Junior ISA’s are now available

Another ISA option came into play last November when the Government announced that Tax-free savings accounts for children, known as Junior ISAs, would become available from providers for the first time.  Experienced Independent Financial Advisors Enable of Bishops’s Stortford know how important it is to maximise your ISA options as part of your financial planning and tax efficiency. We all have worries at the moment about what kind of financial future our children are going to have to face.  Junior ISA’s might provide some comfort.

About six million children are estimated to be eligible for the products, which cannot be cashed until they have reached the age of 18. The idea is that this option has been created for children who didn't qualify for a Child Trust Fund account which had included a voucher from the government to help kick-start the savings habit for families with children.

The Junior ISA allows you to invest up to £3,600 in the current tax year in a cash or stocks and shares Junior ISA, or a combination of both. Family or friends can pay money into a child's Junior Isa, run by banks, building societies and investment groups but only the child will be able to access the money and only from their 18th birthday. 

If you have family and friends who what to play a part in investing for your child’s future Enable have many years of experience at maximising families tax efficiency and can help you formulate the best ISA savings plan for junior’s future.

New rules for ISA’s

Enable like most reputable Independent Financial Advisors know ISA’s are a vital part of personal financial planning. It is important to keep on top of any changes that occur and make sure that ISA’s are working for you. At the end of last year the government  introduced new rules for investors whose ISA savings are lost in the collapse of a financial firm making it possible for them to be able to refill their annual allowance.

Under the old rules, any funds lost if the provider folded would have been considered  part of the annual input. In a statement to MPs, Mark Hoban, Financial Secretary to the Treasury, said that the new plans allowed savers who have lost their cash Isa to save the equivalent amount, in the same year, in a new account with another provider and that they gave an investor the opportunity to reinvest any compensation paid out if a stocks and shares ISA is affected by a financial firm's collapse.

This permitted investors with ISAs directly affected for example  by the collapse of Lehman Brothers to reinstate the same level of investment, irrespective of whether compensation had been paid.
"[The changes] will enable investors whose ISAs are affected by the failure or default of a financial firm to continue to benefit from tax-advantaged savings," Mr Hoban said. "They also demonstrate the government's commitment to ensure that the Isa remains a secure, accessible and tax-advantaged saving product."Enable IFA’s of Bishop’s Stortford are happy to help you maximise your ISA’s investments as part of your financial portfolio.

Making the most of your ISA...

With the New Year resolutions a bit more realistic it’s time to look to the rest of the year and having a plan for your finances is the best way to make them work for you even in the toughest of times.  At Enable our IFA’s can help you make realistic plans to maximise your savings and investments.

ISA’s are an invaluable part of any savings portfolio as they help you maximise your tax efficiency. Enable are happy to talk you through the basics and find the best options for you.

ISA stands for ‘Individual Savings Account'. ISAs allow you to get the income and returns from you savings and investments without having to pay any income or capital gains taxes. There are two types of ISA - cash ISAs and Stocks & shares ISAs. Investment products such as authorised unit trusts, can be held in the Stocks & shares ISA. Cash ISA is where you save in a cash deposit account.
Stocks & shares ISAs are a medium (at least 5 years) to long term (over 10 years) investment.

The maximum cash ISA investment allowance is £5,340.  The maximum you can invest in a stocks & shares is £10,680 per tax year (less any amount you save in a cash ISA).Cash ISAs are available to all UK residents aged 16 or over. Stocks & shares ISAs are available to all UK residents aged 18 or over. You are only allowed to contribute to one cash and/or one stocks and shares ISA per tax year.

Mike Cooke to cycle 5 countries in 5 days, to raise money for Isabel Hospice

In a fit of madness I have decided to join the Isabel Hospice team and cycle 5 Counties in 5 days (500miles!!).

The event is taking place from the 12th to the 17th of June 2012 in which time you will be able to witness a middle aged, balding, overweight me, passing through the UK,France,Belgium,Germany and ending in Holland.

