Article by Mhairi
We believe that making sure you receive family financial advice is important.
In fact, it is so important that we only provide advice to both partners whether a couple is married or not. This is called holistic advice which looks at the whole financial picture. That doesn’t mean that partners can’t have their own money. It means that we can provide the most tax efficient family financial advice by knowing about all the family’s assets.
It could make your wealthier as well! Research by Rathbones found that by coordinating their finances couples could find themselves up to £2 million better off over a 20-year period. (This was based on maximum annual contributions of £60,000 a year plus paying an extra £20,000 into a spouse’s pension).
Now were not claiming to be able do the same, but you can read about Rathbones analysis here.
Not every advice firm takes this view about the value of holistic advice. In fact, most don’t sadly.
Strange because according to LV 50% of couples say that share the financial decision making. But, of those couples without children, twice as many keep their finances separate despite the risk of losing out on tax efficiencies.
Advice legacy important
Research from Blackrock found that 80% of widows left their financial advisor within the first 12 months. Simply because they felt that the advisor only dealt with their husband and had no time for them. Tragic really. That never happens to us because we are always advising both parties and satisfying both their objectives.
In the survey less than 20% said that they thought their children would use their adviser. Again, we’d hope this wasn’t the cases. In most instances for example, we’ve dealt with the family estate planning requirements and often act as an executor to help families navigate their inheritance from the beginning.
Plus having an existing advisor is an advantage these days. Figures show that the number of Family Financial Advice firms has fallen by 15% over the last two years. Especially smaller firms with less than five advisers. It is often the small firms who have the longest and strongest client relationship as well.
Crypto tax crackdown on the way
With the crypto tax crackdown looming, family financial advice for the younger generations is increasingly important. The Crypto Asset Reporting Framework (CARF) came into force on 1st January this year. The new framework legally requires all crypto service providers including brokers and exchanges to report all their client transactions to HMRC. This is a worldwide project designed to crack down on crypto tax evasion. There are massive penalties for those who don’t comply.
From January 2027 HMRC will receive the data for all 2026 transactions. So crypto holders need to prepare for tax demands from HMRC including penalty interest if gains have not been disclosed. This new system has been badly needed to put crypto gains in the same bracket as other mainstream investments.
This will have wide ranging consequences with over 7 million people in the UK thought to hold some form of crypto. HMRC have taken the view that tax on crypto should be paid wherever the owner is resident for normal tax purposes.
In the UK this means that crypto gains are subject to Capital Gains Tax (CGT). The calculation is going to.
Be a simple sum (buying price minus the selling price equals the gain subject to tax). Although in some cases if there is evidence of trading, gains may be subject to income tax. Crypto holdings will also qualify for Inheritance Tax (IHT) calculations.
HMRC are encouraging people to make a declaration of unpaid tax sooner rather than later. To do this they can use the Digital Disclose Service online, which allows 90 days to make the correct declaration. Otherwise, harsher penalties would apply. There is no doubt that many people will be caught out by these new disclosure requirements, as HMRC forecasts that it will collect over £300 million in crypto tax revenues.
Retirement Planning help
Family financial advice will also help the younger generation with their retirement planning. Hargreaves Lansdown found that only 40% of under 50’s understood their retirement options. This means that 60% or more are in danger of making poor decisions because of a lack of understanding.
For example, simply underestimating life expectancy and the budgeting needed around that. Standard Life found that 90% of people underestimated their life expectancy. For a 66-year-old man the average is now 86 and for a woman 88.
Families with an adviser don’t face this problem.
Get more information.
If you are looking for family financial advice, then why not contact Christina today. She offers a free initial meeting to discuss your requirements and explain how our service works. You are under no obligation to use us after that if you don’t want to and we won’t pester you.
So why not call us today on 01282 614444 or e mail us enquiries@ccfps.co.uk or use our contact form online.
