Due to emotional and unfortunate circumstances faced by some of my clients recently, I am drawn back to the importance of a simple document we created some years back, during our Covid lockdowns of 2020, and have recommended that our clients do the same.
Have you made THE folder?
By Chris Webb
This article is published on: 10th July 2024
10.07.24
Most have embraced it, some probably haven’t. Personally, I think it’s of benefit to everybody, but we all have our own ways of doing things. A lot of time and effort went into producing the document, based on previous client experiences, and our own. There didn’t seem to be an appropriate name for it at the time, so we simply called it ‘’The Folder’’.
The whole point of creating your folder is to ensure that there is a record of your assets, your important contact information and plenty more. It is a single file or folder and can be digital or physical. This folder will allow you to detail any important information / assets where it is vital a record is kept. We think we have covered everything and believe this document will make things a lot easier for everybody in many different circumstances.
Recent dealings with my clients reminded me to review my own folder and unsurprisingly there were a few changes to be made………
There are many scenarios where you´ll be thankful for making the folder. When I moved house I went straight to the folder and had all the company’s contact information as well as all the policies or account details which were relevant. This made informing them all much easier. I´ve also lost family members where finding their folder reduced the stress in dealing with their estate. In these moments of stress, you can find yourself trawling through endless pieces of paperwork to ascertain asset and account details, then you get that lightbulb moment…….. why wasn’t it all documented.
And that’s exactly why the folder was created.
Apart from dealing with personal practicalities, like moving house, I believe the folder comes into its element when having to deal with the loss of a loved one. Rather than spending hour after hour trying to unravel their finances, all the information is to hand, in one folder. Having experienced both sides of this situation (one with a folder and one without) I completely understand the additional pain caused by what should have been easy administrative tasks. The folder took most of that pain away. Speaking to some of my clients recently I know they are feeling the same………….
As I mentioned earlier, the folder can be physical or digital. For the physical folder it is vital to only list information that would not create a problem should that folder end up in the wrong hands. So, I have only listed the names, telephone numbers, policy / account numbers of all our assets. It would give enough information for someone to be able to deal with our affairs with minimum hassle.
Some still ask, is it worth the effort?
Well, I think it is. A time of loss can be stressful enough without having to try and piece together the deceased’s financial affairs. This can be a really difficult time for family members. However, preparing the folder is much more than avoiding stress; if you leave behind an administrative nightmare you could delay the access of inheritors or beneficiaries of funds and potentially cost a small fortune in legal fees. Imagine trying to track down investments you have no record of or pensions that may have been held for 50 years or more?
To give you an example of this, the UK Department of Work and Pensions estimate that there is currently more than £400 million sitting in unclaimed pensions pots in the UK. Good luck trying to find out if you have one!
If you´re wondering what to include, the Folder makes that very clear and is simple to follow. It´s essential to list what assets you have, where they are and important contact information for each asset. Keep copies of any insurance policy documents, pension statements etc.
I have put a small list below which would help most people but you do need to look at all your assets individually to make sure the list is as correct as possible
- Personal pension documents
- Employer pension details
- Details of any entitlement to state pensions
- List of bank accounts with account numbers, login details
- Details of any credit cards
- Property, land and cemetery deeds
- Proof of loans made
- Vehicle ownership documents
- Stock certificates, brokerage accounts, investment platform details, online investment account details
- Details of holdings of premium bonds, government bonds, investment bonds
This list is based on my own experiences and those of my clients – you need to be thorough when completing the folder, ensuring nothing is left out.
And don’t forget to review your folder. I will admit to being guilty of not keep my folder up to date and tend to only look at the folder when something significant changes in our lives. It´s easy enough to overlook a change in insurance company or something that at the time doesn’t seem hugely important. I reviewed mine recently and it was just that – small changes to our circumstances, but apart from being hidden deep within our emails there was no other record of those changes.
I would recommend reviewing the folder on an annual basis, but if you’re extra diligent you should review and update every time something changes. For example, if you change insurance companies then add the new details and delete the old. This is a continuous job, its not something you do once and never look at again.
Most importantly – please remember to tell someone about your folder!
Someone needs to know you have made one and whether it´s digital or physical. If its digital they need to know if there´s also a password. Personally, I have sent copies of mine by email to family members, so they have a record of it. They don’t need to know your passwords, just the basics.
Remember, there is very little point going to all this effort if know body knows it exists.
