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“M&G Wealth Advice” is a trading name of M&G Wealth Advice Limited which is registered in England and Wales. Registered office at 10 Fenchurch Avenue, London EC3M 5AG. Registered number 5739054. Authorised and regulated by the Financial Conduct Authority. © M&G Wealth Advice 2024
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In the news: Rising cost of living
Tax year end – use your ISA allowance before the end of the tax year – or lose it
How can you manage inheritance tax and help the grandkids with their education
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In the news: Don’t find yourself drawn into the IHT net
5 reasons why making a will can be so important
Don’t leave it too late to talk to your family about wills and inheritance
What is the value of financial advice?
Walk for Ukraine
Don't leave it too late to talk to your family about wills and inheritance
Give a gift to help a loved one through the cost of living challenges
How do your finances affect your wellbeing?
Financial advice for everyone
It’s an important question which is worth asking, particularly now when the cost of living and inflation are placing added pressure on many of our finances. If you're ill, you see a doctor, if you're moving house you go to a solicitor. We use experts for important decisions because that’s their job – to have the knowledge that we don’t. But there can be a hesitancy around getting financial advice from experts, often when help is needed most.
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Why get advice?
In an M&G Wealth survey people shared their reasons for getting advice from a financial adviser. There are many reasons – some small, some quite significant and some potentially life changing. Here are the top 20 reasons that highlight the value financial advice can potentially add, in so many different ways.
And it’s not just about the big things in life
The need for expert advice when faced with life-changing circumstances makes sense. But what about seemingly less significant factors? And ongoing financial advice when things change? We look after our cars with MOT tests and some of us have dental plans to ensure regular check-ups, health plans to access specialised healthcare or pet plans to look after our cat or dog’s health. So why not a financial plan with regular reviews from a trained professional, to help look after your money, and ensure you’re on track to do what you want when in your retirement. Those surveyed said their biggest long-term financial concern at the moment was the impact of rising inflation (25%). Second to this were concerns about “investments losing money” (15%), stock market volatility and inflation clearly front of mind. There were also concerns about “having a reduced income” (14%) and the “inability to save any money” (14%). People value an adviser who really listens to them and their concerns. 30% of those surveyed felt it important for their adviser to answer any questions they had and 29% said an adviser who understands their situation. Whilst 29% felt a review of their situation and recommendations for how they can meet their needs better was important.
Family Wealth Unlocked Report 2022. A survey of 2,000 UK adults who have personally, or who have parents, or grandparents, who have received financial advice from an adviser in the last 5 years. Conducted by Opinium for M&G Wealth The Advice Gap 2023, The Lang Cat ILC The ‘Value of Financial Advice’ report. July 2017 ilcuk.org.uk/new-research-finds-those-who-receive-financial-advice-are-on-average-40000-better-off-than-their-unadvised-peers - ‘What it’s worth: Revisiting the value of financial advice’ December 2019 ilcuk.org.uk/wp-content/uploads/2019/11/ILC-What-its-worth-Revisiting-the-value-of-financial-advice.pdf ILC Peace of mind – Understanding the non-financial benefits of financial advice’ November 2020 ilcuk.org.uk/wp-content/uploads/2020/11/ILC-Peace-of-mind-The-non-financial-value-of-advice.pdf
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“M&G Wealth Advice” is a trading name of M&G Wealth Advice Limited which is registered in England and Wales. Registered office at 10 Fenchurch Avenue, London EC3M 5AG. Registered number 5739054. Authorised and regulated by the Financial Conduct Authority. © M&G Wealth Advice 2023
Does financial advice really pay?
There’s no doubt that the last few years have been challenging for many with the pandemic, war in Ukraine and cost of living crisis. According to recent research ‘The Advice Gap 2023’ almost half (47%) of respondents feel their household finances are in a worse position than they were three years ago, with another 29% saying they’re about the same. Despite this, financial advice is still felt to be valuable. 88% of those who paid for financial advice in the last two years believe that the advice they received is good value for money, according to the research. A study by the International Longevity Centre – UK (ILC)* was carried out over a number of years to get an extensive view of people's finances and measure the impact longer term. Over this period, those who took financial advice ended up with an average increase in their wealth of over £47,000 more than those that didn't take advice. The research looked at two groups of people to see if they were better off with or without advice. The first group were ‘affluent’ and the second group considered themselves as ‘just getting by’. It shows just what a positive difference advice can make and that advice is for everyone. A well put-together financial plan with regular reviews really could make a difference to your money in retirement. As we all know, nothing is certain. As with any investment, even with an experts’ help, the value can go down as well as up and you may not get back the amount you put in.
What does a financial adviser really do?
Getting financial advice is not just about financial reviews, planning for retirement, investments, reducing inheritance tax or insurance. It’s about a whole lot more, much of which goes unseen. And similar to an iceberg, only a small part of the benefits are visible on the surface.
Can you put a price on?
peace of mind security reassurance freedom confidence
savings & investment review retirement planning inheritance tax planning protection insurance intergenerational wealth planning
Preparing for retirement
34%
An unexpected windfall
32%
2
Receiving an inheritance
30%
3
Inheritance planning
29%
4
Writing a will
25%
5
Me or my partner becoming seriously ill / dying
19%
6
The death of a parent / family member
7
Getting into financial difficulty
18%
8
Contact from your pension scheme
9
Market turmoil impacting my finances / investments
15%
10
Maximizing my legacy
11
Wanting to begin my investment journey
12
A significant change in my career
13
Looking to get on the property ladder
14
Contact from the HMRC
15
Divorce
16
Wanting to move into ethical / sustainable investing
17
18
19
20
14%
12%
11%
7%
6%
Many of my clients simply want advice around the cost of living challenges and to make sure they don’t run out of money if they decide to retire early or just enjoy spending some of it.
"
Lucy Moran, a Financial Adviser from M&G Wealth Advice
So you could benefit from financial advice in a number of ways
Peace of mind – we’ve got you covered Confidence – helping you manage your money through life’s ups and downs Access to expert advice when you need it – get your questions answered, regular updates and reviews, avoid scams A long-term plan – for your money and your life It could change your life – potential to increase your wealth
Family Wealth Unlocked Report 2022
financial health check up mapping your life goals help to manage your cashflow emergency fund contingency planning estate planning inflation check tax planning wealth optimisation managing investments debt management
Real life examples where advice has made a difference
We want people to really benefit from financial advice and feel confident to do the things that are important to them. So we talked to Lucy Moran, one of our expert Financial Advisers at M&G Wealth Advice, to see how she has helped just some of her clients. These examples shouldn’t be taken as advice or a personal recommendation. Advice is personal to you. Tax rules, relief and the impact of taxation depend on your own circumstances.
