We would like to introduce what we intend to be a bi-annualcommunication to our corporate and private clients, ourprofessional introducers and other interested parties.

The intention is to provide a high-level summary of certain points of interest in respect of private andcorporate financial planning following on from relevantBudget announcements. The comments are made subject to further consultation and enactment.

We hope you find the content informative and helpful and we will be pleased to have your feedback and contactshould you wish to discuss any of the matters raised.

Maxwel l BuchananManag ing Dir ectorKer r Henderson (Financia l Ser v ices) Ltd

individual SavingS

aCCounTS

The annual ISA allowance will be

indexed from 6 April 2011 to

£10,680, with up to the full

amount invested in a stocks and

shares ISA, or up to £5,340 placed

in a cash ISA and up to the same

amount in a stocks and shares ISA.

The now closed government-

funded Child Trust Fund will be

replaced by a ‘Junior ISA’ from

next autumn; up to £3000 can be

invested with the capital not

available to the child until age 18.

inCome Tax

The personal allowance increases

to £7,475 for those under 65,

£9,940 between 65 and 75, and

£10,090 for those over 75. Those

whose taxable income exceeds

£114,950 will not have any

personal allowance. The age

allowance for those over 65 is

increased to £24,000 from

£22,900. The basic rate band (20%

tax) reduces from £37,400 to

£35,000, 40% tax is changed

between £35,001 and £150,000,

and 50% over £150,000.

CaPiTal gainS Tax

The capital gains tax exemption for

individuals will be £10,600 and up

to £5,300 for most trusts. For

individuals, gains in excess of the

exemption will be charged at 18%

or 28% depending on total taxable

income; for most trusts the tax rate

will be 28%. Under

Entrepreneurs’ Relief the first

£10m of qualifying gains on or

after 6 April 2011 will be charged

at 10%. These rates of capital gains

tax compare to 20%, 40%, 50%

and 60% income tax rates. Subject

to a suitable investment asset

allocation, it may be appropriate

for higher rate income tax payers

to house invested capital in low

yielding unit/investment trusts

(including via ISAs), OEICs or

investment bonds, all of which

have specific taxation benefits.

CorPoraTion Tax

The small companies’ rate will

reduce to 20% for the 2011

Financial Year; the main rate will

reduce to 26%, and then by 1% pa

over the next three years to 23%

by the Financial Year starting

April 2014.

inHeriTanCe Tax

The inheritance tax nil rate band

will remain at £325,000 per person.

From 6 April 2012 a reduced rate

of IHT will apply where, after

exemptions, reliefs and the

deduction of the nil rate band,

10% or more of a deceased’s

dutiable estate is left to charity.

From 6 April 2011 an HMRC

disclosure report will have to be

made on transfer of property into

trust where that transfer avoids or

reduces a lifetime Inheritance Tax

Charge. This will only apply to

new and innovative schemes,

therefore schemes already in

existence on 6 April 2011 and new

schemes that are substantially the

same as existing schemes do not

have to be reported. Standard

discounted gift schemes and gift

and loan schemes do not need to

be disclosed unless they have

innovative features that give rise to

an additional entry charge

advantage.

naTional inSuranCe

From 6 April 2011 employers will

pay 13.8% NICs on income above

£136 per week. Employees will

pay 12% NICs on income between

£139 and £817 per week and 2%

above this level.

NICs for self-employed are a flat

rate £2.50 per week plus 9% on

profits between £7,225 and

£42,475, with a further 2% levied

on profits over £42,475.

STaTe PenSionS

The government intends to bring

forward proposals to provide a

basic State pension of £140 (and

potentially up to around £155) per

week with effect from 2015.

The default retirement age of 65

will be removed.

enTerPriSe inveSTmenT

SCHemeS and venTure

CaPiTal TruSTS

Income tax relief on investments

into EISs will increase from 20%

to 30% from 6 April 2011. The

investment limits and company size

thresholds will be increased for

EISs and VCTs from April 2012:

for EISs the investment limit will

increase from £500,000 to £1m

and the assets limit will increase

from £7m to £15m.

For more information

contact Maxwell Buchanan

on 028 9068 0614 or Tommy

Liddle on 028 9068 6416.

illuminaTe

in S i d e T H i Si S S u e. . .Financial Planning

Private Pensions

automatic enrolment

default retirement age

retail distribution review

Jewellery under-insurance

Kerr Henderson Services

FinanCial Planning...what you need to know

Spring 2011

The Annual Allowance will reduce to a

capital value of £50,000 from April 2011.

An increase in defined benefit pension rights

will be valued at 16:1, ie, an increase in

pension of £1000 pa will have an Annual

Allowance value of £16,000.

Tax will be charged on any excess

contributions at the individual’s marginal rate,

although it will be possible for some of the

tax charge to be paid from a member’s

pension arrangements in certain

circumstances.

