“Nothing is constant but change”
– Heraclitus
(“One cannot step in the same river twice”)
Moving to pastures new
By Gareth Horsfall
This article is published on: 3rd June 2024
03.06.24
“Nothing is constant but change”
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
UK Inheritance tax
By Dennis Radford
This article is published on: 21st May 2024
21.05.24
Baby boomer homes will have to be sold off in a “fire sale”
I wrote in a recent article about the disadvantages of holding excessive real estate in one’s investment portfolio. I highlighted a few issues around costs and illiquidity along with more recent poor performance, and the need to hold liquid investments that can be passed down outside of your estate.
I was therefore interested to read, in a recent article in the Daily Telegraph, about the subject of ever increasing Inheritance Tax liabilities being suffered by so called ‘Baby Boomers’.
Referring to the article by Rob White of the Telegraph –
Baby boomer homes will have to be sold off in a “fire sale” as their families are hit by unaffordable inheritance tax bills, wealth experts warn.
Baby boomers will pass on £1.2 trillion in inheritance over the next few decades. But a combination of property values and a lack of preparation could leave their loved ones in financial peril at the very height of their grief.
UK Inheritance tax (IHT) can run into hundreds of thousands of pounds and must be paid within six months of death. Unless the deceased left enough behind in savings, their cash-poor descendants could be unable to afford their own inheritance.
Experts believe this could lead to a flood of homes hitting the market, as the next generation is forced to sell the family silver and take “punitive” loans to pay huge tax bills they were completely unprepared for.
As Britain’s troops came home from the Second World War, expanding the population was probably just a by-product of the first thing on many of their minds. Back home after six years of battle and bloodshed, they were finally reunited with the loved ones they left behind and the lives they’d put on hold. The next three years heralded a birth rate not seen on our shores since the early 1920s. Over a million babies arrived in 1947 alone as the baby boomer generation was set firmly in motion.
Around one in four are thought to be millionaires, while last year estate agent Savills found that over 65s hold around 43% of housing wealth. Their children could inherit £90bn in the next decade alone and there are fears that passing on such substantial estates could lead to unintended consequences, both for those they loved the most and the country as a whole.
IHT in the UK is now a 40pc “death tax” charge on someone’s estate.
Everyone gets an allowance of £325,000 before anything is due, with the possibility of another £175,000, known as the nil-rate band, if you’re bequeathing a property to your children or grandchildren.
There’s nothing to pay on what you leave to a spouse or civil partner and, even if you’re widowed when you die, your late partner’s allowance can still be used. However, 40pc of anything you inherit above your allowances must go straight to the taxman. Neither allowance has increased since 2020 and they’re both frozen until at least 2028. There were hopes Chancellor Jeremy Hunt would scrap IHT in this year’s Budget, but he didn’t.
As a result, HMRC is already reporting that families handed over a record £7.5bn in IHT last year – an increase of £400m – and forecasts suggest it could rise another £2bn before 2030.
The amount of IHT paid by families is climbing rapidly.
Experts fear this is all combining to create a major problem for the UK housing market.
When someone dies, the executors of a will have to apply for probate to legally deal with the estate. However, it often isn’t granted before IHT becomes due. Although you can pay it with cash from the estate, such as the deceased’s savings, you cannot sell their assets before probate is granted.
This can mean people are not only forced to sell, they’re also pushed into taking expensive, long term loans until completion – all at a time of mourning.
Harry Bell, of wealth managers Charles Stanley, said: “Being an executor is not an easy job and it’s very stressful. Often, they’re the children of the deceased, so they’re already in a fragile and difficult position and are constantly reminded they’ve lost a loved one.”
“To add insult to injury, the IHT bill has to be paid within six months and probate usually takes longer than this. This often means money must be borrowed at punitive rates to cover the bill. If there isn’t enough cash in the estate, investments and property will have to be sold to cover the bill. This can be a long process, all while the funds borrowed are accruing more punitive interest.”
Chris Rudden, of investment platform Moneyfarm, said: “The average 35-44 year old has less than £7,000 in savings and they’re the first generation that’s poorer than the one before.”
“Property prices are generally very high now, particularly in the south, where there are 600,000 properties over £1m. If you’ve suddenly got £100,000 IHT to pay and only £20,000 in the bank, it’s not going to get you very far.”
