Monthly Archives: July 2023

10 REASONS TO GET YOUR TAX RETURN FILED NOW

BRITISH WORKERS OVERPAY £8.2BN IN TAX DUE TO WRONG CODES

According to new research, more than two-fifths (43%) of UK adults who have checked their tax code have found they are on the wrong one. While a fifth (20%) of those who were on the wrong tax code were underpaying, almost three-quarters (71%) were overpaying as a result.

Those who paid too much gave the tax man £694 more than they were supposed to on average, with one in seven (13%) overpaying more than £1,000 – this totals £8.2bn in overpayments because of wrong tax codes.

CLAIMING BACK OVERPAID TAX

With only a third (36%) of UK adults comfortable with claiming back overpaid tax, around 34 million individuals need clarification about the process, many of whom could currently be owed an unclaimed tax rebate.

Conversely, two-thirds of UK adults (67%) believe they are on the correct tax code, but just 38% know this for sure, and taxpayers who haven’t checked their code have yet to check their code for two years on average.

SOONER RATHER THAN LATER

However, nearly two in five (38%) say they have noticed a change in the amount they pay in Income Tax in the past three months.

Filing your tax return can be daunting, but there are plenty of reasons why you should get it done as soon as possible.

HERE ARE 10 REASONS TO FILE YOUR TAX RETURN NOW:

1. Avoid penalties: The earlier you file your tax return, the less likely you are to incur late filing penalties. These can add up quickly and put a dent in your finances.

2. Reduce stress: Filing your tax return early allows you to avoid the last-minute rush and reduces stress associated with meeting deadlines.

3. Get your refund faster: If you’re due a tax refund, filing early means you’ll receive your money sooner, which can help pay off debts or make new investments.

4. More time to pay: If you owe taxes, filing early gives you more time to budget and make payment arrangements.

5. Avoid errors: Rushing through your tax return increases the likelihood of mistakes, which can lead to penalties or delays in processing your return. Filing early gives you ample time to double-check your information and make necessary corrections.

6. Maximise deductions and credits: Filing early gives you more time to gather documentation and ensure you claim all eligible deductions and credits. This can help reduce your overall tax liability.

7. Plan for the future: Knowing your tax situation early allows you to make informed decisions about your finances for the coming year, including retirement contributions, investment strategies and other financial planning.

8. Beat the rush: Tax professionals tend to be swamped during the peak tax season. Filing early ensures you can secure an appointment and receive personalised attention from your tax advisor.

9. Protect against identity theft: Filing your tax return early can reduce the risk of identity theft, as it leaves less time for criminals to file a fraudulent return in your name.

10. Peace of mind: Finally, filing your tax return early provides peace of mind, knowing that you’ve fulfilled your obligations and can move on to other essential tasks.

ENSURE YOU’RE PAYING THE RIGHT AMOUNT OF INCOME TAX
Understanding your tax code is vital to ensure you’re paying the right amount of Income Tax. Those not on the correct code may find themselves out of pocket. If it’s wrong, you may contribute more or less than you should. And although overpaying means you should get a rebate – if and when it’s spotted – underpaying means you may have to pay HMRC a lump sum to make up the shortfall. If you are in doubt about your tax code, there are a variety of online resources to help you check, including salary and pension withdrawal calculators.

If you think you need to have your tax code corrected, you can call HMRC directly. Remember there are time limits to reclaim overpaid Income Tax, which is four years from the end of the tax year in which you are trying to claim. There are minimal exceptions to this – for example, if HMRC has made an official error – so if you are in any doubt, the earlier you contact HMRC, the better.

WANT TO DISCUSS YOUR FINANCIAL PLANS?
Filing your tax return early offers many benefits, from avoiding penalties and reducing stress to maximising eligible deductions and protecting against identity theft. Don’t wait until the last minute – start preparing your tax return now and enjoy these advantages. For more information, please get in touch with us.

THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH.

THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE

NORMAL MINIMUM PENSION AGE UPDATE

ESSENTIAL INFORMATION FOR YOUR RETIREMENT PLANNING

A significant change is on the horizon that may affect when you can access your pension money. We’ll guide you through this change and its potential implications, so you can confidently prepare for retirement.

The current normal minimum pension age (NMPA) is 55, which means you can start taking your pension savings once you reach that age. Some exceptions exist, such as if you’re experiencing ill health or have a lower protected pension age. However, the general rule applies to most people.

