Thursday, 11 December 2014

ISO22222 International Standards x6

BS ISO 22222

– the international quality standard for personal financial planners

I'm delighted to announce I have been awarded this charter mark again in 2014, having first obtained it in 2008.
This standard specifies requirements and provides a framework that applies to the ethical behaviour, competencies and experience of a professional personal financial planner.
As an Independent Financial Adviser providing personal financial services it is important to keep up to date with the latest best practice guidelines.
BS ISO 22222:2005 was created with the objective of achieving and promoting consumer confidence by providing an internationally agreed benchmark for a high global standard of personal financial advice.
The core six steps of the personal financial planning process are:
  • Establishing and defining the client and personal financial planner relationship
  • Gathering client data and determining goals and expectations
  • Analysing and evaluating the client's financial status
  • Developing and presenting the financial plan
  • Implementing the financial planning recommendations
  • Monitoring the financial plan and the financial planning relationship
To support the high level benchmark of best practice one needs to demonstrate the requirements of:
  • Ethical behaviour and financial planning
  • Information security, client confidentiality and data protection
  • Risk management
  • Continual improvement
By adhering to the requirements of BS ISO 22222 I am are able to demonstrate commitment and dedication to continual improvement  and ensure that client satisfaction is at the core of my business culture.
Pre-requisites of Certification to ISO22222
  • Hold an appropriate qualification that assesses Financial Planning knowledge at an advanced level.
  • At least three years experience [Ian Green: as at 2014 I have nineteen years experience] in each of the six steps of the personal financial planning process


BS8577 British Standards Accreditation x3

I'm delighted to announce that Green Financial has received its British Standards Accreditation for BS8577 for the third year running.

Green Financial was just the fifth firm in the UK to gain this charter mark.
What is BS 8577?

BS 8577 is the British Standard framework for the provision of financial advice and planning services for financial planning and advisory firms.
Rather than individual examination passes on subjects such as pensions or investments which all advisers have to have in order to practice, BS 8577 is the only professional quality standard within Financial Services to focus solely on the following key areas of business practice:
  • Operational management;
  • Objectives and policies;
  • Management responsibility;
  • Customer relationship management;
  • Recruitment, training, development and ongoing competence; and
  • Control of documents and records.

Developed by the British Standards Institution (BSI) with industry experts and consumer bodies, BS8577 is aimed at assisting firms and financial advisers operate efficient and transparent financial planning and advice services.
In today’s professional world thriving in business is about striving for and achieving ‘Best Practice’ and not just about delivering ‘Best Advice’.
The British Standards Institute (BSI) say they have "been successful in building a sustainable best practice operational framework for firms allowing them to create an environment their staff want to work in and a business their clients want to work with."

Monday, 8 December 2014

ISA IHT - Good but not great

the devil is in the detail...

As is so often the case, an announcement that seems BRILLIANT actually turns out to be less so.
So from the joy of ISAs being potentially outside of IHT, it is more a 'first death' benefit.

Still good, but not as great as I'd hoped it would be.

ISA inheritability makes 'allowance' for spouse

Details have begun to emerge on how the new inheritable ISA rules will operate. And the good news is that it will be achieved by an increased ISA allowance for the surviving spouse rather than the actual ISA assets themselves. This means you won't have to revisit their wills.
How the rules will workIf an ISA holder dies after 3 December, their spouse or civil partner will be allowed to invest an amount equivalent to the deceased's ISA into their own ISA via an additional allowance. This is in addition to their normal annual ISA limit for the tax year and will be claimable from 6 April 2015.
This means the surviving spouse can continue to enjoy tax free investment returns on savings equal to the deceased ISA fund. But it doesn't have to be the same assets which came from the deceased's ISA which are paid into their spouses new or existing ISA. The surviving spouse can make contributions up to their increased allowance from any assets.
What it means for estate planning
By not linking the transferability to the actual ISA assets, it provides greater flexibility and doesn't have an adverse impact on estate planning that you may have already put in place.
For example, had it been the ISA itself which had to pass to the spouse to benefit from the continued tax privileged status, it could have meant many thousands of ISA holders having to amend their existing Wills. Where the spouse was not the intended beneficiary under the Will or where assets would have been held on trust for the spouse - a common scenario - the spouse would miss out on the tax savings on offer.
Instead it's the allowance which is inherited, not the asset. This means that the spouse can benefit by paying their own assets into their ISA and claiming the higher allowance. And the deceased's assets can be distributed in accordance with their wishes, as set out in their Will.
The tax implications
The tax benefits of an ISA are well documented. Funds remain free of income tax and capital gains when held within the ISA wrapper. And it's the continuity of this tax free growth for the surviving spouse where the new benefit lies. It's an opportunity to keep savings in a tax free environment.
But the new rules don't provide any additional inheritance tax benefits. The rules just entitle the survivor to an increased ISA allowance for a limited period after death. The actual ISA assets will be distributed in line with the terms of the Will (or the intestacy rules) and remain within the estate for IHT.
Where they pass to the spouse or civil partner, they'll be covered by the spousal exemption. Even then, ultimately the combined ISA funds may be subject to 40% IHT on the second death.
With ISA rules and pension rules getting ever closer, it may be worth even considering whether to take up an increased ISA allowance if the same amount could be paid into a SIPP. This would achieve the same tax free investment returns as the ISA and the same access for clients over age 55. But the benefit would be that the SIPP will be free of IHT and potentially tax free in the hands of the beneficiaries if death is before 75.
What's next?
The new allowance will be available from 6 April 2015 for deaths on or after 3 December. Draft legislation is expected before the end of the year and the final position will become clear after a short period of consultation.

