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disclaimer
This page is under revision
NOTICE : I understand that the Financial Services Authority does not like unqualified people giving financial advice. I would like to state that none of the following should be considered as advice. I just like to point people in the direction of useful information. To find an Independent Financial Adviser (IFA) try www.unbiased.co.uk. Details on this page 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 or you get a 'Page Not Found', please email me at paterson.keith@gmail.com
Since 2021 the Bank Rate was 0.25%. From
mid June 2022 this rose to 1.25%. Slowly, banks, building
societies and other financial institutions were raising what they will
offer you for your hard earned savings. But is is such a fluid market
that I can only recommend that you search the internet. Try a site such
as https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/
By late July 2023 the Bank of England had raised the
Bank Rate to 5.5%. The general feeling is that this is the highest it
will get. But with only the chairman's casting vote in favour this is
not certain. Bad news for anyone having to renew their mortgage but
time to review any savings you may have. One regular saver account I
had was paying a miserable 1.25%. Time to look around. But it is not
easy. Do you lock your money up to get a better rate? Or will you
need it or regret it if it is stuck when other rates are
climbing? Difficult. This is even more confused by the
number of lesser known 'banks' which are touting for your money.
Martin (link above) is happy to suggest these as they are all covered
(up to £85,000) by the government. A couple he suggests are
Kroo,
and Chip. But one of the one year accounts was paying 6.1% for a one
year saver! More familar names like Sainsbury's offer as much as
3.76%.
And Nationwide now has an account where you can make up to three
withdrawals a year without loss of interest. And, although there is the
possibility of the Bank Rate going even higher, you may find that some
longer lasting savers are not as high as the shorter ones. The
finanicial organisations don't want to to get caught paying more than
they need to attract your cash.
So it pays to look around. Most high payers will want you to do everything on line. They pay well because they don't have a lot of staff hanging around in High Street banks waiting for your custom. In fact, High Street banks are closing rapidly, leaving the 'personal' field to the building societies. I do prefer somewhere where I can talk to a real human, whether it is about finance or my health!
Mind you, I have recently fallen for the safer idea of
accessing my account with a single fingerprint. Saves a lot of trouble
and you may be able to link your account to others you have. That is a real time saver.
Bear in mind that any reputable savings organisation will be committed to the government FSCS scheme,
which promises to pay up to £85,000 in the case of the organisation
going broke. If you have savings of over £85,000 (£170,00 for joint
accounts) it is wise to split it between more than one savings
organisation.
But with Inflation is running at around 10% any savings rates
you may find will be eroded over time.
The
scammers are not far behind in these circumstances. The magazine
"Which" has found several Facebook (X) advertisement for 'investments'.
Even legitimate Youtubes are interspersed with very doubtful videos
suggesting that you invest some cash and that you could see that rise
to thousands in a matter of hours! Pull the other one. See
my page at Help24.htm
The still complex matter of Benefits has been
brought together at https://www.benefitsguide.co.
https://www.gov.uk/browse/working/state-pension
Which gives the rate of the NEW State Pension. Older people may only get the BASIC State Pension
But take a look at https://www.independentage.org/information/what-does-new-financial-year-mean-for-me?
Good tips on this site https://www.moneyadviceservice.org.uk/en/articles/money-saving-tips-and-discounts-for-disabled-people
DOV(Deed
of Variation). It is possible to change a will up to two years
after the death of the will maker if you get the agreement of all the
beneficiaries. Or even if no will was made. This can be useful if it
appears that the tax bill (capital gans and IHT) appear high. It
may be possible to transfer cash into a Trust Fund for one's offspring,
whilst retain control of the cash while you are alive.
Property
Protection Trusts
Many people are asked to fund their later life care from the value of
their house before falling back on local council funds, which are
becoming increasingly scarce. There is a way in which you may protect
half the value of your house using this type of trust to will part of
the house to their heirs while they are still alive. There may be a fee
for this arrangement but if your think this might be appropriate it is
worth sttuding the content of this link https://www.
Inheritance Tax.
Believe it or not there is an Office of Tax Simplification !
(OTS) They are making proposals to simplify the Inheritance tax
(see below). It is possible that the Gift Allowances may change and the
special allowances for wedding gifts may be dropped. Also the
Seven Year Rule (whereby recipents are liable be taxed on gifts and
inheritances on a sliding scale over a seven year period) may be
shortened to Five Years. So, watch this space.
In worrying
times it may be time to look for security, despite
the awful rates. If anything should be safe it should be National
Savings, backed by the Treasury itself. National Savings
have
stopped selling Children's Bonds but have started a Junior ISA
paying 13.65% (variable) Parents can pay in up to £4369 per child (or they can start their own
from 16 years of age but they
must
keep it there until they are 18. No withdrawals..
NS&I Direct Saving rates fell earlier but they are now competing
with Guaranted Income Bonds paying 5.12% AER for a one year fix! The
latter compares well with most
banks)
Rates change rapidly, so you need
to check all of the following
Money Savings
Expert mentions some interesting regular savers for people willing to
open a main account.
Watch out for bonuses for new customers from the big banks, First Direct and M&S.
Santander 123
Account is
still good for people who can keep a credit balance and have regular
standing orders. But these things change so often that it is best to go
directly to their site and check whether you would gain. There is
a monthly charge.
Their main claim to fame is the pecentage payments they make towards
household
bills if paid via them.
I NEVER
give advice on investments (or even savings), merely regurgitating what
I see published for all to see. Hargreaves Lansdown suggest some funds
that would bring in over 3% if they continue to perform as they have
done for the last 30 years, in fact rising in value during the pandemic : See HERE. And as they often stress, investments can go down as well as
up. They can be sheltered from tax and capital gains in an ISA.
But, although
the stockmarkets have stabilised after precipitous falls when the
Covid-19 virus pandemic started it seems likely that things will be
de-stabilised for a long time to come.
It is highly
likely, with current interest rates, that you will still benefit MUCH
more by
reducing monthly bills than trying to save in other ways. It really IS possible
if you have the time and means to shop around.
