Author: Rob Bowers

As a parent, it is important to understand what expenses students face, how they will repay student loans in the future, and how you could offer support.

If your child will be going to university this year or is planning to further their education in the future, you undoubtedly feel proud. However, you may also worry about what it means for your child financially.

As a parent, it is important to understand what expenses students face, how they will repay student loans in the future, and how you could offer support. This could put your mind at ease and mean you could take steps that will allow your child to focus on their studies.

In this guide, read more about:

• The cost of going to university, including tuition fees and living costs
• How student loans work
• How students can fund postgraduate education
• What to consider if you want to make your child’s education part of your financial plan
• And more…

Download your copy of “The parents’ guide to paying for university and student loans” to learn more.

If you’d like to talk about how you can make education part of your financial plan and support your child while they study, please contact us.

While dealing with the loss of a loved one, organising their affairs can be overwhelming.

You may also need to make decisions and provide information to authorities and services. This guide is designed to help you understand what action you may need to take and what you need to consider, from whether Inheritance Tax is due to how the probate process works.

This guide can help you answer questions like:

• What steps need to be taken immediately after a death?
• How does the probate process work?
• What happens if the deceased hasn’t written a will?
• What steps do you need to take if you’re an executor of a will?
• Do you need to consider Inheritance Tax?
• And more…

Download “Your guide to organising affairs after a loved one passes away” to learn more.

If you have questions about the guide, how to deal with the affairs of a loved one, or the steps you can take to make managing your affairs easier, please contact us.

Here, we share some of the highlights of what’s been happening in and around Blue Wealth.

This month, congratulations go to Mason Harrison who has been certified as a Chartered financial planner. Also, following the poll we put to you about which charity we should support, you have spoken, and the winner is clear…

Read on to find out which worthy cause got your vote and hear what Mason has to say about his latest professional achievement.

Mason Harrison is now a certified Chartered financial planner

Following on from our chat with Mason in June, 2022, when we learned about his promotion to financial planner, Mason has now achieved his Chartered financial planner certification from the Chartered Insurance Institute.

Here, Mason tells us more about what was involved…

How long have you been working towards becoming a Chartered financial planner?

I started a training course with an external provider – NextGen Planners – in January 2019. That was the first time I had enrolled in any financial planning exams, although I joined Blue Wealth five months prior to this.

The training course ran to November 2020, by which point I had passed my diploma in regulated financial planning.

I jumped straight into my Chartered exams and began taking them as soon as possible. I had my last result published on 22 July.

All in all, the journey from zero to Chartered took three and a half years.

What did the process involve?

The training provider, NextGen, have been brilliant. They provided support throughout both my diploma and Chartered-level exams.

They delivered weekly webinars, practice exams, and a constant stream of hints and tips to help guide me through each exam.

Also, about a fortnight before each exam, they held a two-day intensive webinar as a final push towards the exam. This focused on making sure we were revising the right topics that were likely to come up and giving pointers on frequently asked questions.

A lot of the work also revolved around technique for these exams, which can be equally as important as the knowledge needed.

Of course, all of this happened alongside my own revision, which I did in the office after work for months on end – I’m glad that’s finished now!

What will this mean for you professionally?

This is something I have been working towards for so long, it felt miles away at some points.

The excitement of passing one exam quickly meant my attentions were turned to the next one, so to achieve the end goal has been brilliant.

It has also coupled with my role developing into a financial planner from April and having the Chartered badge has given me a massive boost in terms of the knowledge and skills I’ve developed while studying.

At Blue Wealth we look for all advisers to be Chartered to coincide with our chartered firm status, so it was also great to be in keeping with this.

Are you taking a break now, or are you already pursuing a fresh challenge?

Study-wise, a bit of break definitely!

The goal now is purely towards financial planning and finally being able to do the role I have been working towards for so long.

I have been itching to get out and see clients for a long time, so it’s great to finally be at that stage. I’ve loved speaking with new clients and it’s safe to say it was all worth it.

The hard work definitely starts now and I’m looking forward to helping lots of people take control of their financial future.

Is there anything else you wish to add?

I’m really happy that I managed to get through each exam without experiencing a single fail.

This achievement is largely due to the support from my colleagues at Blue Wealth and the training provider NextGen, who Rob (Bowers) and Dan (Britton) decided would be a great route for me back in 2019.

