BlackettwalkerltdPWP IFA May13 WK orange
Gosforth Park Avenue, Newcastle upon Tyne Tyne & Wear NE12 8EG 0191 256 9600 [email protected] www.blackett-walker.co.uk
Welcome to your May newsletter. This month, we look at why new laws for the insurance industry will ensure greater clarity for consumers around cover and claims. In savings and investments, recent research revealed that many individuals are failing to use their tax-free ISA allowances; are you? We also ask if your family members are paying the right amount of tax after students were urged to double-check their tax bills. Finally, the Government’s Equitable Life compensation scheme came under the spotlight after a report warned that many may never receive the money they are entitled to. As always, please contact us if you would like to discuss any areas of your inancial planning.
May 2013
New insurance law provides greater clarity New laws and business regulations typically come into efect on two common commencement dates in April and October each year. This April saw a change for the insurance industry, which should allow greater clarity for consumers on cover and making claims, according to the Association of British Insurers (ABI). The new rules came into efect on 6 April under the Consumer Insurance (Disclosure and Representations) Act 2012, and mean that insurers will have to explicitly ask consumers for all the information they require before generating a quote. It was previously the policy holder’s responsibility to divulge any information they felt might be relevant to their policy. It is hoped that the new legislation will put an end to insurers rejecting claims because questions, which were often completely unrelated to the policy or claim, were not asked before the point of sale, or were included in the small print of policies. The Act works alongside industry best practice guidance to ensure that insurers ask speciic questions about the information they need to know. The new rules will relate to any insurance policy taken out for personal use including home, car, travel, life, critical illness, income protection, health insurance and pension annuities. The ABI said: “We want customers to take out insurance policies with the conidence that they are covered. By placing a legal duty on insurers to ask customers all relevant questions at point of sale, people will know exactly what they need to disclose upfront.”
Blackett Walker Ltd is Authorised & Regulated by the Financial Conduct Authority. Registered in England Number: 2895559.
Stocks and shares ISAs underused Recent research revealed that many people are failing to utilise their available tax-eicient savings allowances or are unaware that they even exist. Individual Savings Accounts (ISAs) ofer savers a tax-eicient way of saving, with any interest and capital gains being free of income tax and capital gains tax on receipt by the investor. A total of £11,520 can be invested in the 2013/14 tax year, with a maximum of £5,760 being invested in cash. The remaining sum, or the full amount if no cash ISA is held, can be placed into a stocks and shares ISA.
According to research from First Direct, a quarter of UK adults have invested in stocks and shares but many failed to take advantage of their tax-free stocks and shares ISA allowance. Out of those surveyed: • only 14 per cent had used their
available ISA allowance • 14 per cent of these said they didn’t
know how an ISA worked
One in ten said they had yet to use their cash ISA limit, “perhaps not realising that this was not a prerequisite for holding a stocks and shares ISA,” said First Direct. The research also found that 62 per cent of savers had never transferred their ISA to another provider, and 87 per cent were unaware that the annual ISA limit had increased to £11,520 for 2013/14.
• six per cent claimed the application
process was too complicated • a further six per cent said they didn’t know that a stocks and shares ISA even existed.
Students urged to check their tax bill Many students choose to work throughout the holidays in order to supplement their income. Often, the erratic nature of working around study and exams means that the PAYE system does not automatically deduct the correct tax liability at tax year-end. As a result, students often pay too much tax on their earnings. The new HM Revenue & Customs (HMRC) Real Time Information system is modernising the way employers report employee deductions. It has also abolished the P28(S) form that was previously available to students to have their holiday wages paid without income tax being deducted at source. Now, more than ever, it is vital that students check their tax deductions. The Low Incomes Tax Reform Group (LITRG) recently urged students to double-check their tax bill. Those who end up paying too much tax may be able to claim a refund, while those who ind they haven’t paid enough may be due a tax bill.
WE CAN HELP... ...you make the most of your taxfree savings allowances
Delay with Equitable Life compensation The Government is at risk of failing to meet its £1.5 billion commitment to compensate former policyholders of the failed Equitable Life Assurance Society, a report by the National Audit Oice (NAO) has warned. According to the NAO, as many as 200,000 individuals (a ifth of policyholders) may never receive compensation because they cannot be traced by National Savings and Investments (NS&I). Equitable Life came close to collapse in 2000, afecting around 1.5 million policy holders, many of whom bought policies with annuity guarantees. The Government agreed in 2010 to provide compensation to just over one million policy holders who had lost some of their expected retirement income. However, the NAO report argues that the speed at which the Treasury had to set up the Equitable Life Payment Scheme “impeded its ability to design one which worked eiciently and efectively.” The Scheme’s objective of paying all traced former policyholders by the end of March 2014 is at risk, it said. As of March 2013, the scheme had made 407,000 payments worth £577 million – equating to only 35 per cent of eligible policy holders, but 72 per cent of the allocated budget. Key facts:
LITRG chairman, Anthony Thomas, said: “We urge students to take an interest in their tax afairs at an early stage. They should check their PAYE coding notices and payslips to make sure as far as possible the right tax is being taken from them in-year and contact HMRC if they are unsure or think something is wrong.”
• £1.5 billion set aside to make compensation payments • 1.46 million total eligible policy holders • £57 million budget to administer the scheme • 664,187 payments still left to be paid • 17 to 20 per cent of policyholders may never be found.
WE CAN ADVISE...
PLEASE GET IN TOUCH...
... on income tax deductions.
... if you think you may be elgible for compensation.
