% for those with gains falling in the basic rate tax bracket

NOTE:  CGT on sales of residential properties that are second homes or buy-to-let properties (i.e. not your main residence) is not reducing and will remain at the old rates of 28% for higher rate tax payers and 18% for basic rate tax payers.

• ISA allowance increase to £20,000 from April 2017, including cash, and stocks and shares. This will remain at £15,240 for the 2016/2017 tax year.
• A new Lifetime ISA. This has a deposit limit of £4000 per annum; for every £4 invested the government will add £1. This special offer is available to anyone between the ages of 18 and 40 years; you can continue to invest in the account until you are aged 50, however you will not receive any further government contribution. The money saved can be used by first-time buyers for property up to £450,000 or by savers over the age of 60 as a tax-free withdrawal –obviously, you must therefore hold the account until you reach the age of 60.

NOTE:  If any funds are withdrawn from the Lifetime ISA for purposes other than those listed, the government bonuses will be withdrawn and a 5% levy charged on the withdrawal.

Although we are currently focused on this budget’s new announcements, we must not forget those from the last budget that will be introduced for this tax year:

• Pension Lifetime Allowance will reduce from £1.25m to £1m. If you are now above the new allowance, you can apply for the newly introduced Individual Protection. If your benefits were in excess of £1.25million as of 5th April 2014 you can still apply for Individual Protection for 2014.
• Pension Annual Allowance will be reducing at a rate of £1 for every £2 over a “net adjusted income” (income minus reliefs: trading losses, gift aid donations, gross pension contributions) of £150,000, to a minimum annual allowance of £10,000. This means that anyone with income over £210,000 will only be able to contribute £10,000 to a pension each year.
• A personal savings allowance will be introduced where basic rate tax payers can earn £1,000 per year of tax-free interest. For higher rate tax payers the allowance will be £500.
• A new dividend allowance will be introduced where the first £5,000 of dividend income is tax free. Any dividend income over this allowance will be charged at a rate of 7.5% within the basic rate tax bracket, 32.5% in the higher rate bracket and 38.1% in the additional rate bracket.
• Any withdrawals from an ISA can now be replaced without the replacement funds counting towards that year’s allowance. This will give much more flexibility.

Even though we have summarised the main points and missed out some of the less significant changes (sugar tax!) of this budget, this is still a lot of information, especially when those announcements from last year that are due to come into effect are included! If you are not clear on any of the above, or feel you need to talk anything through, please call or email the office and we can look at this on a more personal level for you.

Leaving Europe … too much disinformation

You are probably as bored as we are with the whole “leave, not leave” question. And, if you are like us, you are probably also finding it very difficult to establish real facts.

The “out” campaign claims that we will save £55m every day if we leave the EU. While there will be a net benefit, the £55m figure is a little disingenuous. A little digging has revealed some real facts about what we pay to the EU, and what we would save if we left.

In 2015 the UK paid £17.6bn – which is where the £55m per day comes from.

What we get back is:

• £4.9bn rebate (this is the rebate Mrs Thatcher negotiated in 1984)
• £4.4bn of regional and agricultural subsidies
• £1.4bn grants to private companies
• £800m aid payments (which are paid on our behalf, and so we do not pay them from our aid budget)

When these are deducted, the actual cost of being in the EU is £6.3bn per year, which equates to £17m a day.

So there you have it – the real cost of membership is £6.3bn per year. This is in the context of a total government spend of £750bn in 2015, and therefore it represents less than 1% of government spending. That said, if you piled £6.3bn up on your dining room table, it would be a BIG stack of money!

NB. For all you eagle-eyed readers that spotted the mistake in last month’s WMU, the referendum is of course on the 23rd June and not the 27th. Oops!

Book of the month

This month’s book is one that everyone should read to be fully informed. The ISIS Apocalypse: The History, Strategy, and Doomsday Vision of the Islamic State by William McCants gives a detailed history of the terror group, how it came to power, and its beliefs. After reading the book, you will be even more horrified about the mind-set of this group than you probably are at present. McCants clearly knows his stuff and, as a lecturer in political science for Yale University, he has reputation on his side.

Best Savings Selections

Top Three No Notice Accounts without Bonus

Top Three Monthly Interest Accounts

Top Three Cash ISA’s

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 April 2016 Edition