IFA Guide to Financial Services

International Freelancers Association

  1. Financial Advisor
    Investment advice and financial planning services for individuals and businesses - the financial advisor helps maintain the desired balance of investment income, capital gains, and acceptable level of risk by using proper asset allocation. Stocks, bonds, mutual funds, REITS, options, futures, notes and insurance products are used to meet the needs of clients.
  2. FSA
    The Financial Services Authority (FSA) is an independent non-departmental public body and quasi-judicial body that regulates the financial services industry in the United Kingdom.
  3. Mortgages
    As your mortgage is normally your biggest financial commitment in life, it is paramount that you gain professional advice, whether a first-time buyer or an existing home owner.
  4. Critical Illness Insurance
    Critical illness insurance pays out a tax-free lump sum if you are diagnosed as having one of the specific life threatening conditions defined in the policy. Some policies will also combine life and critical illness cover together. These pay out if you are diagnosed with a critical illness, or you die, whichever happens first.
  5. Income Protection Insurance
    Income Protection Insurance (IPI) (formally known as Permanent Health Insurance (PHI)) is designed to replace part of your earnings if you are unable to work because of illness or disability. Depending on how much cover you choose to buy, income protection insurance provides a tax-free monthly payment of between 50 and 60 per cent of your usual earnings. The monthly payment typically continues until you go back to work or you reach retirement age. Premiums will vary dependent on the level of benefit and the length of time of time you opt to delay payment.
  6. Life Assurance
    Life Assurance (or Life Insurance) assists your dependants to cope financially in the event of your premature death. When you take out life insurance, you set the amount you want the policy to pay out in the event of your death – this is called the sum assured. This is the most straightforward type of cover with no investment element, paying out a lump sum if you die within a specified period.
  7. Income Tax Planning
    Individuals are affected by three main direct taxes, those being income tax, capital gains tax and inheritance tax. Although tax planning should be a continuous process, it is recommended that you have your tax affairs reviewed at least once a year to ensure that the tax burden on your income is minimised.
  8. Corporation Tax Planning
    Corporation Tax impacts upon the income of your business. A company's taxation affairs should be reviewed regularly with a view to achieving tax savings that take into account the commercial requirements of the business.
  9. Capital Gains Tax
    Changes delayed until April… The Chancellor delivered another blow to business and shareholder groups by announcing that concessions to ameliorate the impact of changes to the Capital Gains Tax regime would be delayed until April this year.
  10. ISA
    ISAs are tax-free savings accounts that do not have to be declared for income or capital gains tax purposes to HM Revenue & Customs (HMRC). Individuals can save up to £7,200 for the tax year 2008/09. A financial year runs from 6 April until 5 April the following year.
  11. Your Will
    Having a Will written is often neglected yet properly done could save tax and heartache for those left behind. A Will should be prepared in conjunction with your financial planning and review of tax affairs.
  12. Private Health Care
    In the current climate of NHS waiting lists, Private Health Care will ensure that you receive treatment when you need it. The rates are dependent on age and history and it is possible to cover the immediate family. Treatment usually takes place in private hospitals which are spread throughout the UK.
  13. Investment Portfolio
    An Investment Portfolio is the collation of your wealth at any time in terms of cash, equities, bonds and gilts but normally excludes your permanent home. We all have different priorities at different times in our lives that will determine how we construct our individual portfolios. One of these will be your attitude to investment risk and the length of time you wish each investment to be locked away in terms of years with or without penalties and/or the potential for loss of value as well as financial gain.
  14. Pension
    Plan to get the most out of your pension provision and commence saving for your retirement as soon as possible as the longer you leave it, the harder it is to catch up on missed time and contributions. Remember that your life in retirement could be as long as your working lifetime, if not longer. You need to think about the affects of future inflation on your pension income and how you will cope. Your pensions may not just be providing income for you but also potential income for your spouse or partner and dependants in the event of your death after retirement. You may need to consider how to structure your income to make provision for them. It is important to review your affairs on a regular basis so that you keep making the most of the funds that you have available.
  15. Annuity
    Annuities are purchased when pension funds mature. There are a bewildering range of different annuity types on the market and you only get one chance to make your selection, so it is crucial that you receive professional advice before you buy. The 'annuity rate' that you receive expresses the annual income your annuity will provide as a proportion of the lump sum you invest. If the annuity produces a rising income, the quoted rate indicates the income at the start.