Confidence for your future
People who take advice are more confident and better prepared, according to the ILC. They reported that advice improves financial literacy, boosts confidence and people are less worried. As well as peace of mind, people feel they have greater control of their financial future and are reassured that they’re doing the right thing because they have consulted an expert. The ILC report ‘Peace of mind – Understanding the non-financial benefits of financial advice’ suggests that the wellbeing and mental health benefits could be more important than any financial benefits. They too want to see more people benefit from taking financial advice.
9 in 10 people are satisfied with the advice they received and the vast majority decide to go with their adviser’s recommendations
* The research explored the impact of financial advice between 2001-2006 on financial outcomes in 2012-2014. In 2017 the research was revisited using data for 2014 to 2016. Due to the fact this study was carried out over such a long period, it is the latest research available.
Getting married
A financial request from a family member / friend
Planning for school fees / university fees for child(ren) / grandchild(ren)
Reasons why people seek advice from a financial adviser
I’ve been an Adviser for 15 years and many of my clients have been with me for a number of these. Together we’ve built a relationship and a long-term plan for their money and investments. And that creates peace of mind and confidence for clients, knowing I’m there to help them manage their money through everything life throws at them and help them achieve their goals.
For example, I helped a client recently sort out all of her different pensions. She was single, retired with no income and living in her old family home. She’d lost track of how many pensions she had and quite honestly felt overwhelmed with all of the various statements. I discovered nine different pensions in the end, after I sat on the floor and sorted all the paperwork into separate piles. I was able to help her combine these into one pension, which was around £150,000. And she was able to take her tax-free cash lump sum and, together with the sale of her home, was able to buy a beautiful new house with a lovely garden. And she can take £1,000 a month income which is flexible. She was absolutely over the moon. It’s not just the big life events, but the everyday things as well that can make a real difference. I regularly keep in touch with all of my clients and encourage them to check in with me or send me a question if they need to. I remember one client who had already taken some money from his pension. And he messaged me one evening to say he was going to get another £5,000 out. But I messaged him straight back to tell him to hold off. I checked his account and explained that if he took any more money out it could mean losing thousands of pounds every year for the next ten years. There are some HMRC rules which limit future tax relief when certain pensions are accessed early, and it’s easy to fall foul of these. He was absolutely fine – he didn’t need the money that much and was just so glad that I had caught this. But to be honest, I was just glad he’d checked in with me first. It’s my job but for clients it really is peace of mind – knowing that I’m there helping them manage their money.
Good advice is not about making it easier to buy an ISA, it is about improving financial wellbeing. Whoever you are, and whatever your level of wealth, gaining control of your financial affairs and accessing the peace of mind that comes as a result, is a huge benefit and one that should be attainable for all.
The Advice Gap 2023
Our thoughts continue to be with the people of Ukraine and our collective hearts go out to all of those affected by the war. On Wednesday 22 June around 165 staff from M&G Wealth were involved in a ‘Walk for Ukraine’ to raise much needed funds to help those in need. Five or ten mile walks were organised from our office locations in Edinburgh, Bath, Reading and Huddersfield. And for those who couldn’t make it on the day, there was the option to take part ‘virtually’. Together they covered 1,505 miles, the equivalent of walking from Edinburgh to Kyiv. The sun was shining on the day and we’re delighted to report that it was a great success. And all money raised went towards supporting M&Gs long-term charity partners who are on the ground: SOS Children’s Villages, Habitat for Humanity, and through the British Red Cross.
“The whole concept of the walk and raising money for Ukraine is fantastic,” Mark said. “We’ve all seen what’s happening in the news and it’s heart-breaking. So being able to do something – although it may seem small – really does help." The 10 miles was a significant challenge for Mark as he’s about to have open heart surgery to fix a structural defect on his heart. But that didn’t deter him. “I wanted to take part in the walk because I need to make sure I’m physically stronger before the operation. I’m fine, I don’t have any symptoms, but I’m not allowed to put any strain on my heart. Walking is okay. But that’s why my wife came – to keep an eye on me.”
Ukraine Emergency Response – update
In response to the crisis in Ukraine, M&G made emergency corporate donations to support the relief efforts of our established long-term charity partners who are on the ground: SOS Children’s Villages, Habitat for Humanity, and through the British Red Cross to the Ukrainian Red Cross Society. This strategic two-pronged approach is providing immediate humanitarian aid as well as longer-term, affordable housing support to those who have lost their homes. Through their emergency programme, SOS Children’s Villages are continuing to work with local organisations to support thousands of vulnerable children and their families, with food, essential supplies, trauma care and mental health support – as well as assisting with the relocation of children in the care system. Habitat for Humanity in Poland, Hungary, Romania and Slovakia are providing a united response for refugees arriving in these border countries as well as delivering emergency supplies. They are helping displaced families access safe shelter and are working to address longer-term housing needs. Red Cross volunteers are continuing to provide on-the-ground emergency aid in Ukraine including transporting urgent medical supplies and helping at blood donation points as well as supporting humanitarian corridors to enable civilians to evacuate. In bordering countries, Red Cross teams are providing humanitarian assistance, distributing food, clothing and hygiene supplies, as people cross the border.
Mark McCafferty, an Adviser from M&G Wealth Advice, took part in the Edinburgh walk along with his wife Suzie, a Director in his firm.
We both really enjoyed taking part in this charity fundraiser, although I don’t think I could have managed another mile. It was great catching up with people we’ve not seen for some time and meeting new people, and just feeling a part of this community.
The money raised by staff was doubled by M&G and Gift Aid was also added.
There’s a saying that nothing is certain in this world, except death and taxes. So planning what happens to your money and possessions when you die can help to:
make sure your money goes to the people you want to give it to reduce or even eliminate inheritance tax so you may leave more to those you love ensure that your wishes are carried out without unnecessary expense or delay
This might sound quite simple, but managing the transfer of your money and possessions after you’re gone can be complicated, with many financial and legal hurdles. It’s easy to keep putting things off, but it doesn’t have to be difficult. Here are five basic tips which you may find helpful:
A recent M&G Wealth report found that one in five now talk openly with parents about inheritance, so they can plan as a family. Often an unspoken taboo in years gone by, open conversations between generations about parents’ wills, plans and inheritance could help improve financial planning outcomes for the family as a whole. The report revealed 21% of those surveyed had discussed their parents’ will with them, albeit only “a brief conversation”. And 16% are (or were) executors of their parents’ wills with 12% having discussed it with a sibling.
13% said their parents had never raised the subject of a will. And 8% said that, while their parents had never spoken to them about their will pre-COVID, the pandemic had now prompted them to discuss it. A further 10% express regret that “they wished their parents spoke more to them about their will” and a worrying one in eight (12%) confirmed their parents do not have a will.
1.
Make a will and review it regularly
Do you know that if you don’t have a will, your estate will be shared according to rules set by the government, which may be different from your wishes? The consequences can be devastating for those you leave behind. A will can help you ensure your estate goes to who you want and they don’t pay more inheritance tax than they need to. If you’ve already made a will, that’s great. Please just make sure it’s kept up to date. A change in family circumstances, changes in inheritance tax rules – which happens more often than you might think – and wider legislation can all affect your will. It’s recommended that you review your will at least every five years.
