On Friday 30th September, the Eldon team completed their ’20 Miles for 20 Years’ challenge, with a 20-mile hike around Ullswater Way.

The purpose was to celebrate 20 years of the firm’s existence, with the funds raised being directed into our Charitable Fund with the County Durham Community Foundation (the Foundation). Funds will then be applied to the Foundation’s Poverty Hurts Appeal – a cause close to our hearts and homes. More information about the Appeal is available here.

Against near-extreme weather, the team completed the challenge within 9 hours – a great feat for a route that can typically take up to 12 hours!

We are just shy of our target of £2,500, excluding any Gift Aid claimed on donations. Eldon will be matching the donations received, up to our overall target, and the Foundation will also match 50% of the funds that are directed to the Appeal. This is an effective tripling of donations.

We would like to thank all who have supported us with such a great cause, that is as important as ever in the current climate. Here’s to more charitable events to come!

Thank you!

With the cost of living crisis taking hold and energy/fuel bills increasing significantly, many individuals have been forced to make cut-backs where possible. One such area appears to be pension savings, to help provide more disposable income on a monthly basis. Whilst this may be temporary, and reductions minor, we need to consider the longer-term impact.

In a recent study, one in twenty UK adults confirmed that they had stopped their monthly workplace pension contributions in response to rising cost pressures. A further 6% of the 2,000 respondents to the survey by pension provider, Canada Life, said they were considering pausing pension savings now, with a further 9% considering doing so in future.

Canada Life’s modelling found that a 40-year-old earning £50,000 per year, who paused pension contributions of 8% for one year would have around £15,000 less in their pension by retirement at age 67. In giving up this potential £15,000, they would have only saved contributions of £4,000 gross over the year (£2,720 net, assuming an income tax and National Insurance saving on the contributions).

A further consideration is that with most workplace pension schemes, contributions are matched to a certain level by the employer. Therefore, a reduction in employee pension contributions may also mean a reduction in employer contributions, compounding the long-term implications.

However, it is important to remember that these are unprecedented times, with the energy price cap increasing almost 80% in September 2022. A temporary reduction in pension contributions may therefore be necessary for some people to help meet monthly outgoings.

What individuals should keep an eye on is that longer-term retirement savings aren’t forgotten about following any reduction in contributions. Doing so could lead to an increasing number of individuals being unable to meet their retirement goals, potentially having to work longer than planned, or forgoing their intended lifestyle in retirement.

This is where effective financial planning is key, taking into account short-term needs and balancing these with longer-term goals and objectives.

From 6^th July 2022, the level at which people start making National Insurance contributions (NICs) rose from £9,880 to £12,570.

According to the Treasury, the threshold change means that 70% of UK workers will pay less in NICs, even after accounting for the 1.25% increase through the Health and Social Care Levy which came into effect on 6 April 2022.

The threshold rise was previously planned for the end of parliament, but the former Chancellor brought forward these plans amid the rising cost of living.

If you would like to check how the National Insurance contribution changes will affect you, you can use HMRC’s calculation tool.

If you would like to discuss these changes, please do not hesitate to contact a member of our team.

The deadline for registering trusts on the new Trust Registration Service (TRS) of 1^st September 2022 is fast approaching and now under 2 months away.

As a reminder, the new rules, which were introduced on 6 October 2020, extended the scope of the TRS to UK (and some non-UK) trusts, regardless of whether or not the trustees have become liable to pay any tax. Following this, many trusts that are not liable to tax, nor expected to be in the future, have been caught under the new rules and must register.

In terms of registering the trust, there are two possible options to achieve this:

• The trustees can authorise an ‘agent’ to register the trust on their behalf – but, as per HMRC guidance, it’s only possible to register as an agent if the business operates as an accountancy service provider, or;
• The trustees can register the trust themselves, with one trustee designated as the ‘lead trustee’ for HMRC correspondence

 
It should be borne in mind that the registration process is relatively straightforward, particularly for non-taxable trusts, and the trustees may wish to consider carrying out the registration themselves, potentially with some support from their financial adviser, rather than pay a third party. Following registration, the trustees need to be aware of their ongoing requirements.