“Many, many estates will have one of these properties, possibly even two, and would be way above the threshold with other assets. A lot of the next generation don’t have the money sitting around to pay the tax, so they may have to sell the assets they’re inheriting.”
“That will negatively affect house prices, both for those selling and those not. We saw in 2008 and 2009 what falling house prices can do, particularly in the US. Either the Government will change the policy on IHT, or people may have to foot the bill for something they can’t afford.”
“We could be looking at a property fire sale and the next generation is sleepwalking right into it.”
Please get in touch if you would like to discuss tax efficient investments that can be left to your loved ones and beneficiaries outside of your taxable estate.
The risk of negativity and diversification
By Jozef Spiteri
This article is published on: 20th May 2024
20.05.24
The information within this article is for information purposes and is not to be construed as investment advice or recommendation. Please consult with your investment advisor before making any type of investment.
Each year we are exposed to at least one event that can have an effect on our savings and investments. You may not be old enough to have been around in the ‘good old days’ when there were world wars, and life expectancy of 20 years less than now, but the world has never been short of diseases, viruses, strikes, politicians making crazy decisions, and conflicts, and these can influence the value of our money.
It is not really important for us all to understand the complexities of the different types of investments but it is vital to understand that no investment is immune to short term problems. It is also important to appreciate that, generally speaking, short-term problems should be treated with a long-term view. That is, they should be ignored in the most part. There have been many occasions where some financial experts have been so far off the mark with their forecasts which has created unnecessary losses for those with a tendency to panic.
Speaking of experts, we leave it to those professionals that we associate ourselves with to select the best asset types for our clients’ circumstances. The amount in each asset type can depend on general trends and, although they can buy and sell funds and shares on a daily basis, discovering a trend after one day is pretty tricky.
Of course, headlines get into our heads and we might make decisions that we later live to regret. By employing experts, who in turn will be diversifying your investment funds, you limit the downside when markets, rightly or wrongly, go down, whilst making the most of positive times. As mentioned, we have seen investors lose out because they sell up due to headlines that actually have had no effect on their money. Since the invention of the internet, and certainly since the majority of the planet has been able to use it, the pace of information supply has increased dramatically and, consequently, has affected investment markets. We no longer have to wait for Speckled Jim the carrier pigeon to arrive or sit on a beach looking for a bottle with a message in it. For some older readers from the UK, 50 years ago their knowledge of China may have extended to ordering Special Fried Rice from the local takeaway menu. Now China is one of the major players in the world economy having opened its doors to economic globalisation in the 1970s. We know, today, about events that happened in China, today.
Reducing exposure to negative headlines will help avoid emotionally driven investment decisions that prove to be mistakes. Having an addiction to watching, listening to, or reading the news is not helpful.
Having a financial goal helps to combat the problems we all face. If we understand how much money we need or desire, and when we would like it, this will keep us on track and enable us to bat away any doom and gloom. We often meet clients who are nervous about investing for the future having had issues in the past. Our role is to provide our clients with solutions and a service that are not mind boggling and actually simplify their lives, thinking about the future as well as the present, and to be there whenever our clients need our help.
The Spectrum IFA Group Limited is licensed to provide investment services, under the Investment Services Act, by the Malta Financial Services Authority.
The facts about Domicile
By Portugal team
This article is published on: 19th May 2024
19.05.24
Domicile is a highly complex area of law and one which many misunderstand. For British nationals here in Portugal, it is a key factor in the application of UK inheritance tax (IHT) and often one that is incorrectly planned for.
What is domicile?
Firstly, domicile is not residency and they should not be confused. Domicile broadly determines IHT and residency determines income and capital gains tax.
There is no official definition of domicile (which only adds to the complexity) but a very loose definition is ‘where you have a permanent home’. However, just because you have moved to Portugal, established residency and a home here, it does not automatically change your domicile status.
Domicile is a subjective concept that is usually only challenged once you are gone, so planning correctly during your lifetime and leaving the right evidence behind for your executors is crucial if you intend to make a non-UK domicile claim.
How is it determined?
You can only have one domicile at a time and there are several types, the most relevant for expats are ‘origin’ and ‘deemed’.
