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Bydylanbbd Posted Apr 28, 2021

Tax Planning – April 2021

Andrew Singleton shares some considerations on tax planning, Money Advice and Planning’s network of independent financial advisers are able to assist with your tax planning needs.

SALARIES       

You may think that this is a strange one to put in for tax planning, but it is an obvious one – and sometimes we do miss the obvious. The main thing to remember about personal allowances is use it or lose it – it’s that simple, and this will apply to people who run their own companies.

In the current year we get a personal allowance of £12,570 which is the amount we can earn without paying any tax.   Now if you have you have your own company, and you or your spouse haven’t used your allowances for the year, then it is worth thinking about taking an amount of salary to use these allowances up – after all, if you don’t use them, then that means that some tax-free money has gone.   

DIVIDENDS

Same again, if you are a shareholder of your own company, then think about taking £2,000 in dividends as this would be tax-free, but please ensure that you have profits of at least this amount, as dividends should only be taken out of net profits. 

You should even look at the possibility of taking out more than £2,000 IF the company can afford it, as dividends are taxed at lower rates than income tax and they don’t have National Insurance on them either.

PENSION INCOME

If you are taking a pension income, and your fund could stand you taking out more – then if you could take out more AND it was tax-free, i.e. by taking up to £12,570 – then why not. You should always maximise the tax free element, even if you extract it and put it in the bank – at least you are not paying tax on it.   Don’t forget that this applies per person – so if you are married, then your spouse can do the same. 

The material is for general information only and does not constitute investment, tax, legal or other form of advice.  You should not rely on this information to make (or refrain from making) any decisions.  Links to external sites are for information only and do not constitute endorsement.  Always obtain independent professional advice for your own particular situation.  Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.  For any enquiries, contact Andrew on 07957 836211 or enquiries@mapfinances.co.uk

Bydylanbbd Posted Apr 22, 2021

The Cost of Investing

It never ceases to amaze me that some people think investing is so easy, that they could do it blindfolded and still make money. Now to a certain extent that is true in a bull market when prices and valuations basically only rise, and let’s be honest, at times like this you could invest in almost anything and it would make money. But, this last week saw a big drop in the FTSE and other markets over fears that the control over COVID is not getting a great deal better, so what do investors do then?

The simple answer is not to panic. Yes, everything will go down in value and you will be hit with losses on some funds, but that is to be expected and the main thing that you need do is anything but a knee jerk reaction – as that will give you the wrong outcome. Of course, some advisers will do nothing anyway as they may have clients in passive type funds, but that shouldn’t stop them reviewing things.

What we do at MAP is fallback to our research BEFORE we do anything, because it is always far better to have a logical approach to things as opposed to a scatter gun approach. At MAP we do two main pieces of research on what funds that we use and this is 1. Long-term and 2. Short term. The long-term approach wouldn’t change things in this aspect as what we look at is what funds have good consistent performance over 1, 3 and 5 years. Where the main difference is though is in the short-term analysis. Every week we analyse all the funds that have a good long term performance to find out the best ones that are still doing this SHORT TERM and in this respect we look at performances over the previous 3 months, and we highlight the top 10 performers in low risk, middle risk and high risk.

So what we would do at MAP is wait until any fall in values has settled down, and then we would look to see what funds have maintained their performance in the short term – and this then identifies the funds that we would use – and it is based on FACTS. This means that you are not doing a knee jerk reaction and instead only making changes based on logical facts and statistics. Far better that way.

We don’t do a lot of research to find out the best funds for our clients only to jump out of them at the first hint of trouble.

MAP does all the background work – so that you don’t need to.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Astute Invest Ltd is an Appointed Representative of Money Advice & Planning Ltd who is authorised and regulated by the Financial Conduct Authority. For any enquiries, contact Andrew on 07957 836211 or enquiries@astuteinvest.co.uk

Bydylanbbd Posted Apr 16, 2021

Investing money

I invested money for a client just 10 days ago, and this morning I received a frantic email that one fund had lost a lot of money – it was almost like a cry for help, so this showed that I had failed in my first task.

