Savings And Investments - An Overview

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Information gleaned from financial papers and Teletext in the UK

NOTICE : I understand that the Financial Services Authority do not like all and sundry giving financial advice.  As I consider myself in that category I would like to state that none of the following should be considered as advice.  I merely copy what I have read in newspapers and the like and try to point people in the direction of useful information. To find an Independent Financial Adviser (IFA) try www.unbiased.co.uk.
As I have said from the beginning, "All the following details are to my knowledge correct at the time of uploading but are supplied as information only and in no way implies advice and the author cannot be held responsible for any actions which you take as a result of what is written". Also, as interest rates and investment charges can change at any time, it is imperative that, before acting on the information below, you check with the organisation concerned. If you find any of the rates are inaccurate, please email me by clicking Here

General disclaimer

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A banker is someone who lends you his umbrella when the sun is shining and wants it back the minute it begins to rain. (Mark Twain)

This week's top payers (but check, offers can be withdrawn at any time) Updated 4th May 08

One year Fixed Rate Savings are offering great interest rates Most ask for £1000+: IceSave 7.01%, Kaupthing 6.86%,  Abbey 6.5% - branch or phone, Halifax and B & B 6.6%, Saga 6.76%, Heritable 6.8%

Birmingham Mids e-saver 6.5%, West Browich 6.55%, Kaupthing 6.5%, Anglo Irish Bank 6.35% or 6.75% one year;  Heritable Bank 6.51%. ICICI 6.41%, Coventry BS 6.45% (60 day, for older folk) Manchester BS 6.41% (90 day); Chorley BS 8.5% (1 year) Nottingham BS 6.8%; Abbey Saver Direct Bonus 6.5%. Ing 6.5% (Fixed 6 months) ISA's : Barclay's 6.31% ** Birmingham Mids 6.35% (Halifax)**. Abbey Direct ISA 6.0% (transfers allowed) Scarborough BS 6.3%

** Barclay's and Birmingham Midshires ISA offers CAN NOT be taken up by transferring from existing ISA's. New cash only.
If you think savings rates will be affected by the lower bank rate it might be time to go for a one year fix e.g Alliance and Leicieter 6.3%, Heritable 6.8%
See also http://www.find.co.uk/banking/savings_accounts_centre/savings_accounts

27th April 08. The Bank of England has imposed a blackout on further news of bank bail outs - and further requests under the Freedom of Information Acts will be denied.  This is due to the huge stigma that can be attched to banks or building societies which apply for temporary loans, making their situation much worse. However, it is expected that more banks will seek to bolster their liquidity by issuing 'Rights' shares to existing shareholders.  These will be at a discounted rate to their current share price and will be backed by finance companies who will guarantee the take-up of the shares. Rights issues 'dilute' the value of existing shares but may be worthwhile purchasing if the price is considered to be fair.  A bank may consider it preferential to going to the B of E 'cap in hand'.  It will be interesting to see how the first offering, by the Bank of Scotland, is received.

27th April 08 Interesting point.  Savings are now guaranteed to the tune of £35,000 per company. But what if your savings are split between a number of organisations all owned by the same company ?  Well, it seems your maximum payout would be just £35,000. e.g. you may have £35,000 in each of Halifax, Bank of Scotland, Birmingham Midshires, Saga and theAA.  Guess who owns the lot. 

23rd April.  The big news is that the courts have decided that the Office of Fair Trading proved their case regarding the need for it to look into the fairness of bank charges.  It seems likely, therefore, that when the OFT finally makes up its mind, charges for such things as unauthorised overdraughts will be reduced, along with the punitive charges for notifying customers that they have overdrawn. This will not mean that banks will not charge in future but they will be given clear guidance as to what they should charge.  Whilst this case has dragged on banks have not had to reimburse people (as they were doing in many cases hitherto).  But it DOES mean that, if you feel that your have been overcharged you should apply NOW, using an appropriate form.  A template for such an application can be found at the site http://www.moneysavingexpert.com/reclaim/bank-charges

April 08  had a good look round to see if I could find any really good ISA's to which I could transfer our pile, preferably with no strings attached.  After all, I am only getting 5.25% and one would think I could beat that with all the info on the net.  Well, sad to say, there are more strings attached to ISA's than most forms of saving.  So, how about transferring it to Barclay's, you ask? Just pop in to the local branch and get over 1% more with its one year bonus.  Oh dear! Not allowed to transfer old ISA's.  Same with Birmingham Midshires.  Ah ! A & L. Super rate : 10% ! I'm quids in.  Oh! dear, only if I get my pension paid in and stick half of my cash ISA's into a Stocks and Shares ISA.  What ? With the current economic climate ! I should coco.  How about a fixed deal ? Not that keen because of massive loss of interest  (with most of them) if you want your cash early. Abbey looks best at 6.25% for 13 months. You just lose the bonus if you take it out during the 13 months. But it is more accessible than most. They also have a 10% deal but with strings attached. In the end I left it alone.

There are a lot of new banks vying for your cash with high rates. Most are covered by the FSA £35,000 guarantee and subscribe to the Banking Code of Practice. Kaupthing is big in Scandivanian countries, Icesave is Icelandic and is a branch of Landisbanki, which is 120 years old,  AKbank (Turkey) ICICI (India), First Save (Nigeria), First Direct (HSBC)  See also article HERE   and Times Online article re Icelandic Banks. If foreign banks get in trouble you are assured of minimum payments by their governments. It can be as low as £15,000. You would then have to apply for the rest from the more generous British scheme.

Did you know that under section 187 of the Social Security Administration Act 1992: it an offence for banks to take bank charges out of the accounts of people who are on social security benefits. So, if your bank has taken charges out of your Benefits eg: if you are in receipt (and totally dependant on) of any of the following benefits:   Income Support; Tax Credits; Child Benefit; Job seekers allowance;  Incapacity benefit;  Disability living allowance;  Attendance Allowance ; CSA payments;  Other DWP payments....   then you should get onto them and point this out

NEW TAXES.  Are you better or worse off ?

In last year's budget, the Government announced the new income tax thresholds. This doesn't just impact what you earn, but also the rate of tax on savings and pensions too. The main changes were:
* The 10% starting rate has gone. The 10% income tax ‘starting rate’ will be removed for pensions and salaries, but will stay for savings.
* Basic rate of income tax drops to 20% from 22%. (the cost this change is clawed back by the ending of the 10% band).
* The ‘higher rate’ of income tax stays at 40%.
The idea behind these changes was a simplification of the tax system and now (barring savings) there are only two bands. While this was meant to be a tax boost, those who were only paying the 10% level have lost out, meaning its some of the poorest people who will pay more tax.
There will be a new 10% starting rate for savings income only, with a limit of £2320. If an individual’s taxable non-savings income is above this limit then the 10% savings rate will not be applicable.
.... so if your non-savings income exceeds your personal allowances you will pay tax, initially, at the new rate of 20%. But if your non-savings income exceeds your personal allowances .... but by less than £2320 - then the balance can be off-set against any savings income at 10%.
Not easy to comprehend and creates a further level of complexity both for HMRC (because you'll have to claim .. as tax will have been deducted from your interest at 20%) and their customers. Quite frankly it was hardly worth leaving in the calculation at all. If you did calculate (with difficulty) that you were in this narrow band the maximum you would get back is £232

Halifax, Britain's biggest mortgage lender,  has started a trend. If you have a 25% deposit on the mortgage you propose, they will reduce your interest payment slightly.  If deposit less than 25% your interest rate will be higher

 Did you know that under section 187 of the Social Security Administration Act 1992: it an offence for banks to take bank charges out of the accounts of people who are on social security benefits. So, if your bank has taken charges out of your Benefits eg: if you are in receipt (and totally dependant on) of any of the following benefits.

• Income Support
• Tax Credits
• Child Benefit
• Job seekers allowance
• Incapacity benefit
• Disability living allowance
• Attendance Allowance
• CSA payments
• Other DWP payments.    then you should get onto them and point this out

.The Financial Services Authority has a useful site at http://www.moneymadeclear.fsa.gov.uk/dealing with many different financial matters.  

I really do recommend that people sign up to get regular emails from the Money Savings Expert at http://www.moneysavingexpert.com/site/money-tips-email-faqs

ISAs  We are now in another ISA year with an increased Cash ISA allowance of £3,600.  Although there are some good Instant Access Savings schemes on offer they are unlikely to be better than the better ISAs.