Starting with 2008/9, 2009/10 and 2010/11,

it will be possible to carry forward unused

allowances from the three previous tax years

if the annual allowance is exceeded in a given

tax year.

From 2012 the lifetime allowance will be

reduced from £1.8m to £1.5m. It will be

possible to register pension rights/funds

for fixed protection of up to £1.8m with

effect from 6 April 2012.

The requirement to purchase an annuity at age 75

will be removed, but the lifetime allowance test will

continue to apply at 75. In addition to the option

to secure an income in retirement by way of

annuity purchase, unsecured and alternatively

secured pensions will be replaced by two versions

of income drawdown: capped drawdown will allow

up to 100% of the comparable annuity to be taken

from the pension fund; flexible drawdown will

allow uncapped withdrawals where an individual

has a secure income (comprising State pension,

some annuity income or certain scheme pensions)

of £20,000. There will be a change to the taxation

position on death during drawdown and to the

inheritance tax treatment of certain death benefits.

unregistered pensions.Employee Benefit Trusts and Employer Financed

Retirement Benefit Schemes will be addressed so

that they are no more attractive than other forms

of remuneration.

For more information contact Nikki Rodgers on

028 9068 0625.

PrivaTe PenSion Funding

and CrySTalliSaTion oPTionS

The government wishes to take

action so that more people save for

their retirement in order to deliver the

level of income they are likely to

want or expect when they stop work.

Starting with the largest employers in

October 2012, all employers will be

required to provide a workplace

pension arrangement and to

contribute to it. Employers will have

the option of using the NEST

scheme or an occupational pension

scheme or a workplace pension such

as a group personal pension plan.

Employees who are not members

of a qualifying pension must be

automatically enrolled into one of

the above schemes.

From 2017 contribution rates will

be a minimum of 3% of relevant

earnings from the employer, 4%

from the employee with the latter

benefiting from 1% tax relief thereby

making a combined contribution of

8% of relevant earnings. Relevant

earnings will be those between the NI

earnings threshold (currently £5,304

for 2011/12) and an upper limit

(£42,475 for 2011/12).

Other funding/accrual options

may mean that an existing scheme

or an amendment to it results in that

scheme meeting the qualification

requirements.

We expect to see an increase in the

use of salary sacrifice arrangements

for corporate pensions.

For more information contact

Brian Jackson on 028 9068 0621 or

Shaun McKeown on 028 9068 0623.

worKPlaCe Saving:auTomaTiC enrolmenT inTo a

QualiFying worKPlaCe

PenSion SCHeme/naTional

emPloymenT SavingS TruST

(neST)

RDR will take effect from 1 January 2013. By then, financial

advisers offering investment advice to retail clients will need

to be qualified to QCA level IV, advisory businesses will need

to meet certain capital adequacy requirements, and

commission as a means of remuneration to an advisory

firm will cease. Firms offering independent financial advice

will be required to offer a whole of market service.

The intention is to ensure that advice is provided by those

who have the appropriate expertise, that firms are sufficiently

robust in their resources, and that costs associated with the

provision of financial advice are fully transparent.

Whilst commission as a means of remuneration to the

advisory firm will cease, it will still be possible to pay for

the firm’s consultancy and advisory services by way of an

agreed deduction from an investment or pension.

reTail diSTriBuTion

review (rdr) For

FinanCial ServiCeS

The government has recently announced that the default retirement age (dra) is to be phased out over atransitional period running until the end of September 2011.

After this date, Employers will only be able to maintain a compulsory

retirement age if this can be “objectively justified”. The objective

justification must demonstrate that the Employer is using this as a

“proportionate means of achieving a legitimate aim”. It is fair to

assume that this will be tested in the courts and tribunals over the

coming years.

Fortunately, after extensive lobbying by the industry, the Government

has agreed to an exemption for insured group risk benefit.

The exemption allows employers to:

• Lawfully cease benefit provision at the higher of

age 65 or State Pension Age

• Only provide such benefits for those below the

higher of age 65 or State Pension Age

It is worth noting that the exemption specifically mentions insured

benefits so there is a question mark over whether self insured benefits

are covered by the exemption.

Most Group Life and Income Protection Products have an expiry age

for eligibility to the scheme membership and in many cases this is 65.

Whilst this might not be

of immediate concern for

Group Life Insurance, it is

important that employers

urgently consider Group

Income Protection

provision as unless the

expiry age is changed,

any new group income

protection claims for

younger staff members may

have an uninsured element.

Existing income protection

claims where a claimants

state retirement age is now beyond 65 may well have an uninsured

element if the incapacity continues beyond age 65.

Most insurers appear to be responding by allowing the cease age of the

scheme to be amended to “age 65 or if higher, the State Pension Age”.

