Le Tour de Finance in Spain
By Spectrum IFA
This article is published on: 9th May 2014
Le Tour de Finance arrived in Spain on the 5th May in Girona, Catalona. After further events in Mallorca and the Costa Blanca Le Tour is now ready to move eastwards to France.
Commenting on the 3 events in Spain, Jonathan Goodman from The Spectrum IFA Group said “We’ve seen an increase in attendance in Spain with some really great input from the attendees. The range of expert speakers has been wonderful and from general feedback, the events have been a massive success”.
Le Tour de Finance is now preparing for the French leg with a total of 9 locations being visited from the end of May and then into June. If you’re interested in joining us for any of these events, please contact us to find a location near to where you live.
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Lifetime Allowance changes and ‘Fixed Protection 2014
By Chris Burke
This article is published on: 18th March 2014
This year the Her Majesty’s Revenue and Customs (HMRC) are lowering the UK Pensions Lifetime Allowance amount. This is the maximum allowance the HMRC grant to each individual to hold as a UK pension without incurring any extra tax charges. Previously, UK residents receive tax relief on the contributions made into a pension up to £1.8 million in 2010/2011 before it was reduced to £1.5 million in 2012. The HMRC has changed this twice over the last 8 years bringing the allowance down each time, from £1.8 million in 2010/2011 to £1.5 million 2012. The government agency is enforcing a further reduction to £1.25 million this coming year.
Any amount above the lifetime allowance is liable to 55% taxation when withdrawn as a lump sum, or 25% taxation when withdrawn as a pension.
It is important that those affected by this change apply for ‘Fixed Protection’ before 6th April 2014. A successful application allows the pensioner to maintain their lifetime allowance of £1.5 million as opposed to a reduced £1.25 million commencing from 6th April 2014.
A successful application for Fixed Protection in essence allows a pensioner to withdraw savings worth up to £1.5 million without paying the lifetime allowance charge which will soon affect all pensioners with more than £1.25 million across their schemes.
Firstly note – you cannot apply for ‘fixed protection’ 2014 if you already have ‘primary’, ‘enhanced’ or ‘fixed’ protection.
Secondly, you will lose fixed protection 2014 if:
a) You join a new pension scheme – unless you’re transferring pension savings from one of your existing schemes into the new scheme.
b) You build up new benefits in a defined benefits or cash balance pension pot above a set amount – enquire for further details.
c) You start saving in a new pension pot either under an existing pension scheme or a new pension scheme.
d) You have a contribution paid to any of your money purchase pension pots.
Links:
Apply for Fixed Protection 2014 at: http://www.hmrc.gov.uk/pensionschemes/fp14online.htm
Calculate if Lifetime Allowance affects you at: http://www.hmrc.gov.uk/tools/lifetimeallowance/index.htm
Are you a Spanish tax-resident for tax purposes
By Chris Burke
This article is published on: 5th March 2014
If you are currently living in Spain, you would assume that you would also be a Spanish tax resident. That is not always the case. The underlining rule is that if you live more that 183 days of the calendar year in Spain then you are deemed to be tax resident also. Although this is usually the deciding factor there are exemptions to the rule. If the ‘centre of your interests’ is arguably in the United Kingdom, Her Majesty’s Revenue and Customs (HMRC) could reason that you are responsible for tax there, not Spain.
Where is your ‘centre of interests’? Well, you could quite conceivably spend most of your time in Spain whilst still having a house in the UK, a business or job based in the UK, children in school in the UK and/or a spouse in the UK. If all these were the case then you would almost certainly be UK resident for tax purposes. You would also be liable to tax in Spain (in theory) if you spend more than 183 days here. In practice there is however a ‘double tax treaty’ in existence between the UK and Spain which ensures you do not have to pay tax twice as a result.
If you currently reside in Spain and the majority of your ‘centre’s of interest’ are (in Spain) then you will be deemed as a tax resident by the Hacienda (the Spanish tax authorities) and liable to pay taxes on your assets world-wide.
The Spectrum IFA Group Expands in Madrid, Spain
By Spectrum IFA
This article is published on: 3rd March 2014
The Spectrum IFA Group are delighted to announce that Conor MacSherry has joined Chris Webb in the Madrid office.
