Significant life changes, such as getting married, having a baby and buying a property, are key times to consider protecting your family’s future. Life insurance assures that your loved ones won’t face financial stress in your absence and this peace of mind is not confined to those earning an income.
Even if you’re not currently working, for instance, if you’ve taken a career break to raise children, your demise could impose unexpected costs such as childcare on the surviving partner. A life insurance payout could alleviate these expenses.
The government does provide some benefits like Bereavement Support when a family member passes away. However, these benefits typically fall short of covering living costs. Moreover, even if you have a Will to financially support your family posthumously, the estate distribution process can be time-consuming. A life insurance payout can cover interim expenses or contribute towards funeral costs, easing the strain during an emotionally challenging time.
There are scenarios where life insurance may not be necessary. For instance, if you’re single with no financial dependents or your partner earns enough to support your family without your income. However, remember that a life insurance payout could still be beneficial by allowing your partner to take time off work to grieve. Additionally, you can purchase life insurance more cheaply the younger you are and while you are in good health.
Choosing the right life insurance policy necessitates understanding the types available and how they align with your circumstances. Often paired with a mortgage, term life insurance is a popular choice. It provides coverage for a specific term and only pays out if you die within the agreed period. There’s no lump sum or refund if you outlive the term.
On the other hand, whole life insurance covers you for your entire life, provided you keep up with the monthly premiums. The guarantee of a payout makes these premiums higher. Life insurance typically only pays out in the event of death, but some policies offer a terminal benefit, paying out early if you’re diagnosed with a terminal illness. Some insurers also provide integrated critical illness cover for slightly higher premiums.
It’s important to note that most life insurance policies exclude certain causes of death, such as those resulting from drug or alcohol abuse. If you’ve been diagnosed with a severe illness, a basic life insurance policy may also exclude causes of death related to this illness. Therefore, we can advise and help you scrutinise your contract terms carefully to understand what is and isn’t covered.
Please contact us to learn more about life insurance and find the right policy for your needs. We are here to assist you in making an informed decision that best suits your individual circumstances.
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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.
Have you recently evaluated your personal tax situation? Is your tax structure optimised for efficiency?
As we approach the end of the tax year on 5 April 2024, it presents an ideal opportunity to assess and leverage the various allowances and reliefs available to enhance your tax profile. Allocating time for this review can provide valuable insight into potential opportunities for you and your family.
The vast scope and complexity of the UK tax system may seem daunting. However, navigating it with careful planning can lead to significant financial benefits. Understanding your tax affairs is key to maximising your wealth and ensuring your financial future.
However, the tax landscape has witnessed considerable changes, making the situation more challenging for taxpayers and investors alike. As we near the end of the 2023/24 tax year, every taxpayer should understand the importance of this date and consider their tax position.
Furthermore, 5 April 2024 marks the end of your personal earnings year. Knowing your yearly income will help you understand your tax band and ensure you take advantage of potential reliefs or allowances. The current tax year officially ends on 5 April 2024. The following day, 6 April 2024, ushers in the 2024/25 tax year.
This allowance provides a unique opportunity for couples where one partner is a basic rate taxpayer and the other partner’s income falls below the personal allowance threshold. With the Marriage Allowance, you can transfer up to £1,260, which equates to 10% of the personal allowance, from the lower-income partner to the higher-income partner.
This transfer can significantly reduce the tax liability for the basic rate taxpayer, potentially saving up to £252 in the current year. It’s important to note that this allowance is specifically designed for married couples or registered civil partners. By efficiently utilising this allowance, couples can optimise their combined tax liabilities and make the most of their financial situation.
In the course of your employment, there are several tax reliefs you may be eligible to claim. These provisions are designed to offer financial respite for certain expenses related to your job. One such relief is for professional subscriptions. If you must maintain membership in a professional body as part of your job, you can claim tax relief on these fees.
Another provision is the working from home allowance. This relief is aimed at employees who incur additional costs due to working from home. It’s designed to alleviate some financial pressure from maintaining a home office. You may also be entitled to claim relief for business miles travelled in your personal vehicle. If you use your own car for work-related travel, this relief can offer significant savings.
These allowances are aimed at individuals who earn small amounts of income from activities like selling items on eBay or Amazon or renting out spaces on Airbnb. Each of these allowances offers up to £1,000 of tax-free income.
Furthermore, if you rent out a portion of your home, you may be eligible for the Rent-a-Room relief. This relief allows you to receive up to £7,500 tax-free from letting out a room in your home.
