Inheritance Tax in the Isle of Man? What next? I thought that would get your attention. Being asked to write an article about such a riveting subject as inheritance tax (IHT), when most people in the Isle of Man believe it has nothing to do with them, is a challenge. This is even more true if you consider that more than half of our population do not even have a Will with the most common justification being ‘I haven’t got around to it yet’.
Both these matters are beyond most people’s time horizon and put as far out of their minds as possible since none of us like the idea of dying – at all. Unfortunately at some time we all have to face the idea that no-one gets out alive.
Isle of Man residency has the advantage of excellent tax rates and for the most part that includes no IHT. However, there are traps to be aware of, but with the correct professional advice, these can be planned for and possibly even avoided.
UK ‘Situs’ Assets. It is quite usual for people living permanently in the Isle of Man to hold UK assets, particularly property and investments. If these assets are in your personal name and valued at over £10,000, your executors (or estate administrators if you haven’t made a Will) are going to need to obtain a UK grant of Probate/Letters of Administration to distribute the assets. IHT can arise even if you are born and bred in the Isle of Man if your UK assets are over the current IHT threshold. Therefore without the correct planning your estate is liable to get an IHT bill to pay before the assets are released. With proper advice the IHT exposure mentioned above can be completely avoided.
The various options available usually include the use of an Isle of Man company or an offshore Life Assurance Bond. The former option means ownership of the asset is transferred to the company: this means the individual then owns shares in an Isle of Man company rather than a UK asset. The method of transfer of the asset from the individual to company merits careful consideration to avoid unnecessary tax liabilities: in some cases the use of a trust may also be contemplated. Not only can correct tax planning ensure that IHT is avoided it can also avoid the necessity for UK probate.
A really important note is that where UK equities, for example, are held by a stockbroker/investment manager in their nominee name, they may not be protected from taxation. Use of the broker’s nominee name does not avoid exposure to IHT and anybody who is holding UK assets under the misapprehension that the nominee name will protect them from IHT should obtain professional tax advice immediately.
The Deemed Domicile Rule. An issue which we come across on a regular basis is where an individual has moved from the UK to the Isle of Man within the last three tax years. Even though this person or family has made the Isle of Man their permanent home and intends to stay here, their estate and any gifts they make are still within the scope of IHT for at least that period. Beyond this IHT can still be an issue; for example if the individual is seriously ill and has to attend the UK for treatment, or has to go to the UK to care for elderly and sick relatives. You may need to consider planning carefully to ensure potential IHT liabilities are mitigated or avoided altogether.
Isle of Man Domicile? Someone living in the Isle of Man having made the Island their permanent home or perhaps was born in the Isle of Man but is currently living elsewhere on a temporary basis may be in the advantageous position of having an Isle of Man domicile. The big advantage of Isle of Man domicile is that their estate, for the most part will not be subject to any Isle of Man estate taxation. But, if the individual holds UK assets, for example, UK property, a portfolio of UK investments or a beneficial interest in a trust with UK assets then IHT may apply. This is because any UK assets held by a non-UK domiciled individual are potentially exposed to IHT rates at 40%. This exposure can be relevant in two circumstances: firstly, if any of these UK assets are gifted, perhaps to an individual or a trust and secondly if the individual dies holding UK assets. We often find that people delay getting proper financial, taxation and Will planning advice due to a lack of understanding of their current and future financial positions.
What can you do? By spending some time with a Financial Planner with an up to date knowledge of both the UK and IOM tax regimes, it is possible to then meet with an advocate and/or tax adviser fully armed with a statement of of assets and liabilities, along with a better understanding of your estate planning wishes which I’m sure do not include gifting assets to HMRC in the form of 40% tax!
Sources; Chartered Insurance Institute AF1 syllabus, PKF (IOM) LLC
FSA Approves CII as an Accredited Body
Fay Goddard, CEO of the Personal Finance Society today wrote to all members to advise that the CII has been provisionally approved by the FSA as an Accredited Body ahead of the implementation of the RDR. The Personal Finance Society (PFS) is part of the CII Group, so PFS members will continue to benefit from the reputation, backing and financial security of the world’s leading professional organisation for insurance and financial services.
