Income Withdrawal, also sometimes referred to as income drawdown is a means by which a pension fund can provide tax-free cash and, if required, a regular retirement income. Income withdrawal / income drawdown has become the preferred choice for people with pension funds greater than £50,000 who are ready to take the benefits from their pensions. But it is always bust to consult experienced Independent Financial Advisors like Enable of Bishop’s Stortford when you are thinking of drawing cash from your pension.
We at Enable urge caution and have noted that the Pensions Regulator, FSA and HMRC have recently detected an increase in schemes with pension offers that claim to be able to provide loans or release tax-free cash from people’s pension pots before they reach age 55. Apparently known transferred funds amounted to nearly £200m by the end of 2011. Consumers have been warned to steer clear of such schemes and not to be taken in by website promotions, cold-calls or adverts encouraging them to transfer their existing occupational or private pension to a new arrangement in order to access a cash payment or loan.
These schemes usually work by transferring some of the member’s pension fund into highly risky or opaque investment structures, frequently based overseas - with no guarantee that members will get their money back if something goes wrong. By accessing pension savings earlier than the law permits, individuals are likely to be poorer in retirement – and can face substantial tax charges.
Monday, 12 March 2012
Remember ISA transfer should be faster than it used to be…..
In 2010 after a 90-day investigation following a super-complaint from Consumer Focus about the cash ISA market , the OFT secured agreement from the industry to: publish clearly the interest rates on the face of cash ISA statements - around 15 per cent of customers currently receive statements that include their interest rate, but from early 2012 all statements will include this information, and they agreed to revise industry guidelines on how long cash ISA transfers should take: down from 23 to 15 working days – which came into effect from 31 December 2010.
Clive Maxwell, the OFT's Senior Director for Services, said: 'This is an important market for the 17.5 million consumers with £143 billion of savings in cash ISAs, and also for the wider economy since those savings support lending to many households and businesses. Our work over the past 90 days has revealed that, whilst there is often strong competition between providers in this market to win new savings, the transfer of cash ISAs is taking too long and there is not enough transparency over interest rates. The voluntary changes announced today will give consumers a fairer deal and drive stronger competition. We are grateful to Consumer Focus for bringing these issues to our attention.'
Enable of Bishop’s Stortford can help with your ISA contributions and ISA transfers, as Independent Financial Advisors experience tells us that sorting out ISA contributions and transfers help you maximise your savings.
Clive Maxwell, the OFT's Senior Director for Services, said: 'This is an important market for the 17.5 million consumers with £143 billion of savings in cash ISAs, and also for the wider economy since those savings support lending to many households and businesses. Our work over the past 90 days has revealed that, whilst there is often strong competition between providers in this market to win new savings, the transfer of cash ISAs is taking too long and there is not enough transparency over interest rates. The voluntary changes announced today will give consumers a fairer deal and drive stronger competition. We are grateful to Consumer Focus for bringing these issues to our attention.'
Enable of Bishop’s Stortford can help with your ISA contributions and ISA transfers, as Independent Financial Advisors experience tells us that sorting out ISA contributions and transfers help you maximise your savings.
Switching ISA’s could be easier than you might think...
The other thing about ISA’s it that there's nothing stopping you switching provider for cash or shares ISAs; in fact it can be a good idea to make sure you continually get a top rate particularly important for cash ISAs. Yet it isn't like switching a standard savings account; transferring an ISA is a technical process.
Keeping on top of your ISA contributions and keeping them in the best accounts as part of your financial portfolio is something expert IFA’s like Enable of Bishops’ Stortford are happy to do for you. But there is one golden rule for ISA transfers rule, never, ever, ever, ever withdraw money from a cash ISA in a transfer process you'll immediately lose all the tax benefits.
It is vital that you speak to the new provider and fill out a transfer form. This will usually include a note you can send to your existing ISA company. Your new company should then sort it all out, including moving the money over for you, keeping your tax benefits in tact. If you want to, transfer a shares ISA it may be necessary to pay another initial charge.
That's the key thing to remember, but when transferring ISAs what you can do depends on what type of ISA you want to transfer. For past years' Cash ISAs. You may move ALL of this to another Cash ISA or into a Shares ISA, or SPLIT it between more than one Cash or Shares ISA. Past years' Shares ISAs. You may move ALL of this to another Shares ISA, or SPLIT it between more than one Shares ISA. You may not move any of it into Cash ISAs. Not all ISA providers however will accept transfers of previous years' allowances.
