Featured (7)

The annual individual savings allowance has changed.
The 2012/2013 Cash ISA limit is £5640 with the overall annual ISA limit being £11,280.

The deadline to use the 2011/2012 ISA allowance is 5th April 2012.

From April 6th 2012, ISA limits will increase in line with the Retail Prices Index (RPI).

Wednesday, 20 March 2013 09:43

Endowment Policies Explained

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An endowment policy is a savings and life assurance policy for an agreed period, the minimum term being 10 years. A tax free benefit is normally paid out at maturity or on earlier death.


Wednesday, 20 March 2013 09:43


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Open ended investment companies were introduced into the UK in 1997, from Europe.

Open-ended means shares in the fund will be created as investors invest and cancelled as they cash in. Closed-ended funds like investment trusts have a fixed number of shares to be bought and sold.

OEICs have a structure somewhere between an investment trust and a unit trust.

Wednesday, 20 March 2013 09:43

Unit Trusts

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A unit trust reduces your risk of investing in the stock market by pooling your savings with thousands of others, and then spreading the money across a wide range of shares or other types of investment.

Unit trusts are also cost effective, charging a fraction of what it would cost you to invest in a broad basket of shares by yourself.

Wednesday, 20 March 2013 09:43

Investment Trusts

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Investment Trusts are companies that buy and sell shares in other companies.

When you invest in an investment trust company, you become a shareholder of that company. Your shares will rise and fall in value according to supply and demand for the shares.

Investment trusts enable you to spread risk by investing in numerous other companies - without the hassle of having to buy, monitor and sell shares individually.

Wednesday, 20 March 2013 09:43

Investment Bonds

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An investment bond is in fact a whole of life policy usually paid for with a lump sum or single premium.

Proceeds can be taxable if the investor is a higher rate taxpayer and may also be taxable for lower rate taxpayers.

The money invested is used to buy units in a selected fund. Most insurance companies offer a wide range of funds from low to high risk.

Wednesday, 20 March 2013 09:43

Annuities explained

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Annuities explained

What is it?

A lifetime annuity pays a guaranteed income for your life from the funds you have built up in your pension plan. Your annuity provider will pay you a regular income taxed in the same way as earnings. The amount of income payable is dependent on your age and health, the size of your pension fund, economic factors, the type of annuity and the options you select. You should also be aware that once you have purchased an annuity you cannot cash it in or make changes to your selected options.

Annuity options include:

Single-life or joint-life - A joint life last survivor annuity pays out until the second life dies. It is possible for the annuity to continue at the same level to a survivor but most couples elect for a survivor’s income of between 1/3rd and 2/3rds of the original amount. It is not necessary for a couple to be husband and wife and any person of either sex may be eligible for a survivor’s pension, although it may be necessary in such circumstances to show financial dependency (the rules on who can be paid a survivor’s pension were relaxed from 6th April 2015 although annuity providers will have their own restrictions in place). With some pension schemes a spouse’s pension must be provided. The higher the level of survivor’s pension included, the lower the starting income will be.

Frequency of Income - You may select at the outset how often you want to receive your income payments. Most people choose monthly, but you can be paid quarterly, half-yearly or annually.

Income paid in advance or in arrears - Payments can be made either in advance or arrears. If you opt for monthly income and purchase your annuity on 1st January and you receive your payment on that day, you are being paid in advance. If your first payment is not made until 1st February, you are being paid in arrears. Payments made annually in arrears would give the highest income figure but the first payment would not be received until a year after annuity purchase.

With Or Without Proportion - When you die, an annuity with proportion will pay a proportionate amount to cover the period from the last payment until the date of death. This is most valuable when income payments are made on an annual basis. This option is only available for payments made in arrears. Without proportion represents the cheaper option.

Level, Escalating or Decreasing - A level annuity pays the same amount of income year after year. It pays a higher income compared to the initial starting income available under an escalating annuity, which will take a number of years to catch up and exceed a level annuity. An escalating annuity, on the other hand, is designed to increase each year. The greater the level of escalation chosen, the lower the initial income will be. It is possible to select a fixed rate of increase each year normally in the range of 3% to 8.5%. Alternatively, you can choose to link increases to reflect changes in the Retail Prices Index (RPI) - however, your income is not guaranteed to increase each year as the RPI may not rise and if it did fall, so might your income. Some annuities arising from occupational pension schemes can also escalate by Limited Price Indexation (LPI). LPI means your income increases each year in line with the RPI but only up to a maximum of 5% or 2.5% depending when the pension was earned. It is also now possible to purchase an annuity that has the facility to be decreased.

A guarantee period - If you select a guarantee period and you die within the period chosen, payments will continue for the balance of time remaining. Normally the guarantee period will be either 5 or 10 years although providers are free to offer their own choice of guarantee periods as there is no longer a maximum period set by the government. Remaining instalments would be paid as an income to the nominated beneficiary and would be tax free if you die before age 75 and subject to income tax at the beneficiary’s marginal rate(s) if you die after age 75. The longer the guarantee period, the more costly the option is.

Annuity protection lump sum death benefit - This option allows for a return on death equal to the difference between the cost of annuity purchase and the gross income payments received. If you die before age 75 the payment to your beneficiaries will be tax free and if you die aged 75 or over it will be taxed at the beneficiary’s own income tax rate(s).


  • - You must be aged 55 or over or, if younger, meet ill-health conditions.
  • - The annuity must be purchased using funds from your uncrystallised rights held in a money purchase pension or from drawdown funds.

Some annuity providers offer annuities which pay you a higher than normal income if you have a medical condition(s) which can affect your normal life expectancy. These are called impaired life annuities.

An enhanced annuity may be available if you smoke regularly, are overweight, if you have followed a particular type of occupation or live in certain parts of the country.



Jonathan Hales

Independant Financial Advisor


T: 01795 477744

M: 07886 516087