Tax saving opportunities - 'New Age' of self-employment Planning for a more relaxing retirement - Attivo Financial Planning
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Spring 2021
£4.99
Planning for a
Tax saving more relaxing
opportunities retirement
Time to identify, plan for and
mitigate your tax burdens ‘New Age’ of
self-employment
CONTENTS
Welcome
Welcome to the Spring issue of Life
Contents
Magazine.
As we enter a new financial year now
is the perfect time to start planning
for, and potentially mitigating, your tax 3 Gender pension gap 14 ‘New Age’ of self-employment
burdens. On page 16 I look at the top What you can do to reduce a future financial Changes in how people save, invest and plan
five things you should consider before shortfall. for retirement.
the end of the tax year.
The coronavirus pandemic has resulted
in more Britons becoming their own 4 New financial year, new start to 16 Tax saving opportunities
bosses, but with just 31% saving into your finances It’s time to identify, plan for and potentially
a pension, David Halloran, Financial Taking time to understand your financial mitigate your tax burdens.
Planner, looks at how the self-employed plans will really pay off.
can save, invest and plan for their
retirement on page 14. 18 Planning for a more relaxing
Retirement should be what you want it 7 Are you under-prepared for a retirement
to be and on page 18, Sophie Pearcey, financial emergency? Time to get back to dreaming about stopping
Financial Planner, looks at the key Pandemic causes people to re-evaluate their work. Not dreading it.
considerations to help you plan for a financial resilience.
relaxing retirement and ensure you
aren’t left fretting about your finances. 18 Breaking up is hard to do
8 Taxing times on the horizon! Managing the financial impact of divorce.
Bitcoin is often in the headlines, and
Taxing times on the horizon!
with recent high values prompting
investors to ask whether it’s time to
21 Bitcoin – time to include?
include Bitcoin in their portfolio, Roy
10 Why cash may not be king The Bitcoin rally has certainly caught the
Coulson, Proposition Analyst, looks at
How much of your wealth do you currently attention of many, reaching a high valuation
the pros and cons of investing in this
hold in cash? of almost $50,000 in February 2021.
cryptocurrency on page 21.
If there is a particular topic or area
you would like us to cover, please let 11 Personal Finance Portal 22 Is the future of your loved ones
us know. If you have any questions Factfind on managing your Personal in good hands?
about any of the articles or would like Finance Portal Coronavirus spurs one in six to take action on
to speak to us about your financial their Will.
planning needs, please get in touch.
12 Wealth needs managing – now
Stuart Harding more than ever 24 More over-55s forced to dip into
FPFS FCSI MSc Achieving your financial goals through pension pots
Managing Director investing, and one size does not fit all. Understanding the different ways you can
use your pension money.
Also available online at attivofinancialplanning.co.uk/lifemagazine and sovereignasset.co.uk/lifemagazine
2 LIFE Spring 2021 | Attivo Financial
RETIREMENT
Gender pension gap Top 5 pension tips:
1. Find out what you have got by talking
to your employer or checking your
What you can do to reduce a future financial shortfall pension statement. You can trace old
pensions at www.gov.uk.
A lot has been made of the gender lives. Women are more likely to take time 2. Check if you are eligible to join your
pay gap, but what’s not so well out of the workplace to look after children employer pension scheme. It’s a great way
known is how this can affect women or elderly relatives, which are the two to build up savings, with your employer
in retirement. Unsurprisingly, women biggest drivers in the gender pensions gap. paying in on your behalf too.
don’t fare as well as men when it
Saving enough for retirement 3. For many women short-term stability is
comes to the savings they’ve built
Also, the social structures of our families, the priority just now but if you can, try to
up for a healthy and economically
workplaces, benefits systems and keep paying into your pension, even if it’s
stable retirement.
communities have an interdependent and the minimum for now, so your employer
The gender pension gap, the pension negative impact on women’s abilities to keeps paying too. It soon adds up.
savings gap between men and women, has save enough for retirement. As a result of
4. Decisions like reducing hours or
closed to just 1% – the narrowest on record the gender pay gap, in the vast majority of
stopping working can leave you with less
– as more women are putting enough cases it is women who earn less than men.
savings at retirement. If your income
money aside for a comfortable retirement.
Therefore, when decisions are made about drops over time your partner may be able
Almost three in five (59%) women are now
who should stay at home to look after to pay into a pension for you to keep the
saving adequately, compared to 60% of men.
children it usually makes sense that the finances balanced.
Persistent pay gap exists lower earner takes a career break. The fact
5. Claim child benefit – check if
Despite this progress, the persistent pay that this is seen as the norm has an impact
you are eligible on the government
gap and part-time working ratio means on women’s career prospects, despite their
website. Going through the application
women saving adequately on the median potential – and despite equal opportunities
process keeps your National Insurance
wage are still saving £1,300 a year less than legislation.
contributions up to date, which you’ll
men, according to a new report[1]. Source data:
need to claim the full State Pension at
[1]
The research was carried out online by YouGov
This means that for a woman to save the Plc across a total of 5,757 adults aged 18+. Data
retirement age.
same amount into her pension as a man, was weighted to be representative of the GB
she would need to work an extra 37 years population. Fieldwork was carried out 26 March
– which would take her over the age of 100 – 11 April 2020. An additional survey was
carried out online by YouGov Plc across
if retiring at State Pension age – a number a total of 2,251 adults aged 18+. Data
that is likely to grow as the full economic was weighted to be representative
impact of the pandemic is realised. of the GB population. Fieldwork was
carried out 11 March – 12 May 2020.
Compound interest benefits
Young women are among those struggling
most to save for later life. Just 46%
of those in their 20s are saving the
recommended minimum 12% of salary. This
compares to 56% of men the same age, and
to almost two-thirds (64%) of women in
their 50s, showing that women do tend to
save more as they get older.