If
you are on a low income you can get an adequate phone and broadband
deal for £9.50 a month from BT. That would be another £30 a month saved
for some people. The latest offers from Shell Energy and Vodaphone work
out at less than £200 a year. Look for deals which include line and
phone call costs. I paid over £700 a year for Virgin. Threatening to
leave had no effect, so I did. Not quite so fast but adequate for my
computing needs.
Mobile
phone deals vary a great deal in price,
too. (I have a 1p.com SIM (1p a minute) - worth a look if you are a light
user). When buying I have been happy with a refurbished phone from Backmarket
The
amount allowed free of tax on dividends
is £5000 for
each
individual. So someone with £100,000 invested and receiving a
5% dividend would not pay tax on the dividends.
Regardless of
whether you keep an investment in an ISA or other savings most people
will not have to pay tax on investment earnings The current tax
allowances (IHT, income
etc) can be seen HERE
The
following quote is now thought to be fake news In
1887 Marx was supposed to have said : "Owners
of capital will stimulate the working class to buy more and more
expensive
goods, houses and technology, pushing them to take more and more
expensive
credits, until their debt becomes unbearable. The unpaid debt will lead
to
bankruptcy of banks, which will have to be nationalised" It almost happened.
1. Interest on PPI cash returned may have been taxed incorrectly
2. Student Loan reapyments may have been taken too early.
3. Your house may have been wrongly rated for years.(mine was)
4. Payday loans may get compensation in some circumstances
5 Flight cancellations or delays since 2013
6 Power companies may not have paid credit balances when you moved.
7 Train delays
8.Oyster cards with cash left
9.Bank accounts which charge a fee for extras (and were pushed at you)
10. Paying Amazon Prime when you didn't want to.(It is very easy to get caught by this)
11. Reduced council tax for someone with Parkinsons (or other mental disability)
12. There is a tax refund for people who have to wear a uniform/T shirt etc and launder it themselves
13.Unclaimed Married tax allowances.
Anyone over
40 can skip the following paragraph, unless you are
advising a youngster !
LISAs
Lifetime ISAs You
can choose to save cash or invest in the stock market, and as with
other ISAs, your money can grow free from UK tax. But the real benefit
is a 25% government bonus worth up to £1,000 a year.This is a strange product was pushed by
the government from April 2017.
It is intended to help two groups (1) First time buyers saving for a
house (2) People saving for a pension. You have to be over 18 and under
40. The government (er.. you and me if you don't qualify) will add the
princely sum of 25% to any amounts you save in the scheme. You can add
up to £4000 per annum. So, a couple saving for a
house
could add as much as £2000 per annum (25% of £8000) towards their house
deposit. Someone saving £4000 p.a. until they are 50 could
have
as much as £32,000 added to their pension pot. This would be
in
addition to any (compound) interest of dividends paid by the scheme.
Dividends ? Yes, the money can be saved in cash or
invested
with an Investment company. This is all so new that it is not yet clear
which organisations will offer LISAs and what interest/dividends are
likely to accrue. BTW. If you withdraw your cash and do not
use
it for these two specific things (first house or pension pot) your will
lose the additional sum added by the government ! See more at http://www.moneysavingexpert.com/savings/lifetime-ISAs
At an average of 3.5% of income we are saving less than at any time since records were taken. The climate of low interest rates is dissuading people from saving and is keeping the country going as we go deeper into personal debt.
************
Don't forget
that if you and your legal partner are both under 81 and one is not a
tax payer you could be getting additional tax relief. You need to transfer unused tax
allowance from one person to the other. Only HALF of those eligible are
doing this and may be missing out. For older couples, where one was born before 6th April 1935, then different (and more generous) rules apply. This can reduce tax paid for a 20% tax payer by as much as £912.
If they do not qualify (being born after 6th
April 1935) then they can still apply to transfer £1,185 allowance to their
earning partner. This is worth £237 a
year. To apply see www.gov.uk/apply-marriage-allowance
Post Brexit everything financial was up in the air. The Bank of England reduced the bank rate to 0.25% (now back up to 0.5%) and pound fell against most other currencies, including the Euro and the dollar. The result was expected to be rising import prices (e.g. food, oil, gas) and therefore rising inflation. If the economy needs a boost the bank rate could even reduce to zero (as did Japan). Organisations seeking safety are even investing in government stock at LESS than zero percent. So, for now, I have deleted all references to bank and building society interest rates until things calm down.
So, what is left ? Equity release on a house? Which (magazine) discovered that many 'middlemen' did not make clear the pitfalls, such as penalties for early repayment of the loan and inheritance tax implications. One should read guidance given by the Equity Release Council and only do business with a company that is a member of that body
People worry that when the last village bank closes they will be without banking facilities. But for those which still have a Post Office Post Office banking includes Direct Debits, Standing Orders, Online, phone and Mobile banking, card use abroad, contactless Visa card, cheque book on request, even an overdraft at 14.5% There is a charge for going overdrawn or bounced cheques. You can avoid these for a monthly £5 fee N.B. The site says that all Post Office Current Accounts are closed. Go to their site to reclaim any savings you have with themTax free interest (more detail and
the savings tax relief)
According the
Money Savings Expert "Any
interest you earn from bank accounts, savings accounts, credit union
accounts, building societies, corporate bonds, government bonds and
gilts is tax free up to £1000 of interest. This includes interest
earned on other currencies
(eg., US dollars, euros) held in UK-based savings accounts. Peer
to Peer ** Lending
(see below) interest is also covered, but dividend income from shares is not
included in the allowance (although benefits in another way -
see
below **). It also includes interest distributions (but not dividend
distributions) from authorised unit trusts. open -ended investment
companies and investment trusts and most types of purchased life
annuity payments" (end of quote) Higher rate taxpayers will only
be able to earn £500 interest free of tax.
Effectively,
this
means that for 95 per cent of savers all interest in
High Street accounts will be paid tax-free — giving
them
a 20 per cent boost. And with many bank accounts
(e.g Santander) paying
more than ISAs this will probably mean that people will begin to move
cash from ISAs to those accounts. Currently, banks and building
societies automatically deduct basic rate tax of 20 per cent before
your interest is paid and pass it directly to HM Revenue &
Customs.
