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Monthly Archives :

June 2022

National Insurance Contributions

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Class 1 Employees (Primary)

2021/22
Earnings p.w.
Employee 06.04.2022 – 05.07.2022 Earnings p.w. Employee
Below £184 Nil Below £190 Nil
£184 – £967 12% £190 – £967 13.25%
Over £967 2% Over £967 3.25%
06.07.2022 – 05.04/2023
Earnings p.w.
Employee
Below £242 0%
£242 – £967 13.25%
Over £967 3.25%

Class 1 Employees (Secondary)

2021/22 Earnings p.w. Employer 2022/23 Earnings p.w. Employer
Below £170 Nil Below £175 Nil
£170 – £967 (U21s/apprentice U25s/Veterans) Nil £175 – £967 (U21s/apprentice U25s/Veterans) Nil
Over £170 (otherwise) 13.8% Over £175 (otherwise) 15.05%

Class 1A: Generally the employer rate on all benefits in kind is 13.8% for 2021/22 & 15.05% for 2022/23.
Employment Allowance reduces overall employer class 1 NICs by up to £4,000 for 2021/22 & £5,000 for 2022/23, subject to conditions.

Voluntary

2021/22 2022/23
Class 3 Flat rate = £15.40 p.w.
£800.80 p.a.
£15.85 p.w.
£824.20 p.a.

Self Employed

2021/22 2022/23
Class 2 Flat rate =

 

 

If profits over

£3.05 p.w.

£158.60 p.a.

 

£6,515 p.a.

£3.15 p.w.

£163.80 p.a.

 

£11.908 p.a.

Class 4 Rate =

On profits

9%

£9,568 – £50,270

Over £50,270

2%

10.25%

£11,908 – £50,270

Over £50,270

3.25%

Income Tax Allowances

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Income Tax Allowances – UK

Allowances   2021/22 2022/23
Personal allowance (PA)* £12,570 £12,570
Married couple’s allowance (MCA) Ø Spouse/civil partner born before 6.4.1935 £9,125 £9,415
Minimum MCA £3,530 £3,640
Blind person’s allowance £2,520 £2,600
Marriage allowance** £1,260 £1,260
PA income limit £100,000 £100,000
MCA income limit £30,400 £31,400
Dividend allowance £2,000 £2,000
Personal savings allowance Basic rate tax taxpayers £1,000 £1,000
Higher rate taxpayers £500 £500

* PA reduces by £1 for every £2 adjusted net income exceeds PA income limit.

ø MCA relief at 10% if at least one spouse/civil partner born before 6.4.1935. Reduces by £1 for every £2 adjusted net income exceeds MCA income limit, but not below minimum.

** One spouse/civil partner can transfer up to 10% of their PA to the other, provided neither is liable to tax above the basic rate.

Income Tax Rates

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Income Tax Rates 2022/23

Non-savings, non-dividend income – England, Wales, NI

2021/22 Band 2022/23 Band
Basic rate: 20% £0 – £37,700 Basic rate: 20% £0 – £37,700
Higher rate: 40% £37,701 – £150,000 Higher rate: 40% £37,701 – £150,000
Additional rate: 45% Over £150,000 Additional rate: 45% Over £150,000

Non-savings, non-dividend income – Scotland

2021/22 Band 2022/23 Band
Stater rate: 19% £0 – £2,097 Stater rate: 19% £0 – £2,162
Basic rate: 20% £2,098 – £12,726 Basic rate: 20% £2,163 – £13,118
Intermediate rate: 21% £12,727 – £31,092 Intermediate rate: 21% £13,119 – £31,092
Higher rate: 41% £31,093 – £150,000 Higher rate: 41% £31,093 – £150,000
Top rate: 46% Over £150,000 Top rate: 46% Over £150,000

Savings and dividend income – UK

  2021/22 2022/23
Savings income – basic rate 20%* 20%*
Savings income – higher rate 40% 40%
Savings income – additional rate 45% 45%
Dividends – basic rate 7.5% 8.75%
Dividends – higher rate 32.5% 33.75%
Dividends – additional rate 38.1% 39.35%

*0% starting rate on up to £5,000 of savings income for 2021/22 & 2022/23.

Not available if non-savings/non-dividend income exceeds this limit.

Trusts Standard Rate Band £1,000

Jubilee bake off

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We recently held a jubilee bake off for the Queens Platinum Jubilee to raise money for two brilliant charities, Alzheimer’s Society and Smile for Life. The delicious array of sweet and savoury snacks were judged by our very own Academy Trainer, Catherine Duncan, who needed a lie down after taste testing.

The selection of treats included cheese scones, cupcakes, savoury plaits and a variety of different flavoured cakes.

The winners were:

  • Best savoury:  Cheese and onion plait
  • Best sweet: Chocolate brownie
  • Best looking: Lime cake & icing with raspberry & blueberries
  • Most comical: Hedgehog

Thank you to everyone who got involved, whether that was by baking or donating – even the Queen made an appearance!

For more information on the fantastic charities we are raising money for please visit their websites:

https://www.alzheimers.org.uk/

http://smileforlife.org.uk/

 

Pension Allowance

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Pension Allowance

The maximum amount of contributions on which a member can claim tax relief in any tax year is greater of:

  • the ‘basic amount’ – currently £3600 gross, and
  • the amount of the individual’s relevant UK earnings that are chargeable to income tax for the year.

Lifetime Allowance

Tax Year Amount
2016/17 to 2017/18 £1,000,000
2018/19 £1,030,000
2019/20 £1,055,000
2020/21 to 2025/26 £1,073,100

Lifetime Allowance Charge: 55% on excess paid as a lump sum and 25% on excess designated for drawdown, annuity or scheme pension.

