The (tax) benefit of marriage = £212

Introduced this month is a new tax benefit which means that a spouse or civil partner may now be able to transfer some of their unused personal allowance to the other.  This is aimed directly at couples where one partner does not earn enough to fully utilise their personal allowance and is only available to couples where neither is a higher rate tax player.

This new transferrable personal allowance allows spouses to transfer up to £1,060 of unused personal allowance from the partner that has taxable income below the personal allowance threshold (currently £10,600) to their higher earning spouse, as long they are just basic rate taxpayers.

If your income is below £10,600, and is likely to remain so for the rest of this tax year, and your spouse, or civil partner, earns below the £42,385 higher rate threshold, you can apply to have this personal allowance transferred.

The benefit of such a transfer is that as a couple you will pay up to £212 less tax this year than you would do if you don’t apply.

This is not something that will be automatically actioned on your behalf by HMRC, you will need to apply.  To request this transfer of personal allowance, you currently need to register on the HMRC website at and they will then contact you to ensure eligibility.

Should you have any questions about this, please do speak to your accountant or your adviser here at Chilvester Financial.

Pension Freedom

So you’ve seen all of the press, read all about it and you’re ready to cash in your pension for a lump sum. But is that really the right thing for you to do?

In a rather unexpected announcement, George Osborne revealed in his 2014 Budget that from April 2015 pensioners would have completely flexibility to access their pension savings. No longer would they have to buy an annuity for life or utilise the rather strict income drawdown rules, quite simply you will be able to take as much, or as little, as you want whenever you want.

To relieve the burden on the state pension system, in recent years we have seen the introduction of workplace pensions whereby employers have had to automatically enrol employees into a pension scheme. With the added introduction of these new freedoms from April, the government are rather relying on pensioners being responsible for their own future and expecting them to manage their income appropriately. But, as the pensions minister Steve Webb alluded to, there’s nothing to stop somebody from blowing their whole pension fund to buy a Lamborghini and then expecting to rely on the fallback security of the state pension – exactly what the government have been trying to avoid.

So, is taking the whole of your pot as a lump sum a good idea? Well, that will depend on individual circumstances and taking proper advice is paramount – but there are a number of very important factors that you should be aware of.

Future income

You work for 30 to 40 years (or even more) of your life, all the while saving into a pension that you intended would provide your income in retirement. Taking some or all of your pot as a lump sum might sound an attractive thing to do, but by splurging on that new car or round the world cruise you’re writing off the benefit of any future income that a pension might’ve provided and that you saved for all those years.

If you have no other pension provision you’ll be heavily reliant on the state pension which is designed to provide not much more than a basic sustenance (£151.20 per week for 2015/16).

Means tested state benefits

Taking a large amount of cash from your pension could affect entitlement to benefits that are tested against capital/savings, like pension credit, housing benefit and council tax support.

The government intends to issue guidance on how pension freedoms will interact with Department for Work and Pensions rules, however, as things stand currently, withdrawing cash from a pension and putting it into cash or other investments might put you above the means tested limit and make you ineligible for benefits, meaning you may end up having to spend that cash on rental payments or council tax that you could otherwise have had help with.


Whilst in most cases the first 25% of any lump sum will be paid tax free, the rest of the lump sum will be added to the rest of your taxable income and will be subject to income tax at your highest marginal rate.

Pension providers will be obliged to deduct basic rate tax at source (20%) and any amount that lifts you into the higher rate tax bracket (£42,385 for 2015/16) will be subject to tax at 40%. That tax will most likely be collected by an adjustment to an individual’s tax code, so for someone still in employment taking a lump sum from a pension could actually have a negative effect on take home pay.

Reduced annual allowance

HMRC rules currently allow individuals to contribute up to a maximum of £40,000 per year to a pension and still get tax relief on contributions. To stop people from abusing these rules by withdrawing large sums from their pensions and immediately paying it back in to benefit from tax relief, the government have introduced a new reduced annual allowance of £10,000 for anybody who flexibly accesses their pension after April.

Whilst this reduced limit might not pose much of an issue for many, anyone still contributing large sums to their pension might be adversely impacted.

