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Inheritance tax (IHT) receipts were reported as being £5.2bn in the last tax year. IHT is the one tax we never pay ourselves, but that does not stop it being the most unpopular, because IHT is charged at 40% on our estates – everything we leave behind, after a basic allowance of £325,000, and some concessions for the family home. Rising house prices and general wealth are leading to more families paying a tax that was once described by Chancellor Nigel Lawson as a ‘voluntary tax’, you can either do nothing and volunteer your beneficiaries to pay it, or you can take steps to avoid it.


Why you should consolidate them all Why you should consolidate them all


At Continuum we can help you stay out of the IHT trap. Here are just some of the potential solutions;


Your home


The pension industry grew up at a time when for many people a job was for life. It meant that when the time came to retire, in most cases they had a single pension pot, and very little choice in how they used it to provide a pension. But life, work and pensions have all moved on.


PROTECTING YOUR FAMILY LEGACY FROM THE TAXMAN


SHOULD YOU CONSOLIDATE YOUR PENSION POTS?


SIMON PHILLIPS Independent Financial Adviser SIMON PHILLIPS Independent Financial Adviser


The question is, what is the best way to make the most of those pension pots?


The pension industry grew up at a time when for many people a job was for life. It meant that when the time came to retire, in most cases they had a single pension pot, and very little choice in how they used it to provide a pension. But life, work and pensions have all moved on.


SIMON PHILLIPS Independent Financial Adviser


SHOULD YOU CONSOLIDATE YOUR PENSION POTS?


What’s more, charges on pensions vary considerably, and it’s not always true that a consolidated pension will have lower charges. There could even be charges simply for transferring your pension with some providers.


If you leave 10% or more of your net estate to charity you may qualify for a reduced inheritance tax rate of 36%.


The question is, what is the best way to make the most of those pension pots?


It can be tempting to have all of these pension pots in one place, as they will be easier to keep track of. You may be able to reduce management fees if you only have one lump sum that needs care and investment on your behalf.


The value of our home will often use up your available concessions for IHT. If you bequeath a property to your direct descendants, the residence nil-rate band (RNRB) is an additional concession on top of the basic allowance of £325,000. This is a further £125,000 in the current tax year rising to £175,000 in 2020/21, after which it will keep pace with inflation.


Why you shouldn’t Why you shouldn’t


Give it away


Giving away surplus cash can put it out of your estate, but you must live another seven years. However, you have an annual £3,000 tax-free gift allowance, which will let you put money outside your estate immediately.


It is easy enough to do. Most of us have grown used to the idea of moving around money between accounts, but perhaps there are reasons not to put all your eggs in one basket.


It can be tempting to have all of these pension pots in one place, as they will be easier to keep track of. You may be able to reduce management fees if you only have one lump sum that needs care and investment on your behalf.


It is easy enough to do. Most of us have grown used to the idea of moving around money between accounts, but perhaps there are reasons not to put all your eggs in one basket.


While it may seem the tidiest thing to do and can have some advantages, there can also be some disadvantages to merging pension pots.


You can give up to £250 each year to anyone or make a wedding gift to a family member up to £1,000 per person, rising to £5,000 for a child or £2,500 for a grandchild or great-grandchild.


While it may seem the tidiest thing to do and can have some advantages, there can also be some disadvantages to merging pension pots.


Older pension policies may have attractive features which are lost if transferred, whilst small pots can benefit from tax privileges which might not apply to larger sums.


Older pension policies may have attractive features which are lost if transferred, whilst small pots can benefit from tax privileges which might not apply to larger sums.


The value of pensions and investments can fall as well as rise, you may get back less than you invested. Your home may be repossessed if you do not keep up repayments on your mortgage. Estate planning is not regulated by the FCA. Levels and basis of reliefs from taxation are subject to change and depend upon personal circumstances.


Some older employer pensions come with valuable guarantees, including safeguards such as guaranteed annuity rates (GARs). Some pension schemes will guarantee a certain level of income with your pension or that the value of the units within it cannot fall below a certain level.


Some older employer pensions come with valuable guarantees, including safeguards such as guaranteed annuity rates (GARs). Some pension schemes will guarantee a certain level of income with your pension or that the value of the units within it cannot fall below a certain level.


So, are


pots, before you decide.


e information contained in this article is based on the opinion of Continuum and able investment s rategy, you should seek independent financial advice before pension and investments, and the income they produce, can fall as well as rise and reliefs from taxation are subject to change and depend upon your personal circumstances.


MORTGAGES MORTGAGES


LONG TERM CARE PLANNING INVESTMENTS


LIFE INSURANCE LIFE INSURANCE SAVINGS SAVINGS


IHT PLANNING PENSIONS


Tax efficient investment planning


When you put assets into a trust they are no longer yours, they belong to the trust. As with large gifts, assets placed in trust only fall outside your estate for IHT purposes if you live for at least more seven years.


