Your essential guide to ISAs

by libertas2019 on June 15, 2020

ISAs are an incredibly important part of many financial plans, whether you’re saving for a short-term goal or investing for a long-term one. In fact, over ten million adults saved into an ISA account in 2017/18.

Whilst ISAs have been around for 20 years, the product range and allowance has changed considerably in that time. As a result, it can be more difficult than you would expect to pick the right ISA for you. So, we’ve put together a guide to help you get to grips with the ISA options open on offer. In the guide you’ll find:

  • A brief history of ISAs
  • The different types of ISAs available, including the Junior ISA
  • And how the Additional Permitted Subscription can let you leave your ISA savings to a loved one

Click here to download your free copy of the guide.

ISAs should form part of your wider financial plan, if you’d like to discuss how they fit into your goals, please get in touch.

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libertas2019Your essential guide to ISAs

Staycation: 5 popular destinations in the UK

by libertas2019 on June 10, 2020

Lockdown restrictions are easing but the typical summer holiday abroad still looks uncertain for millions of Brits. As high streets, attractions and other key tourist spots begin to open back up, now could be the perfect time to look at staycation destinations if you want to escape.

Whilst restrictions are lifting, social distancing is likely to still be in place over the summer months, so keep this in mind when booking destinations and thinking about what you’d like to do. With uncertainty remaining, booking last minute may be a wise decision. Be sure to understand the refund or exchange policy of any providers you’re booking with beforehand too.

1. Pembrokeshire

This southwest county in Wales boasts plenty of coastline and stunning views. If you like being active during your staycation and taking in some incredible sights. There are over 180 miles of trails to explore in the country, which will take you through quaint villages, vibrant towns and beaches. The Pembrokeshire Coast National Park ensures the area stays pristine and you might be lucky enough to spot some of the coastal wildlife.

As you stroll through Pembrokeshire, there’s plenty of opportunities to step back in time too. Pembroke Castle is just one option that is steeped in history. If it’s open, you can climb the towers, explore hidden passages and descend into the limestone Cave below. If you’re a fan of delving into history, you may also want to add St Davids Bishops Palace, Castell Henllys Iron Age Village and some of the historic churches to your itinerary too.

2. Falmouth

Cornwall is a favourite staycation destination thanks to the beaches and thriving towns. If you want to escape to the coast this year, Falmouth may be a great place to start. The Falmouth Harbour is a gateway to the beautiful Fal River, which runs through an Area of Outstanding Beauty, perfect for nature lovers. There are some excellent beaches to walk along or relax in if the weather is warm enough too, including Swanpool Beach and Gyllngvase Beach.

As well as the natural attractions, you may want to spend some time visiting Pendennis Castle, which was built by Henry VIII, the National Maritime Museum or Falmouth Art Gallery. Falmouth usually has a packed calendar of event to entertain locals and tourists alike entertained, however, you should check whether scheduled events are still going ahead and expect changes last minute given the current circumstances.

3. Inverness

Heading to the Scottish Highlands can provide a perfect opportunity to escape from your usual setting. Inverness, often regarded as the capital of the Highlands, has plenty to offer those looking for a break. Of course, the most famous attraction close to Inverness is Loch Ness with visitors intent on monster hunting. Even if you don’t catch a glimpse of Nessie, the Lock is well worth a visit thanks to its picturesque views. Inverness is perfectly placed for getting out and seeing more of the stunning Scottish Highlands.

Inverness Castle is a riverside fortress that you’ll want to explore too. Other places you should check the opening hours of inclined Inverness Museum and Art Gallery, the botanical gardens and the Culloden Visitor Centre.

4. Lake District

As the largest of England’s national parks, it’s easy to see why the Lake District has and continues to be a popular staycation destination, and is now a World Heritage Site too. It’s an ideal place to head of you if like taking in the views as you walk, from the lakes to the fells. With so many lakes, there are plenty of chances to get out on the water to take in the view from a different perspective too, whether you prefer a boat cruise to relax or a kayak.