From 6th April 2008 all PEPs became ISAs; the annual ISA investment allowance increased; there are no longer be Mini and Maxi ISAs (just Cash ISAs and Stocks and Shares ISAs). You can transfer Cash ISAs to Stocks ISAs (but not the other way)

9th April 08 Although the stock market has recovered and the FTSE is even back over the magical 6000 mark, with the cooling of the housing market the Bank of England knocked another quarter point off the rate amd most lenders promise to pass this to the variable interest mortgagees.  Nevertheless mortgage lenders have at last seen the error of their ways and have stopped lending more than property is worth.  Pity it took so long.  The effect of the drop in interest rates resulted in the pound being at its lowest level against the Euro.  But there was little effect on the stock market or the value compared with the dollar. It is not expected that rates will go even lower because of the danger of inflation, which is real. The miserable outlook portrayed by the IMF has not, so far, unsettled investors in the UK, and the economy is still expected to grow in 2008, but only by a fraction.

The government is planning to introduce a Money Guidance Service to compliment existing services.  It is felt that people will trust advice more readily if they think that they are not being sold a product at the same time. I must admit that I would ! But this is only in the planning stages and is unlikely to be introduced before 2009.

In debt ? www.nationaldebtline.co.uk provides a national telephone helpline for people with debt problems in England, Wales and Scotland offering free, confidential and independent advice (Telephone 0808 808 4000). They have a downloadable information pack, debt management plans and sample letters to creditors. Or you can e-mail them.  But I also recommend that you have a good look at the site run by Martin Lewis at http://www.moneysavingexpert.com/loans/debt-help-plan

1st April 08  Another large bank, UBS of Switzerland, has had to write off billions more because of the sub prime disaster. They expect to make a first quarter net loss of approximately 12 billion francs.  And one always thought of Swiss banks as being cautious and rock solid.  But this did not appear to upset the Stock Market and banks, in particular, were great gainers.  HBoS is now is now £1.50 above what it was when it was suffering from ill founded rumours. 30% in a week ! Other banks were cautiously higher on the 2nd and 3rd April.

30th March 08  Iceland has increased its Bank Rate to 15% (!) to protect its sysem from the financial turmoil. This is causing concern for people with savings in their banks.  The Icelandic government is ready to bolster its banking system, which is going through a bad patch See Times online . However, Kaupthing Bank have reported three London companies to the FSA for spreading rumours, similar to the case below.

23rd March 08  I was lying in a hospital bed and turned on the Channel 2 teletext (225) and was shocked to see HBoS shares down to 450p. I had some once when they demutualised and sold them for twice that.  What could be afoot? Surely Britains largest mortgage lender has not been lending to folk who can't pay back. I should have rung my stockbroker (Halifax) and got in quickly ! It all turns out to have been because of the activities of what the boss of the FSA calls City Spivs.  They had put out a whisper that the bank was short of funds and the news spread like wildfire.  A couple of billions was knocked of the shares, with the spivs profiteering by that. Although the FSA is chasing around the city trying to nail the villains it is very doubtful that anyone will be brought to book.  After all, legitimate fund managers use 'selling short'  techniques if they bet that share will go down.  After reassurences from the Bank of England and the FSA the HBoS shares recovered quite a bit but are still down because of the nervousness brought about by this scam. It is not completely beyond reason that ANY bank can have a 'run' on its funds in the present climate.

16th March 08. With a large bank in the USA having to ask the government for a Northern Rock style loan, stock markets are really nervous.  Could this be something more than a recession ? Will the dreaded word Depression come back into use ? We all know that capitalism is based on debt and it has worked well since 1931 but the way gold is hitting the heights it seems that folk are now getting really nervous. There is now talk of our government increasing saver's guarantees to £50,000 by the end of the year.  Meanwhile the Budget passed by without dramatic changes. And banks and building societies are pushing hard with ISA publicity, with offers up to 6.31% (Barclays) and Birm Midshires 6.3%) followed closely by Scarborough, Saffron and Alliance and Leicester. If you had grabbed all your ISA allowances over the years and are getting a whole percentage less than this your are missing out to the tune of more than £300 per annum. A new bank,  Akbank NV,  is offering 6.25% on an Instant access postal account.  A Turkish bank ? Mmm. Is there no end to new banks in the UK.

13th March 08  It is distressing to see the state of the stock market.  Banks seem particularly badly hit, with Banks of Scotland now so low that the dividend, if held, would yield over 8% (minus tax).  

24th Feb 08. Banks are still declaring profits but somewhat reduced by the last quarter turmoil. Many have cut savings rates, including ISAs and it looks like preople who took out 125% fixed rate mortgages may find things expensive when they have to come to renew. They committed themselves to 'negative equity' from the start and the housing market may have made things worse. It is tough.

19th Feb 08  With banks in the USA and Europe showing much reduced profits and even billion dollar losses it is surprising (and encouraging) that some of our banks appear to have survived the crisis relatively unscathed. Lloyds, for instance, was not too exposed to the sub prime mess and are expected to declare around £4billion profit.  Like all banks their shares have suffered from the sentiment in the markets and at current levels their shares are yielding over 8% in dividends alone.  Tempting to say the least.

17th Feb 08.  So, the Northern Rock thing is finally settled with nationalisation. The customers should be alright, as will the taxpayer, when the solvent bank is finally sorted and sold off.  But it is no wonder that the Tories are not keen.  Some of their friends who took a punt on the shares and, quite recently, paid over £1 for them will lose most of it if the government pays shareholders de minimis.  That could be as little as 5p a share.  Dealing has been suspended. This thing is not over by a long way with large influential bodies promising legal action. High Street banks are already crying "unfair!" This is a different world from the nationalisations of late 1940s,

11th Feb 08 The Bank of England reduced the going rate to 5.25% as expected. Hopefully mortgage rates will reflect this and stem the increasing tide of house repossessions.  The only beneficiaries of that are people trying to rent their 'buy-to-let' houses, which are now in greater demand from the dispossessed, especially in London. But one can still get better than bank rate savings if you look around. Bank shares are still looking very cheap, but are they bovered ?  With profits for last year expected to top £12 billion ?  And that takes into account a £5.3 billion hit from the sub prime fiasco in the USA. Sounds like a runaway success to me. But I know nothing about finance.

9th October.  In response to the Conservatives promise to increase the IHT tax free level to a million, the Chancellor, in a pre budget report, has immediately raised the amount to up to £600,000 for 'legal' couples. Several thousand couples have suddenly decided to get married ! This now makes my section on Inheritance Tax (below) somewhat out of date, especially with regard to the Nil Rate Discretionary Trust, which was always a hassle to get almost the same result. It is tough on singles (and those fond elderly sisters who have lived in the same house (jointly owned) for many years and cannot legally be married). But it can be claimed retrospectively by widows and widowers.  

From 1st October, savings with any bank or building society have been protected (in the case of the company's collapse) to the extent of £35,000.  Up until that date only the first £2000 was protected and 90% of the next £33,000. Current savers in the Northern Rock are still assured of full protection, regardless of the amount.  Unit Trusts, however, are still only covered by the previous arrangement.

This month banks will begin to share credit information about customers, so tightening up on loans to people who have accumulated debts with various agencies.  Not a moment too soon for the volunteers at the Citizens Advice Bureaux, who have to advise people how to get out of their mess.

The following graph shows the exponential nature of debt in the UK.  As the previous Bank of England chief said... " This cannot go on ".  But it does. Most of it is, of course, mortgages, which are secured against bricks and mortar, although many lenders have been so anxious to lend cash that they have not probed too deeply into whether folk could be reasonably expected to keep up the payments, creating a 'sub-prime' situation here, too. The average household debt, including mortgages is around £57,000

If you are not worried about debt take a look at http://www.creditaction.org.uk/startpage.html  and http://www.creditaction.org.uk/debt-statistics.html

Sept 07 Age Discrimination legislation may be good for older people in many cases but it seems likely that, unless exceptions can be made, it will mean the end of beneficial savings rates for older people.  These are saving accounts by organisations such as Nationwide, Skipton and Coventry and National Savings and even the government Pensioners Guaranteed Income bonds. How about Children's Savings, too?  Hopefully the indiscriminate doubling of holiday insurance costs for older people WILL be affected.