The guidance they have given me filled me with a massive amount of confidence going into each exam, which only grew as time went on!

With your help, Blue Wealth will support homeless charity BillyChip

From the shortlist of eight local charities that we thought deserved our support, you voted resoundingly in support of BillyChip.

About BillyChip

Set up in 2018, BillyChip works to continue the legacy of Billy Abernethy-Hope, a 20-year-old ambulance driver from Bristol, who was the inspiration and idea behind the BillyChip.

After helping support the homeless one Christmas, Billy felt disheartened at how little support the public gave to local homeless people. Although many people donate to charity on a regular basis, Billy was surprised by how few donations were given directly to homeless people, living rough on our streets.

Billy put this down to the fact that people can feel awkward engaging with a homeless person, even when offering a donation of food or a drink.

The BillyChip is a small act of kindness that helps break down barriers

The BillyChip allows people to engage and offer help to a homeless person.

The small act of kindness of giving a homeless person a BillyChip not only helps the person in need, but also helps to build better communities within our towns and cities.

The BillyChip can be given to those sleeping rough and/or homeless to allow them to purchase food and drink from takeaways and coffee shops. This helps people give money directly to those who need it, without fear of how it’s being spent.

How it works

We will make a £50 donation to BillyChip for every initial meeting we have that comes from a client recommendation.

However the meeting takes place – in person or remotely through video call – we’ll donate.

So, if you recommend your friends, family or colleagues to us and we meet with them, we’ll make a £50 donation on your behalf.

There’s still time to join us at the Bristol and Clifton Golf Club

As you may already know, we are holding a client golf day at Bristol and Clifton Golf Club on 22 September.

It’s not too late to add your name to the list of attendees and it would be great to see you.

Arrival starts from 12.30pm, when you can take advantage of full access to the club’s practice areas, including the driving range, which has eight undercover bays allowing you to practise in comfort, no matter the weather.

Tee times begin from 2pm onwards, after a light lunch.

Following a pleasant afternoon on the course, dinner and drinks will be served in the Clubhouse.

According to data from the Financial Conduct Authority (FCA), 15.6 million UK adults have investible assets of £10,000 or more. Of these, 37% hold their assets entirely in cash, and a further 18% hold more than 75% in cash.

With current stock market uncertainties caused by the war in Ukraine and the economic turbulence of rising inflation and interest rates, it’s easy to see how some investors may feel safer to leave their money in the bank.

Retreating to cash might provide some comfort in turbulent times

Since cash is easily accessible, it’s great for your emergency fund. However, while retreating to cash might provide some comfort – especially during turbulent times – holding on to too much cash could actually be bad for your long-term financial health.

3 reasons not to hold too much cash in the bank

Here are three reasons to avoid holding too much of your money as cash.

1. Other assets can provide greater long-term returns

Numerous studies have proved that, over time, returns on assets such as equities far outweigh those you see from cash.

The 2019 Barclays Equity Gilt Study compared the performance of £100 invested in cash, bonds, and equities between 1899 and 2018. The report revealed that:

• £100 invested in cash in 1899 was worth just over £20,000 in 2018
• £100 invested in gilts in 1899 was worth close to £42,000 in 2018
• £100 invested in equities in 1899 was worth around £2.7 million in 2018.

While few of us are likely to want to invest for more than a century, the same study showed that even with a shorter investment term, equities will still outperform cash.

Also, as long as the time horizon is long enough, history shows that the timing of a new investment is relatively unimportant when it comes to enjoying long-term returns.

The tables below compare the returns of investing in the UK stock market (as represented by the FTSE All Share Index) with dividends re-invested and the returns of investing in cash deposits with interest re-invested.

Since the beginning of 2000 to 31 March 2022 (just over 21 years)

Since the beginning of 2010 to 31 March 2022 (just over 11 years)

Source: FE fundinfo – data as at 31 March 2022.

Bear in mind, the value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

The returns in the two tables above are very different. This is because the longer, first period includes the two bear markets. Following the “dotcom bust” in 2000, UK equities fell by 48% between September 2000 and March 2003.

Similarly, UK equities fell by 46% between October 2007 and March 2009 during the 2008 financial crisis. However, despite these two significant declines, equities have still outperformed cash deposits by more than 100% since the beginning of the century.

Of course, both periods also include the 35% fall in UK equities between January and March 2000 as the Covid pandemic took hold.