2.
Set up a Power of Attorney
Sometimes people think having a will means they don't need a Power of Attorney (POA), but this isn’t always true. The POA lets you appoint someone you trust to make financial and/or medical decisions for you if you’re unable to do so yourself – for example, if you become ill. It might help to think of a will as something that helps your loved ones after you die, whereas a POA is designed to help you while you’re still living. Another common mistake people make is thinking that the POA means you’ve automatically handed over control to someone else, but again this simply isn’t true. The POA only kicks in when you’re no longer able to act in your own best interests. Please note that neither wills nor POA are regulated by the Financial Conduct Authority (FCA).
3.
Make sure you know who stands to inherit your pension
It can be a strange anomaly, but your will doesn’t always decide who inherits your pension. When setting up a pension, you normally have to complete a “nomination of beneficiaries” form. The people who you list on that form will usually inherit your pension when you die. Over the years, it can sometimes be easy to forget who you’ve nominated to inherit your pension. This information can also change and quickly becomes out of date if your circumstances have changed. So it’s worth checking who you have nominated, and updating if necessary.
4.
Speak to your loved ones
This is often the step that’s forgotten about or saved for a “rainy day”. It’s really important to have these documents and keep them up to date. But it’s even more important that you have a conversation with your loved ones about this. Informing your loved ones in advance that you've done this important planning could help make things easier for them during what is often a very difficult time. And you may even wish to go a step further and involve them in this process.
5.
Plan today to prevent avoidable problems
Each of us are unique individuals, no two of us have the same circumstances or family dynamics. By planning in advance and speaking to your family you can ensure your intentions are respected, your family is protected and everything goes according to your wishes.
But does more need to be done to encourage family conversations?
So where do you start?
Family Wealth Unlocked Report 2022. A survey of 2,000 UK adults who have personally, or who have parents, or grandparents, who have received financial advice from an adviser in the last 5 years. Conducted by Opinium for M&G Wealth
Use your ISA allowance before the end of the tax year – or lose it
Don’t forget to use your individual savings account (ISA) allowance before the end of the tax year on 5 April 2022. If you have cash that you won’t need to access in the short term, take advantage of this opportunity to save up to £20,000 tax efficiently.
You can save up to £20,000 into a cash ISA or invest in a stocks and shares ISA. Or you can mix and match by adding to both, providing the total combined amount doesn’t exceed the annual allowance of £20,000. Remember, any money invested in a stocks and shares ISA should be money that you don’t need in the short term – typically the next five years.
Now, more than ever, you’ll want to make sure your savings give you the best possible return. Putting money aside tax-free is an easy way to make your savings work that bit harder and is especially useful for those in higher tax bands who don’t benefit from the personal savings allowance. Remember, the value of your investment can go down as well as up so you might not get back the amount you put in. Also, tax rules can change and the impact of taxation (and any tax relief) depends on your circumstances.
£20,000
ISA ALLOWANCE
2021/22
Use it or lose it You can’t carry any unused allowance over to the next tax year – it resets every year. And any allowance that’s not used by the end of the tax year will be lost.
How much can I save tax-free?
Year 2021/22 2022/23
ISA allowance £20,000 £20,000
With the cost of living challenges continuing you’ll want to make sure your savings are giving you the best possible return. Putting money aside tax-free is an easy way to make it work that bit harder for you and is especially useful for those in the higher tax bands who will lose some, or all, of their savings allowance. So, as we near the end of the tax year on 5 April, remember to use your Individual Savings Account (ISA) allowance.
You can invest up to £20,000 in a stocks and shares ISA or a cash ISA. Or you can mix and match by adding to both, providing the total combined amount doesn’t exceed the annual allowance of £20,000. Make the most of this tax-free way to save as you won’t pay income or capital gains tax on your ISA profits. Of course, any money invested in a stocks and shares ISA should be money that you don’t need in the short term – typically the next five years.
Remember, the value of your investment can go down as well as up so you might not get back the amount you put in. Also, tax rules can change and the impact of taxation (and any tax relief) depends on your circumstances.
ISA allowance continues in
2023/24
Any allowance that’s not used by the end of the tax year will be lost. You can’t carry any unused allowance over to the next tax year as it resets every year.
Year 2023/24 2024/25
Use it or lose it
The rising cost of living is making times tough for many of us. So what if you could help fund your grandchild’s education and also help manage an inheritance tax (IHT) bill. IHT is the tax that must be paid by your loved ones if the value of your estate is worth more than the tax-free amount or threshold, currently £325,000 (January 2023). If you give away your home to children or grandchildren, your threshold can increase to £500,000. Anything over the tax-free amount is taxed at 40%.
gov.uk/inheritance-tax ucas.com/finance/undergraduate-tuition-fees-and-student-loans ‘Student Loan Statistics’ House of Commons Library, December 2022 researchbriefings.files.parliament.uk/documents/ SN01079/SN01079.pdf ‘Research findings: Graduate indebtedness: its perceived effects on behaviour and life choices – a literature review’. Published June 2018 researchcghe.org/publications/research-findings/research-findings-graduate-indebtedness-its-perceived-effects-on-behaviour-and-life-choices-a-literature-review/
The rising cost of education
Education has the potential to change lives – opening doors while adding richness and meaning that lasts a lifetime. But education can also be costly. The cost of a university degree can vary, but as a guide, the maximum tuition fee for a course in the UK is £9,250 a year. Scottish students attending a Scottish university or college full-time don’t pay any tuition fees currently. But when adding in living expenses such as housing, utilities, groceries, technology and transport, it can be a significant consideration. The average debt for students who started their course in 2021/22 is forecast to be £45,800 when they complete their course, according to the Student Loan Statistics report published by the House of Commons library. You could help your kids or grandchildren avoid significant student debt, which can have many negative consequences beyond graduation. A study by University College London in 2018 shows student debt can negatively impact the career choices, home ownership, health and finances of young adults. If you’re in a position to do so, it can be rewarding to help family members with education fees, to give them a helping hand when they most need it. And at the same time you could also use this as a way to reduce IHT.
Simply put, the smaller the value of your estate, the smaller any IHT bill would be. So by helping the family with the cost of education, you can reduce the size of your estate and therefore the amount of IHT due. But it’s not as simple as just handing over a load of cash. There are different options for funding education and some strict rules you must adhere for each. Here’s a look at some of the options:
How can paying university fees help me with IHT?
You can find out more about IHT by visiting gov.uk/inheritance-tax. And if you have questions or would like to know more about how to help your loved ones get a great start in life and reduce or eliminate an IHT bill, please get in touch with your adviser.
What to do next?
Options for helping with the cost of education Why you might do this Things to consider
Pay all fees in lump sums
Use gift allowances There are gift allowances that you can use each year which are instantly free from IHT. The allowances may not be enough to cover the full cost of education. You need to keep detailed records of each gift you give.