Because of nervousness due to the Norther Rock fiasco National Savings and Investments have had a record year with nearly double their usual net savings pouring in (in excess of £5 billion. Watch out for new products from NS & I under the new boss, Jane Platt

Keep an eye on SAVING rates and move money if you feel that it is worth the hassle. Rates keep changing every week, so you must check with each company.
An example of a high paying telephone account Heritable Bank (08456 07 1212) East Access Account is still paying 6.46% (5.17% net) and guaranteeing that until 2010!
For over 50's, Coventry BS, E-saver account, for instance, is offering 6.4% gross (on line only). Bradford and Bingley (6.45%);. ICICI Bank's HSAVE internet account. The Post Office  (0800 169 4977) is offering 6% in their Instant Access savings account if you have anything over £500 in there (includes a 1% one year bonus). Below £500 it is zero. A number of organisations are offering as much as 6.3%  e.g. AA, IceSave, Alliance and Leicester and Abbey. Some may ask you to pay into an ordinary account as well.  In view of the slight decrease in the Bank Rate one financial paper suggested that people with savings should grab one of the high term rates now. For instance Chelsea is offering 6.7% (5.36% net) was fixed until Feb 2009. It is a non complicated offer with immediate withdrawals allowed but with a 90 day loss of interest on any amount withdrawn without notice. Anything from £1,000 to £500,000. That even beats some ISAs. You can even get 5.75% over the counter at the Post Office if you have £500 to spare.

BONDS  with one to four years length are paying the most and, as most of them are fixed, you may be in the money if rates fall.  Take a look at  Chelsea , Anglo Irish Bank phone or post (0845 455 2222); The Bank of Scotland  ; Birmingham Midshires  (08456 03 66 01) ; Saga (0845 603 2292); Alliance and Leicester (08000 68 66 99); Yorkshire BS ; Halifax (fixed rate websaver), Icesave, Nottingham BS 0800 077 6777 Nationwide , London Scottish Bank High Interest Bond, Julian Hodge Bank Capital Millennium Bond. Don't want to tie you cash up for a year or more ? Bradford and Bingley are offeringa 6 month deal at 6.5%

Alliance and Leicester are advertising a Current (over 50s) Account paying a very good rate up to £2500, (very little over that amount).  The interesting thing about this account is that they give worldwide travel insurance up to 79 years of age, plus private out-patient consultations up to £750 p.a., plus credit card and Identity protection  But it is not as wonderful as it sounds.  You have to pay them £10 a month for the privelage; there are just two private consultations and the 2008 advert confusingly says that the high rate reverts back to less than the bank rate in 2007. The main purpose appears to be to get your current account.

Other 'perks' from Alliance & Leicester are a free one year authorised overdraught facility for new on line applicants and free worldwide travel insurance up to 79 years of age (!)  They will also pay £25 commission  to both you and your friend if you recommend them and they open an account. You have to have an account with them yourself to do this.

Halifax (Ultimate Reward Account) have now caught onto this idea offering worldwide travel insurance, home emergency, car breakdown and credit card cover as well as a good rate current account (6.17%), for £10 a month.

Most banks and building societies are covered by the Financial Services Compensation Scheme (up to £35,000 is absolutely secure) and may subscribe also to the Banking Code.  But you should check these things. If foreign banks get in trouble you are assured of minimum payments by their governments It can be as low as £15,000. You would then have to apply for the rest from the more generous British scheme

For a selection of rates see  www.find.co.uk

Of course, anyone paying tax should look carefully at ISA's before anything else.

ISAs The government's Individual Savings Accounts (UK only) See http://www.thisismoney.co.uk/isacentre  Now confirmed to be an indefinite form of saving. From 6/4/08 all PEP (Personal Equity Plans) became Stocks and Shares ISAs and you can invest your full annual ISA allowance of £7,200 in the 2008/09 year, £3,600 of which can be in a Cash ISA.  Mini and Maxi ISA's no longer exist . Cash ISA's can be transferred into Stocks and Shares ISAs.  The current Mini Stocks and Shares limit has increased from £3000 to £4000. A couple can each have their own allowance. Rates tend to be slightly higher than normal savings. It pays to shop around and, if your ISA is getting uncompetitive, you can swap it to a different one - but you may lose some interest on the way or have a one-off charge. Usually you have to approach the new company and ask them to transfer the money for you.  Try  www.find.co.uk , www.moneyexpert.com  or www.blays.co.uk. for a complete list. A good No-Notice online or telephone cash ISA can pay as much as 6.35% but National Savings have been clipped down to 5.55% tax free http://www.nsandi.com/savingneeds/taxfreeinvestments.jsp Can't be safer than that.

Regular Savings Wars  See here for details. But do come back after!
I am beginning to think all this publicity about high savings rates is just a load of spin.  They really don't want to pay you well above the Bank Rate.  I mean, how could they ?  So there is all this publicity on the TV and posters in windows about paying you 8% (and more) when they are just wanting you to get hooked on a Current Account, where you pay in your salary/pension.  Most want you to pay in a £1000 a month to some current account for the sake of a high rate Savings account, into which you can't put much at all.  And at the end of the year they hope you will be too idle to change.  The cost of this advertising must be astronomical.  And who is paying ?  Anyway, for what its worth, read on...........

The Halifax Regular Saver Account is now 7.0% gross. Each person is restricted to saving up to £250 per month. No big deal.  I did this last year and was rewarded with £86 interest in April. But it was a good way to save and finished up with £3,000, which we might have frittered away otherwise.  (But at least their current account is paying 6.17% on the first £2,500) Nationwide has a similar scheme but paying 6.25% providing your savings increase by £200 to £250 a month.  And they don't tie up the money if you want it. Their E-savings account is also quite good.
The Halifax Children's Regular Saver is 10% (from £10 to £100 a month) Tax free, too.
Both the HSBC and Norwich and Peterborough Building Society (NPBS.co.uk. Tel : 0845 3002511) pay well. The same sort of conditions apply (i.e. pay in your salary/pension and save regularly).  Alliance and Leicester, not to be outdone, are offering 12% fixed for one year on similar Savings accounts if you open a Premier current account.and in their case they only demand £500 paid into the current account each month. Most demand £1000. They also pay a very good rate on Current Account balances up to £2,500.

Abbey are now paying 8% (with bonus) on their current account.  But again, only up to £2,500.  They, too have a Savings account, which pays 10% fixed for a year but you have to have another 'qualifying account'.  See Abbey  Whilst there, also look at their e-savings, 50+ and Saver Reward accounts. They also have an 8.1% (fixed one year) deal providing you put the same amount in their 3 year Guaranteed Growth Plan.  The guaranteed growth looks good at 10 % until you divide it be three and take the tax off.

Barclays Bank are offering 10% gross for monthly savings of between £50 to £250, providing you have at least £1000 per month paid into their measly current account. So, basically, they are paying over the odds to get your account, though people who already have their wages paid in would do well to take up this offer.  No withdrawals during the year, though.  

Can't Save, Won't Save ? Lloyds TSB have launched a unique idea with their Debit/Visa card. They will automatically round up purchases you make with the card to the nearest pound and sweep the extra into a Savings account of your choice.  So you can dispense with that piggy bank.  Novel.

And there is a useful site at http://www.taxvol.org.uk/retired.htm/ (free tax advice to older people by volunteers)Tel. 0845 601 3321 email taxvol@taxvol.org.uk. They may even make home visits for disabled people

The (official) Financial Services Authority has a new site at http://www.moneymadeclear.fsa.gov.uk/

The current tax allowances can be seen at http://www.hmrc.gov.uk/rates/it.htm  (IHT, Income etc)

For older people a good site is http://www.helptheaged.org.uk/Money/_default.htm

A good general site which will give you links to most financial sites is www.77finance.co.uk

There is about £466 million lying idle in National Savings accounts.  One person found that an early savings account set up by her parents had accumulated nearly £500.   If you think you might have similar savings lying around you can ask NSI to try and trace it. Click Here.  There is also around £30 million of unclaimed Premium Bond prizes.

PENSION CREDITS

The government reports that there is £2.5 billion in pension aid which pensioners are not taking up. In fact there were 33,000 FEWER claims for pension credits this year. The pension credit scheme aims to ensure that no pensioner over 60 receives less than £119.05 a week (£6,1906 per annum) and that no couple receives less than £181.70 per week (£9,448,84 per annum) Over 65s can claim even more even if a couple is already receiving over £12,000 per annum. Are you SURE you are getting your share ?  Because apparently one third of those eligible are not claiming. For more information call the free phone line at Age Concern on 0800 009966 or the government Pension Credit helpline on 0800 99 1234

The rules on Pension Credits are a little complex.  e.g. the description of what constitutes a partner.  The partner does not necessarily have to be over 60.  In addition benefits may be payable to people who have additional pensions such as annuities. One can get an estimate of how much you could claim from http://www.thepensionservice.gov.uk/pensioncredit/age65.asp  But don't delay. Back pay can be claimed but only up to a year before a claim.