2. Savings rates struggle to beat inflation

According to data from Moneyfacts, the best rate of interest you can currently find from an easy access savings account is 1.67%. With inflation at 10.1%, if your money is in an instant access account, returns are not keeping up with rises in the cost of living.

Many accounts pay even less.

Even if you somehow manage to find a fixed-rate bond or similar limited access account that pays a higher rate, there’s slim chance that it will keep up with inflation. The problem with this is that if the returns you get on your savings are lower than the inflation rate, your money is losing value in real terms.

This is another excellent reason not to hold too much cash.

Read more: What is inflation and what does it mean for you and your wealth?

3. You could be taxed on interest

While we recommend you keep an emergency fund in an easy access savings account so you always have available cash should you need it, avoid holding more than you need.

Generally, it’s wise to have between three and six months net income for a “rainy day” fund. With average monthly earnings in the UK around £2,000, that could mean having an emergency fund of £12,000 or more.

If you’d like to know more about the importance of maintaining a “rainy day” fund, watch this video from Mason on LinkedIn.

Cash savings are protected by the FSCS up to £85,000. If you hold more than this amount in any one account and the financial institution holding your funds fails, you could lose everything over this threshold amount.

Large cash savings can also attract tax on the interest you make. Your Personal Savings Allowance is based on the rate of Income Tax you pay.

Source: Gov.uk

If you are a basic-rate taxpayer, you’ll pay tax on interest over £1,000. For higher-rate taxpayers, the threshold is halved to £500.

Get in touch

If you’d like to talk to us about the balance of your assets, or you’re concerned about inflation affecting your cash savings, please get in touch. Email hello@bluewealth.co.uk or call us on 0117 332 0230.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Buy-to-let properties can provide an additional income stream and help you to support your goals. As a result, becoming a landlord is something you may have thought about.

For example, you may want to purchase a buy-to-let property to diversify your assets or provide children with an inheritance. One of the most common reasons is to fund retirement.

However, it’s also common to have concerns about buy-to-let. You may worry about understanding the regulations and tax requirements if you become a landlord.

If you’re thinking about investing in a property, there are some important things to consider first. This guide explains some of the essential things you need to know, including:

• How a buy-to-let mortgage works
• What taxes you may need to consider as a landlord
• How to reduce tax liability
• What to consider when you’re choosing a buy-to-let property
• And more…

Download your copy of ‘Your complete guide to buy-to-let’ to learn more.

If you have any questions about the contents of the guide or would like to discuss your buy-to-let plans, please contact us.

Here, we share some of the highlights of what’s been happening in and around Blue Wealth.

This month, Dan Britton tells us about his first UK Ironman competition. Plus, find out more about the client golf day we’re holding at Bristol and Clifton Golf Club, where you can join us for a slightly less strenuous day of golf and socialising.

Dan Britton competed in – and successfully completed – his first UK Ironman competition

Earlier this month, fortunately before the heatwave, Dan completed his first UK Ironman competition in Stafford.

Not for the faint-hearted, the race involved a 1.2-mile swim, 56 miles on the bike, followed by a 13.1-mile run. It was an early start too, with competitors arriving at the venue by 6am on race day.

Here’s what Dan had to say…

How it all began

“I’ve been training with a personal trainer for 12 months, and it was him that encouraged me to sign up for the competition to give us something to aim for. He structured months of training around the event.

“Back in April, well ahead of this Ironman race, I did an Olympic triathlon. That event helped me to practise the transition from swim to bike and bike to run, which can make or break race success.

“Fitness training started out as what is probably a mid-life crisis, but I also wanted to get fit and healthy.”

Training is tough

“Training is difficult. Fortunately, I have a very understanding wife! But I also benefit from having a flexible work-life balance that means I can fit some training into weekdays when I’m working from home.”

It’s not just about the physical challenge

“As well as being physically challenging, it’s also mentally tough.

“I was extremely anxious about swimming in a reservoir as I’d only done three proper open water swim sessions before the competition. I am not a particularly strong swimmer and getting up at 4.30am following a sleepless night didn’t help, either.

“It was hard – reaching the end of the bike ride, know I still had half a marathon to run was a real emotional challenge. But I did it with my PT and a friend, so we managed to get ourselves through the tough patches.”