Starting from 6 April 2028, the NMPA will increase to 57. This change may affect you differently depending on your birth date. What does this mean for you?

WHAT ACTIONS SHOULD I TAKE?

IF YOU WERE BORN AFTER 5 APRIL 1973:

It’s a good idea to review any existing plans to determine if the change will affect them. You may need to plan for another couple of years of saving, which could alter your retirement income. No action is required if you didn’t intend to access your pension savings before turning 57.

Regularly reviewing your retirement plans is a smart habit, especially as you approach the age when you’d like to start accessing your pension savings.

IF YOU WERE BORN AFTER 6 APRIL 1971, BUT BEFORE 6 APRIL 6 1973:
You have two options – carefully consider which one best suits your circumstances.

OPTION 1: ACCESS YOUR PENSION SAVINGS BEFORE THE DEADLINE
If you don’t want to wait until you’re 57 to access your pension savings, you’ll need to begin withdrawing funds between turning 55 and 6 April 2028. Remember that you can access your pension savings without taking large or regular amounts; you can decide what’s right for you. However, obtaining professional financial advice before making any decisions is essential.

Remember that leaving your pension savings invested longer allows for potential growth. Also, note that taking taxable money from your plan (anything exceeding your tax- free entitlement) may reduce the amount you can contribute to your plan due to the Money Purchase Annual Allowance.

OPTION 2: WAIT UNTIL YOU TURN 57

No action is needed if you weren’t planning to access your pension savings before age 57. You can access your pension savings at any time after turning 57. However, if you crystallise funds before 6 April 2028, you’ll retain the opportunity to do so before age 57.

IF YOU WERE BORN ON OR BEFORE 6 APRIL 1971:
No action is required, as you will already be 57 when the change takes effect, and your retirement plans won’t be impacted.

NOT RETIRED YET? REVIEW YOUR RETIREMENT DATE
Even if you can no longer access your money at 55, your retirement date may still be set to your 55th birthday. It’s worth checking it now.

You can change your retirement date at any time, but the chosen date can affect your plan. For example, if you’ve invested in a lifestyle profile, your pension investments are designed to transition to lower-risk investments as you approach your retirement date. This helps reduce the impact of market fluctuations on your pot’s value.

If your retirement date is set to your 55th birthday, but you don’t plan to access your money until 65, your investments won’t align with your plans, potentially affecting the value of your pension savings when you’re ready to withdraw them

THINKING ABOUT RETIRING BUT TRYING TO FIGURE OUT WHERE TO BEGIN?
Retiring is a big decision. You’ll have different options when it comes to taking your money. We’ll help you find suitable options so you can make the right choices. To discuss your retirement plans, please get in touch with us for more information.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

PRICE OF ADULTHOOD

FINANCIAL RESPONSIBILITIES INCREASE SIGNIFICANTLY AFTER 25

Paying essentials such as utilities and council tax becomes a reality as young adults transition from student life to the workforce. The reality of financial responsibilities often accompanies the excitement of newfound independence during one’s mid-twenties.

According to research, young workers may find their first salaries insufficient to cover necessities like utilities and council tax. The study reveals that the number of people making regular payments significantly increases among those aged 25 to 34 compared to those aged 18 to 24.

The data highlights that only 34% of 18-to- 24-year-olds currently pay utility bills, but this figure doubles to 68% among 25-to-34-year-olds. Similarly, internet usage payments rise from 45% for 18-to-24-year-olds to 70% for 25-to-34-year-olds.

TIPS FOR MANAGING REGULAR PAYMENTS

By following these tips and taking control of their financial responsibilities, young adults can ease the transition from student life to the workforce and set themselves up for a more secure financial future.

CREATE OR REVIEW YOUR BUDGET

A household budget can help you afford essential costs and identify potential savings. It can give you peace of mind about whether you can afford your essential expenses and have money left over for any non-essentials. If you already have a budget, it’s worth checking to see if it’s still working for you, especially as many costs have risen over the last few months.

Looking more closely at your current and past spending habits, you might find ways to cut costs in the future – freeing up some money to put elsewhere. Budgeting apps can analyse your spending and categorise expenses, making finding areas where you can cut costs easier.

CHECK FOR SAVINGS

Find opportunities to cut costs by switching providers or finding better phone contracts utility bill deals. It’s always worth seeing if you can cut costs by changing providers or shopping around to see if you can get a better deal on your phone contract or utility bills, for example.