I hope you consider completing your folder. Unfortunately, most people only consider it when they´re trying to deal with a situation and as mentioned, they have that lightbulb moment. Taking an hour out of your time now will save someone many, many hours later down the line.
If you have any questions about The Folder or other aspects of your finances, please feel free to reach out on chris.webb@spectrum-ifa.com
The Financial Review Process
By Peter Brooke
This article is published on: 9th July 2024
09.07.24
… why, what and how …
Whether you are an existing client of mine or not, and following on from my previous article on ‘The Value of Seeking Financial Advice’, I wanted to take this opportunity to go through the steps in our ‘Client Financial Review Process’.
WHY?
Firstly, and most importantly, it’s crucial to regularly check in on your financial journey, ensuring that we’re on track to meet your goals.
Secondly, we have a regulatory obligation to conduct a review at least once per year for all of our clients, whether this is in person or remotely.
Thirdly, we have a relationship which is built on trust and my understanding of, often, very personal details, so a regular catch up is a great way to nurture this relationship and ensure important issues are raised and discussed; and its a good excuse for a cup of tea and a biscuit [even if via Zoom].
WHAT?
A review won’t just be looking at what has happened over the last year but is designed to identify potential financial planning adjustments we might want to make if your circumstances are changing.
The review should, and will, include the following:
- An update of your situation – incomes, bank balances, asset values, expenditures.
- Changes to your situation – retirement, moving house, changing jobs, school fees etc.
- Cash Flow planning update – are we still on target to meet your goals? … “am i going to be ok, and if not what do I need to do to make sure I am?”
- Investment Portfolio performance update – has it out-performed or under-performed the risk ‘benchmark’ we have allocated? If so, why? Are any changes needed?
HOW?
Many of my clients have been through this review process over the years but I have made a few tweaks and so I wanted to take you through the steps.
The biggest change for us is that I will be asking many of my clients to update their situation directly onto the Secure Cash Calc Portal prior to our review, so I have the most up to date information in advance. This will give me a chance to review your situation before our meeting to ensure we get the most from our time together.
Of course it is not obligatory to use the portal as it is not appropriate for everyone, but if you would like to then do let me know.
The following summary explains each step.
Options for you…
The above summary is focused on the normal Face to Face or Zoom meeting review process, but I can also provide your review as an email or I can even record a video presentation of my update on your portfolio and cash flow plan which you are then free to watch at your leisure; then we can discuss any steps necessary and update any administrative requirements afterwards.
Please do let me know if you prefer to have an email or video review?
As you can see, it’s a collaborative process and financial reviews are a great way to check-in on how things are going and where adjustments need to be made, so if your situation changes, please don’t wait for the next review, get in touch and we can review early.
If you have any questions please use the the below channels, or the booking system – always drop me a quick message if you need a time slot outside of those available.
If you have missed any previous emails, click here to access the Archive.
For now, have a great day,
British living in Italy
By Gareth Horsfall
This article is published on: 8th July 2024
08.07.24
In this E-zine I will keep things brief because house work is still ongoing from my end (hopefully completed by the end of July and moving into the new place on the 5th of August). The photo below was taken down the road from the property near a vineyard.
I know many of you already own properties near views very much like this one, or see equally beautiful sunsets, but I thought I would share this as my excitement builds!
Anyway, not wanting to burden you too much with my own personal matter, I came across a few things recently which I thought should be communicated to the British contingent amongst the readers of this article.
The first is an important announcement for anyone who is over 80 years old and a recipient of the UK state pension!
The Department of Work and Pensions is checking to make sure that everyone is still eligible to receive UK state pension benefits, and therefore requires that anyone over 80 years old, of any nationality, and who is drawing a UK state pension, complete a form and have a witness sign it before sending it back signed, in the post!. This is called a life certificate. This is a routine process with which the DWP update their records. (If you have already done this, then you do not need to do it again!)
The number of submitted life certificates so far is lower than the DWP expected and so it has extended its deadline to the 31st of July 2024.
** If the certificate is not provided, it could lead to suspension of UK state pension benefits **
If anyone over the age of 80 and receiving UK state pension benefits has not received a letter explaining this, or has not updated their address details, then the link to do so is here:
https://www.gov.uk/international-pension-centre
Anyone receiving or about to receive UK state pension benefits UNDER the age 80 will be contacted towards the end of this year, therefore you may like to check that the DWP have the correct address on file for you by using the same link above.
Please feel free to share this information if you feel anyone might be affected or just to spread the word.
Brexit – for the Italians it’s all wrapped up!