However, not saving more while young
means women miss out on the benefits of
compound interest, which can help savings
increase substantially over their working
LIFE Spring 2021 | Attivo Financial 3
FINANCIAL PLANNING
New financial year, new start
to your finances
Taking time to understand your financial plans will really pay off
Getting our financial life in order will be a top Money doesn’t buy happiness but 10 areas to consider when
priority for many this year. Consider focusing on it can certainly help. And the key setting financial goals
two key areas: goals related to being prepared is building healthy financial habits.
for the unexpected this year, and those related
to what you want to be different at the end of
Whether you want to stay on top of
your bills, pay off your debts sooner,
1 New financial year, new
financial goals
Having clear financial goals to work
the year. save for a dream holiday or look
towards will give you a sense of
forward to a successful retirement,
purpose and motivation to spend
taking time to understand your
less and to save and invest more
financial plans will really pay off.
throughout the year ahead. But
remember, without a plan in place, a
goal is just a dream. So, if you want
to ensure you achieve your financial
resolutions, then it helps to break
the bigger goals down into more
4 LIFE Spring 2021 | Attivo Financial
FINANCIAL PLANNING
or to leave something behind for
manageable bite-sized objectives that on interest? The key is making a plan
grandchildren, reviewing what your
you can gradually work through bit by to pay off the balances before the
goals are and whether you’re on
bit to create better financial habits. introductory period ends and you
track is important. Ask yourself
begin paying a standard interest rate.
2 Go over your budget
Review this past year’s budget.
What did and didn’t work for you? If
Are you utilising less than 25% of
your available credit across all of
these questions: How long should
I be prepared to put my money
away for? Do I want to invest for
your current budgeting methods and your cards and loans at any one income, growth, or both? Are my
tools aren’t working, look for a better time? Anything higher could affect investments aligned with my values
way to track your spending. Assess your overall credit rating score. and life goals? How can I grow my
your income and expenses, looking wealth?
for places to save money. Revise
your budget to reflect any changes
4 Check the interest rate on
your savings
Savings rates have been at
It’s important to remember that
volatility is also part of investing. But
to your income or expenses in the
historically low levels since the rather than looking at short-term
new year. If you don’t have a budget,
volatility, it pays to look at the bigger
it’s time to make one. Ask yourself:
picture. Your long-term goals should
What are my priorities? How can I When choosing a remain centre stage. All investments
make this sustainable?
savings account, come with some level of risk and
3 Evaluate your emergency fund
Do you have an emergency fund
to cover up to six months’ worth of
you need to think carefully
about whether you will need
you can decide how much risk you
want to take. This should be tied
to your overall financial position
your expenses? That’s the goal, but
access to your money, how and investment attitude. Differing
even if you haven’t saved that much, long you are looking to save circumstances and goals may mean
continue to work towards building up for, and how you that what was once appropriate,
this important safety net. If you don’t want to operate it no longer is. It’s important that you
have an emergency fund, start one. feel comfortable with the level of
risk you’re taking with investments.
Do you need to save for any big financial crisis of 2008. Which
Questions to ask are: Should I review
expenses or goals this year? If so, makes it all the more important
my investment portfolio? Is my
develop a budget for this so you can to shop around for the best rates.
portfolio sufficiently diversified?
start setting aside the money you’ll Could you deposit money into
Does my portfolio reflect my goals
need. Consider setting up automated another account where you receive
and risk profile?
transfers to your savings account(s) a better rate of interest?
to help build your emergency fund
and other savings.
It’s important to check how your
savings are growing and whether it
6 Planning for your retirement
Even if retirement seems a long
way off, think about what you want
3 Review your borrowing
Find out if you could save money
by refinancing your mortgage, car
is at a rate above inflation, and then
decide if you need to make changes.
Different types of savings accounts
your money to do for you when
you stop working. Ask yourself: Do I
know how much money I may need
loan or student loan. If you have have different rules on how much you
in retirement? How long will my
high-interest debt, make a plan can put in and when. When choosing
money need to last for? How much
to pay it down. If you don’t have a savings account, you need to think
should I be saving today?
enough extra money in your budget carefully about whether you will need
to make a big dent, investigate access to your money, how long you Planning for your retirement is a
credit cards with a 0% introductory are looking to save for, and how you great way to prepare yourself for
balance transfer offer. Could you want to operate it. the future, and to make sure that
transfer your high-interest balances you’ll be financially secure and
to a card with a temporary 0%
interest introductory period to save
5 Take a look at your investments
Whether your goal is to create
a nest egg for early retirement
live the lifestyle you want – even
when you’re no longer earning.
LIFE Spring 2021 | Attivo Financial 5
INVESTMENTS
FINANCIAL PLANNING
The earlier you start the process of
planning for your retirement, the
more manageable it will be, and the
8 Make the most of your
tax-efficient allowances
Time is running out if you haven’t
forward to. It can easily slip down
the to-do list – for a number of
reasons. If you were to die without
less of an impact it’ll have on your taken full advantage of your tax- a Will in place, your estate would
daily finances. Questions to ask efficient allowances before the be shared out according to certain
include: Am I taking full advantage end of the tax year on 5 April. rules, known as ‘intestacy rules’
of the tax-efficiency of my Personal Every tax year, commencing on 6 and this could create a tremendous
Pension or Workplace Pension? April, you receive new Individual burden on your family and loved
What am I looking forward to doing Savings Account (ISA) and pension ones. A Lasting Power of Attorney
the most in retirement? How much allowances. These have valuable for Health and Welfare (LPA) will
retirement savings will I actually tax benefits that are designed to also allow you to give someone
need? How much can I afford to encourage you to save what you can you trust the legal power to make
spend yearly once I have retired? and help you make the most of the decisions on your behalf in case
money you put aside. you later become unable to make
7 Combining a number of
different pensions
It’s not uncommon now for people Pension
decisions for yourself.
Other questions to consider: How
to have built up a number of consolidation can I leave money to charity?
pensions during the course of their How much money can I give away
could potentially be a
lives. Ask yourself the following: each year in gifts without tax
Over my career, have I worked for
way to maximise implications? Can I make regular
different employers and built up a the value of your gifts out of my surplus income?
number of different pension pots investments Should I put my assets into a trust
and/or pension schemes? Do I have during my lifetime?
personal pensions built up during
times spent being self-employed?