Please help me on my way and in turn help a great local Charity by sponsoring my efforts, thank you in advance, just visit my just giving page to make a donation http://www.justgiving.com/5in5MikeCooke 

Tax Advisors must be up to speed...

Experienced IFA’s like Enable of Bishop’s Stortford know how important it is to be fully up to speed about tax advice. Revenue and Customs (HMRC) have announced new plans for tackling suspected tax fraud using civil powers. HMRC will offer some people suspected of tax fraud the opportunity to enter into a contract to disclose that fraud in exchange for a guarantee that they will not face criminal prosecution.

Gary Ashford, Head of Tax Investigations at RSM Tenon, has welcomed the new facility, saying:
“This is a positive development. HMRC’s proposals would potentially provide greater clarity to those who have deliberately got their tax wrong and now want to engage with the taxman to regularise their affairs..”

 “This new facility will start to be used from 31 January. We are likely to see a flurry of big tax investigations starting then. Those pursued under the CDF can expect to have to pay the tax owed, interest and substantial penalties…..With HMRC targeting a five-fold increase in criminal prosecutions for evasion, the consequences of not clearing up tax irregularities could be grave.”

“The new procedures also raise the bar for tax advisers. Those seeking to advise clients in this area really will have to be sure they have the necessary skills and experience. There will be risks for client and adviser alike if these procedures are not followed properly – we are, after all, working in an area where criminal offences are being alleged.”

Independent Financial Advisors know tax efficiency is part of good financial management but it must operate within the law.

Returns on the new tax unit have caused much debate...

There has been much debate at Enable IFA’s of Bishop’s Stortford about the expected revenues of the new tax unit some say they will be  a relatively small share of the £7bn a year that HMRC is due to raise by closing the tax gap by 2014-15. The tax gap was estimated to be £35bn in 2009-10, with individuals accounting for 11 per cent of it, according to official figures.

The HMRC say the new unit did not involve new recruitment. The new unit also draws on expertise from across Revenue & Customs, including those who deal with corporate entities, residence and domicile issues and trusts and estates. Revenue & Customs said it would use sophisticated data mining techniques on publicly available information to identify individuals who own property abroad. It would then use risk assessment tools to identify people who did not appear able legitimately to afford the property, as well as those who did not appear to be declaring the correct income and gains from the property.

The issue of how rich individuals and corporations are taxed is politically charged. George Osborne, has justified his austerity plan on the basis that the burden would be fairly shared across society. The government views cracking down on evasion as an effective way of raising revenues and increasing the fairness of the tax system.  Making sure your tax efficiency is above board and up-to-date is vital for effective money management something experience IFA’s Enable work with all the time.

Taxing the rich - do you declare earnings from overseas property?

Whether the rich should  pay more tax is a debatable political issue but Enable,  Independent Financial Advisors of many years experience note that The Revenue are targeting the wealthy and have started with Owners of overseas property  first.  A 200-strong team of investigators has been set up to identify wealthy tax evaders, Revenue & Customs declared this  at the end of last year when it unveiled a new “affluent” unit, which will focus on the tax affairs of  those earning more than £150,000.

Commodity traders are said to be the Revenue’s next target, and holders of offshore accounts will come under scrutiny later next year. The tax affairs of the very wealthiest 5,000 individuals, with at least £20m in assets, are handled by a specialist group that generated an extra £86m of revenues in 2009-10 and £162m in 2010-11.

Danny Alexander announced the launch of the unit which will deal with the 350,000 richest people, at the Liberal Democrat conference in September when he said “the small minority who don’t pay what they owe” would be found and made to pay their fair share.  David Gauke, financial secretary to the Treasury, said the new unit was expected to raise £560m in the next few years, adding: “The government is committed to tackling tax evasion and avoidance across all areas of the economy. That is why we allocated HMRC £917m to reduce the tax gap over the next four years in the last spending review. This new team is part of that investment.”