The next bit of news came from the Agenzia delle Entrate recently. Specifically their notifications page on the telegram app.. They regularly post the latest decisions taken re: specific cases submitted to them (intepelli) and also the latest announcements re: tax and various other bureaucratic measures.
The Italian government has taken the decision to close the ‘Punti Assistenza’ for both foreign investors looking to invest in Italy and also the ‘Info Brexit’ points of assistance. The reason for such a move is that they say they are rarely used. They go on to say, regarding the punto ‘Info Brexit’, that since the UK left the customs union, the Agenzia delle Entrate has provided clarification regarding most issues and hence is closing the Brexit information point.This may or may not be the case, but, certainly, questions remain and it looks like the Facebook citizens group ‘Beyond Brexit’ will be the last bastion of information regarding Brexit issues in the end. I would imagine that the UK Embassy will also be providing little to no support moving forward.
If you want to read the communication from the Agenzia delle Entrate, you can do so at the following link:
Confirmation of EU permanent residence
Charlotte Oliver, of Oliver and Partners legal firm in Rome, also put out a recent communication from the Ministero dell’Interno which has issued guidance to the Comune in relation to British citizens resident in Italy since before 31.12.2020 which marks the end of the Brexit transition period. The Circolare confirms that British citizens are still entitled to obtain a certificate of permanent residence from the Anagrafe (“attestazione di soggiorno permanente“).
In other words, as guaranteed by the UK-EU Withdrawal Agreement, British citizens continue to have the right to obtain a permanent residence certificate (as provided for in the EU Freedom of Movement Directive and article 16 of Italian Law no. 30/2007). British citizens are entitled to this certificate after 5 years of regular and continuous residence in Italy, registered with the Comune, even if part of those 5 years were after Brexit.
You can see Charlotte’s communication and the MInstero documents on her website, at the following link: https://www.oliverpartners.it/confirmation-of-permanent-residence-for-british-citizens/
A Sterling revival?
A nice piece written by Evelyn Partners, one of our asset management partners, was sent through to me on the 28th of June. It may interest you as it describes a possible revival in Sterling’s fortunes.
Some of you might remember the heady days of GBP:EUR (just after the launch of the EUR in 1999 and the uncertainty at the time) at €1.752 reached on the 3rd of May 2000. But, you may also be surprised to know that over the EUR’s 20 year history, the GBP:EUR exchange rate has averaged €.1.33. The lowest, €1.08, reached on 30th of December 2008 (financial crisis – right after the global crash) .
Due to Brexit and the political uncertainty, the average GBP:EUR exchange rate over the last decade has now fallen to €1.20.
So, why the potential revival?
Well, it may not surprise you to learn that it is all about the UK elections, the Labour win and the disastrous time under the Conservatives. (Theresa May, Covid lockdowns, rising energy prices and Liz Truss’s short-lived government).
It would seem that Labour is very likely to try and realign the interests of the UK with its nearest neighbours and Labour may try and negotiate new agreements with the EU to ease trade and the share of technology and other areas. The EU may be interested in the UK’s military equipment and intelligence capabilities, given the ongoing events in Ukraine. The UK may also decide to align with the EU market on food and agricultural products, which may maintain smooth customs arrangements for import and export, but it might be a sticking point because it may mean that the UK becomes a rule taker again rather than rule maker.
Also, the longer the UK remains non-aligned with the EU, the more its businesses are adapting to other foreign markets. The US is now the UK’s biggest customer regarding service led businesses. In reality, though, the service sector is unlikely to interest the EU anyway, because they are able to continue to take away valuable services based businesses from areas which had previously been monopolised by the UK.
This may all be rather positive for the GBP: EUR exchange rate of course, but a lot depends on to what degree Labour will be able to negotiate closer ties to the EU, without breaking the Brexit red lines.
If you are interested in the wider article, you can find it at the link below:
https://www.evelyn.com/insights-and-events/insights/get-ready-for-a-sterling-revival-under-labour/
I have for years now been advising clients to retain any GBP holdings in the currency and invest likewise. It is my long term view that a single country like the UK, will have the ability to develop its markets and economy more dynamically and quicker than a bloc of 27 states who need approval from each (in most cases) to make decisions for the bloc. I am not anti EU by any means, but the political environment in the EU is such that it does not bode well for long-term economic stimulus and development. This will always be a drag on the EUR versus other currencies, and particularly now with the situation in Ukraine and long term inflationary pressures. That all being said the UK will need to go through some soul searching to determine it’s future direction, which may or may not lead to a Sterling revival.