At some point and not necessarily near
Questions to ask are: Have I fully
maximised my contribution levels
for the current 2020/21 annual
10 Check when your next
review is
You’re not sure what to prioritise –
your retirement, you’ll have to decide £20,000 ISA allowance and annual your pension, your mortgage or your
whether to consolidate your pensions £40,000 pension allowance? Can ISA. You’re starting to lose sleep
or leave them separate. Pension I take advantage of pension carry over whether you’re saving enough
consolidation could potentially be forward to make extra pension for your children’s education. And
a way to maximise the value of contributions? Am I fully using my you can’t quite recall whether you
your investments. It can make it Personal Savings Allowance for have accumulated four, five – or was
easier to track how well a fund is tax-free interest payments? What it six? – pension pots from previous
performing in putting your money to is my financial gifts tax allowance? jobs. Now may be time to consider
work on the markets to boost your Can I use my Capital Gains annual your next financial review so that
investment returns, and it provides allowance to create tax-free returns? we can discuss your immediate and
an opportunity to reduce how much future plans, and talk you through
you lose paying scheme charges.
However, consolidating a pension
9 Review your estate plan
There is never a good reason to
not have a Will. Ask yourself: How
your financial goals.
isn’t for everyone. When weighing up
can I write my family’s future? Have
whether consolidating your pensions is
I written a Will, or does my existing
the right move, it’s essential to obtain
Will need updating? Making a Will
professional financial advice.
is not a task that many people look
6 LIFE Spring 2021 | Attivo Financial
FINANCIAL PLANNING
Are you under-prepared
for a financial emergency?
Pandemic causes people to re-evaluate their
financial resilience
Managing your current and future Rainy day funds help people cope with life’s there be further falls in stock markets. Having
finances successfully can be a minefield unforeseen events and play an important role access to emergency cash funds can help tide
in today’s economic climate. The for short and long-term planning. The general them over while markets recover.
coronavirus (COVID-19) pandemic has rule is that people should build a financial
Financial ‘haves’ and ‘have nots’
derailed many a financial plan, ushering cushion, with six months’ worth of living
Unfortunately, a lack of savings or a savings
in job losses, decreased earnings and expenses regarded as a good starting point.
pot that has already run dry means the
creating lifestyle changes that have the
Year’s worth of savings immediate priority for one in four people is
potential to send our spending into an
Unfortunately, a quarter (24%) of people in simply ‘just getting by’. The stark reality is that
unhealthy cycle.
the UK would struggle straight away with the longer the coronavirus crisis continues,
The general financial uncertainty created by the no rainy day fund to fall back and almost a the more people will find themselves in that
COVID-19 pandemic has resulted in over a third third (31%) would run out of money within predicament, underlining the real need of
(37%)[1] of UK savers acknowledging they’re three months. At the other end of the scale, a safety net savings.
under-prepared for a financial emergency and fifth (21%) of people have more than a year’s
There is clearly a contrast in the UK’s financial
have started to build a rainy day fund. worth of savings in their rainy day fund, with
health between the financial ‘haves’ and ‘have
the average covering eight months.
Bigger financial cushion nots’ and an individual’s ability to manage
However, while many admitted their need to Having a cash buffer is particularly important their money. While the economic outlook
build a bigger financial cushion, the findings for those approaching or in retirement, helping has prompted many to begin building a rainy
highlighted wide geographical differences to protect their pension savings during volatile day fund for the first time, others have been
across the UK. In Edinburgh, only a quarter market conditions. However, with more than a exposed as being perilously under-prepared.
(24%) of people said the pandemic has quarter of over 55s having no rainy day fund, Source data:
prompted them to build up funds for a financial there is a danger that dipping into retirement Opinium surveyed 2,000 adults for Aegon between
[1]
emergency, half the number of those living in savings at a time when the value has fallen 23 Oct – 26 Oct 2020
London (47%). will deplete their funds more quickly should
LIFE Spring 2021 | Attivo Financial 7
TAX
Taxing times on the horizon!
Are you protected against future Capital Gains Tax rises?
It is almost inevitable that taxes Investors handed over £9.5 billion as well as areas where the present
will have to rise to help meet to HM Revenue and Customs via rules can distort behaviour or do not
the potential £391 billion bill the capital gains duties in the year to meet their policy intent.’
government has racked up in April 2019, a record haul for the
Distorted behaviour
supporting the British economy Government. Subsequently, the
Mr Sunak asked for a review of its
through the coronavirus Office of Tax Simplification (OTS)
use in ‘the acquisition and disposal of
(COVID-19) pandemic. published a report[1] in November
property’ and ‘the practical operation
2020 outlining the policy design and
of principal private residence relief’.
principles underpinning Capital Gains
This suggests that reform could be on
Tax (CGT).
the cards. The first report found ‘many
Shorter timeframe features of CGT which can distort
The OTS acknowledged that the behaviour, including its boundary with
consultation has been produced in Income Tax and interconnections with
a shorter timeframe and this hints Inheritance Tax.’
that change to CGT will be on the
The report said that ‘more closely
cards as the Government looks to
aligning CGT rates with Income
counteract the escalating deficit
Tax rates has the potential to raise
caused by the COVID-19 pandemic.
a substantial amount of tax for
In July 2020, the Chancellor of the the Exchequer.’ A second report,
Exchequer, Rishi Sunak, asked the which will follow early
OTS to carry out a review of CGT, this year, will explore
to ‘identify opportunities relating to key technical and
administrative and technical issues administrative issues.
8 LIFE Spring 2021 | Attivo Financial
TAX
Raising revenues 97% of Capital wealth transfers to happen earlier, as
Above an annual exemption of Gains Tax revenue well as raising significant funds.
£12,300 (2020/21), CGT is charged is paid by over-35s, with Annual exemption
on gains at 10% for basic rate most people caught by The OTS also suggest lowering the
taxpayers and 20% for higher and
the tax in their annual exempt amount. Their view
additional rate taxpayers. This
rises to 18% and 28% respectively
50s and 60s is that while small gains should
still be exempt in order to avoid
where the gains relate to residential
Income Tax has been touted for administrative hassle for the sake
property. Income Tax is charged at a
some time and so that is relatively of a minor tax bill, the current
basic rate of 20%, rising to 40% and
unsurprising, although it would lead allowance results in too many profits
45% for higher and additional rate
to a significant rise in tax paid by being tax-free.
taxpayers.
those subject to CGT.