You receive an ISA allowance of £20,000 in the current tax year. Contributions can be allocated to a Cash ISA, Stocks & Shares ISA, Lifetime ISA, or Innovative Finance ISA. ISAs are a ‘tax efficient wrapper’ which can make a big difference to your money over time. As a couple, it’s important to think about making the most of each of your individual allowances so that each of you has access to tax-efficient savings for the future. At death, a surviving spouse or civil partner is entitled to an extra ISA allowance equivalent to the value of their spouse’s ISA, allowing these savings to pass tax-efficiently to the surviving partner.
Investors who have yet to use up their full ISA allowance should discuss with us the potential to sell shares yielding dividends outside their ISA and buying them back within this tax-exempt wrapper. However, care should be taken as this could trigger a Capital Gains Tax charge.
Children are entitled to a Junior ISA (JISA) allowance of £9,000 per annum. Consider funding a JISA to give your children a tax-efficient nest egg which they can access at 18 or convert to an ISA, allowing them to continue the saving habit you have instilled in them.
A Lifetime ISA (LISA) applies to individuals aged 18 to 40 who are either planning to purchase their first home or preparing for retirement. With the ability to invest up to £4,000 annually, the government bolsters your efforts with a 25% bonus, up to a maximum of £1,000 per year. This money can be used to buy a new property (subject to certain restrictions) or accessed when you turn 60 to supplement your retirement income.
Pension contributions should be a key consideration at the end of each tax year. There are several advantages to doing so. For example, the pension scheme can reclaim basic rate tax from HM Revenue & Customs (HMRC). You’ll receive additional tax relief if you’re subject to a higher tax rate exceeding 20%. You’re establishing a pension fund for your retirement or to pass on to future generations. Contributions to pension schemes can also be made on behalf of your minor or adult children and your grandchildren, helping them to boost their retirement savings and potentially improving their current tax position too.
In the current tax year of 2023/24, contribution limits have increased.
All UK residents under the age of 75 can contribute up to £3,600 gross (£2,880 net) per year, irrespective of income level. For those with income, the annual pension contribution limit has increased and is now the lesser of your relevant earnings or an annual allowance of £60,000 gross, corresponding to a net payment of £48,000. If your income exceeds £260,000, then these allowances are tapered, and if income exceeds £360,000 then the annual allowance is £10,000.
For individuals aged over 75, no tax relief is provided on contributions made. If you can make additional contributions, you can use any unused allowances carried forward from the previous three years. Reviewing your pension status and that of your family members is crucial for effective financial planning.
The ‘Carry Forward’ rules allow you to carry forward unused allowances from the previous three tax years if eligible. As we reach this tax year end, you’ll lose any unused allowance for the 2020/21 tax year if it remains untapped. Considering these rules when planning your pension contributions would be best.
In light of the changing landscape for Capital Gains Tax (CGT), it’s essential to understand how you can optimise your financial strategy. Before 6 April 2024, you have an opportunity to solidify your capital gains and make the most of the annual CGT exemption, which is capped at £6,000. However, please note that this benefit is not extended to individuals who are taxed on a remittance basis with income and capital gains exceeding £2,000.
One effective method to crystallise capital gains involves strategically selling and repurchasing stocks and shares. This approach enables you to maximise the annual CGT exemption. It offers an opportunity to elevate the base cost for future sales, potentially reducing your tax liability in the long run.
However, knowing the timing and the party involved in the repurchase is crucial. To derive the maximum benefit from this strategy, the repurchase should ideally occur after a gap of more than 30 days. Alternatively, the buyback can be executed by your spouse, registered civil partner or through an Individual Savings Account (ISA).
For those with invested assets, the dividend allowance can offer substantial benefits. You can receive up to £1,000 per year tax-free, with dividend tax rates applied to amounts over £1,000. The dividend allowance will be reduced to £500 per annum in the 2024/25 tax year.
Certain gifts can be exempt from Inheritance Tax, immediately leaving your estate upon gifting. These are commonly referred to as exempt gifts and include gifts presented to your spouse or registered civil partner. In addition, contributions to charities or political parties are exempt as well as gifts valued up to £250, provided each gift is given to a different recipient and is the only tax-exempt gift they’ve received from you within that tax year. This often encompasses birthday and Christmas gifts derived from your regular income.