‘Origin’ is acquired at birth, usually from your father and is never fully lost. It can be suspended by acquiring a new domicile of choice, but it is adhesive and will revive if the new domicile is lost. For example, if you moved to Portugal and satisfied a domicile of choice of Portugal but then moved to France, your UK domicile would revive on the move to France, and you would have to wait and satisfy the requirements again to shed your domicile of origin again – even if you never set foot in the UK again.
Acquiring a domicile of choice involves forming a clear and fixed intention for a new country to be your permanent home and therefore requires permanent residence.
Effects of changing domicile
The worldwide estates of UK domiciles are assessed for IHT in the UK, even if you live elsewhere. This is assessed at 40% tax above the threshold of £325,000 per person.
For non-UK domiciles, only UK-based assets are subject to UK IHT e.g. UK property or company shares. Non-UK domiciles also have a £325,000 exemption per person to set against any UK situ assets.
How to change domicile
The burden of proof lies with the person claiming the change and the standard is particularly onerous.
There is no checklist and your circumstances are looked at as a whole. Some factors that might be considered are family and business ties, location of friends and social interests, location of assets, acquisition of citizenship or languages spoken.
Traps and mistakes to avoid
Non-domiciles by choice with a UK domicile of origin must be very careful with return visits to the UK, especially if they have a second home there.
Incorrectly using IHT shelters such as QNUPS. These are intended to provide pension-saving provisions for non-UK residents but are often misadvised. Therefore, if HMRC deems it has been set up for tax-saving purposes rather than pension income provision it is likely to fail. Some ways these are open to failure are if you have ‘too much’ wealth in there and it is clearly too much to support the level of income you require for retirement, holding the majority of your wealth within QNUPS, or holding assets that cannot provide that income e.g. art or non-let property, just to name a few. HMRC are vigilant so careful planning is required.
Usually, any challenge will come after your death, and it is up to your personal representatives to prove your intentions in life and gather evidence – which may not be possible, so you must ensure your record-keeping and evidence is strong.
French pensions
By Katriona Murray-Platon
This article is published on: 17th May 2024
17.05.24
Many people come to France for “la belle vie” in retirement, but a large number of us (myself included) moved to France way before retirement and have even spent several years working in France contributing to the system here. Therefore when it comes to retirement, in addition to any other state or private pensions, we will need to apply for our French pension(s)..
Since 2017 the procedure to apply for your French pension has been simplified. You make one application and all your pensions from the various pension organisations will be paid to you. However, in practice things may not always go as smoothly and there have been numerous complaints from those trying to claim their French pensions.
No matter how long you have worked in France, or which pension body you have contributed to, you can consult your pension rights on this website www.info-retraite.fr. This is the website that you need to use to apply for your pension. You can also download from this site your pension entitlement statement. If you are getting close to retirement it may be advisable to download this document and keep a copy of it in your paper or computer files as it is updated each year so it is important to check it every year. The website may not take into consideration any years that you have worked in other countries in Europe, so you may need to email them to ask for more detailed information showing all the countries you have worked in.
If you can see that any periods of work in France have not been recorded, rather than asking for them to be investigated, it is better to ask whether you can buy any trimestres. By doing this, the pension authority will then have to investigate whether you can in fact buy any trimestres or whether you are fully up to date on all the periods you have worked.
Since 1st September 2015, is has been possible to obtain a provisional payment of your French pension even if your application is not “complete” and then have your pension recalculated once you have been able to provide the missing information. To do this you must apply for the pension four months before the planned date of retirement.
It is important to plan ahead and start the process of applying for your French pension 4 – 6 months before your intended retirement date. By requesting your retirement this will prompt the pension authority to start to calculate all the periods you have worked and what you may be entitled to.
If you have lived in France for any amount of time you know how it is important to have the necessary documentation ready. With some French authorities I have found that they may request documents you have already sent, so make sure you have several paper copies or scanned copies on your computer ready to send off.
If you do not think that the amount is correct you have five years to get any unpaid amounts paid to you, and if you have any issues with your pension authority you should contact them directly. You can usually do this by email or on your online account messenger service.