It seems highly likely that changes
According to the OTS, 97% of CGT
Other proposals, such as scrapping are on the horizon and, while it
tax revenue is paid by over 35s, with
CGT uplift on death, have far- is not suitable for everyone to
most people caught by the tax in
reaching consequences and need to change their financial plans because
their 50s and 60s. It means that
be considered carefully. One of the of mere policy speculation, it is
raising additional revenues can be
biggest challenges of tinkering with worthwhile reviewing in light of
positioned as a tax on those with
the CGT system is its interaction what will inevitably be a harsher
the broadest shoulders.
with several other parts of the tax tax environment. If adopted, the
Reforms package system, in particular Inheritance Tax, recommendations by the OTS could
The OTS has suggested a package so many changes can be complex have a significant impact on some
of reforms, some of which are and have knock-on consequences for investors, company directors and
tweaks around the edges that will other parts of the tax system. buy-to-let property owners when
be relatively quick wins and some realising gains.
Inheritance Tax
which will cause a bit of a stir. The Source data:
CGT uplift means that CGT is
prospect of bringing CGT in line with [1]
https://assets.publishing.service.gov.
overlooked when an individual uk/government/uploads/system/
dies and they hold taxable assets uploads/attachment_data/
Conditions associated with Capital Gains Tax
that have gone up in value. This file/935073/
includes the following: Capital_Gains_Tax_
is because when the assets are
• You can carry forward losses from previous years transferred to someone else,
stage_1_report_-_Nov_2020_-_
web_
• Capital Gains Tax arises on disposal of an asset normally a spouse or family member,
they are ‘reset’ for CGT purposes.
copy.pdf
– normally on sale, but gifts, insurance claims or
Instead, the assets may be subject to
compensation for losses can be chargeable disposals
Inheritance Tax.
• The value of the gain is normally the amount you The OTS recognise that this means
receive, but gifts and certain sales may be valued at
some people may hold on to assets
the open market value
until they die for the tax benefits.
• Capital Gains Tax is not normally payable on death. Removing or limiting this relief
could be seen as a way to encourage
LIFE Spring 2021 | Attivo Financial 9
INVESTMENT
Why cash may not be king
How much of your wealth do you currently hold in cash?
One paradox of the coronavirus Below the rate of inflation holding cash and are comfortable with the
(COVID-19) pandemic is that even By leaving large amounts of money sitting in idea of setting your money aside for the long
as businesses have shut down and cash you could be losing out on substantial term (at least five years or more).
jobs have disappeared, some British returns over the long run. The rates of return
Whether you’re concerned that you’ll lose
households have on average been on cash accounts are extremely low and have
your money or just don’t know where to begin
saving more money than they usually plummeted further still since the COVID-19
investing, it’s common for some people to
do, due to lower spending, according outbreak, with the average currently below
hold large cash balances in deposit accounts,
to new research[1]. the rate of inflation.
especially in times of market uncertainty. But
But the choice between holding large The research also reveals this group are historically cash has not been a good store
amounts of cash long-term in a savings aware of the opportunities, as 42%, the of value for individuals due to the corrosive
account versus investing could have a big largest of any wealth group, think there are nature of inflation eating into its purchasing
impact on your future wealth. Prior to the good opportunities in the current market. power over time.
COVID-19 outbreak, data also highlighted the Indeed, 29% would like to move their cash
Well-structured and well diversified
fact that a considerable number of people to investment but don’t know what to do,
portfolio
already had substantial amounts of money in and 37% plan to be more active with their
This is particularly acute in the current
cash, including those with £250k or more in investments overall.
environment where deposit rates on cash
investable assets.
Long-term return for specific goals are low and in the event inflation starts to
More money to invest than usual Every investor needs a cash buffer in case of accelerate. If you have excess cash balances you
The research reveals that 18% of those with emergencies, but too much can negatively should consider how to protect and grow your
£250k or more in investable assets have impact on returns. A good rule of thumb is capital to meet your specific needs.
40-60% of these assets in cash, or at least to save six months of your salary in cash and
Investing does, of course, carry its own risks
£100k. This group have also benefitted from then invest in a spread of different assets
but a well-structured and well-diversified
the lockdown as 35.5% have said they have that can deliver a long-term return for your
portfolio, tailored to an individual’s
more money to invest than usual. specific goals.
requirements and managed sensibly, ought to
During periods of stock market volatility, It’s important to do this in the most tax- protect capital from inflation and the decline in
which we’ve seen over the past efficient way, by making sure you fully utilise purchasing power over time. Diversifying your
year, it’s totally understandable your allowances, including the Individual investment portfolio is one of the best ways to
that cash feels safe, and can Savings Account (ISA) allowance and the reduce risk, and thus promote growth.
be looked upon as a security pension allowance. Source data:
blanket of sorts. But in the Quilter research of 2,005 UK adults aged 40+ carried
[1]
Purchasing power over time out by Toluna. According to ONS figures over-40s hold
long run, it can do more
You might choose to invest because you are 90% of the UK’s savings.
harm than good to your
looking to achieve potentially higher returns
financial wellbeing. Information Is based on our current
on your money than you might get from
understanding of taxation legislation and
regulations. Any levels and bases of, and reliefs
from, taxation are subject to change.
The value of investments and income from
them may go down. You may not get back the
original amount invested.
Past performance is not a reliable indicator of
future performance.
10 LIFE Spring 2021 | Attivo FinancialPersonal Finance
Portal
In this issue we look at the ‘Profile’ The Review tab can be accessed from the Completing your Profile
section of the Persoanl Finance top right of the screen and brings all of your Where a section is shown in green with a tick, that
Portal. This is where you let us personal data together in a form for easy means that the data in that section is complete. If
know the information your Financial reviewing and editing. you see a section which is faded and you cannot
Planner needs to help you make access it, that means that you need to complete
Your Family
the most out of your finances. The the other sections first before it is unlocked.
