In a recent Sunday Times article, journalist, Ben Marlow, warns of the risk of such things as Boiler Room Scams where you are contacted by a caller with an opportunity that literally is too good to be true.

We have heard of one such case where one of our clients was contacted regarding an investment in shares in a business which he had never heard of but the value was going to going to sky rocket in value because of some event only the seller seemed to know about.

He lost £80,000!!

Alternatively the “investment” might have been a piece of land that has “planning permission” and whose value is going to go up rapidly in the short term (so called Land Banking). If you think about it, why would someone who has land with planning consent want to sell parcels of it to small investors?!

All of these are no more than scams so beware. If you invest in them you will lose your money.

The FSA maintain that on average people lose about £20,000 and money they can ill afford to lose.  So the old adage does apply so if you get a call like this say no and hang up!!!

Over the last 10 months Richard has been part of a LEAD programme which is specifically designed to help businesses develop and grow.  It provides an opportunity to strengthen leadership skills and open up many opportunities for companies to learn and develop.

The LEAD programme was developed by the Institute of Entrepreneurship and Enterprise Development (IEED) within Lancaster University Management School and is based on extensive research into SME leadership learning conducted at the University.

The programme combines formal input and experiential learning with a peer group of other business leaders. This integrated learning approach draws upon a combination of formal and situational learning to develop both a manager and the business through a variety of management and leadership development activities.

Richard comments:
“It has been a tremendous experience and even though I thought at the beginning of the course that you couldn’t teach an old dog new tricks, it has certainly helped me develop my management skills and become a better leader.”

The course entailed a combination of modules including Action Learning, Coaching, Reflection days, Business Shadowing and Master Classes (including a presentation from Chris Bonnington) and has given Richard a new insight into a multitude of management skills which he never thought possible.

“I have spent the last 10 months with other business owners from within the county and, as a result, have built up a strong network which will continue well into the future so we can continue to work with each other for the benefit of our respective businesses.”
Profile Financial Management is also pleased to report that Trevor Iredale their Corporate and Personal Financial Planner has completed his Chartered Insurance Institute Diploma in Regulated Financial Planning. The qualification is the latest benchmark for Financial Advisers set by the Financial Services Authority.

Trevor has also received his Statement of Professional standing issued by the Chartered Insurance Institute confirming he meets all the required standards to provide advice post 1st January 2013 when the latest Financial Services Authority Retail Distribution Review Regulations come into force.

Trevor has been in the Financial Services Industry since 1978 initially in banking for many years gaining the Chartered Institute of Bankers qualification, before becoming a financial planner in the early 1990’s. His broad depth of knowledge, experience and other qualifications built up over the period has proved invaluable, enabling him to provide a truly holistic approach and advise to both Profile’s corporate and personal clients.

Profile Financial Management are committed to staff training and encourage all members of staff to undertake further training and career development.  This helps the individual grow, but also ensures the business develops and that they can provide the best quality service ensuring standards are met and strict financial legislation is adhered to.

For further details please apply in writing, in the first instance, with appropriate CV to:

Mr R C Utting (Managing Director)
Honeysuckle Cottage
Skirsgill Business Park
Skirsgill
Penrith
Cumbria
CA11 0FA

With a speech lasting for 1 hour, Mr Osborne did spring a few surprises but also some nasty shocks for pensioners, bankers and smokers. Announcing that ‘Britain needs to earn its way in the world’ he also stated that it would be a budget which would reward work and repair debts. Whether it does, remains to be seen.

Amongst his announcements were that the 50p income tax rate on individuals earning more than £150,000 introduced in April 2010 would be cut to 45p from April 2013 and that he also plans to increase the personal allowance by £1,100 to £9,205 as of April 2013 but plans to phase out age related tax allowances.

Child benefit is being phased out for those with a household income exceeding £50,000, falling by 1% for every £100 earned over this £50,000 threshold. This means that households with incomes of over £60,000 will not receive any child benefit.

Smokers also took a hit with the cost of duty on all tobacco products to rise by 5% above price inflation. This will add 37p to a pack of 20 cigarettes.

In the world of business the Government will cut the main rate of corporation tax to 24% in April with the intention of cutting it to 22% by 2014.

The banks however will face an increase in their levy 0.105% from January in a move by Osborne to ensure that banks do not benefit from plans to cut corporate tax.

Profiles Commentary

Even though the increased personal allowance was widely expected the phasing out the age-related personal allowance has come as a bit of a shock. Those in retirement will need to carefully review their investment income in line with these measures.

Seeing the top rate of tax reduced to 45% in April 2013 could present some tax planning opportunities around the timing of pay and pension contributions.

We were pleased to see no major tinkering with pension rules in this Budget. It had been widely thought that the annual allowance would be cut or access to tax-free cash from pensions would somehow be restricted. However, the new cap on tax reliefs set at 25% of total income for anyone who is claiming reliefs exceeding £50,000 a year will have an impact on some of our clients and will need to be carefully examined to ensure full tax relief is obtained on any tax efficient investments made during the course of the year.

