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Financial News Updates

Welcome Relief For Investors

Welcome Relief For Investors The old joke about death and taxes being the only constants in life will probably ring particularly true to many people when it comes time to fill in tax returns. The good news is that there are various forms of relief available to savers and investors, so a little judicious advance planning can go a long way to minimizing the amount of tax payable. Here is a quick run-down of some of the various forms of relief currently available.

Tax relief on interest income


Basic-rate taxpayers can now earn up to £1000 interest income tax free, while higher-rate taxpayers can earn up to £500 interest income tax free.

Property allowance

While not, strictly speaking, a savings or investment allowance, it may be worth noting that it is now possible for individuals to earn an income of up to £1000 on property without paying tax on it. This is separate from the long-established “rent-a-room” scheme. This could potentially make it more interesting for people to use their property to generate a small income in some way, although those investigating the AirBnB route may wish to check where their mortgage provider stands on this.

Trading allowance

On a similar note, it is now possible to earn up to £1000 income from trading without paying tax on it. This may be of interest to anyone with skills they are interested in monetizing in a small way.

Dividend income allowance

Currently investors can receive up to £5000 of dividend income without paying tax on it. This is due to reduce to £2000 in the 2018/2019 tax year.

Capital gains tax relief

Individual investors can make a profit of up to £11.3K on the sale of investments before capital gains tax becomes payable. Depending on their personal situation, investors may be able to make use of the fact that transfers of assets between spouses and civil partners are exempt from taxation and hence dividing an asset between two halves of a partnership can make use of both allowances.

Individual savings allowances

It can be easy to forget about the familiar, so here's a quick reminder to make the most of your ISA. There have been a few additions to the ISA stable over recent years, one of which (the Help to Buy ISA) has ceased to be offered, so for the sake of completeness, here is a quick run down of the ISAs currently on offer as of 2017/2018 and the relevant allowances.

Adults aged 18 or over can save a total of £20K into ISAs. They can choose to put all of it into a Cash ISA, a Stocks and Shares ISA or an Innovative Finance ISA or they can choose to mix and match between the different forms. Lifetime ISAs have special rules around them and savers can only deposit up to £4000 each year, which comes out of their total ISA allowance, in other words, they would only have £16K to deposit in other forms of ISA.

Niche forms of tax relief

Certain investors may be interested in some, more niche, forms of tax relief such as Enterprise Investment Schemes, Venture Capital Trusts and Business Property Relief (this last is one which may be helpful for people looking at estate planning). Those interested in these options are highly recommended to get specialist advice since these areas can be higher risk.


Investments are generally best looked at as a whole with tax relief just being one factor to consider. If an investment is fundamentally wrong for your particular situation, then the fact that attracts tax relief is unlikely to make it right and vice versa. If, however, there are two similar investments to consider, then the question of tax relief may well factor into your calculations as to which one to choose.

Making Sure You're On The Right Platform

Making Sure You're On The Right Platform Life can get really hectic and one of the keys to staying on top of everything you need to do and to manage is to ensure that you have a place for everything and everything in its place and that, if at all possible, like items are kept together. This principle often holds good in many areas of life, including taking care of your finances. Seeking out the best products for your needs and wants may have left you with a range of investments with a variety of providers. If you are in this situation, then you may find it helpful to start using a platform.

Platforms might not be suitable in every circumstance, for example, not all funds might be available on the platform which you choose, and they might also be available elsewhere with lower charges. You should seek advice from a suitably qualified professional adviser, if you are considering using a platform.

Platforms can help you to go in the right direction


In financial terms, platforms are simply dashboards which allow you to view and manage all of your investment products from one place. They offer several advantages over accessing each of your investments individually.


For many people, this may be the most compelling aspect of using a platform. In these days of multiple online accounts with associated passwords, pins, security questions and card readers, it can be a blessed relief to consolidate different accounts into one convenient and secure location with one set of credentials to remember. What's more the user will only have one interface to learn rather than having to master the process required to perform what is essentially the same action on several different websites.


Taking care of your pennies is a good start but pounds do actually need some care too. At the end of the day, the small savings we make through thrift are made for a reason. For some people that may just be ensuring that they can get through the proverbial rainy day but for others it may be for longer-term life goals, whether that's a (first) home or a dream retirement. Having everything “under one roof” can make it easier to see the overall picture and hence can help to make it clearer what you need to do to achieve your goals.


Generally speaking, as people travel through life, their needs, wants and priorities change. A person in their twenties may be looking to get on the housing ladder with their first starter flat, while a person in their fifties may already be planning ahead to where they will spend their retirement. Sometimes these changes follow broadly familiar patterns, at other times, they may pop up unexpectedly in the form of a new challenge or a fresh opportunity (sometimes a situation can be both at once). Keeping all your financial matters together can make it easier to react to changes in your situation, even unplanned ones.

Transparent charging

Charges are a fact of life with any service and while it's fair enough that people (or companies) who provide you with a good service earn a reasonable fee for their efforts, it's important that you can feel confident that you are getting good value for money. You can only determine if charges are in line with your expectations if you actually know what they are. One of the benefits of using a platform is that you will be able to see at a glance how much you will pay for any given action. On a similar note, using a platform can help you to manage your tax matters as effectively as possible, for example by making it obvious how much, if any, of your annual capital gains tax allowance you have used. In fact some platforms may allow you to record the value of non-investment assets such as property on them, which can be very helpful not only from the point of view of managing your immediate taxation liabilities but for general financial management and, ultimately, for estate planning.

The Financial Conduct Authority does not regulate Estate Planning or tax advice.

Making Sure Your Mortgage Is Paid Off

Making Sure Your Mortgage Is Paid Off A mortgage is a long-term commitment and has to be met regardless of any short-term issues with your income such as unemployment or being temporarily unable to work through illness or injury. With that in mind, it's worth looking at how you can be sure to make your mortgage repayments are made even if you face adverse circumstances.

Only take on a mortgage in the first place if you're sure you can manage it for at least five years


The house-buying process is something of an anomaly in a world where people have become used to buying and selling products at the click of a button. It's slow and there can be a lot of up-front costs associated with it such as surveyor's fees, legal fees (conveyancing) and stamp duty and that's before you get to moving costs and the cost of furnishing your new home. Homeowners also have to be realistic about the fact that the process of selling a home, even in a buoyant market can take much longer and be more stressful than just handing in a month's notice on a rental contract and that letting out a property as a means to pay the mortgage while you are away from it may be a whole lot more complicated than it sounds. In other words, think carefully before you commit to a house purchase in the first place, as a minimum you should be confident about paying your mortgage for the next five years.

Keep your mortgage within your means

This advice should be less relevant than it used to be since the Mortgage Market Review obliges lenders to look at affordability rather than just to headline income figures, but it's still worth repeating. Just because you can get a mortgage of a certain level, doesn't mean you necessarily should. Also, just because you can borrow from family and friends to put together a (bigger) deposit doesn't mean you necessarily should either.

Make sure you still have some cash savings

When it comes to deposits it's generally a case of the bigger the better, but using up all your cash in hand leaves you with nothing to fall back on in an emergency. If at all possible, aim to keep at least three months of living expenses, including mortgage payments, set aside “just in case”.

Look at life insurance

Having life insurance may well be a condition of your mortgage but if it's not and you have dependents then it's strongly recommended to look into it anyway and even if you don't it could still be beneficial if it allows you to make life less stressful for those left behind. If you are only taking out life insurance to cover your mortgage, then you can reduce your level of cover as you pay back your mortgage.

Consider some form of income-protection insurance

In the context of ensuring that a mortgage continues to be paid even if you are experiencing adverse circumstances, there are three forms of insurance it is worth considering. (Mortgage) Payment Protection Insurance is a form of insurance which guarantees that a specific credit commitment will be met if the claimant fulfills the relevant conditions. These are usually accident, sickness and unemployment, hence its alternative name of ASU cover. The self-employed may be able to get similar cover but without the unemployment clause or they may wish to look at the second option which is Income Protection Insurance. This is much the same as MPPI except that the income may be used as you wish. Your third option is Critical Illness Cover, which, as its name suggests pays out if you are diagnosed with one of a range of serious illnesses and, again, the payment can be used as you wish.

Prioritising Peace Of Mind

Prioritising Peace Of Mind Fundamentally, a lot of life comes down to setting priorities. Just as you can only live each moment in time once, so you can only spend each penny you have once, hence it is often wise to think about how best to use the time and income at your disposal.

Solid financial management covers both the pennies and the pounds

The small decisions we make every day can have a huge impact on our overall financial health. It's easy to think of this in terms of getting the best price for whatever we buy and there's certainly some truth in that, but really we should also be thinking about what it is that we buy and how much of it we actually need (or genuinely want). In short, we should always be aware of how we are spending our money and making sure that we get the best value for it, even if this means going somewhat out of our comfort zone, such as by trying new brands instead of sticking with what we know.

Small sacrifices can add up to big wins

Whether it's your morning coffee from a well-known chain, a magazine as a reward for braving the supermarket or a glass of wine each evening to celebrate surviving the day, the fact is that “treat” purchases are entirely discretionary and the more of them you make, the more of a chunk they can take out of your overall finances. Cutting back on these small pleasures can allow you to dedicate more of your money to larger goals.

Life is for living but peace of mind is priceless

If we worried about everything which could possibly happen to us in the course of a day, we might never get out of bed, but all the same the reality is that each and every day, people do get injured, fall sick and even die of causes other than old age. People also become victims of crime, have accidents or see their pets cause damage or become ill. Because of this, unglamorous as it may be, having the right insurance cover in place should usually be a high priority for anyone who has anyone or anything they care about enough to want to protect and that should probably start with protecting themselves. Income protection insurance and critical illness cover can both provide money in times of need. The former usually covers periods when you are unable to work through accident or illness and may provide some cover in the event of unemployment. The latter pay out in the event of the holder being diagnosed with one of a range of serious illnesses. Private medical insurance may also be a wise investment, even with the NHS, dental bills can be expensive and waiting lists for treatment can be much longer than you'd ideally like, particularly if you're self-employed and only get paid if you work.


After this, you need to think about the people, pets and possessions in your life, to decide which, if any, require specific protection in the form of insurance. If you have any dependents then they should almost certainly be next on your list of priorities, hence life insurance and medical insurance for them could both be good options. If you have pets, pet insurance could save you some pain if they need expensive veterinary treatment. After that, it's a question of seeing whether or not your belongings also need protected and, if so, thinking about what protection is best for them. For example, even if you have the option to include your bicycle in with your home contents insurance, you may find it better to get specialist insurance as this may include third-party cover and legal support in the event of a claim being made against you.

The Cost Of University Education

The Cost of University Education It can seem like student tuition fees and their associated loans are rarely out of the news these days, but sadly that's only one part of the cost of sending a young adult to university. Accommodation can also be a significant expense and then of course you have standard living expenses plus the materials/equipment needed for their course. In short, university education is not likely to come cheaply, but then over the long term neither is a lack of education as it can severely hinder a person's prospects in a competitive job market. Because of this, it can be very helpful to assume that a young adult will be going to university and plan accordingly and if they make other plans, the money is sure to prove helpful to them in some other way.

Start early


When you're looking to make any big purchase, the more time you give yourself to save up for it, the more chance you give yourself of being able to finance the purchase without taking on debt (or at least only taking on minimal debt). You also give yourself the option to take advantage of any benefits only available to minor children. For example, Junior ISAs are only available to those under 18, however adult cash ISAs can be opened from a person's 16th birthday, which can be very useful for putting away as much cash as possible before a person finally reaches their 18th birthday.

Involve your child in the process

Encourage your child to think about investing in themselves and to play a role in building up the nest egg they will need for their university education. Even making minimal financial contributions can help to give them a sense of ownership of the process and an appreciation of what is being done on their behalf to get them off to a good start in adult life. Likewise, it will help you to set realistic expectations for them. While it might be nice to think that you would be able to save up enough to finance their entire university education without having to take on debt, even with an 18-year head start, this is quite a big ask and in reality it is entirely possible that many parents will have less than 18 years in which to do their saving since the pre-school years can be very expensive, due to the demands of providing childcare (and the initial expenses of baby equipment) and hence meaningful saving may only start when (all) children are at school.

Take professional advice

Saving for a child's university education is likely to be a significant, long-term goal for many people and it is probably going to have to be fitted in with other priorities, such as building a pension fund. While you, as a parent, obviously want to do what's best for your child, in the very long term, sacrificing your own retirement funds for your child's university education may actually be a very bad financial move.

You also need to look at investment vehicles as a whole, their complete packages of advantages and disadvantages, rather than just focusing on headline benefits. For example, Junior ISAs have clear advantages from the perspective of saving on tax, however they do mean that all the money put into them is locked away until the person's 18th birthday whereupon it becomes theirs to do with as they please. In other words, if your plan is for them to use it to pay for university education and they choose to spend it on the holiday of a lifetime, there is nothing you can do about it.

The New Financial Year

The New Financial Year The 2018/19 tax year starts at the stroke of midnight between the 5th and 6th of April. While many individuals leave tax planning to the end of the tax year, you can look to maximise the benefits by using your personal tax allowances* and reliefs straight away. Please get in touch to take advantage of one or more of the following:

Income Tax (for non Scottish taxpayers)


  • The tax free personal allowance has increased to £11,850 from £11,500

  • Basic rate tax of 20% will be payable on income above the tax free allowance and up to the new higher rate threshold of £46,350 (which has increased from £45,000).

  • Additional rate income tax remains the same at 45% on income above £150,000

Income Tax (for Scottish taxpayers)

  • New income tax rates and bands apply for Scottish taxpayers.

  • The tax free personal allowance has increased to £11,850 from £11,500.

  • A new starter rate of income tax of 19% for income above £11,850 up to £13,850.

  • Basic rate tax of 20% will be payable on income above £13,850 up to £24,000.

  • A new intermediate rate of tax of 21% for income above £24,000 up to the new higher rate threshold of £43,430.

  • A new higher rate tax of 41% for income above £43,430.

  • Top rate income tax of 46% for income over £150,000.


  • The Junior ISA allowance has risen to £4,260 from £4,128 for children under 18.

  • The adult ISA allowance of £20,000 remains unchanged.

  • If you are 16 or 17 this tax year (or have children of these ages), they can benefit from both the Junior ISA allowance and adult ISA allowance (cash only).

  • The Personal Savings Allowance, which gives you tax-free savings interest, remains £1,000 for basic rate tax-payers. This reduces to £500 for higher rate tax payers and additional rate tax payers do not get any allowance.


  • The State Pension has increased by 3%, which for the full allowance is an increase of £4.80 a week to £164.35

  • Minimum pension contributions (paid by employers and employees) through auto-enrolment have risen to 5% (2% employer and 3% employee) from 2% (1% employer and 1% employee)

  • The Lifetime Allowance for pension savings has increased to £1,030,000.

  • The Annual Allowance stays the same at £40,000 (though this reduces for individuals with income over £150,000 or if you have already accessed your pension savings)

Inheritance Tax

  • The Residence Nil Rate Band has risen to £125,000 from £100,000.

  • This can be added to the £325,000 Inheritance Tax allowance when a direct descendant inherits someone’s main house.

  • The annual gifting allowance remains the same at £3,000 and if you did not use it in 2017/18, this can be carried over to this tax year.

  • Investments

    • The tax-free Dividend Allowance has reduced to £2,000 from £5,000 (although dividends received by pension funds and ISAs remain tax-free).

    • There is no change to the taxation of Venture Capital Trusts, so you can invest up to £200,000 and get up to 30% income tax relief.

    • Similarly, the taxation of Enterprise Investment Schemes is unchanged, meaning you can invest up to £1 million and claim up to 30% income tax relief.

    Capital Gains Tax

    • The Capital Gains Tax allowance has increased to £11,700 from £11,300.

    • Married couples and civil partners will continue to be able to combine their annual allowances.

    Landlord Mortgages

    • Landlords will only be able to offset 50% of their mortgage interest payments against their rental income (down from 75%).

    • By 2020, there will only be a 20% tax credit saving from a landlord’s mortgage interest.


    *This information is based on our current understanding of the rules for the 2018-19 tax year.

    HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
    The value of investments and any income from them can go down as well as up and you may not get back the original amount invested.

    The Financial Conduct Authority does not regulate tax, trusts or commercial Buy to Let mortgages.

3 Reasons To Make Time For A Regular Health Check

3 Reasons to Make Time For A Regular Health Check Sometimes it can feel that there's not enough time in the day to do whatever it is you absolutely need to do, let alone get started on what you want to do or what you feel you ought to do. It is, however, often very worthwhile to make the time to have a regular financial health check with a financial adviser. Here are 3 reasons why.

It's easy for change to creep up on you


As the old joke goes, change is the only constant in life. Over time, small, incremental changes in your life, can add up to make a big difference and you may only realize just how much your life has changed when you sit down with a financial adviser and talk through your situation with them. Even supposing your situation and priorities are much the same as they were at your last meeting, it's worth remembering that the financial market also changes. Some of these changes can make headline news (like the changes to mortgage tax relief for landlords), while others can be introduced with somewhat less fanfare (like the introduction of Innovative Finance ISAs). It's, literally, a financial adviser's job to stay on top of these changes and make it clear what they mean to you.

You need to be constantly on the look out for ways to make your money work harder for you

Even if your situation stays exactly the same from year to year, you may find that there are changes you can make so that your money works harder for you. This may mean exiting an underperforming investment to make the most of a better opportunity or moving to a new product with lower fees and charges or indeed something else entirely. The fact of the matter is that regardless of whether you are just starting out in life, with minimal assets at this point, or whether you're in your senior years and looking at financing your dream retirement while leaving something behind for the ones you love, you need to make what you have work as hard as possible for you. Just as small changes to your life can wind up making a huge difference to your needs, wants and general priorities, so small changes to your finances can wind up making a huge difference to your overall situation - regardless of how young or old you are.

You can confirm that you have the right protection in place (and at the right price)

Insurance may seem a chore but having the right protection in place is important at any and every stage in life and even more so if you have financial dependents such as children. When it comes to insurance, there are three basic questions to ask.

1. What type of cover do you need?
2. What level of cover do you need?
3. Where can you get the best value for the cover you need?

You need to know the answer to the first two questions before you can make a realistic assessment of the third and this can be a more complex process than it may appear. For example, life insurance comes in two forms, term assurance (which covers the holder for a specific period of time) and whole-life insurance, which covers the holder, literally, until they die. Mortgage-holders and parents with young children might find it more appropriate to use the former so that their mortgage is paid in the event of their death and/or that their children are provided for until they reach adulthood. Older people, however, might find it more appropriate to use the latter so that their loved ones can receive payment shortly after their death, rather than having to wait for probate.

Making Sense Of Mortgages

Making Sense of Mortgages A house is the biggest purchase many people will ever make and hence taking out a mortgage can be a major decision. Because of this, it is worth taking the time to understand the basics of them.

Mortgage lenders have to abide by the Mortgage Market Review


The Mortgage Market Review stressed the importance of looking in greater depth at affordability rather than simply looking at headline figures. This means that anybody looking for a mortgage can expect to be asked detailed questions about their overall financial situation. This applies to those remortgaging as well as to first time buyers.

There are three main types of mortgages: repayment, interest only and offset

Repayment mortgages pay off the loan and the interest thereon

Repayment mortgages are arguably the simplest form of mortgage to understand. You make a monthly payment which covers both the loan principle and the interest due and at the end of the term, you own the property.

Interest-only mortgages only pay off the interest on the debt; they do not reduce the principle

If you wish to keep the home you purchase, then you will need to have a clear plan in place to repay the loan principle at the end of the term. If you are happy to sell it, then you will still need to have a plan in place for a situation in which house prices drop to the point where you find yourself in negative equity. Interest-only mortgages aren't actually banned in the residential mortgage market but they are subject to serious scrutiny regarding the borrower's ability to repay them at the end of the term. They are still very much a feature of the buy-to-let mortgage market as landlord's are buying property to let out rather than to live in, although there is always the risk of negative equity.

Offset mortgages work like giant overdrafts

Basically, the idea behind offset mortgages is that you put all of your cash into one place and thus give up the interest you would have earned on your cash savings in exchange for paying less interest on your mortgage. You still have access to your cash savings although there may be restrictions on how much you can withdraw since mortgage lenders have to keep in mind the need for the loan to be repaid by the end of the term. These are still niche products, but can offer a combination of security and flexibility.

Fixed rate mortgages can provide security but this may be at a price

It may be tempting to opt for a fixed-rate mortgage as a hedge against rate rises, but remember that your lender will factor in the prospect of rate rises in the deal they offer you. On the plus side, knowing what you will be paying each month will provide stability, which may be invaluable.

Residential mortgages are for the purchase of residential property

If you're interested in purchasing a property to let out, then you need a buy-to-let mortgage.

Letting out your property via Airbnb may be against the rules of your mortgage

This goes back to the previous comment about residential mortgages being for residential property. If you are letting out your property in its entirety, by definition, you're not living in it at the time. It is strongly recommended to check your lender's policy on this.

Renting out a room may require consent from your mortgage lender

The government allows people to earn £1000 income from property without paying tax on it and there is also the “rent-a-room” scheme, which allows people to earn up to £7,500 from renting out furnished accommodation in their home. This may be fine with the government, but your mortgage lender may have a different view, it's strongly advisable to check.

Your home may be repossessed if you do not keep up the repayments on your mortgage.

Could You Build Your Own Home?

Could You Build Your Own Home? There's a lot goes in to building a house and commercial housing developments are often a matter of teamwork, with tasks handed out to people who specialize in them. Private housing development, however, can, within certain limits, work within their own rules and you might be surprised at the options for creating your own home from scratch (or almost). Here are three options for doing so - and three considerations to keep in mind when making your plans.

Renovate an existing property


By this we mean, essentially, gutting a property which is currently uninhabitable, or close to it, and making it a desirable dwelling place. This may not be quite the same as starting from scratch, but depending on the state of the property, it may be pretty close to it, in fact it may bring its own challenges. On the plus side, if there is already a building on the land, you may find it easier to get planning permission, at least as long as you intend to stick fairly closely to what was already there. If you're planning something radically different, planning officials may need more persuading.

Buy a prefabricated property and put it together yourself.