Let us know who is in your family – especially
more up-to-date the information,
your financial partner and those who depend The first time you visit your Profile, all of the
the better your Financial Planner can
on you financially. You can add and edit sections except ‘About You’ will be locked. This is
advise you. The information you give
financial dependants (such as children) as well normal and you just need to review the data in
is all stored securely and is only used
as add and edit a financial partner (such as each section to complete that section.
for the purpose of advice.
a spouse), provided you have consent from
Some sections feature a ‘wizard’ or ‘carousel’
What is the Personal Finance Portal? this person to add and maintain personal
which is a succession of questions on different
Your Personal Finance Portal provides you information on their behalf.
screens. Each screen is represented by a dot at the
with a clear overview of your finances and
Employment bottom and a ticked one indicates that screen has
the ability to manage and track them in one
Here you can add details of your and your been answered. If you need to complete a section
place. It is your personal digital filing cabinet
financial partner’s current employment then the un-ticked dots will show you which
where all of your financial records are kept
status and remuneration. screens are outstanding.
together, making them easily accessible
whenever you need them. Your Home If you have any questions about completing your
Use this section to add and maintain your Profile, or the portal in general, please contact
By logging in to the portal via your mobile,
current address and residence history. your Financial Planner.
tablet or computer, you can see your
When you add a current address for a home
investments, savings, pensions, mortgages, Registering your portal account
you own you will also be given an up-to-
loans and properties all on one dashboard Clients of Sovereign Asset Management will
date valuation of the property by Zoopla
whenever you need to. There is no need to receive an email inviting them to register for the
(provided they have one). This value is then
log on to multiple financial sites, reducing Personal Finance Portal in April 2021.
recorded against your property asset as part
the risk of online fraud.
of your net worth. Registering your portal account is simple
The portal makes managing your money and only takes a few minutes. On your
Accounts & Policies
simple using easy-to-understand graphics computer, tablet or smartphone, visit https://
Review your accounts and policies and
and most importantly, it is completely safe attivofinancialplanning.mypfp.co.uk/account/
add any which are not listed. You can add
and secure. register, enter your email address and follow the
and maintain a variety of different types
instructions sent in the activation email.
including savings, investments, protection
What is your Profile?
policies and liabilities (debts). You can only register with the email address we
Your Profile is where you control your data. It
have on record for you. You will need your own,
is organised into sections and subsections that Your Income and Your Expenditure
unique email address – you cannot use the same
represent different aspects of your personal In these sections you can add and maintain
one as your spouse or partner. Please contact
and financial information. the details of your income and expenditure.
your Financial Planner if you need to update
They are broken down into different
About You your email address. For more information
categories and you can record details for
This is your personal details – name, date of about the benefits of the portal, please
yourself and your financial partner as well
birth, marital status etc. You can also upload speak to your Financial Planner or visit
as joint income.
your picture to personalise your profile. www.attivofinancialplanning.co.uk/pfp
LIFE Spring 2021 | Attivo Financial 11INVESTMENTS
Wealth needs managing –
now more than ever
Achieving your financial goals
through investing, and one
size does not fit all
Even as we hope to put the coronavirus hope volatility is less elevated this year, investment goals is important to keep
(COVID-19) pandemic in the rearview mirror in financial markets and the economy you focused when you need it and
2021, uncertainty regarding both the virus and could still remain at the mercy of will enable you to build a portfolio
Brexit is likely to continue to weigh further on COVID-19 developments. to get you where you want to be.
the UK and global economies as well as on our Investment strategies should include
Strategies to help you manage
personal finances during this year. a combination of various investment
volatility
and fund types in order to obtain a
2020 was a tumultuous year. Volatility is essentially a measurement
balanced approach to risk and return.
Government support during the of risk, and as the balance of risk and
crisis has been significant in its scale, return is at the heart of investing it Maintaining a balanced approach
borrowing more since the lockdown is important to understand how it is usually key to the chances of
was imposed back in March 2020 than affects your investments, but it’s also achieving your investment goals, while
during the entire year following the important not to let emotions drive bearing in mind that at some point
Global Financial Crisis. your decision-making. you will want access to your money.
This makes it important to allow for
But even with unprecedented steps Setting specific investment
flexibility in your planning. Your long-
being taken to ensure the roll-out of goals is key
term plans (those that are at least five
vaccines globally, the big question for It can be difficult to focus on the big
years away) should be the focus of
2021 is ‘what further market volatility picture during any times of market
your investment portfolio.
can we expect?’ Market volatility turbulence. Understandably investment
can impact on your investments volatility can make it easy to focus on Market factors that
considerably, depending on the the short term and those temporary determine volatility
specifics of your portfolio. While we peaks and troughs. Setting your specific Market volatility can be nerve-
12 LIFE Spring 2021 | Attivo FinancialINVESTMENTS
racking, even for the most seasoned returns that allow you to grow your amount of volatility you experience by
investors. Many different factors wealth. Looking at a twelve month simultaneously spreading market risk
can impact market volatility, sending snapshot of your investment portfolio across many different asset classes.
values of investments in either may show that investments have
By investing in several asset classes,
direction. Some of the most common underperformed but look back over
you may improve your chances of
factors that determine the volatility the last five or ten years, and you’ll
participating in market gains and
of the market include investor hopefully be on track.
lessen the impact of poor performing
concern, political events, natural
Carefully considered decision asset categories on your overall
disasters and major events in foreign
to invest portfolio returns. A well-allocated
markets. But it’s important to keep
By making a carefully considered portfolio alleviates the need to
matters in perspective. Avoid making
decision to invest, you’re giving constantly adjust investment
rash decisions and focus on your
your money more opportunity to positions to chase market trends, and
long-term goals.
grow than if you’re just saving it. can help reduce the urge to buy or sell
Bear markets are unsettling but they How much risk you take will affect in response to the market’s short-term
are not new and history proves they how your money will grow so it’s ups and downs.
don’t last forever. Stop looking at important to understand how much
Diversification to protect and
your portfolio and its value on your you’re willing and able to take. All
grow investments
phone, tablet, laptop or desktop. It’ll investments come with a level of
Diversify, diversify, diversify – in other
only make you anxious – or worse, risk and don’t always perform as
words, ’don’t put all your eggs in one
make you want to do something. expected. This is why you need to
basket’ – is sage investing advice. In
Keep investing as you normally make sure you’re making the choice
addition to diversifying your portfolio
would. Also don’t attempt to pick the that’s right for you.
by asset class, you should also
market bottom or the turnaround to
One of the first steps in developing diversify by sector, size (market cap)
jump in. Fight the impulse to think
an investment strategy is to and style (e.g. growth versus value).
you can.
identify your tolerance for risk as Why? Because different sectors, sizes
Riding out the market ups an investor, referred to as your ‘risk and styles take turns outperforming
and downs profile’. Every investor has a different one another.