Mortgage rates have risen rapidly, of course, and most of their Standard Variable Rates (SVRs at over 7% are higher than when the Bank Rate was last at the present level.  Many people have cottoned on to a fixed, tracker or discounted rates, sometimes saving as much as £4,000 over two years on a £150,000 25 year mortgage. That is quite a saving, especially when you think of the tax you might have paid on £4,000. Although you must beware of high entry and exit charges and do your sums, you could very well save this sort of cash by changing to another mortgage as the first deal ends. But, because the lenders are expecting to harvest higher rates from borrowers in the near future they have withdrawn their Fixed rate offerings. You can still get a discounted rate such as HSBC at 4.99% for 90% as long as you van find £1500 arrangement fee and astick with it until 2020 (better not think of dropping out early!). You can get as much as 95% of the property value from Cheshire BS with a deal that will cost you £1500 to arrnage and then Base rate + 0.54%. Mind you Marsden BS will charge you half that to arrange and the same repayments and NO REDEMPTION PENALTY (Unusual these days)
It is not quite as bad as when I wanted a mortgage in 1961. I was in the middle of negotiating for a house and the Pru said "Sorry, try again next month!"

That Overdraft and Credit Card Charge Business
Swingeing charges on Credit Cards and unauthorised Overdrafts have been a safe bet for banks, with one making 40% of its card company profit from these. Not content with this card companies are increasing interest rates, scrapping interest free deals and reducing the number of days before you have to clear the debt.  If you think that you have been charged unfairly TAKE ACTION.  See HERE how to go about it.

A number of people have been awarded large settlements by banks and building societies when they contested the punitive charges made due to their unauthorised overdrafts and credit card limits. Such charges can be as much as £35 for going over by £10. Banks are ripping off customers for as much as £4 billion a year. Magazine 'Which' says "The law is clear that when bank charges are disproportionate then the charge is a penalty, rather than a reflection of costs and, as such, is unenforceable in law".  Nevertheless the OFT has, so far, failed to take court action on any case. BUT courts have ruled in favour of the banks in two recent cases, so no-one should get the idea they can run up overdrafts without paying.  All such settlements are now in abeyance awaiting a court decision as to what is fair..... So, customers are stuck in limbo as claims against current account default charges are on hold until the test case between the leading banks and the Office of Fair Trading (OFT) is settled.  As of April 08 this is still on-going.  However the banks are not out of pocket!  Research by Uswitch reveals that the ‘big freeze’ could mean almost one million claims, worth a staggering £713 million, being put on hold. By keeping this money from consumers, they estimate these frozen claims could net the banks an extra £20.5 million in interest until the case is settled.

In March 08 the news was: The test case ended on the 8 Feb 08 after nearly four weeks of legal discussion between the banks and the OFT. Soon after, we were told the judge was expected to take a few months to make his decision on whether the charges could be unlawful, as first he needs to check, read, consider and double check everything he has learnt. A decision is not expected before July 2008  Keep and eye on the OFT page on the subject HERE.  If you think you have a case you should apply NOW as overcharges over 5 years old will not qualify.  How to claim ?  See HERE  Please note that, if you have a case outstanding and the banks win their case you will not only have to pay the charge but also the interest on the amount.

For further information on how to make a claim see www.bankchargeshell.co.uk and www.bankactiongroup.com See also sample court cases at bankcharges.htm.

Personally, I can't see banks being willing to write off charges more than once.  People who have overdrawn once are likely to overdraw again.  I think that the next time they plead with their bank that charges are unfair they are likely to get 'a flea in the ear', just the same as people who fall for phishing more than once. One recent judgment turned down an application because it was made on behalf of a client by a 'no fix, no fee' company, on the grounds that the company had acted unlawfully as it was not a qualified solicitor. "Which?" recommends, therefore, that people should make their own applications.

So, Watch Out for charges from Banks and Credit  (and Store) cards. Some charge over £30 for a missed payment or going over the credit limit, £10 for a replacement card and £15 extra for the letter telling you they have charged you !  Some of these cheaper options may turn out to be very expensive indeed. Introductory rates of 0% (Halifax, B of S, M & S, Lloyds) are very tempting but they have to get their money back somehow.  The lowest standard rate is now up to around 9%  but only if you are considered to be 'low risk' and many charge as much as 11%. The OFT has now banned 28 credit card companies from claiming their low introductory rates were their APRs. Bank charges can be equally high.  The rates charged for each bounced cheque can be huge. HSBC £25; Barclays £30, Lloyds £35, Natwest £38, Halifax £39. Unauthorised overdrafts are charged as a percentage of the amount and it can be as high as 30%.   So, now you know how the banks can write off huge bad debts that they unwisely loaned and still make even bigger profits. The Financial Ombudsman  http://www.financial-ombudsman.org.uk/ is receiving complaints at the rate of 5000 per week.

Please note that the OFT case against banks is entirely separate from the question of unfair charges for late payment on Credit Cards.  You may still question the legality of these if you feel they are excessive.  See HERE how to go about it. Many people have had charges reduced.

The Loan Insurance Business (PPIs)

One site which is dealing exclusively with this problem and helping people reclaim charges that have been wrongly made is www.ppireclaimservice.co.uk There is a lot of information there.  If you want them to take it up on your behalf there will obviously be a charge. Take a look.
In this age of low cost loans and competition one must check carefully how the company is managing to offer cash at such a low rate.  A closer look reveals that some lenders - even well know names - try to make up the difference with additional insurance in case you get sick or lose your job. On a £5000 loan over three years one (Internet) Bank charges nearly £1000 for insurance, more than doubling the cost of the loan, whilst another (Building Society) not only charges half that fee but also offers the loan at 10% less than the bank! This made the cost of borrowing almost precisely half what it would cost from a big bank. What the Mail on Sunday described as a scam is the fact that many of those they telephoned added the (voluntary) insurance automatically and did not even mention that they were doing it or even what it was for. Always bear in mind that the profit margin on loan insurance is estimated to be around 70%.  So they will sell it to you if they can. Most self employed people would not be able to claim if they had no work and pensioners probably couldn't claim anyway.  But did you know that you can obtain this sort of protection from separate companies such as Paymentcare.co.uk and britishinsurance.com for much less than most banks charge. Shop around if you feel you need this.
n.b. Jan 07. The FSA is going undercover to find out which organisation are selling PPIs to people who cannot possibly benefit. Let us hope they rapidly expose the Banks and Mortgage lenders who are continuing to perpetrate this scam and NAME and SHAME them.  It is thought that the number and total of claims against lenders (for miss-selling) will outstrip the number claiming against banks for 'higher than reasonable' charges for unauthorised overdrafts. Of course there is always someone who see they can make easy money out of this so the companies wanting to 'help' you with such claims are queuing up for your business.  Better to do it yourself.

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The Daily Telegraph has published a series of free personal finance guides. For your copy telephone...0870 167 0980 (Retirement planning); 0870 169 0999 (Inheritance Tax); 0870 382 4409 (Buying property abroad);  0845 450 9190 (Private Medical Insurance); 0870 830 3421 (Investments); 0800 068 6065 (Releasing the Wealth in your Home). Another booklet about remortgaging to release money is Home Truths, issued by Key Retirement Solutions on 0800 068 6065. But they ARE in the business and you may be also offered a 'no obligation consultation'.

More useful websites: www.express.co.uk/money/  www.arrow1066.co.uk, www.betterfinance.co.uk  www.moneysupermarket.com (Daily Express)  www.moneyexpert.com  www.mortgages.charcol.co.uk (a broker)  www.learnmoney.co.uk  www.thisismoney.co.uk  (Daily Mail) which has links to the whole world of finance or  www.virginmoney.com  or  www.bestinvest.co.uk  to compare various products www.moneyweb.co.uk  http://money.guardian.co.uk http://News.ft.com/yourmoney (Financial Times). www.moneysavingexpert.com & www.yourmoney.com  For other savings rates check Teletext Page 255 on BBC 2

Investing for Grandchildren
Each child has their own annual personal allowance of £4,745 income p.a. free of tax and a capital gain allowance of £7,500 per year. Grandparents have the advantage of being able to make gifts to grandchildren, whereas parents who purchase investments or savings on their behalf are taxed on a child's income in excess of £100.  Whenever possible you should save in the child's name to avoid paying tax. Parents should complete Inland Revenue form R85 as that tells the taxman that the saver is a non-taxpayer and interest will be paid tax-free. Young children cannot have ISAs in their name as they are only open to the over-16s.