Watch this space…

“I am going to keep trying to improve in all areas. I have a 75-mile bike ride in late July and I am doing the Bristol half marathon in September, so after that we will see…”

Join us at the Bristol and Clifton Golf Club

On Thursday 22 September, we are holding a client golf day at Bristol and Clifton Golf Club.

It would be great to see you. If you wish to join us, arrive from 12.30pm and take advantage of full access to the club’s practice areas, including the driving range, which has eight undercover bays allowing you to practise in comfort, no matter the weather.

There will be a light lunch and tee times begin from 2pm onwards.

Following an afternoon on the mature and undulating parkland course, enjoy dinner and drinks in the Clubhouse.

And finally, check out our updated website

We’ve expanded the Blue Wealth website to make it easier to navigate and provide more information.

The new site has a dedicated page for each of our team members to highlight their achievements and share more about their work and lives.

We’ll also be adding results of recent client surveys to showcase testimonials and share what clients have said about working with us. To expand on this, we’re putting together some client video testimonials. This will give existing and prospective clients more insight into the work we do and the positive effects of lifestyle financial planning.

Investing small sums on a regular monthly basis allows you to drip-feed your money into the markets. Creating a habit to save little and often, over the long term, could make a big difference to your overall level of wealth.

Building your portfolio with regular top-ups to your investment portfolio using smaller amounts of money can also prove less risky and more profitable. This can make it particularly appealing during periods of high market volatility, as we have experienced in the first half of 2022.

Regular investing can be a great way to save for your children, too

Alternatively, if you want to save for a child’s future, investing regularly while children are growing up can help you to accrue a healthy lump sum. This can then be used to cover university fees, a deposit for their first property or an adventure, such as world travel or starting their own business.

Read more: How to invest wisely for your grandchildren

Here are five more reasons regular investing can be a useful way to grow your wealth.

1. Build discipline

Investing regularly helps you form a good savings habit and keep you committed to a long-term investment strategy.

Typically, the longer you leave your money invested, the greater the potential rewards.

For those new to regular investing, a good approach is to invest a fixed portion of income each month. Then, as your income fluctuates over your working life, you can simply adjust the amount you’re saving in line with the amount of money you are making.

Over time, no matter how little you might save each month, your regular investment should build up. It shouldn’t be long before you start to see a sizeable pot accumulate. This measure of achievement can help keep you motivated to keep topping up your investments.

2. Profit from compound growth

Compound growth is the most powerful and underrated benefit of long-term investment. It also has its largest impact during the latter stages of your investment journey.

For example, 10% growth on £1,000 is only £100, but 10% growth on £1 million is £100,000.

As these figures tell you, starting early and establishing a strong saving habit is vital if you want to reap the full rewards of compound growth.

Thanks to the effects of compound growth, even small sums add up and can help make a big difference later down the line.

To illustrate the power of compounding, if you invested £500 a month for just five years –  from your 16th to your 21st birthday – in a fund that delivered 5% a year, and made no other contributions for the rest of your life, by your 60th birthday you’d have accrued almost £300,000 (The Calculator Site).

3. Bounce back from market dips sooner

Drip-feeding your money into the stock market means that you will be buying shares at a range of different prices.

When prices rise, your money will buy fewer shares. But, when prices drop, your money will go further and buy you more stock.

This is called “pound-cost averaging”.

Because pound-cost averaging can help to eliminate the impact of volatile markets, over time, you end up buying the average market price.

Also, If the market goes through a rough patch – as we have seen during the first half of 2022 – regular investing helps cushion the impact.

While there’s no guarantee of achieving better returns than you’d get from investing a lump sum, over a fixed, long-term period, you will end up paying the average price of the share. In effect, this reduces your risk and provides you with potentially smoother returns.

4. Pick up potential bargains

Many people find it difficult to remove emotion from investing and so struggle to benefit from market downturns. Helpfully, regular saving reduces this emotional element of investing.

For example, when stock market prices start to fall, some investors instinctively panic and avoid investing more money into the markets.

Nervous investors, who get spooked by market changes, may pull their money out of the market or refuse to enter the market until things settle down. And yet, because investors’ fear drives prices artificially low, this is often the best time to buy into the market.

At times like these, topping up your investment portfolio means that you may be primed to enjoy larger returns when the markets rally.

The table below shows how a regular £1,000 investment every month during 2018 compared with a £12,000 lump sum invested at the beginning of the year. In both cases, dividends are reinvested and don’t take fees into account.