Investments don’t always go in a risk tolerance with regard to their
By diversifying your holdings
straight line – they have the potential investment selections. Making
according to these parameters,
to react and recover from short- investment decisions can depend on
you can smooth out short-term
term market events. When markets your personality as well as the goals
performance fluctuations and
become volatile, the gut reaction you are investing towards. Weighing
mitigate the impact of shifting
up the level of risk you’re willing to
Investments don’t always go in be exposed to can be challenging.
economic conditions on your
a straight line – they have the portfolio. Diversification is essential
Whether you’re reviewing your
to any successful investment strategy
potential to react and recover pension or building a personal
and provides an opportunity for both
from short-term market events investment portfolio, balancing risk is
protection and growth within your
a crucial part of the process.
investments.
for most of us is to panic – to buy
Well-allocated investment
when everyone else is buying (and Information is based on our current
portfolio asset classes
when prices are high) – and panic sell understanding of taxation legislation
During volatile times, asset classes
on the downside (when prices are and regulations. Any levels and bases
such as stocks tend to fluctuate
depressed). Panic selling also runs the of, and reliefs from, taxation are
more, while lower-risk assets such
risk of missing the market’s best- subject to change.
as bonds or cash tend to be more
performing days.
stable. By allocating your investments The value of investments and income
Rather than looking at short-term among these different asset classes, from them may go down. You may not
volatility, it pays to look at the you can help smooth out the get back the original amount invested.
bigger picture. Over the long term, short-term ups and downs. Portfolio
Past performance is not a reliable
investments will usually deliver diversification may reduce the
indicator of future performance.
LIFE Spring 2021 | Attivo Financial 13FINANCIAL PLANNING
‘New Age’ of self-employment
Changes in how people save, invest and plan for retirement
Self-employment plays a vital the self-employed are saving into for a workplace pension[4], creating
role towards the UK’s economy. a pension. 67% of self-employed a situation that the Association of
In recent years the number of people are seriously concerned Independent Professionals and the
people who are self-employed about saving for later life[2]. Self-Employed (IPSE) is calling a
has risen steadily. But one of pensions crisis.
Even if retirement seems a way
the main drawbacks is that the
off, there’s no escaping the fact And with the fastest growth in self-
self-employed do not have the
David Halloran that we’re going to need to fund it employment among the over 45s[5],
DipPFS
advantage of an employer to
somehow. ‘Being your own boss has how to fund retirement is a question
Financial Planner help arrange pension provision.
many attractions, but unfortunately that many will have to face up to
and Occupational
At a time of rapid technological it won’t stop us from getting old.’ sooner rather than later.
Pension Specialist
advances and societal changes, the
Tax benefits
increasing prevalence of the self-
employed not only represents a
The pandemic There are certainly other savings and
change in how people work, it also forced even more investment accounts you can use to
Britons to become their save for your retirement, but the fact
calls for changes in how people save,
is that pensions are built for the job
invest and plan for retirement. own bosses. More than and come with tax benefits that you
Seriously concerned 5 million people are now won’t get elsewhere.
Last year, the coronavirus (COVID-19) registered as self- With pensions, the government
pandemic forced even more Britons employed in the UK gives tax relief equal to the highest
to become their own bosses. More rate of tax that you pay. So if you’re
than 5 million people are now Pensions crisis a basic rate taxpayer, you only need
registered as self-employed in the It’s perhaps no coincidence that to contribute £80 to end up with
UK, up from 3.2 million in 2000[1]. only 31% of self-employed people £100 in your pension pot. And if
The self-employed account for 15% pay into a pension,[3] compared you’re a higher rate or additional rate
of the UK workforce. Yet just 31% of with 84% of employees eligible taxpayer, you can claim back even
Self-employed and looking to to pay into your pension can be daunting. longer working. So instead, visualise the
sort out your pension? Getting into the habit of saving for your dreams and goals you’d like to pursue when
Here’s what to do when you don’t know future is half the battle for many people – you finish working. Thinking about the
where to start. so pay in what you can regularly. positive benefits of saving can be a good
motivational tool.
1 The sooner the better
When it comes to pensions, it pays to be
an early bird. The sooner you start paying
3 Increase it when you can
If your earnings increase or you secure
a new contract, consider increasing your 5 Have a regular review
Once every six months, take a look at
in, the more tax relief you’ll get from the regular payments or paying a lump sum your pension and consider whether you’re
government, and the more time your into your pension. on track to save enough. Just remember
money has to potentially grow. that, as with any investment, the value of
2 Aim to pay in a regular amount
The thought of saving a large lump sum
4 Visualise your future
If retirement is still a way off, it can be
hard to think of your future self and no
your pension can go down as well as up,
and you may not get back as much as has
been invested.
14 LIFE Spring 2021 | Attivo FinancialFINANCIAL PLANNING
more tax relief when you fill out your Source data: file/712812/workplace-pension-
self-assessment tax return. [1]
1 https://www.ons.gov.uk/ participation-and-saving-
employmentandlabourmarket/ trends-2007-2017.pdf
Comfortable retirement peopleinwork/
It’s worth noting that there’s an annual employmentandemployeetypes/articles https://www.ons.gov.uk/
[5]
allowance which limits how much coronavirusandselfemploymentintheuk/ employmentandlabourmarket/
can be paid into your pension each 2020-04-24 peopleinwork/
year while still receiving tax relief. It’s employmentandemployeetypes/
The Association of Independent
[2]
based on your earnings and is currently adhocs/008728
Professionals and the Self-Employed
capped at £40,000. selfemploymentbyage2001to2017
2020
Exactly how much you should pay
https://www.ipse.co.uk/uploads/
[3]
into your pension depends on how
assets/uploaded/de9c9fad-459a-
soon you start. The earlier you begin,
4afa-96e85116aad25641.pdf
the less you’ll have to put away
every month to afford a comfortable [4]
https://assets.publishing.service.
retirement. Starting late? You’ll need to gov.uk/government/uploads/
save more. system/uploads/attachment_data/
LIFE Spring 2021 | Attivo Financial 15TAX
Tax saving opportunities
It’s time to identify, plan for and potentially mitigate your tax burdens
The Government has any remaining reliefs, allowances and to you. We’ve listed five things to
spent hundreds of billions exemptions before the end of the consider before the end of the tax year.
on measures to support 2020/21 tax year on 5 April.
businesses and jobs, and fight
the coronavirus (COVID-19)
At the same time, you should be
considering whether there are any
1 Maximise tax relief on your
pension contributions by using all
of your annual allowance
pandemic. But how will it pay
planning opportunities that you need Pensions are one of the most
for these? We won’t know the
Stuart Harding to consider either for this tax year or tax-efficient ways to save for your
extent of the final bill until
FPFS FCSI MSc for your long-term future. longer-term future. The annual
long after the crisis is over.