The new inherited allowance will complement the new pension death rules - a welcome addition to the whole new world of tax planning opportunities from next April.

Thursday, 4 December 2014

Autumn Statement - a little more detail

This update based on content provided by the technical team at Standard Life:

There were no surprises in George Osborne's Autumn Statement to match the seismic pension changes in his last Budget. However, he did pull one rabbit out of the hat for savers in the shape of new inheritability of ISAs for married couples. He also confirmed how pension wealth can be cascaded down the generations.

ISA inheritabilityISA savers will benefit from two positive changes:

  • The annual allowance will increase to £15,240 from £15,000 from April 2015.
  • There was NO mention of a lifetime cap for savers.
  • From today, spouses and civil partners will be able to inherit their deceased partner's ISA fund and retain the tax advantages of the wrapper. There will be no impact on the spouse's/civil partner's own ISA annual allowance.

ISA accounts left to a spouse or civil partner will of course continue to pass IHT free as before - the transfer itself being covered by the spousal exemption. The big difference is that the continuing returns on a deceased partner's savings will be tax free.

The combined value of a surviving partner's ISA account will ultimately be included in their own estate for IHT. Those near to or already over age 55 may want to consider moving these savings into a pension, potentially allowing the pension fund to be passed on to their children and grandchildren tax free.

Pension freedoms confirmedToday's confirmation of the new DC (defined contribution) pension death benefit regime puts the final icing on the cake for next April's world of ‘freedom & choice'.

  • On death before 75, any death benefit will be paid tax free within the Lifetime Allowance (LTA). In a change from the original proposals, this will now apply to survivors' annuities and pension guarantee payments as well as inherited drawdown pots.
  • On death at 75+, death benefits will be taxed as the recipient's income, when they draw the funds. For 2015/16 only, non-drawdown lump sums will be taxed at a flat rate of 45% - but income tax will apply to all post-75 death benefits from 2016/17 onwards.
  • The old tax distinction between crystallised and uncrystallised pots is gone. Within the LTA, the sole determinant of tax treatment will be the deceased's age at death.
  • Any individual beneficiary of a flexible pension can choose to keep their inherited pension pot in the drawdown wrapper and decide when (or if) they draw down on it.

These changes transform the wealth transfer planning equation. This places flexible pensions at the heart of inheritance planning going forward, opening up exciting new planning opportunities.

On the flip side, as widely expected, those accessing the new freedoms will pay the price of a reduced £10k ‘money purchase' Annual Allowance and no future carry forward.

  • This sends a clear message to maximise pension funding before accessing the new flexibility.
  • And the exemptions for existing capped drawdown users, and those only drawing tax-free cash after April, position advice as the map to navigate this tax minefield to keep options open.

Other pension news

  • State pensions: The new single-tier State pension from April 2016 will be at least £151.25, with the final figure being confirmed next Autumn. Meantime, the Basic State pension will be increased by 2.5% (to £115.95 for a single person) from April 2015 under the ‘triple-lock' guarantee.
  • Age 75: Following informal consultation, there will be no change to the 75 upper age limit for tax relief on pension contributions by individuals.
  • Means-testing: Fears that the new pension flexibility could lead to a lifetime's pension savings being deemed immediately available in means-testing assessments have been quashed. Assessments will be based on the annuity income the pot could provide, with higher income only being assessed if it's actually taken from the pot.

U-turn on IHT settlement nil rate bandsThe Government has confirmed that it has scrapped plans to introduce the IHT settlement nil rate band and replace it with new rules to be announced in next week's Finance Bill. The replacement rules will still seek to prevent tax avoidance through the use of multiple trusts.