Conor has worked in Financial Services for 27 years covering all aspects of protection, mortgages, investment and retirement planning. Through many years of management roles covering sales, development, compliance and consultancy, Conor has always maintained his authorisation to deal with and look after his clients directly.
As well as being a fully qualified Financial Adviser, Conor holds a B.A. Degree in Business Studies, a Diploma in Management Studies and a Masters of Business Administration.
Commenting on this recent appointment, The Spectrum IFA Group’s Chairman Michael Lodhi explains that “The group has been expanding within Europe over the past few years and it is clear that our services are badly needed by the expatriate community. This recent appointment under pins The Spectrum Group’s commitment to extend our range of services and add further advisers in Europe to provide expatriates with professional financial advice”.
You can contact Conor directly here
Brandeaux February Update 2014
By Chris Burke
This article is published on: 25th February 2014
Brandeaux February Update 2014
Brandeaux Student Accommodation Fund (Sterling) Limited
Brandeaux Student Accommodation Fund (Multi Currency) Limited
Announcement
Further to the recent press speculation, the Brandeaux Student Accommodation Fund (Sterling) Limited and the Brandeaux Student Accommodation Fund (Multi Currency) Limited confirm that they are continuing to actively review various options with the aim of creating liquidity for their existing shareholders. The options being considered include a potential initial public offering of the assets of the Brandeaux Student Accommodation Fund (Sterling) Limited. The consideration of an initial public offering is at an early stage and there is no certainty at this time that this option will be pursued.
A further statement will be made as and when appropriate.
The above is an extract from Brandeaux on the February update of their suspended funds. In many cases we will be able to help you if you have money frozen in these funds, please contact one of our advisers to find out more
Written by: Chris Burke based in the Barcelona/Costa Brava area
If you are based in that area contact Chris at: chris.burke@spectrum-ifa.com
If you are in another area please complete the form below and we will put a local adviser in touch with you.
Investments can have too much structure
By John Hayward
This article is published on: 24th February 2014
What are structured products?
Structured products are usually set up as an investment of a lump sum in exchange for a return based on the performance of an underlying index such as the FTSE100. They are arranged as fixed term contracts of, normally, 5 to 6 years although some can pay out earlier under certain circumstances. They can be bought from a variety of sources and are particularly popular with banks.
Structured products could be suitable for someone who is willing to buy and hold, understanding that if markets fall sufficiently, then the return could be less than what was paid in. Some structured products offer capital guarantees. This ´promise´ of the return of your initial investment can be somewhat veiled in that the guarantee could be based on the particular underlying index not falling below, say, 50% of its starting level. For example, the initial investment is made and the FTSE100 and that point stands at 6000. 5 years later, the end of the contract, the FTSE100 is at 5700. In this case, the client would receive the full initial investment even though the index level has fallen. Some suggest that the FTSE100 falling by 50% is not likely thus selling the product as risk free. The FTSE100 certainly has fallen by more than 50% in the past (eg. 1999 to 2003).
The people offering any guarantee could be a third party. This is where we have another level of risk, known as counter-party risk. If the third party fails then the guarantee could be worthless.
Another risk is people wanting to access their money before the fixed term is up. The problem is that these products often have no secondary market which could mean you may not be able sell it without suffering a significant loss.
As with all types of investments, there are varieties on a theme, some suitable, some not, depending on one´s risk profile. Complete understanding is essential from the outset.
For more information on how we can protect your savings whilst offering low risk, liquid investments, contact one of our advisers.
Brandeaux Suspended Funds Update
By Chris Burke
This article is published on: 19th February 2014
The following is an extract from Brandeaux on the latest update of their suspended funds. In many cases we will be able to help you if you have money frozen in these funds, please contact me below to find out more:
Chris Burke
Partner
Office; 34 936652828
Mobile; 34 689915730
chris.burke@spectrum-ifa.com
Ground Rent Income Fund Limited, The Ground Rent Portfolio Limited Ground Rent Portfolio Plus Limited (the “Ground Rent Funds”)
Brandeaux Dual Asset Fund (Sterling) LimitedBrandeaux Dual Asset Fund (US Dollar) LimitedBrandeaux Dual Asset Fund (Euro) Limited(the “Dual Asset Funds”)
Brandeaux Student Accommodation Fund (Sterling) LimitedBrandeaux Student Accommodation Fund (Multi Currency) Limited(the “Student Funds”)
(and together the “Brandeaux Funds”)
The Ground Rent Funds
Update on sales The Brandeaux Update of 26 September 2013 reported that the Ground Rent Funds were in negotiations on sale transactions representing approximately 80% of the total value of the ground rent properties.
