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No need for a 20% VAT hangover Will the pension contribution changes affect you? Protecting borrowings ISAs revisited Mortgage advice is important Market volatility futurefinancial 26 Queen Square Bath BA1 2HX Telephone: 01225 44 66 11 Email: kt@future-financial.co.uk Future Financial is a trading name of Synergie Financial Planning Limited which is authorised and regulated by the Financial Services Authority. January 2011 Firstly let me take this opportunity to wish you a Happy New Year! Please find enclosed a copy of our New Year 2011 Newsletter. As usual, we have sought to address topical issues that are likely to be of interest to most readers. Included in this edition are: • No need for a 20% VAT hangover – despite a modest rise in the rate of VAT from January, there are still positive signs for the economy and investment markets … • Pension contribution changes - the amount that can be contributed into a pension each year is set to change in April, but how this might affect you will depend ... • Protecting borrowings – household debt is growing rapidly and we all need to ensure that we are adequately protected should anything happen to disrupt repayments … • ISAs revisited – there is plenty of scope for using Individual Savings Accounts as a form of long-term and short-term savings; and the tax savings can be massive … • Mortgage advice – with the housing market moving so slowly, mortgages in short supply and nobody knowing what will happen to interest rates, the right advice is essential … • Market volatility – does it really matter that stockmarket values fluctuate so much throughout the year … I do hope that you find this newsletter both interesting and informative. Should you have any queries or require more information on any of the articles or any other financial matter please do not hesitate to contact me. Our next newsletter will be the Post-budget edition, which should be available in April 2011. Wishing you a Happy and Prosperous 2011. Yours sincerely, Keith Tadhunter Dip PFS Director futurefinancial No need for a 20% VAT hangover The recent increase in VAT may not have such an adverse impact as predicted. This is not a really significant increase, it does not apply to everything and, even where it does bite, prices should only increase by just over 2%. Of course, this will be inflationary, but commentators will already have fed this into their economic models, so there should be no need to fear an unexpectedly harmful effect. Find out more here. Will the pension contribution changes affect you? As part of last year’s spending review, The Government has radically changed the amount that can be invested into a pension plan from 6th April 2011. For the majority, there is unlikely to be a significant change, because the new ‘annual allowance’ is £50,000 (down from £255,000), which is far more than many of us would have been contributing in any event. Find out more here. Protecting borrowings Data from Credit Action in November 2010 showed that individuals throughout the UK owed a massive £1,455 billion; . more than the gross domestic product of the UK for last year. On the other hand, the rate at which we are borrowing is growing far more slowly than 30 months ago. This appears to have been the trend for some time. Despite many people seeking to reduce their borrowings, there is no significant fall in overall credit. Find out more here. ISAs revisited Last April, the maximum level of investment that adults under 50 could put in an Individual Savings Account (ISA) was increased to £10,200 a year, the same as for over-50s. Within this overall limit, up to half can be invested in cash and the balance in stocks and shares. Those aged between 16 and 18 are limited to the cash element only (up to £5,100). Younger people have no ISA allowance at all, although there may soon be a ‘Junior ISA’ version to replace the soon-to-disappear Child Trust Funds. Find out more here. Mortgage advice is important With a slow housing market you might wonder whether the services of a professional mortgage adviser are necessary; would you not be better off walking into a building society or bank, or searching the internet instead? In fact, the answer is a resounding “no” for several reasons. Not least of these is that the mortgage market is moving rapidly and it can be difficult to predict, from one week to the next, which lenders are most active in the area you are interested in. They also charge different levels of fees, which can be confusing. Find out more here. Market volatility Anyone looking at stockmarkets over the past few years could be forgiven for wondering what is going on. Of course, volatility is one of the factors that investors have to accept and, in many ways, this is not always a bad thing. After all, investments should be seen over the long term and in most cases especially where they are being bought on a regular basis occasional falls in value need not be a matter for real concern. When share values fall, you get more of them for a given investment. What really matters is the value of your shares when you want to sell them in order to get money back. Find out more here.

© FutureFinancial This publication represents our understanding of law and Inland Revenue practice as at the date of publication. It does not provide individual tailored investment advice and is for guidance only. Rules may vary for Scotland and Northern Ireland. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. The value of land and buildings is generally a matter of a valuer’s opinion rather than fact. The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Your home may be repossessed if you do not keep up repayments on your mortgage. Loans are subject to status and written details are available on request. Always seek independent advice from a qualified financial adviser. Think carefully before securing other debts against your home. Fees for mortgage advice maybe charged and for details of these please contact us. The Financial Services Authority does not regulate all the activities undertaken by the company, including taxation advice and overseas mortgages.