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Financial Planning for later life and health concerns

By Portugal team
This article is published on: 13th July 2024

13.07.24

As we age, financial planning and investing take on greater significance, particularly for those facing health challenges such as dementia or other serious illnesses. These circumstances necessitate a comprehensive and thoughtful approach to ensure that financial stability is maintained and that the needs of both the individual and their loved ones are met.

The Importance of Financial Planning
Financial planning for older adults or those with health issues often requires more detailed and forward-thinking strategies compared to younger, healthier individuals. This is because health care costs can be substantial and may increase significantly over time. Furthermore, cognitive impairments like dementia can make managing finances independently increasingly challenging.

A key concern in such situations is the possibility that one spouse may have predominantly managed the household’s finances. If that spouse were to pass away or become incapacitated, the surviving partner might be unprepared to handle complex financial decisions. This gap in knowledge and experience can lead to significant financial difficulties, or even permanent financial loss which is why proactive planning, and the involvement of both spouses, is crucial.

Put your plan in place

  1. Comprehensive Financial Review: Begin with a detailed review of your current financial status, including assets, liabilities, income streams, and expenses. Think about how these are likely to change in the event of a prolonged illness or on the death of one spouse e.g. will pension income stop or costs of care increase? If assets will need to be sold or will be gifted on a death, what are the tax implications? As this could leave the beneficiary with less than expected. Understanding the full financial picture is essential for making informed decisions and early planning is key to avoid any unexpected outcomes.
  2. Health Care and Long-Term Care Planning: Consider the potential costs associated with health care and long-term care. This may involve looking into long-term care insurance or earmarking certain investments specifically for medical expenses. Planning for these costs can help prevent the depletion of assets and ensure that care needs are met without compromising financial stability.
  3. Estate Planning: Ensure that wills, trusts, and powers of attorney are up-to-date. These legal documents are critical in ensuring that one’s wishes are carried out and that there is a clear plan for the management and distribution of assets in the event of death or incapacitation. A well-structured estate plan can help avoid legal complications and ensure that the surviving spouse and other beneficiaries are taken care of according to the individual’s wishes.
  4. Simplifying Finances: Simplify financial accounts and consolidate where possible. This makes it easier for the surviving spouse or a designated caregiver to manage the finances. Reducing the number of accounts and financial instruments can help streamline management and reduce the risk of oversight or errors.
  5. Regularly Updating the Plan: Life circumstances and health conditions can change rapidly. It is vital to regularly review and update financial plans to reflect current needs and goals. Regular reviews ensure that the plan remains relevant and effective in addressing changing circumstances.

The Role of Financial Professionals
Given the complexities involved, it is often beneficial to work with a financial professional who can provide objective guidance and help navigate the intricacies of financial planning, especially when health issues are a factor.

You also have the control to choose a trusted professional for you and your loved ones to work with. Doing this ahead of any event can provide comfort, continuity in financial safety and quality of advice, especially for financially inexperienced individuals.

An advisor can help in developing a comprehensive plan that considers both current needs and future contingencies. They can also work alongside other professionals such as lawyers, accountants or your executors, to ensure that all aspects of your financial life are coordinated and optimised.

For those with dementia or other cognitive impairments, actively managing investments can become increasingly challenging and an advisor can take over this responsibility, ensuring that the investment strategy remains aligned with the client’s goals and risk tolerance.

An advisor can also help ensure that the surviving spouse is prepared and supported. This includes educating them about the financial plan and ensuring they know how to access accounts. This support can be invaluable in helping the surviving spouse navigate financial matters during a difficult time.

Conclusion
Financial planning and investing for older adults or those facing health challenges requires a proactive and comprehensive approach. The potential for increased medical costs and the possibility of cognitive decline make it crucial to have a well-thought-out plan in place. When one spouse handles most of the financial matters, it is even more critical to ensure that the surviving spouse is not left unprepared.

By addressing these issues head-on and seeking professional advice, older adults and those with health concerns can safeguard their financial future and that of their loved ones. Proactive planning, regular updates, and professional guidance are the keys to managing the financial complexities that come with aging and illness.

Top financial tips – Spain July 2024

By Chris Burke
This article is published on: 11th July 2024

11.07.24

Summer is well and truly here so it’s time to enjoy everything that brings, especially before it gets too hot! It’s hard to beat Spain when we have so many sunny days – a walk along the seafront or a stroll through the forest to keep cool and listen to the nature.

From a financial perspective, I am always here to update you on anything new or tips/hints to keep your finances healthy – this month we are focusing on the following:

  • Biometric card for entry & exit to Spain – Autumn 2024
  • Inheritance tax & gift tax in Spain
  • 80+ state pension for UK persons living abroad

Biometric card for entry & exit to Spain
The EES (Entry/Exit System) will be introduced by the EU in Autumn 2024 – this is an automated system for registering travellers from the UK and other non-EU countries each time they cross an EU external border. It will require third country nationals, including UK nationals, visiting the EU to create a digital record and provide their biometric data (fingerprints and facial image) at the border when they enter the EU’s Schengen Zone. It is expected that Spanish Green Certificate holders may face significant delays and difficulties at borders if they do not have a TIE.