Going for Income ?
Bonds are promising the highest rates. But it is not all plain sailing.  These are loans to companies (or the government) which mature at certain dates.  You can expect around 6.5% from a range of bonds. There are some High Income Funds available, either within the ISA investment area or non ISA.e.g. www.newstarinvest.com,  but there may be an initial charge**  Look at  www.morethan.com/money  But they are linked to the performance of companies and have a higher risk. Bonds and rates are variable and your capital could go down in value. That said, most are not as volatile as the stock market generally. Look at  www.bondscape.net for details of bonds and brokers who sell them.  See also Stakeholder Pensions under Annuities, below.
**  Most investments of this kind involve an initial charge and this may be quite hefty, eating into any anticipated gains you may make.  The charge can be as high as 5.5% of the sum invested.  This is in addition to annual management charges, which can be from 1 to 1.75%, again taken from any gains or interest which have accrued.  Though management charges are unavoidable you can shop around for a reduction in that initial charge. For instance Financial Mail mentions that www.financial-discounts.co.uk offer considerable discounts on such deals.

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U.K. Tax exemptions. http://www.hmrc.gov.uk/rates/it.htm (The 2008-9 rates are now available. 2007 figures in brackets. The first £5,435 (£5,225) of each person's income is free of tax. This rises to  £9,030 (£7,550) at 65 and £9,180 (£6,790) at 75 (a big jump). Blind people can add £????? (£1730) to this. This year nothing is taxed at the lower 10% rate (£2,230 )N.B. If you are lucky enough to have total income of £21,800 (£20,900) or more your age related tax allowance is reduced by one half of the excess amount until it is reduced to the ordinary personal income tax allowance of £5,435 (£5,225).Your age is calculated at April 5th, so some 65 /75 year olds already qualify.  If a married man (or his wife) was born before April 6th 1935 then they still qualify for a Couples Allowance  (married or civil) of £6625 (£6365) if one is over 75 or £9030 (£7550) if 73 or 74 (another big jump). The Higher rate tax band now starts at £41,435 (£39,825) when it goes up to the 40% or ANYTHING above that amount.
Don't forget that children have their own £5,435 a year tax allowance.  Parents should make sure they fill in a tax form R85 to ensure that they get the interest on their savings tax free.

INHERITANCE TAX

 (9th Oct 2007 - This section has been amended due to the sudden increase of tax free allowance to legal couples. The situation is complex and you should consult a financial advisor)

As from October 2007 a substantial change was made in the rules governing Inheritance Tax.  Hitherto the value of the estate left by the last survivor of a legal partnership was taxed at the punitive IHT rate of 40% if it was more than £300,000. The 2008 alowance is £312,000 or £624,000 for a couple, as legal partners 'inherit' the partner's tax exemption. This is retrospective, so it applies to partners who died a while ago.  But the exemption would only amount to the level that was relevant at the time of their death and would be less any amount that they willed to (say) their children.  The site below gives examples and can be consulted as to the level of exception in any particular year.

Reducing your heirs' liability to Inheritance Tax (IHT) See http://www.hmrc.gov.uk/leaflets/iht.htm for leaflets on IHT.  

**  A little known fact about IHT.  Ex-service personnel (and Ulster Constabulary) whose beneficiaries can prove that they died as a result of their injuries from their active service, are exempted from Inheritance Tax. Financial Mail recommends that anyone who thinks this is likely should prepare their case carefully before they depart.

Did you know that in the Isle of Man, they pay no inheritance tax and no council tax and the top rate of income tax is 18%? That compares with 40% on the mainland of the UK. From April 2006, no resident on the island will pay more than £100,000 a year in income tax. In addition, the rate of corporation tax is being reduced from 10% to zero  So all you rich people you had better get moving !

There is a very useful site on this question at http://www.squareonefinancial.co.uk/inheritancetax.html Work out your liability and the best way to deal with it.  Another article is at http://www.caredirections.co.uk/frame_comment_23.htm

You can give away as much as you like during your life but the money would still be taxable if you do not survive seven years after the gift. If you survive over three years the percentage taken by the tax man is reduced.  For example, if you gave £100,000 your heirs would have to pay £40,000 to the tax man. Between 2-4 years this would be reduced to £32,000. 4 -5 years £24,000. 5 - 6 year £16,000. 6 - 7 years £16,000

You can give away a total of £3000 per annum without any tax worries (or £5000 as a wedding gift to one of your children (before they marry), £2,500 as a wedding gift to a grandchild or great grandchild and £1,000 to anyone else). And you can give any number of £250 gifts to individuals. In addition you can make  regular gifts from normal income and this, too, is exempt from IHT but you must give it regularly and 'not materially reduce your standard of living' (pretty vague that). So you could put, say, £25 a month in savings for each grandchild, if you can afford it.

Copied from a government site : Q: "Can I carry forward any unused annual exemptions (for cash gifts)?"
A: Yes. If the total value of gifts in any one tax year is less than £3,000 any surplus can be carried forward to the next tax year but no further. You can even carry forward last year's £3000 allowance.  
So, If you gave someone £6000 in one year and nothing the following year it still would not be taxed on your death. But if you gave away £12,000 one year and nothing the following year £6000 of this would still be taxable if you did not survive 7 years from the date of the gift.

One of the worst aspects of the IHT problem is that, if you are over the limit and you die (without a legal partner) the tax has to be paid before "probate". So nothing can be released to your heirs until the tax bill is settled.  If you have not left enough cash to settle the bill then assets such as property may have to be sold in order to raise the necessary funds. And, even with a straightforward will, probate can hang on for a year (as I know to my cost).

For the (many) people who have fled to warmer climes things get complicated. You are still considered to be 'domiciled' in the UK if your FATHER was born here (!) You may be considered to have left only if you are away for over three years, sell all your UK assets and give up your passport. Then you may be liable to taxation in the country to which you fled.

A novel way to reduce your liability is to have a new type of mortgage. In Switzerland and Japan the lifelong interest only mortgage is popular and you may be able to obtain one over here. Basically you just keep paying the interest on the loan but the mortgage then passes on to your heirs, who could then sell the house and settle the debt.  With the way house prices go the chances are they will still inherit some cash but their IHT liability would be considerably reduced (as would their inheritance) - but, at least, the Government would not get their hands on 40% of it.

You cannot be taxed on any money that was never yours, so you can consider making out life insurance plans in trust to others. Even a legacy can be diverted to another person within two years of your receiving it.  
One does not have to pay tax on the death of a spouse but people who just live together (without being registered under a civil partnership) do not have this benefit and could be caught having to pay IHT just to stay in their joint house.  From December 2005, however, it was possible for couples (of any sex) to register under civil partnership laws. Unfortunately a test case turned down any help for sisters who have lived together all their lives (seems unfair!).

Nil Rate Discretionary Trusts. In view of the fact that in most cases the new rules allow a couple to have a much larger IHT Allowance I have cut the section which referred to Nil Rate Discretionary Trusts. For people who jointly own a house but cannot take advantage of the new, more generous,  rule because the do not wish (or are unable) to marry it is probably worth them investigating this further
 
Lastly, you may wish to consider taking out an insurance which will help your heirs pay the IHT bill when it arrives. Such insurances are tax efficient in their own right.

I state (again) that I am not giving financial advice.  For that you should find a professional financial adviser.

Pensions :  Do you think that your National Insurance contribution record might be incorrect ? Look at this site for an explanation as to what might have happened http://nirs2.atspace.com/index.htm  In fact, because people may now have paid into multiple pension schemes it is easy to lose track of them. The Pansions Service 0845 6002 537 www.thepensionsservice.gov.uk offers a free pension tracing service. They have a database of over 200,000 pension schemes.