We will be contacting all our clients over the next few months to

discuss the options available. If you have insured Group Risk Benefits

for your staff but not with Kerr Henderson, please feel free to contact

us to discuss your options.

For more information contact John Kerr on 028 9068 0610.

ending oF THe deFaulT reTiremenT age

The need for accurate jewellery valuations is

greater than ever. Significant price fluctuations

in the past four years have meant that some

jewellery insurance values could be potentially

too low … and in some cases, too high.

In 2007 and 2008, the price of diamonds, gold,

platinum, and other precious metals experienced

some of the highest ever recorded increases.

Whilst there was significant price correcting in

2009 and into 2010, replacement costs are on

the rise again – much of it due to demand and

supply. The replacement values of premium

watch brands continue to increase steadily.

External research about engagement rings by

Chubb Insurance (a leading insurer of jewellery)

indicates that at least 50% of engagement rings

in the UK have not been valued since their

purchase; 40% of ring valuations were over two

years old; and 15% of ring valuations were over

20 years old. This suggests that, in addition to

the sentimental impact, most owners could be

significantly out-of-pocket should a loss occur.

In early 2011, analysts predicted that the average

price of gold would increase about 19% in the

year, and the average price of silver by about

48%. In late March 2008 the price of platinum

per kg experienced its highest ever weekly

increase – rising 34%. The price dropped

significantly in late 2008, but has been rising

steadily in the past two years, to about 150% of

its March 2006 price. Analysts have predicted

that platinum demand could be up this year, due

to demand for jewellery and pollution-control

devices. Some predicted the price would rise

about 12% in 2011. Due to the recent

fluctuations, platinum jewellery valuations could

be either significantly over or under-valued,

depending on when they were conducted.

It is important that you avoid a financial loss due

to out-of-date jewellery valuations. An accurate

jewellery valuation will avoid the need to accept

a lesser quality item or make up any cost

difference after a claim.

We usually recommend a jewellery valuation

every 3-5 years, but highly recommend

undertaking one in the near future to ensure

correct values are set. Once you have these

prepared remember to forward them to

your insurer.

Kerr Henderson (General Insurance Services)

Ltd specialise in higher net worth household and

motor insurance. We can provide exceptionally

wide and non-restrictive cover at an

affordable price.

Please contact Andrew Rodgers on

028 9068 0612 for more details.

PrevenTing Jewellery

under-inSuranCe

The Group comprises Kerr Henderson (General Insurance Services) Ltd, Kerr Henderson (Financial Services) Ltd and Kerr Henderson

(Consultants and Actuaries) Ltd. We will remain an independent financial advisory firm, employee benefit consultancy providing whole

of market advice to its corporate and private clients.

Among our 70+ staff we employ scheme actuaries, Fellows of the Pensions Management Institute, Chartered Financial Planners,

Fellows and Associates of the Chartered Insurance Institute. Under their guidance we provide a comprehensive range of services, as follows:

Kerr HenderSon services and position

• Commercial Insurances: Employers Liability, Public Liability, Motor Fleet and Property

• Professional Indemnity insurance

• Death-in-service, sickness and disability benefits

• Private Medical Insurance

• Critical Illness Insurance

• Keyman, business and partnership insurance

• Total remuneration planning (including Flexible benefits)

• Pension disclosures for company/partnership accounts

• Pension strategy and change

• Pensions and benefits for executives

• Pension aspects of Mergers and Acquisitions

• Group Personal Pensions

Services for Businesses

• Personal Insurances: Motor, Household, Holiday Home and Pleasure Craft

• Strategic and tactical financial planning advice

• Personal investment advice and administration

• Wealth Management

• Pensions and retirement advice and administration

• Inheritance Tax planning

• Trust advice and administration

• Advice in respect of pensions and divorce

• Protection: life, medical, critical illness, income

Services for Private Cl ients

• Actuarial consulting

• Investment consulting

• Pensions Administration

• Pensions consulting

• Secretarial services for trustees

• Trustee Training

• Trustee Governance

• Scheme and member communication

• Insurance of group risk benefits.

• Trustee indemnity insurance

Services for Pension Scheme Trustees

29-32 College Gardens, Belfast BT9 6BT 08452 47 77 77

www.kerrhenderson.com

Kerr Henderson (Financial Services) Limited (registered in Northern Ireland No. NI5131) is authorised and regulated by the Financial Services Authority, FSA Register number 125322.

Kerr Henderson (General Insurance Services) Limited (registered in Northern Ireland No. 28521) is authorised and regulated by the Financial Services Authority, FSA Register number 309312.

Kerr Henderson (Consultants and Actuaries) Limited (registered in Northern Ireland No. 34514) is an Appointed Representative of Kerr Henderson (Financial Services) Limited, FSA Register number 188411.