Higher earners paying 40 or 45 per cent income tax have to declare the
interest they receive on a self-assessment form. Lower earners who
don’t pay income tax had to fill in a form to stop
the tax
being deducted. These deductions mean that someone with
£20,000
in a High Street savings account paying 2 per cent earned only
£320-a-year net interest if they were a basic-rate taxpayer
but will now earn £400. A
higher-rate taxpayer previously earning £240 and a top-rate
taxpayer
£220 will get more than before.
But since 2015 those on low incomes have already had a much larger allowance on savings interest. I would advise anyone who suspects they are paying tax on their savings accounts to have a chat with their bank or building society. It is all a bit of a muddle and I suspect many people are losing out. After all, how would a bank or building society know your level of income ?
Peer to Peer lending usually pays more (4% - 6%) than other forms of lending. But there are risks and some people have had difficulty getting their money back during the pandemic, which has been particulalry difficult for the type of small companies who used this form of finance.
For an article on tax free savings click : MoneySavingsExpert
Although it may be wise to retain ones ISA holdings, there will be
competition from other financial organisations, as many savings
accounts will be tax free.
Although the total amount that people up to 75 can save into pensions (via SIPPs) is reduced to £1million, amounts invested in SIPPs will continue to attract an addition from Inland revenue equal to their tax rate. This means that someone on the highest tax rate need only invest £6,500 in a year but this will be made up to £10,000. Surprisingly even non tax payers will also have a gift from the tax man if they invest in a SIPP
However, the amounts charged for servicing your SIPP varies, not only from one financial organisation to another but also depends on the amount you invest.
Help to Buy ISAs Anyone 16+ can start one of these with the intention of building up a deposit for a house. If they put it towards a deposit the government will add 25%, up to a maximum of £12,000 - to which would be added £3000. The minimum to attract a bonus is £1,600. If you don't put it down as a deposit you get the interest but not the bonusWith
the increase in the value of houses, many people are property rich but,
in their later years, if on a basic state pension, may be cash poor.
In the past, the idea of Equity Release got a bad
name
because, if the loan was based on Compound
Interest,
(especially at punitive rates) it was possible that the loan might grow
to the value of the whole house - especially if the borrower lived to a
ripe old age. But why shouldn't someone borrow cash against the
security of their house and pay the interest each month, as one does
with a normal mortgage. After all, what has age got to do
with it
? Www.purelyretirementmortgages.co.uk is
and example of a site which will offer advice on that sort of
arrangement. See the section on Interest
Only Lifetime Mortgages
With luck the increase in house values will keep pace with the interest
paid. However, I have not checked this site personally and I advise you
to seek advice on any big financial arrangements. Interest rates are
currently low but might rise, unless fixed at the outset.
See :
http://www.maturetimes.co.uk/equity-release-myths-dispelled/
Not
strictly Savings
but a clarification of 'Rights to Buy' for Council tenants. A big
article but interesting http://www.remortgage-me.co.
But if you want to look into investing you can have a look at the site where the Nationwide BS explains the mysteries
The Financial Services Compensation Scheme
protection limit is ow only £75,000 (per organisation if it fails), so
one really does need to be sure you are covered.
Santander's Edge
Saver account Now pays 7% on
balances up to £4000 (includes a one year 2.5% bomus . In
addition it continues the cashback allowances on household bills. There
is still a monthly £3 fee.
EQUITY
RELEASE ?
An
excellent article in Mature Times (website) about equity release for
the older
set. This points out the advantages. That people could release some
cash, paying low current interest rates, while their property may
continue to rise in value. Up to the age of 75 cash might even be added
to their pension pot (e.g. a SIIP), with the government adding an
amount equal to their tax rate. http://www.maturetimes.co.uk/
AGE ACTION ALLIANCE FINANCE (Much good advice and useful links)
HMRC
estimate as many as 4 million people are eligible. Unfortunately
the
online request does not tell you if you are actually eligible. ,
If you didn't claim, it is possible to do so within 4 years of the relevant tax year. If you make a claim prior to, or in, the year you want to transfer your allowance, it will remain in force until you tell HMRC to stop.If you claim after the year then it will only apply for that year. To claim future years you will need to apply again. HMRC does recognise that some customers may struggle to apply online and plans are being put into place to address the issue.
Although there is £50billion in Premium Bonds the amount distributed in prize money has always made it a bad investment. But, even though the amount distributed is only low this is beginning to compare with the miserable rates from savings accounts. After all the bonds are easily cashable and the winnings are not taxable. So, what are your chances if you have a spare £40,000 languishing in a bank somewhere. But see NS&I for the latest on Premium Bonds.
Lately NS & I have caught up when offering savings
and as the safest of all 'banks'. well worth looking into with regard
to larger sums. But bear in min that interest could be taxable,
unlike ISAs
I had a horrendous time accessing my
National Saving
Account, for over two months. It was all to do with passwords
and
security checks. I reckon to know a little about computing on
line. If it takes me
this long I hate to imagine how many other
people have difficulty with their site. I made
recommendations
but doubt very much if this stuffy organisation will take note, even
though I have also made them via my local MP.
n.b. if you live in the EU and are looking forward to a
checque for a million from a Premium Bond win, please check whether you
still have a bank in the UK - some are stopping accounts for
ex-pats. You need to tell organisations which use that account,
which includes the NS&I for Premium Bond wins.
ISA's of relatives who have died
People may wonder what happens to the ISAs held by a spouse who dies.
It
is, of course, passed to the spouse if no other decision has been made
but
it used to lose its tax-free protection. Under new rules the surviving
partner
will be able to keep their tax-free ISA allowance.
There were new rules on Intestacy (dying without a will, like 50% of us!) See the government site at https://www.gov.uk/inherits-someone-dies-without-will: For the many couples who are not married, this is a very important issue, especially if there are children. It is particularly important for them to have wills and keep them up to date with their current situation.