Whilst the outdoors is a key part of enjoying the Lake District, there are places to head if the weather takes a turn as well. You may want to check out the Lakes Aquarium, Wray Castle or even the world of Beatrix Potter, ideal if you have young children with you.

5. Bakewell

Heading to another one of England national parks, Bakewell is in the Peak District is a small market town that can act as a gateway for exploring more of the area. The charming town is the perfect base for exploring the peaks, making it ideal for those that want to take in the scenery and natural beauty of the area, but you’re also just a short trip away from Sheffield for when you want to head to a city.

Other local attractions that tourists should add to their list are Haddon Hall, Chatsworth House and the Monsal Trail. Of course, whilst you’re in Bakewell make sure you tuck into a traditional Bakewell pudding too.

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libertas2019Staycation: 5 popular destinations in the UK

The gig economy: Making money from skills and hobbies

by libertas2019 on June 10, 2020

The gig economy has become a huge part of the labour market in the UK and further afield. Whilst it’s a term that’s become associated with jobs such as delivery driving, there are plenty of ways that the gig economy can supplement your income.

Rather than being paid a salary, gig economy workers are paid per ‘gig’ or work completed. It’s become a term that’s frequently used to describe a range of employment positions, from those with short-term contracts to freelance work. Whilst the gig economy has received negative publicity, with some businesses using it as an alternative to traditional employment leading to claims of exploitation, there are plenty of reasons why workers may find it attractive.

The rise of the gig economy can provide more flexible working opportunities and a chance to earn some money through a side hustle. It’s a trend that has revolutionised the place of work. Last year it was estimated that 4.7 million workers were involved in the gig economy either full or part-time. Up to one in seven working-age adults, about 7.5 million people, have worked via a digital gig economy platform at some point.

If you’re looking for ways to make extra money to supplement your salary, the gig economy could provide an opportunity.

4 side hustle options

When you think of side hustles there are probably a handful of options that spring to mind, but there’s a huge demand for a range of skills, services and products that you could deliver. If you’re looking for a way to make some extra cash, these four areas are worth considering.

1. Selling crafts: Online selling platforms have opened up a whole new market for those that have a creative talent. If you enjoy making crafts or getting artistic, selling your products can be an excellent way to make some additional money. It gives you plenty of flexibility but there is a lot of competition out there too. Standing out from the crowd and understanding what your target audience wants is important.

2. Taking on freelance projects: There are numerous online platforms where you can sell your skills and connect with someone looking for a professional like you. From graphic design to data entry, there’s a world of opportunity when it comes to freelance projects. A one-off gig can deliver a boost to your income and there may be a chance to establish working relationships that lead to frequent projects.

3. Renting assets: There’s been a huge boom in individuals renting their assets to others. You only have to look at the enormous success of Airbnb to realise the potential your home or possessions could have. Whilst renting out a room in your home has become more common, other options don’t mean letting strangers into your home too. Depending on where you live there could be a huge demand for parking spaces or storage.

4. Tutoring or mentoring: It can take a huge amount of time to develop skills, expertise and an understanding of a particular industry. One option when it comes to a side hustle is to put your experience to good use. Working with the next generations of professionals can be incredibly rewarding and provide extra income through tutoring or mentoring opportunities.

Making your side hustle part of your financial plan

Whether your side hustle is a hobby or something you’d like to develop further in the future, it’s important to make it part of your wider financial plans too.

One of the first things you should consider is how your side hustle could affect your tax liability. If your total income for a tax year is less than £1,000 you usually won’t have to declare this as you benefit from the Trading Income Allowance. However, if you earn above this figure, you will usually have to register as self-employed with HMRC and fill out a self-assessment tax return. Your earnings will be classed as income and be taxed as such. It’s worth keeping in mind tax thresholds and how earnings could mean moving into a higher tax bracket.

You should also consider how you want to use your additional earnings, whether it’s to boost disposable income or save for the future, making it part of your plans can help keep you on track. Contact us today to discuss your financial plan.

Please note: The Financial Conduct Authority does not regulate Tax Planning.