You can buy a “tiny house kit” from as little as £6,500 plus chassis, although this will only give you the materials for the basic structure and you will have to add electricity and plumbing yourself as well as furnishing it. Life in a tiny house may not be for everybody, but they can certainly be an affordable way of getting on the housing ladder and could be a good solution for young adults in their pre-child years allowing them to avoid handing over money to a landlord while they build savings towards a family home. You can also sell on a tiny house when you are ready to move on, although this is still a niche market. For those looking for something rather bigger, prefabrication is still very definitely an option and can make the building process quicker and simpler although the nature of prefabrication is such that there can be limited scope for customization, so whether or not this is an appropriate choice depends on what your priorities are.

Build a standard house from scratch

In this situation you're only restricted by your imagination, your budget, the realities of your site and the opinion of local planning officials. This may sound like a long list, but how much of an issue any of these will be will depend on your plans and it's worth remembering that, in principle, there's nothing to stop you from starting small and expanding your home as your budget allows (with appropriate planning consent). This option allows you to take the home of your dreams out of your head and make it a reality.

Some practical advice

When you create your budget and timescale allow yourself a generous margin of error and be realistic about how much you can realistically expect to be able to borrow on a self-build mortgage. You may wish to look into getting professional advice on your options here. Remember that lenders who provide self-build mortgages do not necessarily release all the funds at once. They may opt to release them in stages when agreed milestones are met.

Always keep the issue of planning consent to the fore when designing your dream home. Planning officers can and do have the power to order owners of unofficial builds to tear down their creations.

Check out other legalities too, for example you may be required to use qualified tradespeople for certain tasks and even if the law does not actually require it, your insurance company might. If you're tempted to go off grid, look into the legalities of this as well as the practicalities, for example see where your local authority stands on water disposal.

Getting Ready To Meet The Grim Reaper

Getting Ready To Meet The Grim Reaper Death is a fact of life, but life goes on for those we leave behind and so being prepared for the reality of your own death can go a long way to easing the making life easier for those who stay behind. Here are five tips to help you do so.

Look at minimising the impact of inheritance tax


Estate planning can be a complex topic, but the basic idea behind it is that you do everything legally possible to ensure that as much as possible of your estate goes to who and what you love rather than to HMRC. If you have significant assets (for example if you own a house) you may wish to seek professional advice on this and if you have any assets at all, it can be very worthwhile to keep the concept of estate planning in your mind during your later years.

Put your trust in insurance

Life insurance policies can be ring-fenced into trusts, which has two big advantages for the beneficiaries. The first is that it means that the payout can be made before probate is completed and the second is that is means that the money is excluded from the estate itself for the purposes of inheritance tax calculation.

Make a will

You have two choices, you take control of who gets what and how by making a will or you leave your estate to be divided up according to rules laid down by the government. While considering this, you might also wish to consider the fact that while wills and inheritance planning are separate, hence the two separate points, they are related and the way in which you bequeath your assets can influence the amount of inheritance tax, which is ultimately payable. You may remember that the late, great Rik Mayall died without a valid will, leading to much press speculation on how this would impact the tax payable on his extensive estate.

Give guidance as to your wishes regarding the disposal of your body

These days a funeral can be anything from a cremation with ashes being sent into outer space (literally) or turned into diamonds (also literally) to a simple burial in an environmentally-friendly casket and wakes can be anything from massive parties to small gatherings of family and close friends. Setting out your wishes clearly can make it much easier for your nearest and dearest to organize the funeral you want rather than them having to try to second-guess your wishes.

Put your (digital) paperwork in order

In the old days, people had to think about storing paperwork safely so that it would be both protected from damage and accessible upon their deaths. These days, there is still an element of this, it will probably be quite some time before it becomes acceptable to keep important legal documents such as wills and land registry documentation in purely digital format. In fact, arguably anything which is really important should be recorded both on paper and in a digital format. For example in addition to keeping a paper copy of your will yourself, you can scan a copy of it and keep it in electronic format and also keep a digital note of where your paper copy is kept and the details of the solicitor who drew it up.

You should also keep details of any financial products you have such as: bank accounts, credit cards and loans including mortgages, investments, pensions and insurance policies.

It is also a good idea to keep relevant documentation for any assets you own, particularly valuable ones such as your house, for example in addition to your mortgage and insurance details, you might find it useful to leave details of any work you had done on your house and any associated guarantees.

Finally, in this day and age, you may also want to think about digital assets such as social media accounts.

The Financial Conduct Authority does not regulate Estate Planning, Wills, Tax and Trust Advice.

Pension Death Benefits

Pension Death Benefits The importance of saving for retirement has been really driven home over recent years, particularly with the auto-enrolment campaign (“We're all in”). Here is a quick look at the four types of pension and what happens to them upon the holder's death.

The state pension


A state pension is given to an individual (even though there are certain circumstances in which a person may be able to claim a state pension based on another person's contributions). Therefore, it ends upon the death of that individual.

Defined benefits pensions

These operate to their own set of rules and hence holders of such pensions would need to check what happens to them upon their deaths.

Annuities-based pensions

The key point to remember about buying an annuity is that once it is bought it is a done deal. Therefore, if it is important to you that there is at least the option of your nearest and dearest receiving a legacy from your pension fund after your death, you need to look into this before buying your annuity since it is too late to do it afterwards.

Pensions based on income drawdown

Since “pensions freedoms day” 6th April 2015, holders of pension pots have been able to bypass the traditional annuities route and use their pension funds essentially as standard investment funds with which to generate an income. Depending on the investor's success, there may or may not be capital left over upon their death. If there is, they are now able to pass the funds onto their chosen beneficiary or beneficiaries by means of a scheme called Nominee Flexi-Access Drawdown and then when the chosen nominee(s) die(s), they can pass it on to their chosen beneficiary by means of a scheme called Successor Flexi-Access Drawdown. Under current rules, this process can essentially continue indefinitely, as long as there are funds left in the pension fund.

In addition to the obvious benefit of being able to pass on your assets to those you love rather than simply handing them back to the company behind an annuity, there is the further benefit that the pension fund itself is excluded from the calculation of the value of the estate for the purposes of inheritance tax calculation. What's more, if the current holder of the pension fund dies before their 75th birthday, subsequent drawdowns (withdrawals) will be paid out free of income tax. After that age, they are taxed as income but still free of IHT.

NB: the Nominee Flexi-Access Drawdown scheme was introduced in April 2015, after the initial pensions freedoms, hence existing plans may not be set up to accommodate the scheme. It is therefore recommended to check promptly whether your current pension scheme has this option and if not to take professional advice as to your best options.

A final point about pensions

There is a major difference in meaning between the words can and should. You can choose to use income drawdown to fund your retirement and if you do you may have capital left over to bequeath to your chosen beneficiaries. At the same time, however, it's important to remember that the whole purpose of retirement funds is to fund your retirement and that any legacy you can leave is a bonus, which will benefit someone else rather than you. It's also important to remember that it may still be possible for you to leave a legacy even if you go down the route of an annuity-based pension, you would just have to look at other options for doing so. Annuities-based pensions are still a valid way of ensuring an income in retirement and for some people may be a far superior option to income drawdown (whereas for others they may be a terrible choice). It is therefore strongly recommended to take professional advice before making

Why You Can Profit From Good Mortgage Advice

Why You Can Profit From Good Mortgage Advice If you pay any attention to adverts, you may have noticed something of a running battle between price-comparison sites urging you to use their services to get the best deal and companies urging you to go directly to them for the same reason. Actually, there's a very good case for arguing that the best way to get the best deal is to get the best advice first. Let's look at five reasons why.

A good mortgage adviser will look at the bigger picture


Getting a good deal is not necessarily about getting the absolute, lowest possible price, not even with a large-scale financial product such as a mortgage. It's about getting the deal which is most appropriate for your situation, even if that costs a little more. For example, you may have a strong preference for the security of a longer-term fixed-rate mortgage and be prepared to pay a little extra for it.

A good mortgage adviser works on your behalf

Mortgage advisers can receive their payment in different ways, some charge up-front fees, others work purely on commission, others use a combination of fees and commission, but the basic fact remains that mortgage advisers can only hope to run successful businesses over the long term if they keep their customers happy and that means delivering value. Even though using a mortgage broker creates an additional cost which must be paid one way or another, this cost can be recouped and then some by the fact that they can help you to avoid the expense and inconvenience of taking out a mortgage which is inappropriate for your situation. When considering this topic, it's worth remembering that mortgages tend to carry high up-front costs due to the need to have a home valuation, plus there is the time required to complete the relevant paperwork, both of which facts serve to highlight the importance of making the right choice to begin with.

A good mortgage adviser will understand the mortgage market

In very simple terms if you "go direct" to a mortgage lender, you will have the choice of the products they offer (or at least of the ones for which you qualify). Similarly if you "go compare" you will have the choice of products offered by the companies which work with that particular platform. A good mortgage adviser, however, will be familiar with the overall market from the big players to the niche lenders and will therefore be in a strong position to steer you in the right direction, even if that direction might initially take you somewhat by surprise.

A good mortgage adviser will be by your side throughout the whole process

There are basically two aspects to getting a mortgage. The first is agreeing that the home you intend to purchase is worth (at least) what you have offered to pay for it. (In times gone by it was sometimes possible to get a mortgage for more than the value of a home, but that is highly unlikely these days). The second is confirming that you actually can afford to pay for your mortgage over the long term. Both of these points can involve a fair amount of paperwork and a good mortgage adviser will guide you through it.

Some mortgage advisers can advise you on protection for your mortgage and home

Mortgages and life insurance go pretty much hand in hand, since having the latter is usually a condition of getting the former. Because of this, some mortgage advisers can go the extra mile and offer advice on life insurance and even home insurance, thereby making your life simpler and giving you the opportunity to save more money.

Inflation, Interest Rates & Investment

Inflation, Interest Rates & Investment
This week interest rates were very much on everyone's mind.

There are various ways to measure inflation but the basic idea behind them is much the same, inflation indexes track the changes in a basket of goods and services which is considered to be a good representation of how the average person spends their money. Of course, whether or not it is a good representation of how you personally spend your money, depends on how closely you fit the model of the “average person” and this can work both ways, in other words, you might find that your personal rate of inflation is higher or lower than the official measure.

Inflation and income


There are essentially two ways inflation can influence income, one is direct and the other is indirect.

Direct - inflation as a measure for wage and pension increases

Employers can use the official rate of inflation as a convenient measure for determining annual, standard wage increases (i.e. wage increases which are unrelated to either promotion or performance). It also forms part of the current “triple-lock guarantee” on state pensions (i.e. that they increase by the rate of standard earnings, inflation or 2.5%, whichever is the greater).

Indirect - inflation as a parallel to interest rates

When inflation is low, if a central bank wants to try to stimulate the economy, it has a choice between lowering interest rates or using quantitative easing. If inflation rises, however, and a central bank wishes to put a gentle brake on the economy, then it really only has one tool at its disposal, which is to raise interest rates. This is good news for savers as it increases the interest income they receive but of course it is bad news for borrowers since it increases the amount of interest they need to pay and hence reduces their effective income.

A little inflation is seen as a positive

The Monetary Policy Committee of the Bank of England is charged with keeping inflation at exactly 2%. Of course, it's very hard to make sure a moving target stays in exactly the same position, so the MPC is allowed 1% leeway either way before it is called to account for its actions. A reasonable level of inflation is seen as a stimulus, encouraging people to take action now rather than waiting for prices to rise further. By contrast stagflation (static prices) or deflation (falling prices) can both encourage people to put off purchases in expectation that waiting will either make no difference or might even be beneficial.

Incorporating the reality of inflation into your financial management strategy

In very simple terms, any investment decision you make must at least match inflation in order for you to break even and must generate returns which exceed the rate of inflation in order for you to make a profit. For example, in the current low-interest-rate environment, cash deposits in savings accounts are highly unlikely to make the sort of returns needed to beat inflation, although there may be other, perfectly valid, reasons for keeping them, in which case looking at strategies such as putting them in an ISA wrapper may be valid. By contrast, stocks in start-up companies may offer the prospect of massive returns - although there may be a very high level of risk involved with them.

The skill of balancing risk and reward is at the very core of successful investing and one of the key points which successful investors need to understand, is that sometimes the investments which seem the most safe can actually carry a high risk of their own, namely the risk of having capital devalued by the impact of inflation. This is not, of course, to say that investors should see this as a sign to dive into the higher-risk end of investment vehicles, just that they may benefit from opening their minds to investments they might otherwise have rejected out of hand for being slightly too risky for their tastes.

The value of investments can fall as well as rise. You may get back less than you invested.

What Price For Retirement

What Price For Retirement When it comes to working out how much money you'll need to pay for something, you need to have at least a reasonable idea of how much it's going to cost. This holds as true for retirement as for any other aspect of financial planning.

Working out the cost of your retirement


Look online and you can find plenty of sources giving suggestions as to how much you'll need to enjoy a comfortable retirement. These may be good places to give you some inspiration, but the reality is that the cost of your dream retirement will depend entirely on what your dream is. For example, if you want to spend your winters cruising somewhere rather warmer than the UK then you'll need more than if you're happy to spend them curled up by the fire with a pile of good books. Even if you decide to let dreams take care of themselves and concentrate on practical needs, the fact still remains that the cost of living in the UK varies widely depending on where you live and that is before you start thinking about options such as retiring abroad. Likewise the opportunities for earning extra income can vary depending on where you live. That being so, realistically, you will need to do your own sums when it comes to deciding how much money you will need for your retirement.

Working out how much you need to save per month to finance your retirement

This is actually a hard question and as such you may find it very beneficial to get professional help to answer it. The only truly simple answer is: “as much as you possibly can”, but this is likely to be of very little practical help given that most people have to work out how to balance the competing priorities of dealing with decisions taken in the past (such as debts) and managing the present as well as preparing for the future. The practical answer to how much you need to save per month to finance your retirement will depend on a number of factors such as your current age, your intended retirement age and your plans for retirement as well as what you can realistically expect to receive as a return on your retirement-related investments. Remember, however, that the phrase “how much you need to save” can include contributions made by employers (such as workplace pensions) as well as money gained as a result of tax breaks for pension savings, so even though the numbers may look big and scary, you may be able to get help to achieve them, perhaps more than you currently realise.

Working out the practicalities of how you are going to save for your retirement

This is another very broad topic with which it may be useful to get professional help. The first step in working out the practicalities of how you are going to save for your retirement is to work out how to maximise your disposable income, so that you have as much money as possible to save for retirement (or to put towards other purposes). After that you may wish to look at what your options are for getting “free money” for example employer contributions (such as under the auto-enrolment scheme) and tax incentives for saving towards your retirement. It's also worth noting that while “retirement saving” and “pensions contributions” can often seem pretty much one and the same thing, you can save towards your retirement in other ways, such as via a Lifetime ISA or even a standard ISA, although only the former attracts government contributions as well as tax benefits.

Ensuring Your Insurance Is Right For You

Ensuring Your Insurance Is Right for You The blunt reality of insurance is that insurance companies are businesses and as such they aim to make a profit. The onus is therefore on the buyer to get right type of cover and the right level of cover and, of course, to provide the insurance company with any relevant information needed to assess the price of the premiums. Let's look at these one at a time.

The right type of cover


First of all you need to decide what, in your life needs to be insured. This could be anything from your jewellery to your pets to your health to your income. Then you need to look at what your options are for insuring them. For example, these days it may be possible to cover consumer electronics under your home insurance or through a specialist policy. Which one is right for you will depend on your particular circumstances. Sometimes you may find that you need more than one form of cover to give you the security you need, for example, if you are self employed, you may benefit from income protection cover, payment protection cover and critical illness cover, which are all essentially different elements of the same general concept.

The right level of cover

Depending on your situation this can be a prime example of easier said than done. If you're a student moving into halls/a student flat then you'll probably have a fairly good idea how much your belongings are worth and hence what sort of level of cover you need. If, however, you're an adult with a house full of possessions, of which you've long since lost track, then deciding on the right level of cover can be a bit more complicated. Having said that, you probably have a good idea of what really matters to you, so take that as a starting point. Remember that insurance, like life, is a work in progress and so it's important to keep tabs on your level of cover and adjust it upwards or downwards as your circumstances change. For example, if your only reason for having life cover is because you have a mortgage, you can lower the level of your cover as you pay off your mortgage. It should, however be noted that even though overpaying for excessive cover carries a financial cost, it is generally far less of a potential problem than underpaying for inadequate cover.

Making yourself an attractive client - ethically

Ultimately insurance is a business of risk and reward and, hence, anything you can genuinely do to lower your risk to insurers is likely to be rewarded in the form of lower premiums. An obvious example of this is giving up smoking, which is, understandably, looked on very favourably when taking out health and life insurance. Sometimes it is possible to improve your premiums, if only slightly, with a little finesse. For example, in some forms of insurance, for example car insurance, occupation can be taken into consideration. Therefore if you have a job which can reasonably be described in different ways, then you may want to do some research into which definition is likely to get the best response from an insurance company. At all costs, however, avoid the temptation to tell “little white lies” even if “everyone else is doing it”. For example, if a teenager is the main driver of a car then they need to be listed as such, even though it's almost certainly going to make a sharp difference to the premiums. Leaving aside moral issues, the simple reality is that insurance companies may take your word about facts when they are taking your money for premiums, but in the event of a claim, they may well decide to do their own fact checking and that is when you could find yourself facing significant problems.

Getting The Crowd On Board

Getting the Crowd on Board It's probably fair to say that in the UK, topics related to the NHS tend to make their fair share of news headlines, both positive and negative. The NHS can and does save lives, but at the same time, it is facing (more than) its fair share of pressures, both in terms of budget and in terms of possible staffing issues post Brexit. It is therefore, arguably, hardly surprising that sometimes the NHS is unable to deliver either the level of care or the speed of care patients and their families would prefer.

Crowdfunding is the new charity appeal


The basic concept of people needing medical care getting help from their community when the NHS was unable to meet their expectations is nothing particularly new. Prior to the advent of the internet and the digital age, people ran official or unofficial charity appeals to help raise funds either for their own treatment or for the treatment of someone they loved. The digital age has, however, helped to make this fact more visible since it is much easier to look at the entries on crowdfunding sites than to keep track of appeals, large and small, across the UK. The statistics are revealing. On the crowdfunding site JustGiving, a total of 2,348 medical-treatment-related campaigns were initiated during the course of 2016 - as compared to a mere 304 in 2015. That's an increase of around 700%.

Cancer still kills - and it kills children

As a parent, when you think about your children's health and wellbeing, the idea of them getting cancer may seem far-fetched but actually any child under the age of 15 has approximately a 1 in 500 chance of being diagnosed with cancer and even once they reach their young adult years (15-24) the danger is far from over with over 2000 young adults being diagnosed with cancer each year. In fact, it is the most common cause of death in children (aged up to 15), ahead of the likes of traffic accidents, even though the latter may be far more visible. While children in the UK are typically eligible for NHS treatment, the treatments available and the speed with which it can be delivered may fall rather short of what those on the receiving end would consider ideal. Even when the NHS can deliver what is required with the minimum possible delay, the consequences of a child becoming ill can really drive home the fact that children and specifically childcare can be very expensive. Even if one parent is already a home maker, the extra requirements of caring for a sick child can mean that they need additional help either from their partner or family or from professionals. Either of these options has the potential to have a severe impact on the family finances, which can put a strain on the strongest of relationships at what is already a difficult time.

Critical illness cover can protect both adults and children

When looking at insurance, it may be tempting to focus on the breadwinner(s) in the family to protect the income they generate in the event that they become unable to work. In reality, however, if one member of a family falls victim to a critical illness, then the impact is very likely to extend to the family as a whole and that impact may well have a (significant) financial element even though the child in question is too young to bring in any meaningful income. Because of this, it can be very advisable for parents to take out critical illness cover for both home makers in a family and for minor children (and to encourage young adults to take out their own policies) as well as for income earners.

Stop Your Pension Becoming Overly Taxing

Stop Your Pension Becoming Overly Taxing Managing your money in a tax-efficient manner is generally to be recommended at any stage in life, but it's arguably most important for pensioners, who need to make the income they've earned during their working years, last them all of the rest of their days, literally. Over recent years, the government has permitted greater flexibility with regard to how people can manage their pension, however greater freedom brings with it a greater degree of responsibility for people to understand what their options are and what they mean in practical terms.

You have several options as to how to treat your pension pot when you reach retirement age


Option 1 - withdraw up to 25% of your pension pot as a tax-free lump sum and use the rest to buy an annuity. This was one of the only options prior to the world of pension freedoms and it may still be a very good option for some people. Annuities have the advantage of reliability and simplicity and in some cases these may be major selling points.

Option 2 - withdraw up to 25% of your pension pot as a tax-free lump sum and reinvest the rest to provide an income (known as income drawdown). This approach carries the usual risks and rewards of any form of investment and as such benefits from being well-managed.

Option 3 - withdraw cash lump sums on a regular basis, paying tax on 75% of each withdrawal. This keeps your pension pot in limbo, so to speak, in that you neither get the security of an annuity nor the potential returns offered by income drawdown.

Option 4 - withdraw the full pot as a lump sum and pay tax on 75% of it. This option is only likely to be recommended in a very small percentage of instances.

Option 5 - leave it be for the time being. You can simply leave your pension pot to grow until you have need or want to use it.

Pensions income is taxable but you still have a personal allowance

At current time (2017/2018 tax year), if your total income is less than £100K, the first £11.5K of your total income is tax free. The key word here is total income, in other words, if you have non-pension income, such as income from employment, then this will also count towards your taxable income. If you find you can live comfortably on less than your personal allowance, it may still be worth your while to withdraw extra income from your person, to make the most of your tax-free income allowance each year. If you earn £100K or more, then each £2 you earn reduces your personal allowance by £1, hence, if you earn 123K or more, then your personal allowance will be eliminated.

Other standard tax-free allowances still apply

You can still hold ISAs and take advantage of their tax effectiveness. For example, if you withdraw more income from your pension than you actually need in order to make the most of your personal allowance for income tax, you could find it useful to place the extra in an ISA (cash or any other form) to shield it from tax. If you want, or need, to hold funds outside of an ISA wrapper, there are further options available to you. At this point in time, you have a dividend allowance of £5K although this is due to reduce to £2K next (tax) year. Similarly you have a personal savings allowance of £1K (base rate tax payers) or £500 (higher-rate tax payers), meaning that you can earn interest on savings up to this amount without having to pay tax.