People who have difficulty getting a credit card can try Vanquis.
But
I just noticed that they charge 39.9% if you don't pay it off each
month !
Although my opinion of credit cards is only marginally better than pay day loans and pawnbrokers, they continue to be universally popular and many give people a chance to get on top of things by transferring their existing credit debt to another lender, with zero percentage interest up to three years. There is a one-off charge, which in one case is as low as 0.65% of the amount transferred. But that option is probably only open to people who can convince the lender they can pay it back. To check this you can complete a form at https://creditcards.moneysavingexpert.com/?balance-transfer.
N.B. You cannot use old £50 notes in the shops any more. Since October 2014 the only place to exchange them has been the Bank of England . And old pound coins should have been changed by October 2017People are using 'creative saving methods'. One paper
seriously
suggested
that you move cash around from one bank or building society to take advantage of any special (temporary) offers they give. Mad!
GENERAL THOUGHTS Saving for one's
retirement is problematic.
After all, you don't know how long you will live and, with women, on
average,
living longer than men, it is often they who have a
lengthy, solitary,
old age. And often it is they who have not been in
a position to put
money away or have a good work-based pension. Annuities were usually
claimed
to be the answer. But the rates have been so low and often
provision
ceases when the man dies, leaving poor widows.
These days the decisions about what to do with
pension
pots (if any) have become even more complex. From now on you can do
what you
like with your pension pot. So, what alternatives do we have, apart
from
continuing to work ? Annuities will continue, with even
smaller returns
if provision is made for a wife. But at least they continue until the
end
of life. So, many people must be considering alternatives such as
income
producing investments. As advisers repeatedly tell us ''investments may
go
down as well as up" but over the years the value of stocks have risen
steadily,
well ahead of cash savings. Then there is property. Many older people
have
been through a period of unprecedented increase in the cost and
valueof
bricks and mortar. Not long ago "Buy to Let" was on everyone's lips.
And,
in the absence of a decent pension and annuity, it is likely to become
popular
again. So many young people are trapped in the rental market, unable to
save
for a deposit, that there appears to be a ready market for rental
properties.
But it is not all gain. Landlords have responsibilities for
the upkeep
of their properties and will have the tax man looking at what they
receive.
Unfortunately, I do not have any ready answers and, anyway, so much
depends on
individual situations. But for many people the answer comes down to
"Get
a job" and this is often preferable if suitable work can be found.
And, deferring taking one's State Pension increases what one receives
eventually.
Other big savings may
be
made by attempting to lower your Rating Band. Or getting a cheaper
broadband.
Recently a number of organisations have been told to reimburse
customers
for miss-selling. This included banks and insurance companies, the CPP
card
protection company and now the Energy Suppliers. If you think you have
been
miss-sold by the latter, the Citizens Advice Bureau has published a form
by
which you might action a claim. See
HERE . There are many
adverts on TV and on line which try to persuade you to apply for a
refund. Better to do it yourself and avoid the fee of such
advertisers.
You may also be able to make big savings on your broadband, phone and TV bill. Tip: Join Topcashbackand look for what is on offer. My previous ISP charged well over £65. I moved to another ISP at £35 a month including phone calls. I was comparatively painless. So, saving £360 per annum Try getting that from your savings !
News Around 3.5
million people are owed money by an
old power supplier. The energy companies have been
found to be sitting on
£200 million !
** n.b. The H***fax has asked me to remove all reference to
it
from
this page. If you want information about their offerings
better check
out Money
Savings Expert,
who routinely includes such references.
The Government Money Advice Service : Click www.moneyadviceservice.org.uk rather than the many other sites that are out to make money.
I have a separate page on (State) Pensions
and Benefits
Current Accounts are the
'in' thing.
Financial organisations do not need you money (they can
borrow it cheaply elsewhere) but they are still keen to gain
customers. They have lots of other services to offer like
iniquitous credit cards !
Please check these old figures....
Look at the Nationwide, TSB, Tesco, Virgin, Santander, for payments if you move to them and as to who pays a reasonable amout on regular savings. And many offer useful packages of travel and mobile phone nsurance and roadside help
I never give advice
on savings or investments
but, with savings showing such miserable returns, I was interested to
see
an article in the Telegraph which suggested that the best performing
and
most consistent shares were in companies which were large but also paid
a
reasonable dividend (4%+). Most advisors charge monthly for this sort
of
research but they published a list of companies which had
also seen a
substantial price rise this year. The ones that passed the
test included
Centrica (4.71pc yield), J Sainsbury (4.7pc), Tesco
(4.5pc), GlaxoSmithKline (4.6pc) and British American Tobacco
(4.4pc).These dividends may have changed.
Since November 2009 banks have been liable for any payments (e.g. direct debits) made after you have instructed that they should be stopped. The new Financial Conduct Authority (FCA.org.uk) estimated that 30,000 people could be due compensation by banks who continued to pay. If they do not repay, you should write to the Financial Ombudsman or call 0800 023 4567 (good number!)
The government Help to Buy scheme is stimulating the housing market. It allows you to buy a new build house with a value up to £600,000 with a 5% deposit + an equity loan of 20% provided by the taxpayer. But you will have to pay back 20% of the value if/when you sell. It sounds great for people who can take advantage of that. The building trade must be pleased. A little more risky-sounding was the (now defunct) scheme which was due to start in January 2014, allowing you to buy ANY property up to £600,000 with a 5% deposit. Shades of the housing scramble in the USA that got us all in this mess in the first place ? What happens to the loans when people overstretch themselves? Never mind, it is only taxpayer's money... not real money.