Long-term productivity figures seem to imply that GBP:EUR should be at a natural rate of around 1.2 to 1.25 but that does not take into account political cycles and significant economic events such as Brexit. Markets like stability and until that returns sterling will probably still be in for a volatile ride.
I will be back with more information, musings and ideas when we are installed in the new home, after August 5th, but if in the meantime you would like to discuss any tax or financial planning related issues in Italy then please don’t hesitate to contact me as I will working through the summer.
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The Spanish Capital Gains Tax Trap
By Jeremy Ferguson
This article is published on: 5th July 2024
05.07.24
When to sell your UK home and whens best to move to Spain
It’s a big decision to make, selling up in the UK and moving to Spain, but it’s also a decision that needs careful planning when it comes to making sure you don’t get caught up in the Spanish Tax system unnecessarily.
The best way to explain what I mean is to look at a typical example.
Mr and Mrs Smith decided enough was enough, and they put their home in the UK on the market with the intention that once it sold, they would move to Spain. The house sold to the first viewer for £500,000 in February 2023, with a quick completion needed, so things moved fast. The couple had owned the house since 1980 when they paid £100,000 for it, so a nice £400,000 profit.
If they Upped sticks to Spain in March of 2023, then this could have terrible implications, which many people aren’t aware of. Essentially, in many circumstances (not all, depending on your age etc.), Spain will tax you on the capital gains made on a UK property if you are considered a tax resident in Spain in the year in which you sell the property, even though it was your main residence. This of course is not what we are used to in the UK.
So, in this example, because the couple moved to Spain in March of 2023, they will spend more than 183 days in Spain this year, deeming them tax residents in 2023. Therefore, the £400,000 profit made on the sale of the UK property will first need to be converted to Euros, and then capital gains tax will be applied at a rate of between 19% and 26%, meaning a tax bill due in 2024 of approximately €112,000. Imagine the shock when sitting with your tax adviser in 2024 to file your first Spanish tax returns, and he informs you how much tax you will have to pay.
So this is exactly why careful planning needs to take place when sorting out the timing of your move to Spain.
In this theoretical example, by simply delaying the move until after the summer, then Mr and Mrs Smith will no longer have spent 183 days in Spain in 2023, and will have still been UK tax residents that year. By doing this they will have completely avoided any tax implications here in Spain, a huge saving for them.
So, the cost of a short term rental after selling their home, or staying with family, may seem a bit of a hassle, but it will certainly be worth it in the long term.
There are also other things to consider. Tax free lump sums from UK pensions are taxable here, as are the profits on any ISAs you may have, so it’s not just selling the house that needs careful planning when timing your exit from the UK.
Make sure you leave the UK in the most tax efficient way before starting the next stage of your life here in Spain.
Watch the podcast with Jeremy Ferguson and UPSTICKS.ES below
Financial update July 2024 – France
By Katriona Murray-Platon
This article is published on: 4th July 2024
04.07.24
During one of the presentations that we received in January at our annual conferences, we were told that this year 40% of the population would be going to the polls. Now, with Macron’s decision for an election, that figure has increased to almost half the world’s population.
Having already voted in the European elections earlier in June, I will now be voting in both the French elections at the end of June and the UK elections in July. Three elections in the one year! The first round of the French elections was on Sunday 30th June and the second round on the following Sunday, 7th July.
What does this mean?
Well, notably it means that any law reforms that had been going through the French parliament have now been suspended. What will be on the parliamentary agenda will be determined by whichever party gets the majority.
So far the markets seem to be less interested in the elections and more interested in the decisions of the central banks. With the European Central Bank reducing its interest rate by 0.25% on 6th June 2024, all eyes are on the Fed and the Bank of England to make a decision about their rates in the coming months.
As from 1st July 2024, Autoentrepreneurs carrying out a non-regulated ‘liberal’ activity under the micro-BNC regime will have to pay increased social contributions. The rate will increase to 23.2%.
Come the autumn months we will have to pay taxe foncière and taxe d’habitation for those with second homes. These taxes increased by 7.1% last year because of inflation and they are predicted to increase again this autumn by 3.9% due to the reassessment of the rental values. There may also be an additional increase if the local authorities of towns of more than 100,000 inhabitants so decide, which will be 1.2% on average.
From 31st July and until 4th December, you will be able to amend your online tax declaration on the impots.gouv.fr website if there is any information you missed out or you realised there were mistakes made but you were just trying to submit the return before the deadline.