In summary, whilst the headlines make the notion of pension freedom sound very appealing, never has it been more important to take advice about your pension before making any decision. The government have introduced the new guidance service under the guise of Pension Wise, however this is essentially an information service. Thankfully, Pension Wise will be signposting people toward independent financial advisors such as ourselves. If you’d like to skip the guidance step and come straight to us, please contact us for a no-obligation meeting with one of our consultants.

Who will pay for your funeral?

Such a lovely topic should always start with a quip.

“In the city a funeral is just an interruption of traffic; in the country it is a form of entertainment. ”
― George Ade

It is said that the only certainties in life are death and taxes but often the cost of a funeral can be a burden on your loved ones with the average cost of a burial now £4,6901. According to Engage Mutual, 40% of families would be unable to cover the cost of a funeral2 unless they had access to the deceased’s money. Waiting for probate, which officially allows the deceased’s estate to be distributed, often takes 3 months but if there are complications this can drag on for some time longer.

Prepaid funeral plans are becoming more popular and growing demand allows for more choice; such as the quality of your coffin and the number of cars. The other big advantage of funeral plans is that it ensures that your funeral arrangements are discussed in advance, rather than leaving the arrangement wholly to loved ones.

Prepaid funeral plans are available to all over the age of 50 and are designed to keep pace with inflationary costs, so however long you live, you have the peace of mind that the cost of the funeral will be covered even before your estate has been distributed.

Should you want to find out more, contact us at


(1) The Engage Mutual 2014 Funeral Costs Tracker Report based on commissioned research from Brass Insight
(2) Engage Mutual One Poll Research, December 2014

At last a decent interest rate for the older saver

National Savings and Investments (NS&I) have today launched the much awaited new issues of the 65+ Guaranteed Growth Bonds.  As promised, the key points are

  • There are two issues; a one year and three year fixed term deposits

Investment terms

  • The investment is restricted to those individuals over the age of 65 at the time of application or jointly when both parties are over the age of 65
  • The maximum deposit per person per issue is £10,000
  • Investment can be made online by phone or by post


  • The interest accumulates and is paid at the end of the term
    • There is no ‘monthly income’ option
  • The 1 year bond is paying 2.80% gross/AER
  • The 3 year bond is paying 4.0% gross per annum/AER


  • The account can be closed early but will suffer 90 days loss of interest


  • Interest is paid net of basic rate tax (20%)
    • Nil taxpayers will have to reclaim the tax paid as there is no provision to have the interest paid gross
    • Higher rate taxpayers will have to pay additional tax through their Self-Assessment return


  • The Financial Services Compensation scheme does not apply to NS&I products however these deposits are 100% guaranteed by the UK Treasury
  • There are no cancellation rights to this investment so please ensure that it is suitable for you before you invest

This is a limited tranche of investment and NS&I will withdraw this once they have received the £10bn of monies.

If you feel that this may be of use to you or a family member, more information is available direct from NS&I , either online at or by phone on  0500 500 000.

2014 – Another year of changes

They say that change is the only constant in life; well this year has been no exception to the rule.

At Chilvester we are coming to the end of our 15th year in business and this has been one of the most exciting for us. In April, Andrew Tottman, who had been with us for the last couple of years took a seat on the board which has shared some of the management responsibilities – and allowed me to spend a bit more time sailing!

Staff numbers have grown over the last year. Sally joined us in January to provide technical support to our advisers and over the year she has become a really valued member of our team. Demand for mortgages has picked up back to levels not seen since before the housing crash of 2007/8 and in July we appointed Kirsty as our first full time mortgage adviser for some years. Having dropped to a team of just four of us in 2008, we are back up to an office of nine staff now with five advisers admirably supported by an experienced admin team.

The bigger changes to affect many of our clients (and keeping us in work) are the financial/political ones. We have seen a string of announcements from government and legislative changes this year; some expected and others which no one had foreseen. Over the course of the year electioneering has got more and more pronounced and this is likely to continue in intensity right up to May.