Annuities. Hopefully, by now, everyone is up to speed about shopping round for annuities when that time has come. Nothing shows this more clearly than an article in the Telegraph which said "In fourth place in the table of "plain vanilla" annuities – those with no provision for a spouse and no inflation protection – was a Standard Life product paying £5,363 per annum for a 65-year-old with £100,000 to spend. A table-topping annuity from Legal & General, meanwhile, was paying £5,532 a year, according to the Annuity Bureau. Not so unusual, you may think – getting £160 or so extra for shopping around. But the Legal & General offering was at the top of a different table – the one for "joint-life" annuities, in this case paying a surviving spouse a pension of two thirds of the original income. In other words, someone who decides to shop around for an annuity will not only get more income to start with but will also receive – in effect, thrown in for nothing – a pension that continues to pay out to a widow or widower should the buyer die first! Buying L&G's joint-life annuity could mean a couple receiving (an average) about £40,000 more in total compared with the single-life policy from Standard Life, according to calculations by Ros Altmann, the veteran pensions campaigner.
IN VIEW OF THE FALLING RATES IT IS NECESSARY TO CHECK ALL OFFERS DIRECTLY ON THEIR WEBSITES AS MANY OF THE RATES QUOTED BELOW WILL NOW BE OUT OF DATE
Buy to Let ? Because many older people are finding that their pensions and saving are being eroded some people are rekindling the idea that they should buy a property with the aim of living off the rental in their later years. In a recent article, Mark Dampier, Head of Research at Hargreaves Lansdown does not enthuse about this tactic. In some areas the value of property has even reduced over the last five years, in some cases as much as 25%. So, might this be a good time to buy? Mortgages are comparatively cheap if one has a fair sized deposit and there is a huge population of young people who seem destined to rent rather than buy (as well as a large number of partners who seem unable to live with each other). But it is not all profit. One has to consider maintenance costs and insurance, although these and the cost of borrowing may be set against the tax which will be exacted from any 'profits'. Mark considers that shares are a better bet; less trouble and much easier to dispose of and, in the long run, more profitable. Me ? Like Manuel : 'I know nothing'.
Peer to Peer lending The idea of borrowing from and lending to small organisations (instead of banks) has grown recently. One article at http://www.knowyourmoney.co.uk/ points out the pros and cons. An example is ZOPA where you could earn 4.8% p.a. with a five year loan. Peer to peer lending interest also qualified for tax free interest from April 2016
************
I have
mentioned it before but for a site
which summarises best savings at http://www.savingschampion.co.uk/
is
great
and it has a warning system, so you don't get caught out with the
miserable
rates when the bonuses inevitably run out. Among their suggestions are
a
number of taxable bonds (for people who can't find suitable ISAs or
don't
pay tax)
AgeUK also have a series of videos by a financial adviser dealing with
debt,
annuities and retirement. See
http://www.ageuk.org.uk/money-matters/
Paying too much tax ? Inland
Revenue is in a mess due to staff reductions. Check your
old codes — some have
reclaimed £5,000.
The
Tax
Code Calculator also lists past years' codes and
shows how to reclaim
if you've overpaid. You may be due big money like Chris Kendall: "I
checked
my tax code, rang HMRC and it told me I'd get over £5,000
back. Incredible!"
An article at www.thisismoney.co.uk suggests that "Those worried about private sector banks might consider National Savings bonds, savings accounts or Premium Bonds - which are directly guaranteed by the government - as possible homes for spare cash".
In
these days of austerity there
may be ways of saving money apart from looking for meagre savings
accounts.
If you have enough cheek - and you know that you have got
retailers
over a barrel, you could try your hand at bargaining (especially if you
have
just come back from a Mediterranean market !)
If your spouse has low earnings it might be a good idea make sure that any tax deductible savings are in their name. They may then be able to complete a form to ensure the interest is paid gross. Otherwise the tax is deducted at source.
The Financial Services Authority (now the Financial Conduct Authority FCA) has a useful comparative site at www.moneyadviceservice.org.uk (was MoneyMadeClear) dealing with many different financial offerings. Just fill in what you want to do and it will show an up-to-date list of what is available. Incidentally I am making efforts to block all adverts which related to debt counselling and PPI miss-selling, apart from official ones. If you see any, please ignore them.
Junior ISAs. The amount allowed
for cash or stocks ISAs has
been upped to £3,720 per annum. Junior Isas will
automatically be converted
to standard Isas when the child reaches 18. They
are only be available
to kids born in 2011 or later, or before 1 September 2002.
Anyone
born between those dates is instead eligible for a child trust fund
(CTF)
which is also a tax-efficient vehicle, though this is closed to new
joiners.
However CTFs can still be added to (up to £4000 p.a.by
parents or
grandparents.
Child trust fund future In March,
the Government announced
the limit for CTFs as £3,000 but eventually it increased it
in line
with the junior Isa to £3,720. CTFs can be converted into a
Junior Isa
when the child is 16. The worry is banks may not offer their
best rates
to CTF holders as they are not available to new customers so there is
little
incentive to gain business. From 2015 they could be
transferred to Junior ISAs, which may pay
more.
Going Abroad ? If you don't want to be left stranded when your credit card is refused it is advisable to tell your bank you are going. Most also have an emergency number you can call and some even can let you have a code to get cash from a machine. So get their emergency number and add it to your mobile phone list or keep a note somewhere.
Are my savings safe ? Recently
a spokesman for the government
said that, in future, banks should not assume that the taxpayer will
bail
them out. This is taken as a shot over the bows to banks which are
still
acting as if they are 'too big to fail'. In view of this new stance
should
we ask 'are my savings safe?'. An excellent article on this subject can
be
found in Martin's money tips at
http://www.moneysavingexpert.com/savings/safe-savings.
After all, the Financial Compensation Scheme is known to have too
little
cash to be able to compensate the customers of even a small deposit
taker.The amount covered is now back to £85,000 per
customer per organisation. How
would they raise the money ? Martin explains this mystery in the
article.
If you wonder why you rarely see adverts on my pages for 'Debt Help' sites it is because I actively filter them out. This has proved to be a wise course. Recently the OFT has closed 19 sites which targeted disabled people and those in debt with offers of 'financial help'. Examples include (and I quote Computer Active) Loansforpeopleondisability and Samedayquickloans. If you have money problems, although they are very busy, your first port of call should be the Citizens Advice Bureaux. Although the Office of Fair Trading no longer exists you can still find links on the old site at http://www.oft.gov.uk/
The Daily Mail points out that banks are taking advantage of the ISA
rules,
which make tax payers feel that they SHOULD take up their annual
allowance.