Also exempt are wedding gifts from a parent to their child up to £5,000, from grandparent to grandchild up to £2,500, or up to £1,000 to anyone else. Additionally, you’re allocated an annual exemption each tax year, allowing you to give cash or property up to the value of £3,000. This can be given to a single individual or divided among several recipients. If the previous year’s exemption wasn’t utilised, it can be carried forward to the current tax year, effectively doubling the exemption to £6,000.
Most importantly, if you make regular gifts that are affordable from your income to loved ones, then these are not considered when calculating inheritance tax. For example, beginning a regular pattern of making pension contributions for grandchildren out of your annual income could allow you to pass on wealth in a tax-efficient way. Whatever you decide to do, good record keeping is essential and understanding these exemptions will help in efficient tax planning and potentially reduce your Inheritance Tax liability.
Your Personal Savings Allowance (PSA) refers to the amount of savings interest income/growth you can earn tax-free. Current levels are set at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. Additional rate taxpayers, however, are not entitled to this allowance.
Time is running out if you want to ensure your personal affairs, family and business affairs and plans for the long term are arranged tax-efficiently. For further information on tax year-end planning opportunities get in touch today.
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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.
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.
As you sail into your 50s, it becomes pivotal to consider your financial strategy. Life has likely found a steady rhythm by now. Children have probably taken flight, becoming financially self-sufficient, and the idea of reducing work hours or even retiring completely starts to surface.
Each person’s life journey is unique and has different resources and challenges. However, there are shared goals and steps that one can take during this stage. Knowing where to begin can be daunting, whether you aim to maximise your earnings or lay down a robust financial plan.
The key to financial stability lies in balancing cash and investments. It’s generally advisable to have an emergency fund that can cover three to six months of living expenses and any planned spending. This provides a safety net for unexpected events like job loss or significant sudden expenditures. However, the exact amount depends on factors such as employment security and expense levels.
While it may be tempting to hoard cash, having too much idle money is only sometimes the best strategy. For long-term goals, investing can offer the opportunity for your money to grow and outpace inflation.
As you enter your 50s, retirement planning should take centre stage. This period often comes with increased earnings, which, when channelled towards pension contributions, can yield extra benefits from tax relief. Determining how much capital you’ll need for the rest of your life can be challenging, but tools like pension calculators can provide guidance.
If your income has increased compared to in your 30s or 40s, consider using the extra money to accelerate your retirement savings. This could be in the form of additional pension contributions, with options like a Self-Invested Personal Pension (SIPP) offering flexibility.
The State Pension forms a significant part of most people’s retirement income. Yet, there’s often confusion about its specifics. In your 50s, it’s crucial to understand the rules for qualifying, how much you’ll receive and from what age.
You can obtain a State Pension forecast from the government website https://www.gov.uk/check-state-pension, which helps you understand how much you could get and how to increase it. Monitoring your National Insurance (NI) contribution record is also essential, and you can fill any gaps in contributions from the last six years through voluntary payments.
Deciding between paying off your mortgage or investing the money is a personal decision that involves considering factors such as your risk tolerance, financial goals and tax situation.
If you’re risk-averse, you may prefer to pay off your mortgage quickly for peace of mind. On the other hand, investing could provide higher returns, especially for higher rate taxpayers making pension contributions if you’re open to taking some risks. Downsizing could also be an option if you own a large home. This could free up equity to fund your retirement and reduce maintenance costs.
As you age, it becomes increasingly important to plan for the future, particularly regarding passing on assets and managing Inheritance Tax. Even those who aren’t exceptionally wealthy may be subject to this tax.
Inheritance tax is levied on the value of an estate upon the owner’s death, but there are ways to reduce this liability, such as making gifts or setting up trusts. Ensuring your Will is updated to reflect your current circumstances is also crucial.
For a no obligation chat about your position and future plans get in touch today.
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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.
Pensioners are set to see a substantial increase in their income next year. The State Pension is projected to rise by 8.5% in April 2024, following a 10.1% increase in April 2023[1]. Whilst this may be seen as helping many pensioners combat the cost-of-living crisis, it’s not all good news. Pensioners may also face a potential tax pitfall, this is because Income Tax bands remain fixed. So as the State Pension escalates, a proportion of this pension increase is lost in tax, so you may not be as better off as you thought.
