• Hi everyone and welcome to my latest blog post. I had planned to cover a couple of financial topics in this issue but decided instead to concentrate on one. This was brought home to me when I was referred to a couple seeking mortgage and protection advice where the male aged 46 casually asked me to look over pension documents that he was about to sign and send off in acceptance of an offer by a company to liberate his pension.


    The documents were well presented, offer looked very attractive. After close inspection I had to tell him that the figures presented bore no relation to reality, there was absolutely no reference to the implications and believe me there are many not to mention the company charges which weren’t even disclosed.


    Sometimes I get the feeling that there are people out there whose sole purpose in life is to think up ways of parting people from their hard earned cash with absolutely no regard to their wellbeing. I refer to a new menace that is sweeping the country right now the so called “Pension Liberation” schemes.


    What is it?

    Pension liberation also known as ‘pension loans’ and ‘pension scams’, is a transfer of a scheme member’s pension savings to an arrangement that will allow them to access their funds before the of age 55.

    Pension liberation can result in tax charges and penalties of more than half the value of a member’s pension savings, and those being targeted are usually not being told about these potential tax implications.

    In rare cases – such as terminal illness – it is possible to access funds before age 55 from a current pension scheme. For the majority, promises of early cash will be bogus and are likely to result in serious tax consequences.

    How are individuals targeted?

    An increasing number of companies are targeting savers claiming that they can help them take their pension cash early. Individuals may be targeted through websites, mass texting or through cold calls. Individuals should be very wary about giving out information in response to a text or cold call. They should always make sure that they know who they are dealing with.

    What is the catch?

    There are some people out there in the current economic climate that maybe desperate for cash. These are the sort of people that will be ruthlessly targeted by bogus companies using marketing techniques akin to those of the PPI claims specialists. Converting a pension into cash might sound very attractive to people who urgently need money. However, if something sounds too good to be true, it invariably is.

    • A member may be poorer in retirement. A member can only use their pension fund once. If they liberate their pension, there will be much less (or no) income from it when they retire.
    • A member may be hit by unexpectedly high fees. As part of the liberation transaction, a member will probably have to pay the organisers a ‘commission’ or ‘arrangement fee’ and these can typically range from 10 – 30%.
    • A member may be misled as to the consequences of the transfer. The member may not be informed or misled as to huge tax consequences of making such a transfer.
    • A member may be hit with significant charges by HM Revenue and Customs (HMRC). If a member has liberated their pension, they need to tell HMRC and will have to pay tax. If they fail to tell HMRC and HMRC contacts the member first, they may be charged penalties and interest in addition to the tax.

    The Financial Conduct Authority (FCA) is charged with regulating this area and has taken a dim view regarding the activities of the so called pension liberation companies leading to them stating that; “Regulated firms who engage in so-called pension liberation schemes should be ‘in no doubt’ about how the FCA will deal with them”, Tracey McDermott has warned.

    Speaking on Monday 1st July at the FCA’s first financial crime conference in London, the regulator’s director of enforcement and financial crime said; “If someone is offering people under 55 the opportunity of unlocking their pensions, it is almost certainly a scam and we are working with other agencies to raise awareness of this practice.” Ms McDermott added that she wanted to make the UK a ‘hostile’ place for criminals.

    Earlier in the day Martin Wheatley FCA chief executive, reinforced his hard-line interventionist strategy, saying he expected the financial services industry to make progress in developing controls against financial risk and crimes such as money laundering. He said; “This is not a matter for debate.”

    In terms of pension liberation, he added; “The uplift in cases is worrying. This is a scam that operates beyond legality and morality, with people losing up to 80% of their savings. Financial crime is a live risk to global economic recovery. We are placing great emphasis on personal conduct and personal accountability.”

    So in the final analysis please do not be tempted by these people, a reputable adviser will always consider what is best for you going down the ‘pension liberation’ route will only result in a small short term gain coupled with irreversible long term pain as a consequence. Take care everyone and stay safe.

    Who to contact

    If you are concerned or are approached and offered the services that have been described above, you should contact Action Fraud on 0300 123 2040.




  • Hi everyone and welcome to my latest blog post. This presented a good opportunity to highlight some of the key announcements made by the Chancellor from the recent budget.

    Although it was leaked well in advance that this would be a fiscally neutral budget, there was a sense of deja vu in the Chancellor’s fourth Budget, with many of his announcements already trailed in his autumn Statement in December. Mr Osborne did however produce some surprises despite the economic constraints. With the 2013 growth forecast halved to just 0.6%, the tax give-aways, such as they were, were often deferred and on the whole balanced by either extra revenue or reduced spending.