Achieving Your Financial Goals

Achieving Your Financial Goals Money only has any meaningful value, when it's used to help you achieve your goals. When you're thinking of how to allocate your disposable income, here are five outcomes you may wish to keep in mind.

Looking after yourself and your loved ones


It may lack glamour, but having the right insurance in place can make a huge difference in difficult times. When thinking about insurance, it's often a good idea to start by thinking of yourself. What would happen if you A) lost your job, B) became ill and required care or C) died? You need to determine what sort of funds you would need to be able to keep going comfortably in order to be able to determine whether or not any existing protection is sufficient. Then broaden the net to the people you love, your pets and your possessions. Finally, think about your daily life and consider whether there are any ways you could feasibly cause accidental damage to someone else or even just be blamed for it and if so whether insurance could mitigate this. For example, third-party insurance is mandatory for drivers, but cyclists could also benefit from it since they will have someone on their side if they are blamed for an accident. Likewise third-party insurance for pets, particularly dogs, can also come in useful.

Preparing for your later years

As long as you live, you're only going to get older. When you're in your twenties, your later years are literally a lifetime away, but starting your preparations early can really give them a head start. The older you get, the closer your later years get and the more important it is to be ready for them.

Planning for your own death

In simple terms, as soon as you have either A) assets or B) people who depend on you in any way at all, then you should really be thinking about what will happen to them in the event of your death. This applies even if you're a young adult. Sadly young people can and do die and those with assets and/or personal responsibilities need to be prepared for that possibility.

Saving and investing for your future plans

The main difference between saving and investing is that saving emphasizes preservation of capital, whereas investing emphasizes growth. For most people, both form an essential part of achieving their plans and life goals.

Organising a place to live

For many people this phrase will translate as “buying a house” but there are other options, such as building your own home or living on board a boat. You may even enjoy the flexibility of renting and having the use of a home without the responsibility of maintaining it. Whatever your preferences, you do need somewhere to live and hence this fact should be incorporated into your financial plans.

Your plans are your own but help is available

These days there seems to be a whole barrage of adverts from companies which claim that they can either offer you the cheapest deal themselves, or get the cheapest deal for you. The problem here is that the deal with the cheapest headline price may actually be inappropriate for your situation and you may only find this out when you have already spent a lot of money on it and need to make use of it only to discover that it falls short of your expectations. Getting professional advice can help to avoid this pitfall and to ensure that you get the deal which delivers the best value to you and the people you love. They will also work to get this deal for you at the best available price. Ideally, you should have a “financial health-check” with an adviser on a regular basis and certainly in preparation for any major life change, such as a house purchase or the arrival of a new baby.

Top Financial News Stories Of 2017

Top Financial News Stories of 2017 As we prepare to bid a (fond) farewell to the year 2017, here's a quick round up of the year's main financial news.



While it wasn't, strictly speaking, financial news, the inauguration of President Trump, was pretty much guaranteed to set the stage for some major changes in numerous areas, including financial changes. As the UK looks to leave the EU, it will presumably have to negotiate a trade deal with President Trump and his government.


The triggering of Article 50 and the consequential start of the Brexit negotiations was arguably the single, biggest financial event of 2017, at least from the perspective of people living in the UK.

March was also the month in which the UK held what was billed as its last ever spring budget. The chancellor, Philip Hammond, declared that going forward, budgets would be presented in the autumn. This, however, is unlikely to be the point for which the Spring 2017 Budget will be remembered. It is, arguably, far more likely to be remembered for the chancellor's decision to raise national insurance for the self-employed and the political furore which resulted. Ultimately the chancellor backed down.


The election of President Macron put an end to fears that the far right would take power in France and set France on the path to economic reform. At present time it remains to be seen how far and how fast France will travel down that path, let alone where it will eventually lead or what implications it will have for the UK. President Macron is likely to be one of the major figures on the EU's side of the Brexit negotiations.


Right after the French election, the UK had an unexpected election, which, it was hoped, would bring about a more decisive result than the 2016 election. In actual fact, it left the Conservatives with an even smaller majority and a “confidence and supply” deal with the DUP. From a financial point of view, what was noticeable was not just what parties offered in their manifestos, but what they didn't. For example, the Conservative manifesto conspicuously did not include a promise to refrain from raising national insurance for the self employed.


The government announced plans to ban retailers from charging customers for using payment cards (both debit and credit). While the change is in response to an EU directive, the government has gone further than the directive required by also banning charges for the use of ewallets such as PayPal. On the one hand, it's understandable that governments would wish to encourage the use of digital payments in an attempt to squeeze out the (untaxed) cash economy. On the other hand, it will be interesting to see the effect of this move in practice, since real-world retailers have the option to stop accepting payment cards and online ones could simply move to “handling fees”.


While Angela Merkel technically won a historic fourth term as German chancellor, her party did not win an outright majority and has struggled to form a coalition. To put a new twist on an old joke, when Germany sneezes, the EU catches a cold. More accurately, it is likely to be difficult for the EU to progress with key decisions until they know which way the political winds will be blowing in Germany. A long period of political uncertainty in a key EU state could turn out to be very unsettling both for the markets and for Brexit negotiators.


Inflation saw the Bank of England raise interest rates from 0.25% to 0.5% and a new mandate saw Philip Hammond u turn on his spring u turn and start to implement his plan to increase national insurance for the self employed. Presumably the increased revenues he expects to collect from the self employed will at least help to cover the stamp duty exemption he granted to first-time buyers (for the first £300K of homes costing up to £500K) and the 3% increase in the state pension promised for next year.

State Pension – All You Need To Know

State Pension – All You Need to Know If you were born after the 5th of April 1951 (for men) or 1953 (for women), you will receive what is being called the “new state pension” as opposed to the old one. Any contributions you made under the old scheme will be transferred to the new one and treated under its rules. Here are five key points about it.

The “additional state pension” has been abolished


Under the old system, your state pension entitlement was based on a combination of your national insurance contributions (basic state pension) and your earnings during your working life (additional state pension), unless you chose to opt out of paying the earnings-related contribution, for example, to put extra money towards a workplace pension scheme. The new state pension is based purely on national insurance contributions and, going forward, only a person's individual contributions will be counted, but during the introductory period, women who paid reduced national insurance contributions, sometimes known as the “married women's stamp”, might be able to improve their own state pension by claiming on their partner's contributions.

The name “flat rate pension” is a bit of a misnomer

The full state pension will only be given to those with (at least) 35 years' of qualifying contributions. You need a minimum of ten years' of qualifying contributions to receive any state pension at all and if you have at least ten years of qualifying contributions but few than 35 years' worth of qualifying contributions, then the level of state pension you will receive will be in proportion to your level of contributions.

Any existing pension contributions will be respected

Your existing pensions contributions will have been converted into a “starting amount”. If this is exactly equal to what you require to claim the full new state pension then you will receive the full amount, but will be stopped from building up any further entitlement. If you already have more than you would have received under the new system, for example, you have been paying into the additional state pension, then this will be respected, but again, you will be stopped from building up any further entitlement, if you have less, then you will receive less but you will have the opportunity to build up further entitlement, even if you already have 35 years' of contributions. For example, if you were “contracted out” of the additional pension for an extended period but now want to make up the difference to improve your entitlement, you will be able to do so.

Deferment is still possible, but is worth less

Under the new system, each year you defer taking your state pension will earn you an increase in payments of 5.8%, which is almost half of the 10.4% offered by the old system.

It's still often a good idea to make your own plans

At current time the full new state pension is £159.55 per week. This is, obviously, better than nothing and may be enough on which to live comfortably if you have paid off your mortgage and are based in one of the more affordable parts of the country. At the same time, however, it's unlikely to be the sort of income on which dream retirements are built. It's also worth remembering that during a lengthy retirement period, inflation may well raise the cost of living, but it is entirely up to the government whether or not the state pension is increased and, if so, to what extent. For example, during the last election, the Conservatives conspicuously declined to renew their “triple-lock guarantee” (that pensions would raise by the highest of inflation, average earnings or 2.5%). Because of this, it can be very advantageous to make your own plans to fund your retirement and to view the state pension as a handy top-up rather than a mainstay of them.

Decision Time

Decision Time Arguably the most significant difference between childhood and adulthood is that as adults, the default assumption in most cases is that we have the ability and the authority to take our own decisions about how we want to live our lives. We also have responsibility for dealing with the consequences of them. There are times, however, when we're unable to act for ourselves and it is strongly recommended to think about those times and what we should do about them.



While it is theoretically possible to use any one of a number of channels to communicate your wishes with regard to what you would like to happen to your estate after your death, a legally-valid will is by far the most strongly recommended. Quite simply a well-drafted will makes it clear who should receive what and how (for example directly or via a trust). The drafting of a will can also be a helpful part of the process of succession planning, in other words, making sure that you leave as much as possible to the people and causes of your choice, rather than HMRC.

Powers of attorney

While the principle of delegation has probably been around for as long as humanity, the importance of appointing a delegate to act on your behalf if you become incapacitated has grown significantly over recent years as lifespans have extended and lifestyles have changed. At current time, there are three, legally-recognized, ways of granting someone the authority to make decisions and take actions on your behalf, in the event that you are unable to do so.

Ordinary power of attorney is used when an individual only requires temporary assistance, for example during a period of ill health from which they are expected to recover.

Enduring power of attorney was used up until 1st October 2007, at which point they were replaced by lasting power of attorney. Basically enduring power of attorney works in much the same way as a property and financial affairs lasting power of attorney.

Lasting power of attorney replaced enduring power of attorney and it comes in two forms: health and welfare LPA and property and financial affairs LPA. The former empowers your representatives to take decisions regarding your health and wellbeing if you become unable to do so. The latter allows them to take decisions relating to your money and your property, up to and including selling your home. Unlike the health and welfare LPA, a property and financial affairs LPA can be used straight away, even while you are still capable of managing other matters - but only with your consent.

Making a power of attorney work for you

There are basically two aspects to making any kind of power of attorney work for you. One is getting the right attorney (or attorney's) and the other is given them clear guidance as to your wishes. When considering the former, as well as thinking about how well you know a person, how much you trust them and to what extent you have confidence in their judgement, it's also a good idea to think about how much time they would have available if you needed them. When considering the latter, think about how you can give them clear guidance so that they are in a position to act as you would have wished, even if they have to take decisions quickly. Unless they have a clear indication of your wishes and expectations, there is a very good chance that they will end up taking decisions based on what they themselves would have wanted in that situation, which may be very different from what you want. Hence, as is so often the case in life, communication is crucial.

DIY Disasters

DIY Disasters A quick internet search on the term “DIY” will bring up countless results ranging from making your own gifts, to customising shop-bought products, to traditional home-improvement jobs. These last are often the source of comedy gold (think of the programme Home Improvement), but they can have serious consequences if they go wrong. Here are five points to consider before you decide whether or not to go down the DIY route or call in the professionals.

Is it legal/OK with your insurer?


There are certain jobs, typically anything involving electric, which must be undertaken by a qualified professional in order to be in compliance with the law. Even if it is legal for you to undertake a job, your insurer may require it to be completed by a professional in order for your to be covered.

What is the potential risk?

All jobs carry some element of risk, for example, even something as basic as painting could result in a tin of paint being overturned on a floor or path and if you are working with ladders there is even more risk. Jobs which involve power tools can result in a lot of damage if they go wrong and if your task relates to anything structural, then you could literally bring the house down (or at least a part of it).

Do I have adequate insurance cover?

You probably have home contents insurance, but accident-related damage often requires extra cover, either as an add-on to an existing home-contents policy or as a stand-alone purchase. Even if you are an experienced DIYer, jobs can go wrong, in fact, even if you are a professional, jobs can go wrong, which is why reputable professionals tend to have insurance. It would be a bit ironic if you opted, for example, to save money by painting a room yourself, only to have to replace an expensive carpet on which you had spilled paint.

Do I realistically have the skills and tools to do this job?

As a rough rule of thumb, one effective way to get a ballpark feel for this is to look at the list of tools and materials required for the job and ask yourself whether you have them (or at least have easy access to them) and, if so, whether you really feel comfortable using them. If the answers to these questions are yes and yes, then have a look at the instruction and, again, ask yourself realistically, how you feel about following them. When considering this question, look carefully to see if the instructions apply to all situations, for example, assembling a piece of flat-pack furniture, or if there are parts in which you need to apply your own judgement, such as compensating for an uneven floor or wall. Also check any assumptions, such as that plumbing is already in place and double-check for yourself that they actually apply in your, personal, situation.

What do I value more, my time or my money?

If you've come to the conclusion that you're capable of doing the job, then the final question is whether or not doing the job is really worth your, personal, time. If you think you'd enjoy it, then that's a clear sign to do it yourself. If, however, you're simply prepared to do the job because you think it would save you money, then it's time to think carefully about how much money you could realistically expect to save and what that would mean in practical terms. To reiterate one of the previous points, your figures should take into account the cost of taking out appropriate accident cover, unless you already have it.

What Does The Budget Mean For Your Finances?

What Does The Budget Mean For Your Finances? Budget day is a day which is probably awaited with a mixture of hope and fear. As always, it will leave some people more happy than others. Here's a quick rundown of the key points of the budget as they impact personal finances.

Wages, benefits and income tax


The National Living Wage is to be raised from £7.50 an hour to £7.83 an hour (as of April 2018). As always, it remains to be seen what impact this has on the job market and whether or not it translates to pay rises for higher earners.

If you are receiving universal credit or benefits, it may be some relief to know that the Philip Hammond has set aside no less than £1.5B to support the roll-out and although the government has declined to pause it, let alone scrap it, there has been a commitment to improving the efficiency with which it is undertaken. Basically at present time, processing universal credit takes a total of 6 weeks. There is four-week period in which the claimant's current income is assessed, after which there is a further week for the claim to be processed and then, at present time, a final, 6th week in which no benefit is paid. The chancellor has announced that this last week will be scrapped, thereby cutting the overall time from claim to payment from 6 weeks to five. He has also announced measures to provide advance payments to those in particular need.

If you are working, the personal allowance for income tax is to increase to £11,850 and the higher rate threshold to £46,350 both as of April 2018 and both roughly in line with inflation.

Sin taxes

Alcohol, tobacco and fuel have long been targets for revenue-raising. Perhaps surprisingly, alcohol escaped pretty much unscathed, the exception being white cider on which the Chancellor plans to raise duty via new legislation. Tobacco by contrast was subject to a 2% increase over inflation (as measured by the retail price index), with hand-rolling tobacco increasing by 3% over RPI.

Overall motor-related taxes, which are arguably in something of a grey area between necessary expenditure and sin taxes, stayed much as they were with vehicle excise duty on most vehicles only rising by inflation. The exception to this for diesel cars which do not meet the latest standards, for them VED will rise by one band as of April 2018. Interestingly, this will not apply to diesel vans, at least not for now but the diesel supplement on company car tax is to rise by 1%.

The chancellor also indicated that he would look at a tax on disposable plastic items, although it's currently very unclear what, if anything, this is going to turn out to mean in practice.

Landlords and small businesses

After all the battering buy-to-let landlords have received from the chancellor over recent times, the news that he is considering offering tax incentives in return for landlords offering longer-term tenancies, may come as a ray of sunshine in gloomy skies. As always, how welcome it is will depend on what it actually turns out to be in real terms.

The VAT threshold for small businesses has been frozen (at £85,000) for the next two years and rises in business rates are to be pegged to the consumer price index rather than the retail price index. The CPI is often lower than the RPI, so this should be of some benefit to businesses.

The chancellor has also announced £500m support for 5G, full-fibre broadband and the development of artificial intelligence. It's unclear whether or not his actions were influenced by a the “Ostrich to Magpie” report from the Confederation of British Industry, which called for the government to help businesses to achieve a greater level of adoption of newer technologies in order to achieve productivity gains.

Tax treatment varies according to individual circumstances and is subject to change.

All Change For Buy To Let

All Change For Buy To Let As the old saying goes, hope for the best, prepare for the worst. This seems as good a description as any for the Bank of England's approach to managing interest and recently rates going up. While savers may be delighted at the idea of earning a better return on their deposits, rate rises are bad news for borrowers and this last fact has clearly been noted by financial regulators.

From the Mortgage Market Review to the Prudential Regulation Authority


Since the end of April 2014, lenders in the residential mortgage market have been obligated to operate according to the principles set out in the Mortgage Market Review. With the benefit of hindsight, it was arguably only ever a matter of time before regulators took a similar approach to overseeing the buy-to-let mortgage market. Both sets of guidance take into account the possibility of future interest-rate rises.

The key points of the PRA's requirements


More stringent checks on affordability

This is pretty much analogous to the requirements of the Mortgage Market Review. First of all, lenders are obligated to verify personal income and secondly they are mandated to look at the bigger picture including tax liabilities and the possibility of higher interest rates.

Greater demands on rental income

Landlords must be able to show that the rental income on the property in question will cover the mortgage payments by at least 145% even if interest rates reach 5.5%, unless the mortgage offers a fixed interest rate for more than five years.

An obligation to assess a portfolio of four or more properties in full

In keeping with the concept of lenders looking at the bigger picture in detail rather than just focusing on headline figures, where landlords own four or more properties, lenders will be required to look at the performance of the portfolio as a whole rather than just looking at the figures for the property on which they are being asked to lend money.

Sticking points with the new rules

Possibly the biggest challenge facing both landlords and lenders is to get to grips with how these changes will be implemented in the real world. For example:

Assessing landlords for tax liabilities is challenging when the tax landscape keeps changing, leaving both landlords and lenders in a state of confusion about where they stand.

Landlords who are remortgaging may be able to show evidence of actual rental income on a property, as may landlords who are buying a property which is already let, but landlords buying owner-owned properties or new builds will presumably have to rely on comparables, which raises the question of how these will be assessed.

While it may be fair to say that a landlord's ability to run one property effectively indicates that they may well be able to do the same with another, there may be very good reasons why a landlord may have an unprofitable property in their portfolio, at least over the short- to medium-term, for example they need to refurbish it or they are aiming to sell it. How are lenders to assess these kinds of situations effectively?

The mortgage market and incorporation

Over recent times, there has been a great deal of debate over the advantages and disadvantages of private landlords transferring their portfolios to incorporated companies. The headline advantage of this move is that it can be used to cancel out some of the negative effects of recent tax changes in the private BTL market. This move, however, does bring its own risks in that it must be undertaken absolutely correctly to be both legal and tax effective and that the fact that incorporated companies operate to a slightly different set of rules to private landlords also has its disadvantages. In particular, there is the fact that mortgage lenders treat incorporated companies very differently from private individuals. With this in mind, anyone contemplating moving their properties to an incorporated company is strongly recommended to seek professional advice first.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Some Buy to let and commercial mortgages are not regulated by the FCA.

Britain's Best Lenders – Mum & Dad

Britain's Best Lenders – Mum & Dad The days of 100% mortgages are unlikely to return any time soon. Quite the opposite, in the current climate, it's a case of “the bigger the better”, where deposits are concerned. While it may be the purchaser who hands over the deposit, many first-time buyers are turning to the bank of mum and dad for help to get on the housing ladder. This, however, impacts on the financial health of the parents in question. With this in mind, here are three points to consider on the topic.

Set expectations early


Ideally parents should start teaching their children about the importance of managing money as soon as the latter are old enough to grasp the basic concepts of it. As they grow, involving them in the management of the family finances, as far as reasonably possible, will both help them to learn the skills they'll need themselves in later life and help them to gain an appreciation of what is within their parents' means - and what isn't. Clear communication should go a long way to stop children making plans based on unrealistic expectations of what their parents can do for them.

Start saving early

The pre-school years can be very expensive, but once children reach school age, costs can often become more manageable, which gives parents about 11 to 13 years to prepare for when their child leaves school. This money may well be needed to help them through university or to help with the practicalities of entering the world of work, for example if they need a car to reach their place of employment, but having it ready can go a long way to avoid overloading the family finances at what can be a very expensive time and can therefore make it easier for parents to start saving again for their children's next major milestones in life, such as marriage, getting on the housing ladder and having children, which are often closely connected. While it might sound great, in theory, to give a financial gift to your children as a surprise, in reality, it is likely to be better practice to make them aware of what you are doing and why and, crucially, what they can expect in what timescales. Basically this relates to the previous point about setting realistic expectations.

Take tax into consideration every step of the way

When your children are born, it's worth taking some time to think about the advantages and disadvantages of opening a Junior ISA for them. The obvious advantage is its tax-efficiency. The potential disadvantages is that once the money has been deposited, it's locked away until the child turns 18 and once they do turn 18, the money is theirs completely to use as they wish, whereas you might prefer to have some degree of control over how it is spent. As soon as your child turns 16, they become eligible to open a cash ISA in their own name, which they can hold at the same time as their Junior ISA, giving a two-year period in which meaningful tax gains can be made. Once they are adults, if the family is still working largely as a single unit, from a financial perspective, then it may be worth parents and other older relatives considering giving the younger adults gifts to put into an ISA wrapper, on the understanding that, unless otherwise agreed, the money is to be kept for major events and purchases (such as weddings and buying a home). This has the advantage of providing tax-efficient savings, which may go some way to compensating for the fact that interest rates are currently very low.

Fixing Mortgages

Fixing Mortgages For many people a mortgage is one of the biggest financial commitments they will ever make, which is why it's so important to choose the right product for your, personal situation. At this point in time, it's very hard to find interest-only mortgages for residential properties (although they are still available in the buy-to-let sector), which means that for practical purposes, your choice of mortgage boils down to a tracker mortgage, an offset mortgage or a fixed-rate mortgage.

Tracker mortgages


Tracker mortgages are pegged to the base rate set by the Bank of England and hence rise and fall in line with the decisions taken by the Monetary Policy Committee. While this means that borrowers benefit from any reductions to the base rate, it also means that the responsibility for absorbing any increases lies with the borrower rather than the lender. From a lender's perspective, this makes tracker mortgages less risky than fixed-rate mortgages and hence they can offer them at a more affordable rate.