The CII has almost a century of experience as a professional body, having received its original royal charter from the Privy Council in 1912. Its mission remains unchanged by maintaining the professional competence, ethical and technical standards of the profession in order to secure the trust and confidence of the public. Globally renowned for its market leading training and qualifications for the financial planning and insurance sectors Goddard strongly believe that PFS membership can continue to enhance the reputation of those committed to adhering to the highest professional standards.
She says the PFS provides a wide range of valuable benefits to members including a nationwide programme of high quality Continuing Professional Development. The PFS regional support network is invaluable for many of our 29,000 plus members and our innovative tool has already lightened the gap fill workload for thousands of members. Very soon those members requiring a Statement of Professional Standing (SPS) will be able to add this, at no extra cost, to the range of other benefits they enjoy as part of their existing membership.
She said ‘Rest assured that your professional body membership matters more than ever to your clients and recent research by JP Morgan found that consumers placed considerable importance on membership of a reputable professional body; in fact it was the third most important driver that would make them willing to pay an adviser.’
Full details about the requirements to obtain an SPS and the process for PFS members to submit their application will follow shortly.
The Isle of Man Insurance & Financial Services Institute (The local branch of the CII and Personal Finance Society, PFS) recently hosted a talk on ‘Ensuring Space’ by Tim Wakeman, Executive Vice President of Aon International Space Brokers. The talk followed the Institute’s Annual General Meeting during which Sharon Sutton of Thornton Associates became the new President of CII.
Sharon Sutton, who is preceded by Nick Boon of Gough & Co., will take up the presidency for a year, which involves assuming responsibility for a number of CII events and activities. Sharon commented, “I am excited about taking on this new role for the year ahead. As a Chartered Financial Planner, being President gives me an opportunity to pass on my experience and knowledge in the sector. The CII local council is made up of a motivated group of industry professionals and we will continue to drive up awareness of the relevance of the CII and its extended family (Financial Service, General, Captive Insurers, Life Companies etc.), supporting our members to increase and maintain their professional standards. We very much embrace the challenges ahead to lead the financial services community towards higher levels of professionalism through a wide programme of activities. We believe professionalism means ethical and behavioural standards, interpersonal and business skills and technical knowledge. This will lead to the ultimate benefit of the profession and consumer alike.”
The event’s speaker, Tim Wakeman is a space insurance broker responsible for the placement and servicing of insurance programs for a large number of customers. He has 28 years of experience in the industry and has worked in the field of space risk for over 10 years. Tim gave an introduction to the space insurance industry and talked about its capacity and future trends. He commented: “Space is an area that has appeal to most people. However, many don’t realise the lengthy assessment of risk that goes on behind each satellite launch and space mission. The Isle of Man has shown focused attention on its space industry and promoted itself as a centre of excellence. A great deal of the work that is done here contributes to space development on a global scale.”
Sharon continued: “It is a pleasure to have someone of Tim’s calibre speaking on a subject that many of us know little about. However, space has been a relevant topic in the Isle of Man recently and we can all gain from some more in depth knowledge on the subject. His presentation highlighted the importance of the UK insurance markets being, globally, the largest player in insuring space”
The Isle of Man CII hosts regular industry events, training seminars and social activities for its members. For more information visit http://www.cii.co.uk/cii/localandglobal.aspx
We pride ourselves as being members of a caring society and many of us are now turning our thoughts as to how best to fund care for close family members in old age.
The majority of us are keen to put off such thoughts however it becomes even more of a challenge when the day is upon us and we have not thought about the expense involved. Many elderly people face selling their house because they don’t have the money to get the care they need. This article talks about how you begin to think about such an expense and the options available to you.
At Thornton Associates we often work closely with individuals to help them to manage and protect their wealth in later life and a study by Sun Life Financial of Canada’s Sense Check at 60 study suggest that very few people (around 1 in 4) are putting these plans in place for later life. This study looked at people with between £100,000 and £500,000 in pensions and savings; the sort of people we typically work with here at Thornton Associates.
Whilst we can make a big difference to the financial position of elderly clients by assisting with proper budgeting and clear succession planning, the biggest impact a financial planner can make to their client is earlier in life, with proper planning for later life and the peace of mind that can bring.
This is against a backdrop of a more complex environment for retirement planning with increased regulation, innumerable changes in legislation, to say nothing of rising inflation (6% IOM RPI as we go to press) and continuingly low interest rates for savers.