On a more positive note the lower corporation tax rates will hopefully mean a more competitive environment for business. We would have liked to have seen some more cutting of red tape as the main simplification measure appears to only benefit very small companies. If the British economy is going to get moving again, the Government needs to create a much more productive environment for all small and medium sized enterprises.

As with every budget the devil is often in the detail. As more detail comes out and planning opportunities arise we will issue further blogs.

However do call us on 01768 840000 or email us at info@profilefm.co.uk if you wish to discuss your own investment, pension or financial planning requirements.

It should be noted that the details provided above is not an exhaustive description of every measure described in the Budget and you should seek professional independent financial, tax or legal advice where necessary.

This information is provided for general consideration only and the information contained herein is not to be acted upon without professional independent financial advice. Profile cannot accept any responsibility for any loss occasioned to any person no matter howsoever caused or arising as a result of or in consequence of action taken or refrained from in reliance of the contents herein.

Do you realise that you can claim extra tax relief on your personal pension contributions as you only receive basis rate relief automatically??

As the end of the current tax year looms make sure you apply for the tax relief via your tax return. And if you don’t complete a tax return, make sure you do.

HMRC has allowed, in the past, for people to claim up to 6 years of missed relief. However, that has changed and the number of years claimable currently depends on whether or not a tax return has been completed. By 2015 the period allowed to claim will be reduced to 4 years.

In 2011, the proportion of employees who belonged to a workplace pension scheme was 48%. This was the first time the proportion had fallen below a half since ONS began the measure in 1997. The 48% membership number hides a significant difference between sectors:

83% of public sector employees were members of a workplace pension scheme; but only 33% of private sector employees were members of a workplace pension scheme.

The fall in overall membership since 1997 has been driven mainly by the fall in membership of defined benefit occupational pension schemes over the same period, down from 46% to 30%. Membership of defined contribution occupational pension schemes also fell, from 9% per cent to 6%, but group personal pension membership (including stakeholder pensions) rose from 1% to 10%.

With auto enrolment on the horizon this will see membership of workplace pension schemes increase over time but the gap between the public sector and private sector remains.

ISA stands for Individual Savings Account. They are available to anyone resident in the UK aged 18 or over for a Stocks and Shares ISA or 16 for a Cash ISA.

Cash ISA or Stocks & Shares ISA?

So what is the difference between a Cash ISA and a Stocks and Shares ISA?

A Cash ISA is basically very similar to any savings account you will get from a Bank or Building Society; you open an account and will receive an interest rate.  The interest rate is unlikely to be very exciting, perhaps 2-3% pa, but you know the value of your savings will not rise and fall on a daily basis.

With Stocks and Shares on the other hand you invest your money in investment assets. Typically we think of shares listed in a global stock exchange such as the FTSE 100 but other asset classes such as gilts, corporate bonds and commercial property are also available.

In fact, having your money spread around the major asset classes is sensible so that you don’t have all of your eggs in one basket.

The general principle is that by investing in a Stocks and Shares ISA you are exposing your money to investment risk so that in return for better returns over the long term compared to Cash ISAs there is a chance that the value of your ISA fund can fall over a day, month, week or year.

What makes them attractive?

They are attractive because any capital gains made on the growth is free from capital gains tax and any income received into the ISA is free from income tax (with the exception of a non reclaimable 10% tax credit on dividend payments from UK Shares).

So what is the ‘ISA Season’?

So what do we mean by the ISA season as referred to earlier; this is the period before the end of the tax year (5th April) when savers and investors rush to make their ISA contributions before it is too late.  Every tax year there is a maximum limit that can be contributed to an ISA so if the deadline is missed the opportunity to save or invest that much is lost.

The total ISA limit for the current 2011/12 tax year is £10,680, of which only £5,340 can be saved into a Cash ISA.

So, you have the choice to put £10,680 into a Stocks and Shares ISA or £5,340 into each.

From the 6th April 2012 the allowance is increasing to £11,280 (£5,640 for Cash ISAs) and will increase each subsequent tax year in line with inflation.

Junior ISAs

I mentioned earlier that ISAs were only available to individuals aged over 16. However, since November Junior ISAs have been available for children.  The Junior ISA limit is only £3,600 a year and the fund cannot be accessed until age 18 but they do allow parents and family members (anyone in actual fact) to save for a child’s future.

Are there any disadvantages?

Other than the fact that the contribution levels are limited and there is a chance of investment loss with Stocks and Shares ISAs, compared to other investment options there aren’t really any disadvantages.

Unlike pensions you can access the capital at anytime should you need it (unless you have saved into a fixed term Cash ISA account).

In fact, ISAs are an important part of an individual’s personal financial planning so if you have spare capital you want to work harder it is important to consider them in good time so you don’t miss the current deadline.

Equally, if you have ISAs currently it is important to review them to make sure you are still getting the best return possible and they are invested in a suitable way to meet your objectives.

The Consumer Price Index (CPI) rate of inflation has fallen to 3.6% with the largest downward pressure coming from fuel.

