Targeting high earners

The measures are designed to see those who earn more contribute more to the repayment of the UK’s extraordinary debt levels. They include:

- a reduction in the personal income tax allowance for those earning more than £100,000;
- a new 50% income tax band (from April 2011) for those earning more than £150,000; and
- limitations on the tax rebates available on pension contributions.

Taken together, these measures mean high earners need to start thinking now about how to mitigate some of their impact. There are a number of things that can be done to help but, with time running short, you should start thinking now to make the most of this opportunity.

Getting help

If you would like to find out more about the measures and start making plans to limit their effects, we can help. Whether it is through pension planning, investment advice or simply assessing your salary level and tax position, we will take a close look at your financial situation and recommend solutions tailored entirely to your needs.

Give us a call today for a confidential chat - 01204 663904

A well drawn up agreement will deal with:

• How the business will be run
• Entry or exit of new partners
• Death
• Succession
• Retirement
• Valuations - property etc
• Disputes
• Other earnings
• Divorce

A recent discussion with a GP client of mine revealed that the lack of such an agreement has enabled a previous partner of his to continue to enjoy the rent & value increases of the business premises which he vacated over 15 years ago!

In the event of the death of a partner, the beneficiaries of the estate will usually be their family. They may have no experience of running a business and are unlikely to be able to contribute to it in any way. In these circumstances they will usually wish to withdraw their share of the capital at the earliest opportunity. Having partnership protection in place ensures that the family can receive a fair value for that interest.

From the surviving partners’ point of view, they will be continuing to run the business with a sleeping partner taking a share of the profits. They will be keen to ensure that they will be in a position to regain control of the business by paying the family their share of the business back as soon as possible. Partnership protection ensures they have sufficient funds to do so.

For further information on partnership agreements and protection, please contact me on 01204 663904 or advice@themedicalifa.co.uk

See the headline in 12 January’s Daily Mail here.www.dailymail.co.uk/news/article-1242497/Middle-class-medical-professionals-targeted-new-tax-clampdown.html#ixzz0d58v5Dtz

First up is medical consultants, surgeons, doctors and dentists. If this proves “successful” HMRC intends to target other professionals such as Solicitors and bankers.

They have proposed an amnesty to allow any untaxed earnings to be declared. This will be available for 3 months only and after 31 March they intend to be more aggressive.

Of course, you would be forgiven for thinking that this is not new. The Revenue has always had the power to open an aspect or investigate a tax matter should they wish. You may have personal experience of this or know of a colleague who has gone through this. If you do as a busy professional you will know it can be stressful, expensive and time consuming.

Perhaps an audit of your income and outgoings with a professional financial adviser specialising in your field would help.

If you are concerned about these issues and would like to discuss matters further in a confidential manner, please contact me on 01204 663904 or email advice@themedicalifa.co.uk

This comes hot on the heels of the increase personal taxation measures which come into force in April 2010, see here - www.themedicalifa.co.uk/taxation/what-the-proposed-taxation-changes-in-april-2010-will-mean-for-you

recession-proof-portfolio-article

Article reproduced with permission from marketing-hub.co.uk

If you any questions regarding this article, please contact us on 01204 663904 or email advice@themedicalifa.co.uk

Writing a will could therefore be one of the most important things you ever do. Without written evidence, your assets could end up in the hands of the wrong people – or even worse, in the hands of the Government.

Did you know?

If you do not make a will, the assets of your estate become subject to the laws of probate. This means, depending on the size of your estate:

- Your spouse may not get everything you intend for them;

- Children may not get the share you desire – and step children will have no claim;

- ‘Common law’ spouses may get nothing;

- Long estranged relatives could take a share even though you never speak;

- Close friends and favoured charities are left out;

- Personal items might need to be sold to raise funds for death duties; and

- The Government could end up with an unnecessary chunk in Inheritance Tax

Consequently, even for the most straightforward case, it is essential to put your plans in place long before they might actually be needed. The more planning you do, the better you can ensure your beneficiaries get what you desire for them - and a continual review will keep those plans up to date as your circumstances change.

Further information

At The Medical IFA, we work with trusted solicitors who operate a comprehensive estate planning and advice service which can make sure your every need is taken care of. Alongside basic will writing, they can also offer help setting up trusts and giving advice on tax planning to minimise any potential liability. The FSA does not regulate Will writing.