Clearly, proper planning for later life is more important today than ever before. We can see that as the increasing numbers of baby boomers retire, contrasting markedly with a decreasing working population with little job security, our society will come under increasing pressures as a result of an ageing population since we know that a large amount of government budget pays for the associated social care costs of looking after the aged. Also consider the impact of the recent global financial crisis on investment values to say nothing of the indebtedness of our governments, not only in paying back the debt, but actually meeting the interest payments of those debts.
The Daily Mail reported in early November that more than 20,000 pensioners in the UK were forced to sell their homes last year to pay for care fees and estimate that over the past five years, the cost of care fees have escalated by more than 20%.
The Association of British Insurers (ABI) states in a recent report “The costs involved can be daunting. The average cost of care in a residential home in the UK is approaching £25,000 a year. In a nursing home, if nursing care is also required, this cost rises to nearly £39,000 a year. Even receiving long term care in your own home can be expensive. Every week around 300,000 households receive nearly four million hours of home help, and people in England spend an estimated £420 million a year on privately paid home care services.”
Seeking professional independent financial advice from a suitably qualified and experienced financial planner before you retire can put you in a much stronger financial position ahead of later life but if you’re already there, all is not lost and you should still seek advice from an adviser with a relevant Later Life qualifications who can provide specialist advice on areas such asImpaired life annuities, equity releases and immediate care plans.
The Sense Check at 60 concludes ‘To successfully manage funds in retirement people need to deal with 5 key risks: the risk of living too long; the corrosive impact of inflation; the need to maintain exposure to higher risk investments; the risk of withdrawing too much income and the prospect of requiring long term care later in life. The ‘baby boomer’ generation is reaching retirement. Millions of Britons will retire over the next 10 years. It is important they make informed decisions and plan their retirement well if they are to enjoy the benefits of the
longest retirement of any generation.’
A private consultation to discuss any issues arising from the above or matters of other financial concern may be arranged by contacting Sharon Sutton, Chartered Financial Planner, Thornton Associates Ltd; www.thorntonfs.com
Thornton Associates Limited is licensed by the Isle of Man Financial Supervision Commission.
Boiler Room Scams – preying on pride
28th March, 2011
A phonecall today prompted me to update and republish this article. If you’re contacted out of the blue purporting to offer some wonderful investment opportunity, for goodness sake, get advice locally from a licensed qualified adviser
Boiler room scams continue unabated, and Iocal residents continue to be victimised. The Isle of Man Constabulary recently recorded the second £1million loss suffered by a victim of this crime.
The following is a generic typology of the modus operandii employed by boiler room fraudsters, which may assist the finance industry in recognising potential victims.
A ‘boiler room’ is a bogus stockbroking company, usually based overseas, which cold-calls investors and pressures them into buying worthless or bogus shares, or even old shares they might have with the promise of participation in a hostile takeover bid for the shares they already own. This latter case had pressurised the individual concerned into signing a ‘non-disclosure agreement’ (NCD) which prevented him from feeling able to seek advice earlier – they were actually preying on his pride. This horror story meant £50,000 had already been sent with a further £50,000 promised and he had only contacted us to check the bank weren’t acting strangely in refusing to send a second sum to an international escrow account!
Historically, older people with previous experience of investments or share dealing are targeted. Typical local losses average around £40,000, but are increasing rapidly and when you see the extent to which these criminals will go to with false websites and bogus due diligence you will see how easy it can be to be lulled into a false sense of security.
In the current economic climate, boiler rooms are starting to target high net worth victims or those who are not experienced investors, the latter initially being asked for smaller sums of money to invest. Many victims participate seeking to supplement their pensions with interest rates remaining a record lows.
Those operating the boiler rooms have developed new strategies to target investors, such as a promise to recover monies lost to the original boiler room, or to purchase these worthless or bogus shares, once an up-front fee has been paid. In addition, investors are being encouraged to sell previously highly regarded ‘blue chip’ company shares, such as banks and financial institutions and to invest in green or new technology shares marketed by the boiler rooms, or even to take out loans to fund new investments, like warrants, possibly even in company shares they already own.
The fraudsters are usually well spoken and knowledgeable. They are also very persistent and may groom their victims for several years beforehand. They might call their victim several times with offers of research, discounts on stocks in small overseas companies, or shares in a firm that is about to float. They warn them to guard the information jealously as otherwise they may miss out. Boiler rooms make their money in one of two ways: by simply taking money and walking away, or selling ”shares” at vastly inflated prices and with exorbitant dealing charges.
