Category: news
Guide: Your complete guide to buy-to-let
Buy-to-let properties can provide an additional income stream and help you to support your goals. As a result, becoming a landlord is something you may have thought about.
For example, you may want to purchase a buy-to-let property to diversify your assets or provide children with an inheritance. One of the most common reasons is to fund retirement.
However, it’s also common to have concerns about buy-to-let. You may worry about understanding the regulations and tax requirements if you become a landlord.
If you’re thinking about investing in a property, there are some important things to consider first. This guide explains some of the essential things you need to know, including:
- How a buy-to-let mortgage works
- What taxes you may need to consider as a landlord
- How to reduce tax liability
- What to consider when you’re choosing a buy-to-let property
- And more…
Download your copy of ‘Your complete guide to buy-to-let’ to learn more.
If you have any questions about the contents of the guide or would like to discuss your buy-to-let plans, please contact us.
7 important things to know if you’re a trustee
As a trustee, you may be unsure about what your responsibilities are and the steps you need to take. If you’re acting as a trustee, here are some of the essential things you need to know.
Being a trustee means that you’re taking responsibility for money or assets that someone, known as the “settlor”, has placed in a trust for someone else, known as the “beneficiary”. You may have to make decisions about how the assets are used or when they are distributed.
There are many reasons why someone may set up a trust. It can be an efficient way to pass on wealth, create a family legacy, or give assets to those who cannot manage them themselves, such as children. Perhaps you’re also thinking about setting up a trust to pass on or protect your own wealth.
So, if you’re acting as a trustee, here are seven essential things you need to know.
1. The decisions you make must be in the best interests of the beneficiary
As a trustee, you must act in the best interests of the beneficiary. This means you must consider their needs, as well as the trust agreement, when you’re deciding how to use or distribute the assets.
If you don’t act in the beneficiary’s best interests, you could be taken to court and face penalties. As a result, it’s a good idea to keep records of your decisions and notes of the reasons why, if necessary.
It’s important to note that you won’t be liable if the value of the assets falls, as long as you acted in the best interests of the beneficiary. So, if you invested the assets in a risk-appropriate way and the value of the investments fell, you would not face penalties.
2. You won’t benefit from the trust yourself
Unless the trust specifically makes provisions for you, you won’t benefit from the trust yourself. This means you cannot take an income from the trust for the work you’re doing.
However, you can claim some expenses. You must incur these costs through your responsibilities of managing the trust. Again, you should ensure you keep clear records of any expenses you want to claim.
3. You should read the trust agreement carefully
How much freedom you have when making decisions will depend on the type of trust and the trust agreement the settlor has written.
If you’re managing a discretionary trust, you will usually be able to use your own judgement when deciding how and when to use the assets. In other cases, the settlor may have left instructions or imposed restrictions that you’ll need to follow.
The trust agreement will set out what you can and can’t do, so it’s something you should read carefully and refer back to when making decisions.
4. You may be responsible for paying tax the trust is liable for
Some trusts are liable for tax, and as a trustee, you’ll need to understand what tax is due and ensure it’s paid.
Depending on the assets held in a trust and their value, a trust could be liable for Income Tax, Dividend Tax, and Capital Gains Tax, as well as others. However, there may be allowances you can use to reduce the tax bill.
Understanding the tax liability can be complex but it’s a crucial step if you’re to avoid unexpected bills. We can help answer your questions.
5. You may need to register the trust
From 1 September 2022, many trusts in the UK will need to be registered with the Trust Registration Service. As a trustee, this will be your responsibility.
All “express trusts” in the UK, whether or not they are liable for tax, must be registered unless they’re on the exclusion list.
An express trust is created by a settlor, including those created in a will, rather than those created through a court decision or the law. As a result, it’s likely you will need to register the trust you’re responsible for.
6. You will be responsible for keeping track of records
Keeping track of records is an important part of a trustee’s role, from showing any tax liability to how you’ve distributed assets. This evidence can be invaluable if there are ever any disputes with the beneficiary and for tax purposes.
You should keep the necessary records for at least six years, but it’s a good idea to keep them as long as possible.
7. You can ask for advice
Managing a trust can be overwhelming and a lot of responsibility. Remember, you don’t have to do it all alone and you can seek advice when you need to.