The system will register the person’s name, type of travel document, biometric data (ie fingerprints and captured facial images) and the date and place of entry or exit each time they go through a ‘checkpoint’, which will in real terms replace stamping of passports (so those regular travellers to the EU won’t have to worry about running out of passport pages with stamping!).

Whilst hopefully making travelling easier and quicker, it’s also clear to note that there will be a ‘hard electronic’ record of which borders you cross and how many days you are spending in each country, which from a tax perspective could be interesting. Let´s see how long it takes for this to also become common practice at ‘road borders’.

Inheritance tax (IHT) & Gift tax in Spain

Inheritance tax (IHT) & Gift tax in Spain
One of the great unknowns amongst those who are non-Spanish and tax resident in Spain is how inheritance tax works and what amounts are payable. Particularly if you come from the UK, it’s important to note that Spain does not, (generally), take into consideration the rules of other countries regarding IHT. Inheritance tax in Spain has no ‘double tax treaty’ with the UK, meaning Spain will not take into account any tax paid on this OR rules applicable in that country (for example, if there is no tax to pay in the UK there could be significant tax to pay in Spain).

They purely look at the amount you are inheriting and if you are a Spanish tax resident apply the following to work out how much tax you need to pay them (if any):

  • Your relationship to the deceased, (the more distant a relative you are, the more tax)
  • The amount being received, (there is a progressive tax upwards with the more you inherit)
  • The value of existing assets by the inheritor
  • Which region you are tax resident in Spain and where additional ‘local’ laws apply

Inheritance tax starts from zero (allowances) and can reach up to 82% for a distant relative. Therefore, it’s imperative to understand what this number is should the situation arise, enabling you to plan effectively and maximise the remaining monies. It´s only my personal opinion but why would you not want, with proper planning, to maximise those ‘hard earned monies’ your relatives accumulated and left you over their lifetime?

On a side note, if there are relatives in other countries, (perhaps you have siblings), the Will can be set up to make sure you receive the same amount from the estate net of inheritance tax -the executor of the Will can deduct the tax from the ‘pot’ and then distribute accordingly – therefore the tax can be paid from all members receiving the inheritance not just yourself and enabling you to receive the same amount in real terms. This is something I have come across on a few occasions.

Another way is to receive any monies is as a ‘Gift’ whilst the donor is still alive, the tax on these is between 5-9% (again, the closer the relation the less tax you pay, so for a parent making a gift the tax would normally be 5%). Furthermore the location of the assets, (such as property in the UK), will make a difference to the amount paid.

As you can probably appreciate, by understanding these rules you can start to plan how and when best to receive any assets from relatives/parents. This is an area in which we work closely alongside tax advisers/planners almost every day, making sure our clients take sound financial/tax planning advice and a strategy is implemented to make sure the money is:

  • Received as tax efficiently as possible
  • Managed carefully to provide a tax efficient income for life (and for any other close family members)
  • Invested safely and strategically
  • Set up in an inheritance friendly manner for future generations
UK pensions in Spain

80+ state pension for UK persons those living abroad
If you do not receive the UK basic State Pension or you get less than £101.55 a week, you could get the difference paid up to this amount, as long as you were 80 years old before the 6th April 2016.

Other qualifying criteria are:

  • you were resident in the UK for at least 10 years out of 20 (this doesn’t have to be 10 years in a row) – this 20-year period must include the day before you turned 80 or any day after.
  • you were ‘normally resident’ in the UK, the Isle of Man or Gibraltar on your 80th birthday, or the date you made the claim for this pension if later.

If you would like to discuss any of the topics above in more detail or you would like to have an initial consultation with Chris to explore your personal situation, you can do so here.

Click here to read independent reviews on Chris and his advice.

If you would like any more information regarding any of the above, or to talk through your situation initially and receive expert, factual based advice, don’t hesitate to get in touch with me.

Have you made THE folder?

By Chris Webb
This article is published on: 10th July 2024

10.07.24

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.

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………

your folder

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!

what to include in the folder

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’.

The 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?
Financial review

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.

The financial review process

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?

cashcalc

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.

British living in Italy

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

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:

https://www.agenziaentrate.gov.it/portale/documents/20143/6193290/Provvedimento+Deskdel+26+giugno+2024.pdf/d860fa81-1922-866b-97ae-91f86b9a073a

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/

Sterling revival

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

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.

tax deadlines in France

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.

summer in France

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

www.spectrumspanishmortgages.com

Buying your dream home in France – webinar

By Peter Brooke
This article is published on: 20th June 2024

20.06.24

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.

French Property

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.

ASSURANCE VIE

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.