Certainly one is hard put to find a decent rate without
strings - usually
a bonus which runs out after a year, meaning that you have to
constantly
move your money. If you do not, the chances are that you will
continue
to get a miserable rate. It is as frustrating as having to
move fuel
supplier every year. This 'churn' must cost the companies
money and
is certainly a nuisance to the consumer. But the banks hope lethargy
(or
confusion) will rule and they will get your cash at 1% or less. The
Mail
article pointed out that, even after tax, many savings rates beat the
ISAs
on offer. One of the 'strings' is that most banks and building
societies
do NOT allow the transfer of existing ISAs. They are after
NEW customers
and NEW money. (mainly to sell them other 'services')
The Mail suggests the following links for financial help : As
a rule
Org Uk addresses are 'not for profit'
www.moneyadviceservice.org.uk (was MoneyMadeClear)
Pensions Tracing Service Call 0845 601 2923 or go to https://www.gov.uk/ and search for 'pensions tracing'.
State Pension forecast 0845 300 0168 or go to https://www.gov.uk/and search for 'pension forecast'
NationalDebtline.co.uk 0808 808 4000
Financial Services Authority (is now the Financial Conduct Authority - FCA)
Unbiased.co.uk
Used to be Independent Financial Advisor Promotions. They
recommend advisors
Saw an article in the Sunday Mail which mentioned that some parents and grandparents are helping youngsters get on the property ladder, by using their savings in an "Offset Loan" arrangement. Their cash earns no interest (well, it is pretty low these days) but is taken into account in the mortgage. In one example their daughter's payments were cut by £250 a month, meaning that she was paying no more than she had been paying to rent one room in a house. Try Newbury, Market Harborough or Yorkshire Building Societies.
The tax mess. The tax
authorities have admitted to giving
out incorrect tax codes to employers, which will have resulted in over
5
million pay more or less tax than they should. They are beginning to
send
out letters demanding more or paying some back. The people
most likely
to be affected are those who have had more than one source of income
during
the last two years. It is less
likely to affect the self
employed or pensioners (unless they also have a job). The
period over
which repayment is required seems uncertain. There was vague
talk of
people owing over £2000 being asked to pay more quickly than
those asked
to pay less. There has also been talk about people being charged
interest
if they do not pay on time. This adds insult to injury for a
mistake
that is THEIRS and there has been hostile reaction to this.
2 million people have underpaid tax and 4 million have paid too much
because
of errors by the tax authorities. If you get a demand you should check
the
facts carefully. If you have to pay you will be allowed to do
over
a period of a year.
A new site which tackles financial matters is at www.restless.co.uk-
Purchased Life Annuities
:(Article extracted from
www.thisismoney.co.uk) Hard-pressed savers were given no cheer.
Continuing low interest rates are forcing savers to consider new
ways
to generate the income they need. And, for older people, higher returns
have
put Purchased Life Annuities (PLAs) firmly on some
savers' agenda.
A PLA involves handing over capital in exchange for a regular income.
While
the cash cannot be recovered, unlike a bank or building society savings
account,
the income is guaranteed for life. Buyers also gain from the unique tax
rules
surrounding a PLA. A large part of the regular payment is
treated not
as income, but as a return of the buyer's capital. This element is not
taxed.....
Take the case of a man aged 70 who buys a £20,000 purchased
life annuity.
The gross annual income from this is £1,444. But
£1,194 of this
income is called the 'capital content', so the buyer is taxed only on
the
remaining £250. This means a net income for a 20% taxpayer of
£1,394.
To earn the same after tax, he would need to find a savings account
paying
a much higher rate. The equation improves with age. The same
£20,000
earns a man aged 80 an income of £2,260 a year after
basic-rate tax.
Matching this requires an account paying an improbable 14.1% gross.
Annuity
rates are slightly lower for women because they have a longer average
life
expectancy. A woman aged 70 investing £20,000 might receive
£1,376
a year and an 80-year-old would get around £2,000
p.a.. But people
with health problems may be able to get an even better deal.
See rates
at http://www.sharingpensions.co.uk/annuity_rates_purchased.htm
Another Annuity Comparison site is at http://www.bankingtimes.co.uk/
Saga reckons their annuity rates are better than most. You would get more if you are a smoker and positively unhealthy. .
and there is always this option of course
A good site that deals with GRANTS of various kinds is at http://www.moneysavingexpert.com/protect/grant-grabbing Includes the new grant for laptops and broadband for kids from poor households.
Credit Cards. I use a Debit card and have always considered Credit cards to be an invention of the devil. But they are hugely popular, so is there any way in which you can win? If you take a look at http://www.moneysavingexpert.com/loans/plastic-loans you will see that some companies offer exceptional terms for transferring cash to your bank account, providing (a) you are looking for a longer term loan (up to 16 months) (b) pay a one-off fee, (c) make a direct debit covering the minimum monthly payment and (d) tie up the whole thing by the end of the period. But don't use the card for purchases unless you want to pay more. Credit Cards also vary quite a lot in the length of zero interest on purchases, so check before committing to one.
**IVPPs Hargreaves Lansdown sent me information about Immediate Vesting Personal Pensions (IVPP) where people under 75 can arrange an annual pension payment at a far higher rate than is now available from savings. There is a limit each year that you can put away and the money is lost on death but, as an example a man of 74 would receive as much as £211.21 a year for the outlay of less than £2000, which is over 11%. Younger people and women would get less but even at age 50 a woman would get over 6% for the rest of their lives. The pension is taxable and, once committed cannot be withdrawn. But, if you feel you will beat the odds and expect a long life, this is where an IVPP would pay off handsomely !
End of Savings Section ******************
The Financial Services Compensation Scheme
assures savers that
savings in UK banks and building societies are safeguarded to the
extent
of £85,000 per person (£170,000 for a joint
account).