Nowadays, switching providers is a relatively seamless process, and it can save you substantial amounts. As you age, you should check for any discounts or benefits you’re entitled to.

SET GOALS AND CONSIDER WAYS OF SAVING

Establish clear savings goals and explore options to manage your finances better. Even if you don’t have the money to set aside right now, analysing your options will help you better manage your finances. If you can save, first try to build up a ‘rainy day fund’ for those unexpected expenses that can tip monthly budgets over the edge, like an appliance or car repairs.

CONSIDER LONG-TERM SAVINGS AND RETIREMENT PLANNING

Saving into a pension plan offers tax relief on payments, and employers often contribute as well. They offer tax relief on your payments, so putting money into one can cost less than you think. If you have a workplace pension plan, your employer will typically pay into this – usually making a minimum payment of 3% of your earnings (or a portion of them).

In comparison, your minimum personal contribution generally is 5% if your employer pays 3%, with some employers willing to pay more. Some even match the employee payments up to a certain amount – meaning if you can put in more, they will too. It might be worth checking to see what’s possible, as this is a great way to boost your pension savings. Starting contributions early can significantly impact your total retirement fund.

DO YOU HAVE A CLEAR VISION OF YOUR FINANCIAL GOALS?
Understanding your priorities is essential for building self-assurance and a clear vision of your financial goals. We recognise that each individual has unique objectives and aspirations. We are committed to guiding you through every stage of your wealth journey. Contact us today to learn more.

THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

PROFESSIONAL FINANCIAL ADVICE MATTERS

MAKING INFORMED DECISIONS ABOUT HOW TO BEST ALLOCATE YOUR RESOURCES

Financial planning is a crucial step towards achieving financial freedom and security. By taking the time to thoroughly evaluate your needs and personal goals, you’ll be able to make informed decisions about how to best allocate your resources.

With a comprehensive professional financial plan in hand, you’ll have the confidence and peace of mind to pursue your short-term goals and work towards your long-term future. With professional guidance, you’ll be inspired to realise that you have far more resources at your disposal than you ever imagined.

BETTER EQUIPPED

According to a recent study, UK consumers who receive professional financial advice can expect to retire on average three years earlier than those who do not seek professional advice, with advised consumers planning for retirement at age 66 as opposed to non-advised consumers who expect to retire at 69.

This underlines the positive impact that professional financial advice can have on retirement preparations, with those who seek advice feeling better equipped for their later years. The study identified that twice as many people who seek financial advice create a detailed spending plan in retirement compared to those who don’t take advice, with 45% of advised people falling under this category as opposed to 18% of non-advised consumers.

ENJOYING RETIREMENT

Financially advised consumers expect to fund their retirement for a longer period, with an average of 23 years, compared to 17 years for non-advised people before pertinent cutbacks must be made. In addition, the study reveals that financial planning tends to be beneficial for people already in retirement.

Almost all (96%) of wealthy retirees who did a great deal of financial planning or just planned their finances slightly say they’re enjoying their retirement, dropping to 72% among those who have done no financial planning.

MORE PRONOUNCED

Regrets for non-advised retirees are more pronounced, with the majority stating that they require more money in retirement compared to their original estimates, and that they wished they had planned more thoroughly, compared to advised people.

Despite having a higher household income, 23% of wealthier pensioners, with an income of between £40,000 and £49,999, wished they had planned more thoroughly, indicating that the value of advice remains consistent regardless of income.

SIGNIFICANT VARIATION

Planning for retirement can be overwhelming, leading to several considerations, making financial advice crucial for people to feel more confident and prepared about their future. The research results underscore the significant variation between the retirement plans and experiences of those who have taken advantage of financial advice and those who haven’t.

The research findings demonstrate the value of professional financial advice in terms of the retirement age and the enjoyment of one’s retired life. So start planning today, and take the first step towards a brighter tomorrow.

ANY CONCERNS ABOUT YOUR FINANCIAL FUTURE OR WOULD YOU
LIKE TO FIND OUT MORE?

Financial planning can certainly feel complicated at first glance, but with the right guidance, it can be a smooth and stress-free process. At every step of your financial planning journey, we’re dedicated to providing you with the knowledge, resources and support you need to make informed decisions about your finances. If you have any concerns about your financial future or would like to find out more, please contact us.