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libertas2019The gig economy: Making money from skills and hobbies

How will coronavirus affect house prices?

by libertas2019 on June 10, 2020

The housing market has been severely affected by the coronavirus lockdown, as viewings were halted and sales that were in progress faced delays. Now there are fears that the economy will dip as a result and house prices will fall. For those hoping to sell in the coming months, it can be a concern.

According to Zoopla’s UK Cities House Price Index, the lockdown led to 373,000 property transactions being delayed, with an estimated value of £82 billion. Demand for homes fell by 70% in March and even levels of browsing property online fell.

The good news though is that many potential buyers are still keen to press ahead with plans. Some 60% of would-be home movers said they intend to still purchase a property, compared to the 40% who are putting plans on hold due to the uncertain outlook. As restrictions are being lifted, activity in the market is increasing but, unsurprisingly remains subdued.

What does Covid-19 mean for property prices?

As the property market starts to open back up, homeowners and prospective buyers are wondering what it means for property prices in the coming months. Whilst there are lots of forecasts and predictions out there, it’s impossible to say with certainty what will happen.

What we do know is that the economy has been affected by the lockdown, as has consumer confidence. It could mean in the short term, demand for property decreases as potential buyers take a ‘wait and see’ approach and hold off making major decisions. If a recession is on the cards, as some forecasts suggest, this too could lead to house prices falling.

According to Nationwide, house prices fell 1.7% in May when compared to the previous month. It’s the largest monthly fall for 11 years, which would have occurred during the financial crisis.

Robert Gardner, Nationwide’s Chief Economist, said: “We have already seen a sharp economic contraction as a result of the necessary measures adopted to suppress the spread of the virus.”

However, he added that the measures implemented to support businesses and individuals should help create an economic rebound. This, in turn, may limit the impact on the housing market.

What does a fall in property prices mean for you?

If you plan to stay in your home

No one wants to see the value of an asset fall. For many of us, our homes are the largest asset owned so when property prices fall it can be a worry. However, just like when investing, it’s important to look at the long term.

If you don’t plan to sell, the fall in value is a paper loss only. Until you sell your home at a lower price, you’ve not lost anything in real terms. Property prices have increased significantly in recent years, more than making up the fall they suffered following the 2008 financial crisis. Over the long term, house prices have recovered from short-term dips. If you’ve owned your home for a while, it’s likely the value is higher than when you bought it, even accounting for a potential fall in the coming months.

So, if you’re not planning to sell your home, you shouldn’t be worried about property prices.

If you’re hoping to sell

If you’re hoping to sell in the coming months, the fall in property prices can be frustrating. However, whilst some predictions suggest a fall in prices, others indicate there will be strong demand from buyers that were forced to put plans on hold.

Ultimately, you need to decide what you’d be willing to sell your home for and be prepared to negotiate with potential buyers. Getting your home valued and speaking to real estate agencies, as well as keeping an eye on sales in your area, can help give you an idea of whether your goal is realistic.

If your property value does fall in the coming months, and you’re not happy to sell at a lower price, delaying the sale may be an option. Historically, property prices have recovered and when you look at the long term, have risen considerably.

If you’ll be buying another property, it’s worth noting that you’d also benefit from a fall in price during the purchase, helping to balance out a potential fall in value for your current home.

If you’re a first-time buyer

A fall in property prices does ultimately benefit first-time buyers. You may be able to get more for your money and stretch that deposit further. If you already had plans to buy, now could be a great time to look at what’s available.

As always though, the value of a property is linked to what you’re willing to pay for it; do you think the asking price is worth it?

Whilst lower property prices as a whole can make stepping on to the property ladder seem attractive, it doesn’t always mean you’re getting a bargain and you need to consider if the property is right for you and whether mortgage repayments would be affordable. During times of recession, it’s normal for banks to stress-test mortgage applicants more carefully. As a result, a mortgage offer may be lower than expected.

If you’re worried about the property market and would like some advice, please contact us.

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libertas2019How will coronavirus affect house prices?

Business owners: 5 important dates in the coming months

by libertas2019 on June 10, 2020

Whilst the last few months have been unusual for many businesses, there are key dates that still need to be penned into diaries of business owners to ensure they stay on track and meet financial commitments.