The government’s ‘triple lock’ mechanism, guarantees that State Pension benefits increase in line with wage growth, inflation or 2.5% – whichever is higher. Consequently, a full new State Pension could increase from £10,600 this tax year to slightly over £11,500 in 2024/25. What is still unconfirmed by the Prime Minister is whether the ‘triple lock’ system will remain in place in 2024 and beyond.
Your personal allowance is the limit you are able to earn without paying any income tax. This limit is static and equates to £12,570 a year. In some situations, an individual could have a higher amount than this tax-free, for example if all income is savings income. This could mean some people might receive less tax-free income from other sources. This situation may result in a tax code change on a pension or annuity, or necessitate reporting other income to HMRC for the first time.
When retiring it’s good to be aware of certain ‘allowances’ that could help you earn from your cash and shares without paying tax. Understanding these allowances is the first step towards paying less tax in retirement.
For instance, take note of the personal savings allowance. This allows basic rate taxpayers to earn £1,000 of interest in 2023/24 before paying tax. The allowance is lower (£500) for higher rate taxpayers, while additional rate taxpayers don’t receive any personal savings allowance.
An additional ‘starting rate’ for savings offers a special 0% rate of Income Tax for savings income of up to £5,000 for those whose general taxable income falls below £17,570 in 2023/24.
The dividend allowance is another tool at your disposal. It allows you to receive £1,000 tax-free from shares for the 2023/24 tax year, which is reduced from £2,000 in the previous tax year. Come 2024/25, the allowance will drop further to just £500.
There are different ways to shelter your savings from tax. One such method is using a Cash Individual Savings Account (ISA), where any interest earned is tax-efficient. However, remember that the more you use your £20,000 a year ISA allowance for cash, the less you’ll have available for investments in a Stocks & Shares ISA. This could be more useful in avoiding tax on income or gains from shares or other assets.
National Savings and Investments (NS&I) also offer certain tax-free cash savings products, like Premium Bonds. With these, your money is secure, and you are entered into a monthly prize draw where you can win between £25 and £1 million tax-free.
Under the current rules, once you reach normal retirement age, you can usually take an invested pension pot, such as a Self-Invested Personal pension (SIPP), as cash in one go. But remember, taxes on retirement income will generally apply to 75% of this pension sum. It’s also added to other income in the tax year it is received, so it could push you into a higher Income Tax band.
Depending on the scheme options available, you can ‘phase’ your retirement pension income by taking the 25% tax-free lump sum and taxable income in stages. Spreading withdrawals over multiple tax years in this way may help you make the most of tax allowances and avoid paying more tax than necessary.
Stocks & Shares ISAs are a tax-efficient way to invest your money for the long term. Unlike a pension, an ISA also offers the freedom to withdraw money easily whenever you want to without paying any tax. Proceeds are free of Income Tax and Capital Gains Tax.
These features make ISAs very useful for almost any investing need. They can be beneficial in retirement as a way to supplement income without any tax consequences. For example, they can complement pension income, which is usually taxable beyond the first 25% of the pot, or in some circumstances, help bridge a gap until you access a pension.
It’s worth noting that you don’t have to claim your State Pension as soon as you’re entitled. By not claiming your State Pension immediately, you’re giving up income in the short term, but if you’re still working and know you’ll experience a drop in income later on, it can make sense. You could pay less tax, plus you’ll receive a larger amount when you take it.
However, you must also be confident you will live a relatively long life. The longer you live, the more valuable deferring gets, but if you live significantly shorter than the average, it is unlikely to be worth it.
If appropriate to your situation, consider splitting income-producing assets if you’re married or in a registered civil partnership. This can be done by holding them in joint names or allocating them to the partner with the lower income and tax liability. The beneficial ownership, as well as the legal ownership, would need to be transferred.
You can also think about how you arrange your asset types across different accounts. For example, it can make sense to prioritise your ISA allowances for dividend-producing investments rather than cash. However, your needs, objectives and circumstances will dictate what’s best for you.
Many factors come into play when looking at your income and the tax you pay in retirement. But with careful planning, you can secure your financial future. Please don’t feel that you have to go it alone. We’re here to help you take control of your finances, giving you freedom and peace of mind.
Understanding the intricacies of retirement tax can be complex. Please get in touch with us for further information.
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[1] House of Commons Library 2023 – The triple lock: How will State Pensions be updated in future? Published Friday, 13 October, 2023
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.
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.
As we approach the end of the year, taxpayers should begin assessing their tax obligations. This is not a task to be left to the eleventh hour, especially considering tax changes coming into effect in 2024.