Offset mortgages

Offset mortgages are a relatively new product in the UK and the basic idea behind them is that the borrower treats their mortgage rather like a current account with a huge overdraft facility. By transferring their savings into the mortgage product borrowers reduce the balance of the loan and hence the amount of interest payable. If need be, however, they can still access their money. Given that interest rates paid to savers are typically lower than those charged to borrowers, the question of whether or not these mortgages are right for any given borrower usually relates less to interest rates themselves and more to whether or not such products fit in with a borrower's overall financial plan.

Fixed-rate mortgages

Both the Mortgage Market Review and the recent review of buy to let mortgages undertaken by the Prudential Regulation Authority emphasised the need for lenders to examine how potential borrowers would cope in the event of interest-rate rises. The reason for this is obvious. At this point in time, interest rates are so low that there is far more scope for them to go up than for them to go down. Borrowers who are also thinking about this possibility might be tempted to take out a fixed-rate mortgage now so that they have confidence about what their repayments will be over the coming years. While this may be an astute move in some cases, there are a few points to consider.

Fixed-term mortgages tend to be more expensive than tracker mortgages. In theory, interest rates can go up infinitely and if you have a fixed-rate mortgage, it's the lender who has to absorb the cost of this, so while fixing your payments can bring a level of certainty and a feeling of security, this can come at a price.

Longer-term fixed-rate mortgages tend to be particularly expensive. This fact is a corollary of the previous point. Basically, fixed-rate mortgages are a combination of a loan and an insurance policy. The longer the term of the policy, the more the lender is exposed to the risk of interest-rate rises and hence the higher the price of the cover.

Exiting a fixed-rate mortgage early can lead to penalties

Admittedly exiting any form of loan earlier than the lender expected can lead to penalties, particularly if the borrower is offered some kind of introductory deal, the cost of which needs to be recouped by the lender over the lifetime of the product, but given that the nature of fixed-rate mortgages is such that they are likely to attract people looking for a guarantee of stability, we feel it's important to emphasise this point. If borrowers are looking to fix their rate because they are concerned that they may be about to enter choppy financial waters, then it may be best to seek professional advice now to look at what options are open to you, rather than assuming that a fixed-rate mortgage will resolve the issues you may face.

A Trust Can Make All The Difference

A Trust Can Make All The Difference Death itself is fairly straightforward for the deceased, it can, however, be both complicated and distressing for those left behind, even when the death involves an elderly person dying quietly in their sleep. The life of those left behind can be made much simpler by some judicious planning. Here are 7 points to consider.

Minimise your tax liability


Managing personal income and assets in later life is essentially a balancing act between making sure you have enough to take care of your present needs while doing what you can to reduce the value of your estate for tax purposes. Good financial advice can easily pay for itself here.

Make a will

In times of stress, such as after a bereavement, people generally appreciate clear and straightforward instructions. A well-written will spares your loved ones the complication and confusion of trying to work out what was intended to be left to whom.

Take out life insurance and place it in a trust

Even when your estate should be more than sufficient to take care of your beneficiaries over the long term, life insurance can still have a valuable role to play. There are two main reasons for this, both of which relate to the fact that placing a life insurance policy within a trust wrapper essentially ring-fences it from the rest of your estate.

Payments can be made before probate is complete

The law does allow for certain payments to be made out of a deceased's estate before probate is complete, for example, funeral payments, but for the most part HMRC gets their share before anyone else. Given that, however sympathetic companies may be, they usually still want their bills paid on time, it can be extremely helpful to have the proceeds of a life insurance policy to tide them over during the process of probate (which can be extremely lengthy).

Payments are excluded from inheritance tax calculations

The law does allow for certain payments to be made out of a deceased's estate before probate is complete, for example, funeral payments, but for the most part HMRC gets their share before anyone else. Given that, however sympathetic companies may be, they usually still want their bills paid on time, it can be extremely helpful to have the proceeds of a life insurance policy to tide them over during the process of probate (which can be extremely lengthy).

As an added benefit, trusts can permit both control and flexibility

If you simply make a bequest to someone in your will, then it is entirely up to them what they do with it. In many cases, particularly when dealing with competent adults, this is entirely desirable. In some cases, however, especially when dealing with more vulnerable people such as children or even younger adults, it may be preferable for the donor to exercise some degree of control over how their legacy is used. A trust can be written in such a way that it is subject to supervision by a responsible party, who can either act on the beneficiary's behalf or guide them as to the best course of action. If so wished, the level of supervision can be reduced over time before being withdrawn completely.

A final point on trusts

Trusts can be extremely useful, but need to be set up correctly to be both fully effective and fully legal. Because of this, it is strongly recommended to seek professional advice when setting one up.

The Financial Conduct Authority does not regulate wills and will writing, tax and trust advice.

What Now For Cash And ISAs?

What Now For Cash and ISAs? It may seem hard to believe these days, but once upon a time, savers with relatively modest bank balances could still generate a decent income from leaving their money in a savings account to earn interest. Right now, however, those days are long gone and unless and until they come back, people need to think seriously about how best to manage their money in a low-interest-rate environment.


In the real world, most people are going to need some level of cash in hand, if only in the digital sense of a positive balance in a bank account. It is also often preferable for people to have some form of cash savings, the so-called “cash cushion” easily accessible both to deal with predictable events such as replacing household items and in case of emergencies. Assuming you are one of these people, your options for storing your cash are: hard cash, current accounts and savings accounts.

How best should you store your cash?

The answer to this question is really one of personal preference based on the practicalities of the individual's situation. For most people, the ideal might be to have a combination of hard cash, current accounts and savings accounts but percentage of funds held in each will be a matter of taste. Those in the countryside, with a long trek to an ATM or bank might prefer to keep more money in cash, if they can do so safely, whereas those in cities might feel more comfortable keeping most of their money in a bank. The question of how much cash to keep in a current account and how much to keep in a savings account will also depend on a person's situation. Obviously, you'll need to keep enough in your current account to cover regular outgoings such as bills and have cash at hand for when you need it, but you probably want to keep as little as you feasibly can in a current account, since they are likely to pay little to no interest.

Cash ISAs are now, effectively, super-savings accounts

When ISAs were first introduced, once you took money out, that was basically it. You had to accept that your tax-free allowance for that year had been reduced (or eliminated). Now, however, if you take money out of a cash ISA, you can replace it (within the same tax year), which means that it is feasible to use them as tax-effective savings accounts for the cash you need to keep readily available.

Alternatives for your extra cash

Once you've stored enough cash for immediate and foreseeable needs and emergencies, you then need to think about what to do with any other disposable funds you have. Assuming you still have a tax-free allowance available, then putting them into a cash ISA is certainly an option and, if you have used up your tax-free allowance, then there is still the option of using a regular savings account. At this point in time, however, neither of these is likely to generate significant returns. Those prepared to take a little more risk might want to look at peer-to-peer lending platforms and/or the bond market. The returns generated in these areas are both still linked to prevailing interest rates, but as you are effectively lending directly to the borrower (rather than lending money to a bank to lend to someone else), the effective returns can be much better than the returns on bank deposits, even in cash ISAs. Those seeking the best returns, however, may well find themselves needing to look elsewhere, such as investing in the stock market and accepting the higher degree of risk in exchange for the prospect of much better returns.

The Importance Of Good Pension Advice

The Importance of Good Pension Advice Good advice can be invaluable and when it comes to pensions, getting the right advice at the right stage in your life can make all the difference to the degree of comfort in which you spend your retirement. Fortunately the government has recognized this and since April this year it has been possible to withdraw £500 per (tax) year from pension pots (defined contribution or hybrid) without any tax liability as long as it is used for the purpose of paying for pension advice.

The right time to use this benefit?


As is so often the case, the right time to get any sort of financial advice, including pension advice, is the time which is right for you. In practice, we'd suggest that you might want to take advantage of this benefit when you have a difficult and/or important decision to make. If you happen to find yourself reaching the period just before retirement without having used this benefit, then you might want to check in with a financial advisor once a year before retiring.

Questions you could discuss with an advisor

• Would it be best for me to access my pension pot as soon as I retire?

o These days “retirement” is a somewhat of a flexible concept. For some people it can mean giving up a full-time day job to go off and earn an income doing something else, at least for a while. If you have other income and can manage without your pension in the period immediately after retirement, you may wish to leave your pot to grow for a bit longer.

• Would I be better to use an annuity or income drawdown (or a combination of both)?

o Even though the announcement of pensions freedoms, including the right to opt out of buying an annuity, was met with great excitement in the press, the reality is that for some people annuities may well still be the most appropriate way to ensure that they have a reliable and stable income in their retirement. On the other hand choosing an annuity when income drawdown can would have been more appropriate could wind up being a very expensive decision.

• If I opt for an annuity, which annuity should I choose?

o The word “annuity” actually covers a broad range of options and if you go down this route, it's hugely important to get the right one for your particular situation. This is a situation where getting the right advice can be hugely important.

• Should I take a cash lump sum and if so how much and when?

o Upon retirement, you can choose to take up to 25% of your pension pot as a tax-free lump sum. You can withdraw more than this, but such withdrawals are liable for income tax at your marginal rate.
o Withdrawing the cash has the obvious benefit of giving you cash in hand, but it also has the obvious drawback of reducing the value of your remaining pension pot. Hence, each individual has to work out which takes priority in their situation. For example, if you still have debts to pay off, particularly high-interest debts, then it may be to your advantage to take out money to pay them off, or if you choose to go down the route of purchasing an annuity, you could use the 25% withdrawal as an investment budget so that you still have the opportunity to pursue the sort of returns which can be found in the stock market. If, however, you choose to go down the route of income drawdown, you may find that it is in your best interest to keep your pension pot as large as possible for as long as possible.

Saving For All Ages

Saving For All Ages Savings generally fall into two categories. “Cash cushions” provide a soft landing for life's bumps. “Goal-orientated” savings help us to make key purchases, large and small. Perhaps the clearest example of this is saving for the deposit on a house. Whatever your stage of life, savings can make a big difference to it, particularly if you plan ahead.

Childhood years


In the very earliest childhood years, it will probably be older family members who make savings on behalf of the child. Junior ISAs are a popular choice for this, but there are other options such as trust funds. As soon as children begin to develop an awareness of numbers, however, parents can start to give them their earliest lessons in financial management by teaching them how saving now can pay off later. Young children can watch their cash in a jar, while older ones can start to get to grips with bank accounts.

Sweet sixteen

At this point, 16 is a very important age in financial terms. The reason for this is that Junior ISAs run until the child's 18th birthday, but 16 year olds can open cash ISAs, which means that for two years, you have the opportunity to make extra-large tax-free savings, right before those expensive post-school years.

The post-school education period

Regardless of whether or not a person goes to university, they will probably need some sort of training after they leave school and may also need to get some form of private transport. It may be very difficult for them to save any money during this time, in fact it is more likely that they will need help from the savings made on their behalf during their childhood years. If they can save at all, it's probably advisable to ensure that the savings are easy-access, just in case they need them.

The young-adult working years

These can be some of the most financially-critical years of a person's life, handled well, they can set a person up for a prosperous future. For many people, their next major financial priority will be to get on the housing ladder, which means building up as big a deposit as possible. The Lifetime ISA is one way to do this, but there are other options and hence it may be worth getting professional advice on the best route. The Lifetime ISA can also be used to save for retirement but if a person is working then it may be better to go down the workplace pension route to benefit from employer contributions. This again, is a good place to get financial advice.

The family years

Once you are on the housing ladder, a person's two key concerns are often saving for their children and saving for their retirement. We've already discussed children, so the next issue is retirement. While there are ways to fund retirement other than pensions, they are a mainstay of retirement for many people and for good reason, so if you haven't started one already, then this should probably be high on your list of priorities. You will probably have other goals as well and hence may well have a need for other means of saving and investing, for example making use of your standard ISA allowance. You might wish to seek professional advice here too, so that you can decide how best to allocate your available funds, for example in the earlier period of your family years, you may be want to make some higher-risk and/or longer-term investments for the best rewards, whereas later, a more conservative investing strategy may be more appropriate.


Perhaps it would be better to say, “the post-employment years” since the concept of retirement is changing dramatically and hence so are the financial needs of retirees. Getting the maximum value out of a pension pot can make a huge difference to the quality of a person's retirement and again, professional advice can be invaluable.

Why It Pays To Go Via The Middle Man

Why It Pays To Go Via The Middle Man We've all seen the adverts on TV (and elsewhere), cut out the middleman, go direct and get the best, possible price. In theory, that's sound advice - provided that you know exactly what you're doing. In practice, however, going to a reputable middleman can be exactly the right move to save money (and hassle). This is particularly true with mortgages because they are complex products and as they tend to involve large sums of money, mistakes can be magnified, while astute moves can generate very meaningful rewards. Let's look at three examples of what this can mean in practical terms.

Choosing the right type of mortgage for your situation


Is that a standard repayment or an offset mortgage? Is it a tracker or a fixed-rate mortgage? If it is a fixed-rate mortgage for how long should the rate be fixed? The answers to all these questions, and possibly many more, will determine what mortgage is best for your situation right now and in the foreseeable future. You can only choose the right provider when you know what it is you need, so doing this ground work is essential and unless you really know your way around the topic of mortgages, you're unlikely to have the same sort of insight as a professional who deals with them as part of their daily business. Even if you do feel confident you understand mortgages, it can still be helpful to have a fresh pair of eyes look over your calculations, because getting them right could have a huge impact on your overall financial situation.

Choosing the right provider

How many lenders provide mortgages in the UK? Do you really know all of them or at least all of the ones who provide the sort of mortgage you've decided you want? Do you know how to approach them to get the best deal? If we asked the average person to name as many mortgage lenders as they could, we suspect they'd be able to name all the major high-street brands and possibly a few niche providers as well. If you went to a price-comparison site, you'd get access to a list of companies which work with price-comparison sites, but for many and varied reasons, there are numerous companies out there, large and small, which prefer to steer clear of being involved with them. A mortgage broker, by contrast, will have an in-depth knowledge of the market and will be able to direct you straight to the best lender(s) for your overall situation. These may or may not have the very lowest price in their range, as your broker will look at the complete picture rather than just the headline figures.

Mortgage brokers may actually be the lowest-cost option

Mortgage lenders are in business to make a profit. That's a simple reality. Maximizing their profits means that they have to sell their product to as many people as possible for as high a price as possible. To achieve the first objective, many mortgage lenders combine direct selling with working through intermediaries such as price-comparison sites and mortgage brokers, both of whom have their own bills to pay and therefore expect payment for the work they do. The main price-comparison sites are free for consumers to use, hence they make their money from the companies which use their services. For example, they may receive a commission on sales made through their site. Mortgage brokers may take an upfront fee from their clients or they may take a commission on sales from the lender, however, as they are real people, who genuinely work on behalf of their clients, they can offer flexibility about this, for example they may forgo some of the commission available to them to get their clients a lower price. In theory, individuals could try to negotiate a lower price directly with the lender, but in practice lenders who rely on affiliates to generate sales for them may be very loathe to put those relationships at risk by offering better deals to customers who bypass them.

Your home is at risk if you do not keep up the repayments on your mortgage.

The Advantages Of ISAs

The Advantages of ISAs Most people benefit from a combination of savings and investments. Savings make sure that we have access to cash in case of need. Investments grow our net worth and make it possible for us to achieve our financial goals. Putting our savings and/or investments into a tax-free wrapper helps us to enjoy more of the returns ourselves, hence the huge popularity of ISAs.

ISA allowances tend to go up each year


There are no guarantees, but traditionally ISA allowances have tended to be raised at the start of each financial year. The standard ISA allowance for 2017/2018 is £20,000, this can be put into a cash ISA, a stocks-and-shares ISA or an innovative finance ISA. Anyone (resident in the UK) who has reached the age of 16 can open a cash ISA, stocks-and-shares ISAs and innovative finance ISAs can be opened by anyone who has reached the age of 18.

Cash ISAs come in various forms:

Instant-access ISAs are basically supercharged savings accounts and handy if you want the reassurance of knowing you can always get at your cash quickly if you need it.
Regular-saver ISAs tend to give a better rate in return for the commitment, but may have restrictions on how you can access your cash.
Fixed-rate ISAs give guaranteed returns, but again they may restrict how you access your cash.

Stocks and shares ISAs allow you to shelter a variety of investments in a tax-free wrapper and eliminate the need to pay capital gains tax on your returns. You may, however, have to pay some form of tax within any funds in which you invest.

Innovative finance ISA

Peer-to-peer lending is becoming a major force in the UK, so it's good to see that it can now be included in ISAs – in theory at least. In practice, P2P lending platforms need to be regulated in order to be included in an IF ISA and this is taking time, however progress is being made. Landbay and Lending Works are already registered. Zopa is nearly there.

Junior ISA

Junior ISAs are often just known as JISAs and can be opened on behalf of children under the age of 18 (the sharp-eyed may have noticed that this means 16-18 year-olds can have both JISAs and cash ISAs). For 2017/2018 families will be able to save up to £4,128 on behalf of the child. This money is locked away until the child's 18th birthday at which point it becomes theirs completely.

Lifetime ISA

The Lifetime ISA has caused both interest and controversy in the press. The interest stems from the fact that it is new and quite different from existing products. The controversy stems over the question of whether it is really an appropriate choice for its target market. Lifetime ISAs can be opened by people aged between 18 and 39 and, in very simple terms, its sole purpose is to help people save for (a deposit on) their first home and for their retirement. Savers can put away up to £4000 of their own money per year, which the government will top up by 25% to make a total of £5000. The money saved can only be withdrawn for a house purchase or after the saver has reached the age of 60. If the saver wishes to access their money in any other situation, the ISA must be closed and the bonus will be lost.

Help to buy ISA

The help to buy ISA will close to new applications in November 2019. At current time, savers who go down this route will see their savings topped up by 25% to a maximum of £3000. There are, however, restrictions on the type of property which can be bought with these savings and, critically, the funds can only be accessed upon completion rather than put towards a deposit.

Making A Retirement For Those Who Make A Home

Making A Retirement For Those Who Make A Home Children are expensive and as soon as you know you're having one, planning for their arrival and taking care of them once they've arrived can take precedence over every other priority. You'll always be a parent, but you'll always be a person too and while your children may seem like they're growing up so quickly that you'll miss something important if you even blink, you're growing older too and it's important to prepare for your own old age. If you think of this as being selfish, then consider how much of a relief it will be for your children to know that you are able to take care of yourself and maybe even help them (with grandchildren) rather than them having to worry about how to take care of you.

If you are a home maker


Even if your overall household income is too high for you to receive any child benefit payments, it can still be worth your while to register for child benefit so that you can receive National Insurance credits, which can count towards your State Pension. Having said that, it is an open question as to what level of State Pension will be offered when you reach retirement age, in fact, in principle the State Pension could be abolished completely or be converted into a means-tested benefit. That being so, it is advisable to look for additional ways to save for retirement, which will boost your income if you do receive a State Pension and replace it if State Pensions are withdrawn (or the qualification process changed). You'll be unable to take advantage of the benefits offered by workplace pensions, but you can still open a personal pension and if a taxpayer such as your partner pays into it for you, you can claim tax relief.

If you work part time

As a part-time worker, you may or may not be automatically enrolled into a pension scheme, but if you are not you can still ask to be enrolled and your employer may choose to make additional contributions. If they do, then it is generally very advantageous to make the most of them to build up your retirement funds as much as you possibly can, particularly given that part-time workers, by definition, earn less than their full-time counterparts (on a like-for-like basis). If they do not, then you may wish to stick with a personal pension for reasons of continuity. In either case, however, you do wish to contribute as much as you can from as early a time as you can manage, even when retirement is decades away.

If you work full time

Upon returning to full-time work, you are very likely to be eligible for auto-enrolment in a workplace pension scheme. In this situation, unless you actively opt out, you will have deductions made from your salary and your employer will also make contributions. The minimum level of both employee and employer contributions is set out by the government, some employers may choose to let employees make extra contributions and some may make extra contributions themselves. Obviously, employer contributions are attractive in any situation and if an employer makes contributions over and above the government-mandated minimum, then this can be a very attractive benefit and you should take full advantage of it if possible. At the same time, however, it is understandable that some people may be uncomfortable making a commitment to sacrifice part of their salary in the here and now, when they may be on tight budgets and have little room to manoeuvre when life happens. In that situation, it may be appropriate to use a personal pension, which offers more flexibility. You may lose out on employer contributions (although you could ask and your employer may offer to pay them), but if you opted out of auto-enrolment, you would lose those anyway and at least this way you are saving something.

Buy To Let Numbers Do Still Add Up

Buy To Let Numbers Do Still Add Up The UK is one of the most densely-populated countries in the world and hence there is a high demand for housing both to buy and to rent. Over recent years, the government has attempted to help first-time buyers onto the housing ladder though a combination of providing direct assistance, in the form of help-to-buy schemes, and by making it more expensive to buy and run investment property (buy to let). With all the recent changes, now may be a very good time for landlords to reassess where they stand financially and to decide if buy-to-let still makes sense for them.

Tax change 1 – Mortgage tax relief


Those three simple words encompass a whole world of complexity and potential pain for buy-to-let landlords. Up until April 2017, landlords declared their rental income net of mortgage-interest payments. Starting April 2017, this system has been in the process of change to one in which landlords declared their gross profits and their mortgage interest separately and receive a certain level of tax relief on the latter. At current time, the plan is for the level of tax relief available to be reduced to a maximum of 20% by 2019. This means that landlords on the higher rate of tax will essentially find their tax relief cut in half.

Tax change 2 – The wear and tear allowance

While this tax change may be more of an inconvenience than a major source of financial upheaval, it's still a change which few BTL landlords are likely to welcome. Instead of landlords being able to claim a straightforward 10% “wear and tear” allowance, but will have to itemise allowable expenses on which they can claim tax relief. Even if the financial impact is minor to nil, buy-to-let landlords may well feel that they could well live without the hassle of the extra paperwork.

Tax change 3 – Stamp duty

The 3% stamp duty surcharge was openly aimed at buy-to-let landlords as can be seen from the fact that people who temporarily end up with two properties, for example as part of a house move, can typically reclaim the 3% surcharge when they sell one of their properties. This change effectively places a 3% handicap on buy-to-let landlords when competing for properties against those looking to buy for their own use as residential property.

