Newsletter – Autumn 2015

By: | Tags: | Comments: 0 | October 28th, 2015

Lifetime Allowance Reduction

The significance of the reduction in the personal pension fund allowance to £1m in the last budget should not be overlooked by long serving and higher earning practitioners, especially those members of the NHS Superannuation Scheme.

To avoid the imposition of an income tax surcharge on your accrued pension benefits, it is important to assess your position and take the appropriate action. If your liability is £2,000 or less then you will be obligated to paying that with your annual tax bill. If your liability is greater than £2,000 in any one year, then you can opt for what is known as “Scheme Pays”, that is allowing the NHS to meet the additional liability from your accumulated pension pot. This will not only incur a 3% charge but also have the effect of reducing the subsequent increase in your superannuation benefits. For those with private pensions, we have a third way, that is a solution whereby you can allocate investment growth to other members of your family. To identify whether you have a problem, it would be helpful if you contacted the Pension Schemes Office in Fleetwood to obtain both a pension input statement and a pension savings statement for each of the last two financial years.

For further information on this bespoke solution to protect your pension and reduce your tax liability, please contact us at the earliest opportunity.

Pensions Freedom

The realistic threat of the removal of higher rate tax relief means it would be prudent to consider maximising your pension contributions if circumstances and cash flow permit. Not everyone wants or needs advice but most professionals would benefit from the wise counsel of an experienced adviser. An adviser who, ideally, is a business owner rather than just a company rep! Pensions offer a tax efficient means of saving for retirement but they should only form part of one’s long term plan. The money invested is tied up until age 55 at the very earliest so careful consideration should be given to whether that commitment is appropriate in your circumstances.

Stock Market Fall

The recent global stock market falls consequent upon the Chinese currency devaluation will have had a negative impact upon savings and pension portfolios. However, it goes without saying that those of you with portfolios on our various investment platforms are invested for the medium to long term and have accepted the short term volatility inherent in the asset classes in which your savings are held. Markets are always vulnerable and sensitive to sudden events; indeed, often they are waiting for a trigger to bank profits and prevent overheating.

In this instance, the Greek debt crisis, worries about economic stability in Europe and the Chinese stock market have all combined to trigger an implosion. For those approaching retirement and who share the view that a serious implosion, similar to 2008, is imminent and are worried that any recovery will come too late for them, a switch to cash would be understandable. My suggestion would be to speak to your personal investment consultant before making any such decision.


The individual annual allowance is now £15,240 and can comprise of a mix of cash and stocks & shares or all of either. Now that undrawn pension funds, prior to age 75, are IHT free, it may be prudent, for those of a certain age, to consider drawing money from their ISAs as opposed to their pensions. In the event of death, any savings within an ISA form part of your estate for IHT.

To maximise your ISA contributions for the year, you can either increase your direct debiting authority or make a lump sum payment. Again, if you are concerned about the direction of global markets, then making monthly contributions will allow you to take advantage of pound cost averaging (talk to us!).

Interest Rates
There has been concern in some quarters that rates will rise towards the end of the year leading to lenders increasing fixed rate deals. Since then we have had the Chinese currency devaluation and consequent global stock market falls with the result that the likelyhood of an imminent rate rise having receded. Whether you borrow money and at what rate should be determined as much by your circumstances as by the cost of borrowing. With rates at an historic low, ‘the only way is up’ as the song goes. So it is wise to factor in an increase when it comes to budgeting. Indeed, many lenders will do this in assessing affordability.

Many people see the purchase of a house or a flat as an investment. It should not be viewed as such. Your residential status should ideally be determined primarily by your aspirations and circumstances. There are any number of factors that should determine whether you even purchase at all:

(i) Do you want to buy a practice?

(ii) Are you sure you will remain in the area in which
you are buying?

(iii) Can the property be easily let if you do need to

(iv) Will your lender accommodate you?

A good financial adviser will establish what your long term aims are whilst an estate agent or company/bank rep is only interested in securing a sale, regardless of its future implications. We can often help clients secure funding for buy-to-lets, let-to-buy and for practice purchase by ensuring the presentation is correct. The advantage we have is that we are more familiar with each lender’s criteria in an ever changing market. One of our clients applied on his own last year and succeeded in obtaining one declinature after another. Once we identified the problem, we managed to raise the funds required. Please contact us for a professional appraisal of your requirements and an objective assessment of the options available.

Credit Score

I have mentioned before the importance of a good credit rating. It’s crucial in borrowing money and I suggest that you secure a free credit check through Experian before applying for finance to avoid being both disadvantaged and embarrassed. For specialist mortgage advice please contact us on 01689 607007 or at

Metrobank and Child & Co.

It is not often that I extol the virtues of a bank (largely because they don’t have any) but Metrobank is working hard to change the image of our high street bankers. I have had great success in arranging both practice finance and domestic mortgages with Metrobank, one all American import which we can be pleased with. Not constrained by the effects of the banking implosion of 2008 and the subsequent fall out of strict borrowing criteria and more onerous lending conditions, Metro is keen to offer finance to both medics and dentists on very favourable terms.

Child and Co are my personal bankers. It is a private client bank now owned by RBS. There is only one branch and that is the prestigious building situated at No 1 Fleet Street. If you require a more personal service from a bank that is more likely to appreciate your status, aspirations and financial requirements, then please allow me to introduce you to either the business banking manager or a private client manager.

Please contact us for help with a business plan and presentation for finance.


Talk about something that is too good to be true! This is a valuable and innovative way of both investing and borrowing. However, it is not without risk on either side as has been reported in the press recently.

Perils of Incorporation

On the advice of your accountant, many of you will have incorporated. That is, trade as an employee of your own limited company. We all want to save tax and it is not our role to advise on your personal tax position or question the advice of accountants; they have their own professional indemnity insurance. However, it should be appreciated that there is a flip-side to the obvious benefits of the tax savings. Firstly, some sickness insurers will not cover dividend income or those without a history of dividend payments for say, three years and, secondly, many lenders will not consider dividends for those without at least one year’s company accounts.

Furthermore, some lenders will not include retained profits when assessing the amount they are prepared to lend. Also, dividing your earnings up between members of your family can reduce your tax liability but this, too, will restrict your borrowing capacity. We have had at least two such instances in the past year where our clients’ borrowing ambitions have been thwarted by incorporation. So, if you’re considering incorporation, think about any imminent borrowing requirements before committing yourself.