The big legislative change this year has been the passing of the Care Act, which makes some fundamental changes to how care will be provided and funded. I have spent quite some time this year speaking to groups about the implications of this Act, parts of which start to come into effect this coming April.
Changes long proposed in State Pensions have also been finalised (until the next government tweaks them again) with a single tier state pension, for those eligible to draw their state pension from April 2016, of around £148 per week in todays money. Those already eligible for state pension will not see any increase and those already eligible for more will not see any reduction. We will be publishing a more in depth article on this in the New Year.
Personal pension freedoms announced in George Osborne’s March Budget came as a complete surprise to the advice profession and to political and financial commentators alike. The provision of uncapped access to monies held in pension funds for over 55’s from this April has given individuals much greater control over how to plan their retirement income streams but also much greater risk of the monies running out. This strategy has benefits for many; individuals have greater freedom to plan more flexible income streams to meet needs; we as advisers are going to be more in demand to support requests for advice on how best set this all up and, being the cynic I am, it will also increase the immediate tax take for government as everyone cashes in pension funds to buy their Aston Martin! Once again, we will be producing a detailed briefing on this in the Spring.

Several other money related announcements have hit the headlines this year.

The changes to ISA rules earlier this year unexpectedly lifted the threshold to £15,000 per person (going up to £15,240 from next April).

The promise of the reintroduction of National Savings Pensioner bonds for over 65s from this January with 1 year fixed bonds at 2.8% gross interest and 3 year bonds fixed at 4% are well in advance of current market rates. It makes no economic sense for the government to be borrowing at these rates only to be then letting the banks have the monies back at 0.5% but hey ho, we are now in the run up to an election!! More information on these will follow from us as soon as it is available but each individual will be able to deposit up to £20,000; £10,000 into each tranche. They are limiting the availability of this and it is highly likely that this opportunity will not extend beyond the election, earlier if demand is really high.

George’s recent Autumn Statement also saw a fundamental change to the way Stamp Duty is charged on property transactions which has made purchases cheaper for us mere mortals buying houses below about £930,000. This was a welcome stimulus and no doubt has had the desired effect of endearing a few more votes in the desired direction.

So that was last year, what will 2015 bring us? Personally I have a few ideas, but one thing is certain and that is that there will be more of the same ……change.

Thank you all for your support and business throughout 2014 and we would all like to wish you a merry Christmas and a prosperous New Year.

September economic update – Geopolitics in focus

Geopolitical issues continued to dominate both international newsflow and investor sentiment during September. In particular, market confidence was undermined by news of air-strikes in Syria against Islamic State forces. Meanwhile, amid ongoing conflict surrounding Russia’s military involvement in Ukraine, the US and European Union announced further sanctions against leading Russian banks and energy companies.

In the UK over September, much attention was focused on the referendum on independence in Scotland. The result – a 55% vote against independence – was greeted warmly by equity markets as speculation over the result had preoccupied investors in the run-up to the poll, and the uncertainty had been reflected in share prices. The FTSE 100 index fell 2.9% during September and by 1.8% over the third quarter.

Across the Channel, eurozone interest rates were cut to a fresh low of 0.05% by the European Central Bank and policymakers announced a programme of measures designed to support the economy. Investor sentiment in Germany registered its ninth consecutive month of decline during September, dampened by economic uncertainty and concerns over Ukraine. Germany’s Dax index remained broadly unchanged over September as a whole, despite a certain amount of daily volatility.

At their September meeting, Federal Reserve policymakers confirmed the US central bank’s programme of stimulus measures would finish in October, but reiterated US interest rates will rise only after “a considerable time” has elapsed. Disappointing data from the labour market curbed any thought of an imminent increase – although the rate of unemployment edged lower to 6.1% in August, fewer jobs than expected were added to the economy over the month. Nevertheless, wage growth gained some momentum during the month, rising at an annualised rate of 2.1%. The Dow Jones Industrial Average index edged 0.3% lower during September although it was up 1.3% over the third quarter of 2014.

Japan’s economy contracted during the second quarter at a quarterly rate of 1.8% and an annualised rate of 7.1%, dampened by April’s increase in sales tax. A further sales tax increase is scheduled to take effect in October 2015 although prime minister Shinzo Abe is coming under intensifying pressure to postpone it amid concerns over its economic impact. The Nikkei 225 index climbed 4.9% during September and was up 6.7% over the third quarter. Elsewhere in Asia, pro-democracy political protests in Hong Kong caused the Hang Seng index to drop 7.3% over the month.