Brandeaux is pleased to report that property sales to release approximately £173 million of liquidity available for shareholders have now been achieved representing approximately 37% of the total remaining assets of the Ground Rent Funds. The sale prices for these properties are in line with the directors’ expectations as communicated in our last Brandeaux Update of 26 September 2013 and therefore there is no change to the current share price of any of the Ground Rent Funds.
The potential buyer for the remaining properties that we reported in our September Update as being at an advanced stage failed to complete the purchase in the agreed time frame. This was unexpected and disappointing, but the continuing interest that has been shown in these properties is very positive and a reflection of their inherent value. Brandeaux has recommenced marketing of these properties and will report progress as it develops. In addition, Brandeaux is actively marketing two remaining portfolios and has received significant interest.
Future of the Ground Rent Funds Given the desire that has been expressed by investors in the Ground Rent Funds to realise liquidity, and following the positive results achieved in property sales so far, the directors of the Ground Rent Funds have resolved to market and sell all the remaining properties within the Ground Rent Funds. Once completed, the intention is to wind-up the Ground Rent Funds.
The directors do not wish to wait until winding-up the Ground Rent Funds is completed before releasing to shareholders the proceeds of the sales achieved thus far and so, after allowing for ongoing operating cash requirements and transaction costs, it is intended that the net proceeds will be released to shareholders as quickly as possible. It is presently anticipated that this will take place early in the New Year.
In view of the intention to wind-up the Ground Rent Funds, the directors consider that the best way of ensuring that all shareholders benefit fairly from the liquidity created by the sales is to make compulsory pro rata share redemptions to all shareholders. The effect is that every shareholder will
receive a proportion of the available liquidity based on their current percentage shareholding. The directors have written separately to all shareholders in the Ground Rent Funds to provide further details of the arrangements, process and timing of the redemptions.
The directors will keep under review the progress of further sales and whether further redemptions can be made as further property sales are achieved prior to the commencement of the winding-up process. It is not possible to say definitively when further property sales will complete and, therefore, when the winding-up process will commence. However, the directors are taking steps to progress these matters as quickly as possible while at the same time preserving shareholder value.
The Dual Asset FundsThe Dual Asset Funds, which are shareholders in Ground Rent Income Fund Limited (as well as in Brandeaux Student Accommodation Fund (Sterling) Limited), will receive their share of the net proceeds of the Ground Rent property sales as these are distributed. The Dual Asset Funds will distribute their share of the proceeds of each redemption to their own shareholders on the same basis as the Ground Rent Funds, namely by way of a compulsory pro rata share redemption to all shareholders. It is intended that this will be carried out promptly following the share redemptions by the Ground Rent Funds. The effect is that every shareholder will receive a proportion of the available liquidity based on their current percentage shareholding.
The directors have written separately to all shareholders in the Dual Asset Funds to provide further details of the arrangements, process and timing of the redemptions.
Future of the Dual Asset Funds The Dual Asset Funds were created to give investors exposure to both the Ground Rent and Student Accommodation asset classes within one fund. Once the Ground Rent Funds are wound-up, the Dual Asset Funds will no longer be invested in both asset classes. The directors therefore intend to wind-up the Dual Asset Funds in due course. In order for this process to be completed it will be necessary for the Dual Asset Funds to first realise their investment in Brandeaux Student Accommodation Fund (Sterling) Limited and then distribute the proceeds to shareholders. Accordingly, it will be necessary for liquidity to be achieved in the Student Funds before the Dual Asset Funds can be wound-up.
Important information for IFA’s who have clients invested in The Ground Rent Funds and the Dual Asset Funds through institutional platformsThe shareholders of the Brandeaux Funds are the institutional platforms that hold Participating Shares in these funds. Brandeaux does not have details of any underlying investors (neither their names nor bond numbers) and are unable to identify their individual holdings. IFA’s should contact the relevant platform for information concerning queries from their clients, and the process and timing of distributions from the platforms over which Brandeaux has no control.