If you are not satisfied with their response there is a mediation service available. You have 10 days for an urgent request, 40 days for non urgent requests, which may be extended to 90 days in more complex cases, and two months to apply to the Commission de Recours Amiable (CRA). If you are still not satisfied with the decision you can apply to the Defenseur de droits.
For those whose deceased spouse worked in France they may be entitled to a French widow/ers pension. Like other pensions, this should also be paid to you within four months of the date of application. However, this pension is means tested according to your annual income so you may find that you don’t qualify for it.
It is important to plan ahead and there are many things you can do at various stages:
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- Throughout your working life in France, keep all paperwork. As cumbersome as this may be, it is important to keep all payslips, pension letters, social security payment statements, as you may need them when you apply for your pension.
- From age 50, if you haven’t already created and consulted your account on the www.info-retraite.fr website, now is the time to do it. You should regularly download the career statements and save a copies. Sometimes any missing periods may appear on earlier statements but not on later statements.
- From age 55, you can request pension simulations. The closer you get to retirement the more accurate these simulations are likely to be.
- Once you reach 61, think about working part time from age 62 as a progressive retirement and look at buying back any missing trimestres. You have to buy back the trimestres before going part time. Once you start receiving your pension you cannot buy back any missing trimestres.
- 4-6 months before your retirement date, start applying for your pension.
Can an employer force you to retire?
Strictly speaking an employer cannot force you to retire before you are 67 years old. If you want to retire before this date you have to request to do so and comply with the requisite notice period. Only when you are over 70 can an employer require you to retire without consulting you. Between 67 and 70 they can retire you, but only if you agree to leave. It is better to be asked to retire rather than voluntarily taking retirement since the statutory amount of retirement benefit is higher than the voluntary retirement benefit when it is the employee that requests it. You may have even more favourable provisions in your Convention Collective. This retirement benefit is exempt from income tax (except the higher amounts) whereas the voluntary retirement benefit is taxable in the same way as your salary.
For any questions about your pensions or planning your retirement, please do get in touch.
Living in the Algarve Free Seminar Event
By Portugal team
This article is published on: 8th May 2024
08.05.24
The event on 23rd May, at the Vila Galé Tavira Hotel is the tenth of a series of seminars that are planned to take place along the Algarve. Organised by the Open Media Group, the Living in the Algarve events provide an excellent opportunity for anyone who is planning to either move to the Algarve or buy a property in the region.
All you need to know about Living in the Algarve
The speakers and event partners are all seasoned experts and local residents who will be on hand before and after the seminar presentations to answer any questions you may have.
When: 23rd May – The two seminar sessions will be held, at 11am and 3pm with identical content, so please choose whichever time suits you best and register for your seminar seats.
What you can expect to learn from our seminar sessions:
- Practical information about living in the Algarve
- How Portuguese taxation can effect you as a foreign resident
- Information about residency (especially for UK and other non-EU nationals)
- An update on the Non Habitual Residency
- Legal aspects about buying a property
- Information on the property market
The above are just a few of the subjects that will be covered. We look forward to seeing you there!
Alpine Property Live Webinar Series
By Alan Watson
This article is published on: 7th May 2024
07.05.24
Buying your dream home in France
Join our on-line seminar
Talk to the experts and have YOUR question answered
Wednesday 15th May – 7pm – 8pm CEST
Our highly experienced panelists are here to discuss all nature of topics to do with buying and relocating to France.
Submit the questions you would like covered so we can make this time as valuable as possible. It is important to do this at least 24 hours before the start of the webinar to ensure we have time to cover as many topics as we can.
We all need somewhere to live
By Dennis Radford
This article is published on: 6th May 2024
06.05.24
Owning our home is generally considered to be a good idea.
It provides us with creature comforts along with a sense of security, particularly in our retirement years.
Is investing in ‘bricks and mortar’ a good idea?
Perhaps not, if you are selling a UK property whilst resident in Spain, as I am currently.
Apart from capital gains tax considerations and selling costs, a recent BBC News report says:
House prices fall as lenders raise mortgage rates in the UK
House prices fell in April as potential buyers continued to face pressure on affordability, according to Nationwide. The UK’s largest building society said that UK house prices were down by 0.4% compared with the previous month, with the average home costing £261,962 (some 4% below the peak of summer of 2022). The rising cost of borrowing is a key factor behind the recent drop in property values.