Source: Bloomberg

5. Resist temptation to “time” the market

Some people will agonise over when they should invest their money in the stock market, hoping to find the perfect time to buy. However, there’s rarely such a thing as “perfect”.

Even professional investors and money managers with substantial sums to invest will drip-feed their funds into the market over time (usually over the course of a few months, depending on the circumstances).

As the strategy of seasoned professionals, it’s a great approach for novice investors, too.

Get in touch

Regular investing is a powerful discipline that you can use to build your wealth. The sooner you start, the better. We’ll help you identify what your dream future looks like and use financial modelling software to illustrate how regular investing can help you achieve your goals.

To find out more about how we can help you invest your money wisely and profit from long-term growth, email hello@bluewealth.co.uk or call us on 0117 332 0230.

Please note: The content of this newsletter is offered only for general informational and educational purposes. It is not offered as and does not constitute financial advice.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Financial protection is an important part of creating long-term security. Yet, it’s something that many people overlook.

Appropriate financial protection can provide you or your family with an income or lump sum when you need it most. It can create a valuable safety net and help ensure you’re still able to meet financial commitments if something unexpected happens.

If financial protection isn’t something you’ve thought about, this guide can help you answer questions like:

• What is financial protection?
• How does financial protection add value to your financial plan?
• What are the different types of financial protection, and which ones are right for you?
• What things do you need to consider when selecting financial protection?

Download “Your complete guide to financial protection” to learn more and understand if financial protection is right for you.

If you’d like to discuss how financial protection could help your family or whether existing policies are providing the protection you need, please contact us. We’ll help you select the appropriate financial protection that gives you peace of mind.

Every month or so, we’ll share some highlights of what’s been happening in and around Blue Wealth.

This month, meet Naomi, who has joined us as our new trainee paraplanner, hear about Adrian Thorley’s exam success, and find out about Mason Harrison’s promotion to financial planner.

Meet new trainee paraplanner, Naomi Davidson

Naomi is our new trainee paraplanner. Arriving from another firm in Bristol, here she tells us a bit more about what she’s been up to since joining the team at Blue Wealth.

What is your job title and who do you work alongside?

I am a trainee paraplanner and I mostly work alongside Nathan, Sarah, and Mason.

What were you doing before you joined Blue Wealth?

I worked in a similar role for a large financial advice firm called Close Brothers. I was responsible for researching and analysing clients’ existing policies.

I enjoyed the role but missed getting involved in the whole advice process, which I’d done more of in previous roles.

Tell us a bit about your new role.

Day to day, I mostly prepare client files and reports, and anything else that comes up. At the moment, Nathan is training me, so I’m learning a lot every day too.

How was your first day at Blue Wealth?

I was really nervous at first, but I had a really good day. I got a card and some chocolates from everyone, which was a nice surprise.

So far, what do you enjoy most about your new role?

Working with my new colleagues – they’ve been really welcoming and make coming to work enjoyable.

I also like that this role is more involved in the process from start to finish. I love that I have more interaction with clients, especially since my old role was entirely back office.

What are you looking forward to in the coming months?

Getting to know my colleagues better and meeting more of our clients.

I’m also looking forward to continuing with my qualifications and exams. I’m currently working towards my CII diploma, which I’ve part-completed.

Adrian Thorley passed the first stage of CII AF8, advanced retirement income planning

Adrian, one of Blue Wealth’s four financial planners, has recently passed the CII AF8 exam.

Having joined Blue Wealth in September 2019, Adrian looks after a number of clients previously taken care of by Rob (Bowers) and Dan (Britton), to help them make time for other necessary tasks.

Adrian is keen to engage with new clients to help grow the business. This latest qualification focuses on advanced retirement income planning to enhance the skills needed for advising on income planning to those in and approaching retirement.

Here’s what Adrian had to say…

How long have you been working towards this qualification, and did you have to pass other exams to reach this one?

I’m working towards Chartered financial planner status and am now within touching distance.

I started work on this qualification soon after joining Blue Wealth but took my first three CII exams in 1984 – to that extent, the answer to the question is 38 years!

How are you at exams, generally?

I failed the first three exams I took when my career in financial services started. I’d only just left school and wasn’t in the right frame of mind to undertake more study.

Fortunately, since then, my performance has improved considerably, although I have had to re-sit one exam (which I passed second time) and the final coursework I am currently undertaking is also a second attempt.

