Blog

21/04/18
Whilst the well-known phrase was always ‘Trust me I’m a Doctor’, it is a marked development in the profession of providing ‘Independent Financial Advice’ to focus on the ‘Trusted Adviser’ which is a concept Wealth Design is proud to promote.

Wealth Design Limited began trading at the beginning of 2015 and established themselves as a growing force in the Midlands financial advisory community. Since their inception they have been regular finalists in the Express & Star Business Awards.

Wealth Design was founded based on a belief that there had to be a better way to deliver financial services and founding Directors, Steve Bennett and David Philips set themselves out to be different from the start. They are not ‘different’ for the sake of it and the firm has a set of core values which focus on delivering excellence to clients. Wealth Design’s mission is a job well done and a satisfactory outcome for happy clients.

In order to build trust, their approach with clients is transparent from the outset. Steve Bennett explains that the business prides itself on being approachable, with the initial meeting being at their expense, clients are listened to and solutions offered to suit each individual’s circumstances, which is underpinned by a clear menu of charges agreed in advance.

Being wholly independent across all areas of financial advice, including pensions, Investments, Life Assurance and Inheritance Tax planning, has contributed to Wealth Design' growth over three years. They now have 14 staff over two offices in Cannock and Streetly.
David Philips, offering further evidence of their ‘trusted status’, explains how the majority of their new clients are being referred by existing clients. David adds, ‘The greatest compliment that you can ever achieve in this profession of to have one client recommend you to another. For me this is the greatest evidence of being a ‘Trusted Adviser’. The reputation and awareness of the Wealth Design brand has supported the business growth and the team are regularly interviewed in the industry press.

There is an assumption that your adviser should ‘know their stuff’, but again how do you know that you are getting the ‘best advice’? It is a principle in the world of ‘Independent Advice’ that the client must receive ‘best advice’. Steve explains that the Wealth Design team never stop learning, in a world where ‘nothing ever stands still’.

David adds, ‘The world of pensions and how tax affects your financial decisions, for instance, are subject to constant change and so we maintain a regular programme of ‘Continuing Professional Development’ and we are all still going through professional examinations to achieve higher standards of qualifications’.

Having been the Regional Chairman of the Personal Finance Society for Staffordshire & Shropshire for the last 14 years, David is keen to promote the development of his professional colleagues across the region and provide a positive environment at their regular quarterly meetings, where up to around 120 plus delegates attend.

Wealth Design advisers are all members of the Personal Finance Society and carry a ‘Statement of Professional Standing’ which is annually approved and renewed by the Chartered Insurance Institute.

Steve concludes that what is most important to us as we grow the business is that we continue to deliver the excellent level of customer service which we founded the business on. This is achieved by building trust with our clients through our knowledge, listening skills, abilities to provide client focused solutions and being fair’ with our fees. Each client should feel confident that we are there to support them throughout their life and it is also essential for the team to know that they make a difference. As the business grows our values remain consistent as does our commitment to our team and our clients.
21/04/18
The Treasury is now accepting that individuals will be affected by the reform to taxation of corporate capital gains.

HMRC’s initial take on the impact of the removal of indexation relief was, to say the least, disingenuous. HMRC’s Budget policy paper (still on site, unchanged) said that “This measure has no impact on individuals or households as it only affects companies.” When challenged on Budget Day about the impact on individual policyholders, the HMRC response was a non-committal “I can confirm that, as life assurance companies are subject to corporation tax on their capital gains, this measure will apply to them”.

It would now appear that the official stance has changed somewhat. According to Royal London, the Treasury’s standard letter in response to correspondence from the public on the subject says “…the impact passed on to individual policy holders is likely to be small”. No specific measure of what “small” means is supplied, nor is there any explanation of why the letter contradicts the website impact statement.

Royal London, primarily in the guise of Steve Webb, is calling on MPs to challenge the measure as the latest Finance Bill goes through parliament. The chances of a government U-turn look unlikely given the current political landscape
20/04/18
HMRC has recently published guidance in relation to the deemed domicile rules and the ability to cleanse mixed funds.

From 6 April 2017 those who are resident in the UK for 15 of the prior 20 years are deemed UK domiciled for the purposes of income tax, capital gains tax and inheritance tax. The effect of these domicile rules is to tax long term non domiciled individuals on their worldwide income and gains as they arise, so there is no ability for them to claim the remittance basis of taxation.

In order to help long term residents move from the remittance basis to worldwide taxation, two provisions were introduced by Finance Act 2017 namely; the ability to rebase certain foreign assets to the 5 April 2017 value (see our earlier bulletin) and the ability for all remittance basis users to cleanse mixed funds in the two year period to 5 April 2019.

Broadly, a mixed fund is a fund of money or other property which contains more than 1 type of income or capital (including ‘foreign chargeable gains’) and/or income or capital from more than 1 tax year.