Your tax statements will be available over the summer from 24th July and end of August. If you have paid too much tax, your statement will be available between 24th July and 2nd August online or between 24th July and 29th August by post. If you still have some tax to pay after your monthly contributions your statement will be available online from 26th July and 2nd August or by post between 25th July and 23rd August. If you opted not to receive paper statements, you will receive an email letting you know that your tax statement is online.
If you have less than €300 to pay in tax, this amount will be taken on 25th September 2024 but if you have more than this, then the payment will be spread out into 4 payments taken 25th September 2024, 25th October 2024, 25th November and 26th December 2024. You will continue to pay your normal monthly tax payments on 15th of each month but these will be adjusted as from September.
July is a busy month for me as I still have a few review meetings to do before the summer holidays. So please do use this time to get in touch if you have any questions or any matters you want to address before the summer.
I shall not be doing an Ezine article in August but instead will look forward to bringing you all the latest financial and tax news in September!
Best wishes,
Katey
Mortgage interest rates in Spain
By Spectrum IFA
This article is published on: 27th June 2024
27.06.24
Mortgage Interest rate update – June 2024
On June 8th, the European Central Bank (ECB) announced the decision to lower interest rates, from 4.5% to 4.25%. It was as expected, with the institution itself pointing out for months in advance that June would likely be the time for a change.
Companies and governments will be able to continue financing themselves at a lower cost, having adjusted to interest rates that have reached their highest levels since 2001. The announced cut is of course marginal, especially in comparison with the dramatic increases from zero in July 2022 to 4.5% in September of last year – two years during which the cost of financing skyrocketed and banks turned off the credit tap.
Inflation is now showing signs of subsiding. The ECB’s objective was to cool the economy in order to stop the upward spiral in prices, and it seems to have succeeded – the inflation rate in the Eurozone reached a maximum of 10.6% in October 2022 and currently prices are growing at a more subdued rate of 2.6%, according to May data. At this level, it is close to the ECB target of 2%. The rate cut is designed to lower borrowing costs, thereby encouraging consumer spending and business investment. This increase in economic activity is expected to help balance inflationary pressures and move us further towards the ECB’s inflation target.
The Eurozone has recently been experiencing a noticeable slowdown in economic activity. Additionally, geopolitical tensions and trade uncertainties have exacerbated these economic challenges, prompting the ECB to act. This move aims to address the Eurozone’s slowing economic growth and persistent inflation concerns, reflecting the ECB’s strategic role in supporting economic stability. And, although economic growth has been anaemic (barely 0.4% in the euro zone in 2023), the ECB may have saved the economy from recession, understood as two consecutive quarters of negative growth.
ECB President Christine Lagarde indicated that the ECB is prepared to implement further measures if necessary, depending on future economic direction. The central bank will continue to closely monitor key economic indicators, such as growth rates, inflation trends, and external economic factors, to guide its policy decisions. Mortgage interest rates in Spain have started to fall, which is good news for borrowers, but there is no certainty on the timing or the scale of future rate cuts.
Should you have any enquiries regarding the content of this article, or any other questions relating to mortgages in Spain, please do not hesitate to reach out to us for further information.
Patricia Nadal: spain@spectrum-mortgages.com
Buying your dream home in France – webinar
By Peter Brooke
This article is published on: 20th June 2024
20.06.24
WATCH THE WEBINAR HERE
I have worked with many of the panelists for a number of years and their knowledge and experience is valuable to me and my clients; so if you are looking at buying and/or relocating to France then please join us for this live webinar.
Our experienced panelists are here to discuss all nature of topics to do with buying and relocating to France:
Karen Tait – Webinar host
Peter Brooke – Wealth & tax planning from The Spectrum IF Group
Joanna Leggett – French Property Expert from Leggett
Jonathan Watson – Currency Expert from Lumon
Paulette Booth – Banking and insurance expert from AXA
Tracy Leonetti – Visa & paperwork expert from LBS
Sharon Revol – Mortgage expert from Cafpi
Financial update June 2024 – France
By Katriona Murray-Platon
This article is published on: 5th June 2024
05.06.24
Tax season is pretty much over for another year, and by the time of publication most of the deadlines for filing will have passed. However, if you have an accountant who does your tax return they will usually be given extra time to file the returns. If you submitted your own return but have questions about whether you did it right and would like to speak to an accountant about it, you should try to speak to them late June, early July or early September to submit an amended return.