    Personal allowances For 2013/14 the personal allowance will rise from £8,105 to £9,440

    (as announced in December) and there will be a £2,360 reduction in the basic rate band from £34,370 to £32,010. The additional rate of tax falls from 50% (42.5% for dividends) to 45% (37.5% for dividends) partly to fund the proposed increase to the personal allowance in 2014/15 (see below).

    For 2014/15 the personal allowance will rise by £560 to £10,000 and the basic rate band

    will be cut by £145 to £31,865. As a result the higher rate threshold (personal allowance +

    basic rate band) will rise by 1% to £41,865. The personal allowance will then be increased

    in line with the Consumer Prices Index (CPI) from 2015/16.


    Childcare scheme A new tax free childcare scheme will be introduced for children under

    12 that will ultimately provide support worth 20% of childcare costs up to £6,000 per child

    per year. The system will be phased in from autumn 2015, with all children under five eligible

    from the first year of operation. Disabled children up to age 16 will also be eligible in line

    with existing employer-supported childcare rules.

    Tax free childcare will be available to families where the parents are working and are

    not already receiving support through tax credits or Universal Credit. It will be available

    if neither parent earns over £150,000 a year. Alongside the new scheme, the current

    employer-supported childcare will be phased out for new applicants from autumn 2015.


    State pension reforms The government has confirmed that the single-tier state pension

    will be introduced from April 2016, even though in its January White paper the DWP said the

    launch date would be “2017 at the earliest”. The State Second Pension (S2P) will close and

    defined benefit contracting out (and the associated NIC rebates) will be abolished. The final

    end of contracting out will produce a £5.5bn annual windfall for the Treasury, but ironically

    60% of this will come from the ending of rebates given to public sector employers.


    National insurance contributions (NICS) From April 2014 businesses and charities will

    be entitled to a £2,000 employment allowance towards their employer’s Class 1 NIC bill,

    which will be delivered as part of the normal payroll process through Real Time Information

    (RTI). The benefit of this allowance will mainly be felt by very small employers, as £2,000

    per employer per year is only enough to cover about £14,500 of NICable pay (£14,500 @

    13.8% = £2,001).

    The government will consult on using self-assessment to collect flat-rate Class 2 NICs from

    self-employed people.


    Corporation tax A single rate of corporation tax of 20% for companies will be introduced

    from April 2015.


    Stamp duty on Alternative Investment Market (AIM) and other shares Stamp duty

    will be abolished from April 2014 on transactions involving shares in companies listed on

    markets such as AIM and the ISDX Growth Market. The government is also consulting on

    how these shares should be included within ISAs, with draft regulations due in summer. It

    has already been confirmed that AIM shareholdings within ISAs will qualify for IHT business

    property relief, subject to the normal rules.


    Seed Enterprise Investment Scheme (SEIS) The one year capital gains tax (CGT)

    reinvestment relief for SEIS companies introduced for 2012/13 has been extended, but

    on a more limited basis. Investors who make capital gains in 2013/14 will be able to claim

    capital gains tax (CGT) relief on 50% (previously 100%) of any gains they reinvest into SEIS

    companies in either 2013/14 or 2014/15. This means the maximum effective tax relief will

    be 64% (50% income tax + 28% x . CGT reinvestment relief). The government is not

    expecting much take up it has costed the change at just £5m.

    The qualifying conditions attached to the SEIS will be amended so that from 6 April 2013

    an investment into a company established by corporate formation agents can qualify for the



    Mortgage scheme A package of measures to increase the supply of low-deposit mortgages

    for credit-worthy households will be introduced from January 2014, including a government-backed

    mortgage guarantee scheme.


    VAT thresholds The VAT registration threshold will rise from £77,000 to £79,000 and the

    deregistration threshold will increase from £75,000 to £77,000, both from 1 April 2013.


    Tax avoidance schemes A General Anti-Abuse Rule (GAAR) will be introduced in Finance

    Bill 2013. There will be consultations on proposals to target the promoters of tax avoidance

    schemes, including ‘naming and shaming’ as well as a range of targeted disclosure

    requirements and associated penalties. Retrospective legislation will address aggressive

    SDLT avoidance schemes, particularly those exploiting ‘transfer of rights’ rules.

    • Suppliers bidding for government contracts will be required to declare they have complied

    with specified tax obligations, allowing government departments to exclude non-compliant


    • The tax provisions for unauthorised unit trusts will be amended to remove avoidance

    opportunities while simplifying the rules and reducing administrative burdens for exempt


    • The IR35 provisions will be changed to equalise the tax and NIC treatment of office

    holders. There will be a change to the IHT rules for the calculation of the value of an

    estate where there is an outstanding debt. For example, this may depend on whether the

    debt is repaid and its commerciality.


