Money Talk | Living North

Money Talk


Finance Text
Managing your money can be a tricky task. Here some of the North East’s finance experts offer their top tips on subjects close to their hearts, from planning ahead to staying on top of tax

Death And Taxes
It was Benjamin Franklin who famously said ‘In this world nothing can be said to be certain, except death and taxes.’ None of us can predict our own demise, though your financial adviser can certainly show you how to pay less tax, but there is one thing you can do, and that is to ensure your dependents are not left in a financial dilemma by ensuring that you have adequate life assurance. However, as Ian Northey, of Birchwood Independent Financial Advisers, explains ‘The majority of us have too little cover, or worse, no cover at all. In the main it’s something we tend to put off, but it is crucial to act sooner rather than later. Cover comes in the form of a capital sum or a monthly income payable on death; the latter is called Family Income Benefit. The term of the plan is chosen by the client and could provide protection until the youngest child reaches the age of independence, until their education ends, or possibly until the insured person reaches retirement age. We wouldn’t dream of not insuring our cars, so how much more important is it to insure ourselves?’ Birchwood IFA, 07966251350 

Staying On Top Of Tax
Patrick Evans, Director at Optimus Accounting, says ‘Operating your business as a limited company instead of a sole trader or partnership can have a number of benefits, not least of these being a range of opportunities to save tax. The headline rate of corporation tax on a company with profits of up to £300,000 is 20%. Compare this to a sole trader who will pay tax at 40% on profits over £42,475. What about profit extraction? Many company owners draw a small salary from their company, and take the rest of their income as dividends. This can be done in a very tax efficient manner, often saving thousands of pounds. Likewise, if some profits are retained within the company (and possibly reinvested) the only tax paid is the 20% corporation tax highlighted above. Building the value of the company in this way, possibly with a view to a future sale, can again be extremely tax efficient. Finally, company owners and directors usually have a choice of how and when they draw money from the company. In this way they have complete control over their personal income tax bills and liabilities.’ Optimus Accounting 
01289 330311

Planning Ahead
It is never too early to start thinking about packing up and taking off to live the dream, and it’s the same when it comes to retirement planning - especially if you are hoping to spend some of your retirement living the dream! A review of your current plans will help you to avoid disappointment later when you do retire. According to Jennifer Morris, of North East Independent Financial Services (NEIFS), ‘The big question is, how much do you need to live a comfortable retirement? Everyone’s dream is different. Money and how you save it is the overriding factor in a more financially secure future, and as experienced retirement planning advisers, our guidance is designed to find you the right way forward. For example, we can help you work back from your retirement aspirations, calculating how much you realistically need to save in order to achieve them, select products that are flexible enough to adapt to your changing circumstances between now and retirement, and find the perfect blend of your needs today and your plans for tomorrow. The trend of people needing to save for their own future is unlikely to slow down, so if you think now’s the right time to start planning for tomorrow.' NEIFS, 0191 495 2395

The Big Picture
Many of us have consulted a financial adviser at some point to receive advice on a specific matter such as pensions, mortgages or investments. However, few will have approached an adviser for a holistic review, possibly because we didn’t know that we could or perhaps because we believed we only needed advice on a very specific subject. John Bloomfield, an Independent Financial Adviser at Paul Wilson Financial Services, believes the holistic approach offers real ‘big picture’ financial planning. He explains, ‘Your finances are not one-dimensional, and you have many goals and objectives to achieve in your life. The danger with non-holistic advice is simply that the adviser will focus on only the problem being discussed with little regard or knowledge of your other needs and goals. Time is your biggest asset in financial planning: the sooner you start working towards any goal, the less you have to do. The holistic advice approach is somewhat different to other financial planning. At least once a year your adviser will review all your financial issues and goals and take a big picture view, so that the most urgent can be prioritised and the less pressing goals can at least be chipped away at. When specific issues do need to be dealt with your regular holistic planner can do so quickly, efficiently and with the bigger picture of your life and financial goals in mind, because they know you well already.’ PWFS 0191 406 6453

Published in: November 2013

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