More changes to mortgages – the question of affordability

The Prudential Regulatory Authority of the Bank of England recently brought in new rules for lenders, which highlight their obligation to ensure that landlords really are capable of managing the mortgage for which they apply, even if interest rates rise. On the one hand, it could be argued that landlords should be making these sorts of checks themselves anyway. On the other hand, it may encourage lenders to be more nervous about the buy-to-let market and hence make it unreasonably difficult for landlords to get mortgages.

Regulatory changes

In addition to the tax and financial changes, buy-to-let landlords have also had further legal obligations placed on them, such as the controversial “right-to-rent” scheme, under which landlords could face time in prison if they fail to undertake checks to ensure that their prospective tenant has the right to be in the UK.


While the points previously raised can paint a somewhat bleak picture, the fact still remains that the UK still has a shortage of housing coupled with strong demand from people who actually want to rent (such as mobile young adults) as well as those who are currently priced out of buying their own home. Because of this, buy-to-let can still be an attractive investment prospect, just as long as prospective landlords do their sums very carefully.


Check Your Spam Folder & Your Priorities

 Check Your Spam Folder & Your Priorities Call it spam, call it junk mail, whatever you call it, it's one of the banes of the digital world and these days many of us get so much email, we just delete the contents of our spam folders without even looking (or leave it to our providers to empty it automatically). Actually, we probably should make a point of checking our spam folders we hit that delete button.

Spam folders can contain hidden surprises


Most of what gets put into spam is exactly that, but sometimes legitimate messages get put there too since the sheer quantity of email sent around the world is making it harder and harder for email companies to work out what is unwanted spam and what are popular newsletters and other genuine forms of mass mail. What's more, even genuine spam can have some value, either for amusement or education. For example, the many emails washing around offering to deal with various threats to your business can actually make valid points, although getting in touch with a spammer is unlikely to be the best way to take action on the matter.

Brands, domains and international business

A widespread piece of scam goes along the following lines. “We've noticed that someone is trying to register a local variation of your domain name. Have you authorised this? If not, please contact us, so we can help you to stop someone else stealing your name.”. We've never taken anybody up on this offer, so we don't actually know what happens next, but we suspect it would involve a lot more money and hassle than just claiming the domain directly – if that's even necessary.

Brands beat domains

Here's a point it's important for you to understand. A brand is so important that it takes priority and precedence over just about everything else. If customers recognise your brand, they will come and find you on the net or in the real world, even if you've been unable to get the internet (or real world) address you wanted. Putting the situation another way, a brand can manage without a perfectly-matching domain. A domain without an associated brand is going to have its work cut out to get traffic and visibility, in fact building up domains is basically all about building a brand. Hence, while it's generally preferable to own the domains related to your brand (and ideally relevant handles on the key social media sites as well), it's far more important to build and protect your brand by means of trademarking and such like than it is to buy every domain you could possibly own.

The internet is global, but domains are increasingly local

If you follow the development of the internet, you will already be aware that ICANN, the authority behind internet domains, recently introduced a number of new top-level domains, to allow for greater niching of internet addresses, particularly by locality, such as .London. These have been eagerly snapped up, showing just how keen businesses are to establish an online foothold and how they are starting to move away from the strategy of going “.com” first and looking at other domains (such as .co.uk) as an afterthought, if at all. While the internet does facilitate global trade, the fact of the matter is that practicalities mean that relatively few companies do actually work on a truly global basis. In fact, many profitable companies only work in a specific geographic area in their own country. That being so, while they may benefit from an online presence, it's unlikely that they would get any advantage from buying up international domains. Even if a company does plan to expand internationally, it's perfectly feasible to use a .co.uk address which is then used to create a sub-site tailored to the needs of the target country. As previously mentioned, the key point is to ensure that visitors to the site recognise the brand, rather than the domain.

Helping Your Children To Fly The Nest

Helping your Children to Fly the Nest Just as young adults may yearn for their independence, outside the parental home, so parents can be just as eager to speed them on their way, so that they can get on with their own plans for the future. The challenge for both sides is that houses are far from cheap. Assuming buying a property outright for your offspring is too much of a financial demand, there are basically three ways, you can help your offspring move out of the family home.

Guaranteeing rent


While this doesn't directly help them onto the property ladder, it does get them out of the family home and it may improve their overall prospects, e.g. by helping them progress in their career, thereby improving their ability to buy in the future. The key point to remember when acting as a guarantor is to ensure that, if at all possible, your liability is restricted to your own child rather than potentially including other people's children as well. In other words, you want each person to have their own rental contract with their own areas of responsibility, rather than being jointly and severally (i.e. collectively) liable for the property.

Helping children to get a mortgage

The classic “bank of mum and dad” scenario used to involve parents helping their children put together a deposit and this is still one approach today, but there are other options such as offering some element of mortgage guarantee, for example Barclays' “Family Springboard” mortgage allows purchasers to borrow up to 100% of the value of the property, provided that someone opens a “Helpful Start Account” and deposits at least 10% of the purchase price. This is returned to them, with interest, after 3 years, provided that all goes well with the mortgage. There are other companies with comparable offerings although it has to be said that this is very much a niche market and that as such the lack of competition may mean that the product offers worse value overall than a standard mortgage with a deposit. If parents do opt to help with a deposit, it needs to made clear whether the money is a loan or a gift and, if the former, what arrangements are to be made for paying it back. If the latter, it may be useful to look as to whether the gift can be incorporated into inheritance planning.

Becoming your Child's Landlord

When considering whether or not this is an appropriate route for you, it's important to remember that the purchase of second or subsequent residential properties carries a 3% Stamp Duty surcharge (LBBT surcharge in Scotland), assuming the property is valued at £40K or over. This applies even to parents buying properties for their children to live in (although not to parents helping their children to buy property themselves). The next key point to understand is that parents will have all the legal responsibilities of landlords (even though the tenants are their children), including making sure that whoever lives in the property has the right to be in the UK. In other words, if your child wants to share the property with someone else, e.g. a partner, their parents, as landlords, have to check their documentation to ensure all is in order. At the moment, this only applies in England although the official plan is to roll out this scheme to the other parts of the UK in future. Finally, parents need to understand that in the eyes of the law (and the eyes of HMRC) rental income from your children is still income and will be taxed as such. Prospective parent landlords also need to be clear about the fact that changes to the way profit on rental properties is calculated could see a small number of people pushed into a higher tax band for part (or all) of their income from the property.

How Much Is Your Home Worth?

How Much Is Your Home Worth? Your house is basically a pile of bricks and mortar. Your home is whatever's inside it that matters to you. Obviously it's important to insure your house itself appropriately, since you need somewhere to live, but it can be easier to determine the insurance value of your house itself than the value of the contents. Here are some tips on protecting what really matters.

Take care of the uninsurable


Un-insurables are anything which can't be replaced. In practical terms that means: people, pets, documents, photographs and special possessions. For people and pets, think of how you would get everyone out of the house in the event of a fire or flood blocking your access to your main exit points and make sure you invest in whatever you need for that to happen (for example chain ladders and harnesses which allow you to get large dogs out of upper floors) and make practice runs. For documents and photographs, if possible make digital copies and store them both in the cloud and on a medium you can easily take with you in the event of a fire (such as a portable hard drive). If you still want or need to keep paper copies, invest in a safe which gives protection against fire and flood. Likewise if you have any other possessions, such as jewellery, which would be irreplaceable, look for a safe which can protect them against fire and flood as well as theft.

Review your possessions and their storage

Life goes on from day to day and it's easy to lose track of what we bring into our homes and how it can impact our insurance cover. It's also important to remember that items we own can change their value over time. For example, consumer electronics generally depreciate, but classic IT equipment which may have been stored away and forgotten can actually appreciate in value as can jewellery, collectibles, art, musical instruments, antiques and such like. Therefore it's important to stop every so often and do a double-check of what you own and how much it is currently worth. Overvaluing the contents of your home will raise your insurance premiums, but undervaluing it can leave you short in the event of a claim. You will also need to look at how your possessions are stored. Garden sheds are probably the single biggest example of what a difference this can make. Some home contents policies exclude them, others will include them but there may be conditions attached regarding security features and the value of the items which can be stored in them.

Have an expert review your cover

Getting the right cover for your possessions starts with knowing what your possessions are, where they are stored at how much they are worth. After that, however, you may find that you have a number of options open to you and while a standard home-contents policy is likely to feature in the insurance cover you need, you will benefit greatly from getting both the right policy and the right level of cover. In addition to this, you may also find that certain belongings which could be covered by standard home contents insurance would be better covered by specialist insurance or that they are already covered by another insurance policy. For example, those with expensive bicycles might find that they get an overall better deal by going for a specialist cycle-insurance policy and leaving their bicycle out of their home contents insurance altogether. Alternatively, you may find that you have a bank account which offers insurance for your mobile phone and hence you are already covered without paying extra. Picking your way through all this can be complicated, which is why getting expert advice can, literally, pay for itself.

Preparing Your Pension

Preparing Your Pension As the old saying goes “money doesn't grow on trees” and sadly pension pots aren't found at the ends of rainbows either. Building a meaningful pension pot takes time and, frankly, some degree of effort and sacrifice. Essentially, you're giving up part of your income today, in order to provide an income for yourself at some point in the future. Here are three top tips to help make this happen.

1 - The earlier you start the more time you have on your side


Even though young adults are typically without financial dependents, making ends meet can still be a challenge, particularly for people who are living away from the parental home. Zero-hours contracts, short-term and fixed-term contracts, temping and spells out of work are all par for the course for many of today's young adults. That being so, the order of priorities for most young adults should be: building up a cash cushion of emergency savings; paying off high-interest debt (or at least getting it to the point where it can be moved to a lower-interest credit vehicle) and then looking at pension savings.

2 - Decide if a workplace pension is the right choice for you

If you are working, you may well find that you are automatically enrolled into a workplace pension scheme unless you actively opt out and that even if you do opt out, you are enrolled into the scheme after three years unless you choose to opt out again. The advantage of workplace pension schemes is that the government requires the employer to make some level of contribution. The disadvantage of them is that the employer is only required to contribute part of the mandatory minimum level of contribution, so unless they choose to pay more, as an employee benefit, the employee will be required to make up the difference. Private pensions are much less likely to benefit from employer contributions (in principle employers can choose to contribute but since they are mandated to run workplace pension schemes they may be unwilling to provide pension contributions through another channel as well), but they offer much more flexibility. In short, if you can commit to regular saving each month, employer contributions can boost your pension pot nicely, however, if this is too much of a challenge, it's better to save what you can afford into a private pension than to go without any pension provision at all.

Remember pensions are only part of financial planning

For people who earn an income, by any means, pensions are a very tax-efficient way of saving for retirement and adults in employment can also benefit from pension contributions. At the end of the day, however, pensions are just one way of saving for the future, there are other possibilities. For example, those aged between 18 and 40 will soon be able to open a Lifetime ISA, which will offer an alternative and more flexible means of saving for retirement. Ultimately any savings or investments you can grow over your working years will form a contribution to your lifestyle in retirement. With this in mind, one positive step all adults can take, regardless of their age or financial situation, is to make an active commitment to managing their finances to the best of their ability, starting with basic budgeting skills. The simple act of keeping track of your money and understanding where it is going and why will help you to make the most of what you have and to make intelligent decisions about where it is appropriate to spend money in the present (accepting the fact that it's important to enjoy life in the here and now as much as you can) and where it is appropriate to save and invest for the future.

Look after your pennies and your pounds will take care of themselves. It's an old piece of wisdom and it still has a lot of value in a modern world. Even though it may seem pointless just to save a few pennies here and there, those pennies do add up and will make pounds. With that in mind and given that so many of us are keeping a close eye on our wallets these days, here are three tips for taking care of those precious pennies.

Pay yourself first


If you know you should have at least a little money left over to save each month and yet you never seem to, then put this money aside first in a place where you can access it if you need it (like an instant-access savings account) and then do your level best to work off what's left.

Track, budget and track again

Get a year's worth of bank statements and as a minimum look at what you spent in the upcoming month at the same time last year and what you spent over the last 3 months. Use these as a prompt to budget for any payments you know you are going to need to make in the forthcoming month, even if you decide to cancel them (many contracts require a notice period). While you are doing this, look at each payment and ask if it relates to a need and/or if relates to something you really love and which you can comfortably afford. Unless a payment can score at least one yes here, then it should be a priority to get rid of it. Even where a payment does score a yes, you can still look at ways to satisfy your need or want at a more affordable cost. Once you've budgeted for anticipated payments, you can then budget for anticipated living costs, such as groceries. Supermarkets and other large shops can be danger spots for budgeters because they often make it very easy to slip in discretionary purchases with the necessary ones, even when you have a shopping list and while this is a bit harder for them to do when you shop online, they will still try to upsell you items based on your shopping history. Start to keep your receipts so you can have full visibility of where your money actually goes and hold yourself accountable for discretionary purchases. If you hate paper, then use your mobile camera to take a picture of them.

Minimise your tax liability

When cash ISAs first began, you were able to withdraw money from them but it was counted against your ISA allowance for that year. Now, however, you are able to replace any funds withdrawn as long as you do so within the same tax year, which essentially turns cash ISAs into super-efficient, instant-access savings accounts. They are therefore obvious places to put the money you need to keep available “just in case”. Once you have built up some savings, you may then want to think about taking out some investments. You can also keep investments in an ISA wrapper, this time a stocks and shares ISA. Alternatively, you may wish to look at one of the more specialised forms of ISA such as the innovative finance ISA or the Lifetime ISA (assuming you qualify). Choosing the right approach for your situation can be a bit of a challenge, so it can be worthwhile to get professional advice to ensure that you're making the most of the money you save each month and building it into a fund which will really help you to achieve your life goals and make the most of your future.

New Rules To Soften The Blow Of Inheritance Tax

New Rules To Soften The Blow Of Inheritance Tax Inheritance tax has always been one of the most controversial taxes around. Depending on your point of view it can be:
an essential means of making sure that a private individual's wealth is shared with society as a whole a pragmatic approach to filling government coffers a ghoulish tax applied at a difficult time.

Whatever your point of view on inheritance tax, there are two indisputable facts. One is that it is a reality and none of the main parties has recently shown any inclination to abolish it completely. The other is that house prices and house-price inflation in the UK means that anyone who owns a home needs to take inheritance planning very seriously if they want to leave as much as possible to the people they love, rather than to HMRC.

A brief guide to IHT and the new “Resident's Nil Rate Band”

Each individual in the UK gets an IHT nil-rate band of £325K. Starting April 2017, home owners can receive an additional “Resident's Nil Rate Band”, which is currently set at £100K and is planned to increase to £175K between now and April 2020. In simple terms, this allows them to pass on equity in their home to their lineal descendants (or the legally-recognised partners thereof) without paying IHT on it. As with the standard nil-rate band, this can be transferred to a spouse or civil partner upon the death of the first person in a legally-recognised relationship. While this does give home owners some degree of respite for the foreseeable future and the fact that the current government has pledged to increase the RNRB in line with the consumer price index does at least show recognition of the fact that house prices do increase over time, in a densely-populated country such as the UK, it is entirely possible that house-price inflation will regularly outstrip the CPI. It's also worth noting that this RNRB only applies when leaving property or the proceeds thereof to close relatives, those wishing to leave their estate to unrelated parties will be left with the standard IHT nil-rate band. Likewise, those who have significant estates composed of assets other than property will gain nothing from this change.

So what does this all mean in practice?

Boiled down to basics, all this change means is that the government has given some individuals an increased nil-rate IHT allowance, applied in certain circumstances. While it will doubtless be a welcome change to many people, it is hardly a ground-breaking one, nor is it likely to negate the need for an overall IHT strategy. Estate planning, like most aspects of financial management, generally comes down to balancing current and foreseeable needs with future goals. For those in the later period of their lives, current and foreseeable needs is increasingly likely to include making provision for assistance or even care, either in our own homes or in a residential facility. Future goals may include items on an individual's “bucket list” or may simply be the desire to leave a legacy to people and/or causes the individual holds dear, rather than simply handing over funds to HMRC. Striking this balance may involve blending a number of approaches rather than just relying on the new RNRB or gifting as much as possible during a person's lifetime. For example, those who are currently approaching retirement may wish to look at their pension arrangements in the light of the fact that pensions pots used for income drawdown can now be passed to any chosen nominee without IHT being charged. Those who are investing outside of pension may wish to pay particular attention to investments which qualify for business property relief as these can be very advantageous from the point of view of estate planning.

Inflation – The Race Against Time

Inflation – The Race Against Time The Monetary Policy Committee of the Bank of England is tasked with keeping inflation at exactly 2%. If inflation moves more than 1% away from this target (up or down), then the governor of the Bank of England has to write an open letter to the Chancellor of the Exchequer, explaining why this has happened and what the MPC intends to do about it.

Inflation – theory and practice


There are various ways to measure inflation and the one used by the MPC is known as the Consumer Price Index. Basically this approach creates a theoretical “shopping basket” of goods a hypothetical “average consumer” would be likely to buy. It then measures the movement in prices of these goods. As can be clearly seen therefore, whether or not any given private individual agrees with the MPC's views on inflation will depend very much on the extent to which their shopping patterns match the MPC's imaginary shopping basket.

The importance of understanding “personal inflation”

Averages have their uses, but the reality is that we are all individuals in widely different circumstances and hence it is pretty much inevitable that there is going to be some degree of discrepancy between the MPC's “theoretical” inflation rate and the rate of inflation felt by any given person. Some people may be lucky enough to find themselves “winners”, for example if they are able to grow their own food at a time when food products are experiencing high inflation, then their personal rate of inflation will be lower than the MPC's rate. Some people, however, may be “losers” and find that the rate of inflation they experience is higher than the MPC's rate. One situation where this may happen is when a person has a low disposable income and hence makes fewer discretionary purchases. If low inflation on discretionary items is counterbalancing high inflation on necessary purchases then people who are only buying necessary items are going to find that their personal experience of inflation is much higher than the MPC thinks it should be.

Managing high personal inflation

If you are already in a situation where your personal inflation level is higher than the MPC says it should be, then there are basically two approaches you can take. One is to try to increase your effective income and the other is to try to save money. Of course, you can try to put both approaches together for maximum impact. While increasing your income may seem unrealistic, the digital “gig” economy has opened up a wide variety of ways for people to earn a little extra money, which may go a long way to helping you feel more comfortable. Likewise, saving money can be about more than cutting back on what you buy (although that can be a part of it), it can be about being more astute about what you buy, when and how. For example, could you team up with other people you know to shop in real bulk for the best deals? This may take a little organisation, but could lead to real savings.

Inflation and retirement

Inflation will be a fact of life in your retirement, which means it really pays to plan ahead so that you can have a reasonable degree of assurance that your retirement income will at least keep pace with it, particularly since the “Triple Lock” guarantee (that pensions would rise by the lowest of average earnings, inflation or 2.5% was a 2015 pledge for the duration of that parliament. There has been a conspicuous absence of a pledge to keep this guarantee for the duration of the next parliament, let alone beyond. Hence, private individuals would be well advised to do everything they can to ensure that their retirement funds can stand the test of time, which means standing the test of inflation.

Is Buy To Let Still A Good Investment?

Is Buy To Let Still A Good Investment? Over recent times, tax changes have delivered a sharp blow to the buy-to-let market and yet it has simply rode out the punch and stood firm. This is a pretty clear reflection of the strength of the market, which is essentially based on the fact that the UK has a chronic shortage of housing of all varieties, coupled with a large pool of people for whom renting is clearly the most appropriate choice, such as students and mobile young adults. If you are considering incorporating buy-to-let into your portfolio, here are some questions to ask.

Do I really want to be a landlord/landlady?


Even if your first thought is that you're going to use an agency, ultimately responsibility for the property and tenants therein still rests with you. The agency will simply be acting on your behalf and, of course, they will be charging a fee for this.

Are the financial practicalities of buy-to-let investment are right for me at this point?

Even if you opt for an interest-only mortgage, you are very likely to need a deposit and that deposit could be in the region of 25% or more. That money stays in your mortgage lender's possession until either the mortgage is paid off or the house is sold. Selling houses tends to be a relatively slow process even in the hottest of markets (at least when compared to selling other forms of investment such as shares) and if a market is slow, it can take an extended period for a property to sell and in a worst case this could even be at a loss. Your mortgage has to be repaid regardless, hence you are the one who has to absorb any loss.

Does BTL investment fit in with my overall aims/goals?

As a rule of thumb, BTL is all about generating income, the fact that you may end up with an asset is an extra bonus and it should be noted that in some situations BTL investment can still be worthwhile even if it involves using an interest-only mortgage with the result that you never actually own the house. In other situations, BTL may be an inappropriate investment, even if you can afford a repayment mortgage, meaning that you will end up with an asset. Everything depends on each individual's particular situation.

Do the sums really add up?

If you're still interested in buy-to-let then you need to make sure you do a very thorough job of checking your sums. In addition to the total purchase cost of the house (including transactional costs and a 3% stamp-duty surcharge), you will also need to account for all the associated costs, such as insurance, remembering that there are likely to be different rates for BTL products as compared with their residential counterparts. You will then need to see if you can feasibly recoup these costs in the form of rental income and make a profit. You may also wish to leave yourself a substantial margin of breathing space in case of future tax changes. Of course, while you can investigate BTL in general, you will only be able to go into specifics once you start looking at a particular property and you will only find out whether or not your projections about rental income were accurate when you actually start letting out the property.

There's more to investment than property and more to property than BTL

BTL can be a very good investment for some people in some situations, but it can be useful to remember that there are other ways to invest in property, for example investing in property development. These can be more appropriate choices for some people. Likewise there are many other investment options out there. With so such a wide range of possibilities, you may find that your best starting point is to get some independent, professional, financial advice.

Why Your Pet Would Insure You

Why Your Pet Would Insure You Even those who've never had a pet and never wanted a pet could probably explain the arguments for having pet insurance, courtesy of the many adverts for the product. Now imagine what would happen if your pet could talk. What would it say about insuring you?

If you die, who would look after me?

Would you really be happy with the thought of your pet ending up in a shelter if you died? What about your children landing up in a children's home? Admittedly if you have a partner or family this latter option is less likely (in both cases), but it does happen. Even if you do have someone in mind to take care of the ones you love in the event of your death, how will they manage without the support you are currently able to offer? Pets and children can both be expensive, in the latter case, there may be some state support for those in real need, but even if there is, would it really provide for them the way you would have if you had lived? In very simple terms, if you have a pet or a person who depends on you in any way, then life insurance should be thought of as a must-have rather than a nice-to-have.