The many benefits available are very complicated to describe.  The best document for this is at http://www.thepensionservice.gov.uk/pdf/pensionersguide/pg1june06.pdf.  You will need to download a PDF file reader (such as Acrobat - 20 mb!) to read this. The document deals with most benefits such as Pension Credits, Council Tax Benefit, Carers allowances and even Child Benefit and Tax Credits
According to the Saga Magazine 2.5 million over 60's are missing out by not claiming their Pension Credit. See  www.thepensionservice.gov.uk The government ensures that single 60 year olds have a total income of not less than £119.05 per week; £188.05 for couples.  This is even greater of over 65s. You may be surprised that couples receiving over £12,000 per annum can claim.  However, the calculation is complex and savings are taken into account, as well as expenses such as mortgages.  The best thing to do is look at the charts on the Pensions Service website. Click here. You can apply for Pension Credit by calling the Pension Credit application line 0800 99 1234, textphone 0800 169 0133 (8am to 8pm Monday to Friday, 9am to 1pm Saturday) or can print a form by going to the site on line.  For deaf people with a text phone the number is 0800 169 0133

Anyone deferring drawing their state pension can get increases equivalent to 10.4% for every year that they wait, OR you can get a lump sum instead.  At current estimates this could be as much as £30,000 for five years' delay.  But be careful. Two out of every five people don't make it to 70 ! And, in some poor areas of the country this is as much as three out of every five. For longevity live in Cornwall !  Also, bear in mind that the 10% tax band will disappear in April 2008 and this lump sum could well be affected by this.

From 2012 everyone in employment will have the equivelent of 7% of their salary saved into a pension scheme, 4% of which will come from the employee. A problem for the government is whether this will be a disincentive to work and save.  As is the case now, people who saved hard for their retirement are penalised when it comes to means-tested benefits (from additional pensions to household expenses such as central heating installation and in many other ways). It has been the same since the introduction of the 'Welfare State' : if you waste your maney during your life someone else will hopefully keep you in old age. I realise, however, that there are many people who have NEVER been in a position to save, even living frugally. This problem will never be resolved. One cannot, in a modern socierty, let people starve because they were not wise savers during their lives, as Malthus suggested. Our local workhouse still exists, but has been turned into modern flats !

See more on pensions, including SIPPS lower down

Education Maintenance Allowances (EMA) are available to students of 16 and 17 who are studying more than 12 hours per week and whose parents earn less than £30,000 per annum.  The allowance is not  affected by the student's own earnings.

Child Trust Funds. In January 2005, children born after 31st August 2002 will receive a voucher for either £250 or £500 (depending on family income at the time). It is intended that this should be invested and is not available to them until they are 18.  This can be topped up by parents or grandparents. So, if you are feeling generous watch out for this.

Borrowing Money. A while ago, before leaving office, the Bank of England's Eddie George said "That (our) rate of borrowing is not sustainable". But we keep on doing it. We are now collectively  over ONE TRILLION pounds in debt, which is £17,000 for every man, woman and AND CHILD in the UK ! and are borrowing extra billions by remortgaging our houses every month (as well as those people paying big percentages on Credit and Store cards).  If you got a low fixed-term mortgages you will now be laughing.  People are also thinking " If I pop off with an estate worth £?00,000 my kids are going to have to face a big tax bill. So I might as well spend it now, or get them started on the housing merry-go-round ".  For the latest in mortgage rates see www.mortgages.charcol.co.uk
In March 07 one research organisation found that people who borrow CASH from a credit card may be paying up to 27% per annum. This has risen substantially over the last year.  
STORE CARDS are all more expensive (M & S is now on 23.9%; Miss Selfridge, Burtons and Dorothy Perkins all charging 29.9%) But the Independaent (Dec 07) suggests that it is better to trnasfer the debt to a credit card such as Halifax One, which has a 0% interest on both purchases and trnasfers for 9 months and then only reverts to 13.9%. And Nationwide's cards are also a good deal

Going for broke ? Individual bankruptcy is becoming popular as people get out of their depth in debt. It is not as shameful as it used to be and it seems and more and more individuals are opting for that as a way out of their (sometimes self-inflicted) financial problems. It is not recommended for everyone, as it can have lasting consequences, such as the inability to get a credit card or mortgage and the debt collectors can be after you for years. And folk might also think about the people who will lose out. I know it cost me many hundreds of pounds when I was in business when companies could no longer settle their bills  
However, a less painful way has recently gained in popularity.  A Debt Advisor may recommend that insolvent people with huge unsecured debts (such as Credit and Store Cards) arrange an IVA.  This is an Individual Voluntary Agreement.  For a fee, the Debt Advisor may strike up a deal with your creditors to pay off an agreed (and lesser) amount.  And this way you don't actually go bankrupt, even though you are insolvent.  Banks and other creditors might agree this so they get something.  If you go bankrupt they will probably get nothing at all.  So you CAN have your cake and eat it! You can rack up £60,000 on credit cards (despite being on a small pension) and then say "Sorry"! Another reason for the rise in IVAs is that a Debt Advisor gets no commission from advising bankruptcy and can get as much £6,000 from arranging an IVA!  So everyone is happy, the addicted shopper, the Debt Advisor and the Banks (who have set aside millions for this purpose, but are still raking in vast and increasing profits). So, who is paying for the feckless, stupid and financially incompetent (and a couple of unfortunate people who fell on hard times) ? Guess who ! Before jumping in to this please read an article at 50Connect HERE  or go and see your Citizens Advice Bureau

There are some organisations which may help tackle a debt problem. One is the free Consumer Credit Counselling Service  www.cccs.co.uk/ and the other is the Credit Action charity www.creditaction.org.uk. But one should first visit your local Citizens Advice Bureau. Unfortunately there is no easy way to tackle debt.  Consolidating your debts is one method but the chances are that the repayment term will be longer, so you finish up paying more.  Remortgaging may also seem to be a good way of reducing payments. But what you are doing is converting expensive short term unsecured debt against long term debt which is secured against the roof over your head. So be careful.

Loans
Ever wondered what your credit rating is ? Experian (www.creditexpert.co.uk) and www.equifax.co.uk are the people who know everything about you r financial activities.  I recently did a check on my own credit rating, using a free introductory offer from Experian, above. It wasn't too difficult but you have to wait for them to post you a Pin number.  The on screen report could be printed out and it told me whether I had been late in paying up on my credit card and whether I had an overdraft on my current account.  It also told me which companies had enquired into my credit rating (such as an insurance company).  It would have told me what my credit rating was if I had forked out £4.99. Big Brother is watching you. Right Mr Orwell ? Another company www.annualcreditreport.co.uk will provide a free report, but my Mcafee Site Advisor has not had time to check out this site.  Equifax recommend a regular checkup in case someone has nobbled your persona (is using your name to get credit at your expense) - and this seems to be happening more frequently lately. Even if you don't have to settle someone else's debt you might find it difficult to get your credit rating back up to scratch.  One couple couldn't get a mortgage because they had been erroneously listed as owing one penny on a bill!  I am not sure how one goes about correcting incorrect information. My report said I had an MBNA credit card.  It certainly hadn't been used and I was not aware I had one, even though these things drop through the letterbox like confetti.

The endowment policy mis-selling scandal. Recently some very large organisations have had their knuckles rapped because of the 'shambolic' way in which they have been dealing with people who believe they were mis-sold endowment policies.

If you think you were mis-sold an endowment policy e.g. one that was supposed to cover your mortgage, you can ask an Endowment Investigation Company to take up your case for you.  But they will charge a percentage of what you are awarded. This can vary between 10% and 50%!  Or you can follow the procedure suggested in Financial Mail.

• Send your complaint in writing to the advisor, insurer, bank or building society that sold you the policy
  Submit copies of supporting documents, such as letters sent at the time the policy was sold, and keep copies of all correspondence. You will probably be expected to fill in forms and return them to the company.  
• Either the seller will uphold your mis-selling claim and agree to pay compensation, or your case will be rejected.
• If your case is refused you can take it to the Financial Ombudsman Service.  It is free and impartial.  Endowment providers are obliged to obey the Ombudsman's decisions

The Financial Ombudsman  If you feel that you have exhausted all possibilities when dealing with a financial organisation you can consider complaining to the Financial Ombudsman at www.financial-ombudsman.org.uk

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Pension books are being phased out and people receiving state benefits will have money paid either into a bank or building society account or, if they cannot be persuaded to open one, will receive a Post Office Card account. Money will be paid out by the counter clerk 'swiping' the card.