If the trust is liable to tax for any tax year, you must declare on the trust register that the details of the persons associated with the trust are accurate and up to date. You must do this whether there have been any changes or not.

If the trust is liable to Income Tax or Capital Gains Tax, you’ll also need to confirm on the trust’s Self Assessment return SA900 that you’ve either:

• updated the details on the trust register
• confirmed that there have been no changes to the trust on the trust register

 
If the trust is not liable to tax, HMRC do not need an annual declaration.

Once registered, third parties who deal with the trust, such as a financial planning firms like Eldon, will need to see proof of registration, as part of the standard money laundering and ID checks that take place. A downloadable PDF can be obtained through the TRS as evidence.

Our Summer Newsletter covers an update on Eldon’s developments together with a range of other articles.

I hope you enjoy reading it.

If you have any ideas for future articles or any feedback, please feel free to get in touch.

Click here to view the newsletter.

Whether you are wanting to help your children in the future with a house deposit, wedding or to provide them with funding to pay for university, saving for your children can help them get off to a flying start.

Teaching young people the value of savings can also lay the foundations for a wealthier, more independent life when they reach adulthood.

Maximising ISA allowances is one way to save for children. A Junior ISA (JISA) can be opened for a child up until their 18^th birthday, per current rules, with an annual subscription limit of £9,000 in the 2022/23 tax year. Once opened by a parent or guardian, anyone can contribute to a JISA.

A JISA can either be held as a Cash ISA, similar to a normal savings account, although the money cannot be withdrawn until age 18. There is also the option of a stocks and shares JISA, which can invest in a range of stocks and shares, funds, tracker funds, investment trusts etc. You can split the subscription limit whichever way you like between the two types of JISAs.

Once the child turns 18, the JISA is automatically rolled over into an adult ISA which gets the full ISA allowance of £20,000 per tax year (as at 2022/23). However, a child can open an adult cash ISA once they reach age 16, which will also allow the full annual adult ISA allowance of £20,000.

Therefore, it is possible for a child to hold both an adult cash ISA as well as a JISA from the time between their 16^th birthday and their 18^th birthday. This means that during this period, up to £29,000 can be paid into their ISAs in a single tax year. Over the whole period, this can total tax-free savings of £87,000 in three years!

If you would like to discuss the above further, please do not hesitate to contact a member of our team.

In response to rising inflation, the Bank of England increased the Base Rate in December, February, and March, with this now at 0.75% pa.

As a result, interest rates have increased on both mortgage products and savings accounts. Santander, for example, have now increased the interest rate on their 1-2-3 current account from 0.30% pa to 0.50% pa.

National Savings & Investments (NS&I) have increased the rates on both its Income Bonds and Direct Saver accounts to 0.50% pa. The annual equivalent prize rate of the Premium Bonds remains unchanged at 1% pa, if you are averagely lucky, but there is no guarantee you will achieve this return.

The above noted increases are still short of the Base Rate and although savings rates are changing on an ongoing basis, it appears that not all Banks and Building Societies are passing on the latest rises to savers at present.

The best instant access rate available is now up to 1% pa gross variable, with some providers including an introductory bonus in the headline rate. Whilst it is possible to achieve up to 1.5% pa gross variable, these rates are often linked with current accounts, so will require savers to open this account first if they do not hold one already. This will not suit the majority of savers, where simplicity is desired.

Fixed rate accounts have also increased: 1-year fixed rate 2.05%; 2 years 2.35%; 3 years 2.50%; 4 years 2.55%; 5 years 2.60%.

It is important to ensure that you are achieving competitive rates on your savings and there are a number of comparison sites available to aid your research. We regularly check this for our clients as part of our ongoing service.

Ensuring your funds are covered by the Financial Services Compensation Scheme (FSCS) is also an important consideration when researching savings accounts. The FSCS protects deposits up to £85,000 per financial institution should a financial firm fail. It is important to note that this limit applies per institution and not per account, as many providers share a banking licence, so in this case, the £85,000 limit is spread across total savings with linked providers.

If you would like to discuss the above, please do not hesitate to contact a member of our team.

All rates quoted are annual, before tax, and mainly for online access as at 26/04/22.