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Wealth Management Update – May 2020

Some good news…

Let’s start with some good news … many people’s car insurer is Admiral (other car insurance companies are available) and they have informed us that they will be giving £25 for every vehicle you have insured with them. Now, this may not seem very exciting or to be a lot of money but they intend to do this for all of their customers and will be giving away a total of £110 million – now that’s a lot. They are doing this because there are fewer cars on the roads and that means fewer claims. They could have kept that £110 million for themselves but instead they are spreading the joy!

 

In the same email they described how they are making the lives of NHS and emergency service workers easier with regard to their insurance; they have set up a support fund of £4 million; and are prioritising the retention of their staff. This was lovely to hear when all the news these days seems to result in feelings of dismay.

 

Admiral aren’t alone – other car insurance companies are doing the same and we am sure more will join. Also, Barclays (and we’re sure other banks) have announced that customers will not be charged overdraft fees until 9th July to help with unforeseen costs during this time. Some mortgage companies are offering 3-month mortgage “holidays” to help those in financial need. The list goes on, and to write down all the little things (and yes they are little) that companies are doing to try to help would make for a big article.

 

It’s these little things that made us pause and reflect on how much everyone has come together during this time, how everyone is going out of their way to make the best of things, to remain positive and to support those in need. Whether it is big government announcements on aid for those in need, someone checking up on a neighbour or just staying at home, all these acts carry their own strength and meaning. We have realised that it is the little things that make the big things count, and we hope this continues long after our world rights itself again.

 

 

Small business support

Even MORE good news (if you are looking on the bright side)! The Chancellor, Rishi Sunak, has announced that small firms are now able to access 100%-taxpayer-backed loans of up to £50,000 within days of applying.

 

The previous schemes were difficult to apply for and slow to come to fruition, putting small firms at risk of liquidation without a quick injection of cash.

 

The loan terms are that no capital or interest repayments will be due for one year – the government will pay the interest for the first 12 months. Unlike the previous loan scheme, banks will not retain any of the risk – which could amount to billions or tens of billions of pounds depending on how long the crisis lasts.

 

Although Sunak came under pressure to underwrite all loans, not just those up to £50,000, he is not prepared to do so as he must balance the risk to the taxpayer with the needs of small businesses.

 

There will be mixed opinions about the scheme, some praising the fact that thousands of businesses could be saved by this lifeline, others concerned about future tax rises and a growing deficit, which are the likely outcomes of such colossal government borrowing.

 

 

Business owners – do you have the right cover?

Let’s learn something positive from this terrible situation. Many of our clients run their own business, so this article is for them. The current situation with Covid-19 has highlighted to smaller organisations that they are not protected for unforeseen events in ways they should be. Whilst many businesses will insure such things as equipment and premises, they overlook what the loss of key people would do to their business.

 

So, some of the cover you should consider when the world returns to some form of normality:

  • Key person cover: This protects a business against the loss of a key employee through an event such as death or serious illness. If you take a moment to think about what the loss of some specialist skills or knowledge would do to your company, the effect is likely to be massive.

 

  • Loan protection: If a loan guarantor within your business dies or has a serious illness and the loan is required to be repaid, it could have massive repercussions, particularly if the loan was taken out with third- party security (e.g. a director’s home). Make sure to take out cover for this eventuality, to protect the business but also your employees and their

 

  • Shareholder protection: Provisions should be put in place to protect the financial interests of remaining shareholders and to ensure the business is able to continue if a shareholder were to die. It will also ensure that the deceased’s family receive the correct

 

  • Relevant life cover: Individual life cover that would offer tax-efficient death-in-service benefits for high earners or other employees should be considered.

 

Whilst not all of these insurances will be relevant to your business, it is worth investigating to be sure that you have all the necessary protection in place if the worst were to happen. We believe we should all come away from this dismal period better prepared than ever for the future.

 

 

NHS pension scheme update 

This may not be as exciting as the previous articles but it is still worth a read. Pensions are always in the news but recently the NHS pension scheme has received a great deal of attention, not least from us. The system was (and still is) broken in so many ways and some long-lasting fixes should have come into effect in this new tax year. However, with everything else that is going on, some of the problems will just get a sticking plaster for a while longer.

 

Some of the changes the NHS have had to embrace over the past few months include relaxing the rules for retirees – those returning to the NHS to help with the Covid-19 situation will not be negatively affected through their pension for their temporary return to work, which is great news! Some form of death benefits will also be reinstated for those returning to the frontline, which will bring peace of mind to those workers and their families if the worst were to happen.

 

The increase in the “adjusted” and “threshold” income cutovers to £240,000 and £200,000, respectively, effective 6 April, is expected to lift all but the highest earners out of the “taper trap”. This does appear to be true at first sight but it will become apparent as time goes on if the rules will continue to be adjusted in line with earnings to keep the tax trap at bay.

 

 

Watch out, scammers about …

Please be aware that you may receive an unsolicited call from a company calling themselves J. Cam Investments Ltd. They will tell you that they are aware that you have made various investments and have been unable to recover your money. They will tell you that on payment to them of 10% of the money that you are owed they will send you all the money within a few days followed a few days later by the refund of your 10% outlay. They will also advise you that the only way that you can pay the 10% is by a banker’s draft.
Please ignore these calls and be sure to report them to the correct authorities should you receive them over the coming weeks and months.

 

Now this is definitely not good news but we thought you should know. Read the article quickly and then move on to the next where more good news awaits!

 

Nothing seems to stop scammers. A new scam involves Prudential. An email is received from <a person’s name> @prudentiaplc.co.uk or prudentiasl.com which asks for resolution to settle an account payment.

 

Please do not act on such emails, including opening attachments or clicking on links they may contain. Prudential advise that the sender should be blocked – you can usually do this by right-clicking on the email address, select “Junk” and “Block sender”.

 

If in doubt, contact Prudential by whatever means you currently can. Some providers may have closed their phone lines but many are offering web chat or email as an alternative.

 

BEST SAVINGS SELECTION

Top three Cash ISAs 

Name Contact £100

Gross %

£1,000

Gross %

£5,000

Gross %

Al Rayan Bank alrayanbank.co.uk 1.11 1.11 1.11
Virgin Money virginmoney.com 1.01 1.01 1.01
Paragon Bank paragonbank.co.uk 1.00 1.00 1.00

 

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.co.uk May 2020

Image provided by: Admiral Insurance

 

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