The settlement nil rate band rules would have seen each settlor have just one nil rate band which they could allocate across all relevant property trusts that they've created. Trusts created before 7 June 2014 would have remained subject to the old relevant property rules, leaving two sets of complex rules operating in parallel.

The result could have saddled clients with trusts where the purpose is to accept the payment of death benefits, such as from life assurance contracts and pensions, with the burden of tax compliance and reporting, even where no inheritance tax is due.

Income taxMinor changes were made to allowances and thresholds for the new tax year:

  • The personal allowance will rise to £10,600 in 2015/16 for those born after 5 April 1938. This is an additional £100 on what had been previously announced. At the same time, the level at which income tax becomes payable at higher rates will rise in line with inflation to £42,385 (from £41,865), meaning that higher rate taxpayers with incomes below £100,000 will also be better off by £224 - a little less pressure on the ‘squeezed middles'.
  • Age related allowances will remain at £10,660 for those born before 6 April 1938.
  • From the 2015/16 tax year, a spouse or civil partner who doesn't have income to fully use up their personal allowance will be able to transfer up to £1,060 to their partner, provided that the partner is a basic rate taxpayer.

More charges, less choice for the non-domiciled
The charge to use the non-domicile basis of taxation is increasing.

Non-domiciles who choose to use the remittance basis and have been resident for at least 7 of the past 9 years, currently pay a charge of £30,000.

This will increase to £60,000 (from £50,000 in 2014/15) once they've been resident for 12 out of 14 years.

And a new charge of £90,000 will be brought in for those who've been resident 17 of the last 20 years in the UK.

The Government will also consult on making the choice to pay the remittance basis charge stick for a minimum of 3 years, so that non-domiciles are not easily able to chop and change the basis on which they're taxed.

Non-domiciles' taxation remains in the spotlight and this is unlikely to change. As offshore bonds are not taxed until a chargeable gain arises, they may offer another way for non-domiciled individuals to control when and how they pay their tax.

The Devil is in the Detail
We await the detail in the Finance Bill for all of the matters noted yesterday and above - and hope that it delivers on the promise of simplifying the taxation of trusts and IHT.

Wednesday, 3 December 2014

Autumn Statement News

I've trawled the news and reckon I have a great idea for a new business, making the best from today's announcements. It's at the end of this post.
For now, onto the financial planning stuff:
NISAs now outside Inheritance Tax

Super piece of Autumn Statement news today. ISAs (now actually called NISAs) will be tax free on inheritance from a spouse. An excellent piece of common sense policy making.

George Osborne said: “From today…when someone dies, their husband or wife will be able to inherit their ISA and keep its tax-free status.”

The Treasury estimates that 150,000 married ISA savers pass away each year, meaning their ISA tax break dies with them.

From today, if an ISA saver in a marriage or civil partnership dies, their spouse or civil partner will be able to transfer the ISA 'wrapper' and keep the ISA tax advantages.


Another sensible update is that surviving spouses will be able to invest as much into their own ISA as their spouse used to have, on top of their usual allowance from 6 April 2015.

The ISA allowance will rise to £15,240 which for monthly savers is a new maximum of £1,270

Pension death tax Cut confirmed

Previously announced as an aim, it was confirmed the cut to the 55% the death tax on pensions will happen.

Changes to starting rate of higher rate tax

The higher rate tax threshold will increase to £42,385 (from £41,865) as the personal allowance will rise to £10,600 next year (£100 more than had been previously announced).

Changes to starting rate of savings tax

Those earning under £15,600 need pay no tax on any of their savings income.

Stamp Duty

A big change ahead, with the Chancellor announcing reforms to stamp duty to “make it fairer”. He described the current system as one of the country's 'worst designed and most damaging of all taxes'.

The residential so called 'slab' system (I've also heard it called cliff-edge) will be replaced by tax bands, which will come into effect from midnight tonight.

There will be no tax paid on the first £125,000,
2% on the amount above that up to £250,000
then 5% on the next amount up to £925,000
and then 10% on amounts above that up to £1.5 million
then 12% on everything above that.
The ‘slab’ system meant that someone buying a house worth over £250,000 would pay 3% of the whole price of the property, rather than 3% of the amount over £250,000

For better: Under the new system, buying a house worth £275,000 would mean paying £4,500 less than under the old system.

For worse: However a property worth £5 million would see its tax increase from £350,000 to £514,000.

Currently stamp duty starts at 1% on houses worth between £125,000 and £250,000, rising to 3% above £500,000 and 4% for a home worth up to £1 million.

And finally... I note there will be a new tax credit for children's TV producers and also a £45m package of support for exporters
So I’m delighted to announce crowdfunding is available for my new business, exporting children's TV producers

Thur 4 Dec Update
More posted here:
Final Finance Bill blog will be posted when available.