When you invest money, it needs to be for at least 3 years minimum, because you need that amount of time to cover charges and start making money yourself. Bear in mind that values of all units will fluctuate and in the short term they may very well fluctuate down the way – so you need to keep that in mind. My client, had only invested the money and was looking at things daily, and he wanted an explanation of why a particular fund fell on the day – well ……. I told the client that he needs to look at values say once a week – and not every day, otherwise he could give himself a heart attack. Investors also need to bear in mind that when you invest money it is not like a deposit account at the bank where you check in every so often to see how much you have gained. Investments do go down as well as up – and you should almost expect this to happen with most funds/shares – that is investing. When you see adverts for investments – the Regulator always gets a statement inserted saying that the value of investments can go down as well as up, and this is an attempt to stop the expectation that they can ONLY go up.

When MAP does any investments for clients – this is why we pick a range of funds, so that we can hope that any value falls are compensated by other funds where value gains. By taking a spread of funds you are attempting to reduce the risk, and just think how bad it would be if you had all of your investments in just one fund – and that went down. Well……

This is also why MAP monitors the funds that we use, because we identify the losing ones and instead of a knee jerk reaction on getting clients out of those funds as quickly as possible, we have look over something like 2 – 3 weeks and if there is no improvement, then by all means we look to switch those investments into other funds, but we take our time to evaluate and don’t just jump in.

We don’t do a lot of research to find out the best funds for our clients only to jump out of them at the first hint of trouble.

MAP does all the background work – so that you don’t need to.

 The material is for general information only and does not constitute investment, tax, legal or other form of advice.  You should not rely on this information to make (or refrain from making) any decisions.  Links to external sites are for information only and do not constitute endorsement.  Always obtain independent professional advice for your own particular situation.  Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.  For any enquiries, contact Andrew on 07957 836211 or enquiries@mapfinances.co.uk    

Bydylanbbd Posted Apr 7, 2021

The MAP monitoring system

When MAP invests money for any client, it is not just a case of putting the money into a spread of funds and walking away – in fact it is the opposite of this.

When we invest a clients money, first of all it is into funds that are found to be performing consistently over the long period AND are still performing well over the previous 3 months.  And that is basically our work merely starting because we then have 3 ongoing monitors.

1. Every calendar quarter we produce what we call the Recommended Fund List and this looks at shortlisting those fuds that have a consistent half decent performance over the previous 5 years. We usually only take funds in excess of £100 million, and any funds we choose need to show a reasonable level of consistency, as we don’t want to pick a fund that is doing 20% today and minus 3% tomorrow. As we need to be able to “rely” on some kind of consistency, then we only use funds that are statistically consistent.

2. Every week, we analyse all the funds in the Recommended Fund List and we list the top 10 performing funds in each risk category from the statistics of the previous 3 months. This then gives us the confidence that a fund that has performed consistently well over the previous 5 years is STILL performing well in the short term – and so can be used, and by listing these in order of return – lets us invest in the best performing areas at all times.

3. In addition to the above 2 monitors, which focuses on funds, what we also do at MAP is analyse all funds performances over time as well.    It’s not too difficult to include fund ABC in your lists and it may be performing well over 5 years and maybe even over the last 3 months as well, BUT, don’t forget that in investing everything WILL change at some time, and you need to keep your eyes on things. So what I do almost daily is go into our investment platform and can list all the funds used, and keep my eyes on those funds showing a negative return.   I will monitor these for a few days and if no improvement, will then look to switch clients out of those funds and into other ones that are doing well.            

So basically, MAP does all the background work to get investments into the right funds and keep them in the right funds – even if it means changing them.  

MAP looks after our client’s money as if it were our own.

 The material is for general information only and does not constitute investment, tax, legal or other form of advice.  You should not rely on this information to make (or refrain from making) any decisions.  Links to external sites are for information only and do not constitute endorsement.  Always obtain independent professional advice for your own particular situation.  Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.  For any enquiries, contact Andrew on 07957 836211 or enquiries@mapfinances.co.uk    

Bydylanbbd Posted Mar 31, 2021

How many funds I use for investing

When you invest any money, then you need to take into account:-

  1. What other areas you are going to invest in
  2. How much you are going to invest in other areas and how does this balance with the total approach
  3. When you invest in any fund, you always need to do your research, and if you invest in a load of funds – then that is a load more research
  4. Since you need to do your research regularly, then more funds means a bigger future commitment to research – and that costs time and money

From an early point when I started doing investments, I have always worked on some basic parameters such as the minimum to invest in any fund should be £5,000 and say a maximum of £50,000. On a number of occasions early doors when I invested less than this, I always found it very difficult to make money – hence why I always do a minimum now of £5k. Number of funds? I tried a few strategies early doors as well and came to the conclusion that 10 funds could give you a good spread without a heavy workload for maintenance, and that ticked most of the boxes.   