Most victims purchase their “shares” by telegraphic transfer, with smaller amounts being paid by same day money transfer (Western Union, Moneygram etc). Where banks are utilised, it is evident in most cases that the victim has not sent money by this method before. Fraudsters also coach the victim in what to say to bank staff if challenged over transferring large sums of money. Generally, most payments are made to accounts in Spain and the USA but other jurisdictions, particularly in the Far East eg Hong Kong, also feature prominently. There are no known cases where the victim has sent money to the same country that the “broker” or “shares” purport to be in.
If the investor has access to the Internet, they may be directed to websites to monitor the share’s impressive performance, not realising the entire site is controlled by fraudsters. Soaring share prices often induce the investor to increase their holding. Often, when the investor attempts to sell their holding, the fraudster encourages them to reinvest their “profits” in another red hot share, and then introduces a minimum investment sum which is greater than the profit figure, so if the investor wishes to participate they are required to send more money.
If the investor insists on selling, they will then realise their shares are “restricted” – it sometimes states this on the share certificate, if the investor has one. The fraudster will demand fees upfront to de-restrict the shares and once the investor has paid these fees the fraudster disappears. It is during the selling process that victims usually realise they have been scammed. Intelligence suggests most boiler rooms operate from virtual office accommodation using virtual telephone numbers etc which are untraceable.
The IOM FSC Financial Crimes Unit kindly requests that any person identified as a boiler room scam victim or potential victim, be furnished with a copy of this Advisory Notice and advised to seek independent financial advice. In blatant cases of deception, victims should be encouraged to consider reporting the matter to police.
Victims of boiler room scams are not likely to see their money again, mainly due to the length of time which elapses between them investing and realising they have been defrauded.
Stocks and shares and other such investments should only ever be purchased from locally licensed stockbrokers, and not from strangers who cold-call them at home. If in doubt consult an impartial and well qualified financial adviser; someone who is responsible (and insured) for the advice given. Please do note that if you are cold called, this is against the rules. Do not use a firm or individual who is not authorised in the Isle of Man or the UK; you’re just asking for trouble.
There was 6 October 2010 deadline for submitting 2009/10 personal tax returns. If the Income Tax Division had not received personal tax returns for the year ended 5 April 2010 by 6 October 2010, taxpayers were charged a £100 penalty.
If the return has still not been received by the Division by 6 April 2011, a further £200 penalty will be charged. Even if the penalties are paid, the tax return must still be submitted and people may be prosecuted for failing to do so.
So the message is, if you can think of something better to spend 200quid on and would rather avoid going to court, and the associated hassle and legal costs, get your tax form in!
Dispelling 5 Myths About Financial Planners
You can tough it out alone; Some people have the time, ability and drive to manage all their finances, others don’t. Either way, professional advisers can provide great insight and judgment in countless instances, and not necessarily at exorbitant cost. But common misconceptions about financial planners prevent many from seeking their counsel. This article is to help you avoid these traps so you get the most value from your adviser.
Myth 1 – Having a financial planner means I don’t need to learn anything about investing.
If you take nothing else away from this article, understand that whether or not you have an adviser, the most important thing you can do is educate yourself. Having a basic understanding of investing will ensure you understand what your adviser is doing with your money, and allow you to ask the tough questions.
Imagine this scenario: you sit down for a review of your personal finances and your new adviser starts with a lecture about asset allocation and diversification and how they are recommending a certain hot new investment. If you understand the terminology you can ask questions like:
- Why are you recommending this?
- How am I more diversified when I already own similar funds?
- What is the TER (total expense ratio) of this new fund?
- What commission do you receive if you sell me this?
By asking the right questions you’ll understand your portfolio better and also protect yourself from agreeing to something you don’t need or is inappropriate.
Myth 2 – A planner or adviser only gives me advice on investing.
Picking the right investments is certainly an important aspect of your personal finances, but it’s not the only part. Financial planning takes into account all the varied financial aspects of a person’s life: taxes, insurance, retirement, budgeting, estate planning, liquidity requirements and other life goals. It considers the various and sometimes conflicting financial aspects of our lives and develops strategies and objectives to make everything work together. For example, what good is it to pick all the right investments but then see most of the return swallowed up in taxes? It’s a full-time job just to keep up with all the laws relating to investment income and taxation. With the aid of a financial planner who considers your individual situation, you’ll be able to minimize the amount of taxes you pay (legally of course) and have a stronger bottom line in the end.