The following share only ONE License
so cash in
more than one of the organisation in each line is only covered to a
TOTAL
of £85,000 per person's account
Lloyds and the Cheltenham and Gloucester.
H****x, Bk of Sc**lnd, the AA, Birmingham Midshires, Intelligent Finance and Saga|
Santander, Asda, Bradford and Bingley, Cahoot and Alliance and Leicester.
Chelsea, London and County Savings and Catholic Building Society
Clydesdale Bank and Yorkshire BS.
The Coop Bank , Britannia and Smile;
HSBC and First Direct.
Nationwide, Cheshire and Derbyshire BS (new accounts).
Newcastle BS and BMW Savings.
Royal Bank of Scotland, Direct Line and Lombard
Coventry Building Society &
Stroud and Gloucester
Regardless of ownership the following
each have their OWN license under the FSCS scheme:
Alliance and Leicester is now absorbed by Santander, above, and no
longer has its own licence. Reducing balances in A &
L and the other related organisations above appears to have caused some
confusion at Santander/Abbey/Alliance and Leicester
Barclays,
Capital One,
Citibank,
Egg,
First Save,
ICICI Bank,
M&S,
Natwest,
Sainsbury's Bank,
Scottish Widows Bank,
Standard Life Bank,
Tesco
Virgin Money.
Other building societies not mentioned above
The Bank of Ireland is covered by the Irish Government.
Ing is covered by the Dutch Scheme.
National Savings is covered to 100% by the UK government
Married Couple's Allowance Click on http://www.hmrc.gov.uk/incometax/married-allow.htm You should be getting this tax allowance where at least one of a marriage or civil partnership was born before April 6th 1935. For marriages before December 5th 2005 the allowance goes to the husband. (For marriages on or after that date the allowance goes to person with the higher income.
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 dependent on) of any of the following benefits.
BEWARE : A little known fact
about credit cards. If the
company gets concerned that you are getting seriously behind in your
payments
they can apply to the courts to get a charging order put on your home,
turning
the debt into a loan secured against your house. A number of
Building
societies are becoming concerned that repossessions are being triggered
by
other lenders who are after their money. In fact Newcastle BS found
that
28% of repossessions were triggered by other lenders (even,
in some
cases, when their customers were up to date with their mortgage
payments.)
The banks have begun to share credit information about customers, so
tightening
up on loans to people who have accumulated debts with various agencies.
The current tax allowances can be seen at HERE (IHT, Income etc)
For older people a good site is the AgeUK site or phone their SeniorLine on 0808 169 6565 for free advice on financial matters.
TRACING CASH There is about £466 million lying idle in National Savings accounts. If you think you might have similar savings lying around you can ask NSI to try and trace it on 0500 007 007. There is also around £30 million of unclaimed Premium Bond prizes. Unclaimed National Lottery winnings amount £3 million. If not claimed in 6 months it goes to charity. Company pensions : Go to the Pension Tracing Service on : https://www.gov.uk/find-pension-contact-details But for people who have died get a leaflet from https://www.bba.org.uk (the British Banking Association. The link still leads to many useful places) and tap in 'Lost Account'. For shares you can try This is Money For Life Policies, unit trusts or dividends there is a site run by Experian at www.uar.co.uk (Unclaimed Assets Register) but there is a charge of £25. You can also try www.policydetective.co.uk to trace your old policies (free). Before trying these services you should gather as much information as you can, such as names, previous names and addresses, policy or certificate numbers, companies
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.
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 ! 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.
************EQUITY RELEASE
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 Release 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. Two alternatives to releasing equity are
downsizing to
a cheaper property and/or taking in a lodger.
Financial Mail also has a free guide called Home Truth (Tel
0800 068
6065) .
IFA (Independent Financial Advisers) can put you in touch with members on 0800 085 3250 or www.unbiased.co.uk Norwich Union (Aviva) 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.
Age
Partnership is the
UK's leading over-the-phone specialist in equity release.
Some equity release plans impose an early-repayment charge, so you
could
incur charges should you wish to pay them off before your death.
However,
like a standard mortgage, these will vary from plan to plan,
reinforcing
the benefit of Age Partnership’s specialist equity release
advice before
you proceed
Compare the entire Equity Release market at
Key Retirement Solutions,
the UK Equity
Release specialists. They do a booklet about remortgaging to release
money
called Home Truths. Phone 0800 531 6027. But they ARE
in the business
and you may be also offered a 'no obligation consultation'. A basic
consultation
is free but if you require an in depth one they will charge and they
will
charge a percentage of any loan raised.
Another site is www.equityrelease.net
Buying property abroad); 0845 450 9190 (Private Medical Insurance); 0870 830 3421 (Investments); 0800 068 6065 (Releasing the Wealth in your Home).
More useful websites: www.express.co.uk/money/ www.arrow1066.co.uk, www.moneysupermarket.com 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 http://money.guardian.co.uk http://News.ft.com/yourmoney (Financial Times). www.moneysavingexpert.com & www.yourmoney.com
See also : www.mortgagerates.org.uk and also daily updates on all the latest rates at www.mortgagerates.org.uk/news/
Investing for Grandchildren
Each child has their own annual personal allowance free of tax and a
capital
gain allowance. 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.
Children
over 16 can now have a Junior ISA (cash or shares) up to
£3,720 in their
name. Parents or grandparents can contribute. But it is a gift and can
only
be drawn by the child when they are 18.
**********
Check for Benefits, Pensions and Jobs at Department of Works and Pensions page.
INHERITANCE TAX
2020
Rising property values mean that more people are being caught
by
the singeing inheritance tax.
Billions are raised by Inhertitance Tax
each year. With
professional
advice, many people can avoid this tax, which is expected to affect
more people each year. Everything in excess of your allowance is
taxed at a punitive 40%
Inheritance Tax (IHT) In 2020 this is £325,000 per person ( £650,000 for a couple). And a further £350,00 by residential property owners. 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.