Business is gradually getting back to normal and there is government support available for many businesses that are struggling with the impact of the coronavirus lockdown. Understanding the key dates and what help is out there can help keep firms on track during 2020 whilst uncertainty continues for many.

If you’re a business owner, here are six dates to consider when measuring cash reserves, planning the coming months and seeking support.

1. Corporation Tax payment

With most businesses having December or March tax year ends, the upcoming Corporation Tax payment will be based on earnings before the coronavirus pandemic took hold. As a result, the tax bill may be larger in proportion to current cashflow if capital has been depleted in recent months.

If you work to a December year-end, Corporation Tax payment will be due on October 1 2020, moving to January 1 2021, if your year-end was in March.

2. VAT payment

If your business pays VAT quarterly, like the majority of business in the UK, the next due date is November 7, covering the third quarter. With many businesses expecting to get back to normal working operations over the summer months, it’s important to plan for your next VAT payment when assessing cashflow and capital in the coming months.

The government previously announced that VAT payments due between March and June could be deferred in a bid to help businesses manage cashflow during the worst of the lockdown restrictions. If this is an option that you took, your next VAT payment may be higher than usual if you choose to repay the deferred amount. However, you do have until 31 March 2021 to make this payment.

3. Income Tax payment

On 31 January 2021, income tax payment is due, which may affect business owners taking an income from the business. On this date, the tax liability for income earned during the 2019/20 tax year will be due. As a result, it may be significantly higher than your earnings over the previous 12 months if operations were affected by coronavirus. Some business owners may have found they’ve dipped into savings allocated to income tax amid stagnant cashflow too. Being aware of the date in January can help build up the sum you need to pay.

If you choose to defer an income tax bill due on 31 July 2020, this will now also be due on 31 January 2021.

For businesses and owners that will struggle to pay the next income tax payment due to the effect of lockdown, there may be an option to discuss a Time to Pay arrangement with HMRC. This doesn’t clear the amount owed but can spread out the cost.

4. Delayed VAT payment

As mentioned above, businesses did have the option to delay making VAT payments amid the coronavirus crisis. If this is an option you took advantage of, the deferred VAT payment must be made by 31 March 2021. At a time when you may have other financial commitments, it’s important to keep this additional payment in mind.

Hopefully, as lockdown restrictions begin to ease, the majority of businesses will be able to get back to ‘normal’ in the coming weeks, setting them on the right track to meet repayments next year.

5. Start of repayments for coronavirus loan schemes

The government introduced several schemes designed to help business during the uncertainty of the pandemic. These included the Coronavirus Interruption Loan Scheme and the Bounce Back Loan Scheme. These offered favourable lending terms to eligible businesses. If you’ve taken advantage of these schemes, it’s important to keep in mind when repayments will need to be made.

The Coronavirus Interruption Loan Scheme provides support to SMEs that lose revenue due to coronavirus. Through the scheme, a lender can provide up to £5 million in the form of term loans, overdrafts, invoice finance and asset finance. The lending is backed by the government in order to encourage more lending. The government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied changes. As a result, interest payments may be due from April 1 2021.

The Bounce Back Loan Scheme gives the lender a full government-backed guarantee against the outstanding capital and interest. Businesses can borrow from £2,000 up to 25% of a business’ turnover, up to a maximum £50,000, over a six-year term. The borrower doesn’t have to make any repayments for the first 12 months, with the government paying the first 12 months of interest payments.

If your business has been affected by the lockdown restrictions, getting to grips with the finances now can help put you on the right path. Don’t delay seeking support if it’s needed. We’re also here to offer advice if your personal finances have been affected by Covid-19, please get in touch if you have any questions.

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libertas2019Business owners: 5 important dates in the coming months

The economic impact of coronavirus

by libertas2019 on June 10, 2020

Are you worried about the long-term economic impact of the coronavirus lockdown? If you are, you’re not alone.

As the coronavirus pandemic is brought under control and restrictions are gradually lifted, concerns around the health risks are easing. However, taking their place are fears about what the lockdown and ongoing social distancing guidelines mean for the economy in the coming months and years.