This is also particularly true for 2023, a year already marked by several tax changes that impact higher rate taxpayers. By understanding your tax obligations early on, you could avoid unwelcome surprises. Understanding these tax changes lets you plan and strategise effectively to meet your tax obligations without unnecessary stress or last-minute surprises.
Remember, proactive tax planning can help you optimise your finances and potentially reduce your tax liability.
In the 2023/24 tax year, the threshold for taxpayers in England, Wales and Northern Ireland paying the top tax rate of 45% has been reduced from £150,000 to £125,140. This figure aligns with taxpayers earning over £100,000, who lose all of their personal allowance. Scottish taxpayers face a similar situation, but the tax rate has increased to 47%.
Capital Gains Tax (CGT) allowances and dividend allowances have also been slashed. The annual exempt amount for CGT has dropped from £12,300 to £6,000 for this tax year and will further decrease to £3,000 from April 2024. Similarly, the dividend allowance has been cut from £2,000 to £1,000, with another £500 reduction planned for April 2024.
The challenge for all is devising ways to counteract these tax increases. Here are some strategies for those likely to become additional rate taxpayers due to the threshold reduction, if applicable.
The tax system encourages generosity by providing tax relief on charitable donations. You won’t have to pay CGT on land, property or shares donated to charity. By deducting the value of your donation from your total taxable income, you can also pay less Income Tax.
With the CGT allowance set to decrease further in the next tax year, it might be worth considering selling stocks that have gained value. However, investment decisions should align with your goals and objectives rather than purely tax breaks.
Offshore investment bonds can provide cash in the form of capital payments, deferring tax on growth. The trade-off is that the growth will be subject to Income Tax rather than CGT when the bond matures.
Pension contributions can reduce taxable income levels. If your earnings surpass £125,140, every £55 contributed to a pension will yield £100 of investment. How you receive the tax relief depends on whether you’re employed or self-employed. However, it’s essential to have enough ‘earned’ income
to cover the gross contribution and be aware of the annual allowance limit. This is the limit on how much money you can contribute to your pension in any one tax year while still benefiting from tax relief. It currently stands at £60,000.
Splitting investment portfolios between spouses or partners allows you to use both CGT allowances and lower rate bands. Gifting investments to a non-earning spouse or partner can ensure their allowances aren’t wasted.
Company owners might consider restructuring dividends to retain their personal allowance every other year. This approach requires careful planning and discipline to retain enough cash each high-income year.
Family investment companies can serve as a longer-term wealth accumulation structure. Although the corporation tax rate has increased to 25%, dividends received by a company are not subject to tax, allowing for potential gross roll-ups of income.
Ready to embark on your journey to financial growth? Get in touch today.
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THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. YOUR OWN PERSONAL CIRCUMSTANCES, INCLUDING WHERE YOU LIVE IN THE UK, WILL HAVE AN IMPACT ON THE TAX YOU PAY. LAWS AND TAX RULES MAY CHANGE IN THE FUTURE. SEEK PROFESSIONAL ADVICE.
Weddings are a source of great joy and celebration but they can also be stressful to pay for. Hannah Rogers, one of Fairstone’s expert financial advisers, takes a look at the realities and trends of wedding finances highlighted in a recent survey.
The cost of living crisis, inflation and social media pressures are causing couples to go over budget on their special day. Rising costs and unexpected expenses from suppliers are the main reasons for increased spending. According to new data, several macro trends have impacted weddings in 2023 [1].
Two-fifths (38%) of newlyweds, and brides- and grooms-to-be are going over budget on their special day, with most of these couples citing the rising cost of living (51%) and suppliers being more expensive than they anticipated (44%) as the reasons for this increased spend.
Over a third (36%) say they are overspending because they want to make the most of the once-in-a-lifetime event. On average, couples exceed their budget spend by an additional £5,034.
The data also reveals that one in five Britons spend over £25,000 on their wedding celebrations, with 7% spending more than £50,000. However, 17% of respondents are sticking to a budget of less than £5,000 by adopting a more economical approach. Some couples even decide to have a smaller wedding or make cutbacks to save money.
More than 90% of couples take a DIY approach to at least one aspect of their wedding. This includes making their wedding stationery, decorations and flower arrangements, and even asking friends or family members to officiate the ceremony.
One in ten couples feel pressured to spend more on photography and videography due to social media influences. While some couples create a wedding hashtag and encourage guests to share images, others discourage social media posting on the day or even ban smartphones altogether.
