Its good to talk
Well the summer is over and we are already into the last third of 2016. So far this year we have seen quite a few changes and many are financial.
In my last article I mentioned the pending EU Referendum vote (BREXIT) and the possibility the Bank of England would lower the base rate. So in August the Bank took that step and lowered interest rates to 0.25%. So cash savings rates are suffering further reductions. It also took steps to print more money and the bank will use this to purchase UK Corporate fixed debt and Government debt, what we call Corporate Bonds and Gilts. This also means that these cautious investments are probably going to offer lower levels of returns as well.
Hence my suggestion it is good to talk on a regular basis with your adviser, not only because we can help with your plans, but because things constantly change, for example.
From April we had changes on how your savings are taxed. Bank and Building Society savings accounts now pay interest gross. Therefore non tax payers, basic and higher rate tax payers each have different rules on how much interest income they can receive before they have to pay tax.
In April the government introduced changes to Dividend Tax rules. Everyone will have a Dividend Income Allowance of £5,000 then after that the Dividend is taxed. So if your dividend income is more than £5,000 a year you have to set some aside money to cover the tax you will have to pay. Again it is a change which has to be managed, where different options or strategies can be employed.
April also introduced a change in how the State Pension looks. We now have a new single tiered State Pension. In May I requested a forecast and found the information provided very useful, different from the old information. I have always encouraged clients to access this information but since May I have gone back to my clients and recommended they acquire up to date information so we can plan. You can usually acquire the information on line through the Government Gateway. If you are wondering what your retirement income requirements are then it is something you should do. Then discuss it with your financial adviser.
As I stated in my last article, working with an Independent Financial Adviser is not just about buying a financial product and there performance. It is having someone who works with you to help map out your financial future. Ensures you have things in place for those bumps in the road and not only up dates with news on the changes, but offers ideas if they affect you.
It’s good to talk – so challenge your adviser or find one to help.