Myth 3 - By law all financial planners are required to be registered with a government agency.
Actually, financial planners are not required to be individually registered, whereas financial advisers firms are. Before deciding on an adviser, you can always look up the person’s details with their registered professional body such as www.findanadviser.org or the licensed company on www.fsc.gov.im . Check to see if there are any complaints or if disciplinary action has been taken against them. You should also find out how long the person has been in the profession.
Myth 4 – Certification letters after the person’s name mean nothing.
If you are looking for an adviser, give extra credit to those who have designations such as the Chartered Financial Planner APFS or FPFS or Certified Financial Planner (CFP) or Chartered MCSI or FCSI. To attain these levels, an adviser must put in hundreds of hours of studying in order to pass grueling exams. Furthermore, members are required to undergo background checks, agree to a code of ethics and do continuing education to keep the certification. Qualifications are no guarantee of performance but it’s a good indication of commitment to the profession. The new minimum ‘level 4’ qualification post 2013 which advisers should be aiming for is Dip PFS. For your information Cert PFS or FPC is the ‘old’ level 3 benchmark; least said, soonest mended. To learn more see http://www.which.co.uk/money/tax/guides/choosing-a-financial-adviser/ifa-qualifications/
Myth 5 – Only wealthy people need a financial planner.
Last but not least, this myth is extraordinarily widespread. Financial planning is about helping people of all income levels achieve short, medium and long-term financial goals. Many assume you need to be wealthy to get professional help. For as little as a few hundred pounds you can have a portfolio assessment done by a fee-based financial planner. This breed of planner only takes compensation from the client and receives no compensation in the form of commissions (which can run into thousands) from selling certain products unless agreed by way of ‘offset’.
Conclusion
Some people are confident enough to make these vital decisions on their own. Others need a helping hand. If you do choose to deal with a planner, keep on educating yourself, understand there is more to managing your portfolio than just picking hot stocks, do the homework in terms of both background checks and certifications and don’t think that you can’t afford advice just because your portfolio isn’t seven figures. Financial planners aren’t a guarantee or magic solution but they can be of help in many circumstances.
Sources; www.investopedia.com
Sharon Sutton is MD and Chartered Financial Planner at Thornton Associates Ltd who are licensed by the Financial Supervision Commission of the Isle of Man and Registered with the Insurance and Pensions Authority in respect of General Business
See www.thorntonfs.com or follow Sharon on twitter @sharonsutton99
Charitable Philanthropy: Planning for what you give
It was Comic Relief’s ‘Red Nose Day’ yesterday and we financial planners find clients are now coming to expect their advisors to help them with their philanthropy. David Cameron’s recent reference to ‘building the big society’ also has us thinking about a whole new range of projects in need of funding in an effort to work towards this common goal.
A report by think tank Policy Exchange highlights how advisers can play a role in facilitating philanthropy by setting up ‘giving circles’ which provide networks of charity contacts.
30 donors interviewed for the study said the process of identifying a charitable cause at grassroots level was one of the hardest parts of giving.
Stephen Hammersely, chief executive of the UK-wide Community Network Foundation, said high-net-worth clients were responsive to giving in times of economic turbulence.
‘In times of uncertainty people are open to conversations about things that would normally not be talked about. There may be factories closing down, people being made redundant and people may feel more aware of the issues on their doorstep and their relative affluence and position compared to others,’ he said.
He added that the downturn could actually catalyse more action than in comparatively well-off times.
‘In times of difficulty people are possibly more prepared to think about giving and engaging in philanthropy than when times are really good and people get caught up in the froth of making money,’ he added.
Hammersely said advisers were making increasing contact with community foundations and his organisation had seen the number of donors doubling over the past four years.
Mark Estcourt, managing director of London-based Cavendish Young, encourages philanthropy in his clients and uses it for tax planning.
‘It is just another form of insuring that their assets are dealt with in a logical and tax-efficient way.’
It is possible to use financial planning to help clients use their wealth to change their lives, after all ‘you can’t take it with you’.
‘As financial planners we have the ability to transform people’s lives,’ he said. ‘Good financial planning can help people achieve their goals of a dream holiday or have a more permanent impact. I don’t think that any other profession does that.’