Speaking to a legal professional about what decisions you can make can put your mind at ease. When you’re making financial decisions, a financial professional can also give you confidence that you’re making decisions that are appropriate for the beneficiary.
If you’re a trustee and have questions about your role or would like to set up a trust yourself, please contact us.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate trusts or estate planning.
Business owners, is poor financial wellbeing among your employees affecting operations?
Research suggests that many employees feel like they’re not receiving enough support to improve their financial wellbeing. It could affect business operations, and cost you money too.
Financial wellbeing isn’t just about income. It covers things like financial literacy, confidence, and having a good relationship with money. As an employer, you can do several things to help your staff feel more in control of their finances and future.
1 in 5 employees say their employer isn’t doing enough to support their financial wellbeing
Amid concerns about rising inflation, 19% of employees feel like their employer isn’t doing enough to support their financial wellbeing, according to CIPD research.
The report found:
- 1 in 8 employees say their pay is not enough to support an acceptable living without having to go into debt to pay for essentials like food and utility bills.
- 27% said their pay is not enough to cope with a £300 emergency.
- Less than half (47%) said their pay is enough to help save for retirement.
Worries about money and long-term financial security can affect mental health, which can affect your business’s performance too.
An Aegon white paper suggests that poor financial wellbeing among employees is costing UK employers £6.2 billion a year. This represents the cost of absenteeism and presenteeism due to financial anxiety.
45% of employees said that financial worries cause them to feel anxious, which led to them taking time off work or being distracted when they’re in the workplace.
Creating a financial wellbeing programme for your business could mean your employees are happier and more confident, which could boost your operations. It can also make your business more attractive when hiring talent in a competitive market.
6 practical steps you can take to support financial wellbeing among your employees
Investing in a financial wellbeing policy is worthwhile.
The CIPD research found that 81% of employees whose employer has a financial wellbeing policy said it’s important to them that any future employer has one in place, so it’s a valued step.
In addition, these employees were far more likely to say their employer does enough to support their financial wellbeing and provides a good level of benefits.
If it’s something you’d like to put in place, here are six steps you could take.
1. Schedule regular reviews and create progression plans
While salary isn’t the only thing that supports financial wellbeing, the research shows that it’s important to employees.
Having regular employee reviews where salary may be discussed can help employees bring up worries they may have and show how they’re providing value to the company through their performance. While you may not be able to meet all salary expectations and goals, being able to have a conversation can be useful.
Making a clear progression plan, which could lead to a salary increase, can also motivate employees and mean they have more confidence about their future.
2. Take the time to explain your workplace pension
The research found that many employees are worried they’re not doing enough to save for retirement.
As most employees benefit from being auto-enrolled into a pension, taking the time to explain how it works, including what you’re contributing, tax relief, and how it’s invested, can be valuable.
Some of your employees may not realise how much is going into their pension or understand how it’ll add up over their working life.
3. Effectively and regularly communicate the benefits you offer
If you offer employee benefits, make sure you show these off and regularly talk about them. Whether it’s a salary sacrifice scheme that can make childcare more affordable or discounts for high street stores, it can be easy for employees to forget about these perks.
Effectively communicating what you offer can highlight how you’re supporting their wellbeing and mean employees are more likely to make use of them.
4. Consider how you could support long-term financial wellbeing
As budgets tighten, many people are worried about how they’d cope if they faced a financial shock. You may already have policies in place to support employees if something happens.
For example, do you offer an enhanced sick pay policy, paid bereavement leave, or group life insurance? Benefits such as these can support long-term security and mean employees feel less worried about uncertainties in the future.
5. Signpost where employees can turn if they’re worried
At difficult times, when struggling with debt or managing their household budget, for example, your employees may benefit from seeking support.
Signposting where trusted advice can be found can be useful and provide someone for them to talk to if they’re not comfortable discussing concerns at work. StepChange can offer advice about managing debt, and many other charities can help people who are struggling.
6. Work with a finance professional to support your employees
If you’d like help creating a financial wellbeing programme to support your employees or want a finance professional to help them understand how they can get the most out of their income and assets, we could help. Please contact us to discuss your needs.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.