There is a very useful site on this question at http://www.squareonefinancial.co.uk. Work out your liability and the best way to deal with it. Another useful article on you liability to pay for care is at http://www.caredirections.co.uk/
You can give away as much as you like during your life (** but see below re Benefits and Care) 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 (and died) 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. Do check these figures as they are likely to change.
Another way to avoid the tax on your inheritance is to
add regular sums to a life assurance plan held in trust. The
amounts put into these must not affect your standard of living.
But that is flexible according to your income and expenditure.
You can give away a total of £3000 per annum without any IHT 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.
** You cannot give away as much as you like in order to qualify for benefits or free care. Mind you, you could book a couple of 5 * world cruises !
Gifts
made 3 to 7 years
before your death are taxed on a sliding scale known as ‘taper relief’.
Years
between gift and death |
Tax
paid |
less
than 3 |
40% |
3
to 4 |
32% |
4
to 5 |
24% |
5
to 6 |
16% |
6
to 7 |
8% |
7
or more |
0% |
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 they 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.
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. Check latest figures
In debt ? First goto the
Citizens Advice site https://www.citizensadvice.org.uk/
http://www.creditjungle.co.uk
is a new website designed by former employees of the Leeds based credit
reference
agency Callcredit, . It offers users free credit scores and
geo-demographic
information about their neighbourhood only usually seen by lenders. It
costs
nothing to retrieve the score and the secured loan/debt management
applications
are entirely optional. A useful tool especially if you are unsure of
your
credit rating and how it works.
(It is important to realise that multiple applications for credit may
leave
a 'footprint' of those applications which may be taken into account
when
a company is considering your creditworthiness but with Credit Jungle
you
can view your score as often as they like without a footprint being
left.)
I never suggest ideas for dealing with debt . There are experts in this field who MAY suggest things like moving credit card debt to a new card which has a nil interest demand for as much as 15 months. There is likely to be a percentage one-off charge (around 3%). Obviously, they are after your business and, after the free period, the rate will return to the usual stinging percentage normally charged by credit card companies. But it might give you time to get things straightened out.
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 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 debtor, the Debt Adviser and the Banks (who have
set
aside millions for this purpose). Before jumping in to
this, do go and
see your Citizens Advice
Bureau
There are some organisations which may help tackle a debt problem. Free and impartial advice on debt at www.stepchange.org.
and the other is
the Credit Action charity
www.creditaction.org.uk.
https://www.nationaldebtline.org/ 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. Whatever you do avoid tempting
sites that say 'Write off 83% of your Debt' . There
is
bound to be a catch.
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 your 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.
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
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.
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
**************
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 bank 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 Impartial
booklet from
http://www.moneysavingexpert.com/mortgages/remortgage-guide
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 , 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.
Capital
Gains Tax. This is a complex
subject and the government
has upset a lot of business people by trying to make it simpler.
Have
a look at https://www.gov.uk/topic/personal-tax/capital-gains-tax
If you are having a clearout, are you liable for Capital Gains Tax on
what
you sell? The answer is maybe. . In 2020 the CGT
Allowance is
£12,000 p.a.(each). If a gain since purchase or inheritance
is over £12,000 you
might be liable for
tax.. But, surprisingly, not on 'wasting assets' (items such as
mechanical
devices with a lifespan of less than 50 years) And the tax
man considers
collectors cars, antique clocks and guns to be wasting assets. So, you
can
see that it is a very complex issue.
You may get interesting information (and cheaper dealing) by getting in touch with Hargreaves Lansdown www.hl.co.uk. They also have a regular newsletter, in which they point people in the general direction of companies or investment organisations which appear to regularly beat the odds e
Exchange Traded Funds If you buy Unit Trusts you will pay an administration fee every year. This is taken out of the value of the units (whether they rise or fall) The percentage taken is likely to be in the range of 1.75%. Unit trust funds are normally administered by a Fund Manager. They vary in their ability to foretell what will happen to the shares or bonds which they buy. Quite frequently they get it wrong, so the value of the units goes down, even more than the general stock market. ETFs usually concentrate on a specific market e.g. Japan, Europe, UK, USA, and merely follow whatever that market does. Without a Fund Manager, their charges are lower - more like 0.4%. Recently these have become more popular with small investors. They can be sheltered in an ISA. For more detail see http://uk.ishares.com/en/rc/about/what-are-etfs.
The Daily Mail share tipper is Midas, which has a Midweek extra at www.thisismoney.co.uk/midas-extra
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 Other sites well worth a look are www.fool.com and www.moneyextra.com. Free investment guides are also obtainable from www.share.com
Unit Trusts : Used to be 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.
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. .
***********
Wills:If someone dies without a will the estate may be divided according to set intestacy rules. They are complicated and depend upon which relations the deceased had. See https://www.gov.uk/inherits-someone-dies-without-will
If you want to make a will on line see http://www.tenminutewill.co.uk/main.cgi The charge is from £30 for a single person. See interesting details regarding the differences between EU and English law with regard to wills. Until recently EU countries had 'Forced Heirship' rules, whereas English law allows you to will your estate to whoever you wish.
Will Writing from £34.95 https://www.glosslegal.co.uk. Each Will is checked by a qualified solicitor, and is then professionally printed, bound and sent to you by post to make sure it does not get invalidated by the probate office -- as can happen with online downloads improperly printed and stapled at home.
Remember, also that, each
November is 'Will Month' when certain solicitors will create your will
for
a donation to certain specified charities
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 ?
Tracing a will. You need a grant of representation. There are three types. Probate, which is granted to the executors named in the will; a letter of administration, granted to someone other than an executor, when a valid will is left and letters of administration when the deceased did not leave a will. To apply one must send to Postal Searches and Copies Department, Leeds District Probate Registry, York House, York Place, Leeds LS1 2BA with the name, data of birth and date of death. There is a small fee. http://www.justice.gov.uk/courts/probate/copies-of-grants-wills
Annuities, Stakeholder Pension Schemes, SIPPS (Self Invested Personal Pension), GARS (Guarantee Annuity Rate Policies), Life Insurance and Endowments have now been moved to Pensions Page on this siteIndex Page | Top of Page | Next Page : Deafness |