Cash flow modelling is critical to the basis of any financial plan but it could also include philanthropy and charitable giving with a significant level of information about clients’ wealth and ambitions. Financial planning isn’t about products; it’s about budgeting, goal setting and eliminating debt – surely a message that is relevant to everybody.
In 2009 it was expected that UK charities missed out on £1.2 billion in donations because of tax-inefficient giving by donors.
New research from Unbiased.co.uk, the professional advice website, found that some simple changes to giving practices could help charities net over £1 billion a year in money that is currently being claimed by the taxman.
UK adults gave a total of £9.9 billion to charity in 2007/08. According to this research, these gifts could be boosted by nearly 12.5% if donors had made full use of the tax allowances available to them via Gift Aid which allows the charities to reclaim basic rate income tax relief on the money. It is a shame that such methodology is inaccessible here in the Isle of Man. However, here is a summary of those ‘charitable’ tax reliefs which are available;
RELIEF FOR CHARITABLE DONATIONS DEED OF COVENANT (not to be confused with the Educational Deed of Covenant)
Charitable donations made under a deed of covenant will be allowed as a deduction from total income in the tax year in which they are paid, provided the deed of covenant is:
• Irrevocable
• Not for consideration in money or money’s worth
• For longer than three years
There are currently no minimum or maximum limits for the amounts allowable. A copy of the deed of covenant should be submitted to the Income Tax Division.
OTHER DONATIONS
Smaller or informal donations to a charity are allowable as a deduction from total income. The practice note sets out ways of getting tax relief for straight forward “annual” donations. Evidence of payments made must be provided.
Relief is restricted on charitable donations to those in excess of £100 and below £7,000
Charitable trusts can be set up and these should get favourable tax treatment if set up properly and all investment income of the charitable trust will be tax free.
Isle of Man trading companies can now get £15000 relief or if greater 1% of taxable income before loss relief and capital allowances.
Further details may be obtained on the Isle of Man Government Treasury Website, Practice Note 83/00 (http: //www.gov.im/treasury/incometax/technical/practice/PN83-00.xml); the rest of the practice note still stands including no relief for investment companies.
We are seeing a burgeoning market for philanthropy advice and there is a pent up demand for people to give more effectively. At the moment, the philanthropy advisor market is unregulated, and anyone can call themselves a ‘philanthropy advisor’ without any formal training or experience. We would therefore advocate taking professional advice from qualified Isle of Man professionals.
Sources; IOM Government Income Tax Division, PKF (IOM), Citywire.co.uk
Sharon Sutton is MD and Chartered Financial Planner at Thornton Associates Ltd who are licensed by the Financial Supervision Commission of the Isle of Man and Registered with the Insurance and Pensions Authority in respect of General Business
See www.thorntonfs.com or follow Sharon on twitter @sharonsutton99
TLC Business Solutions and Thornton Associates, with the support of the Isle of Man Government, have arranged a series of free talks on financial planning for ordinary people. The new series leads on from the success of their first talk on the same topic, held in November last year.
TLC is a leading Manx corporate training company and Thornton Associates is the Island’s only firm of Chartered Financial Planners. The Managing Directors of the two companies, Sue Gee (TLC) and Sharon Sutton (Thornton Associates) first teamed up to provide a government backed seminar last year, which was met with overwhelmingly positive feedback. Over one hundred people attended the talk, designed to encourage people on average incomes to think about the details of financial planning, and 99% of attendees who left feedback said that they had gained something useful from it and would recommend it to a friend. One audience member said, “It was fantastic; the message was received and uncovered the steps to plan for my future – it was a great use of an hour!”
There will be a series of four talks spread throughout March and April on different subject matters, all of which will be hosted at the Claremont Hotel. They will open for coffee and registration at 5.15pm, with the seminars starting at 5.45pm and lasting one hour. They are supported by the Department of Economic Development and are open to anyone over the age of 18.
The first talk is on the 9th of March and will feature Sue and Sharon, covering similar ground to their previous event. Sue commented on the talk: “It is a myth that only affluent, high net worth or rich people need to plan financially for the future; it is actually more important for those of us who have less disposal income because we need to make the money work harder for us. If you didn’t hear about the last talk in time or couldn’t make it along, I would really encourage you to try it out – it’s free, after all.”