However, it is important to note that this opportunity only extends to cash, therefore if an individual has purchased an assets with mixed funds, the asset would need to be sold.

The ‘cleansing’ of mixed funds enables a bank account containing untaxed unremitted income, capital gains and clean non-taxable capital to be segregated through moving the constituent parts to separate accounts. It will then be possible to remit funds from the new accounts to the UK in the most favorable manner.

In practice these rules are extremely complicated and come with a number of conditions. Broadly, the individual has to be a non UK domiciled, be able to identify the make-up of their mixed funds and have been a remittance basis user under the terms of the legislation (s809B, s809D, S809E of the Income Tax Act 2007) prior to April 2017. In addition, for transfers made before April 2008 these rules appear to have an added layer of complexity. In any event given the complex area of taxation individuals falling into this category are advised to seek professional advice from a specialist in this area prior to taking any action.

Note it is not possible to 'cleanse' mixed funds if the client was born in the UK and thus has a UK domicile of origin.
17/04/18
HMRC has recently published guidance in relation to the deemed domicile rules and the ability to cleanse mixed funds.

From 6 April 2017 those who are resident in the UK for 15 of the prior 20 years are deemed UK domiciled for the purposes of income tax, capital gains tax and inheritance tax. The effect of these domicile rules is to tax long term non domiciled individuals on their worldwide income and gains as they arise, so there is no ability for them to claim the remittance basis of taxation.

In order to help long term residents move from the remittance basis to worldwide taxation, two provisions were introduced by Finance Act 2017 namely; the ability to rebase certain foreign assets to the 5 April 2017 value (see our earlier bulletin) and the ability for all remittance basis users to cleanse mixed funds in the two year period to 5 April 2019.

Broadly, a mixed fund is a fund of money or other property which contains more than 1 type of income or capital (including ‘foreign chargeable gains’) and/or income or capital from more than 1 tax year.

However, it is important to note that this opportunity only extends to cash, therefore if an individual has purchased an assets with mixed funds, the asset would need to be sold.

The ‘cleansing’ of mixed funds enables a bank account containing untaxed unremitted income, capital gains and clean non-taxable capital to be segregated through moving the constituent parts to separate accounts. It will then be possible to remit funds from the new accounts to the UK in the most favorable manner.

In practice these rules are extremely complicated and come with a number of conditions. Broadly, the individual has to be a non UK domiciled, be able to identify the make-up of their mixed funds and have been a remittance basis user under the terms of the legislation (s809B, s809D, S809E of the Income Tax Act 2007) prior to April 2017. In addition, for transfers made before April 2008 these rules appear to have an added layer of complexity. In any event given the complex area of taxation individuals falling into this category are advised to seek professional advice from a specialist in this area prior to taking any action.

Note it is not possible to 'cleanse' mixed funds if the client was born in the UK and thus has a UK domicile of origin.
14/04/18
The Pensions Policy Unit have published a briefing which looks at the impact of AE on younger generations.

In summary their findings established:
• Millennials make up around 40% of the target group for automatic enrolment.
• Automatic enrolment has almost doubled the participation of 22 to 29 year olds in pension schemes.
• A 22 year old median earning man in 2017 may be able to achieve a pension fund of £108k under AE minimum contributions.
• Removing the triple lock on State Pensions could reduce the retirement income of a 22 year old low earner by 5%.
• A median earning 18 year old automatically enrolled under the AE Review recommendations, at age 18, with the lower earnings limit removed, could achieve a fund of £146k at their SPa, 32% higher than under the current AE policy.

The briefing note makes interesting reading. The impact of changes made to the AE structure will have a significant positive impact on the funds that can be achieved for future generations. Notably in the 2017 Automatic Enrolment Review the recommendations made included removing the lower limit on eligible salary – so contributions based on first £1 of salary. Other recommendations included reducing the age limit to 18 and the ability to continue contributing post SPA.

The AE space has made significant changes to the pension savings landscape with 9.3m eligible workers having been automatically enrolled. Now the process is business as usual for employers, it’s inevitable that the structure will be amended to maximise its impact. There is no shortage of research showing that low earners are being disadvantaged by the minimum contributions not being based on first £1 of income – rather from £5876 and then the question of tax relief for those not in a relief at source scheme will need addressing.
06/04/18
IR 35 is aimed at identifying individuals who, in the view of HMRC, are avoiding paying tax and National Insurance by supplying their services to clients via a structure such as their own personal service company, when the individual is acting like and is being treated like an employee of the end client.

Its effect is to severely restrict the tax breaks, ensuring that individuals cannot avoid PAYE by remunerating themselves by dividend. If caught by IR35, the individual is required to deduct income tax and National Insurance from any of their company’s income that they haven’t already drawn out as salary. This deemed payment of salary is a special calculation that allows tax relief for certain expenses.

