Edale Accelerate + Edale Investments = Whole Solution

Sound financial planning and generating investment returns in a core part of getting the investment household role for our private clients. But the workplace is also a critical part of our client’s life which Edale now embraces with its Accelerate programme. “Accelerate” brings our expertise in business advisory, financial fitness and investment readiness to SMEs. Edale can provide inspiration, ideas, tips and tricks to build a financially fit investment-ready business without a large financial outlay and has first-hand experience running a business.

Getting sharp business advice

Running a successful business is hard work. A good foundation for success requires time to work “in” the business and “on” the business. Edale shares its wise advice and lean working methods to improve business performance, make firm’s financially fit and ready for growth.

Being financially wise

The personal financial journey is often put into the shade. Brits seem to be unlike many nations and find it hard to talk about money. Edale helps people understand their financial position with a clear and household-based analogy to financial planning.

Get the best of both worlds with Edale Accelerate to improve your business and Edale Investments to be financially wise.

Is there a business strategy you’ve overlooked?

As a business owner, you’ve had to work hard to build your business and work even harder to maintain it. That’s why you need to know about a strategy you can use to address several of the challenges you face – by using life insurance to both safeguard your business against future disruption and provide valuable benefits to your employees.

We can show you how you can:

  • Provide an income-tax-free death benefit for your beneficiaries, while providing the opportunity for cash value accumulation that can be accessed for various purposes,  such as supplementing your retirement income.
  • Protect your business against financial loss in case of a key contributor’s death, disability, or critical illness.
  • Retain valuable employees by providing them with an attractive benefits package with little or no administrative cost.
  • Redeem the business interests of a co-owner in the event of a co-owner’s death.
  • Provide for the continuation of your business upon the death of an owner.

If you want to know more schedule a brief no-obligation consultation, so we can explore which of these options could benefit your business.

Edale the UK’s most popular place to start a walk. Start your investment journey at Edale

Britain’s most popular spot to start a walk is Edale in the Peak District, according to the UK’s map producer Ordnance Survey. Data from the mapping organisation’s digital services found the busiest parts of the country for ramblers. When Edale Group started five years ago we took some of the attractions of the Edale valley in naming the group.Continue reading

Taxation of offshore life policies on return to UK

Many British expatriates working abroad in the past decade or so may have taken the decision to buy a regular savings contract putting a monthly amount away for a later life financial goal. Aside from the controversy on the value of these forms of investments, many people contributed to them for the life of the policy or a long period of the term. In that period they may have returned to the UK. What are the options for policies nearing maturity or that have a period to their maturity where a surrender may be considered? There could be value is putting plans in place for a migration to a UK pension pot.

Offshore bonds and protection products are ‘foreign policies of life insurance and foreign capital redemption policies’ for UK tax purposes (Section 476 of the Income Tax (Trading & other Income) Act 2005). From 17 November 1983, a policy issued by a non-UK life office will be ‘non-qualifying’ for tax purposes, meaning all gains are potentially taxable.

Taxation of maturing offshore taxation plans

We understand that most offshore insurance savings plans are classified by HMRC as foreign life insurance policies. On a foreign insurance company a ‘profit’ or ‘gain’ are defined by the HMRC as chargeable event gains. The insurer will be able to confirm something has happened to give rise to a chargeable event gain, including an annual gain under a Personal Portfolio Bond (PPB), they may send a certificate showing you the amount of the gain that you’ve made or the amount of benefits paid. For PPB’s a 5% withdrawal each year is not taxable and accumulates until the 20th year. If you’ve received a certificate from your insurer then, unless more than 1 person made the gain or you’re entitled to a time apportioned reduction, this is the amount you should enter on your tax return.
Chargeable event gains can also arise on life annuities, including purchased life annuities, as well as capital redemption policies. They are taxable as income although tax at basic rate may be treated as paid on the gain in which case further tax will only be due from higher (or additional rate) taxpayers. They are not capital gains, so capital losses and the annual exempt amount cannot be set against them.

Weighing up early surrender cost vs tax efficiency of Life Policies and tax relief in UK pension pots it could be wise to consider setting up a mechanism to pay into to an existing UK pension scheme, reduce taxation and be more efficient when resident back in the UK.

Income taxes in the UK are higher than capital gains taxes so for offshore tax earners the chargeable income gain can be higher than capital allowances.

BandTaxable incomeTax rate
Personal AllowanceUp to £11,8500%
Basic rate£11,851 to £46,35020%
Higher rate£46,351 to £150,00040%
Additional rateover £150,00045%
Tax bracketCGT rate on assetsCGT rate on property
Basic-rate payer10%18%
Higher or additional-rate payer20%28%

Before surrendering or disinvesting from a policy, speak to Edale on options.

UK option that could receive tax credits to mitigate income tax on policy surrender

Every year there are allowances for making contributions into a SIPP and other pensions. Personal pension contributions are topped up with 20-45% tax relief so this can be considered a method to reduce or neutralise chargeable gains from a foreign insurance company policy. Any UK resident can contribute as much to a pension as you earn each year, up to a maximum of £40,000, this is the annual allowance. The main opportunity to minimise the income tax due on policy surrrender or maturity is to use the pension carry forward rules to get tax relief for personal pension contributions. If you paid in less than your annual allowance in any of the past three tax years you can carry forward the unused allowance, as long as you had a SIPP or other pension in place for each of the three years and your total contributions don’t exceed your current earnings.

It can be confusing, so here is an example:

Tax yearAnnual allowanceContributions madeUnused allowanceRemaining allowance in 2017/18 using carry forward:
2015/16£40,000*£15,000**£25,000
2016/17£40,000£5,000£35,000
2017/18£40,000£40,000£0
2018/19 (current)£40,000£40,000£0£60,000

How UK tax credits could be available on a maturing savings plan

Here is a calculation of the tax credits of benefits from investing in a retirement pot. Your pension provider will claim back basic rate tax at 20% from HMRC adding this to your pot. If you pay a contribution of £80, your pension provider claims back a further £20 so a total gross contribution of £100 is paid into your pension pot. If you’re a higher rate taxpayer, you can claim further tax relief (at your higher rate less the basic rate already claimed on your behalf) from HMRC. This is usually claimed through your self-assessment tax return, although HMRC may also adjust your tax code to give you this additional relief. This means that if you pay income tax at 40%, you could claim an additional £20 tax relief, making your net contribution £60 in the above example.

If you’re a UK taxpayer, in the tax year 2018-19 the standard rule is that you’ll get tax relief on pension contributions of up to 100% of your earnings or a £40,000 annual allowance, whichever is lower.

A £20,000 contribution to a pension has the following tax credit and growth at conservative growth estimates. The tax credit, non-taxable growth makes retirement saving very efficient in the UK.

Contribution to pensionBasic rate tax at 20% from HMRCHigher rate tax relief through self assessmentTotal reliefTax relief for Basic Tax Payer plus growth over 20 years on £20,000
£20,000£5,000£5,000£10,000
20 yrs growth @3%£45,153£54,183 –£9,031 @3% pa for 20 years
20 yrs growth @5%£66,332£79,599 –£13,266 @5% pa for 20 years

 

Given individual circumstances, ifs often best to get advice. Edale is familiar with these rules and could help you in your personal circumstances.

Our drawer of spare currency paid to a charity of your choice anywhere in the world

Our filing cabinet of spare currency paid to a charity of your choice anywhere in the world. Guess the total value (in British Pounds) of the notes and coins we collected last year in the picture. Get it right and we pay the charity the money directly. Edale advises clients globally on investments, so we pick-up a few coins and notes from our travels, this is our clean desk policy applied to storage too.Continue reading