Social media plays a key role in proposals as well. A quarter of respondents updated their social networks within 24 hours of getting engaged, and 14% captured the proposal on camera. Some proposals happened in sentimental locations or abroad; on average, Britons spend £1,397 on engagement rings.
Wedding attire is one aspect where couples are willing to spend more. The data shows increased spending per individual at bridalwear and groomswear retailers. However, 20% of brides opt for high-street dresses instead of designer brands, and 13% buy pre-loved wedding outfits.
Eco-weddings are chosen by 11% of couples, making sustainable choices to reduce costs. This includes using paperless invites, renting decorations, buying second-hand wedding attire, going single-use plastic-free and using flower petals or natural confetti. Some couples also plan to sell items from the day to recoup costs.
Around 31% of couples prioritise spending on music, with 71% hiring entertainment for their wedding. Additionally, 18% of couples opt to have a live wedding singer perform, while 7% opt for a ‘silent disco’ experience. Some couples also take a DIY approach to music and entertainment by playing, performing or asking a friend to help.
Around 11% of couples plan joint stag and hen parties, merging the traditional separate celebrations into one event. This helps to make the celebration more economical and fits within the budget.
Many couples are finding ways to save on floral arrangements. About 22% of couples make DIY flower arrangements, while 19% opt for cost-efficient displays using native or in-season flowers. Some couples are even turning to wholesalers or supermarkets for their flowers.
Couples get financial help from various sources to afford their dream wedding. Three out of ten couples receive financial support from their parents, while 33% save by cutting back on spending leading up to the wedding. Some couples choose to have a more prolonged engagement to save more, and 17% take on side hustles or second jobs to boost their wedding fund.
Only 16% of couples offer an open bar at their wedding, signaling a shift towards more cost-conscious choices regarding wedding expenses.
These trends and behaviours reflect the changing landscape of weddings in 2023, where couples find creative ways to manage costs while creating memorable and enjoyable celebrations.
Our expert advisers can talk you through a range of savings and investment options you can do to make sure you’re all set for your dream wedding. Alternatively, sign up to our newsletter to stay up to date with our latest news and expert insights.
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Source Data: [1] The consumer confidence survey was carried out between 29 June and 10 July 2023 by Opinium Research on behalf of Barclays. 1,000 UK adult respondents were engaged or married in the last 12 months.
Investing early with a junior ISA or a bare trust can be a proactive way of saving for your child or grandchild says Ryan Neil, one of Fairstone’s expert financial advisers.
Many parents and grandparents set aside money for the next generation to help with their financial needs. The rising cost of weddings, housing, cars and life in general, has created concerns about financial stability for future generations.
Increasingly, parents and grandparents want to ensure their children and grandchildren have the financial resources to navigate these challenges successfully. Additionally, a greater awareness of the importance of financial planning and wealth accumulation has prompted many individuals to take proactive steps in securing their children’s financial futures.
Starting early and investing strategically will enable you to provide a solid foundation for your child’s or grandchild’s economic wellbeing. The desire to give the next generation a head start in life and empower them to overcome any financial hurdles is a driving force behind why many parents and grandparents focus on setting aside money for children and grandchildren.
When considering the tax implications and how to arrange your affairs best, tax-efficient structures like Junior ISAs (JISAs) or bare trusts can be worth exploring.
A bare trust is commonly used to pass assets to young people. In a bare trust, the assets are held in the name of the trustee (typically a parent or grandparent) until the beneficiary reaches a specific age, in this case 18.
On the other hand, a JISA has a current annual allowance of £9,000 (tax year 2023/24) and anyone can contribute to it. There is no limit to the amount that can be settled in a bare trust, while there are restrictions on JISAs, and a change of beneficiary is not allowed.
Assets held in a JISA are exempt from Income or Capital Gains Tax, providing a significant tax advantage. However, taxes still apply to assets held in bare trusts. Contributions to bare trusts and JISAs are potentially exempt transfers for Inheritance Tax purposes if the donor survives for seven years from the date of the gift.
Regarding access to the funds, money can be withdrawn from a bare trust while the beneficiary is still a minor, as long as it is used for their benefit, such as for school fees. Conversely, funds cannot be withdrawn from a JISA until the beneficiary reaches the age of 18, but they can assume control of the account from the age of 16.