Important Information This document is solely for information purposes and nothing in this document is intended to constitute advice or a recommendation. Whilst considerable care has been taken to ensure that the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information. E & OE.
Welcome to your May newsletter. This month, we look at why new laws for the insurance industry will ensure greater clarity for consumers around cover and claims. In savings and investments, recent research revealed that many individuals are failing to use their tax-free ISA allowances; are you? We also ask if your family members are paying the right amount of tax after students were urged to double-check their tax bills. Finally, the Government’s Equitable Life compensation scheme came under the spotlight after a report warned that many may never receive the money they are entitled to. As always, please contact us if you would like to discuss any areas of your inancial planning.
May 2013
New insurance law provides greater clarity New laws and business regulations typically come into efect on two common commencement dates in April and October each year. This April saw a change for the insurance industry, which should allow greater clarity for consumers on cover and making claims, according to the Association of British Insurers (ABI). The new rules came into efect on 6 April under the Consumer Insurance (Disclosure and Representations) Act 2012, and mean that insurers will have to explicitly ask consumers for all the information they require before generating a quote. It was previously the policy holder’s responsibility to divulge any information they felt might be relevant to their policy. It is hoped that the new legislation will put an end to insurers rejecting claims because questions, which were often completely unrelated to the policy or claim, were not asked before the point of sale, or were included in the small print of policies. The Act works alongside industry best practice guidance to ensure that insurers ask speciic questions about the information they need to know. The new rules will relate to any insurance policy taken out for personal use including home, car, travel, life, critical illness, income protection, health insurance and pension annuities. The ABI said: “We want customers to take out insurance policies with the conidence that they are covered. By placing a legal duty on insurers to ask customers all relevant questions at point of sale, people will know exactly what they need to disclose upfront.”
Blackett Walker Ltd is Authorised & Regulated by the Financial Conduct Authority. Registered in England Number: 2895559.
Stocks and shares ISAs underused Recent research revealed that many people are failing to utilise their available tax-eicient savings allowances or are unaware that they even exist. Individual Savings Accounts (ISAs) ofer savers a tax-eicient way of saving, with any interest and capital gains being free of income tax and capital gains tax on receipt by the investor. A total of £11,520 can be invested in the 2013/14 tax year, with a maximum of £5,760 being invested in cash. The remaining sum, or the full amount if no cash ISA is held, can be placed into a stocks and shares ISA.
According to research from First Direct, a quarter of UK adults have invested in stocks and shares but many failed to take advantage of their tax-free stocks and shares ISA allowance. Out of those surveyed: • only 14 per cent had used their
available ISA allowance • 14 per cent of these said they didn’t
know how an ISA worked
One in ten said they had yet to use their cash ISA limit, “perhaps not realising that this was not a prerequisite for holding a stocks and shares ISA,” said First Direct. The research also found that 62 per cent of savers had never transferred their ISA to another provider, and 87 per cent were unaware that the annual ISA limit had increased to £11,520 for 2013/14.
• six per cent claimed the application
process was too complicated • a further six per cent said they didn’t know that a stocks and shares ISA even existed.
Students urged to check their tax bill Many students choose to work throughout the holidays in order to supplement their income. Often, the erratic nature of working around study and exams means that the PAYE system does not automatically deduct the correct tax liability at tax year-end. As a result, students often pay too much tax on their earnings. The new HM Revenue & Customs (HMRC) Real Time Information system is modernising the way employers report employee deductions. It has also abolished the P28(S) form that was previously available to students to have their holiday wages paid without income tax being deducted at source. Now, more than ever, it is vital that students check their tax deductions. The Low Incomes Tax Reform Group (LITRG) recently urged students to double-check their tax bill. Those who end up paying too much tax may be able to claim a refund, while those who ind they haven’t paid enough may be due a tax bill.
WE CAN HELP... ...you make the most of your taxfree savings allowances
Delay with Equitable Life compensation The Government is at risk of failing to meet its £1.5 billion commitment to compensate former policyholders of the failed Equitable Life Assurance Society, a report by the National Audit Oice (NAO) has warned. According to the NAO, as many as 200,000 individuals (a ifth of policyholders) may never receive compensation because they cannot be traced by National Savings and Investments (NS&I). Equitable Life came close to collapse in 2000, afecting around 1.5 million policy holders, many of whom bought policies with annuity guarantees. The Government agreed in 2010 to provide compensation to just over one million policy holders who had lost some of their expected retirement income. However, the NAO report argues that the speed at which the Treasury had to set up the Equitable Life Payment Scheme “impeded its ability to design one which worked eiciently and efectively.” The Scheme’s objective of paying all traced former policyholders by the end of March 2014 is at risk, it said. As of March 2013, the scheme had made 407,000 payments worth £577 million – equating to only 35 per cent of eligible policy holders, but 72 per cent of the allocated budget. Key facts:
LITRG chairman, Anthony Thomas, said: “We urge students to take an interest in their tax afairs at an early stage. They should check their PAYE coding notices and payslips to make sure as far as possible the right tax is being taken from them in-year and contact HMRC if they are unsure or think something is wrong.”
• £1.5 billion set aside to make compensation payments • 1.46 million total eligible policy holders • £57 million budget to administer the scheme • 664,187 payments still left to be paid • 17 to 20 per cent of policyholders may never be found.
WE CAN ADVISE...
PLEASE GET IN TOUCH...
... on income tax deductions.
... if you think you may be elgible for compensation.
Important Information This document is solely for information purposes and nothing in this document is intended to constitute advice or a recommendation. Whilst considerable care has been taken to ensure that the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information. E & OE.