Feedback from the last talk suggested that there were three areas in particular that attendees wanted to hear more about: debt management, wills and pensions. Sue and Sharon have addressed this by arranging three additional talks in this series. The second talk is on the 16th of March and will cover the subject of wills. Sally Bolton, Principal of Corlett Bolton and Co legal practice, will lead the seminar, which will cover areas such as what your assets are and how to manage distribution via a will. Andrea Tabb will present the third seminar on the 22nd of March. Andrea is the Advice Centre Manager at the Isle of Man Office of Fair Trading and will outline how to use credit while avoiding debt problems. Finally, Sharon Sutton will provide the last talk of this series on the 6th of April, on the subject of pensions and how to get the most out of them.
Sharon commented on the new series of talks: “We were very pleased by the success of the last seminar and it is good to see the Isle of Man Government supporting further talks. The feedback from the last event has given us the opportunity to understand more precisely the subjects that people struggle with and we have been able to tailor this series to address some common concerns in greater depth.”
To register for any of the free financial planning talks, call Janet on 664 789.
Inflation in the Isle of Man; Up, up, up, down and up again!
The Island’s inflation rate fell for the first time in almost a year last month, but as expected the relief was short-lived with an increase again in June.
The annual rate of inflation given by the Retail Price Index fell from 6.7 per cent in April to 6.3 per cent in May but went back up again in June to 6.4%.
According to figures from the Treasury, the rate has been steadily rising since late 2010.
And the data shows air travellers are facing huge hikes – fares have risen on average by almost 22 per cent, whilst sea travel has risen by just over seven per cent.
Inflation rates in Britain (our main trading partner) are at their highest among developed countries and rising, and pressure is again on the Bank of England to raise the Base Rate of interest from its current 0.5% although the decision last month was to leave it unchanged. Can the Base Rate remain at the historic low of 0.5% much longer?
The main problem with inflation in the Isle of Man is that most of ours is imported. We have to bring in all the fuel to power our cars, heat houses and run our power stations to say nothing of clothing, food; in fact we are net importers of just about everything.
Savers continue to have difficult choices to make about exposing some of their money to investment risk or accepting an erosion in purchasing power.
Cash is most widely known for being subject to inflation risk where over time, its purchasing power is typically eroded by the rising cost of goods and services.
Keeping your money in cash can also result in ‘shortfall risk’, which is the risk of failing to achieve your financial objectives. Over time, cash typically produces the lowest returns of any major asset class. This is the result of the relative security of cash compared to, say, company shares.
Don’t forget ‘Corporate risk’ which is the danger that the bank or building society looking after your cash savings will get into financial difficulties and be unable to meet their obligations. In the IOM, individual savers are protected by the Depositors Compensation Scheme (DCS) which mitigates this risk, up to a maximum limit of £50,000 per saver per institution – but not necessarily within an immediate time-frame.
“The Island’s inflation rate has fallen for the first time in almost a year.
The annual rate of inflation given by the Retail Price Index fell from 6.7 per cent in April to 6.3 per cent in May.
According to figures from the Treasury, the rate has been steadily rising since late 2010.
And the data shows air travellers are facing huge hikes – fares have risen on average by almost 22 per cent, whilst sea travel has risen by just over seven per cent.”
However don’t get too excited. Inflation rates in Britain are at their highest among developed countries and rising, and pressure is again on the Bank of England to raise the Base Rate of interest from its current 0.5% although the decision last month was to leave it unchanged. Can the Base Rate remain at the historic low of 0.5% much longer?
The main problem with inflation in the Isle of Man is that most of ours is imported. We have to bring in all the fuel to power our cars, heat houses and run our power stations to say nothing of clothing, food; in fact we are net importers of just about everything.
Savers continue to have difficult choices to make about exposing some of their money to investment risk or accepting an erosion in purchasing power.
Cash is most widely known for being subject to inflation risk where over time, its purchasing power is typically eroded by the rising cost of goods and services.
Keeping your money in cash can also result in ‘shortfall risk’, which is the risk of failing to achieve your financial objectives. Over time, cash typically produces the lowest returns of any major asset class. This is the result of the relative security of cash compared to, say, company shares.
Don’t forget ‘Corporate risk’ which is the danger that the bank or building society looking after your cash savings will get into financial difficulties and be unable to meet their obligations. In the IOM, individual savers are protected by the Depositors Compensation Scheme (DCS) which mitigates this risk, up to a maximum limit of £50,000 per saver per institution – but not necessarily within an immediate time-frame.