Use excess income If you have more income than you need, you can use the excess to pay for education and it doesn’t attract IHT. For example, if you have an income of £3,000 each month and your expenses are £2,000 – you can use that extra £1,000 to help. You need to make payments on a fairly regular basis to avoid IHT. You also need to be able to maintain your standard of living without dipping into your savings.
Set up a trust A trust lets you control your money and specify how and when it’s used – in this case for education. Money in a trust can also be invested, giving it the chance to grow. Of course, it could also drop in value and be worth less than you put in. For the money in a trust to be fully IHT free you’d need to live another 7 years. Your adviser can help you choose an investment with a balance of risk and reward you’re comfortable with.
Intergenerational issues intensified – time to reconnect
Options for helping with the cost of education
Why you might do this
Things to consider
Doing this or paying the university direct is probably the most convenient option.
This is classed as giving a gift to the grandkids, and for it to be fully IHT free you’d need to live another 7 years. You’re giving up control of your money and it may not be used in the way you want it to.
Use gift allowances
There are gift allowances that you can use each year which are instantly free from IHT.
The allowances may not be enough to cover the full cost of education. You need to keep detailed records of each gift you give.
Use excess income
If you have more income than you need, you can use the excess to pay for education and it doesn’t attract IHT. For example, if you have an income of £3,000 each month and your expenses are £2,000 – you can use that extra £1,000 to help.
You need to make payments on a fairly regular basis to avoid IHT. You also need to be able to maintain your standard of living without dipping into your savings.
Set up a trust
A trust lets you control your money and specify how and when it’s used – in this case for education. Money in a trust can also be invested, giving it the chance to grow. Of course, it could also drop in value and be worth less than you put in.
For the money in a trust to be fully IHT free you’d need to live another 7 years. Your adviser can help you choose an investment with a balance of risk and reward you’re comfortable with.
We spoke to Kam Chana, an adviser from M&G Wealth Advice, to find out why wills can be so important.
Families are now not always as straightforward as they perhaps used to be. With divorce, second or third marriages and blended families, it can sometimes be quite complex. Can having a will help?
5 key financial reasons why you should think about making a will
Have you given any thought to what would happen to your money, property or possessions if you unexpectedly died tomorrow? Perhaps you already have a will, but is it up to date?
This shouldn’t be taken as advice or a personal recommendation. Advice is personal to you. Tax rules, relief and the impact of taxation depend on your own circumstances.
It’s not something any of us like to think about, but I’ve unfortunately seen the aftermath of not having a will, or having one that’s out of date, and it can make a terrible situation even worse for families. Let me give you a couple of examples. My client’s mother died. She’d been divorced for some time but hadn’t gotten around to updating her will. Unfortunately her ex-husband was still listed as the beneficiary on her pension. And there was nothing my client could do about this – the money went to him. I had another client who was divorced as well. His ex-wife unfortunately died of cancer and left four young girls, the eldest only in her twenties, with a substantial inheritance tax bill to pay. This could possibly have been avoided if a will had been in place. Having a will gives you control. I urge people to take control and use your will to specify what you want to do with your money and possessions. Don’t leave it to the children or family to deal with when you’re gone.
Let’s start with the basics: what is a will and what should it contain?
A will is simply a legal document setting out instructions around what should happen with your estate and possessions after you die. It also contains things like who will settle your affairs, known as your executor, and even what sort of funeral you’d like.
And what happens if you don’t have a will when you die?
Unfortunately your estate, money and possessions might not go where you wanted them to, and even your wishes for your children may not be taken into account. The reason for this is because there are strict rules called ‘intestacy rules’ around how your money and possessions are distributed. So for example, if you are survived by a spouse or civil partner and children, your spouse or civil partner inherits all your personal possessions and the first £270,000 of your estate, plus half of anything above this amount. Your children are then entitled to the other half of this balance.
The rules are slightly different in Scotland. For more information see ‘What to do after a death in Scotland’ Part V Rights of Succession gov.scot/publications/death-scotland-practical-advice-times-bereavement-revised-11th-edition-2016-9781786522726/pages/19
Protect your partner if you’re not married. Unmarried partners are not automatically entitled to anything from your estate unless specifically stated in your will.
Make sure your children are provided for financially. You may want to consider a trust to provide for them, for such things as living expenses, education, paying off a mortgage, etc.If you have stepchildren or foster children – you will need to include them in your will if you want them to inherit.
Specify what happens to your family home. You can leave a share of your property to whoever you’d like, if you wish, or a right to reside in the property (although it’s important to take legal advice on the potential implications).
Try to avoid paying more inheritance tax than you need to. There are ways to reduce the tax bill on your estate. For example, leaving your estate to your spouse or civil partner. And if you leave property to your children and grandchildren it could mean paying less tax than if you’d left it to others. Supporting a charity could also help to reduce your tax bill. You can plan ahead – visit gov.uk/inheritance-tax. Or speak to your adviser if you think the value of your estate could be above the £325,000 threshold, as inheritance tax can be a complex area.
Seek to prevent family disputes. If you’re clear about your wishes in your will, you can hopefully help to avoid any disagreements amongst your loved ones. Contested wills can be costly in terms of legal fees and relationships among your family.
So how do I go about making a will if I don’t have one?
You can write your will yourself, but you really should get advice or guidance if your wishes aren’t straightforward. You can find more information on gov.uk/make-will You can get in touch with your lawyer or solicitor or find a professional will writer. Your bank may offer a will writing service. And some charities also offer a will drafting service, sometimes free. We offer a will writing service via our specialist partner, Co-op Legal Services, who is regulated by The Solicitors Regulation Authority. Speak to your adviser who can arrange a free legal review with them for you. During your appointment they’ll make recommendations on which legal solutions are appropriate for your particular circumstances, and will provide you with a no obligation fixed fee quote. Will writing isn’t regulated by the Financial Conduct Authority. Remember, if you die without a will, the law decides who gets everything you’ve worked so hard for.
I already have a will. Do I need to review it?
Yes, it’s worth reviewing your will regularly, perhaps every five years, or after a major change such as marriage or remarriage, having children or grandchildren, moving house, separation or divorce, or the executor named in your will dies. You can’t make changes to your will after it’s been signed and witnessed. You must either make a new will, or if the change is small you could make a document called a codicil to amend the terms of the existing will.
If you have any questions about wills or anything else, please get in touch with your adviser who is happy to help.
It’s common for family members to rally round and look at ways to help one another in difficult times. Perhaps your children or other family members are struggling to make ends meet as a result of the cost of living crisis. If you’re in a position to help out, you may be thinking about giving them some money. But did you know that giving money to help those you care about could also help reduce the inheritance tax bill they may need to pay?