One common concern with JISAs and bare trusts is what happens when the child turns 18 and gains asset access. At this point, they have control over the funds, and there may be little that can be done if the money is misused.
Trustees of bare trusts have a duty to inform the beneficiary about the trust’s existence when they turn 18, and income from the trust should be reported on the beneficiary’s tax return, making it difficult to ignore the trust’s existence.
It’s worth considering alternatives to JISAs and bare trusts, such as setting aside a portion of your savings for your children or grandchildren. More complex trust and inheritance arrangements are also available, and you should always obtain professional advice.
Investing early for your children or grandchildren can give them a significant financial head start. As the costs of private education, university, getting on the property ladder and weddings continue to grow, to find out more about investing for your children or grandchildren, please speak to us.
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THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED.
THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE.
Be proactive, start early and implement your plan in stages to get your house (and your estate) in order to plan your approach to inheritance tax says Mandy Crawford, one of Fairstone’s expert financial advisers.
Over the next 30 years, it has been widely reported that intergenerational wealth transfer is expected to be around £5.5trn, labelled as the greatest wealth transfer in UK history. The Government may be biggest beneficiary of this if people don’t have a plan for their estate.
The UK Treasury has been receiving record-breaking Inheritance Tax (IHT) receipts. IHT receipts amounted to approximately £7.09 billion British pounds in 2022/23, compared with £6.05 billion in the previous financial year[1].
For individuals and families who have to pay it, IHT can be emotionally challenging, often requiring the sale of cherished family assets to settle the tax bill. That’s why starting estate planning early and implementing it in stages is essential. Also, having an open conversation about estate planning with family members is very beneficial but depends on family dynamics and wealth levels.
However, families should take proactive measures to minimise the possibility of facing a substantial IHT bill. By planning ahead and seeking professional advice, individuals can ensure their assets are managed to minimise tax liabilities.
Creating a comprehensive wealth strategy involves considering various factors.
We can help you assess your assets and income to ensure we support your desired lifestyle throughout your lifetime. By understanding your cash flow needs, we can assist in structuring investments and creating a sustainable financial plan.
Gifting can be a valuable tool in wealth planning, allowing you to reduce a potential IHT tax burden. We can guide you on the various gifting allowances and exemptions available, such as the annual gifting allowance, wedding gifts and gifts from normal expenditure out of income.
Most trusts offer flexibility and control over how your assets are distributed. They can also help reduce taxes on inheritance. This excludes Absolute Trusts, where control over assets is discretionary. Working closely with us, you can explore different trust options and understand how they can be incorporated into your wealth planning strategy.
Pensions are important in wealth planning, offering tax advantages and the potential for long-term financial security. We can help you navigate the complexities of pensions, including risk assessment, accessing pension funds and maximising tax benefits.
Protecting your loved ones in the event of death or illness is crucial. We can advise on selecting the right protection products to provide liquidity for IHT and other associated costs.
Incorporating business relief into your wealth planning strategy can be advantageous if you own a business or have qualifying assets. We’ll help you understand the eligibility criteria and how to leverage this relief effectively.
Creating a Will ensures that your assets are distributed according to your wishes. Additionally, appointing a Lasting Power of Attorney provides someone with financial control over your assets and peace of mind if you cannot manage your affairs.
Estate planning is not a one-size-fits-all approach. Although there is no requirement to address IHT, proactive planning can minimise the tax burden on families. Seeking professional advice and taking steps early can help reduce the risk of leaving loved ones with a larger tax bill than necessary.
When you’ve worked hard to build up your wealth, you want the peace of mind to pass this on to your loved ones. There’s much to consider, especially if you have a complex estate. Who should it go to? And when? Is it sensible to pass on wealth during your lifetime? To discuss how we can help, don’t hesitate to contact us.
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THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED.
THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE.
ESTATE PLANNING IS NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.
A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND ON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTEREST RATES AND TAX LEGISLATION.
John McLaren, one of Fairstone’s expert financial advisers, encourages families to lay strong foundations for financial literacy with their children by being open and positive about managing money.
Passing on the benefit of your experience to your children or grandchildren is crucial for their future success. However, financial planning can be complex, and even the most knowledgeable individuals may need help.
Breaking down barriers around talking about family wealth takes time and patience. It requires ongoing conversations and a willingness to address any fears or concerns that may arise. By starting early and progressively educating the younger generations, families can establish a foundation of knowledge and create a legacy of open communication and responsible wealth management.