What was the hardest part of preparing for the exam?

Re-acquainting myself with a much-changed pension landscape, having spent 13 years in the Channel Islands (where things are very different), followed by eight years concentrating solely on protection products as a regional account manager for a product provider.

And the easiest?

The protection-based exam, in which I scored 98%!

How did you prepare for the exam? Do you have a revision technique or are you a natural at learning new stuff?

I’m certainly not a “natural”. I had to make sure that I set time aside to read the texts. At the same time, I also tried to expand my reading into wider relevant publications.

With other demands on my time at work, having the discipline to study was sometimes difficult, but a looming exam date tended to focus the mind.

38 years in financial services does, at least, mean that some things come fairly easily.

What does this qualification mean for you professionally?

Being recognised as a Chartered financial planner will mean a lot to me professionally, as there is no doubt that the qualification is well-regarded.

I hope my qualification will help give Blue Wealth a justified advantage when it comes to attracting new clients. We are very fortunate to have a technical manager who is also Chartered, so the pressure is definitely on.

Are you now working towards another qualification, or are you taking a break before diving into your next challenge?

This will be it for me – at least until the CII does its usual and introduces another level of qualification.

Mason Harrison has been promoted to financial planner

Mason has recently passed his CII J10 exam, a qualification that develops knowledge and understanding of the role of the discretionary investment manager, and the ability to analyse and apply financial information and portfolio management skills.

We caught up with Mason to find out more.

What is your background, can you tell us a bit about your journey to becoming a financial planner?

I joined Blue Wealth in May 2018. I started in a client services coordinator role, supporting advisers and paraplanners in administration tasks and serving as a point of contact for our clients to help answer and re-direct any questions or queries they had.

Soon after joining I was inducted on the NextGen Level 4 training course where I began working towards my diploma to enhance my technical knowledge in the field.

There’s so much information to soak up when beginning a career in financial advice and I was very fortunate to have a great team within Blue Wealth and at NextGen to help me through the process.

After 18 months, I had completed the diploma in regulated financial planning and moved into a paraplanning role. This allowed me to work more closely with the advisers at the firm and manage the back-office tasks for the full client journey, from initial meetings and recommendations all the way through to annual reviews.

As I progressed, I began taking part in client meetings and having more interaction with clients. So, I was able to learn our key principles as a firm. We take a holistic approach, focusing on the lifestyle of our clients and what they want to get out of life, with the investments used as the vehicles that help get them there.

It was this work that made it clear to me that financial planning was the direction I wanted to develop. I felt it was important to continue with my studies and align with Blue Wealth’s Chartered firm status. So, I immediately started working towards achieving my Chartered status.

Fast forward to today and I have completed my last Chartered exam, with results due in July, and have now moved into a full financial planning role.

Do you have a specialist area, or is there a particular aspect of financial planning that you enjoy most?

Without doubt the most enjoyable aspect of financial planning is helping clients understand their current position and what exactly is achievable for them to both build towards and aim for in retirement.

Giving clients the peace of mind that they have the option to retire early, go on that round-the-world trip they have dreamed of, or that they can afford to help their family financially is the best part of lifestyle financial planning.

What do you find most rewarding in your work as a financial planner?

The best things about financial planning are often the simplest.

Seeing the client gain an understanding of their position and having clarity on what the future looks like is massively comforting for everyone that walks through the door.

We get great feedback from the people we work with. Many clients start by saying how pleased they are to have a grip on their financial position and find great satisfaction in knowing everything is now working towards one common objective.

Seeing the weight come off someone’s shoulders is a great part of the work we do.

What’s your main focus right now and what are you most excited about in the coming months?

Much of my career to date has been geared towards financial planning, whether it be building my own knowledge or embedding myself into the culture we set at Blue Wealth.

Everything has been focused on the end goal of helping people take control of their financial affairs. So, I’m really looking forward to meeting new people in a variety of circumstances to help them build towards the lifestyle they want and take away the dark cloud of uncertainty when it comes to planning for their future.

With time, I hope to build long-lasting, strong relationships with clients who are all looking to get the most out of life.

Come and join us for a round of golf at Bristol and Clifton Golf Club

On Thursday 22 September, we are holding a client golf day at Bristol and Clifton Golf Club.

If you’re interested and would like to come along, please get in touch with your planner for more details.

It would be great to see you there.