Inheritance tax or IHT, is a tax on the estate of someone who has died, including all property, possessions and money. The standard inheritance tax rate is 40%. It’s only charged on the part of your estate that’s above the tax-free threshold, called the nil rate band, which is currently £325,000. There is also a residence nil rate band of £175,000, in addition to the nil rate band, if specific qualifying conditions are met. This information is based on our current understanding of taxation law and practice in the UK which may change. The amount of tax you pay and relief you receive depends on your own personal circumstances which may also change in the future.
Helping loved ones and reducing tax, too
Many people only think about the financial legacy they could leave to their loved ones after their death. But helping out during your lifetime can be a way of making the most of your gift – giving those you love a greater sense of financial security in the here and now, while also potentially reducing their inheritance tax liability at the same time. This is because when you give a gift (called ‘gifts’ for tax purposes) you are decreasing the size of your estate (the value of everything you own) which can help to reduce an inheritance tax bill.
What is inheritance tax?
Gifts can include:
money household and personal goods such as antiques or jewellery a house, land or buildings stocks and shares listed on the London Stock Exchange unlisted shares you held for less than two years before your death
Please note that capital gains tax may be payable on some gifts.
Financial support for your children through the cost of living challenges
You may be able to help your children or grandchildren if they’re struggling financially to make ends meet with the rise in energy bills and food costs. And with the price of consumer goods and services rising at the fastest rate in four decades, according to the Office for National Statistics , a little help from you could make a real difference. Or you may be able to help them onto the property ladder, or simply help to pay their mortgage bills, given the recent rise in mortgage rates.
Leave more of what you’ve earned for your loved ones
Inheritance tax used to be considered as relevant only to the wealthy. But with the increase in property prices and freezing of the inheritance tax thresholds at the 2020 to 2021 levels up to April 2028, more estates are being impacted. Inheritance tax receipts are at the highest level on record. Provisional receipts in the latest tax year (2022 to 2023) increased by £1.0 billion to £7.1 billion. When you consider that the average amount of inheritance tax paid was £216,000 in 2019/2020 , it shows just how important inheritance tax planning is. Rather than hand over more than £200,000 in tax, wouldn’t you rather it go to your loved ones? Through inheritance tax planning you can choose to leave more of your hard-earned property, possessions and money to your loved ones. By reducing the value of your estate, you may be able to cut or even eliminate the amount of inheritance tax that may need to be paid. But before you make any decisions to give a gift to your loved ones, there are some important things you need to think about.
Timing is everything when it comes to gifting
The timing of when you give a gift is crucial to how much inheritance tax, if any, might need to be paid after your death. The rules on gifts are set out by HM Revenue and Customs (HMRC) and state that if the person making the gift passes away within seven years of giving the gift, there may be inheritance tax to pay. If you die within three to seven years, you’ll be taxed according to a sliding scale called taper relief. Of course, it only applies if the total value of gifts made in the seven years before you die is over the £325,000 tax-free threshold. This table shows how the rate of tax due on gifts decreases over time, with the amount due at seven years or more being 0%:
Years between gift and death
Tax paid
Less than 3
3 to 4
4 to 5
5 to 6
6 to 7
7 or more
40%
24%
16%
8%
0%
It’s worth considering gifting as early as you can as this increases the possibility of you surviving for the next seven years and reaching the 0% tax rate.
Tax-free gifts and exemptions to the seven year rule
There are some exceptions to the seven year rule. You can gift the following at any time tax free:
Small gifts up to £250 to as many people as you like each year, but not if they’ve received the £3,000 annual exemption Give up to £3,000, or £6,000 as a couple, away each year Wedding gifts of up to £5,000 for children, £2,500 for grandchildren or great-grandchildren and £1,000 for anyone else, if made before the wedding Donation to charities like museums, universities or community amateur sports clubs, and political parties
You can also make regular payments to help your child or another person with their living costs tax free – these are known as ‘normal expenditure out of income’. There’s no limit to how much you give, however you need to demonstrate that payments come from your surplus income and don’t affect your usual standard of living. Outright gifts that aren’t covered by any of the exemptions available are considered a potentially exempt transfer (PET). And if you die within seven years of giving the gift and your estate exceeds the tax-free threshold (nil-rate band) currently £325,000, it will be subject to inheritance tax. Gifting can be complex and we recommend you seek financial advice to help you decide what type of gift is right for your personal circumstances.
It’s important to keep track of any gifts you make, regardless of whether you’re taking advantage of one of the exemptions above, or gifting larger sums of money, property or possessions above the tax-free limits. This will help to avoid unnecessary pitfalls in the future and helps your executors (whoever manages your estate after your death) sort out your finances. Each time you give a gift, it might help to make a note of the information below and keep it with your other important papers:
Who the gift was given to What gift they were given The date the gift was given The value of the gift
Gov.uk
Perhaps there’s never been a more critical time to help your children or grandchildren out with their cost of living challenges. And at the same time take control and pass your hard-earned money on to your family, when you wish and when your children or other beneficiaries may need it most. Don’t leave it to the taxman. The rules around gifts and inheritance tax can be complicated which is why we recommend getting guidance or advice. For more detail around the various rules that apply visit:
Moneyhelper
gov.uk/inheritance-tax/gifts gov.uk/guidance/work-out-inheritance-tax-due-on-gifts
moneyhelper.org.uk/en/family-and-care/death-and-bereavement/gifts-and-exemptions-from-inheritance-tax
If you have questions or would like to know more about gifting to help your loved ones and at the same time help to reduce or eliminate an inheritance tax bill, please get in touch with your adviser. They can help you put a plan in place to pass your wealth on to your family in the most tax-efficient way, without compromising on your own financial security.
Price of consumer goods and services rising at the fastest rate in four decades (in the year to October 2022) ons.gov.uk/economy/inflationandpriceindices/articles/costofliving/latestinsights gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk/hmrc-tax-receipts-and-national-insurance-contributions-for-the-uk-new-annual-bulletin#inheritance-tax gov.uk/government/statistics/inheritance-tax-statistics-commentary/inheritance-tax-statistics-commentary
Plan to pass your money on to your loved ones
Keeping records is key
Taking care of your physical and mental wellbeing is important. But did you know there’s a link between financial security and our overall health? When we feel on top of our finances, we may sleep better at night and are likely to be happier and healthier. But you don’t have to be wealthy to feel financially well. Financial wellbeing is all about making the most of what you have and making sure it’s working in the right way for you and your family – both now and for the future.
The emotional impact of rising bills
A report by M&G Wealth showed more than half (55%) of respondents aged 55-75 were concerned about the cost of living. With over 9 in 10 (93%) people reporting that their cost of living had increased, compared with a year ago according to the Office of National Statistics (ONS) in May 2023. Everything from stamps to broadband and mortgage repayments are up. Council tax has risen. Supermarket costs continue to climb. We wait in hope that energy bills will come down. People are really struggling. They’re cutting back and looking to find ways to save everywhere. The Financial Conduct Authority’s (FCA) Financial Lives survey found that the cost of living is having an impact on people’s mental wellbeing. Around half of UK adults, 28.4 million people in January 2023, felt more anxious or stressed due to the rising cost of living than six months earlier.