August economic update – Conflicts still unsettling investors

August was another relatively volatile month, in which investor sentiment was adversely affected by escalating violence in the Middle East, mounting concerns over the activities of the Islamic State militant group and continuing conflict between Russia and Ukraine. During the month, Russia announced embargoes on food imports from the US, the European Union, Canada, Australia and Norway.

Economic growth in the eurozone stagnated during the second quarter of 2014 compared with the first three months of the year, fuelling speculation policymakers will be forced to initiate fresh stimulus measures to boost the region’s fragile economy. In particular, Italy’s economy slipped back into recession, France’s economic growth remained flat and Germany’s economy contracted at a quarterly rate of 0.2%. Nevertheless, investors took heart from European Central Bank president Mario Draghi’s reassurance that policymakers remain “ready to adjust (their) policy stance” if necessary. Germany’s Dax index rose 0.7% during August while France’s CAC 40 index posted an increase of 3.2%.

In the UK, August saw Bank of England policymakers maintain interest rates at 0.5% for another month – although, two members of the central bank’s Monetary Policy Committee were in favour of increasing rates by 0.25 percentage points. This was the first time since July 2011 that policymakers did not vote unanimously over monetary policy and the announcement triggered renewed speculation an interest-rate rise might come sooner than expected. The FTSE 100 index rose 1.3% over August as a whole.

US share prices generally rose over August, driven higher by positive economic data and confidence monetary policy is likely to remain supportive. The Dow Jones Industrial Average index rose 3.2% over the month. The US economy grew more rapidly during the second quarter than previously calculated, lifted by stronger exports and a rise in personal and public expenditure. Meanwhile, at the Federal Reserve’s annual symposium at Jackson Hole, chair Janet Yellen reiterated that US interest rates would remain low until the country’s labour market improves.

Japan’s economy shrank at an annualised rate of 6.8% during the second quarter although a contraction had been widely expected following a sharp rise in the country’s consumption tax that took effect in April. The benchmark Nikkei 225 index fell 1.3% during August. More positively, Japanese exports posted their first rise for three months during July, rising at an annualised rate of 3.9%, while retail sales showed signs of improvement.

July economic update – Global conflicts cast a shadow

Geopolitical news dominated July and share prices around the world were adversely affected. Violence escalated between Gaza and Israel while the ongoing conflict in Ukraine was exacerbated by the Malaysian Airlines crash, which was followed by fresh sanctions against Russia from the US and the European Union. Investor sentiment received a further knock after it emerged Argentina had defaulted on its debt.

In the US, the Dow Jones Industrial Average index did breach 17,000 points for the first time, fuelled by upbeat investor sentiment and encouraging employment data. Nevertheless, the benchmark index fell 1.6% over July as a whole, undermined by wider geopolitical issues. More positively, the US economy rebounded during the second quarter, expanding at an annualised rate of 4%. July also saw the US Federal Reserve announce its programme of asset purchases is likely to finish in October, stoking speculation about the timing of an increase in interest rates.

According to the International Monetary Fund, economic growth in Europe is showing signs of recovery although financial markets might be “too upbeat”. For its part, the European Central Bank expects interest rates in the eurozone to remain at 0.15% for “an extended period of time”. The region’s rate of inflation continues to languish and dropped from 0.5% in June to 0.4% over July. Share prices in Europe experienced relatively high levels of daily volatility during the month and, over July as a whole, Germany’s Dax index fell 4.3% while the CAC 40 index in France fell 4%.

Closer to home, the UK economy grew at a quarterly rate of 0.8% over the second quarter (equating to an annualised rate of 3.1%) to surpass its pre-crisis peak of 2008. According to research undertaken by Ernst & Young, however, the first six months of 2014 saw profit warnings from UK businesses reach their highest level since 2011 – a result of competitive pressures and a strong pound. The FTSE 100 index fell 0.2% during July.