Making sure you are tax efficient is part of good financial management expert advice from experience IFA like Enable of Bishop’s Stortford is always best.

Pension Fund mangers vindicated...

Fund managers that run liability-driven investment strategies, offering protection on pension schemes against moves in interest-rates and inflation, were dramatically vindicated in 2011, according to Cardano, which said some of its clients made 25% on their money last year.

Our Independent Financial Advisors at Enable of Bishop’s Stortford have noted that strategies  offered by big fund managers including Black Rock, Legal & General and F&C match those of Cardano and offer the same kind of service, which traditionally has involved replacing a portion of a pension scheme's assets with a series of cash funds, overlaid by inflation and interest-rate swaps purchased from banks.

More modern variants of the idea can include switching out of cash-plus-swaps and into inflation-linked bonds as market conditions dictate, but the basic idea remains the same - investing in a portfolio that brings in cash returns that precisely match the pensions that have to be paid, automatically adjusted for movements in inflation and interest-rates.

Cardano said that LDI strategies have typically returned over 20% in 2011. Keith Guthrie, the firm's UK chief investment officer, said: “Some of our delegated clients have seen returns of over 25% in 2011. We have also proposed that our advisory clients hedge a significant proportion of their liability risks for some time.”

LDI strategies did so well because they worked exactly as intended, Cardano said. The yields on swaps, index-linked swaps and conventional UK Government gilts all tumbled in 2011 as safe-haven demand, coupled with the Bank of England's policy of quantitative easing, kept the price of bonds high. If you have any queries about your pension Enable are here to help.

Keeping up with the Chinese

IFA’s at Enable are  interested  to note that the Chinese too have issues with the spending of their local governments. Last June, the IMF laid out a plan for Chinese state bankers which focused on absorbing excess liquidity and appreciation of the Yuan. But in the same month, the Chinese National Audit Offices announced a $1.6 trillion hole in the balance sheets of local governments.

For some this hole, and a slowdown in global growth, has led commentators to be increasingly cautious on the prospects for the world’s second-largest economy. “The question is whether China will act in time and avoid wholesale capital outflows, a property crash and shattering of confidence.” Said Ewen Cameron Watt chief investment strategist at the Black Rock Investment Institute.

With $3.2 trillion in foreign exchange reserves however and GDP growth of 9.1% in 2011, China still has considerable amount of clout with which to confront a deteriorating economy.

Much of the  world is looking to China to prop up the global economy, but it is easy to underestimate how far China itself needs to reform; they do not have a deposit insurance system, for example, meaning its banks do not have to insure savers against bankruptcy. Western banks are hoping China opens its borders but liberalising China’s economy too soon holds dangers,  “any major change to the vital banking sector is potentially destabilising in the medium term, given that other countries in recent decades experienced some form of a banking crisis within 10 years of interest rate liberalisation.” Enable’s independent financial advisors will be watching events in China closely this New Year.

So what’s happening in China...

China held its once-every-five-year state meeting on the direction of its financial markets this week-end and the decisions the country’s leaders take are likely to have a large impact not only on their domestic market, but also the global economy so at Enable our experienced financial advisors will be looking at the financial news to keep track of events.

It has long been the case that many of us within the financial sector  hope China will continues to liberalise its economy, but that it also takes measures to prevent a domestic economic slowdown that would damage any attempt to stabilise the Eurozone.

According to Yao Wei, a Hong Kong-based economist with the French Bank Societe Generale: “The progression of the reforms will determine whether China can avoid a hard landing in this decade.”

At the last Financial Work Conference, held in 2007, China’ Premier Wen Jiabao expanded the management and use of the country’s giant foreign exchange reserves, setting up the China Investment Corporation which has now one of the largest sovereign wealth funds.