‘Retirement Revisited’ report by M&G Wealth, published Oct 22 ‘Public opinions and social trends, Great Britain: 4 to 14 May 2023’ Office of National Statistics (ONS) ons.gov.uk/peoplepopulationandcommunity/wellbeing/bulletins/ publicopinionsandsocialtrendsgreatbritain/4to14may2023 fca.org.uk/publications/financial-lives/financial-lives-january-2023-consumer-experience fca.org.uk/news/press-releases/help-available-those-who-need-it
tips to help you improve your wellbeing, and maybe even your finances
Our research highlights the real impact the rising cost of living is having on people’s ability to keep up with their bills, although we are pleased to see that people have been accessing help and advice. If you’re concerned about your finances, you do not need to worry alone. We've told lenders that they should provide support tailored to your needs.
Sheldon Mills, FCA Executive Director of Consumers and Competition
Talk
If you’re finding things emotionally tough due to pressure on your finances, get some support. Speak to a friend, a family member, your GP. Talk to your bank, pension or insurance provider to see whether there are any additional support measures in place to help. Don’t struggle in silence as there’s help available. Sometimes just connecting with someone helps you feel listened to and supported.
Attempt to keep active
Easier said than done, you might say. But choose an activity that suits your level of fitness. A daily walk can boost your mood and your overall health. And exercise doesn’t have to be expensive. There are now plenty of places where you can work out for free as well as group walks or bike rides – go online and search ‘free exercise’ where you live. You might even make some new friends. For those with mobility or more challenging health issues, the NHS has some useful information, for example, pilates and yoga exercise videos suited to people with back pain.
Try to get enough sleep
Sleep plays an important role in helping our brains and bodies recover each day. Sleep also helps maintain a healthy immune system to fight off illness, helps maintain a healthy heart and weight and assists your emotional and mental wellbeing.
Learn something new and be creative
There are plenty of podcasts and books on making the most of life including learning a new skill, starting your own business, avoiding loneliness, staying healthy and helping you plan for retirement so you can make the most of it when the time comes. You could also consider volunteering for a local charity and give back to your community.
Find ways to relax and reduce stress
Get out and enjoy the outdoors, especially when the weather is fine. Some people enjoy gardening or spending time walking the dog, for example. You could watch a box set, listen to music, or try a mindfulness exercise.
Get help from an expert
Consider talking to your financial adviser if you’d like some help with managing your finances.
You may be surprised to know that having a trusted financial adviser to help with your finances, perhaps over a number of years, is not as common as you may have thought. Financial advice offers many benefits. From access to expert advice when you need it and a long-term plan to help you manage your money through life’s ups and downs, to added confidence and peace of mind. It has the potential to increase your wealth, and could change your life. Yet according to new consumer research, ‘The Advice Gap 2023’, only 11% of adults have paid for financial advice in the last two years. But importantly, 88% of them believe that the advice they received is good value for money.
The Advice Gap 2023, The Lang Cat
The advice gap must be addressed so that people have options to suit their circumstances. We want to enhance trust and meet people’s financial advice needs.
Ross Liston, CEO, M&G Wealth Advice
To what extent do you believe the advice was good or poor value for money?
However, as the name of the report suggests, it is the 89% of people who haven’t paid for financial advice that are causing the advice gap.
The advice gap
The advice gap is the result of too few financial advisers in the UK and not enough people willing or able to access affordable financial advice in a way that best suits them.
Why bother?
The last three years have been challenging for many with the pressures of the pandemic, the war in Ukraine and the resulting cost of living crisis. The research states that almost half (47%) of respondents feel their household finances are in a worse position than they were three years ago, with another 29% saying they are about the same. Less than one in five report an improvement in their finances.
The report asks why bother to try to address the advice gap?
The research looked in depth at the reasons why or barriers (perceived or real) that prevented people from taking financial advice. And thinking about your own experience, you might be surprised at some of the reasons.
Why don’t people take advice?
Trust
One of the main reasons why people haven’t paid for advice in the last two years is a lack of trust. Being sure they could trust the advice was at the very top of the list of things that would need to change (38%) for them to take advice. And people also want to feel they can trust the person giving the advice, as well as the organisation behind it.
If you have taken financial advice, think back to how you found your adviser. A friend, family member or colleague may have recommended them to you. Or you might have been referred by an organisation, such as your pension provider. The report found that 42% of people who paid for advice came through a referral – such as friend or family, other organisation or another professional.
Recommendation
Referrals are key when it comes to overcoming the question of trust, as people are more likely to seek financial advice if the recommendation comes from a source they already trust. You may already have done so, but if you’ve had a good experience with your adviser and the recommendations they’ve made, then you could recommend them to your family, friends and/or colleagues. You may have benefitted from saving money, improving your tax position or just making your investments work that bit harder. Whatever it is, you’re in the best position to tell your friends about the service and trust you’ve built with your adviser.
Recommend your adviser
If you’ve really appreciated the help your adviser has given you in managing your money, think about telling your friends and family. This will mean more people can benefit from advice.
David Montgomery, Managing Director, M&G Wealth
Trust is critical and more must be done to improve the perception of advice and the real benefits it helps bring to people’s lives.
The research highlights several key findings, perhaps most important of all, the need for the financial industry as a whole, to work together. It recommends:
How to address the advice gap
education
more options for people to access financial advice in a way that best suits their circumstances
developing innovative technologies to deliver increased value for money
offering a range of advice options
increasing numbers of financial advisers
encouraging recommendations
The report specifically recommends encouraging referrals. So if you’ve personally benefited from financial advice why not recommend your adviser to family and friends, if you’ve not already done so. This would help them find a trusted adviser.
If you’d like to read The Advice Gap 2023 from The Lang Cat, download here
Received ongoing financial advice
Received one-off financial advice
Very good value for money
Fairly good value for money
Fairly poor value for money
Very poor value for money
Don't know/can't recall
52%
4%
2%
3%
In the last two years
89%
VS
have paid for advice
haven't paid for advice
Source: YouGov
Thinking about now, compared to when the covid-19 pandemic started (i.e. March 2020). How have your household finances been affected?
17%
Considerably better now
Slightly better now
About the same
Slightly worse now
Considerably worse now
Don't know/prefer not to say
Another key challenge for people is awareness. They may not understand the value of advice and how it could benefit them, or even how to find the right adviser. Of those who haven’t paid for advice in the last two years and are unlikely to do so in the future, over a third (37%) said to encourage them to pay for advice they would need to be convinced it would save money. This is up from 33% in 2021. In addition, a quarter (24%) said they would need to be sure how to pick the right adviser, rising from 22% in 2021.
Awareness
What would make you pay for financial advice?