In Japan, meanwhile, the Nikkei 225 index rose 3% over the month, although share prices were dampened towards the end by some disappointing corporate earnings data. According to the Bank of Japan’s quarterly ‘Tankan’ survey of business confidence, although sentiment among large manufacturers deteriorated during the three months to June, large companies intend to increase investment spending, indicating businesses are broadly sanguine about the economic outlook.

Yet again, the few (you) will be paying for the many

The Chancellor of the Exchequer, George Osborne, appeared on television and on the radio earlier this month to put some meat on the bones of the pensions announcement he made in his budget back in March. We have been looking at the paper released this week and are concerned that there is something here hidden from sight that we feel you need to be aware of.

Pensions have historically been a vehicle to save monies to provide you with an income for life when you retire. For some years now, those of us not lucky enough to have a guaranteed income from a defined benefits pension (final salary based company pension scheme), have had options when we retire. These are to either buy an annuity (or guaranteed income for life) or take a limited income directly out of the pension fund (income drawdown).

In the budget George announced that from next year he was removing the cap on the amount of income drawdown which is effectively allowing individuals draw out all their pension savings from the age of 55 in one go if they wished to. As part of the original announcement he stated that everyone retiring would be entitled to free independent advice, which very quickly changed to free independent guidance.

The reason for this change is that “advice” in the pensions world is a regulated activity and has to be provided by fully qualified financial advisers such as our team at Chilvester, whereas “guidance” is not a regulated activity and could be provided by anyone whatever their qualifications or experience. Advice is always supported by guarantees so that if anything goes wrong investors are protected; whereas anyone acting on the basis of guidance will not be protected in any way should that guidance prove to be unsuitable in the future. We accept that if they wish to offer retirees guidance that is fine, as long as it is made very clear that there is no investor protection if an individual acts on the basis of that guidance.

What this months announcements have included is how it is proposed that this guidance is to be provided. The suggestion is that this is not to be provided by regulated firms with set standards and qualified staff with proven experience but from the likes of the Citizens Advice Bureau staff and the Money Advice Service, a quango that a government select committee declared as not fit for purpose just 6 months ago.

These organisations are to be funded for this work not from government funds (thankfully) of from the pension companies who are holding the monies but through a levy on all regulated financial firms, including believe it or not, IFAs such as us who provide advice not guidance. The proposal is that IFAs will fund a high proportion of the total cost of this by way of a new levy, which will be in addition to the levies we (you) already pay to fund the Financial Conduct Authority, the Financial Ombudsman Service, the Financial Services Compensation Scheme and the Money Advice Service. This means that the cost of this free guidance to the many will be funded by those of you who are paying us for individual “advice”.

The idea was floated that the financial advisory firms themselves provide this service as the guidance would at least be supported by qualified and knowledgeable staff but no, the government has in its wisdom decided that we cannot be trusted with this……………madness in the extreme.

We have worked over the last three years to hold our fee structure at the same level and will continue to do so. Whilst this is a threat to us it will be at least another year before we fully know the cost implications and I can assure you that we will do our best to minimise any impact on our fee tariff.

There is much lobbying still going on to try and make them see the errors of their ways but I fear that this will end up as yet another government inspired mess-in-waiting.

Health benefits are key to staff motivation

Half of full time employees think health benefits packages improve their job satisfaction, according to research by Investors in People.

The poll found that happy employees were seven per cent less likely to take an unnecessary sick day than their unhappy colleagues.

The poll found that:

  • 80 per cent would feel more positive towards their employer if they offered better health and wellbeing benefits
  • flexible working hours was the most sought-after benefit with 43 per cent saying it would improve job satisfaction
  • health insurance (41 per cent), dental insurance (23 per cent) and career breaks (10 per cent) were other popular ways to increase employee happiness.

Paul Devoy, head of Investors in People, said:

“Organisations need to see staff health and wellbeing as crucial to their business and staff retention. Companies offering health and wellbeing perks will see real business benefits.”

In a separate survey by Westfield Health, 74 per cent of employees said knowing their employer cared about their health would increase workplace motivation.

Paul Shires, executive director of Westfield Health, said:

“It’s clear that employers that adhere to the three Cs – consult, communicate and care – are going to have a healthier and happier workforce as a result.”