News : Lost cash ?  There is a free tracing service for cash lost in various bank accounts. Maybe granny left a fortune.  A single form is circulated to 45 banks. Download the form from  the British Banking Association - www.bba.org.uk

Remortgaging
The cheapest way to borrow money - for house owners - is still to re-mortgage. Vast sums are being borrowed in this way (mortgages represent the vast majority of the trillions that we owe in the UK). A number of Building Societies will lend money to Owner Occupiers at reasonable rates, keeping the same rate for a year or so. But see the Sunday Telegraph or Mail for the fees charged and whether there is a tie-in period ('redemption penalty') after this initial low rate. Those which don't tie in may still charge a low rate. But compare this with other forms of longer term borrowing and you can see the advantage of remortgaging.  With deals like Intelligent Finance  (Halifax) , Natwest or www.oneaccount.com (RBS) you can reduce mortgage payments even further by linking your current account to the mortgage, so you only pay interest on the balance. It is a question of whether you are prepared to put the house up as collateral or are keen to keep the house value intact.  There may be an arrangement fee, which would make it uneconomic if you are borrowing a smaller amount.  It is difficult to imagine why ANY house owner would borrow large sums on credit card and store cards at their high rates.

Equity Release   (5/08) You can get a free booklet on this subject. The Mature Times guide, produced in association with In Retirement Services, is the first step to finding out. Call freephone 0800 082 65 70 quoting MATN080507.
Equity Realease is where you release part of the value of your house but still remain in it. The money is then used for living or invested to produce income. No repayments have to be made until the person dies, when all the cash and rolled up interest is taken from the value of the house.  This would not be done whilst the spouse still lives in the house. The cumulative interest can mount up considerably over a period of years but the total sum will not exceed the full value of the house (so beneficiaries of the will will not be left with a debt)  It may be particularly suitable for people without dependents and who do not have children to which they wish to will the property or for single people who wish to reduce their IHT liability (see above). People on means tested benefits should be aware that these would almost certainly be affected.  Financial Mail also has a free guide called Home Truth  (Tel 0800 068 6065) .  The government's Financial Services Authority (FSA) also have one called Raising Money from Your Home  (0845 606 1234 or www.fsa.gov.uk) And IFA (Independent Financial Advisers) can put you in touch with members on 0800 085 3250 or www.unbiased.co.uk   Norwich Union has launched an informative film (available in VHS or DVD format) available to consumers and intermediaries alike. To request a copy consumers can call 0800 404 7137

Houses/Buy to let ? : The best investment?  There can be no doubt that an investment in a property at any time since 1945 (apart from a dip in the 1990's) has beaten almost any other form of savings or investment, although the recent fiancial troubles seem likely to stem the ever upward trend.  Fortunately, we are allowed to keep the whole of the increase in the value of our own house and I have known people make  fortune by constantly moving. But what of the current trend of 'Buy to let'?  In this case you have to declare the increase to the taxman and he will treat it like any other capital gain (now taxed at 18%).  Which means that you have to pay tax on the increase, although you are allowed a capital gain each year on investments.  "Not Fair!" I hear you cry.  "What about inflation ?"  Well, you ARE allowed a miserly amount for that. But in no way does it keep up with house price inflation. The fact is that you have to wait three years for ANY 'taper relief' as it is called. After three years you are allowed to deduct only 5% of the gain before tax. This is increased by 5% per annum for subsequent years up to a maximum of 40%.  Even this arrangement only started in 1998, so taper relief before that date cannot be claimed. Well, I suppose you could sell your own house and move into your second home for a while before selling that.  But better ask an accountant about that and any other scheme for avoiding Inheritance Tax.  The government is determined to put the screws on tax avoidance schemes.

Capital Gains Tax.  This is a complex subject and the government has upset a lot of business people by trying to make it simpler.  From next April the tax on a capital gain will be at a standard 18%.  Currently small businesses have a more generous regime.  However, from the point of view of private individuals who have bought second homes to let or in the hope of making a killing as house prices rose, this is likely to be a benefit, especially if they pay income tax at the higher level of 40%.  It is not quite such a benefit to those on the standard tax rate. A Capital Gain has always been considered as part of your income.  So, currently, someone who is on the lower tax scale would still have only paid tax at that level providing the capital gain (over and above their basic annual CGT allowance) did not bring them into the higher tax band in the year in which they sold.  If their total 'income' in that year brought them into the higher tax band they would have had to pay tax at 40% on the excess. Once again, this is all very complex and time to seek professional advice as the amounts of tax can be substantial.  One might conjecture that there would have been a reduction in the number of 'buy to let' houses sold prior to the 6th April 2008 if owners considered that they would save many thousands in CGT by waiting.

From April 2008 any 'indexation' allowance is lost and the capital gain will be the complete gain since purchase (less your annual CGT allowance)  See the government site HERE  n.b. The Capital Gains Allownce in 2007-8 was £9200 per individual.

Helping offspring with house deposits : See www.ParentAidNow.com

Investing Get a free guide to the stockmarket from The Share Centre 0870 400 0266 www.share.com/freeguides   or See Here
If you have investments in stock and want to keep an up-to-date record of your folio go to www.iii.co.uk. You have to register your name but then can enter the details of investments, which will be kept up to date for you.

Independent Financial Advice?  It may be independent but it isn't free.  Advisers have to earn a living and they will want you to buy something that pays them a commission. Purchasing Unit Trusts, for instance, involves initial charges and it is from these that the adviser gets his cut. Try  www.unbiased.co.uk  Also, the Stock Exchange supports a website at  www.equityeducation.com but it does require you to register.  Other sites well worth a look are www.fool.com  and www.moneyextra.com. Free investment guides are also obtainable from www.share.com  

The dotcom and telecom mania, which left in its wake a trail of ruined or vastly indebted companies, (some as big as Marconi, AOL, NTL and British Telecom.) has finally subsided and is actually picking up again. Large airlines are having a tough time, whilst some cheap airlines (Ryanair) seem to be doing better. The housing market is still moving (just) and builders are doing well but we are only building as many houses as we were in the 30's.  Low interest rates are tempting people to spend, spend, spend. Money is cheap and savings bring a poor return. Mortgage payments are back on their way up but still there seems to be money about. So, retailing  has revived a little after a brief dip. We now owe 10% more than we did this time last year.  Biotechnology is still making great advances and such shares are yo-yoing as people get enthusiastic about the latest cure. So, what, if anything, do you invest in ?  Don't ask me. I once famously invested in Lea Francis Cars (remember them?) just before they went broke !!! If you suspect a company has gone out of business you can check at www.hmrc.gov.uk  But for independent shares advice you can look at www.invest.charcol.co.uk  or Thisismoney for ideas.

One area has been consistently profitable this century. This is what is called investing in The Dogs. Not greyhounds but shares which, for one reason or another, have a high yield (dividend) of over 5%. The Thisismoney site (Sunday Mail) follows such a group of companies and, whereas the FTSE was not a good place to be from years 2000-2004 (recovered late 2005 and has done well in 2006 and 2007) you can see that investing in these shares would have shown a considerable increase in value (as well as a good dividend return). . So, in a 'Bull' (rising) market see what can be done by investing in "The Dogs". But right now people are wondering whether "Dog Money" is safe.  You can get 8% gross dividend from some bank shares - just so long as they don't reduce their divi. next time around.  Who knows?  I anyone does they can be sure to become millionaires.

At the latter end of 2007 the Sunday Mail 'Dogs' list has risen but not as well as the main stock market index.  This was mainly due to the problems in the banking sector, which is often included in the high yielding list (e.g. Alliance and Leicester was yielding 7.8% but their investor advisor still has faith in them).

Such shares need to be picked carefully but are not necessarily in little known companies. In February 2005, for instance, they included Scottish Power, Dixons, Lloyds TSB, Alliance and Leicester, BT etc. Bear in mind that whereas dividends are taxable there is a fairly generous annual allowance for capital gains. Another way to invest in 'The Dogs' is to choose a High Income Fund. Such Funds derive their income from choosing shares which are earning a high dividend. Although the risk is proportionately greater the fact is that you would be unlucky if the whole fund lost substantially. You can usually either receive income or can have dividends reinvested.  Much depends on the skill of the Fund Manager and it is even possible to see charts of which ones are consistently doing well.

Unit Trusts :  A slightly safer way for the small investor is the Unit Trust.   These are funds which are managed by companies which invest in the stock market but spread the investments over a number of companies.  They may specialise in a particular area, of industry or the world, and some may be consistently more successful than others. e.g JPM (JPMorgan) Natural Resources has shown and annual growth of 33.9% over five years!  (So all Unit Trust Funds are not the same by any means).  