Managing Director allowance for 2020/21 is £40,000,
and Chartered While the Chancellor of the Five things to consider before but you can also use surplus
Financial Planner
Exchequer, Rishi Sunak, is looking the end of the tax year allowance from the previous three
to reduce the tax gap, there are The end of the current financial tax years. Your annual allowance
nonetheless still opportunities to tax year is fast approaching, which may be restricted to a maximum
review your financial arrangements means now is the time to review of £4,000 where your total income
for saving tax throughout the tax your finances and make sure that plus pension contributions for the
year. Taking action now will give you you’ve taken advantage of all of the year exceeds £240,000, and your
the opportunity to take advantage of tax planning opportunities available net income exceeds £200,000.
16 LIFE Spring 2021 | Attivo FinancialTAX
is to ask HM Revenue & Customs account set up by a parent or
What are my tax planning goals? (HMRC) for your PAYE notice of guardian with a Junior ISA provider,
coding to be adjusted. This way your specifically for their child’s future.
• To reduce my current • Maximise the amount of
tax relief is given through a new Only the child can access the money,
overall tax year liability my wealth that stays in
PAYE code that extends your basic and only once they turn 18. There
my family
• Defer my current year’s rate band. are two types available: a Cash
tax liability to future • Minimise a potential Junior ISA and a Stocks & Shares
years, to increase
availability of cash for
Capital Gains Tax liability
• Minimise potential future
2 Take advantage of the
Individual Savings Account (ISA)
investment limit to generate tax-
Junior ISA.
The current annual subscription
investment, business or
estate taxes to maximise free income and capital gains limit for Junior ISAs is up to £9,000
personal needs
the amount left to my An ISA allows you to save or invest for the 2020/21 tax year. The fund
• Reduce any potential beneficiaries and/or money in a tax-efficient way. An builds up free of tax on investment
future years’ tax liabilities charities (rather than the ISA is a tax-efficient savings or income and capital gains until your
government) investment account that allows child reaches 18, when the funds can
• Maximise tax savings
you to put your ISA allowance to either be withdrawn or rolled over
from allowable • Maximise the amount of
work and maximise the potential into an adult ISA.
deductions money I will have available
returns you make on your money,
• Maximise tax savings by
taking advantage of my
to fund my children’s or
grandchildren’s education,
as well as my retirement
by shielding it from income tax, tax
on dividends and Capital Gains Tax.
5 Plan your capital gains to make
best use of any capital losses
The £12,300 (2020/21) allowance
available tax credits The maximum annual amount that
plans is a ‘use it or lose it’ allowance.
can be invested in ISAs is £20,000
You can’t carry it forward to future
(2020/21). You can allocate the
years. But remember that each
entire amount into a Cash ISA, a
individual has their own allowance,
For every £80 paid in, your pension Stocks & Shares ISA, an Innovative
so a married couple can potentially
provider can claim another £20 in tax Finance ISA, or any combination of
realise gains of £24,600 this tax year
relief from the government, so that a the three.
without incurring any tax liability. If
£100 contribution actually costs you
just £80. Then, if you are a higher rate
(40%) or top rate (45%) taxpayer
3 Start planning ahead for a first
property or retirement
A Lifetime ISA (LISA) is a dualpurpose
appropriate you could transfer assets
between your spouse or registered
civil partner taxfree, so it might
you can claim up to an additional
ISA, designed to help those saving make sense to consider transferring
£20 or £25 respectively, making the
for a first home and retirement. If holdings to a spouse in a lower tax
effective cost of a £100 contribution
you are aged 18 to 39, you can open bracket or one who hasn’t used their
for you as little as £60 or £55.
a Lifetime ISA and save up to £4,000 allowance.
There’s a key difference in how tax-efficiently each year up to and
Gains and losses realised in the same
higher and top rate taxpayers claim including the day before your 50th
tax year have to be offset against
tax relief however. While 20% is birthday. The Government will pay
each other, and this will reduce the
reclaimed at source by your pension a 25% bonus on your contributions,
amount of gain that is subject to tax.
provider, which works for basic rate up to a maximum of £1,000 a year.
If your losses exceed your gains, you
tax payers, if you’re on a higher Your Lifetime ISA allowance forms
could carry them forward to offset
or top rate the additional amount part of your overall £20,000 annual
against gains in the future, provided
has to be reclaimed through a ISA allowance. You can withdraw your
you have registered those losses
self-assessment tax return and will savings from age 60 onwards, if not
with HMRC.
reduce your overall tax liability at used to buy a home before then.
the end of the year. Tax laws are subject to change and
If you are an employee, an
alternative to reclaiming the extra
4 Contribute up to £9,000 into a
child’s Junior Individual Savings
Account (ISA)
taxation will vary depending on
individual circumstances.
through a self-assessment return A Junior ISA is a long-term savings
LIFE Spring 2021 | Attivo Financial 17RETIREMENT
Planning for a more relaxing retirement
Time to get back to dreaming about stopping work, not dreading it.
Life changes when you retire most important question for many
– and so does how you spend is, ‘How much money will I need to 5 key considerations
your money. Whatever your save to ensure I retire successfully?’ Everybody’s circumstances are
plans, it’s important to keep on To answer this question you need to different, but the key considerations
top of things and think about know how you want to spend your for most people when they think
the lifestyle you want. It’s also time in order to know how much about retiring will come down to
worth noting the average life retirement will cost you. factors such as:
Sophie Pearcey expectancy at age 65 years is
DipPFS Type of lifestyle you want 1. How much money do you think I
18.6 years for men and 21.0
Financial Planner to enjoy will need in retirement?
years for women[1].
The amount of money you’ll need
2. Am I planning to phase my
So, it’s vital if you are planning to enjoy a comfortable retirement
retirement by working part-time?
to retire soon that you make is subjective and very much related
sure you have enough money to to the type of lifestyle you want to 3. D
o I have any debt to pay off?
last throughout your retirement. enjoy during your retirement, the
4. What is my health and potential
Whether you’re aiming to retire early age you want to retire and whether
life expectancy going to be?
or have worked way longer than you you’ll receive the full state pension
imagined, retirement should be what amount. 5. How much money have I saved in
you want it to be. pensions and other investments?