Rock-bottom rates long gone
Mark Harris, chief executive of mortgage broker SPF Private Clients, said, “There are likely to be ups and downs in mortgage pricing in the weeks and months ahead, but ultimately borrowers will have to get used to paying more for their mortgages as the days of rock-bottom rates have long gone.”
This is the second consecutive monthly fall in UK house prices, according to Nationwide’s data. Factors influencing regional property prices vary widely across the country, but the national headline figures have been downward. This data is based on the building society’s own mortgage lending, which does not include buyers who purchase homes with cash, or buy-to-let deals. Cash buyers account for about a third of housing sales.
On an annual basis, the pace of house price growth slowed from 1.6% in March to 0.6% in April
You can read the BBC News article in full via this link https://bbc.in/4a0GXfO .
The article highlights the risk of being overexposed to property in your investment portfolio.
Just when you want to cash in, market conditions may not be favourable.
And you cannot usually sell part of a property – it is an all or nothing transaction.
A well-diversified global investment portfolio is a different proposition altogether. It provides access to a range of valuable growth opportunities, it is constructed to ensure your personal risk profile is at the centre of your investment strategy and it can be highly tax efficient for UK expatriates living in Spain.
Please feel free to contact me for more information about this subject or to book a call for an informal chat.
I feel sick that I am not going to the Caribbean and Patagonia…
By Barry Davys
This article is published on: 3rd May 2024
03.05.24
How would you feel knowing that your hard-earned savings could be earning 9.6% pa for the next 30 years but that you have opted for an alternative paying just 2% pa instead? Ok, this is quite provocative as they are two different types of savings.
According to the Schroder 30-year forecast, these could be the average annual returns on the Indian stock market and deposit accounts respectively.
So now you may be rationalising your decision to use a deposit account by saying something like “Oh well, I don’t like the stock markets and I don’t know much about India”. This is fair enough.
Your best friend has just said “We are off to the Caribbean for a few weeks and we have always wanted to go to Patagonia so we may nip across there for a bit after the Caribbean” …. “Blimey, how can you afford that?” is what you might say, or at least think.
How interesting it would be to hear “We put some of our money in shares in Indian companies and they have paid for the trip” Your average return of 2% pa may now seem pretty sickening.
Would you invest for 30 years? Maybe, maybe not. Will you be around for 30 years, depending on your current age?
And here’s a funny thing
- At age 50 your average life expectancy is 82 for men and 87 for women
- At age 60 your average life expectancy is 83 for men and 87 for women
There’s more
- At age 70 your average life expectancy is 85 for men and 89 for women
- At age 80 your average life expectancy is 89 for men and 91 for women
- At age 90 your average life expectancy is 94 for men and 95 for women
The older we get the more our life expectancy increases. All of this means that you could well be around for 30 years or more if you are under the age of 60. You do not however have to have a 30-year investment time horizon. The minimum period we would suggest is five years but after that there is flexibility with timing.
It is not always easy to choose your savings but here is how we help with guidance:
- Leave money aside for an emergency fund (yes, in that deposit account)
- Complete a reliable risk assessment exercise to determine your attitude towards risk
- Show you different combinations of investments around your personal risk profile and discuss the options with you
- Never put all your money in one type of investment eg not all in a deposit account
- Review your attitude to risk regularly because it changes as your circumstances change
- Adjust your investments when required to ensure you are taking the appropriate level of risk for your circumstances
Which of the following applies to your situation?
- Have too much money in bank accounts?
- Have recently received an inheritance?
- Are selling a business or have share options about to vest?
- Have losses on your current portfolio?
- Do not review your risk profile and investments at least annually?
If the answer is yes to any of these questions, please feel free to arrange a call with me using my online system to book a time that is convenient for you.
It is an opportunity to get a better outcome from your savings, provide for your family, and help give yourself a sustainable income in retirement.
Undoubtedly, you will be more relaxed too knowing that you have the right risk profile for your savings and that it is updated annually.
Financial update May 2024 – France
By Katriona Murray-Platon
This article is published on: 3rd May 2024
03.05.24
Tax season is in full swing at the moment and as with every year I have been getting lots of questions and queries relating to tax matters in France.