For this years conference there are a number of factors we hope the Chinese politicians and regulators will consider. They lack  a strong regulatory framework for local governments and have a shadow banking system, a euphemism for black market lending, that is spiraling out of control, and many businesses need to find alternative financing methods aside from bank credit. Enable reputable IFA’s of Bishop’s Stortford look forward to following events in the Chinese economy for their clients.

Thinking of investing in 2012?

Enable IFA’s of Bishop’s Stortford can help you  find the right place to look for your silver lining. It would seem that UK gilt funds dominated the top performance charts in 2011, according to figures from Morningstar at the end of December. Eight of the top 10 performers sat in the Investment Management Association UK gilts and UK index linked gilts sectors, with the Henderson long-dated gilt, managed by Phillip Apel and Mitul Patel the top performer, having risen by 24 per cent between January 1, 2011 and December 20, 2011. That fund was closely followed by Henderson index linked bond and the BAM UK long dated gilt, which have risen 23.59 and 23.58 per cent respectively.

The figures did also reveal that less than one in six funds managed to produce a positive return in 2011, compared to 97 per cent of funds producing a positive return in 2010 but as expected, the IMA UK index linked gilts sector was the best performer, with the 13 funds in the sector up by an average of 21 per cent in 2011. The IMA UK gilts sector rose 15 per cent with the UK corporate bond sector up 4 per cent. The IMA China and greater China sector was the worst performing sector having fallen 24.2 per cent.  If you need help looking for the right place to think about investing for the New Year Enable of Bishop’s Stortford are happy to talk it through.

Cup half full is needed for 2012

IFA’s Enable of Bishop’s Stortford are determined to have a cup half full view of the New Year. Just before Christmas the Office for National Statistics, revised up our quarterly growth rate in the three months to September by 0.1%. Something to celebrate. There will be some pedants about who will point out that the figure for the previous quarter was revised down, by 0.1% - meaning we are pretty much exactly where we thought we were and they might also point out that the current account deficit hit a  record £15.2bn, or an alarming 4% of GDP. But we also know that these trade figures jump about a lot from quarter to quarter and the average current account gap for the first three quarters - at 2.7% of GDP - is below the 3.1% of GDP for the same period in 2010.  So it could be worse but it’s not.

It might be easy to see why the likes of India and China can be so much more upbeat than us and the real living standards in Brazil rising will clearly cheer people up there.  But Italy's economy is now only about 1% bigger than it was a decade ago, and the forecast for the next ten years within the euro, is not much better and they are more optimistic than us. Even the Spanish with a fifth of the Spanish workforce unemployed are being more upbeat than us. Enable IFA’s might be able to help you look at your glass differently.

It's 2012 and here are some reasons to be cheerful

As experienced IndependentFinancial Advisors Enable have seen that confidence is vital to recovery and for some reason we Brits find that hard.  In a recent poll just one in ten Britons (9%) expect their local economy to improve in the next six months, half the level seen in America according to new research from and online survey conducted in 24 countries.

Managing Director, Ipsos MORI, Bobby Duffy, said:

“With all the frenzied talk of a global meltdown it’s easy to miss that there are actually large parts of the world economy that are still feeling pretty confident about the future.  And this is not just Brazil, India and China – the majority in many other countries like Canada, Australia and Saudi Arabia also feel their economy will improve in the next few months.  Even within Europe, which does face real dangers in the coming months, there is a stark difference between high confidence countries (like Sweden and Germany) and low confidence countries (like the UK and France). 

Only the Hungarians (6%), Japanese (6%), Belgians (4%) and the French (2%) are more pessimistic about the future of their local economy than the Brits. Even the Spanish are more optimistic than Britons (17%). By the far the most optimistic of the 24 countries are the Brazilians with 72% expecting improvement.

Enable of Bishop’s Stortford would like to play their part in helping you to be less gloomy about 2012, as we know consumer confidence has a direct relationship with real economic outcomes.