May is always a busy month for me, not least because of all the tax enquiries. However I also found time to write an article on French pensions. If you haven’t seen it already you can find the link here (https://spectrum-ifa.com/french-pensions/). If you have any questions on this article or your French pensions in general please do let me know
People often ask me whether they have to send in documents with their tax return or whether they are likely to get asked about what they have entered. The fact of the matter is that very often the tax office only really focuses on the tax returns of the very high earners (income tax, wealth tax, inheritances etc…). The French tax office generally go after the biggest fish, notably those with an income of over €1million per annum or gross assets that are subject to wealth tax of more than €6.9 million. However if you do start to do a wealth tax return you may find that your local tax inspector will take more of an interest on this one.
In 2020 there were a lot of people who, after many years of holidaying in France and owning a property here, decided to be considered resident in France before the Brexit deadline of 31st December. For wealth tax purposes you are exempt from declaring your worldwide assets for the first five calendar years of your residency. Unfortunately, even if you arrived late in 2020, this would still be considered your first calendar year. This means that as from 2025, if your world wide assets are worth more than €1.3million as on 1st January 2025, you will have to do a wealth tax return next year. You only have to declare your property assets, irrespective of where they are in the world. If you have money in investments or assurance vies, these are not included in your wealth tax return.
At this time last year, after having completed our tax returns, we still had to do the property declaration. This was an online declaration. Now, almost a year later, the tax authorities have produced a paper format of the declaration. You can download the paper form here https://www.impots.gouv.fr/formulaire/1208-od-sd/declaration-doccupation-des-locaux-par-le-proprietaire or some tax offices may have copies available if you cannot print it yourself.
Every year I get a lot of people contacting me about Trusts. Many years ago I wrote an article on Trusts which you can find on our website (https://spectrum-ifa.com/trusts-and-french-residency/). I have not updated the article because the law has not changed a great deal on this subject and much of the information is the same. If you are the trustee, settlor of beneficiary of a trust and you are resident in France you have to declare the existence of the trust using the form Trust 1 (https://www.impots.gouv.fr/formulaire/2181-trust1/declaration-de-constitution-de-modification-ou-dextinction-dun-trust).Then every year you have to declare the value of the Trust as at 1st January of each year using the Trust 2 form (https://www.impots.gouv.fr/formulaire/2181-trust2/declaration-annuelle-de-la-valeur-venale-au-1er-janvier-des-biens-droits-et-)
The deadline for filing the annual value declaration, which must be sent to the Non-Residents tax office, is 15th June.
Finally, for those with Pru assurance vies or those thinking of investing in a Pru Assurance Vie, on Tuesday 28th May 2024 the Prudential Assurance Company (PAC) board reviewed the Prufund Expected Growth Rates (EGR) as part of the quarterly review process. The Expected Growth Rate (EGR) is the forward looking element of the Prufund smoothing process.
For this quarter the EGRs of the Prufunds in our assurance vie products remained unchanged. The Unit Price Adjustment (UPA) part of the smoothing process, which is a backward looking element, and which is formulaic and non-discretionary are also reviewed quarterly. This quarter there was an upward UPA for the Prufund Growth USD fund of +2.71%.
If you have any questions on any of the matters mentioned above please do get in touch. I would be happy to arrange a phone call, video meeting or in person meeting to answer your questions or review your financial situation.
The Value in UK National Insurance Contributions
By Chris Eaborn
This article is published on: 4th June 2024
04.06.24
If you have lived and worked in the UK and have paid National Insurance Contributions (NICS) you may be able to buy top-up years for missed years from 2006 onwards. It will depend on where you are currently living, but it can be beneficial to secure all or a portion of the UK State Pension, which is currently £221 per week.
To qualify for a minimum UK State Pension you must have 10 qualifying years. For example, if you worked in the UK for five years, you would not qualify for a pension but you can buy five years of contributions (or for an even higher pension entitlement, the full eighteen years’ worth since 2006!) and you will receive a minimum State Pension which is currently £63 per week.
The numbers could be compelling as if you have to pay Class 2 voluntary contributions you would pay a one-off £819 (5 x £163.80) to take you to ten years of contributions and receive an indefinite pension in your retirement of what today is £63/week (£3,276 per year) compared to nothing at all! And even if you have to pay the higher Class 3 contributions you would pay £4,121 as a one-off to receive (at today’s levels) an annual pension of £3,276 per year for life from UK State Retirement Age.