Normally, tax relief is available for travel and subsistence expenses for travel to and from a worker’s home to a temporary workplace, but not for ordinary commuting, eg from home to a permanent workplace. However, since 6 April 2016, the cost of travel from home to and from all workplaces is no longer an allowable deduction for a worker who is caught by IR35, or who is otherwise under the supervision, direction or control of the client. This is because each of their assignments is considered to be a separate employment, ie. a permanent workplace.

Since 6 April 2017, public authorities are responsible for deciding if IR35 applies to a person providing services through their own intermediary. The person providing the services through their own intermediary will need to provide information to the public authority to help them make their decision. If the rules apply, the public authority, agency or other third party who is responsible for paying the worker’s intermediary must deduct income tax and National Insurance.

This legislation, known as the off-payroll working rules, hasn’t been extended to apply to workers in the private sector. The person providing services through their own intermediary remains responsible for deciding if the IR35 rules apply for work in the private sector.
06/04/18
Two former work colleagues who spent nearly two decades as colleagues working for major High Street banks have teamed back up to work together at long-standing Streetly-based business, Hunter & Co (IFA) Limited.

Acquired in 2015 by entrepreneurs Steve Bennett and David Philips of the Wealth Design Group, Scott Flemings was recruited to manage the Streetly business and Chris O’Meara joined the business to introduce his financial planning skills, which have centred on the specialised area of personal injury.

Scott has gone on to create additional jobs for new staff at their Thornhill Road offices, with long-term plans for further expansion, after a move in 2017 to the new larger offices.

Financial planning director, Scott, said: “This is a very friendly and successful area in which to work and we are pleased at the steady growth of the business since we took over nearly two years ago from Robin Hunter, as he had been in business in the region for over 20 years.
“As part of our commitment to being involved within the local community we are principal sponsors for the forthcoming Sutton Coldfield Rotary Club Charity Golf Day at Moor Hall Golf Club to be held on 6th June, which raises essential funds for three local charities, so that is great involvement for us.

“Meanwhile we offer all aspects of independent financial advice to a wide range of customers and we also specialise in pension advice, including final salary schemes, which is a very hot topic at the moment.” Senior financial planner Chris, added: “I have worked with several leading firms of solicitors in the past few years, specialising in the area of Personal Injury, so my background and knowledge has a strong legal bearing and I am delighted to be working with Scott once again, offering informal and independent financial advice to many different people.”
31/03/18
The Pensions Regulator (TPR) has secured a High Court restitution order requiring the repayment of £13.7m to pension scheme members involved in a pension scam.

A press release from TPR has announced that four people who ran a series of scam pension schemes have been ordered to pay back £13.7 million they took from their victims.

David Austin, Susan Dalton, Alan Barratt and Julian Hanson squandered the money after 245 members of the public were persuaded via cold-calling and similar techniques to transfer their pension savings into one of 11 scam schemes operated by Friendly Pensions Limited (FPL).

Victims were told that if they transferred their pension pots to the schemes they would receive a tax-free payment commonly described as a “commission rebate” from investments made by the pension scheme – a form of pension scam.

The restitution order came about following TPR’s request to the High Court to order the defendants to repay the funds they dishonestly misused or misappropriated from the pension schemes – the first time such an order has been obtained. The High Court ruled the scammers should repay millions of pounds they took from the schemes over a two-year period.

Dalriada, the independent trustee appointed by TPR to take over the running of the schemes, will now be able to seek the confiscation of the scammers’ assets for the benefit of their victims.
23/03/18
The Office of the Public Guardian has revised the process for dealing with refunds where the donor of a power of attorney has died.
The Office of the Public Guardian (OPG) recently announced that it would refund part of the fee levied for registering a lasting power of attorney or an enduring power of between 1 April 2013 and 31 March 2017.

At the time the OPG website said that if the donor had died, then it would not be possible to claim online and that a claim had to be made by phone. The OPG has since changed its approach where the donor has died (which is probably quite a common situation). The OPG website now states that in such circumstances it will only accept a claim from the executor/administrator, who must supply photocopies of both the:
• death certificate; and
• will or the grant of representation (for example, a grant of probate or letters of administration).

The claimant must also supply their name, contact number, email address and postal address along with the donor’s name and, if known, case reference number. These can all be posted or emailed to poarefunds@justice.gsi.gov.uk.

A Freedom of Information request from Old Mutual Wealth revealed that there is potentially a total of 1.8m refunds due, which begs the question of how the OPG ever thought a phone service was going to cope with demand.
17/03/18
Outside of his work, Chris is a father to two grown-up children, Emily and Michael, both in their 20s. Chris likes to wind down by playing guitar at his favourite Irish bar, Quigleys in Rugby, a hobby he has been enjoying for 26 years. When he was growing up he wanted to be famous. His proudest achievement is being involved in a large injury settlement and the family telling him that his advice had made a real difference to them. Chris ends all his conversations with “good luck”. Chris’ ambition is to finish learning to fly a helicopter. Meet Chris here