Sources of information for those who received free or paid specialist financial advice
38%
37%
27%
20%
5%
I would need to be sure I could trust the advice
I would need to earn more money than I do now
Financial advice would need to cost less
I would need to be convinced it would save me money
I would need to be sure how to pick the right adviser
Organisations who offer financial advice would need to be easier to find
Not applicable - I would never pay for financial advice
Through my own research
I was referred by another organisation that I approached for help
Other
It was recommended by a friend, family member or colleague
I was referred by another professional
Don't know / Can't recall
35%
13%
Shopping around and getting value for money could be more important than ever for many of us. People are now feeling the impact that recent global events are having on their pockets. The rising global price of energy is helping to push the cost of living up with higher energy and transport costs for businesses. Many of who are also facing supply problems and higher shipping costs. Added to that are staff shortages, the pandemic and as a result, potential wage increases to attract more people. Businesses are passing many of these costs on to customers. Household energy tariffs, gas and fuel prices are increasing astronomically, food prices are steadily rising and transport costs are also going up. And we don’t know yet the full impact Russia’s invasion of Ukraine will have on the cost of living.
“M&G Wealth Advice” is a trading name of M&G Wealth Advice Limited which is registered in England and Wales. Registered office at 10 Fenchurch Avenue, London EC3M 5AG. Registered number 5739054. Authorised and regulated by the Financial Conduct Authority. © M&G Wealth Advice 2022
The rate of inflation, the change in prices for goods and services over time measured by the Office for National Statistics (ONS), has been rising rapidly. Prices rose by 5.4% last year. In February the Bank of England forecast the inflation rate to rise to around 7% this year. This is against a target of 2%.
Household budgets may also be squeezed by expected changes to National Insurance Contributions and income tax changes. Static wages could also have an impact on household incomes.
Bank of England forecast the inflation rate to rise to around
%
1 2 3 4 5 6 7 8
Source: Rising cost of living in the UK - House of Commons Library - 8 Feb 2022 researchbriefings.files.parliament.uk/ documents/CBP-9428/CBP-9428.pdf
Make the most of your ISA allowance
We don't believe there needs to be a trade-off between healthy returns and a healthy planet.
Our world is facing huge challenges. If we want it to be a better place for the next generation, we need to face up to these challenges today.
Many of us are aware that the action we take today such as driving an electric car, travelling more by public transport, recycling or reducing the amount of water we use – can make a small difference. But did you know that your money can make an even bigger difference? The way we put our long term savings to work can play a big role in shaping the world around us. Your money could be investing in companies that are working to solve the world’s biggest environmental and social challenges; companies that develop vaccines, generate renewable energy, tackle inequality, companies that build affordable homes, manufacture electric cars and provide clean water. By investing in companies and industries that are looking to fix some of the world’s problems, your money has the potential to grow while also helping the planet. Remember, the value of your investment can go down as well as up, so you might get back less than you put in.
What if your pension could be invested in a way that helps you and the planet?
How does investing for good work?
Investment experts use a range of factors to decide where to invest. One of the things that is considered when selecting investments is whether they do any harm to the planet. Investments are screened and some don’t make it through the first filter. As well as the potential for returns, experts look at three important areas:
Environmental factors – for example levels of carbon emissions produced Things that help society – for example fair working conditions Companies with robust controls (governance) – for example ensuring a diverse and inclusive working environment
These are known as Environmental, Social and Governance or ESG considerations.
Working together to create a better planet
The United Nations have a number of goals that address the world’s biggest problems including poverty, famine and gender inequality. Governments and companies all over the world are signing up to meet these goals and help solve the issues facing our planet. Many funds that invest for good, can be matched against one or more of these goals, and have specific targets in helping to meet them. A number of factors are then used to measure the positive outcomes the investment has made for society and the planet. For example, the positive outcomes of a renewable energy company could be measured by looking at the level of carbon emissions. By analysing this over the longer term we can see the good and positive change the investment is having.
When you invest money, you want it to have the chance to grow. And more and more people also want to make sure their investments do no harm – to people or to the planet. Your money can be used to invest in companies helping to solve global challenges and contributing towards a healthier planet. Companies that develop carbon capture technology, reduce plastic pollution, build transport links around the world, and give more children access to education; companies that create and innovate for a better future. Companies in these areas have the potential to grow, and more opportunity for growth means more opportunity for returns. As they succeed and grow, they could help your money grow too. That’s why there’s more than 22 trillion pounds invested in this way around the world. If you’re interested to find out more about investing for good speak to your adviser.
Investing for good isn’t new and lots of people are doing it
In recent years, the existence of a generational wealth gap has become all too clear. Baby boomers, for example, have largely enjoyed relative wealth. Thanks to a combination of having children and buying property in their 20s, which often meant fewer financial commitments and more disposable income in their 50s when their children were grown. Some have also benefitted from large gains in property and stock markets over the past few decades and generous final salary pensions. In contrast, today’s younger generations face significant obstacles to accumulating wealth due to high levels of student debt, expensive housing costs and a jobs market with less secure terms of employment, not to mention the rising cost of saving for retirement. As a result, there has never been such a wide disparity in wealth distribution between the older and younger generations.
A need to optimise family resources
Other societal changes have added to the financial challenges across the generational divide. Increased life expectancy, for instance, means people are typically living longer, which increases the need for, and cost of, residential and nursing care for the elderly. These trends often exert financial pressures on different members of a family unit and this, in turn, is increasing the need to consider financial planning at a family level. So, rather than each generation making their own arrangements in isolation, families are increasingly trying to optimise their combined resources in order to achieve better outcomes that can benefit the whole family.
What is intergenerational financial planning?
It may sound complex, but intergenerational financial planning is simply a plan to ensure the smooth transfer of wealth down the generations, in a controlled and tax efficient manner. In essence, it involves integrating financial planning decisions across generations, with grandparents, parents and children all working collaboratively to support each other, while ensuring family wealth is protected and opportunities for growth maximised from one generation to the next. By doing so, an intergenerational approach can ensure the right family members have the right assets at the right time, while minimising any potential for family disputes or conflict.
Why is it relevant today?
Planning is particularly important with modern families, which are typically larger and more complex than in previous generations. Divorce and second marriages and second families, for example, have added extra layers of complexity. The need for careful planning has been heightened, if wealth is to be passed down in line with your wishes and used for the reasons you choose. A key element of intergenerational planning is therefore establishing a family roadmap that details who should receive your money and how you would like it to be used. Such an approach ensures family aspirations are met, while keeping you firmly in control of your finances.
‘Great Wealth Transfer’
Another reason why intergenerational planning is particularly relevant today relates to what has been dubbed the ‘Great Wealth Transfer’. This will see unprecedented sums of money cascade down the generations as baby boomers prepare to pass their wealth on to their heirs. Estimates suggest that, in the UK, £5.5trn could be set to pass between generations by 2047. These record-breaking sums inevitably mean that intergenerational planning has never been so important to so many families.
Involving your family
Despite the increasing need to adopt a collaborative and open approach to transferring wealth, many people are still uncomfortable discussing money issues with their family. If the process is to be successful though, it is clearly important to do so, which means you need to start the conversation. Encouraging your children, or grandchildren, to become involved in your financial decisions can also be an effective way of boosting their financial literacy and, in doing so, ensuring they’re ready to take control of family assets when the time comes.