You can check your National Insurance record here:
https://www.gov.uk/check-national-insurance-record
To qualify for a full pension depends on various factors that the HMRC will calculate for you.
You should urgently complete a form CF83 as there is a significant backlog for the response from HMRC with your calculations, and the deadline for making voluntary payments is 5th April 2025.
Form CF83 can be found here: https://assets.publishing.service.gov.uk/media/65a4e2117eb42e000dceb7ab/CF83.pdf
If you have any problems completing it, the telephone number for HMRC is +44 191 203 7010 and after the prompt you should say “International Case Worker” for the correct department.
The form gives you a choice of whether it is to request information about only buying back missing years, or only paying voluntary contributions in future years, or both. I was advised by the officer I spoke to that the maximum contribution required for a full pension varies (and you will be advised) but is typically 35 years.
There is no benefit to overpaying. For example, a young person working overseas who plans to move back to the UK and pick up paying NICS again, may not need to contribute for missing years if the time overseas is relatively short and they are likely to contribute at least the number of years to qualify for a maximum UK State Pension in the future.
Form CF83 must be physically posted to HMRC so we recommend registered mail of an international courier service such as DHL, FedEx, etc.
The cost of the additional contributions depends on whether you have to pay Class 2 or Class 3 contributions. Class 2 contributions are £163.80 per year and Class 3 are £824.20 per year. The HMRC report will tell you the cost and the resulting benefits and you can decide if you think the benefits outweigh the costs.
Clearly, there is no perfect calculation because you don’t know how long you will live after reaching UK State Retirement Age, but if the cost of topping yourself up looks reasonable it could be a helpful part of your retirement planning, especially if you live long into retirement as this will boost your “guaranteed” income.
**Finally, please note that this article is for information only and is subject to change. Please relay on the calculations by HMRC. Information as of 29th May 2024.
If would like to discuss your retirement planning with one of our experienced advisers, please do not hesitate to get in touch.
Moving to pastures new
By Gareth Horsfall
This article is published on: 3rd June 2024
03.06.24
“Nothing is constant but change”
– Heraclitus
(“One cannot step in the same river twice”)
You might be wondering why I have started this E-zine with one of my favourite quotes? Well, you may or may not know that I have been living in central Rome for the last 20 years of my life, between Trastevere, Campo dei Fiori, the Pantheon and for the past 8 years in Prati. I feel like I have been living a real Roman Holiday!! This is also my 50th year on this planet (how time flies) and I will be celebrating my birthday at the end of July.
Some of you may know that I whilst I do love Rome, I have become a bit of a moaning bore about the city of late. The tourism since 2019, and especially after Covid, has gone crazy. The city has always been pretty disorganised and dirty (the lack of respect for the city drives me mad!) but I have put up with it because I get to live in Rome!
However, in the last few years I have been yearning to get out into pastures new, somewhere with greenery and birds tweeting in the morning rather than the sound of traffic and wheely trolley tourism (a term coined by a client recently, one which made me laugh a lot because it’s so true – thanks Bec!).
There was always the possibility of moving out of the direct centre of Rome, in a more quieter area, but the areas we would like to go are either too expensive or badly connected and so choosing to lead a life stuck in traffic or up to my eyes in debt didn’t seem so appealing.
But the city angst was always about me rather than my family. My wife is a self confessed city girl and she can’t imagine a life without cinemas, theatres, restaurants and bars on the doorstep. My son, at 14 years old might have trouble if he were to relocate from Rome, but he is finishing terza media this summer and so Heraclitus might be right with the timing.
I had actually told my wife a few years ago that I could see myself living in Rome until I reached the age of 55, and when Alexander turned 18, then I would need to move out of the city and into the countryside somewhere. She wasn’t convinced back then to which I replied, ‘well that’s OK. You can have a small place in the city and I will have a small one somewhere quieter and we can meet up in the middle’. That’s been a kind of running joke because we did actually try and make a break for it just after Covid when we found 2 properties we liked in and around Cortona and made offers on each, only to be rather disappointingly used to bump up offers for other prospective buyers.
Anyway, that put us off the move and it worked quite well because my son enrolled in a school in Rome and my wife got a job at the Chicago Loyola University of Rome as the lead psychologist/wellness person.
However, my dreams of living outside Rome did not quell and I found that Facebook has loads of properties in the country for sale if you join enough groups and click enough links. The power of social media being that when it knows what you are interested in it just starts firing lots of options at you. The ones I liked I would send to my wife who, I joked would, in a very ‘Tinder dating’ kind of way ( not that I have ever used Tinder I might add !) swipe right for no and swipe left for yes. In about 2 years I don’t think there was even one left swipe but there was engagement and that was the thing.