Remember of course that each fund will have its own investing process, but I would say that you can probably bet on them investing no more than 5% in 1 investment, so at the very minimum they are going to have at least 20 investments, and then if for example they have say £100 mn in their fund, you aren’t going to get 20 investments of £5 mn each, no it’s more likely to be a good bit more. Work on the basis that most funds will go for a reasonable spread of investments and have around 75 – 100 investments, and so if you therefore think that you start with 10 funds to invest in, then that could mean that you are investing in 750 to 1,000 companies – and that’s a good base spread.

I personally have used 10 funds for a while now, and it gives people a good spread of investments and doesn’t add that much to the workload, and that’s important because most people will start with the best of Intentions in terms of research, but after a period it becomes tedious.   Because it gives a good spread, it has always given me and my clients good results – and that’s what we are all doing this for. I have shown over a long period that 10 funds work well for everyone.  

M A P looks after client’s money as if it were our own.

The material is for general information only and does not constitute investment, tax, legal or other form of advice.  You should not rely on this information to make (or refrain from making) any decisions.  Links to external sites are for information only and do not constitute endorsement.  Always obtain independent professional advice for your own particular situation.  Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.  For any enquiries, contact Andrew on 07957 836211 or enquiries@mapfinances.co.uk    

Bydylanbbd Posted Mar 22, 2021

What is a fund?

A Managed Fund is run by an investment manager and usually concentrates on something specific – whether it is UK equities, global equities, a technology fund etc. All the investments that they make will be along the same theme.

The investment fund will in many cases have a good spread of different companies it is invested in, and the majority go for something like 50 to 60 underling investments. Needless to say, the bigger the fund the more investments it will have.

If you are investing your own money and you pick company ABC Ltd then you are focussing on just one company which means that you need to do a lot of research on that company. On the other hand, if you invested in a fund, and that fund has 50 to 60 underlying investments, then your money will be better spread throughout those 50 to 60 companies and that will eliminate some of the risk.

If something goes wrong in one company, then in many cases it could be no big deal whereas if you only invested in one company on its own then that could be an enormous problem. By investing in a fund therefore you can accommodate one or two companies not working terribly well but balanced out by others that are doing well so you get a far better spread of risk.

This is why we invest in funds as opposed to individual companies. At MAP Finances UK our dedicated team support clients by managing your investments using our recommended funds list, whilst always allowing you complete transparency and oversight of your investments.

To explore investing, or indeed to discuss taking control of your existing investments contact us today.

The value of your investment is not guaranteed and can fall as well as rise.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority. For any enquiries call 0345 241 1808 or contact enquiries@mapfinances.co.uk

Bydylanbbd Posted Mar 12, 2021

2021 Budget Review

After a year of Covid-19 restrictions, the 2021 Budget had a lot of ground to cover. There has been considerable speculation over how the extra expense of the furlough scheme, funding the NHS and supporting those out of work would be paid for.

It was also questionable whether the current package of support for individuals and businesses could be sustained.

So what are the plans for recovering from the pandemic and rebuilding the economy? Read about the Chancellor’s budget overview in our latest publication, download it here.


If you would like to find out more information or would like to start investing today, please contact Money Advice & Planning Ltd on 0345 241 1808 or e-mail us at enquiries@mapfinances.co.uk.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Bymapfinancesadmin Posted Mar 26, 2019

New Tax Year Planning Pt. 2

In our second post about tax planning ahead of the new tax year, we look at income sharing, pension contributions, ISAs and Capital Gains.

Income Sharing

Always try and share income (if possible) between spouses, and so perhaps keep one or both of you out of 40% tax. Yes, we know this is not always possible, but for those who are self-employed, you should think about forming a partnership with your spouse, that would allow this.

Pension Contributions

Where you can afford it, try and maximise pension contributions. Bear in mind that you can put up to £40,000 into your pension every year, and equally where you haven’t used the previous three year’s allowances, you could put that into your pension too.

As you are potentially talking about paying up to £160,000 into your pension, then yes, you obviously need to be able to afford it. And whilst this money would be locked away until age 55 at the earliest, it would be less money to pay tax on now and mean a bigger pension upon retirement.

We had one client who through no fault of her own, received a salary which put her into the 45% tax bracket. Therefore, it was more than worth her while to put the excess amount which caused this, into her pension. You get tax relief at your highest rate of tax – and 45% relief is not to be snubbed! For every £1,000 that went into her pension, she only needed to pay £550, so that’s a bargain!