The sooner the better
Another common reason why people fail to speak about inheritance is procrastination. While many intend to have the wealth transfer conversation with their family, they never actually get round to doing so, perhaps putting it off until their next milestone birthday. However, starting to plan the process at the earliest opportunity is often the key to success, as the sooner you begin, the more time you have to sort things out effectively.
Enjoy the benefits
A key advantage of early planning is that it gives you greater control over the process which, in turn, can help ensure you’re around to see younger generations benefiting from your money. Increasing life expectancy also means many people now receive their inheritance at a time when they themselves don’t necessarily have the most pressing need for it. For example, it arrives after they’ve paid off a mortgage or finished putting children through school or university. While the most important element within any wealth transfer process is ensuring your own financial security, transferring assets to family within your own lifetime can be an extremely rewarding experience. Passing on wealth to others while sustaining your own living standards is achievable with the right planning. You’re in control of the process, so you can pass on money when you wish and when your children, grandchildren or other beneficiaries need it the most.
Kings Court Trust. Nov 2020. kctrust.co.uk/partner-blog/infographic-intergenerational-wealth
Latest HM Revenue & Customs (HMRC) data reveals that Inheritance Tax (IHT) receipts for April 2021 to March 2022 were £6.1bn, which is £0.7bn higher than in the same period 12 months earlier. It’s likely the increase is partly attributable to the speed of house price growth, meaning more estates are worth more than the current thresholds, and so have found they are liable for the tax. The Office for Budget Responsibility forecast recently that the Treasury will receive £37bn in IHT payments over the next five years. With the freezing of IHT thresholds at current levels until April 2026 many more estates could be subject to IHT. There are ways to reduce your IHT exposure, such as gifting to family. Each tax year you can give away up to £3,000 worth of gifts with your annual exemption, so as a couple you could gift £6,000 a year. You can find more information at gov.uk/inheritance-tax/gifts. Remember, tax rules, relief and the impact of taxation depend on your own circumstances. Please get in touch if you have any questions or would like to discuss any aspect of IHT planning. Planning now could avoid having to sell a family home to settle an IHT bill.
gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk/hmrc-tax-receipts-and-national-insurance-contributions-for-the-uk-new-monthly-bulletin. 26 April 2022 update Office for Budget Responsibility Economic and fiscal outlook March 2022 obr.uk/docs/dlm_uploads/CCS0222366764-001_OBR-EFO-March-2022_Web-Accessible-2.pdf gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk/hmrc-tax-receipts-and-national-insurance-contributions-for-the-uk-new-monthly-bulletin. 23 June 2022 update
‘Phishing’ for information
Criminals will often use ‘phishing’ emails to trick people into revealing information about themselves and then use that ill-gotten information to steal money. The theft of information is often done by clicking on a fraudulent link within a message to gain access to personal information, such as account details or passwords, that criminals can then use for their own financial gain. These messages look and sound like they’re legitimate, but must be approached with extreme caution. In the case of the cost of living crisis, scam messages may also suggest that financial measures being offered by the government to help those struggling, such as energy rebates or cost of living payments, have to be ‘claimed’ by completing a bogus application form – when many of these financial payments will actually be applied automatically.
Keeping you safe from fraud is something we take very seriously. That’s why we’ve signed up to Take Five, the UK anti-fraud initiative to help prevent email, phone and online fraud – particularly where criminals try to impersonate trusted organisations. The Take Five campaign encourages everyone to Stop, Challenge and Protect. This means that when faced with an email, suspicious phone call or text, you do the following:
Learn how to stay safe with Take Five – Stop, Challenge and Protect
Take a moment to stop and think about what you’re hearing or seeing. A trusted organisation won’t pressure you to act fast or ask for sensitive personal information over the phone, by email, or text.
It’s okay to question what you’re seeing or hearing. Ask yourself: Could it be fake? It’s ok to reject, refuse or ignore any requests to answer questions or supply information. Only criminals will try to rush or panic you.
Contact your bank or financial service provider immediately if you think you’ve fallen for a scam and report it to Action Fraud (the National Fraud & Cyber Crime Reporting Centre) at actionfraud.police.uk/
You can find out more, including a quiz to check whether you can spot fraud, on the Take Five website takefive-stopfraud.org.uk/
With the rising cost of living, Take Five is warning of four key scams to be on the lookout for:
Common cost of living scams
Scams to watch out for
Stop
Challenge
Protect
Purchase scams
Impersonation fraud
Investment scams
Payment in advance fraud
We’re all trying to save money at the moment, but if a deal looks too good to be true, it probably means it is. Criminals will often offer a product or service at bargain prices and may push for a quick sale by bank transfer, rather than using a secure payment method. Do your checks and don’t be rushed into handing over any money until you know the offer is legitimate.
Criminals will try to gain access to your sensitive information by pretending they’re a trusted provider, such as your bank or a government organisation (e.g. HMRC). You should always check that the email, text or letter is from your provider before providing any information, especially if they’re offering a rebate or other monetary incentive for the information you’ll be providing. Another red flag is spelling mistakes or the use of unusual language – if you spot any of these, proceed with extreme caution.
We all want to make the most of our savings and investments during the current financial squeeze, and criminals will be looking to take advantage of this. Investment fraud is where criminals convince people to move existing investments into a fund that may not exist, or to pay for an investment that turns out to be fake. Again, if returns sound too good to be true in the current market conditions, stop and ask yourself ‘can I trust this information?'
This is when a criminal will ask for payment upfront for arranging a financial product or service, for example, a loan, which you don’t receive. If you’re contacted and told that once you’ve paid a fee you’ll receive money, prizes, or goods you’re not expecting, it could be payment in advance fraud. Be wary of contacts from unknown sources who promise anything of value that could be yours, once you make a payment.
Scammers will often project an element of fear into their messages, suggesting that if you don’t act quickly you’ll be at risk of significant financial loss, or that a ‘bargain’ deal will no longer be available. But remember, if it is a genuine request, no one will mind you being cautious – only a scammer will try to put pressure on you to act before you’re ready.
Don’t act on fear
If you think you’ve been a victim of fraud, please contact your provider. You can also report it to Action Fraud at actionfraud.police.uk/ You can find more information and tips from Take Five at takefive-stopfraud.org.uk/ You can find out more about phishing emails, bogus websites and current HMRC scams at gov.uk/report-suspicious-emails-websites-phishing
Help and sources of information
When it comes to scams, fraudsters will use whatever methods they can to gain access to your money. And as we've seen during the Covid-19 pandemic, scammers are now using the current cost of living crisis to their advantage. They’re targeting people eager to save cash, earn extra money on their investments, or claim help that they’re entitled to. In this article, we look at some common ways criminals will try to access your personal details and the steps you can take to protect yourself.