    This is just an overview of some of the key points from the budget which I hope you found useful, a full list of budget measures can be found on the government website at www.hm-treasury.gov.uk/budget2013.htm.


    WARNING – this blog is intended purely to be informative and should not be regarded as an inducement or recommendation to take any particular course of action. Every care has been taken to ensure accuracy of information printed but this cannot be guaranteed.

  • Hello everyone,  and welcome to my first ever blog post. Over the coming months I hope to present a series of posts dealing with a range of topical financial issues which I trust you’ll find both interesting & informative. With this being my first ever post I deliberated as to which topic to start off with. With so much happening right now certainly there was no shortage of material to choose from. The following is a sample of the topics that merited consideration;


    Gender Pricing

    Like most things this started off some time ago as a European directive initially tasked with tackling issues of male/female gender inequalities in the workplace such as salaries pensions etc. More recently providers of insurance products have been forced to fall in line where since the end of 2012 people of both sexes have to be offered equal terms when purchasing insurance products such as car or health insurance.

    Auto enrolment

    This is being phased in over the next 5 years starting with larger firms aimed at making pension provision (almost) compulsory funded by both employers and employees

    Retail Distribution Review (RDR)

    New legislation which came into effect from the start of 2013 aimed at driving up the professionalism and standard of advice provided by financial intermediaries as well as transparency of charges for their clients



    Any of the above would have been worthy for inclusion as all will have a major impact on a large proportion of the population and will no doubt feature to some degree in future posts.

    However, my choice may seem odd to some for I have decided to cover….

    The Eurozone

    Love it or hate it, although we have been trading for a number of years with North America, more recently South America Asia also the Emerging Markets such as India, Brazil etc. there is no denying that the Eurozone remains the major trading partner of the UK and has direct impact on our economy.

    The latest turmoil in the financial markets regarding the banking crisis in Cyprus highlights only too well how fragile this sector remains.

    The European Parliament has launched a consultation asking firms and individuals across the continent how it can improve EU financial services rules and make them more coherent. The public consultation, launched this week by the economic and monetary affairs committee, included a questionnaire that asked firms whether they were given enough consideration by politicians creating new rules.

    The troubles within the eurozone seem to have been with us for quite some time. Earlier attempts to tackle sovereign debt seemed to lack leadership or sense of purpose, were deemed inadequate and often seen as little more than applying a “sticking plaster” to a huge problem. However, in the eurozone, concerns about sovereign debt sustainability eased markedly after ECB President Mario Draghi commented on 26 July 2012 that “within our mandate the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough” and the subsequent announcement of Outright Monetary Transactions (entailing ECB purchases of a sovereign’s debt on condition that the sovereign seeks a formal bailout) i.e. the conditions currently being imposed on Cyprus.

    By the end of December 2012 the yields on all of the troubled peripheral eurozone countries’ sovereign debt had fallen sharply. So far, the ECB has not bought any bonds under its OMT programme, but financial commentators regard that Spain will almost certainly need a bail-out, while Italy may well escape the need for one. Looking to 2013, there is concern that the ‘core economies’ are being contaminated by the depression in the periphery. This can be seen in the decline of German exports to the periphery, and in the decline in business sentiment indicators in both France and Germany.

    There is, however, a silver lining to the changes. It is widely commentated upon that “governments in Europe are taking advantage of the crisis to change labour laws and make them more flexible. Italy and Spain have made huge steps forward in terms of making their labour laws more flexible and market friendly.”

    It has been noted that “policymakers have done a lot. We’ve seen massive support for the capital markets and political commitment to the euro.”

    That has helped the banking sector. A year ago, it was acknowledged that, “banks couldn’t issue debt; now they are issuing subordinated debt and meeting good levels of demand.” It is my opinion that the eurozone will survive. There can be no denying that restructuring is required, emerging out of that will be a stronger, wiser entity having learnt and been reshaped by the lessons from past misdemeanours. Back in the UK, the fiscal tightening plans are falling behind the initial schedule, with the elimination of the structural budget deficit now unlikely even in 2017/18. It looks like the UK will have “two parliaments of pain, not just one”.

    Hope you all enjoyed this, my first ever blog post and sorry I couldn’t finish on a happier note in the meantime but watch this space.


    WARNING – this blog is intended purely to be informative and should not be regarded as an inducement or recommendation to take any particular course of action. Every care is taken to ensure accuracy of information printed but this cannot be guaranteed.

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