A survey from Aegon found those very worried about their own health was just 8%, compared to 15% in March when the lockdown was first brought in. Concern about family members remains higher at 17% but is still significantly lower than the 31% registered in March.

Instead, concerns appear to have shifted to the long-term economic impact and financial security. Some 90% of individuals said they had concerns about the impact of Covid-19 on the economy, with 84% still closely following the news for updates.

Steven Cameron, Pensions Director at Aegon, said: “In the initial period of outbreak, we were all understandably in a heightened state of alert about how we individually, as families and as a nation could navigate the greatest public health crisis in more than a century.

“Whilst remaining vigilant is still key there are some signs that health concerns are coming off their peak and are being replaced by growing concerns about damage to the UK economy and what that will mean for jobs, incomes, taxes and wealth. While the government’s focus rightly continues to be on protecting people’s health and lives, our research findings point to a growing awareness of the difficult balance the government will have to strike as it also seeks to protect livelihoods and the longer-term health of the economy.

Economic forecasts

Economic forecasts vary hugely and offer no certainty about how the economy will recover over the coming months. But the lockdown and ongoing social distancing restrictions will certainly have some impact on the economy.

There are worries that significantly decreased revenue, particularly in sectors like retail, travel and entertainment, over the last few months will mean many businesses and jobs are lost. The Bank of England has warned that the British economy could shrink by 14% this year and unemployment could more than double by spring 2021. Other forecasts paint an even more pessimistic picture.

Whilst forecasts can be a useful indicator, it’s important to keep in mind that they aren’t always accurate, and a huge number of factors will influence how the UK economy performs over the coming months. If you’re worried about economic uncertainty affecting your plans, remember to keep the long term in mind. Historically, markets and economies have recovered when you look at performance over an extended period.

Repaying the cost of coronavirus: Will income taxes rise?

The government has delivered unprecedented support to businesses and individuals during the coronavirus pandemic. This includes the furlough scheme, where the government is paying up to 80% of the salary of workers that are unable to work, which millions have benefitted from.

Whilst it’s hoped these steps have saved millions of jobs, it has come at a cost. As we still battle Covid-19, it’s impossible to tell how big the final bill will be. According to the Office for Budget Responsibility, it could be as much as £298 billion for the 2020/21 tax year.

In order to pay for this, the government will need to raise revenue from somewhere. So, it’s not surprising that people are wondering if manifesto pledges will be broken and taxes will rise. A leaked Treasury document highlighted some of the options the government is considering to balance the books, this includes increasing Income Tax and ending the State Pension triple lock, which sees the State Pension increase by a minimum 2.5% each year.

The Conservatives pledged not to “raise rates of Income Tax, National Insurance or VAT”. These, however, are among the largest contributors of tax revenue and the increasing deficit could mean promises are broken.

We can’t say for certain what will happen over the coming weeks and months, but we do know that the government will need to take action to repay the costs. It seems likely that some tax changes are on the horizon.

Preparing for uncertainty

Predicting what will happen over the coming months and years is impossible. There are a whole host of factors that can influence the economy but there are things you can do to ensure you’re able to weather turbulent periods should they happen.

  • Build up and maintain your emergency fund, ideally three to six months of outgoings, to fall back on if needed
  • Go back to basics with budgeting and understanding where your income goes
  • Have appropriate financial protection policies in place to act as a safety net if it’s needed
  • Review your investments and savings with a long-term goal in mind
  • Assess your finances and plans as changes are announced.

If you have concerns about your financial goals amid economic uncertainty, please get in touch.

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libertas2019The economic impact of coronavirus

Accessing your pension: Annuity vs Flexi-Access Drawdown

by libertas2019 on June 10, 2020

In the past, the majority of people saved for retirement over their working life, gave up work on a set date and used their pension savings to purchase an Annuity. However, as retirement lifestyles have changed, so to have the options you’re faced with as you approach the milestone. If you’re nearing retirement, you may be wondering if an Annuity or Flexi-Access Drawdown is the right option for you.

