Retire Invest Winter 2020

This newsletter is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The FCA does not regulate tax advice, so it is outside the investment protection rules of the Financial Services and Markets Act and the Financial Services Compensation Scheme. The newsletter represents our understanding of law and HM Revenue & Customs practice. © Copyright June 2020. All rights reserved © Copyright 26 November Tel: 0800 028 4040 l l WINTER 2020 RetireInvest 4 Finkin Street Grantham Lincolnshire NG31 6QZ t: 0800 028 4040 w: e: RetireInvest Limited is an appointed representative of Quilter Financial Services Limited and Quilter Mortgage Planning Limited, who are authorised and regulated by the Financial Conduct Authority. RetireInvest Limited is ​Registered in England and Wales, No: 09916200. Registered Address: 4 Finkin Street, Grantham, Lincolnshire, NG31 6QZ. » » The importance of diversification » » The pandemic retirement conundrum » » State pension age now 66 » » Focus on year end planning » » Tax deadline in January » » Savers feel the pinch » » Scams on the rise » » News round up IN THIS ISSUE: Child trust funds grow up The first Child Trust Funds (CTFs) have reached their maturity date, but many have been overlooked. The first CTFs reached maturity on 1 September 2020, when their owners turned 18. A government payment of at least £250 was made at birth to a CTF, for children born between 1 September 2002 and 2 January 2011. Thereafter government payments stopped. HMRC had to set up nearly 30% of the 6.3 million CTFs where a child’s parents had failed to open an account within 12 months of the issue of the government payment voucher. The default opening process means that many people have lost track of their CTFs, particularly accounts that just received the initial £250 payment. This has prompted HMRC to set up an online tracing tool as part of its programme to handle maturities which are currently running at about 55,000 per month. A newly adult owner of a CTF has three options when they reach the age of 18: ■ ■ Withdraw the CTF’s value. ■ ■ Invest all or part of the CTF’s value in an ISA, without the payment counting towards the normal subscription limits. ■ ■ Do nothing, in which case the CTF fund will be transferred to a “protected account” where it will continue to enjoy freedom from UK income tax and capital gains tax. CTFs were effectively replaced by Junior ISAs (JISAs) from November 2011 – and there were no more government contributions. JISAs offer the same tax benefits as CTFs and in this tax year have a maximum contribution limit of £9,000. For advice on JISAs and maturing CTFs, please contact us. The plans may have started out for minors, but their rules mean they are not child’s play. B The Financial Conduct Authority does not regulate tax advice. Levels and bases of taxation and tax reliefs are subject to change and their value depends on individual circumstances. Tax laws can change. The value of your investment, and the income from it, can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit with your overall attitude to risk and financial circumstances. Credit: Monkey/Business Images/ HMRC set up nearly 30% of the 6.3 million CTFs where parents failed to open an account with the government payment voucher. Newsletter STRAIGHT TALKING FINANCE Invest Retire