ISAs

Putting money into an ISA will reduce taxation, as there is no tax on dividends received, and ISAs will never be subject to Capital Gains Tax (CGT), no matter how much you encash later on.

Capital Gains

Everyone has an allowance of £11,700 which means you can make gains of £11,700 per year and pay no capital gains tax at all. This is one of those allowances with a ‘use it or lose it’ scenario, so if you are thinking about cashing in on something which would take you over this limit, and it is possible to cash in part of it this tax year and another part next tax year, you could make gains of £23,400 with no tax to pay at all.

This obviously may not always be possible, but can be done with investments and mean less of your gains are given away in tax.


If you would like to find out more information or would like to start investing today, please contact Money Advice & Planning Ltd on 0345 241 1808 or e-mail us at enquiries@mapfinances.co.uk.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Bymapfinancesadmin Posted Mar 26, 2019

New Tax Year Planning Pt. 1

In the first of two posts about tax planning, ahead of the new tax year, we look at how you can use salaries, dividends and pensions to maximise tax-free income.

Salaries

You may think this is a strange one to put in for tax planning, but it is an obvious one, and sometimes we all miss the obvious. The main thing to remember about personal allowances is use it or lose it – it’s that simple.

In the current year we get a personal allowance of £11,850 which is the amount we can earn without paying any tax. If you have your own company, and you or your spouse haven’t used your allowances for the year, it is worth thinking about taking an amount as a salary to use these allowances up. After all, if you don’t, it means some tax-free money has gone.

Dividends

As with the above, if you are a shareholder of your own company, think about taking £2,000 in dividends, as this would be tax-free. Please ensure however that you have profits of at least this amount, as dividends should only be taken out of net profits.

You should even look at the possibility of taking out more than £2,000 if the company can afford it, as dividends over £2,000 are taxed at 7.5% for those in the 20% tax bracket (a saving of 12.5%) and at 32.5% for those in the 40% tax bracket (a saving of 7.5%). The same warning as before still applies however; the company must be making equivalent profits.

Pension Income

If you are taking a pension income and your fund could stand you taking out more and this amount is available tax-free, i.e. by taking up to £11,850, then why not? You should always maximise the tax-free element – even if you extract it and put it in the bank – as at least you are not paying tax on it. Don’t forget this applies per person, so if you are married, your spouse can do the same.


If you would like to find out more information or would like help with any aspect of tax planning mentioned, please contact Money Advice & Planning Ltd on 0345 241 1808 or e-mail us at enquiries@mapfinances.co.uk.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Bymapfinancesadmin Posted Jan 29, 2019

Tax Planning for Spouses

Capital

As mentioned in a separate article in our January 2019 Professional Newsletter, as transfers between husband and wife are ignored for Capital Gains Tax (CGT) purposes, why not use this as much as you can to reduce a clients’ tax bill for any gains?

Pensions

Many a time when looking at a couple’s finances, everything seems to be done in the husband’s name and very little in the wife’s. If you are wanting to reduce long-term tax, this needs to change.

Let’s say all pension planning is done in the husband’s name alone, and he ends up with a pension of £60k p/year. This will obviously be well into 40% tax whereas, if it was done jointly and evenly, such that each party had £30k pensions p/year, only 20% tax would be payable. That represents a big tax saving and shouldn’t be ignored. Planning must be started early on to achieve this – and that’s where MAP comes in.

If you are doing accounts for a self-employed person, is it possible to do the same thing as a partnership, by introducing a wife into the planning? Perhaps through setting up a Limited Liability Partnership?

Inheritance

Every individual now gets £325k basic exemption from Inheritance Tax Planning (IHT), and then on top of this is the residence nil rate band which in due course will bring the exemptions up to £500k per person. The same applies with CGT – if assets were owned jointly, then maximum exemption could be obtained, and so significant savings on tax could be made.

A lot of these simple exemptions need a bit of planning as they just don’t happen overnight. Care has to be taken every step of the way to ensure compliance with the legislation, and that is what we do at MAP.

One of our IFAs is also a qualified accountant (and ex-Inland Revenue employee), who has many years’ experience as a financial adviser, and his work is all about planning. If he can help your clients, just let us know.

If you would like to find out more information or would like to start investing today, please contact Money Advice & Planning Ltd on 0345 241 1808 or e-mail us at enquiries@mapfinances.co.uk.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

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