If you would like further information on this, please contact us on 01204 663904 or email advice@themedicalifa.co.uk

To summarise, the proposed changes are:

1. The personal allowance will be restricted for people whose earnings are over £100,000. So for every two pounds they earn above that level, they will lose one pound in personal allowance.
2. This would mean that for someone earning over £113,000 per annum, there would be no personal allowance available.
3. A new top band higher rate of income tax of 50% will apply to incomes above £150,000.
4. The tax relief on pension contributions will be restricted from April 2011, for those people with incomes of £150,000 and over, and will reduce steadily until it is 20 per cent. That means the 40% tax relief will disappear completely once someone’s income hits £180,000.

Please note that this is all on top of the Lifetime Allowance issues which high earners have to contend with.

One simple way of reducing any tax burden at this level would be to make a gift aid donation to charity (which can even be backdated). This could create a potential win-win situation out of this changes.

If you wish to discuss any of the issues raised, please call us on 01204 663904 or contact us by email on advice@themedicalifa.co.uk

The Institute of Financial Planning is planning its second Financial Planning Week in September 2009.

For further information on the week, please click on the link below. If you would like further information on the Institute of Financial Planning, click on the logo above to be redirected to their site.

Financial Planning Week - Further Information

Should you have any questions, please contact us on 01204 663904 or email - advice@themedicalifa.co.uk

“We were taken by surprise when we heard the news yesterday that Keydata Investment Services have gone into administration. However, after digesting the news, here is our understanding of the situation as it stands at the moment.

In all likelihood, we envisage that the administration of the products that Keydata were involved in will be moved on to another, or other, administrative companies. This means that the products themselves will continue as planned but that there may be delays in either income or maturity payments.

It is important to note that Keydata acted as providers or as administrators on structured products usually on the behalf of other third parties. They were not involved in the actual investment side of the products – this action would have been carried out by a market counterparty, e.g. HSBC. As such, any investment monies held with Keydata for market counterparty use should be held in ring-fenced accounts under a separate legal entity and not in Keydata’s own business account. Where Keydata have acted on the behalf of third parties, investment monies will be the responsibility of the third party and not Keydata.

Therefore, as any investment monies will be held in either a separate nominee company or with a third party, it is our understanding that investors will incur no financial loss due to the insolvency of Keydata Investment Services.

In the meantime, we will continue to scrutinise events and will provide you any further updates appropriately.”

Ben Willis
Head of Research
09/06/09

If you would like advice or guidance on any of the issues raised, please call 01204 663904 or email advice@themedicalifa.co.uk

The actual answer might surprise you. Finding this out sooner rather than later enables action to be taken. A Lifetime Cash Flow Forecast could be the key.

So, how much is enough?

Firstly, what does retirement look like to you? What do you want to do in retirement that if you were unable to do it would leave you feeling disappointed. Is it holidays, golf, or visiting family? Perhaps it is the purchase of a one off item, such as a boat or holiday home.

Whatever these goals are (and they could be anything) you need to set them down first. Once these are set in place, planning on how to meet future income and capital expenditure can then be assessed.

It is vital to set out what expenditure will be and how this might change over time. Basic expenditure may not fluctuate too much over time (except by inflation) and any extra spending will often be determined by your goals and what stage of retirement you are in.

The three phases of retirement

I like to think of retirement in three main phases.

1. The Golden years – these are the years when your health is good and therefore taking the opportunity to enjoy life is vital. Income needs are correspondingly high.

2. The Conservatory years – these come later when perhaps energy levels are lower and a more sedate lifestyle is required. Income typically reduces from phase 1.

3. The Later Life years – this is the stage when health is failing and more income may be needed to provide for health and care issues. Income needs can increase.

What do you think? What I truly believe is that by factoring the changes in spending patterns over these periods provides the key to successfully meeting your goals.

Lifetime Cash Flow Forecasting

A Lifetime Cash Flow Forecast provides a snapshot of your financial health now. It will determine whether your income and capital needs are met and therefore, highlight whether your goals are realistic. From this starting point the advice process can begin to truly add value by either planning to reach your target or protecting you from ever missing your target.

If you would like more information on answering the big questions or feel that you would benefit from this approach, please call us on 01204 663904 or contact us by email on advice@themedicalifa.co.uk