Keeping on top of your ISA contributions and keeping them in the best accounts as part of your financial portfolio is something expert IFA’s like Enable of Bishops’ Stortford are happy to do for you. But there is one golden rule for ISA transfers rule, never, ever, ever, ever withdraw money from a cash ISA in a transfer process you'll immediately lose all the tax benefits.
It is vital that you speak to the new provider and fill out a transfer form. This will usually include a note you can send to your existing ISA company. Your new company should then sort it all out, including moving the money over for you, keeping your tax benefits in tact. If you want to, transfer a shares ISA it may be necessary to pay another initial charge.
That's the key thing to remember, but when transferring ISAs what you can do depends on what type of ISA you want to transfer. For past years' Cash ISAs. You may move ALL of this to another Cash ISA or into a Shares ISA, or SPLIT it between more than one Cash or Shares ISA. Past years' Shares ISAs. You may move ALL of this to another Shares ISA, or SPLIT it between more than one Shares ISA. You may not move any of it into Cash ISAs. Not all ISA providers however will accept transfers of previous years' allowances.
Monday, 5 March 2012
Money is not necessarily tied up in an ISA
As experienced independent financial advisors at Enable in Bishop’s Stortford we have often come across the question as to whether money is tied up indefinitely in an ISA. It is a common mistake to think an ISA needs to be held for a set length of time in order to reap the tax-free benefits. What you need to be clear about are the rules of the individual product allow it (there's loads that do), you can have full, instant access to your money without losing the tax benefits on the rest of your savings in the wrapper.
However, once the money's withdrawn, it can't be returned. A few examples should help clarify this:
Situation: Mr. Rich Devil invests £10,680 in a shares ISA at the beginning of the tax year.
Options: He may sell the whole investment, or part of it, at any time without losing the tax benefits, but no more may be bought inside that year's ISA wrapper.
Situation: Ms. Irma Indecisive invests £2,000 in a cash ISA at the start of the tax year
Options: She may save a further £3,340 in the cash ISA, or £8,680 in a shares ISA (or a mix of the two) before the end of the tax year.
Situation: Irma then decides she needs to withdraw £1,000 of this cash
Options: There's no problem withdrawing the money; for the time the £1,000 was in the ISA the interest it earned wasn't taxed. However the fact she has withdrawn the cash doesn't increase her allowance at all - she can still only put £3,340 more in the cash ISA, or £8,680 in the shares ISA.
However, once the money's withdrawn, it can't be returned. A few examples should help clarify this:
Situation: Mr. Rich Devil invests £10,680 in a shares ISA at the beginning of the tax year.
Options: He may sell the whole investment, or part of it, at any time without losing the tax benefits, but no more may be bought inside that year's ISA wrapper.
Situation: Ms. Irma Indecisive invests £2,000 in a cash ISA at the start of the tax year
Options: She may save a further £3,340 in the cash ISA, or £8,680 in a shares ISA (or a mix of the two) before the end of the tax year.
Situation: Irma then decides she needs to withdraw £1,000 of this cash
Options: There's no problem withdrawing the money; for the time the £1,000 was in the ISA the interest it earned wasn't taxed. However the fact she has withdrawn the cash doesn't increase her allowance at all - she can still only put £3,340 more in the cash ISA, or £8,680 in the shares ISA.
Make sure you use your ISA allowance
Experienced independent financial advisors Enable of Bishop’s Stortford would always encourage people to take up their ISA allowances as the first step to saving. Just like normal savings accounts there's a variety of cash ISAs available, such as instant access, fixed rate, and accounts with base rate guarantees. IFA’s like Enable are happy to talk you through your ISA options.
For stocks and shares ISAs there are also a variety of accounts to look at, indeed share based investments in various forms are even ISA-able i.e shares in individual companies may be placed inside what's called a self-select ISA, these are usually managed by stockbrokers.
However a more common use of the shares allowance is for collective investment vehicles like unit or investment trusts. These are pooled investments where a fund manager picks a selection of shares based on geographic or sector criteria and the value of the investment depends on the collective performance of the shares picked.