If you have an accident, who would walk me?

Let's say you find yourself temporarily incapacitated. You know you're going to recover, hopefully sooner rather than later, but who walks your dog in the meantime (or opens doors for your cat)? Again, you might well turn to a partner, family or even friends, but that places extra responsibility on them and you may have to accept your pet getting walks when other people can manage it, if they can manage it, rather than getting the amount of exercise they usually have at the times they usually have it. If you had the money, of course, you could actually pay for a dog-walker to come round and take your pet out when you want and for however long you want. For dog walks, read school runs, play-dates and any other children's activity. If you don't have children, then think about everyday life, shopping, washing, cooking, cleaning, think about making any regular payments, such as mortgages or rent. If your plan is to rely on state benefits, you may get a nasty shock if you are ever unfortunate enough to find yourself in that situation. Even if you are in employment and have some degree of cover from your employer, you may find that you actually need more. Insurance policies such as income-protection insurance and payment protection insurance can help if you find yourself discovering the truth of the saying that accidents can happen to anyone.

If you get ill, who will buy my food?

Good health is something it's only too easy to take for granted – until it's taken away. Being laid up with a cold for a few days can be bad enough for your income if you're self-employed, succumbing to a critical illness can be devastating, even if you're in employment. As we mentioned above, neither state benefits nor standard employment cover may provide anything like the level of protection you need in your particular situation. If that is the case, you want to arrange cover beforehand, so that it's there if you ever need it, rather than discovering the reality of the situation when you go to claim on the cover you thought you had. In addition to income-protection insurance and payment protection insurance, you may also want to look at critical-illness cover. We hope it will be money spent on something you will never need, but if you ever do, you could find it makes all the difference to your financial health during your recovery.

The Upfront Cost Of Downsizing

The Upfront Cost Of Downsizing With the notable exception of children, smaller is generally cheaper. This is usually very true when it comes to housing (on a like-for-like basis of course, a studio flat in London might well cost more than a house in rural Wales). Because of this, there's an obvious financial attraction in downsizing property once children have flown the nest. As is so often the case in life, planning ahead can help to keep costs down and maximize the money you can call your own after the move is complete.

Prepare your own house for sale

Even though the UK has a shortage of housing, meaning supply is generally tight, it still makes sense to present your house as attractively as possible to get the best possible price for it. There are plenty of articles online, which give guidance as to what to do in preparation for a sale (and what to avoid doing). A good estate agent will also be able to give some tips.

Remember to budget for all the moving fees

If you're downsizing you may be able to make your next house purchase outright but you'll still need to pay many of the fees associated with buying and selling houses, such as estate agent commission, conveyancing fees and surveys. There's also stamp duty to consider and depending on the logistics of your move, you may find yourself paying the 3% surcharge up front and having to recoup it later. There will also be the costs of actually moving from A to B, although these can be minimized through a combination of shopping around for the best deal and advanced planning.

Downsizing your possessions can pay in all kinds of ways

If you've been in your present home for a while, there's a good chance you'll have accumulated a lot of “stuff” some of which will be very precious to you and some of which may be very useful, but much of which you could probably move on in one way or another. First of all, the less stuff you have to move, the lower your moving costs are probably going to be. Secondly, if you are able to sell at least some of your unwanted possessions, then you can use the money to offset the costs of moving.

Digitising lets you keep memories without the memorabilia

Digital cameras are relatively recent inventions, so many of us have collections of old photographs, which can be scanned and kept in digital form. This also protects against the photographs being damaged for example if liquid is spilled on them or if there is a fire, plus it allows them to be shared. Paperwork of all kinds is also a good target for digitisation.

The idea of digitisation, however, can go beyond just scanning photos and papers. Now that we have digital cameras, it effectively costs nothing to photograph items which have special significance for us, so we can remember them and the memories they trigger once we have moved the item on to pastures new. Whether it's a ticket stub from a concert or a special item of clothing, you can create a digital memory of it and pass on the original.

There are all kinds of options for donating and selling physical items

Even donating items to charity can help reduce your moving costs by reducing the amount of possessions you need to move, but if you're looking to make a little money out of your unwanted items then there are plenty of real-world options (car-boots, Gumtree…) and a whole host of online ones. While eBay may be the best-known place for selling on your old possessions, there's also Amazon and numerous niche sites for certain items from books and CDs to designer clothes and accessories.

Getting Out Of A JAM

Getting Out Of A JAM The plight of JAMs (those who are just about managing) has been hitting the headlines on a regular basis over recent times. Essentially JAMs are people who are living from one pay-day to the next, perhaps managing to avoid racking up any (more) debts, but unable to make meaningful inroads into existing debts or to build up savings.

Political parties say they want to help – but can they?

Theresa May herself has acknowledged the plight of the JAMs and politicians of all persuasions have been busily setting out ideas to improve their situation, but realistically it's an open question as to how much any government can actually do, particularly with all the uncertainties about Brexit on the horizon.

Can the JAMs help themselves?

While it may be disheartening to see how little money, if any, you have left over at the end of the month and to feel that there is no point in even trying, nothing could be further from the truth. The less money you have, the more important it is to make every penny work for you. That's what will put you on the path to being able to cope, even if the unexpected happens such as you losing your job or becoming ill.

Start by (re)assessing your outgoings in terms of your needs

A need is anything necessary to keep you housed, clothed and fed or anything which is a legal obligation, such as a contract until it expires. Making savings here is likely to involve a combination of education, adaptation and creativity. For example, even if you and your family enjoy meat, the fact is that it is the most expensive form of food around. Cutting it out, if only temporarily, can go a long way towards reducing food bills. If you've never tried vegetarian cooking then help is at hand on the net, where there are plenty of budget-friendly recipes to be found for free. Likewise, if you're put off the idea of using “own brand” products and such like because you worry about what other people will think of you (or your children), then decant them into other containers and only you will know. Make use of every money-saving option you can find, including old-fashioned money-off coupons and online codes and signing up for loyalty cards where you shop frequently. Look at the activities you carry out every day and see if there is a more economical way of doing them. For example, if you get the bus to work, could you walk one or two stops further to get a lower fare? If you take the car to a park and ride, could you cycle instead?

As soon as you can free up a little money each month, start putting it to work

Your first task is to build up some emergency savings, ideally at least two or three months' salary. Once this has been achieved, start tackling any debts. With debts, the standard advice is to “snowball” or pick the highest-interest debt first and start paying it off. While this can be good advice, if you have lots of “little” debts, e.g. small balances on credit cards, it could be worth paying these off first and closing the cards as this may help to make a quick improvement to your credit rating and help you to transfer your debts to a lender who charges lower interest.

If you've managed to avoid debts, you're obviously in a better situation. In this case, you may want to look at getting professional advice as to how you can use this extra income to generate a return for you and improve your overall situation as quickly as possible.

Making Money Meaningful To Children

Making Money Meaningful To Children
Even though children will typically have a lot of influences in their lives as they grow up, their inner circle of family and friend and, in particular, their parents, will usually have the biggest influence of all. Part of a parent's job is to ensure that their children learn the practical skills they will need to see them through adult life and these days that means having a solid grasp of financial skills.

The (very) early years

The best time to start teaching your child the basics of money is when they start to display an awareness of it and an interest in it. This may be when they start learning to count or it might be earlier depending on the child. The key point at this stage in particular is to ensure that any lessons are put into a context which can be grasped by a young child. For example, an older child might grasp the significance of being told that it would take X hours of work to pay for a given item, but a younger one is likely to have much less of an awareness of time or a clear understanding of what working for a living means. Hence, the answer to a question such as “Is X expensive” is best phrased as a comparison to something a child can grasp e.g. “Yes, we could buy X pairs of shoes for you for the same amount of money.”.

The older childhood years

Once children have begun to grasp the passing of time in a meaningful way, then it becomes possible to teach them the connection between time and money and hence to help them develop an appreciation of the value of the latter. This is also the time when you can start helping them to learn the basics of earning a wage and managing their money by giving pocket money in return for helping with housework and then guiding them through the basics of budgeting with it.

The Santa Clause

Dealing with Christmas can be challenging for parents whose children are still young enough to believe in Santa Claus. One way to address this is to tell them that although Santa does indeed organise and deliver the presents, the parents of children who have been good are expected to make a contribution to help cover his time and costs and hence what children receive depends in part on what their parents can afford. To this might be added the fact that Santa is very careful about leaving live animals as presents as he needs to be absolutely sure that people have the time and money to look after them all year round.

The teenage years

This is the time when children begin to develop the maturity to understand adult concepts such as saving and investing and the difference between “good” debt (low-interest debt used to buy assets, e.g. mortgages) and “dangerous” debt (high-interest consumer debt). In addition to the connection between work (time) and income, they also need to learn to grasp the concepts of need versus want, cost versus benefit and risk versus reward.

Teenagers are notoriously influenced by peer pressure, but it's worth noting that the more financially aware a child is and the more they understand the reasons for their parents' financial decisions, the easier it is for them to accept them, particularly if they're given some input into the decision-making process. One way to deal with requests (or pleas) for “big-ticket” items (such as fancy phones) is to respond by asking the person making the request to come up with a concrete plan as to how to pay for it. If they do, then it may be reasonable for them to get the item. If they don't then the ball stays in their court. Instead of refusing and trying to get them to understand your reasons, you're challenging them to come up with a plan themselves.

Stop Thieves

Stop Thieves These days, there is a lot of advice available about how to keep safe online and data-security breaches at major organizations make new headlines. As Kim Kardashian recently demonstrated, however, breaches of physical security can be both frightening and costly (even with insurance). With that in mind, here are three pointers to keeping yourself and your valuables safe in the real world.

Be careful with the internet

Using cloud storage services to keep copies of valuable memories can be a great way to protect against the theft of the devices on which they are stored, but beware of posting pictures of your valuables on social media. Even if you know your way around your privacy settings, all it takes is for one person to share an image innocently and you literally never know where it is going to end up. Likewise be careful about sharing information about holidays you are on for the same reason. In very simple terms, assume anything which goes online is in the public domain and therefore keep social media for content you're happy to share with the world.

In the real world, make yourself more hassle than you're worth

The essence of protecting yourself from crime essentially involves making it more effort than it's worth to target you. In terms of protecting your home, some simple and straightforward precautions can really go a long way to making this a reality. Make sure the entrance to your house has plenty of lighting, with a motion-sensitive trigger. This will both help you to see your way to your own front door, but make it obvious if anyone else is heading towards your property. On the subject of lights, internal lights can be fitted with a timer to go on and off when you're out. Real CCTV has to be positioned with care (although any company involved in the industry can advise on this) but realistic fake cameras can act as a deterrent. Burglar alarms are cost-effective and free of the legalities of CCTV. Secure locks on both doors and windows will go a long way to preventing unauthorised entry and adding peep-holes and/or chains will make it easier for you to see who is at the door before you decide whether or not you want to answer it. On that note, remember to ensure that you know the identity of anyone who calls at your house not only before you let them in but before you divulge any details of your property and/or your habits. Most people will probably be who they say they are but one of them might be a burglar checking out a potential target. If you don't have it already, double glazing is a whole lot harder to break than single glazing. Finally, if you do have any irreplaceable possessions, consider investing in a safe, ideally a hidden wall safe. If this is not practical, e.g. you're renting, then think about imaginative hiding places, for example, you can get containers which look like tins of beans and which can be put in your cupboards (along with their real life counterparts).

Take stock of what you have so you can get the right cover for it

Much of what you have in your home is probably replaceable albeit at a cost. Items such as TVs and electronics are unlikely to have a huge amount of sentimental value, but have great attraction to thieves. Take the time to make an inventory of your possessions and their value. If possible gather up any documents showing proof of ownership and, ideally, take scans of them to store in the cloud. This will give you a reasonable figure for home contents insurance. When you choose your policy, check if there are any exclusions, limitations or stipulations for cover. For example some policies may require individual items over a certain value to be itemised. For possessions which really matter to you, e.g. jewellery, take clear pictures and note all relevant details. In a worst-case scenario, this may help you to recover a beloved item.

How Being Wise Can Keep You Healthy And Wealthy

How Being Wise Can Keep You Healthy and Wealthy Even with the NHS (and possibly private medical insurance as well), the simple fact of the matter is that it's miserable being ill and the more ill you are the more miserable it is. When your illness reaches a stage where it can affect your financial well-being, life can get really bad and, in a worst-case scenario, if you are diagnosed with a terminal illness without appropriate insurance cover, your last days can become even more stressful and their aftermath even more so for your loved ones. Making arrangements so that bills can be paid during a period of illness has obvious relevance to the self-employed, but even the employed and home-makers should take the issue seriously. While the employed may get some protection through employee benefits schemes, it may not be enough for your needs and similar comments apply to state benefits. Home makers may not earn an income but their time has a value and in the event of their illness and death, someone will have to stand in for them and what they do (cooking, cleaning, chauffeuring...).

Start with taking care of yourself

Given that prevention is usually a whole lot less hassle than cure (and often cheaper too), protecting your finances should generally start with protecting yourself. These days we all know the basics of a healthy lifestyle, eat well, drink plenty of healthy liquids (like water and unsweetened fruit juices) and avoid excessive alcohol consumption (or excessive consumption of anything), avoid smoking, take plenty of exercise and get a good night's sleep each night. It's a short list, but in the real world, many people may look on all of this as a case of “easier said than done”. There's a certain element of truth to this, leading a healthy lifestyle can be challenging in today's world, but even taking small steps, such as literally walking a bit further, can add up to a big difference and we have to point out, stopping smoking can make a big difference to your finances as well as your health.

Put protection in place in case of illness

What type and level of protection you'll need depends greatly on your personal situation, however here are some ideas of what you should consider.

Pet Insurance - this may come as a surprise for the top of the list, but pets don't qualify for state support and unexpected veterinary bills are unwelcome at any time. Do you really want to be worrying about paying them when you're seriously ill?

Payment Protection Insurance - the infamous PPI. It may have had a very bad press, but the mis-selling scandal was exactly that, PPI was being sold inappropriately. For some people it may be a very useful product. It will take care of repayments towards credit products, such as credit cards and loans, under certain conditions. PPI cover can include spells of unemployment, which may or not be the case with other forms of cover.

Income Protection Insurance - PPI is sold for specific products and is often provided by the relevant lender (for an extra fee). IPI provides and income for you to use as you wish. It will typically pay out in case of illness or injury, some policies may also provide an element of unemployment cover, but this varies.

Critical Illness Cover - This insurance pays out if you suffer from certain serious conditions. Policies vary on what they cover, but typical examples include cancer and heart conditions.

Protect you and your loved ones in the event of your death

The standard comment about life insurance is that it's there for the people you leave behind, which is true, but policies can also pay out in the event of terminal illness, thereby potentially making it easier for you to spend your last days in comfort as well as for your loved ones to manage financially and emotionally after your death.

Pension Tax Planning

Pension Tax Planning The financial decisions we take during our working years will have a huge influence on our quality of life when we reach our senior period. Minimising our tax liability is a very significant factor when it comes to saving for our later years, making the most of our pensions and, ultimately, ensuring that our estate goes to the people we love rather than HMRC.

Pension saving and taxation

The major headline benefit of saving for our later years by means of pensions is that pensions contributions attract tax relief. There are annual and lifetime limits on this relief, however in practical terms they are only likely to have a meaningful effect on particularly high-net-worth individuals. Tax relief is also applied on contributions made by individuals whose earnings are below the income tax threshold. In this case, there is an annual limit of £2,880 in personal contributions, to which 20% tax relief is added, meaning that a person can save a total of £3,600 into their pension each year. People on lower incomes can make higher contributions to their pensions if they wish, it's just that the tax relief will only be applied on the first £2,880. It's also worth remembering that some people in this situation may find it beneficial to register for certain benefits (e.g. Child Benefit and Carer's Allowance), even if the overall household income is too high for them to receive any payments. This is because they can build up NI contributions in their own name and hence improve their own state pension. While the state pension may be less than many people would like to have to live on, if you can claim it, it makes sense to do so, particularly since it may entitle you to other benefits.

Pensioners and taxation

In the old days, taxing pension income was a fairly straightforward matter. You had a fixed income from a state pension and/or a fixed income from an annuity bought with your pension fund. Either or both of these could rise in line with inflation, but essentially your tax bill was much the same from year to year. The “pensions freedoms” introduced in April 2015 mean that pensioners now have the ability to vary their income from one year to another in line with their needs and wants. This, obviously, has implications in terms of tax management and planning ahead, as far as possible can bring very meaningful rewards. For example, if a person thinks there is a reasonable expectation that they will need £5,000 one year and £15,000 the next, it could be best for them to withdraw £10,000 each year, to make the most of their annual, personal allowance.

Estate planning and taxation

While it's important to leave a will, a will simply indicates who should receive what out of your estate. Making sure that there is something in your estate left for them to receive is the job of inheritance planning. The good news about pensions, or, more specifically, pensions funds, is that they're excluded from a person's estate when its IHT value is calculated. The even better news is that as of April 2015 it became possible for pension funds to be passed on from one person to another and as of April 2016, the beneficiary received the income taxed at their marginal rate (as opposed to 45% as before). This has clear implications for estate planning, particularly for those who have younger relatives, such as grandchildren, with no or little income. In such cases it may be most advantageous to bequeath them their share of your pension pot directly so that they can make full use of their personal allowance, rather than having them receive their money via higher-earning relatives who will pay more tax on it to begin with.

The Financial Conduct Authority does not regulate tax and trust advice.

Getting Your Foot In The Door

Getting Your Foot in the Door The plight of first-time buyers has been making headlines for a long time now - along with the importance of the “bank of mum and dad”. Young adults who want to move away from the parental home for study or work (or just so they can have their independence) face the challenge of saving for a deposit, while paying rent. Given that owning a home is an ambition shared by many people, it's worth looking at ways to make it easier.

Putting together the deposit

Those four little words may represent one of the biggest financial challenges any individual will ever face. It's long been understood that even in the heady days of the housing market, long before the Mortgage Market Review, when it came to deposit bigger was better. These days 100% mortgages, while theoretically still available, are very much a niche market and even 95% mortgages are challenging to obtain. The government attempted to address this issue with the introduction of the Help to Buy ISA in December 2015. Under this scheme, buyers can save up to £12K, which will be topped up with a 25% bonus, i.e. a possible maximum of £3K. This scheme has, however, come in for serious criticism as the funds saved can only be used after the sale is complete rather than put towards the deposit, which is typically paid upon exchange of contracts. In theory, mortgage lenders could look for ways to work around this, but since the Help to Buy ISA is due to come to close in November 2019, there is very little time for them to do so. In addition to this, April 2017 will see the launch of the Lifetime ISA, which is available to savers between 18 and 39 and which addresses this complaint by making it possible for savers to access their funds on exchange rather than having to wait for completion. In other words, it makes it possible for savers to use their funds for a deposit rather than forming part of the purchase price. The Lifetime ISA also offers a 25% bonus and there are conditions attached to its use, so potential home buyers should do their research and make sure it is a suitable product for their situation before deciding whether to use it.

Reducing the level of the mortgage you require

The government's equity loan scheme, effectively increases a buyer's deposit by up to 20% of the purchase price of their new home (this is increased to 40% in Greater London). The purchasers need to put up a 5% deposit themselves, which means the mortgage lender only needs to advance 75% of the price (55% in Greater London). The property must be a new build and the maximum price is £600K (this also applies in Greater London). The buyer must have a repayment mortgage as opposed to an interest-only one. The loan is without charge for the first five years and after that fees are payable until it is repaid.

Making yourself more attractive to a mortgage lender

Unless you can actually afford to buy a house outright, you're going to need a mortgage, which means that you're going to need to be able to convince a mortgage lender that you're a good prospect. First and foremost this means convincing them that you meet the affordability criteria set out in the Mortgage Market Review. With this in mind, it helps to start getting your financial ducks in a row as early as possible. Healthy financial habits such as budgeting, saving and keeping your financial paperwork (physical or digital) in order, will all stand you in good stead when it comes to getting a mortgage, as will having a gleaming credit record.

A Lifetime Of Protection

A Lifetime of Protection As you move through life, your needs and wants often change as does the type of insurance cover you require and the level of cover. While insurance may be an unglamorous topic, having the right cover in place can make all the difference in a difficult situation. Here we take a look at what types of personal cover you may need at different stages of your life.

Young adult student, without children

Although students are adults in the eyes of the law, they are in a very specific financial situation in that they often have little to no personal income and therefore any form of insurance which relates to income protection is probably a waste of money. Medical and dental insurance, however, could well be worthwhile and if the student has any plans to travel and/or work abroad then the appropriate insurance should be regarded as a must, even if they have an EHIC card.

Young adult workers, without children

Once a young person is earning an income and supporting themselves, at least for the most part, then it becomes appropriate to look at some form of income protection. At a basic level, a younger adult could look to self-insure, at least in part. Young adults with budgeting skills will know how much money they need to meet their commitments each month and the more cash savings they have the longer they will be able to meet those commitments if they are out of work (or ill). Having said that, some element of insurance may be helpful. If they have pets, pet insurance will help ease the pain of expensive vets bills, which can hurt even when you're working. PPI could be a useful way to ensure you meet credit commitments if you are experiencing financial turbulence. Young adults who are self employed should definitely look at critical illness cover and income protection insurance, even those in standard, paid, employment may wish to see if they would benefit from some extra cover in this area. For people without financial dependents (and with savings to cover their funeral) life insurance is only likely to be relevant if they have a mortgage.

Adults with children

Pretty much everyone agrees that children change your life in all kinds of ways and that includes your financial life. Once you have children, you have people who are going to be financially dependent on you for at least 16 years and quite possibly for a lot longer. That means life insurance ceases to be something you need to keep your mortgage provider happy and becomes something which is vital to ensuring that your children will be in a good position to cope financially in the event of your death. When both parents are involved in raising children, then both usually need to be insured even if only one parent earns an income, because the death of the home maker would mean that someone else would have to step in to replace the contribution they currently make to the running of the house. The level of cover has to reflect the fact that children, by definition, are at the start of their lives and will therefore have financial needs long into the future.

