Sovereign E-News

November 2010

Welcome to the latest edition of E-Newsletter, our update on developments in the world of financial services. We hope you find the contents of interest. If you have any questions, or would like to discuss any of the points raised, please give us a call.

Pensions Alert!

While the focus is on the Spending Review, there are major changes being brought forward regarding pension contributions and the Lifetime Allowance. While these moves are not yet law, if you are considering largish pension contributions, it is worth looking into these new proposals carefully.

Struggling with Debts?

• Here are some possible ways to improve your situation:
• Come to an arrangement with the creditors to pay them what you can afford and rein in your lifestyle.
• Lower your monthly outgoings by consolidating the borrowing into one larger loan at a lower interest rate.
• Use Tax Free Cash from a pension fund to pay off the debts.  In most cases the maximum Tax Free Cash will be 25% of the pension value, but there are some exceptions where it might be more.
• Contact one of the debt-handling charities such as National Debtline (0808 808400) or CCCS (0800 1381111) for help. They do not charge for their help.
• Look into Equity Release options which might be able to provide you with the funds to pay off the debts.

Investment Bond – A Useful Financial Tool

An investment bond is a wrapper around a choice of equity based investments.  It receives special treatment. You can draw 5% of the value of the original investment and not have it treated as income for tax purposes. It is considered return of capital. Ultimately there is a tax reckoning when the bond is cashed in, but only if the person concerned would be a higher rate taxpayer in the year of encashment. The other useful aspect of investment bonds is that currently they are excluded in the calculations of savings when local authority work out eligibility for funded nursing home care. For some this can be a way of preserving some wealth at that difficult time. Contact us for more information.

Do contact us if you wish to discuss any of these matters.

Sovereign

11A Forest View Road

East Grinstead

West Sussex, RH19 4AW

Telephone: 01342 313302

Email: mail@sovereignfinance.org