mowatt financial Planning

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Mowatt Financial Planning: March 2011

Thursday, 31 March 2011

Stocks and Shares ISAs

There are only a few days left to use your Stocks and Shares ISA allowance for the tax year ending on the 5th April. The allowance is £10,200 less any money that you have already paid into a Cash ISA.

I have created model portfolios (a mix of different investment funds) covering investments in Bonds, Property and Equity to fit most risk levels.

If you want to find out a bit more about how this would work click here.

Cash ISA Rates update

With just over 5 days left, there is not much time left to use this year's ISA allowance if you haven't already done so. In fact it's already too late with some of the banks.

I've updated the accounts currently available as well as the deadlines for applications. Click here to check them out.

Both the Santander and the Barclays ISAs offer links to the bank base rate for 12 months. This means that if the bank base rate goes up as is expected at some point during the year so will the interest rate on your ISA. As always you should shop around in 12 months time.

Monday, 28 March 2011

Cash ISA Rates

Only 8 days to the end of the tax year.

I've updated the best of the Cash ISA rates that are currently available. Click here to see the rates

Nothing really new this week although it is woth noting that two of the Cash ISAs mentioned are offering links to the bank base rate. This will offer some protection if base rates go up.

Unfortuantely with inflation at 4.4% none of these rates are offering a real return.

Friday, 25 March 2011


Not surprisngly there wasn't a lot in this week's budget. From a financial planning point of view there were a few areas of interest:

Personal allowance
This is on a journey to reach £10,000 at some point in the future. From 6th April this year, it will increase to £7,475 but this is not intended to benefit higher rate tax payers so at the same time the higher rate tax band will apply to taxable earnings over £35,000 (previously £37,400). It's estimated by the IFS that this will create 750,000 new higher rate tax payers.

This was all known already. The new announcement in the budget was that the personal allowance will increase to £8,105 from 6th April 2012.

Tax and National Insurance
The chancellor announced there would be a review of these with the aim of merging them and creating a simpler tax system. This sounds good in theory but will be tricky in practice. I don't think this will see the light of day before the next election as it is potentially fraught with negative public perception.

Enterprise Investment Schemes
The tax relief on these schemes which are seen to be at the higher end of the risk spectrum will rise to 30% from 20% from 6th April 2012.

Inheritance tax
The inheritance tax rate (40%) will be reduced by 10% for those that leave 10% of their estate to charity.

Index Linked National Savings Certificates
These are 3 to 5 year savings that give returns linked to inflation. Unfortunately they were withdrawn last year at a time when they were much needed as the Government had sold enough. The intention is to reintroduce these in the next 12 months.

State Pensions
The state pension age is already increasing to 66 by 2020. The intention in future is to bring in a link with longevity to make future increases in state pension age more automatic. Sounds like a sensible idea.

In addition the intention is to introduce a flat rate state pension of £140 per week for new retirees. This will be subject to consultation.

Thursday, 10 March 2011

Base Rate

The bank of England base rate will remain at 0.5%. This is the decision of the Monetary Policy Committee which met this morning.

From what I have read and heard this is the right decision as increasing interest rates now could jeapordise the much needed recovery in the UK ecomony. Although inflation is currently running at 4.0% (January figures) this is largely as a result of VAT and the cost of goods such as fuel. An increase in interest rates would hit consumer spending power in an already fragile market.

Although it is hard to predict, assuming that the economy is showing the right growth pattern, an interest rate rise is likley within the next 12 months.

Tuesday, 1 March 2011

Annuity rates

The European Court of Justice has ruled this morning that insurers can not charge different annuity rates between men and women on the basis that this is discriminatory. Wow!

This goes aginst the basic statistics which show that females are likely to live longer. The implication is that insurers will have to use the same annuity rate for males and females. Logically the average rate will be weighted towards males meaning that males will get poorer terms and females better. However, it is unlikely to be quite as simple as this.

The ruling which also affects other insurances such as life insurance and motor insurance will apply from 21 December 2012. I'm not sure what oppoprtunity the UK government has to appeal or opt out but it seems a surprising ruling.
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