The Student Funds The directors are actively continuing the process for the creation of liquidity for shareholders through property sales and other means, although the timeframe remains, at present, uncertain. A number of discussions have taken place over the past six months and the directors are actively looking at various alternative ways to create liquidity for investors but at this time there is nothing further to report.
A further update will be sent when there is information of significance to report.
16 December 2013
This Update is for information purposes only and is not intended as an offer or solicitation to anyone in any jurisdiction in which such an offer or solicitation is not authorised, or to any person to whom it would be unlawful to make such an offer or solicitation. Persons who receive this Update are required to inform themselves about and observe any such restrictions and should seek professional advice. This Update should be read in conjunction with the Funds’ Articles of Association and Private Placement Memoranda. Information and representations herein are based on information available at the date hereof, and are, therefore, subject to change. In particular, past returns are not a guide to future returns and the value of shares may go down as well as up. Moreover, returns in non-sterling denominated shares classes may increase or decrease subject to currency fluctuations. Brandeaux calculates its returns net of Brandeaux charges. This Update is distributed on behalf of Brandeaux Managers Limited by Brandeaux Administrators Limited, Brandeaux House, 13 Upper Mount Street, Dublin 2, Ireland, which is authorised and regulated by the Central Bank of Ireland under the Investment Intermediaries Act, 1995.
QROPS and EURBS – Common questions asked
By Chris Burke
This article is published on: 23rd January 2014
As a specialist in UK and Irish pensions, here is a list questions I’m often presented with on QROPS and EURBS. If any of these apply to you, do not hesitate to get in touch for a consultation, free of charge. chris.burke@spectrum-ifa.com
UK Pension Transfer or ‘QROPS’ – what does it mean?
A Qualifying Recognised Overseas Pension Scheme (QROPS) is a pension scheme transferred or opened outside the UK that meets requirements set by HMRC in the United Kingdom
If I eventually plan to return to the UK, what would this mean for my Transferred Pension?
If you intend to return to the UK permanently or to work, your Transferred Pension will become subject to the same regulations and tax treatments as a UK domiciled pension. It may then make sense to move it back to the UK as a ‘Self-Invested Pension Plan’ (SIPP) for efficiency.
However, if it is your intention to move back to the UK in the future then it is usually inappropriate to transfer your UK pension to a QROPS.
I might want to change location, will this affect my Transferred Pension?
If you live or work in another country, for example you move from Spain to Switzerland, your overseas pension will stay in the jurisdiction it was set up in. You can continue to make contributions regardless of what country you are living (remember though that if you move back to the UK, your pension will be bound by UK pension regulations). You can receive income and contribute to your Transferred Pension in any currency; so even if you move to several different locations, you can still use your Transferred Pension (QROPS).
If you are taking income and then move to another country, the amount of income tax you pay would vary from country to county.
What currencies can I have my UK Pension in once it is transferred?
Your plan can be denominated in Sterling, Euros, US Dollars, and many other currencies on request. Should it be beneficial to you, the currency can be changed at any stage cost effectively.
I have a UK state pension scheme, is it possible to transfer this also?
It is not possible to transfer a UK state pension overseas – UK transfer applies to your corporate and private pension schemes only.
If I have already taken an annuity, can I still transfer my UK pension overseas?
No, it is no longer possible to transfer your UK pension if you have already taken an annuity.
Do I still need to purchase an annuity once my UK pension has been transferred overseas?
No, you do not need to purchase an annuity once you have transferred your pension overseas.
How much does it cost to transfer my UK pension and set up a Qualified Recognised Overseas Pension?
QROPS costs differ depending on the scheme, location and the service level that you require. The main costs you will be looking at are the initial set-up fee and an annual management fee. They are generally slightly more expensive than a UK pension for the first 5 years and then on a par.
Can I manage the assets within my Transferred Pension myself?
It depends on the provider you decide on – some allow you to manage your own assets, while others insist on managing them for you. We suggest you use a financial adviser for guidance, even if you wish to manage your pension assets yourself. Contact us for more information.
What assets can be transferred to a QROPS?
Most UK pension schemes, and the underlying assets, other than the UK State pension can be transferred overseas (as a QROPS). We recommend an independent evaluation of your schemes to find out which are eligible. Contact us for more information.
Can I keep the same pension funds in my UK pension?