  16. Retirement Planning
    Retiring successfully in our fifties is the ultimate goal for many of us. But as the saying goes, ‘Most people don’t plan to fail, but they do fail to plan.’ The reality is that many individuals will not achieve this goal unless they take some decisive action. Households are on track to receive just 76 per cent of their hoped-for retirement income, according to figures from the Fidelity Retirement Expectation Index. Pension planning should start on your first day at work and continue throughout your working life.
  17. Large Capital Investment
    As part of your investment portfolio you may purchase a number of properties, other fixed assets or be part of a consortium or just invest heavily in a specific investment. As this will be a major part of your financial wealth, independent financial advice is essential.
  18. PAYE
    All employers must deduct Pay As You Earn (PAYE) tax and National Insurance Contributions from the earnings of their employees. The operation of such can be onerous and the penalties for getting it wrong equally harsh. Annual reviews of your PAYE affairs are recommended to identify and remedy potential problems and also tax planning opportunities.
  19. Inheritance Tax Planning
    Regardless of your age Inheritance Tax (IHT) is a great example of a tax where bills could be significantly reduced if you plan ahead. See if you are taking full advantage of the options available to you! According to Halifax, nearly 100,000 UK residential properties are now worth over £1m and nearly 2m people remain liable to inheritance tax (IHT). In the current tax year if your property is valued in excess of the combined £600,000 nil rate band for married couples and registered civil partnerships, or if you intend to use your nil rate band allowances on other assets, it is advisable to make provision to protect the value of your property against a future IHT bill.
  20. Domicile Status
    An individual’s domicile can be equated with their income for tax purposes, as opposed to the concept of where an individual resides at any given moment. As such, it is fundamental to how tax is paid. Everybody has to have a domicile. You can change your domicile, but it can be difficult to persuade HMRC that you have. If you want to move abroad for tax purposes you need to show that you have shifted all aspects of your life offshore.
  21. Trust and Offshore Planning
    This area of tax can be complex but through careful planning can achieve significant tax savings. Specialist advice should be sought before putting into place any strategies involving trust and offshore arrangements.
  22. Employers Liability Insurance
    Employers Liability Insurance will indemnify you for your legal liability for injury or death to employees, including claimant’s costs and expenses. Employers Liability Insurance is compulsory for any business that has one or more employees whether they are permanent, part time or temporary. The only exception to this is if you are a ‘Ltd’ company, you are the only employee and you own at least 50% of the issued share capital of the company. In this respect you are exempt from the need to purchase Employers Liability Insurance.
  23. Public Liability Insurance
    Public Liability Insurance will indemnify you for your legal liability for injury or death to third parties and damage to third party property as a result of negligent acts by you or your employees. The insurance will also cover third party costs and expenses.
  24. Product Liability Insurance
  25. Product Liability Insurance provides protection against financial loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of a covered product.
  26. Professional Indemnity Insurance
    Professional Indemnity Insurance (PII) will protect you against the cost of defending claims where it is alleged that a client has suffered financial loss as a result of your error, omission or negligence.
  27. Directors Liability Insurance
    Directors Liability Insurance Cover protects companies’ directors against claims arising from their decisions and actions taken whilst managing their business.
  28. Tax Enquiry Insurance
    Tax Enquiry Insurance covers the professional fees in representing an insured client during a formal enquiry by Revenue authorities or a VAT, PAYE or NIC dispute which arises during the period of the insurance.
  29. Tax Loss Insurance
    Tax Loss Insurance covers not only representation costs, but also additional tax, NIC, interest and penalties arising from a HMRC IR35 enquiry. This provides freelancers with a financial umbrella against the ever-increasing risk of enquiry.
  30. Health Insurance
    Health Insurance provides protection against the costs of hospital and medical care normally in your country of domicile only.
  31. Business Travel Insurance
    Business Travel Insurance provides you with cover normally in the event of travel delays, cancellation, emergency medical, evacuation, repatriation and kidnap insurance. As this is a highly specialised form of insurance, unique to where you are conducting business, duration dependent and whether family members are covered, specialist advice is recommended prior to taking out this very necessary cover.