ETF's : Exchange Traded Funds. These shares, such as Barclays Global Investors iShare FTSE 100, involve no fund manager fees or advisor commissions; and annual fees are only from 0.25 - 0.5%  They can track particular sectors of the market (e.g. oil) or can concentrate on particular countries or areas such as  China or Eastern Europe.  Mervyn Webb (Saga Magazine advisor) describes them as the low cost airline of the investment world. 

Is it worth using the 'net' for buying and selling shares ?  Looking at the charges of on line trading companies it certainly seems to be the case. Take a look at www.halifaxsharedealing.co.uk as an example.

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Wills : If you do not leave a will your estate will be divided along a set pattern which distributes cash to your relatives. At present, in England, a spouse would only get the first £125,000 of your estate (£200,000 if there are no children from either party) In Scotland the law has increased the amount which automatically goes to a spouse to £300,000.  It is expected that this will soon be increased  in England to £350,000 or £650,000 if there are no children. You can imagine a situation, at present, where, if a house is in the name of the husband, and he dies without a will, children of either party would have a claim and the widow might have to sell up in order to pay them. So the change is overdue. Incidentally, if you don't leave a will and there are no known relatives the Queen gets the lot - and she doesn't need it. But it does show that making a will can be important. If you want to make a will on line see http://www.tenminutewill.co.uk/main.cgi  The charge is around £30.  ~
If you would like a free will writing information pack you can get one from www.bluecross.org.uk.  Obviously they hope you will put in a little something on behalf of your darling moggie or pooch.. and why not ?

For more details on taxes, including IHT (Inheritance tax) see http://www.hmrc.gov.uk/rates/it.htm

Annuities     This is a really complicated subject.  The government booklet on  and other subjects it is displayed at the Financial Service Authority site providing you have Acrobat Reader. As things have changed since April 06 I recommend that you read it thoroughly
A  recent law says that, at present, you must convert your company pension fund into an Annuity by the age of 75. Much greater flexibility is being allowed with company and contracted-out personal pensions.  After that date you would be able to take as much as 25% in tax-free cash (which might be used to pay off a mortgage, for instance) or the whole amount if your fund is less than £15,000, although only 25% of this is tax free ! If you convert a lump sum to an annuity, however, that income could be taxable. In addition to this change it is be possible to make a much larger contribution into a scheme just prior to retirement, if that benefits the retiree.  What is more, this lump sum will be added to by the government because of the tax relief allowed on pension contributions and the contributor can then draw out 25% tax free a week later ! What is even more confusing is that you can reinvest the 25% tax free lump sum in what is called a Lifetime Annuity and this has some advantages over an annuity bought with the whole of your pension fund.  I am beginning to sink in this quagmire. Help !

An annuity provides a regular lifetime income paid to you monthly, quarterly or annually from a lump sum, which is then lost on death..There are two main types.

(A) The CPA or Compulsory Purchase Annuity, which is bought from your company pension fund.
(B) The PLA or Purchase Life Annuity, where you pay cash in order to receive regular payments in return.

The money is invested in fixed rate stocks (government funds) by the annuity company.

The main distinction between these two is one of taxation. In the case of the CPA the whole of the amounts received will be taxed as normal income - providing you are in the taxable range - whilst the PLA is made up of returns of your capital plus interest on the investment. In this case only the interest is taxable because the capital is being returned to you.

Beyond this distinction there are options which allow a guarantee period for surviving relatives. Also there are annuities which increase payments over time to keep up with inflation. Generally, the latter will pay much less at the beginning but will overtake the set payments after about ten years.

Also there are annuities which are joint and will pay a spouse a proportion of the income after the death of the other annuitant.

The amounts received in respect of a fund of say, £10,000, vary enormously depending on which of the above schemes are arranged and upon the age at which it is arranged and also whether it is for a man or woman. This is one case when it pays to be older (or sicker!) when you start . It even pays, with some companies, to be in poor health or a smoker because the shorter your life expectancy the more you will receive each year - e.g.  www.britannicretirment.com. It also pays to shop around as benefits do vary from one company to another. Incidentally, you are not bound to convert your company fund to an annuity offered by the insurance company it is with. But once you have committed yourself to one pension provider you are stuck with it for life. Despite this only about one third of annuity buyers actually shop around for a better deal.

Because the rates vary so much I will not attempt to include them here but refer you to BBC 2 Cefax Pages 262 onwards, where the rates by various companies are usually displayed. No doubt there are also Internet sites giving this information. But as an example, in 2008, a Male aged 70 putting £10,000 into a Single Life Level Annuity with the Norwich Union would have received £724 per annum but a couple, where the last survivor would continue to get the pension, might receive £551or even  as little as £255 if it had a 5% per annum cumulative escalator (to take care of inflation).  Under a fiver a week for £10,000 doesn't seem a lot !

Smokers  This is the only time smokers really win. Because actuaries say their chances (of living to a ripe old age) are less, some companies will give them a better annuity (as much as 20% better) than a non smoker. Search for the 'Just Retirement' site.

Postcodes :  Although Legal and General will not advertise which areas qualify they say they will take where you live into account when calculation an annuity.  This is because the average life expectancy in certain areas is so much less than in others, so they may pay more if you retire to the Gorbals......

A guaranteed income for life ? The government is so keen on you making provision for your old age (so they can opt out at a later date !) that they will GIVE you money.  No kidding. This is the STAKEHOLDER pension scheme. Say you are 70.  If you use the following scheme you can pay £2,808 each year. The government adds £792 in tax relief, even if you are not a taxpayer. The scheme immediately pays out the 25% tax (i.e. £900) The annual return you get at 70 would be £238, taxable (a bit less for a woman) and the first payment is made to you immediately.  So your actual outlay is only £2808 - £900 - £238.  That is £1670. The annual income (£238) is 14% !  Mind you, if you pop your clogs you don't get anything back, so to make a profit on this you had better be healthy. Again, this is a way to reduce inheritance tax whilst enjoying a higher income during your lifetime. Check with  www.opas.org.uk  www.thepensionservice.gov.uk  or  www.hargreaveslansdown.co.uk (which is a Financial Advisor/Stockbroker)

SIPPS  (Applies to under 75s) A Self Invested Personal Pension. This is another method devised by the government to encourage people to save towards a pension. The encouragement is that you receive tax relief on the sums invested. This means that for every £100 invested by a standard rate taxpayer it only actually costs you £78 (and higher tax payers only £60). People on a salary can invest up 100% of that every year, whilst people who do not receive a salary can still invest £2,808 per annum (which is bumped up to £3,600 with the tax relief) Although you can put your existing company pension into a SIPP you should take advice on whether this is wise. It is not just cash which can be put into a SIPP. In addition, investments in property, shares and other funds can be added in. You can take out the resulting pension any time between the ages of 50 and 75. When you decide to opt to take your SIPP pension you can take 25% of the fund immediately as cash lump sum. The rest could be used to buy an annuity (see below) or you can take 'income drawdown', which means you can take regular income from the pension pot, whilst leaving the rest to accumulate interest (or, hopefully, make stock market gains). You can bequeath anything remaining, whereas an annuity continues until you die and then is wound up. However, if you opt for 'drawdown', when it's gone, it's gone. One organisation offering a list of companies which offer SIPPS is the SIPP Provider Group at www.sipp-provider-group.org.uk

See also www.pensioncalculator.org.uk (a government site)

GARS ? Another guarantee to mull over.  During the 70's and 80's, when insurance companies were rich and optimistic (and people were not stubbornly living to 84 and 87) hundreds of  thousands of policies were sold on the basis of a GAR or Guarantee Annuity Rate with a minimum lifetime income promised. Although at least one insurance company tried to wriggle out of its contract (and was slapped down in the High Court) other companies are only giving policyholders a limited period in which to claim their GAR, resulting in a substantial loss of income for life if they fail to reply.

Life Insurance (generally for younger people). This is  another area where it pays to shop around. A broker, such as Cavendish Online may find you a better deal than going to one particular company. In fact it can save you thousands over a period of 20 years.

Endowments
If you are thinking of cashing in an endowment policy and it is worth over £2,000 you will find that you get a better deal by selling it as a 'going concern'. Have a look at  www.policyplus.com (0845 20 20 200).  But not all policies are easily sold.  You need to shop around and it may be worth considering 'freezing' the policy rather than just cashing it in, which almost inevitably results in a poor deal.

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