Potentially yes, it is possible to transfer your funds ‘In Specie’ meaning you keep the existing funds and investments from your UK pension.
Can I transfer more than one UK pension overseas into a QROPS?
There is no limit on how many pension transfers a QROPS may receive provided that each scheme relates to the same member. Overseas pensions are a good way of consolidating and managing several schemes in to one.
Is there a minimum transfer value to transfer my UK pensions?
We generally suggest that the combined value of pensions transferred into an overseas pension (QROPS) should exceed £50,000 as an absolute minimum for the scheme to be beneficial to the member. However in the majority of cases it is more appropriate for the final transfer value to exceed £75,000.
When can I access my UK pension?
The retirement date for a transferred pension can usually be any time between the member’s 55th and 75th birthday. Different QROPS jurisdictions may have slightly different age limits, ie Malta’s top age limit is age 70.
Can I still contribute to my transferred pension?
You can receive income and contribute to your Transferred Pension in any currency; so even if you move to several different locations, you can still use your Transferred Pension (QROPS).
How much of the fund can I take as a lump sum?
At the member’s nominated retirement date it is usually possible to take up to 30% of the value of the fund as a lump sum. The lump sum must precede the pension and is a one off payment. For members who have been non-UK resident for less than five full, consecutive tax years the maximum will be 25% of the fund transferred from the UK.
How is my pension calculated?
The basis for the pension withdrawal is calculated using the limits defined by the UK Government Actuaries Department (GAD) tables. . The GAD rates are dependent on your age and the 15 year Gilt rates. Then the maximum income allowable is 120% of this GAD rate. This is in line with the UK drawdown rules. In all cases, the maximum pension level will be reviewed at least every three years and after the maximum age of 70 or 75, depending on juridiction, it will usually be reviewed yearly.
How will my pension be taxed once outside the UK?
As long as there is a Double Taxation Agreement the income is paid Gross and then you are taxed in the country that you are resident in via your tax declaration, again each QROPS jurisdictions rules will vary slightly. In essence you should be no worse off than if you were receiving the pension in the UK or maybe even better off.
What if I die?
Depending on where your next of kin resides then the QROPS can either be paid out in its entirety or be structured so it rolls into a trust for the benefit of your next of kin.
Who will receive my pension when I die?
Your designate as beneficiaries, or, according to your Last Will and Testament.
Can I transfer my UK pension into a QROPS myself?
No. Only appointed intermediaries are allowed to do a QROPS Pension Transfer. This is because you need to have expert advice on this as well as the paperwork being intensive.
I don’t have all the details regarding my UK pensions, what can I do?
With some basic information we can trace most pensions.
How do I know if my UK Pension Transfer scheme is HMRC approved?
The current list of eligible QROPS Pension Transfer schemes can be found here: http://www.hmrc.gov.uk/PENSIONSCHEMES/qrops.pdf
How does a QROPS work?
In effect it is similar to a UK pension except it’s held in a trust, which reports to the HMRC each year to confirm your pension is safe and adhering to the rules.
What UK pensions can be considered for a Pension Transfer?
- Personal Pensions
- Final Salary Pensions
- Money Purchase Section 32 and Section 226
- FURB/URB
- Civil Service & Armed Forces
- Protected Rights/GMP
When should I not transfer my ‘frozen’ pension?
Each instance varies and you will require the advice of a pension professional. Contact us.
What is the minimum age I can draw benefit and how much?
From age 55 year you can take up to 30% lump sum of your fund. 70% minimum, remaining funds need to provide ‘income for life’.
Spectrum Economic Forum Davos 2014
By David Hattersley
This article is published on: 20th January 2014
Having spent four days on a wonderful Spectrum IFA Group Annual Conference I have now had time to read again the scripts of the presentations and reflect on their impact on investment strategies. Apart from the fact it was by consensus of the other Partners one of the best conferences to date, helped by the friendliness of the staff at the Sheraton Hotel, and the stunning location, the presentations by the investment managers we use were of great interest.
When you consider the diversity of styles and approaches from the likes of Jupiter, BlackRock, Henderson / Gartmore, JP Morgan and Kames, it became very apparent that they all held similar views with regard to the markets and the potential area’s for growth for 2014 and beyond. This was enforced by a question and answer forum near to the end of meetings with all of them present to answer a variety of questions. The major message was that any investment holding substantial cash was no longer an option both now and for the foreseeable future. Whatever a client’s attitude to risk was, and their requirement for either real income, capital growth or both, a solution was available. But rather than a single asset class, spread of assets on a global basis was vital, and that was the key message that came out.