It is essential to encourage younger family members to engage with their finances from an early age. These tips can help lay a strong foundation for money management and financial literacy in the next generation.
Begin conversations about money when children are preschool or primary school age. Teach them basic concepts such as saving, spending and the value of money. As they age, introduce more complex ideas like budgeting, investing, responsible credit use and philanthropy.
Discuss the family’s history, values and journey to wealth accumulation. Sharing stories and personal experiences can help younger generations understand the importance of responsible wealth management and its associated values.
Children learn through observation, play and experimentation. Find opportunities to engage them in money-related topics based on their interests. For example, if they love playing Minecraft, use it to teach them about budgeting and earning virtual money.
Increase their responsibility as they get older by providing pocket money or an allowance. Encourage them to make spending decisions based on individual goals and priorities. It’s okay to acknowledge disappointment when they can’t have everything they want.
Start by sharing lower-level concepts and provide more detail as the younger generations grow older and demonstrate a greater understanding and maturity. This will help prevent overwhelming them with information while allowing them to develop a solid foundation of knowledge.
Allow children to make and learn from age-appropriate mistakes. Minor errors now can prevent bigger ones in the future. Help them reflect on their decisions and find ways to do things differently next time.
Encourage open and honest communication within the family. Make it clear that discussing family wealth is not taboo and that everyone’s perspectives and opinions are valued. Ensure they understand the family’s financial situation is not their fault or responsibility.
Children pick up on their parent’s emotions. Evaluate your feelings before discussing financial matters with children. Seek support from a friend or family member if needed. Show them how to approach economic challenges with a proactive mindset.
Money should not be used to control family dynamics. Avoid overpromising or overindulging children’s wants. Help them appreciate non-materialistic things like shared experiences and relationships. Set boundaries around money and explain the reasons behind them.
Help children to understand simple money principles, such as the importance of compound interest and its long-term effect on investments and debt or budgeting and the need to spend less than your net income in order to save. This will help teach them the value of planning ahead and begin to introduce concepts such as how factors including time, interest, tax, income and expenses can all influence personal finances.
Our financial experts are always on hand to support you with financial advice. If you want to make an investment that grows alongside your child, get in touch. Alternatively, sign up to our newsletter to stay up to date with our latest news and expert insights.
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THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH.
THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED.
YOUR OWN PERSONAL CIRCUMSTANCES, INCLUDING WHERE YOU LIVE IN THE UK, WILL HAVE AN IMPACT ON THE TAX YOU PAY. LAWS AND TAX RULES MAY CHANGE IN THE FUTURE.
When it comes to ensuring that your family is taken care of in the event of your premature death, life insurance is invaluable.
Life insurance provides a cash payment, known as a death benefit, which may be used to cover costs such as paying off a mortgage or other debts and funeral expenses. It can also provide a financial cushion to help your family maintain their lifestyle after you’re gone. Ultimately, it provides peace of mind that should the worst happen, your loved ones will be financially taken care of.
The cost of life insurance can vary based on different factors such as the amount of coverage, policy type, age and health. Typically, the higher the coverage amount, the higher the monthly premiums. The policy type can also impact the cost, as term life insurance only covers a specific time frame while whole-of-life insurance does not have an expiry date.
Age can be a key factor, with older individuals often having higher premiums. Health also plays a significant role in determining premiums, with healthier individuals generally having lower premiums as they pose less of a risk to the insurer.
Insurers may review medical records, ask for basic health information, or require a medical exam to assess an individual’s risk. They may also consider an individual’s family health history when calculating the cost of life insurance.
If an individual’s family has a history of health conditions such as heart attacks, strokes, or diabetes, they may be deemed as more vulnerable to these conditions and ultimately end up paying higher premiums.
Habits and lifestyle can also impact premiums, with insurers wanting to know about habits such as alcohol consumption or smoking. Occupational hazards also come into play, with some occupations deemed as more dangerous than others, such as those in construction, the armed forces or emergency services.
Finally, insurers may ask about hobbies outside of work, especially those that could pose a risk to the individual’s health, such as rock climbing or extreme sports. The insurer assesses an individual’s lifestyle and hobbies to determine the risk of future claims under the policy.
Sustaining the future of your loved ones after you are gone is essential. What if the unthinkable happened to you? Life insurance is there to ensure the life you’ve built together goes on. With the rising costs of living and less disposable income for many, life insurance could be more important than ever.
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