An active retirement involving a lot
Exciting chapter in your life of travel and hobbies will cost more
This is a new and exciting chapter than a quiet retirement spent largely
in your life. And for a lot of us, at home. You also have to think
retirement will be the first time about any big-ticket purchases or
where we can do what we want, other plans you’ll need to make.
when we want. With no job to tie
Estimated retirement
expenses
Knowing how much you need Make a list of all your estimated
to cover your retirement isn’t retirement expenses and then try
always the easiest number to calculate, to approximate how much each will
but you can adjust your strategy cost you. Remember, some of your
expenses may decrease between
depending on the size of your pot. now and retirement while others
could increase.
us down, retirement is meant to
Your housing costs may go down if
be a relaxing time. However, your
you pay off your mortgage, but your
newfound freedom and leisure
travel costs could go up if you take
time could quickly become stress-
a lot of trips and holidays. So you
inducing if you spend too much time
can use your current spending as a
fretting about your finances.
baseline, but you’ll have to adjust
When planning for retirement the each figure up or down accordingly.
18 LIFE Spring 2021 | Attivo FinancialRETIREMENT
Annual figure for inflation Unexpected expenses or more, it is vital to be prepared and
Knowing how much you need to cover come up build up a retirement income that
your retirement isn’t always the easiest At the point you’re in retirement, it’s provides the standard of living you
number to calculate, but you can adjust important to keep to the budget you require in the long term.
your strategy depending on the size of laid out as best as you can. If you Source data:
your pot. have unexpected expenses come up, https://www.ons.gov.uk/
[1]
try to trim back some of your other peoplepopulationandcommunity/
Once you know approximately birthsdeathsandmarriages/
expenditures to make up for them so
how much you’ll spend annually in lifeexpectancies/bulletins/nationallifet
you don’t run short. ablesunitedkingdom/2016to2018#:~:te
retirement, you can estimate the total
xt=1.-,Main%20points,for%20males%20
cost of your retirement by multiplying In recent years, the Government and%20females%20respectively.
this figure by the number of years you has made great strides in getting
expect your retirement to last, and people to save for retirement. With
adding an annual figure for inflation. retirement often lasting two decades
LIFE Spring 2021 | Attivo Financial 19STRAPLINE PLANNING
FINANCIAL
Breaking up is hard to do
Managing the financial
impact of divorce
When long-term relationships end, pension assets are divided between the parties. Pension attachment orders: where the
there are a host of implications for This has to be expressed as a percentage of pension provider of one party pays an agreed
mortgages, savings, tax and Wills the fund being divided, rather than a monetary amount directly to the former spouse when the
requiring careful consideration to avoid figure, so the amount paid to the recipient’s pension rights come into payment. This does
hardship. If you are contemplating pension fund can differ quite significantly in not represent a clean financial break between
divorce, are in the middle of divorce value to what was originally intended. the couple and risks the loss of future income
proceedings or dissolving a civil for the former spouse if the person with the
If you are close to retirement age and were
registered partnership, it’s important to pension rights dies before retiring or the former
planning to draw down on the pension part of
understand how the current economic spouse remarries.
the settlement in the near future, hoping the
and financial situation could affect you.
proposed share would produce a certain level Resolving associated marriage
The impact of the coronavirus (COVID-19) of income, you may need to consider thinking finances
pandemic on financial markets highlights the again. One option is to consider a nominal The COVID-19 pandemic has thrown many of
importance of obtaining expert professional maintenance order to hedge against anticipated us into a difficult period of uncertainty and has
advice when it comes to dealing with pension income not meeting your needs. had a profound impact on every aspect of our
assets on divorce. Many couples may have lives. This has presented particular challenges
Most common reason given
a number of pension assets between them. for separating couples who wish to resolve
Unreasonable behaviour was the most common
Understanding the different types of scheme the finances associated with their marriage,
reason given for opposite-sex couples divorcing
and how their values might be affected by especially where there are pensions to be
in England and Wales, published in the latest
stock market fluctuations is crucial. considered within their settlement.
divorce statistics by the Office for National
Different types of scheme Statistics (ONS) [1], with 49% of wives and 35% There has been a reduction in the stock market,
Some defined benefit pensions, such as public of husbands petitioning on these grounds. so any pension plan that has invested in shares
sector or final salary schemes, guarantee a may have decreased in value. Add to this a
It was also the most common reason for same-
certain level of income on retirement. Usually, reduction in interest rates, which has decreased
sex couples divorcing, accounting for 63% of
this is based on years of service and the final the gilt rate making it more expensive to
divorces among women and 70% among men.
salary of the pension member. Conversely, the purchase annuities. This has resulted in an
capital value and therefore income for private What are the different options to increase to Cash Equivalent Transfer Values
money purchase pensions are linked directly consider? (CETVs) for defined benefit schemes (usually
to the performance of the investments. When couples divorce, it is important they note final salary pensions).
that there are different options for how they
Even if, at the given date, the fund value or Anyone going through a marital breakup can be
divide pension assets between them, including:
cash equivalent of the two types of pension forgiven for wanting to temporarily set aside
arrangements are the same, the value of the Offsetting: where the pension assets can be thoughts about Wills, trusts and retirement
underlying benefits and the reliability of the offset against other assets of the divorcing for another time. However, it’s a chapter in life
income stream may differ considerably. parties. For example, one party many wish to when the people involved need to deal with
stay in the marital home in lieu of receiving part both their emotional and financial well-being.
Pension sharing on divorce
of their ex-spouse’s pension rights. Source data:
Two decades on from the introduction of
https://www.ons.gov.uk/
[1]
pension sharing on divorce, the issue remains Pension sharing orders: where pension assets peoplepopulationandcommunity/
a hugely complex area that can spark highly are divided at the time of divorce and there is a birthsdeathsandmarriages/divorce/bulletins/
emotive battles with no guarantee of equality. clean financial break. divorcesinenglandandwales/2019
Pension Sharing Orders determine how
20 LIFE Spring 2021 | Attivo FinancialYou can also read