Empty nesters

In some ways, empty nesters are in a similar position to young adults without children, but these days it is far from unusual for parents still to be offering some level of support to adult children, particularly if the children have their own children. It is also possible for people to be grandparents when their own parents are still alive. Because of this, it may be best for people in this stage of life to take a very detailed look at their situation, possibly with help from a professional, to see what sort of insurance they require at this point and what level of cover.

Passing On Your Pension

Passing On Your Pension What kind of pension or pensions you have will determine what can happen to any remaining funds after your death. Here is a quick look at different types of pensions and what the options are for inheritance planning.

The State Pension

At current time, if you are married or in a civil partnership, widow(er)/surviving partner may be able to inherit some of your entitlement to a state pension. As the rules relating to state pensions are set by the government, this can, however, change at any time.

Defined Benefits Pensions

Often known as final-salary pensions, these schemes will have their own rules about what happens to your pension in the event of your death. This may well depend on whether or not you have already started to access it. If you are, or have been, a member of one of these schemes, then it is a good idea to check what these rules are so you can decide what steps, if any, need to be taken in order to ensure that your loved ones are protected in the event of your death.

Defined Contributions Pensions - Annuities

There are essentially two ways to pass on your annuity in the event of your death. One way is to buy an annuity which makes specific provision for a spouse's pension. Obviously annuity providers are going to take account of this requirement when deciding how much income to offer for your pension pot, hence you are almost certainly going to be offered less than you would have received without equivalent provision. An alternative would be to opt for an annuity protection lump sum death benefit. In this scenario, if the income drawn from the annuity is less than the original purchase price thereof, the difference is transferred to your designated beneficiary. While this option will almost certainly increase the price of the annuity compared to an equivalent product without this protection, it is also almost certainly cheaper than opting for an annuity with a spousal pension since the provider's liability is limited to the purchase price of the annuity.

Defined Contributions Pensions - Income Drawdown

Since April 2015, it has been possible for holders of pension funds which have been designated for income drawdown, to pass their remaining assets to whomsoever they please in a tax-efficient manner by using a vehicle called Nominee Flexi-Access Drawdown. The Nominee can, in turn, use a vehicle called Successor Flexi-Access Drawdown to pass on any remaining assets to their designated heirs and so on for as long as there are assets to transfer (assuming the regulations stay as they are now).

The huge advantage of this approach is that, like a life insurance policy which is placed into a trust, the pension pot is kept out of the deceased's estate and therefore avoids a (potentially hefty) IHT bill. This may be of particular importance to pensioners who also own property as the price of even a relatively modest home can soon gobble up an IHT allowance. As part of pensions freedoms, the government has also removed the hefty 55% “pensions tax”, which decimated the nest eggs left to surviving loved ones.

As rules currently stand, if the holder of the pension fund dies before their 75th birthday, their pension fund can be passed on without any form of tax being payable. This continues down the line as the assets are passed from person to person. For example, if both the original saver and the first nominee die before their 75th birthday, the first successor will inherit the remaining assets without paying tax on them. Once the pension holder reaches their 75th birthday, any withdrawals are treated as standard income for the purposes of tax.

NI U Turn

NI U Turn A week is a long time in politics. It was about the length of time it took Chancellor Philip Hammond (and/or his boss Prime Minister Theresa May) to decide that the proposed increase in National Insurance Contributions (NICs) for the self employed was best abandoned. Here is a quick guide to what happened and some possible explanations as to why and what it means.

The manifesto pledge

In the run-up to the 2015 general election, their predecessors George Osborne and David Cameron campaigned on a pledge to lock taxes and NI and to combat scepticism about politicians' election promises, guaranteed that they would bring in legislation to make it illegal for them to do so, which they duly did.

The “get-out-of-jail-free” card

The legislation, however, only applied to NI contributions made by employers and the employed, hence Philip Hammond was in his legal right to raise NICs for the self-employed.

The court of public opinion

While the letter of the law was on the Chancellor's side, politicians also have to answer to the court of public opinion and the judgement here was clear. The stated campaign pledge had been “no increase in NICs” and the fact that the related legislation had only specified Class 1 NICs was irrelevant. Not to put too fine a point on it, the move was seen as a betrayal of a manifesto promise and this fact was made clear in many newspaper headlines.

A swift U turn

It's probably safe to say that neither Philip Hammond nor Theresa May expected the change to NICS to be popular with the self-employed, but that they completely underestimated the scale and strength of the reaction of the general public. Even though the change only impacted a relatively small number of people, it was perceived as the Conservatives using legal technicalities to get around a clear manifesto pledge and that went down very badly with the public as a whole. If newspaper columns are to be believed, the backlash made both backbench MPs and cabinet ministers very nervous. March 2017 is about halfway through a 5-year parliament. The proposed increase was due to take effect in April 2018 and hence would have factored in tax returns filed between April 2019 and January 2020. In other words, the subject was very likely to be fresh in people's minds at election time in May 2020. Just as MPs need to think about their constituents' opinions, so governments need to think about their backbenchers' opinions, particularly ones which have an absolute majority of 12 and a working majority of 17. The Chancellor and Prime Minister quickly decided that this was one battle which was more hassle than it was worth and beat a hasty retreat.

The end…?

Philip Hammond and Theresa May may be taking their cue from the old saying “least said, soonest mended”. In other words, by backing down now, they've effectively put a stop to the topic for the time being and, of course, with Brexit looming, it's a safe bet that journalists will have plenty of other material for columns and the public matter for debate. At the same time, financial books still need to be balanced and in a letter to Conservative MPs, Philip Hammond stated that it was his view that the benefits gap between the self-employed and the employed had narrowed sufficiently that the gap between their relative levels of NI contributions had ceased to be justifiable. Given that the manifesto pledge only applied to the current parliament, i.e. up to the 2020 election, it is entirely possible that Chancellor will seek to raise NI for the self-employed at some point in the future.

Auto Enrolment “We're All In”

Auto Enrolment “We're All In” If nothing else, the slew of TV adverts which accompanied the introduction of auto enrolment will hopefully have raised awareness of the importance of making preparations for old age and of the fact that it's never too early to start thinking about your future. Even though auto enrolment is now in full swing, its potential importance is high enough that it can be worth recapping what it means in practice.

Auto enrolment potentially applies to all working adults

Employers must automatically enrol all working adults into a workplace pension provided that they meet the relevant criteria. These are:

Not already be contributing into another workplace pension scheme (having previously been a member of another scheme is fine, as is contributing to a personal pension at the same time)/
Be aged between 22 and state pension age
Earn more than £10KPA
You can choose to opt out of auto enrolment, however if you do your employer must auto enrol you again after three years, unless you reconfirm that you wish to remain outside the scheme and so on for as long as you continue to meet the qualifying criteria.

Advantages of auto enrolment

From the government's perspective, the main advantage of auto enrolment is that it works on the basis that people will have to take action if they take a conscious decision that saving for their later years through a workplace pension is not for them, at least not at the point, rather than obliging them to take action if they do decide that they want to make a commitment to saving for old age. From an employee's perspective, the advantage of the scheme is that employers are mandated to make contributions on behalf of their employees, rather than being in a position to put pension contribution under the heading of optional benefits.

Disadvantages of auto enrolment

While the headline benefit of employer contributions may sound enticing, it needs to be viewed in context. The government has set a minimum level of contribution which needs to be made into a workplace pension (assuming the employee wishes to participate) and the percentage of this which needs to be met by the employer. There are three ways in which this minimum level of contribution can be calculated. These are known as tiers. At current time tier 1 requires a minimum overall contribution of 3% (of pensionable earnings), of which the employer must pay at least 2%. Tiers 2 and 3 require a minimum contribution of 2% of which the employer must pay at least 1%. As of April 2018, the minimum contribution will rise to 6% (Tier 1) and 5% (Tiers 2 and 3) of which the employer must pay at least 3% (Tier 1) or 2% (Tiers 2 and 3). From April 2019 the figures will be 9% and 4% for Tier 1 and 8% and 3% for Tiers 2 and 3. In other words, employees could find that enrolment in a workplace pension scheme does wind up making a noticeable difference to their take-home pay.

Alternatives to auto enrolment

With auto enrolment and workplace pensions making so many headlines, it's easy to forget that even those in work can opt for private pensions and, in principle, employers could agree to make contributions towards them. Admittedly it is an open question as to whether or not they would, but in any case the individual would still be able to qualify for tax relief on contributions at the going rate. As private pensions are outside the scope of the government regulations, they can offer more flexibility with regards to contribution levels and therefore, even without employer contributions, some people may find them a more suitable channel for their pension saving.

Understanding ISAs

Understanding ISAs Individual Savings Accounts, commonly known as ISAs, were originally introduced way back in April 1999, replacing Personal Equity Plans (PEPs) and Tax-Exempt Special Saving Accounts (TESSAs). While the rules and savings limits have been tweaked somewhat over the intervening years, the standard ISA is, at heart, much the same product as it was back in 1999. In November 2011, the government introduced the Junior ISA to replace the old Child Trust Fund and 2015, 2016 and 2017 have all seen (or are about to see) the introduction of new forms of ISA in the form of the Help to Buy ISA, the Innovative Finance ISA and the Lifetime ISA respectively. All ISAs share the common features of tax efficiency and the fact that the annual allowance is given on a “use it or lose it” basis. In other words, although it may be possible to replace withdrawals made in the same tax year, once a given tax year is over, any unused allowance disappears with it. Apart from this, they all have significant differences.

Standard ISA

The original product, can hold cash and or stocks and shares, provided that the latter meet the qualifying criteria. Cash deposits are subject to standard Financial Services Compensation Scheme (FSCS) protection, investments are subject to the relevant regulatory body. At current time, cash-only ISAs can be opened by individuals who have reached their 16th birthday, but any ISA with an investment component can only be opened by someone aged 18 or over.

Junior ISA

Junior ISAs are opened by adults for children under the age of 18. At age 16, children can open a Junior ISA for themselves and since they can also open an adult cash ISA, there is scope for two years of intensive (pre-University) saving. Regardless of who opened the Junior ISA, at age 18, it becomes the full property of the person for whom it was opened.

The Help to Buy ISA

Introduced in 2015, the Help to Buy ISA is currently available to those aged 16 or over, who qualified as first-time buyers. Savers received a 25% government bonus on their savings, to a maximum of £3K. In other words, if they manage to save £12K themselves, they will have a total of £15K to put towards their new house. The scheme is due to close to new customers in 2019 and to end completely in 2029. It should be noted that the Help to Buy ISA has come in for heavy criticism because the bonus only applies if funds are used after completion rather than upon exchange. This essentially makes it impossible to use ISA funds towards a deposit.

Innovative Finance ISAs

These ISAs seem to have been largely overlooked by the financial press, possibly because they have such a restricted scope. They were created to allow peer-to-peer lending to be incorporated into the ISA platform, but at the point when they were introduced, the major platforms were all still waiting for accreditation.

Lifetime ISA

The Lifetime ISA is due to launch in 2017 and in spite of its rather generic name, it is intended to be used to purchase a house and/or to finance retirement. The advantage of this form of ISA is that, it too, attracts a government bonus. Currently this is set at 25% of the saver's contributions to a maximum of £1KPA up to the saver's 50th birthday. In other words, there is a lifetime maximum of £32K. Unlike a standard ISA, where withdrawals can be made for whatever purpose the saver sees fit, with a Lifetime ISA, withdrawals before the age of 60 can only be made to finance a house purchase (or in case of terminal illness), otherwise the saver loses the bonus. Unlike with the Help to Buy ISA, however, funds are made available upon exchange and hence can be used for a deposit. After age 60, savers can access their funds as they wish.

Why It Makes Sense To Use A Mortgage Broker

Why It Makes Sense to Use A Mortgage Broker If TV adverts were to be believed, all you need to do to get a great deal on anything is to go compare the market at any one of a number of various online sites. It's questionable whether only using a price-comparison site will actually give you the best deal on any financial product and when dealing with a product as significant as a mortgage it really can pay to get professional help from a mortgage broker. Here's why.

A mortgage broker is on your side

Banks and lenders want your money. It really is that simple. The onus is on you to do your research and apply for the best product with the best lender, all the lender wants to know is whether or not you are a suitable customer. Because most people only buy a house a few times in their lives, they are unlikely to have the same level of familiarity with mortgages as the professionals do. Even if they understand the basic principles on which they operate, such as the difference between a repayment mortgage and an interest-only mortgage, it may be far too much of a challenge for them to look at all the different options available (even if they actually know of them) and work out what is most appropriate for their situation, so that they can then approach the right lender in the right way to secure the best deal. A mortgage broker is someone whose day-to-day job involves dealing with the ins and outs of the mortgage market and who is therefore in a good position to understand your situation and guide you through the maze.

Mortgage brokers know the niche players as well as the major names

If you were asked to sit down and put together a list of mortgage lenders, it's a fair bet that most people would be able to name the major High Street banks and perhaps a few others as well. In reality, however, there are a number of niche players in the mortgage market, who are far more likely to be known to a professional mortgage broker than to the average person looking for a mortgage. Sometimes these will be companies who have a strong base in a particular geographical area but will take customers from elsewhere. At other times, they will be companies who are prepared to take on unusual properties, such as timber houses or who are more open to customers in unusual situations, such as those recently arrived from overseas or the self-employed.

Using a mortgage broker can actually work out cheaper than getting the same product direct

Here's a little secret, which might already be known to people in certain industries such as travel. Headline prices can be open to negotiation. Advertised prices are often what the seller would like to get rather than the lowest price they're prepared to accept. Negotiation is a skill and part of the skill involves knowing the market and what other people are doing, which is part of the reason why a mortgage broker is often in a better position to negotiate on behalf of clients than clients are for themselves. Another part of the reason is that mortgage brokers build up solid professional relationships with people who work for mortgage lenders and even in these days of computers, that can be very helpful. Finally, headline prices are set at a level which allows the seller to pay commission and/or offer discounts and still make a profit. A mortgage lender may well offer to forego some of their commission so the end client can get a better rate.

The Basics of Buy to Let

Anyone who's been researching buy to let will probably have heard that buy-to-let landlords have been on the receiving end of two hefty tax stings recently. The first is the introduction of a 3% surcharge on the stamp duty paid on the purchases of second and subsequent homes. The second is a recalculation of how rental income is calculated combined with a change which fixes the tax relief granted on mortgages at 20% as opposed to the mortgage-holder's rate of income tax. Notwithstanding this, the dynamics of the UK property market (otherwise known as a case study in the laws of supply and demand) ensure that buy-to-let still has a level of attraction. Here are three points which potential landlords need to consider.

Are you sure the figures stack up?

There are basically two kinds of investments, growth investments and yield investments. Buy-to-let is essentially a yield investment because you can only benefit from any increase in house prices if you actually sell the property, in which case you cease to be able to let it out. Therefore, to see if BTL makes sense as an investment, you need to understand, realistically, what sort of return you could expect after all expenses are taken into account and see how that compares to your other options for investing the same money. Given that BTL is a somewhat politically-contentious area at the moment, you may wish to leave yourself a reasonable margin or error and/or of safety for future changes.

Can you actually manage being a landlord?

Being a landlord is very different from taking board money from your children. Leaving aside the practicalities of managing a property and the need to deal with tenants, landlords have a number of legal obligations from ensuring that the property is safe to live in to ensuring that the tenants have the “Right to Rent” in the UK. This scheme only applies in England at the moment, but is (officially) due to be rolled out across the UK. It basically obligates landlords to check the immigration status of their (potential) tenants and failure to conduct adequate checks can be punished by up to 5 years in jail. Using a letting agent transfers the responsibility for the checks onto the agent, but, of course, this increases costs, which brings us back to the question of whether or not the numbers stack up.

Are you able to recognise a good investment property and a good tenant?

There are basically three components to buy to let - the landlord, the property and the tenant (letting agents work on behalf of the landlord). As a landlord, you not only need to choose a suitable investment property (which is different to buying a house for yourself) but also to pick suitable tenants. These last two points can make a significant difference to your success (for which read level of profitability) and they are closely related. The more attractive your property is to tenants, the greater your options for weeding out tenants who may cause problems and focusing on ones who will look after the property and pay their rent on time. Making your property attractive to potential tenants requires understanding your market, i.e. who your potential tenants are and hence what they want. For example, the “young adult” market includes students, young workers and young professionals. Affordability is likely to be a factor for all of them, but people who are earning an income may be prepared to spend a bit more for a place they like and the higher their income level the more they may be able and willing to spend. In other words, different market segments can be equally profitable but noticeably different in how they work. Lettings agents may be able to advise on what market(s) to target and how, but again, using a lettings agent comes at a cost, which leads back into the question of whether or not the numbers add up.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Spring Budget 2017

Spring Budget 2017
While the gist of Philip Hammond's latest budget was widely anticipated (at least the major points), it still makes for interesting reading.

National Insurance rises for the self-employed

Those of a certain age may remember that in 1988 U.S. presidential candidate George H. W. Bush won headlines with a straightforward promise "Read my lips: no new taxes". After election, in 1990, he proceeded to raise taxes. Rather more recently, David Cameron and George Osborne fought the 2015 election on a platform of no increases in personal taxation and explicitly included National Insurance in their campaign pledge. Now that the Conservative party is in government, however, this pledge has been shown to be open to negotiation as new Chancellor Philip Hammond used his April 2017 budget to announce an increase in National Insurance, albeit “only” for the self-employed. This increase will take effect in April 2018. He also reduced the tax-free dividend allowance available to directors and shareholders from £5KPA to £2KPA, again from April 2018. The chancellor did raise the personal tax-free allowance to £11.5KPA and reaffirmed his commitment to raising it to £12.5K by 2020.

Business get some relief from rate rises

Recently the business media has been full of stories of how the 7-yearly reassessment of business rates was great news for large internet retailers operating out-of-town warehouses but really hurting high-street retailers, particularly smaller ones. The chancellor has therefore announced £435M to assist businesses in dealing with this change, of which £300M will be used to create a hardship fund for those who are suffering the most. It should be noted, however, that this will be made available to local councils to use at their discretion, so it will be interesting to see how this works in reality. Additionally, pubs with a rateable value of under £100K will get a £1K discount on their rates and businesses which are losing rate relief will have the increase limited to £50 per month.

The cost of key purchases

As has become almost a budget tradition, fuel duty is frozen as is Vehicle Excise Duty rates for hauliers and the HGV Road User Levy. While some media sources had been anticipating a move to penalise owners of diesel cars or even to force diesel cars to be scrapped, nothing of this sort was mentioned in the budget, although there was a passing reference to the possibility of changes to the "tax treatment for diesel vehicles" at some point in the future. There were no extra increases to the duty on alcohol or tobacco, although there is a new minimum excise duty on cigarettes based on the assumption that cigarettes are priced at £7.35 per packet. Philip Hammond also announced that UK VAT would henceforth be payable by people roaming outside of the EU (which raises the question of whether this will be extended to within the EU after Brexit). To the surprise of some, the controversial “sugar tax” also remains as is for the time being and gambling is likewise left unchanged.

Funding for the regions

Scotland, Wales and Northern Ireland get £250M, £200 and £120M worth of funding respectively. Following on from his backing for a high-speed rail link between Leeds and Manchester in his last budget, Philip Hammond pledged £90M to the north of England and £23M to the Midlands, which is to be used specifically to address pinch points on roads. The chancellor also announced support for local projects over the coming year, for example work on the A483 corridor in Cheshire and the Outer Ring Road in Leicester. Also in keeping with his previous budget, the chancellor pledged £16M for 5G mobile technology and £200M for local broadband networks.

Care Changes

Care Changes Dealing with an ageing population has been an increasing concern for a number of years now. “Pensions freedoms” have been one aspect of encouraging people to save for their later life. Not to put too fine a point on it, the changes made to paying for care in later life are another aspect of the same topic. In simple terms, it allows people to keep more of their money if they need care in their senior years. Presumably the government hopes that this will motivate people to save (more).

The Care Act and what it says

The Care Act actually contains a lot of changes to social care provision, but there are two which stand out.

At current time, people with capital and savings of less than £14,250 have the cost of care paid for them in its entirety, people with a net worth of between £14,250 and £23,250 receive some level of assistance and people who have more than £23,250 must fund the entire cost of care themselves. From April 2020, people with capital and savings of less than £17,000 will have their care costs paid in full and those with a net worth of between £17,001 and £118,000 will be eligible for some form of assistance and only those with a net value of more than £118,000 will need to meet the cost of their care in full - up to a maximum of £72,000.

The other stand out feature of the Care Act is that the amount an individual will have to pay towards eligible care will be capped at £72,000. Eligible care can include care at home as well as spending time in residential care. It is important to note that the actual cost of bed and board in a care home is excluded from the cap, but will itself be capped at £12,000 per year.

For more information go to http://www.ageuk.org.uk/home-and-care/the-care-act/

Calculating the Cost of Eligible Care

One of the most important points to note about the Care Act is that the amount of help you will receive will be based on two factors, which are assessed by your local authority:

1. What care you need
2. How much the relevant local authority estimates that it should cost

In other words, your local authority will only pay for care which they agree you need and at a rate they assess (rather than based on what you actually pay). Given that the implementation of these changes is still three years away, it is arguably far too early to say what effect, if any, these facts will have in practice, although it is probably fair to say that it is always a good idea to aim to have funds available so that you can afford to pay for care which meets your expectations, rather than being obliged to accept your local authority's point of view. It is also too early to know the details of exactly how this new approach will be administered in a practical sense. The basic principle behind them will be that local authorities will create “Care Accounts” for older people, which will be used to keep track of who has paid for what. Presumably this will involve some degree of paperwork for older adults.

Planning ahead

In modern times, the concept of old age has become something of a contradiction. On one hand, older people can be some of the most active people around and on the other, it's still very much the case that some older people can be vulnerable and need extensive care. Realistically as we age, our bodies become more vulnerable to illness and injury and we need longer recovery time, so a spell in care is a distinct possibility for many people. With this in mind, even younger people should look at the question of financing their later years as being a core part of their financial planning.