Fast forward to Thursday 9th May 2024 and I finally achieved my goal and in fact we signed the ‘rogito‘ on a house in Amelia, Umbria ;about an hour north of Rome on the motorway. A property which is independent (no more condominio problems) and is surrounded by its own olive grove and fruit trees.
I have to recount the story about the olive trees though! I have never held great aspirations to do the raccolta delle olive although I can’t deny that having your own olive oil must be a great thing, I have to admit it looks like a lot of hard work. So, the property we bought, with 140 olive trees, seemed attractive because the owner had an agreement with a local coperativa who tended the land, did the tree cutting and did the raccolta but took half the oil and gave you the other half.
Now, that sounded like my kind of arrangement! Then 2 weeks out from the rogito we were told that the coperativa no longer want to do it because they have enough land to deal with already.
So Oct/Nov 2024 could be an interesting time! That being said if you are looking for oil you know where to find it!
One of the old ‘secolari‘ olive trees on the land, probably a few hundred years old.
Thankfully I made friends with the neighbour who is a farmer and he told me not to worry as he knows loads of people he can ask who will help out.
I love the countryside already!
On the subject of olive trees they have also given me a great opportunity for work. I had decided in 2024 that I was going to start doing more video content and just putting out short video content of subjects that come up regularly and which I could talk about quickly and then upload to either Youtube / Instagram or other social media platforms. One of my issues with doing these videos is that I like to be out of the house when I do them. I hate just sitting in front of the computer and doing a video, instead I prefer to be out in the open space and talk, walk, stand…whatever takes my fancy.
But, I have one slight handicap: for some reason I just can’t seem to do my videos when I have people looking over my shoulder or listening in!
I like a bit of peace and quiet (I would make a rubbish influencer!).
But, the olive trees have now given me the best back drop ever (they also don’t talk, although they may listen!) and I will be relaunching my videos with this following logo.
So, as per most properties in rural Italy it needs some work and is currently undergoing building and ripristino work. Structurally the property is sound and so it just needs bathrooms doing, walls painting and bringing up to date as it was last renovated in the 1990’s, that being said it does hide a magical jewel. It’s own very private, yet consecrated catholic chapel.
We are told that underneath the more modern exterior of the house there is an old church from the 1600/1700’s which the local monks used to pass by and pay penitence at the windows of the chapel. The knee imprints can still be seen in the travertino stone underneath the windows. A beautiful story to uncover in time.
Lastly, the exciting thing for me is the land that comes with the house. Finally some green! No more staring at cement and tourists. I must say that although I do love Rome (resident population 2.8 million, expected tourist numbers in 2024 -19 million, expected tourist numbers in 2025 [Giubileo Vaticano] – 35 million), based on these kind of numbers it seems to be the right moment to go.
Of course our Italian friends are horrified and jealous at the same time. They admitted that they would be petrified to live outside the city. That living in amongst the neanderthals, ogres and in the great unknown which they only visit en-mass on Sundays when they want some fresh air and when everyone else is going – safety in numbers – is a big no-no. Yet, some of them have openly wish they had done it themselves and they would have loved to try a similar life. For us, its probably not a forever place, although I am sure it will grow on us and we will never want to leave but we understand that life throws curveballs at you and never say never. For now, its a long term project to bring the land back into the shape and for me to save 4 old ‘secolari’ olive trees which I discovered the other day all covered in ivy and with other plants growing all around them.
I know this E-zine is a little bit off my usual subject but I wanted to write to explain why I have not written an E-zine in the last month or so and to share this journey and excitment with you. Getting the bank to agree a mortgage and then agreeing terms with the ex-owner was, as it always is in Italy, a stressful task. I am now following workmen which is equally stressful but I am determined to keep an eye on them like a hawk, and hopefully learn a few things in the meantime. And so we can move in July, when planned.
It goes without saying that once set up fully (probably after the summer) that you are more than welcome to visit and see the place for yourself if you are down this way, meet for work purposes or just to pop in and say hello. I would be more than happy to see you there. I will be with my new fast Starlink internet connection and so be connected although in the blissful countryside, for those who can’t make it in person but who would still like to hook up online.
For now, I hope you enjoy the fotos and I will be in touch again soon with more financial and tax planning ideas for your life in Italy, and small updates on the state of the house.
If you want to know more about me or the things I do then just click here