Insure your life


So, what should you do? If you are considering consolidating your pensions you should seek professional help. There is actually a requirement for those with the safeguarded benefit of a guaranteed final salary to take financial advice, if they want to transfer and their pension pot is worth more than £30,000.


What’s more, charges on pensions vary considerably, and it’s not always true that a consolidated pension will have lower charges. There could even be charges simply for transferring your pension with some providers.


Whole of life insurance could be the simple way to deal with IHT. Take out a policy in trust and your executors can use the proceeds to pay off the IHT bill.


Fortunately, at Continuum we can help check the benefits offered by each pot you have accumulated over the years.


So, what should you do? If you are considering consolidating your pensions you should seek professional help. There is actually a requirement for those with the safeguarded benefit of a guaranteed final salary to take financial advice, if they want to transfer and their pension pot is worth more than £30,000.


Look at your pension


Pensions can provide a solution. If you die before 75 the money in your pension can be passed to anyone you nominate tax free. If you die after 75 your beneficiaries usually only have to pay income tax on what they take out of the pension.


Make a will


You also need to consider just what you will do with your pot if you do consolidate it. Unless you are an expert investor, choosing how your newly consolidated pension should be invested can be daunting.


A will is the most basic estate planning measure you can take to minimise IHT. With no will, your estate would be processed according to the Rules of Intestacy, which could result in more going to the taxman.


Get some expert help


Whatever the solution, getting expert help is essential for successful estate planning.


At Continuum we know that getting the right mix of investments should involve not just a knowledge of the investment market, but an understanding of your own attitude to financial risk and your individual circumstances. Everyone has different tolerance of risk and different plans for retirement, and this can make a huge difference to how your money should be invested.


answer to what should you do if you about consolidating your pension simply to talk to Simon at Continuum


You also need to consider just what you will do with your pot if you do consolidate it. Unless you are an expert investor, choosing how your newly consolidated pension should be invested can be daunting.


Fortunately, at Continuum we can help check the benefits offered by each pot you have accumulated over the years.


At Continuum we know that getting the right mix of investments should involve not just a knowledge of the investment market, but an understanding of your own attitude to financial risk and your individual circumstances. Everyone has different tolerance of risk and different plans for retirement, and this can make a huge difference to how your money should be invested.


So, the real answer to what should you do if you are thinking about consolidating your pension pots, is simply to talk to Simon at Continuum before you decide.


Th The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suit suitable investment strategy, you should seek independent financial advice before embarking on any course of action. The value of your


INVESTMENTS INVESTMENTS


Continuum (Financial Services) LLP, Falcon House, Eagle Road, Langage, Plymouth, PL7 5JY T: +44 (0)345 643 0770 E: info@mycontinuum.co.uk www.mycontinuum.co.uk Continuum is a trading name of Continuum (Financial Services) LLP Falcon House, Eagle Road, Langage, Plymouth, PL7 5JY which is authorised and regulated by the Financial Conduct Authority


Continuum (Financial Services) LLP, Falcon House, Eagle Road, Langage, Plymouth, PL7 5JY T: +44 (0)345 643 0770 E: info@mycontinuum.co.uk www.mycontinuum.co.uk Continuum is a trading name of Continuum (Financial Services) LLP Falcon House, Eagle Road, Langage, Plymouth, PL7 5JY which is authorised and regulated by the Financial Conduct Authority


FOR A FREE INITIAL CONSULTATION CONTACT SIMON PHILLIPS Independent Financial Adviser: T: 01803 752 177 T: 07484 095 044 E: simon@mycontinuum.co.uk Based in Kingswear


FOR A FREE INITIAL CONSULTATION CONTACT SIMON PHILLIPS Independent Financial Adviser: T: 07484 095 044 E: simon@mycontinuum.co.uk


FOR A FREE INITIAL CONSULTATION CONTACT SIMON PHILLIPS Independent Financial Adviser: T: 07484 095 044 E: simon@mycontinuum.co.uk


Based in Kingswear, providing coverage across the South West. Based in Kingswear, providing coverage across the South West.


www.mycontinuum.co.uk www.mycontinuum.co.uk


PENSIONS PENSIONS


LIFE ASSURANCE RESIDENTIAL MORTGAGES


pension and investments, and the income they produce, can fall as well as rise and you may get back less than you invested. Levels and basis of reliefs from taxation are subject to change and depend upon your personal circumstances.


ESTATE PLANNING


constitute financial advice or a recommendation to arking on any course of action. The value of your get back less than you invested. Levels and basis of


ESTATE PLANNING


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