Archive for the ‘Parents & Families’ Category
The wealthy young give more to charity than their older peers
According to NPC’s Money for Good Report, young, high-income workers tend to give more to charity than their older 
peers.
Those on a high income (which is based on a household income of £150,000 plus) and aged 18-34 give £2,301 on average every year. This is significantly more than the average high income donation of £1,282. High income donors make up 1% of the UK population but contribute 10% of its charitable donations.
As the voluntary sector comes increasingly under pressure, with falling income and growing demand for services, the report shines a light on who gives to charity and why.
The report has found that charities currently under-perform in the areas donors care most about. Donors would like more of an explanation on how donations are used and evidence of its impact. The report revealed that people would give more if the charity provided information on how their donation was used.
Ipsos MORI (a leading research company) surveyed 861 high income donors. Within that group it was found:
- Male high income donors give more to charity than female ones, giving on average £1,417 a year compared to £979 for women – although this may reflect individual income within the household.
- Sponsorship is the most used method of donation,
- There is a stronger preference for direct debits than amongst mainstream donors.
- 43% had also given time as a volunteer in the last year.
- The three most popular causes are medical research (59%), children and young people (46%), and hospital and hospices (44%).
- 24% give to schools, colleges, universities and other education.
Money for Good is the biggest ever UK study of donor motivation. Its aim is to increase the quantity and quality of giving, helping charities to appeal more to the giving public. It identifies different types of UK donor, each distinguished by their particular giving habits, for example Good Citizen – ‘I give because it’s the right thing to do.’ Within these types, the largest group of high income donors is the Ad Hoc Givers (31%) who donate because they are asked to do so, for example, at an event or via sponsorship.
Comment
Don’t forget as well as the philanthropic effect of giving to charity it does have other benefits. For those looking to reduce their income to avoid losing Child Benefit charitable giving is a great way to bring your income back under the £50,000 threshold.
Even if you are not doing it for Child Benefit charitable giving extends your basic rate tax band by the gross amount you give to the charity. So, in other words, it could save you some income tax.
Give your employees a pay rise at no cost to you. Here’s how!
With the Eurozone in continued crisis, more cuts on the way and talk of a triple dip recession; keeping the lid on business 
finances is vital. But how does that affect your employees?
In many businesses April is pay review time. How will your employees feel if their take-home pay is falling in real terms? It seems that all but the top performers and job hoppers have seen their spending power fall in recent years with little prospect of recovery.
Fed up employees impact on your bottom line. Whether it is failing to come to work with their A-game, distracting others with their tales of woe or the simple act of quitting to go to a better paid job, they can undermine productivity and stop your business reaching its potential.
So its a delicate balance, as always, between payroll and profit and loss. However, if you’re looking to reward your employees there is another way. Employee benefits are a great way of putting money in your employee’s pockets without increasing your costs. In some instances it can actually end up saving you money.
Perhaps the best route to achieving this is through salary sacrifice – something many overlook. Both the employer and employee can benefit in the form of NI savings and/or reduced tax. Here’s a quick run through of how it works.
- Decide which benefits you want to offer your employees. These can be childcare vouchers, pension contributions, medical cash plan, cycle to work schemes, cars, laptops or wider benefits.
- Find a benefits platform to administrate your scheme. This part will cost you but don’t worry their fees will normally come out of the money you’ve saved in National Insurance and tax.
- Offer your employees the chance to voluntarily reduce their salary by the value of the benefits they want. These are then paid directly by the employer.
The recent changes to Child Benefit for higher earners means that some of your affected employees could end up getting some of their Child Benefit back if they use salary sacrifice.
As with any benefit, salary sacrifice needs careful explanation and communication to your employees. They will need to think about the impact of giving up salary in favour of benefits. In some instances they’ll need to get financial advice.
Sounds a good deal doesn’t it. Now if only you could find a company that’s interested in your business, can help you deal with all this, select a provider, source the benefits, communicate with your staff and give financial advice to your employees. The great news, if your reading this, is that you already have. 44 Financial have many years of experience of working with businesses like yours to install salary sacrifice schemes.
If you want one of our consultants to contact you simply click here.
Steve Clark
Financial planning for the end of the tax year
The nights are finally starting to get a little lighter – maybe we can start looking forward to Spring after all. In financial services, Spring means two things; the Budget (on March 20th this year) and the end of the tax year on Friday April 5th.
This article gives some suggestions on financial planning steps to take before the end of the tax year, so that you can make the most of your tax allowances and organise your affairs as tax efficiently as possible. However, the first point to make is a practical one.
Easter is early this year, with Good Friday on March 29th and Easter Monday on April 1st. With holidays bound to impact on administration at some financial institutions, our first suggestion is that if you’re going to act before the end of the financial year, don’t leave it until the last minute. If you want to make sure your transactions are processed in time, look on the week commencing March 25th as the last practical week.
Individual Savings Accounts
The overall personal limit for an Individual Savings Account (ISA) for the current tax year is £11,280 and this will increase to £11,520 for the new tax year commencing on April 6th. It’s important to note that if you are only contributing to a cash ISA then the maximum is exactly half the overall allowance – so £5,640 and £5,760 respectively. The other key point is that if you don’t use your ISA allowances for this tax year then they are lost – they can’t be ‘carried forward’ to the next tax year.
We’d always recommend making use of your ISA allowances if you can – you pay no tax on capital gains which you make within an ISA or income you take from it. For long term investment there is a huge range of funds available within an ISA ‘wrapper’ from the very cautious to the very adventurous: as always, we’d be happy to discuss all the options with you if you’d like some advice.