The good thing about placing these investments inside an ISA wrapper is that it provides two tax advantages. First any profits made from share price increases aren't eligible for capital gains tax and second it enables all the tax on bonds to be reclaimed. Enable of Bishop’s Stortford can offer experienced Independent financial Advice on your ISA’s.
For stocks and shares ISAs there are also a variety of accounts to look at, indeed share based investments in various forms are even ISA-able i.e shares in individual companies may be placed inside what's called a self-select ISA, these are usually managed by stockbrokers.
However a more common use of the shares allowance is for collective investment vehicles like unit or investment trusts. These are pooled investments where a fund manager picks a selection of shares based on geographic or sector criteria and the value of the investment depends on the collective performance of the shares picked.
The good thing about placing these investments inside an ISA wrapper is that it provides two tax advantages. First any profits made from share price increases aren't eligible for capital gains tax and second it enables all the tax on bonds to be reclaimed. Enable of Bishop’s Stortford can offer experienced Independent financial Advice on your ISA’s.
The Big thing about ISA’s
The main thing about ISA savings or investments is that they must be made by 5 April, the end of the tax year. If you do not use it you loose it, any unused allowances do not rollover to the next year they are simply lost for good. At Enable of Bishop’s Stortford our experienced IFA’s know that for any saver the first place for any savings is usually an ISA, as after the tax year ends, any savings or investments stay within the tax-free ISA wrapper for the future, where they'll continue to earn interest.
Many savers and investors follow this process and it means that it's possible to have substantial amounts invested within ISA wrappers; £7,000 per year from 1999 to 2008, £7,200 per year until 2010, £10,200 for 2010/11 and £10,680 in 2011/12 then rising by inflation each year after that, plus the gains (interest or investment returns) made in each year.
By using a standard instant access savings account the basic-rate taxpayers have to give 20% of the interest earned straight to the Government. For higher-rate taxpayers this leaps to 40%, and for 'additional rate' taxpayers it is 50%.
Cash ISAs are simply savings accounts where the interest isn't taxed, meaning it's incredibly rare for a normal savings account to pay more interest. Enable of Bishop’s Stortford’s IFA’s can help you make the most of this important tax efficient way of saving.
Many savers and investors follow this process and it means that it's possible to have substantial amounts invested within ISA wrappers; £7,000 per year from 1999 to 2008, £7,200 per year until 2010, £10,200 for 2010/11 and £10,680 in 2011/12 then rising by inflation each year after that, plus the gains (interest or investment returns) made in each year.
By using a standard instant access savings account the basic-rate taxpayers have to give 20% of the interest earned straight to the Government. For higher-rate taxpayers this leaps to 40%, and for 'additional rate' taxpayers it is 50%.
Cash ISAs are simply savings accounts where the interest isn't taxed, meaning it's incredibly rare for a normal savings account to pay more interest. Enable of Bishop’s Stortford’s IFA’s can help you make the most of this important tax efficient way of saving.
Thursday, 1 March 2012
Free Kindle and £50 Amazon voucher give away...
We are giving away 3 Kindles and £50 vouchers to three lucky winners of our Facebook competition, just LIKE and share our page to enter. T's and C's do apply, please see below:
1.Closing date for receipt of all entries is the 18th of June 2012. 2. All entrants must ‘like’ and Share Enable Independents Facebook page/post in order to enter the competition, just tell us about what financial information you are interested in 3. The competition is open to UK residents over the age of 18, or if under the age of 18 they must have parental consent, all entrants must have a permanent UK address, except employees of Enable, their families or anyone directly connected with the prize draw. 4. Entries that are altered, illegible or not in accordance with the rules of entry will be disqualified. 5. There will be three overall winners of the 3 Kindles and 3 x £50 Amazon Vouchers 6. The prize consists of 3 Kindles and 3 Amazon Vouchers for 3 winners. 7. The prize is non-transferable. The judge’s decision is final and no correspondence will be entered into. No cash alternative will be offered. 8. The winners will be notified by Facebook on 19th April 2012. The winner must be willing to have their name and address published and may be required to take part in any post-event publicity. 9. The name of the winner will be made available on www.facebook.com/enableflp and www.enableflp.co.uk 10. Personal data supplied by the competition entrant may be used by Enable Independent or passed to Enable. Entry to the competition is deemed acceptance of these rules.
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