Annual Allowance

Tax Year AA Amount MPAA Amount
2016/17 £40,000* £10,000
2017/18 to 2022/23 £40,000* £4,000

Annual Allowance Charge: Marginal income tax rate on excess, subject to a minimum of 20%.

Carry forward of up to three years unused annual allowance available.

Money Purchase Annual Allowance (MPAA): applies with no carry forward to money purchase pensions once flexible pension income taken from 2015/16.

*Tapered annual allowance: from 2016/17 to 2019/20, tapered by £1 for every £2 of ‘adjusted income’ over £150,000 to a minimum of £10,000 if ‘threshold income’ is also over £110,000.

For 2020/21 to 2022/23, tapered on the same basis if adjusted income over £240,000 and threshold income over £200,000 to a minimum of £4,000.

Pension Lifetime Allowance Q&A Infographic

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If you are a high-income earner or wealthy individual, you could be putting too much into your lifetime pension and risk exceeding the pension lifetime allowance.

Pension Lifetime Allowance Q&A

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How to stay within the limit to avoid a tax charge.

If you’ve been diligently saving into a pension throughout your working life, you should be entitled to feel confident about your retirement.

But, unfortunately, the best savers sometimes find themselves inadvertently breaching their pension lifetime allowance (LTA) and being charged an additional tax that erodes their savings.

The following questions and answers are intended to help you avoid this tax charge.

Q: What is the lifetime allowance?

A: The LTA is a limit on the amount you can withdraw in pension benefits in your lifetime before you trigger an additional tax charge. By pension benefits, we mean money you receive from your pension in any form, whether that’s a lump sum, a flexible income, an annuity income or through any other method. This allowance applies to your total pension savings, which may be in different pensions.

Q: How much is the Lifetime Allowance?

A: In the 2021/22 tax year, the LTA is £1,073,100. This allowance has now been frozen until April 2026.

Q: What happens if you exceed the Lifetime Allowance?

A: Once you have received your full LTA in pension benefits, you will be required to pay an additional tax charge on any further benefits you receive. If you take your remaining benefits as a lump sum, you’ll pay a tax charge of 55%. If you take your remaining benefits as multiple  withdrawals, you’ll pay a tax charge of 25% on each one.

Q: How is the usage of your Lifetime Allowance measured?

A: Each time you access your pension benefits (for example, by purchasing an annuity, receiving a lump sum or establishing a flexible income), this is recorded as a ‘benefit crystallisation event’. There is an additional benefit crystallisation event when you turn 75, and finally, upon your death.

Q: Is Lifetime Allowance protection available?

A: You can only protect your pension from the LTA if your savings were worth more than £1 million on 5 April 2016. You may be able to
protect your pension savings up to £1.25 million, or up to the value of your pension on that date, depending on the type of protection you have.

Q: Is it possible to avoid the Lifetime Allowance?

A: If you do not have LTA protection and you are approaching the limit, there are various actions you can consider. These include stopping your contributions (and, instead, investing your money into an alternative tax-efficient environment), changing your investment strategy or starting retirement earlier.

Q: When should you seek professional advice?

A: The rules around the LTA are very complex and making the right decisions can feel difficult. Receiving professional financial advice will help to identify if you have a problem and offer different solutions to consider, based on a full review of your unique circumstances.

Let us help you make the most of your money – and your future

Everyone deserves a great retirement. Your goals and ambitions are unique to you and we want to help you get there. To discuss your retirement plans, please contact us. Visit our pension Lifetime Allowance page for more information.

Moving forward together

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Promotions

  • Two of our Advisers have moved into Regional Manager roles
  • Ben Clapham, an Adviser and Regional Manager is now our Director of Financial Planning
  • Lauren Nickell-Lean, has moved from a Client Research Administrator to a Trainee Paraplanner
  • Lee DeRedder, has moved from a Client Servicing Administrator to a Trainee Paraplanner

Exam Passes

  • Amy Butler has passed the Pensions and Retirement Planning (R04) CII examination
  • Adam Blakey has passed the Regulation and Ethics examination (CF1)
  • Laura Craven has passed the Equity Release (ER1) exam
  • We have 11 newly qualified mental health first aiders have completed the MHFA course

New Starters

  • Rebecca Summersall joining us as a New Client Administrator
  • Jaymee Stronach joining us as Mortgage Administrator

Financial advice percentages

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Attitudes of over 50s towards their pensions

  • 26% – Stated that they only started paying into their pension after they turned 30 years old
  • 49% – Regret not saving into their pension earlier
  • 64% – Wish they had contributed more into their retirement savings at an earlier stage

Taking professional Financial Advice is KEY

Worryingly, when over 50s  were asked about financial advice they said:

  • 70% – They have never sought professional financial advice regarding their pension
  • 30% – They feel they don’t know what they are doing and don’t need financial support
  • 10% – They rely on their family and friends for support and advice

However, after heading that they could add as much as £47,000 to their pension (over a decade) by taking professional financial advice, half of them say they would.

Source data: 1,034 UK adults over the age of 50 (retired and nonretired) interviewed between 31.01.2022-07.02.2022
[1] https://www.retirementlivingstandards.org.uk/news/retirement-living-standards-updated-to-reflect
[2] https://ilcuk.org.uk/”inancial-advice-provides-47k-wealth-uplift-in-decade/
[3] https://www.bbc.co.uk/news/business-42193251

Cashflow Modelling

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Cash flow modelling allows us to bring your financial future to life together.

We can help to:

  • Plan and analyse your financial goals
  • Project them forwards over time
  • See how changing circumstances will impact your plan
  • See how likely it is you will achieve your goals
  • See the actions you need to take along the way
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