HM Revenue and Customs (HMRC) collected more than £4.6 billion in Inheritance Tax (IHT) between April and December 2021, £600m more than the same period in the previous year.

Meanwhile, the value of estates keeps climbing. A large part of the reason for this is the increase in house prices. According to research from estate agency Savills, 1 in 42 homes are now worth more than £1 million, and around 80% of new “property millionaires” are outside London.

As house prices and other asset values continue to rise, more families will fall victim to IHT.

The good news is that everyone has a tax-free amount

While IHT is due on everything you own when you die, the good news is that everyone has a tax-free amount, known as the “nil-rate band” (NRB). In 2022/23 the NRB allows you to give away £325,000 tax-free if you are single or £650,000 if you are married.

You might also be eligible for the residence nil-rate band (RNRB), which could boost your tax-free allowance to £500,000 for a single person or £1 million for a married couple, if you leave your home to children or grandchildren.

Anything above these thresholds is typically taxed at 40%.

Estate planning can help protect your wealth

An important part of the work we do with our clients is helping to preserve family wealth, ensuring it’s passed on to future generations, without being unnecessarily eroded by IHT charges.

Read on to find out five ways to protect your wealth from IHT liability.

1. Write a will

Without a will in place, your estate may be distributed in a way that doesn’t match your wishes. Helpfully, a will can also be used to help reduce IHT liability. For example, ensuring your main home goes to your child or grandchild can mean you’re able to use the RNRB, mentioned above.

In addition, if you leave at least 10% of the value of your estate to charity, you could reduce the IHT rate payable on your estate from 40% to 36%.

2. Use the gifting allowances

Gifting some of your wealth while you’re still around can be rewarding, as well as helping to reduce your estate’s liability for IHT when you pass away.

There are several gift exemptions you can make use of each tax year. The following gifts fall immediately outside of your estate:

• Up to £3,000 each tax year
• Up to £250 per person each tax year, as long as you haven’t used another exemption on the same transfer
• Wedding or civil ceremony gifts up to £1,000 per person, increasing to £2,500 for grandchildren and £5,000 for children and stepchildren
• Payments that help with another person’s living costs, such as an elderly relative or child.

On top of these, you could also use potentially exempt transfers (PETs), which allow you to give unlimited amounts to anybody you like. If you gift more than £3,000, you will not immediately be taxed. However, if you pass away fewer than seven years after making the gift, it will be subject to IHT.

Unlike the standard 40% IHT charge, PETs exist on a sliding scale, known as “taper relief”.

Source: HMRC

3. Make gifts from surplus income

You can also use surplus income to make gifts. For gifts to qualify, they must form part of your normal expenditure without harming your standard of living. If you decide to take advantage of this, it’s important to keep good records.

If you’re interested in gifting some of your wealth, or income, get in touch. We can help you understand how much you can afford to give away, without jeopardising your own financial situation.

4. Ringfence assets with a trust

Another useful way to pass your wealth without triggering an IHT charge is to establish a trust.

Trusts can be particularly useful when:

• You want to pass money to children or grandchildren but think they are too young to spend it wisely
• You wish the money to be used for a specific purpose, such as education, buying property, or another milestone in life
• You want to cover the costs of your IHT bill using life insurance.

Get in touch and we’ll assess your circumstances and help you understand the type of trust that best suits your objectives.

5. Take out life insurance

Life insurance won’t reduce IHT, but it will mean that any tax your estate is liable for can be paid without eroding the value of your estate.

If you know your estate is likely to be subject to IHT, you can set up a life insurance policy that will pay a lump sum on your death to cover the expected tax bill.

Should you wish to use life insurance in this way, it’s crucial that the life insurance policy is placed in trust. Failure to do this will mean it will count as part of your estate and end up increasing the amount of IHT due.

Get in touch

We can help you to understand whether you have an IHT liability, and if so, what steps you can take to reduce or mitigate it.

If you would like to discuss your potential exposure to the tax and how you may be able to leave more money to your loved ones, email hello@bluewealth.co.uk or call us on 0117 332 0230.

Please note: The content of this newsletter is offered only for general informational and educational purposes. It is not offered as, and does not constitute, financial advice.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.

Levels and bases of, and relief from, taxation are subject to change.

Blue Wealth Ltd is an appointed representative of Best Practice IFA Group Ltd, which is authorised and regulated by the Financial Conduct Authority.