Capital Gains Tax
Accountants will tell you that CGT is the ‘forgotten’ tax relief – people who religiously use their full ISA allowance completely fail to utilise their CGT allowance. For the current tax year everyone has a CGT allowance of £10,600 – meaning that capital gains made on investments such as shares are free of tax if they are within this limit. Husbands and wives can gift assets to each other without incurring a CGT charge, effectively giving a married couple a limit of £21,200. Like the ISA allowance though, the CGT allowance is an annual one, and cannot be carried forward to a subsequent tax year.
Inheritance Tax
The current individual limit for Inheritance Tax is £325,000 and this will remain the same for the tax year 2013/2014. Remember though, that you can make gifts during a tax year and these will be exempt from IHT if they fall within the Revenue limits: the limit is £3,000 per person, so £6,000 for a married couple. Although these amounts are small they can still help to reduce the value of an estate.
There are, of course, far more complex and sophisticated Inheritance Tax planning measures such as the use of trusts; if you feel that you would like specialist advice in this area then we will be happy to help.
Pensions
Why have we left pensions to (almost) the end? For a simple reason – because whilst there is enormous scope to make tax efficient investments through your pension (especially for higher-rate taxpayers) the legislation and rules are complex and it is an area where specialist financial planning advice is almost always required.
The top rate of tax is shortly being reduced from 50% to 45%, so many very high earners will be motivated to make pension contributions now, and as usual there is the chance to make use of reliefs and allowances which haven’t been used from previous tax years.
Equally, those people who are self-employed or directors of companies may need to think about making sure their pensions are as tax efficient as possible, and set up to ensure that they receive the maximum benefits from the business they are running. It all adds up to an area where specialist advice is essential and we are always ready to sit down with clients and use our expertise and experience to make sure they have exactly the right pension planning.
Hopefully that’s a useful overview of the planning steps you should take before the year end.
The key message is simple: “talk to us.” We’re never more than a phone call or an e-mail away and we’re happy to explain any of the subjects above in much greater detail.
*The Financial Services Authority does not regulate taxation advice or trusts.
Financial Planning and Divorce
No-one who is going
through a divorce finds the process easy: it’s long, messy and almost always painful. Even if there are no children involved, divorce is a procedure that takes its toll on both sides: the acrimony, the paperwork – and the inevitable meetings with your solicitor.
It’s understandable that many people involved in a divorce want to minimise the number of meetings they attend and simply let the solicitors get on with sorting it out.
Unfortunately, trying to cut down on meetings could be a serious mistake. Divorces are not just about broken relationships, dividing up the family home and arranging custody of the children. Sadly, they’re about financial planning as well – and meetings with your independent financial adviser may turn out to be even more important than meetings with your solicitor.
Even if a couple have only been married for a relatively short time their financial affairs are likely to be inextricably linked. The mortgage will almost certainly be in joint names; they could well have shared protection policies and pension benefits may need taking into account when assets are divided.
Couples who have been together for longer – and an increasing number of people are now getting divorced in later life – will find the financial situation even more complex. Pensions will certainly be an area that requires specialist financial advice as some people, particularly high-earners in final salary pension schemes, will have built up pension funds which could well be worth more than the family home.
The new rules on pensions sharing in divorce have introduced a variety of options when it comes to dividing accumulated pension funds: they have also introduced the need for some seriously complicated (and potentially contentious) calculations, making expert advice absolutely essential.
All these areas mean independent financial advice can be crucial to making sure that any financial ‘damage’ you suffer as a result of a divorce is kept to a minimum, and that you emerge with a clear idea of the financial planning steps you need to take in the aftermath of the divorce.
Virtually no-one relishes going through divorce proceedings, but if you find yourself in that position, seeking out independent financial advice will be one of the wisest decisions you make. A good IFA will help make sure that you receive the best possible financial ‘result’ from the divorce and will work with your solicitor to see that everything runs as smoothly and painlessly as possible. Whether it’s helping to sort out the mortgage, reaching an equitable settlement of pension assets or any of the other complications that a divorce can throw up, an IFA will be on your side, constantly giving advice with your best interests at heart.
If you are – or fear that you might become – involved in divorce proceedings then please don’t hesitate to contact us. We’ll provide you with expert and wholly confidential advice – and do our best to make sure that the financial pain of your divorce is kept to an absolute minimum.
Steve Clark
A Gender for Change – why women must pay more!
We’ve written in the past about the fact that the EU has outlawed the sale of financial products where the cost for the same cover differs between men and women. If you want a quick catch up you can click through to our previous post here.
The biggest issue for women of all ages is that the price of Life Assurance, Critical Illness and Income Protection Cover is likely to go up. The crucial date when everything must change is 21 December 2012.
However, things are beginning to happen already. One of the biggest providers in the market, Scottish Provident, recently announced it has repriced some of its life insurance products for women.
Scottish Provident has calculated that women will face an increase of up to 15% for life insurance as prices equalise and women start to pay the same price as men. This is likely to be the same story when looking at Critical Illness and Income Protection Cover.
Any women out there who are looking to put in place new or increased cover – perhaps as a result of having a baby or moving home – should act sooner rather than later to save themselves some money. In a few months time the same cover is likely to cost you more – for the rest of the time you have the policy. A £5 a month hike in the cost of your cover will cost you an extra £1,500 over the life of a 25 year policy. Surely, a £1,500 saving is worth acting on?
Of course looking protecting your family needs to be viewed as part of your overall financial roadmap. At 44 Financial Ltd we offer the Good Parent Review. This looks at exactly the types of issues that parents with young children may need to wrestle with. It’ll not only look at family protection but also issues of parental responsibility and wealth preservation if a parent dies.
As a father of three young children I am acutely aware of the need for parents and carers to be adequately covered. If you’d like to book an initial consultation contact us by clicking here.
Steve Clark
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