It was also of interest talking to the CEO of Prudential International, Michael Leahy , not so much about investment, but his view of the future for Prudential as a company and why. In some ways it matched the views of the fund managers, still focusing on the developed world e.g. the UK, but expanding, in Europe where opportunities existed, the Far East and other global opportunities.
Finally it was good to have a presentation from “Best Invest”, voted by the readers of Investors Chronicle, the UK Wealth Manager of the year and Best Wealth Manager for Investments in 2013 by the Financial Times. They can provide a solution for those clients of ours that may be returning to the UK or who are not resident in Europe, but work abroad, have holiday homes here and hold ISA’s, PEP’s and need advice on their UK pensions if a QROPS is unsuitable.
After all the hard work, it was great to wander through the snow, take in the bracing fresh air and explore Davos, with its variety of bars and restaurants. It was also interesting to see how the arrival of the World Economic Forum transformed and affected such a small resort. As a non-skier, and I am pleased I am a non skier having seen how steep the slopes were, it was more relaxing for me. Next year we are off to Bordeaux, warmer climes and although Swiss Air was brilliant, a pleasant drive there is already being planned.
Will Spain be moved by Brussels?
By John Hayward
This article is published on: 28th December 2013
We are at the end of 2013 and after all the festivities some people have the less than happy task of making tax and asset declarations. From the 1st January 2014 to 31st March 2014, residents of Spain will be wondering if they need to complete the Modelo 720 Overseas Assets Declaration. In 2013 there was an immense amount of uncertainty for both those having to declare and also for the accountants who had to work out how to complete the Modelo 720. It seemed that each day a new “Frequently asked question” would appear on the Agencia Tributaria website. The deadline of 30th April 2013 was also part of the revisions having initially been set at 31st March. From 2014, the deadline is 31st March, unless this is revised again.
In the background there have been pressure groups attempting to persuade the European Parliament that this law is discriminatory and that the Kingdom of Spain is acting illegally. Full details of the complaint. The problem is that, as with other complaints made to the European Parliament, Commission, or Court of Human Rights, the speed of response, if any, is pedestrian. Take the Land Grab law. Spain and Valencia have been reprimanded but it seems nothing has actually changed. In my village, a new property development law was introduced in 2004 which would see 30 or so property owners having to pay for a new infrastructure and lose part of their land as well. This is still law although it is unknown when the development will be started. Not soon is the standard guess.
The fact is, as much as some might feel aggrieved about some laws in Spain, they are unlikely to go away. Some believe that Spain might be shooting itself in the foot if it thinks that charging people more is going to encourage people to stay. For example, inheritance tax, which was of little or no significance for residents of the Valencian Community due to a 99% reduction for those who qualified, was increased on 6th August 2013. Other autonomous regions will also be taking steps to balance the books. News of bad weather in the UK, The Netherlands, or Germany may not be sufficient to hold onto foreign residents.
How can The Spectrum IFA Group help you? We do not recommend money is invested in Spanish institutions other than small amounts on deposit for regular short term expenses and needs. Why? Firstly, because we do not have enough confidence in them and, secondly, because we have a wider selection of products at our disposal, especially for Spanish tax residents. Therefore, we can deal with overseas insurance companies and investment houses without your money being in Spain. At the same time, the investments are 100% tax compliant in Spain.
The main areas we look at are UK Pensions and the suitability of transferring these funds to a QROPS (Qualifying Recognised Overseas Pension Scheme). I hold the Chartered Insurance Institute Specialist Pension G60 qualification. Every company discussing pension planning and transfers should have this or its equivalent. In addition we help people to accumulate more from their money, allowing access to income in a tax friendly manner. We use Spanish Compliant Bonds for residents of Spain.
Under the Modelo 720 Overseas Asset Declaration, neither a QROPS, which can hold a Spanish Compliant Bond, or a Spanish Compliant Bonds held outside a QROPS, is declarable. In addition, we can arrange your investments so that there is a reduced, and possibly no, inheritance tax to pay by your dependants or beneficiaries.