It seems that inflation is set to continue to fall!

The summer months were then characterised by global market mayhem, as escalating US political tensions saw a lack of agreement on the debt ceiling and threats of debt downgrades from rating agencies, while in Europe a series of bailouts – direct and indirect – attempted to calm the chaos. China witnessed further rate hikes, while Japan and Switzerland enacted currency interventions, and it became clear that global growth was slowing.

The European soap opera held the market’s attention throughout autumn, and after much stalling and fanfare, a broad framework devised by euro zone leaders – including a debt haircut of 50% for private investors, recapitalisation of banks, and a three-year €489 billion ECB bank liquidity programme – had a more positive market impact than many predicted. There were new leaders for the ECB, Italy, Greece and Spain, and an alarming rise in most euro zone government bond yields. Elsewhere in Europe, the Bank of England introduced a new, four-month £75 billion cycle of quantitative easing. In the emerging markets there was a general loosening of monetary policy, while the US witnessed the rebirth of Operation Twist (last seen in 1961) with a $400bn plan to buy bonds, but started to see more reasonable macroeconomic activity and data, regarding housing in particular.

As the year drew to a close, a divergent world appears to be emerging, with signs of improvement in the US, Europe in recession, and the emerging world facing a softer landing than some had feared.

2012 will of course hold extreme austerity across Europe, and problems are also arising in emerging economies, with Chinese inflation back to 2008 levels and the Indian economy slowing fast. However, there is some optimism to be found on the horizon. The EU (minus the UK) is showing some unity at last, and the ESM (a new primary bailout mechanism with €500bn firepower) is set to be available by July 2012. The US is witnessing signs of decent components for recovery, particularly in auto, housing and manufacturing. Demand is resilient consumers are spending, and initial jobless claims are at their lowest since May 2008, signalling employment growth. GDP expectations for 2012 are also improving slightly, pointing to a brighter new year.

So not all doom and gloom but given the over-arching uncertainty surrounding the global economy, it is likely that the volatility seen in 2011 will continue to blur the story in 2012.

An undercover investigation undertaken recently by consumer watchdog Which? had discovered a number of bank and building society advisers had given substandard advice. Only five out of 37 advisers gave good advice about investments after visiting branches of seven leading banks and three building societies.

Which? claimed that the majority of advisers demonstrated a “poor understanding of the risks of investing, and made misleading statements about the features and costs of available products”

The research also revealed that 18 of the advisers claimed their advice was free. However, banks and building societies make money through commission paid for the products they recommend – but only a handful of advisers admitted this.

Interestingly, at the end of 2012, financial advisers will be banned from receiving commissions from firms for recommending their investment products, under rules designed to stamp out mis-selling to consumers.

The investigation showed that “the high street isn’t the best place to go for investment advice” and states that “if in doubt, consumers should always talk to an independent financial adviser.”*

With this in mind Profile Financial Management has recently expanded its team and has grown into larger premises. The firm now occupies the charming “Honeysuckle Cottage” that was the original visitor centre for the Lilliput Lane ceramic firm at Skirsgill Business Park near Penrith.

Richard Utting Director of Profile explains: “The Financial Service Ombudsman 9/10 review* shows that 98% of all complaints have been against large financial institutions such as; banks & building societies (63%), insurance companies (27%), investment houses, mortgage brokers & stockbrokers’ (7%). Only 2% of complaints during were against Independent Financial Advisers.”

These numbers clearly show that customers want a more personal and individual approach to managing their finances. As a result, Profile Financial Management has seen a significant surge in interest in their services and have expanded their operation in the past 12 months.

Profile has refurbished the interior of Honeysuckle Cottage to create a relaxed and informal atmosphere for clients. In addition, Profile has also created a presentation and seminar room to provide local customers with events and seminars of general interest as well as offering this as a function room for local businesses.

Richard explains: “We wanted to create a place where our customers feel comfortable and relaxed. The surroundings of Honeysuckle Cottage provide an informal and unusual environment that you wouldn’t expect to find in a financial services company. Everyone really enjoys visiting our offices.”

Profile Financial Management was one of the first financial services company in Cumbria to stop taking commissions on products and introduce a fee-based approach to financial services. At the heart of the company’s impartial and independent service is a highly respected financial planning method using cash-flow modelling. This approach allows the company to create an integrated financial plan, from which informed decisions can be made. Once created the plan is reviewed and updated annually to ensure it continues to meet the aims and objectives of the client. In this way Profile can provide financial planning to people who require long term proactive advice about their finances.

With growing uncertainty in economic markets recently, the trend for growing complaints within the financial services industry is not going to go away. The ethos of Profile is about doing things differently, taking a personal approach and ensuring customers feel secure in their financial choices. They work to simplify people’s financial life; managing risk, consolidating debt and giving them a secure future. Profile Financial Management offers some relief to consumers during this turbulent time; providing a relaxed environment, trustworthy independent advice and somewhere to turn for people with any financial worries.