Over the April holidays I did sit down to do our own tax return and therefore was able to see whether there were any new aspects in the online declaration. I’m one of those people who prefers to know rather than waiting for surprises and this particularly applies to tax returns. Either we will have more to pay in which case it would be best to be prepared or we have less to pay in which case I want to know how much the tax refund will be. Because of the increase in the tax bands, if your income was comparatively the same in 2023 and in 2022, then you should have less tax to pay this year. In spite of my many years of experience of doing tax returns, I am not infallible and I did actually have to go back into our tax return to correct it. So based on my own mistakes I thought I would give you some tips about what to do and what not to do!
- COLLECT YOUR FIGURES – Make sure that you know what kinds of income you and your partner received and what the figures are whether they are taken off a bank statement or a certificate. If you have foreign income you will also need to know the exchange rate on the date on which you received the income or the average Bank of France rate for 2023.
- CHECK THE FIGURES ALREADY ENTERED ON THE TAX FORM – if you or someone in your tax household has received income from a French source (pension, salary, French bank income etc) then this should already be entered on the tax form. Nonetheless it is still worth checking that these figures correspond with any certificates issued by the relevant body or the December 2023 payslip. Even though my husband works for a French public body they don’t always communicate the right figures to the French tax office so I have learnt that it is worth checking and querying any differences.
- CHECK THAT ALL THE DIFFERENT TYPES OF INCOME ARE TICKED – Before you get to actually declaring the income you need to tick the boxes of which type of income you will be declaring. Some may already be ticked from previous years but others may not be even though you have been declaring the same type of income for years. If you have received another source of income then you need to tick the box for this new category of income. If you are declaring online not all the pages and the boxes will appear and it is easy to overlook something.
- REMEMBER THE ANNEX FORMS – in particular the 2047 for foreign income and the 3916 for foreign bank accounts. Regarding the latter, your information from the previous year should already be entered so you only have to carry over this information from last year but if you have opened or closed an account in 2023 or one is not mentioned on the form you will have to fill in the details. You will also have to declare the value as at 1st January 2024 of any foreign assurance vies. For the 2047 you may need to swap between this form and the main 2042 form to check that all the income is correctly entered and carried over onto the 2042.
- DON’T FORGET YOUR TAX CREDITS – We have had a piano teacher paid via CESU and the amounts declared were already entered on the tax form however the amounts paid to our cleaning company were not. So if you have had any home help (cleaners; gardeners, lessons etc) they should have sent you a tax certificate for last year so you will need to enter that amount in the tax credit section.
- RETIREMENT CONTRIBUTIONS – more and more of us work in France and contribute to some sort of retirement (PERP or PER). This was where I made a mistake this year because whereas the amount showed on the form, it is not deducted from your tax until you reenter these amounts in the correct box. Given that this is a deductible expense from your income it can amount to a significant tax reduction, so it is important to make sure that it is is correctly entered.
- CHARITABLE DONATIONS – this is another one often overlooked. Normally any charity you donate to should have sent you a tax certificate and you will need this document to claim the tax deduction. If you know you have made a donation make sure that you find the tax certificate or request it from them if they haven’t already sent it.
- NOBODY IS PERFECT – you can start your declaration and go back to it. You can do one version and then go back and change it. Once you get to the signature page which shows the tax due (this won’t appear if you have foreign income that will receive a tax credit) if something seems wrong you can go back and amend it. You can do this as many times as you like until the official deadline without it generating separate tax bills and even after the deadline provided you have submitted something before the deadline. If it gets close to the deadline it is better to declare something and sign the tax return and then correct it at a later date rather than incur a fine for late submission.
The tax filing deadlines are as announced in my previous Ezine however the deadline for filing the paper return is Tuesday 21st May before midnight.
You need to get it into the post box before this time even if it will be collected the next day.
If you haven’t already engaged a tax lawyer or accounting firm to help you out with your tax return then it is too late to do so as they will be too busy at this time of year. Therefore you need to get something onto the tax form and get it submitted by the deadline. It doesn’t matter if it is incorrect you can always amend this year’s tax return at a later date.
If you have any questions on your taxes or finances in France please do send me an email and I would be happy to arrange a time to speak to you.