Since 2015, retirees have had more choice in how they access a Defined Contribution pension. If you want your pension to deliver a regular income, there are two main options – an Annuity or Flexi-Access Drawdown – to weigh up. So, what are they?

Annuity: An Annuity is a product you purchase using your pension savings. In return for the lump sum, you’ll receive a regular income that is guaranteed for life. In some cases, this can be linked to inflation, helping to maintain your spending power throughout retirement. As the income is guaranteed, an Annuity provides a sense of financial security but doesn’t offer flexibility.

Flexi-Access Drawdown: With this option, your pension savings will usually remain invested and you’re able to take a flexible income, increasing, decreasing or pausing withdrawals as needed. Flexi-Access Drawdown provides the flexibility that many modern retirees want. However, as savings remain invested they can be exposed to short-term volatility and individuals have to take responsibility for ensuring savings last for the rest of their life.

There are pros and cons to both options, and there’s no solution that suits everyone when considering which option should be used. It’s essential to think about your situation and goals at retirement and beyond when deciding.

It’s worth noting, that pension holders can choose both an Annuity and Flexi-Access Drawdown when accessing their pension. For example, you may decide to purchase an Annuity to create a base income that covers essential outgoings, then using Flexi-Access Drawdown to supplement it when needed. It’s important to strike the right balance and other options could affect your decision too, such as the ability to take a 25% tax-free lump sum.

5 questions to ask before accessing your pension

1. What reliable income will you have in retirement?

Having some guaranteed income in retirement can provide peace of mind and ensure essential outgoings are covered. But this doesn’t have to come from an Annuity. Other options may include the State Pension or a Defined Benefit pension.

Calculating your guaranteed income can help you decide if you need to build a reliable income stream or are in a position to invest your Defined Contribution pension savings throughout retirement. If you decide Flexi-Access Drawdown is an appropriate option for you, it’s a calculation that can also inform your investment risk profile.

2. What lifestyle do you want in retirement?

When we think of retirement planning, it’s often pensions and savings that spring to mind. However, the lifestyle you hope to achieve is just as important. Do you hope to spend more time on hobbies, with grandchildren or exploring new destinations, for instance? Thinking about where your income will go, from the big-ticket items to the day-to-day costs, can help you understand what income level you need.

3. Do you expect income needs to change throughout retirement?

The second question should give you an idea of how your income will change throughout retirement. Traditionally, retirees see higher levels of spending during the first few years before outgoings settled, with spending rising in later years again if care or support was needed.

However, your retirement goals may mean your retirement outgoings don’t follow this route. If you decide to take a phased approach to retirement, gradually reducing working hours, you may find that a lower income from pensions is required initially. Considering income needs at different points of retirement can help you see where flexibility can be useful.

4. Are you comfortable with investing?

Flexi-Access Drawdown has become a popular way for retirees to access their savings. There are benefits to the option but you should keep in mind that savings are invested. As a result, they will be exposed to some level of investment risk and may experience short-term volatility. Before choosing Flexi-Access Drawdown, it’s important to understand and be comfortable with the basics of investing.

Investment performance should also play a role in your withdrawal rate. During a period of downturn, it may be wise to reduce withdrawals to preserve long-term sustainability, for instance. This is an area financial advice can help with.

5. Do you have other assets to use in retirement?

Whilst pensions are probably among the most important retirement asset you have, other assets can be used to create an income too. Reviewing these, from investments to property, and understanding if they could provide an income too can help you decide how to access your pension.

We know that retirement planning involves many decisions that can have a long-term impact. We’re here to offer you support throughout, including assessing your options when accessing a pension. If you have any questions, please get in touch.

Please note: A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.

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libertas2019Accessing your pension: Annuity vs Flexi-Access Drawdown

Disclaimer: The information provided in our website blogs is accurate and up-to-date at the time of writing. However, please be aware that legislative changes and updates may occur after the publication date, which could potentially impact the accuracy of the information provided. We encourage readers to verify the current status of laws, regulations, and guidelines relevant to their specific circumstances. We do not assume any responsibility for inaccuracies or omissions that may arise due to changes in legislation or other factors beyond our control.

If you would like any clarification, or have any questions, please get in touch.

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