New Buy To Let Changes

New Buy To Let Changes Investment is, ultimately, all about looking at risk and reward and in the real world that means not only looking at the headline figures of how much return any investment could generate in and of itself, but also at how much it will cost to use the investment vehicle. It therefore makes sense to make a point of double-checking these costs on a regular basis to make sure that your investment numbers still stack up. In the case of buy-to-let property, Chancellor George Osborne has recently introduced a tax “triple whammy” of changes to the wear and tear allowance, stamp duty and mortgage tax relief. Let's look at these individually.

Wear and tear allowance

As of April last year, landlords with furnished properties have only been able to claim the exact amount spent on furniture and fittings, whereas previously they were able to claim an allowance of 10% of the rental income (net of any services for which the tenant is responsible but which the landlord pays on their behalf, e.g. council tax) without producing receipts. If they needed to claim more than that, they had to support the claim with receipts. It's an open question as to what effect, if any, this will have on landlords' overall financial situation, give that landlords will still be able to claim for wear and tear, but what it does mean is that some landlords, particularly amateur ones, may have to up their bookkeeping standards and get a lot more diligent about keeping track of their purchases and taking into account the other changes as well, may want to start employing the services of a professional bookkeeper if not an accountant.

Stamp duty

Again as of April 2016, most people who have purchased a second property priced at over £40K have paid an extra 3% stamp duty (except in Scotland). There are a few exemptions to this charge and it can be refunded in certain circumstances (basically people who find themselves in the position of temporarily owning two properties, such as during a house move, are likely to be eligible for a refund), but BTL landlords are likely to find themselves paying it. While this is only relevant to landlords who wish to enter the market or expand their portfolio, where margins are already tight, an extra 3% stamp duty may make the difference between a viable investment and one which is too risky to be worth the money.

Mortgage tax relief

From April 2017, landlords will only be able to claim mortgage tax relief at the basic rate of income tax (currently 20%) as opposed to their marginal rate of tax (40%+). How much impact this has will obviously depend on how much income they have from other sources. Those in the 20% tax band will be unaffected, those on higher incomes, however could find their revenue taking a hit. The financial press has already suggested that one way to get around this could be to operate through a “Special Purpose Vehicle”, which is basically a limited company for BTL landlords. There has been some debate about the pros and cons of this at the moment, what is known is that setting up an SPV entails some degree of cost and effort and there is always the risk that the government will simply apply new rules to SPVs, which will essentially put the owners therefore back to square one (or worse). While it is a separate issue, the Prudential Regulation Authority has introduced new affordability criteria for BTL landlords (in similar vein to the Mortgage Market Review in the residential mortgage market), which could lead to landlords struggling to get mortgages for new properties and/or to re-mortgage existing ones.


Changes To Interest Rates & Inflation

Changes To Interest Rates & Inflation In principle, interest rates and inflation can be viewed as being the two opposite ends of a see-saw. If interest rates go up, the cost of finance rises and savers get more for their money, if people have less inclination to spend, then there is an incentive for sellers to lower prices and hence lower inflation. The reverse is also true. That is, of course, a very simplistic explanation in that, in the real world, there can be many other factors at play, for example if demand for an item is high and supply limited, then raising interest rates may actually cause prices to increase as supply-side costs go up and demand stays high.

The ideal level of inflation

Inflation actually serves a useful purpose in that it acts as a call to action. Basically people know that if they put off making a purchase, there is a good chance that the price will increase. At the same time, however, if prices increase too quickly, then all kinds of problems can ensue. The Weimar Republic in 1920s Germany was characterised by high inflation, which meant that money became worthless almost as soon as it was printed. The opposite of inflation is deflation, which is when prices fall. Deflation has a similar effect to raising interest rates and was one factor in the Great Depression of the 1930s in the U.S.A. Basically although the headline cost of a purchase was reduced, the cost of paying for any finance needed to buy it effectively increased (by much more than the official rate of interest), making it significantly more expensive. At current time, the UK government aims for a continuous inflation rate of 2% and the Monetary Policy Committee of the Bank of England is tasked with managing this.

How does the Bank of England manage inflation?

The Monetary Policy Committee meets 8 times a year and decides what action to take, if any, to keep inflation at the government's 2% target. They have two tools at their disposal, interest rates and quantitative easing. Interest rates can be used to influence inflation regardless of whether it is rising or falling. Quantitative easing only comes into play where low inflation/deflation is a concern. Essentially quantitative easing is when the BoE literally increases the supply of money and uses this “new money” to buy assets, typically government bonds. Increasing the supply of money reduces its value and therefore has a similar effect to lowering interest rates. Both the UK and US administrations have made use of QE in recent years, most notably after the financial collapse of 2008.

What is likely to come in the near future?

At this point, there is very little scope to lower interest rates any further (unless the BoE shows itself willing to go down the path of zero or negative interest rates). That being so, if inflation shows signs of dropping below the 2% target, the UK could see another round of QE. By contrast, if inflation increases, then the BoE, in theory, has plenty of scope to raise interest rates. The challenge to them is the fact that doing so would impact mortgage holders rather than simply reining in consumer spending. This could place the BoE between a rock and a hard place, but since its target is to keep inflation at 2%, it would have very little choice but to raise rates, unless the government agreed to waive the target. One factor which could suggest a rate rise might be on the cards sooner rather than later is that a weak pound increases the cost of importing goods and sellers may seek to pass this increase onto the customer (as the makers of Marmite tried to do). If they did, this would push inflation upwards and increase the likelihood of interest rates being raised.

How Are You Saving?

How Are You Saving? Saving money probably ranks right up there with joining a gym in people's lists of New Year's Resolutions, hopefully though now we're in February, that determination hasn't faded. The good news is that there are lots of ways to go about saving money which are much less effort than sweating it out in a gym. Here are 7 of them.

Write down your savings goals and put them somewhere very visible

Admittedly this isn't a money-saving technique per se, but it can help to keep you on track. It can be a whole lot easier to take action to save money when you can see how it helps to move you towards a goal. You could even create tickboxes and/or a graph to track your progress.

Downsize your mobile

Think hard about how you really use your mobile and what you actually need before buying a new phone at all and if you do decide you need an upgrade, look carefully at how to get the best value for your purchase. You may very well find that buying a mobile yourself and going for a SIM-only deal, or even PAYG, works out cheaper (and more flexible) than taking out a new (2 year) contract.

Buy a water filter (and a SodaStream)

This one depends on where you live but if you're one of the many people in the UK who lives in a hard-water area and you are currently buying bottled water because you find it more pleasant to drink, then ditching shop-bought water for home-filtered water will be good for both your wallet and the environment. Regardless of where you live, if you like bubbles in your water then a SodaStream will add them at home, saving you money and cutting down on plastic.

Rationalise your coffee

If you really want to save money then ditching coffee-shop coffee for home-brew is the best way to go. If, however, that's one step too far for you, then at least ditch the takeaway cups (which, generally speaking, are neither recycled nor recyclable, in spite of what may people think) and take your own to a shop which offers a discount to customers who bring their own mug.

Take advantages of libraries (going digital)

Again this will depend on your habits and where you live, but if you like reading then save space and money by only buying your favourite books to keep at home and picking up casual reading from your library. Some libraries are now also offering the opportunity to borrow ebooks and digital audiobooks (as opposed to the ones on CD). Many libraries also offer a selection of audiobooks on CD, music CDs and DVDs. Why buy them when you can borrow them for free?

Ditch the gym membership (and buy a bicycle and/or some workout DVDs)

If you really are going to the gym regularly and it's the only practical way for you to practice your favourite form(s) of exercise and/or you really enjoy the social scene, then fair enough. If, however, you're paying a monthly subscription for facilities you hardly ever use then it's time to stop kidding yourself and ditch it. Instead of spending money on a gym subscription, you could buy yourself a bicycle, which could also provide some handy transport and/or some workout DVDs.

Do more cooking

Take a look at the price of a basic sandwich such as cheese or egg mayonnaise. Then think about how much the ingredients costs (even at retail prices, before volume discounts). Yes, there will have been a cost for labour, but making a standard sandwich is hardly a highly-skilled job and yes you'll have to add on a bit for packaging and transport, but even so, it's hard to avoid the impression that shop-bought sandwiches are usually extremely expensive for what they offer. Similar comments apply to ready-meals and other convenience foods.

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Self Employment – Is It For You?

Self Employment – Is It For You? There's a lot of plus points about being in paid employment and there's a lot of plus points about being self employed. It would be nice to say that which one you choose should be a matter of preference, but these days job-market forces mean that it can be a wise move to be at least prepared for the prospect of having to earn a living on a self-employed basis, even if it's not something you would want to do over the long term. So what does this mean in practice?

Less debt equals more options

This is arguably very true in any and all areas of life, but is a crucial point for the self employed and, in particular, for those who have only recently become self employed. Not to put too fine a point on the matter, lenders prefer people who have reliable incomes over people who may or may not have any income at all from one month to the next, which is a risk of self-employment. Therefore, if you are currently in a job, paying down debt as quickly as possible, particularly high-interest debt such as credit-card debt, should probably be a priority in any case and all the more so if there is any possibility of you going self-employed.

The mortgage question

If you bought a home recently then you will probably already have experienced the stringent checks carried out by lenders, which are intended to ensure that you can make your repayments over the long term, regardless of lifestyle changes. Those with mortgages should think particularly seriously about making the jump to self-employment and should ideally have a substantial cash cushion. Those who've had their current mortgage for some time may wish to look and see if they can get a better deal now, while they are still in employment and potentially go for a fixed-rate deal so that they can budget consistently or look at options such as “offset mortgages” which allow for greater payment flexibility. Renters might want to think long and hard about buying a property at the same time as going self-employed, but if you are absolutely sure this is the right route for you, then it is usually best to secure your mortgage while still in employment.


As a self-employed individual, you will not get access to a workplace pension at all, let alone one into which your employer makes extra contributions. If you are transitioning into self-employment from work then you may want to make the most of your workplace pension scheme while you still can and also, potentially, start making some form of retirement provision outside of work. Once you are self-employed, there are various ways you could approach retirement planning, of which a private pension is just one. Because of this and because of the importance of making the right decision for you and your personal situation, it could be a very good idea to get some professional advice here.


There are basically two aspects to insurance for self-employed individuals. One is insuring yourself, so that you and your loved ones can manage in the event that your ability to work is impaired for any reason. The other is double-checking that your possessions are adequately insured given your new circumstances and the fact that, particularly in the early years, you are likely to find it more of a challenge to take out credit. The first point includes looking at options such as medical and dental insurance, income-protection insurance and critical-illness cover. The second includes points like double-checking that your current home insurer is fine with you working from home (if this is your plan) and considering taking out pet insurance (if you haven't already) to ensure that a vet's bill can be paid even if you're in a lean period.


3 Debt Excuses Busted!

3 Debt Excuses Busted! Debt is sometimes a pretty-much unavoidable fact of life. It would be nice, for example, if we could all afford to buy houses out of cash savings, but for many people mortgages are the only feasible way of owning a home. While “good” debt may have a purpose, it can still be an advantage to be rid of it and “bad” debt (such as credit card debt) is generally something which should be dealt with as quickly as possible. So why do people keep carrying debt? Here are 3 common debt excuses - busted.

I don't have any spare money

In fairness, this may seem to be true, in some cases it may actually be true, but ironically the tighter your budget is now, the more important it is to deal with debt. Here's why, debt often becomes cheaper the less of it you have. Take credit card debt, say you maxed out a credit card and now you're making the minimum payment each month to pay it off. Chances are most of your payment is actually going on the interest on the debt rather than paying off the debt itself. If you pay extra, more of your repayment will go on reducing the debt - and that means less interest the following month. So if you don't seem to have any spare money, start by taking a long, hard look at your finances and accounting for, literally, every penny you spend to see if there's any way at all you can eke out a little money to put towards your debts. If there really isn't, then you need to look at ways of making extra money. The good news is that starting in April, you can earn up to £1K of extra income (over and above what you make in paid employment) without paying tax on it. This means that by becoming a micropreneur, you can potentially have another 1K a year to pay down your debts. It may not seem a lot, but it can make a huge difference.

I don't want my kids to think they're different from their friends

They are different from their friends. They're your children and, clichéd as this may sound, quality time is the best gift you can ever give them. The memories you make will be with them for a whole lot longer than the latest must-have toy all their friends have. If you still need convincing, remember that children learn from their parents and they take those lessons with them into adulthood. Sensible money-management is one of the most important skills anyone can have in the modern world and parents need to set the example they want their children to follow. If you teach your children how to tell the difference between essentials and desirables and how to resist the temptation to pay for the latter on credit, you'll be setting them on the best financial path for adult life. You may also be sparing them the burden of having to work out how to look after you financially in later years when they are working adults and you would like (or need) to retire.

When X happens then…

This one comes up all the time in all kinds of contexts. When Christmas is over then I'll take out a gym membership. When the children are at school then I'll start studying again. When I get a pay rise, then I'll start paying off my debts. In fairness, in some cases, waiting does make sense, but in many others it's just a way to put off dealing with a problem you'd rather ignore. In the case of debt the golden rule is “take action now”. The longer you leave debt, the more interest will be added to it.

House Market Predictions For 2017

House Market Predictions for 2017 Predictions are a tricky business, but at this time of year, they’re pretty much obligatory. So with that in mind, let’s take a look at what could be in store for the housing market over the year ahead.

London switches to rentals?

At this point in time, Article 50 has yet to be triggered. When (if) it is triggered, then the UK should have up to two years to negotiate an exit deal, although in principle this period could be extended if all parties are in agreement. Only once this is agreed can the UK begin the actual practicalities of exiting the EU and discovering what life is like outside it. In other words, it’s probably safe to say that there is going to be a lot of uncertainty in the UK over the next few years and in spite of the phrase “safe as houses”, uncertainty and the commitment of a mortgage could be an uncomfortable combination. While this applies throughout the UK, the high prices in London (and its commuter belt) combined with the possible impact to the financial-services sector could feasibly motivate people to postpone plans to buy or even to move from a property they own into rental property to become mortgage-free and to give themselves maximum flexibility in a post-Brexit situation.

Buy-to-let becomes consolidated?

After the Mortgage Market Review of 2014, the Prudential Regulation Authority has now brought in a stress-test for landlords which mandates that lenders must ensure that Buy To Let (BTL) landlords must be able to afford their mortgages if interest rates reach 5.5% unless they have a fixed-rate which lasts for at least 5 years. Lenders must have this on place by 1st January 2017. This comes on top of recent changes to stamp duty and mortgage tax relief. It’s still early days, but one potential result of these changes is that small-scale BTL landlords exit the BTL market, possibly to invest in property through some other vehicle, such as commercial property or investing in property developers. This could then create a buying opportunity for larger investors, particularly those operating through limited companies.

Investors with cash go bargain hunting?

The Bank of England (BoE) is tasked with keeping inflation at precisely 2%. If inflation drops below target then, in theory at least, the BoE could drop interest rates even further (it is possible to have negative interest rates) or they could use quantitative easing to try to encourage growth. If, however, inflation rises, then the BoE only has the tool of interest rates to try to bring it back under control. This means that either the government would have to raise the inflation target to allow interest rates to be kept low or the BoE would be forced to raise interest rates to put a brake on inflation, even though this could lead to disruption in the housing market. Higher interest rates make mortgages more expensive. This means that even if home prices remain static, property overall becomes less affordable to buyers who need a mortgage. It also means that home owners with an outstanding mortgage need to allocate more of their total income to servicing their mortgage, leaving them with less money for other purchases. People who are already stretched may therefore look to sell their current home and look for somewhere cheaper, such as a smaller property or a property in a more affordable location. This could create a buying opportunity for investors with cash to spare. International investors could be in an even stronger position if the pound is weak in the currency markets, since this would make property even cheaper relative to their home currency.

Your home may be repossessed if you do not keep up repayments on your mortgage

Financial Planning For The New Year

Financial Planning For The New Year As another January rolls around, it's time for the New Year's resolutions list. This is therefore generally the time when there are articles full of helpful suggestions for resolutions you could make. In the real world, however, we generally know what resolutions we should make. In fact we often make them. The problem, however, tends to relate to keeping them. So, let's look at ways you can give yourself the best chance of sticking with your resolutions throughout the year.

Make resolutions meaningful in the real world

Let's take a fairly common financial resolution - save money. The first question is: “Why do you want to save money?”. There are lots of potential answers to this from retirement, to a home deposit, to the holiday of a lifetime. Once you have stated your savings goal, you can get a realistic idea of the amount you need to save, which then leads into creating a feasible savings plan over a realistic time frame. This turns an abstract idea into a way to finance something you really want and that has meaning.

Pay yourself first (and automatically)

If you've set a realistic budget then treat savings and investments in the same way as you probably treat paying your bills. Prioritise them and automate them. Set up direct debits so that the income you've allocated to saving and investing goes straight where it is supposed to go. Make sure that you have an instant-access savings account so that if you do make a mistake, or if a genuine emergency arises, you can bump up the level of your current account.

Set yourself milestones

Another advantage of connecting your resolutions to your goals is that it gives you the opportunity to recognise and celebrate progress. This could be when you make a purchase using money you've saved rather than taking on debt, or when you've achieved a percentage of your savings target. Recognise your achievement in some way, even if it's just ticking off a box on a savings chart.

Make your resolutions public

Making your nearest and dearest aware of your resolutions has two advantages. Firstly it helps to keep you on track. You've published your goals and there's a good chance your family and friends are going to take an interest in them and ask you about them, which will help to keep you on track. Secondly, it will help them to understand any changes in your habits. For example, if one of your resolutions is to save money, then you may well need to make changes to your current lifestyle. Making those close to you aware of this can help to smooth that process.

Keep tracking your progress and be prepared to make changes

Resolutions To Avoid For Millenials

Resolutions To Avoid For Millenials Everyone knows that New Year is a time for resolutions and hence it's a time when the internet becomes filled with articles suggesting what resolutions you should make. In the spirit of being a little different, however, we thought we'd suggest a few resolutions to avoid - and why.

Cut up the credit cards

We're glad you've realised that credit cards can be damaging to your financial health, but cutting them up and swearing never to use them again is actually throwing out the baby with the bathwater. First of all, credit cards can be a lifeline in an emergency. Yes, it's better if you have enough savings for an emergency but if you don't credit cards been other options, like payday loans, by a long margin. Secondly having a credit card means you can avoid putting your debit card details on the net. Having a credit card compromised is an unpleasant experience, but having to change your entire bank account is probably a whole lot worse. Thirdly, even without any added perks, credit card purchases of over £100 are subject to extra protection under section 75 of the Consumer Credit Act. This is in addition to the chargeback schemes run by card companies themselves. Finally, for better or for worse, credit scores matter. In addition to helping determine if you get accepted for credit at all, let alone at what rate, they can also be checked by landlords and employers.

Pay down debt

Now this may seem like a bit of a strange comment, so let us explain. Rather than just deciding you need to pay down your debts, you need to take a long, hard, look at your current financial situation and determine:

• What debts you have
• What kind of debts you have
• How you acquired these debts
• What savings you have in place

If you have no savings at all, then counterintuitive as it may seem, it may actually be in your best interests to work on building a cash cushion first, before you really start to tackle your debts. That way, you'll be in a much better position to deal with life's slings and arrows without resorting to more credit - assuming you're in a position to get it. Once you have this in place, you need to look at what debts you have an how much they are costing you. Then look at what kinds of debts they are and why you acquired them. For example, racking up credit card debt due to an expensive holiday is very different from having a mortgage to pay off. At that point and only at that point, can you start to tackle high-interest consumer debts such as credit card debts. Start with the highest-interest debt first. For lower-interest debt, such as mortgages, a bit more judgement is called for. If you're confident of your ability to pay off your mortgage over the long term, then you may wish to look at investing your disposable income for better returns over the long run, for example, by paying extra into a pension scheme. If, however, you are less confident about this, then it may be better to pay as much as you can into your mortgage so that you are in a better position if your circumstances change and if you are really unsure about your ability to manage your mortgage over the long term, you should, perhaps, look at renting.

Save for a rainy day

The UK has lots of rainy days, how much money will you need to cover them? Having cash savings does have a lot of benefits and it's generally a good idea to have some. Just shoving your money into a savings account, however, could see you miss out on better investment opportunities. Think hard about how much money you feel you need, in your situation, as a cash cushion for foreseeable expenses and emergencies. Once this is in place, however, ask yourself seriously whether cash savings are still your best option. If necessary, get some professional advice on this.

Buy To Let Tax

Buy To Let Tax As the old saying goes, “If something seems too good to be true, chances are it probably is.”. Anyone tempted to try using creative financial transactions to reduce a tax bill should write out this sentence in big, capital letters using a thick, colourful pen and pin it somewhere clearly visible.

There are plenty of legally-acceptable ways of reducing the amount of tax you pay, ISAs are one obvious example of this. The Inland Revenue, however, understandably takes a dim view of people taking advantage of what could be called grey areas in tax law. It tends to pursue these rather vigorously and it does so on taxpayers' money, while those it pursues generally have to fund their own legal bills. Hence, in very blunt terms, there is no real penalty on HMRC if it loses a case, whereas a taxpayer who loses a case faces a hefty legal bill in addition to the original tax bill. As well as this, when there is a dispute between HMRC and a taxpayer (be it a company or a private individual), the Inland Revenue can insist that any money it claims is owed be paid to it upfront on the understanding that it will be returned if the individual in question wins their case. In fact, under certain circumstances, HMRC can actually take money directly out of people's bank accounts.

In very simple terms, therefore, HMRC have a lot of power and have had a lot of practice in using it. Hence, buy-to let-landlords (and indeed anybody else), should think very careful about engaging in any sort of activity, which could feasibly incur their displeasure. Buy-to-let landlords should also be aware of the fact that buy-to-let is a controversial topic from a political perspective. This could potentially mean that HMRC would be encouraged to pursue buy-to-let landlords for political reasons, even if, economically, there were far more compelling targets.

Taking all this into consideration suggests that buy-to-let landlords would be well advised to proceed with caution when it comes to the new “buy-to-let loophole” being publicised in the mainstream media. In this scheme, landlords set up a limited company to own their property. Instead of claiming mortgage tax relief, now at 20% for all buy-to-let landlords, including higher-rate tax payers, landlords pay corporation tax at 20% instead. In addition, they can offset reasonable running costs (including mortgage payments) against tax. There is, however, a price to be paid for all of this, which is that buy-to-let landlords have to go through the expense and hassle of setting up the company in the first place. Buy-to-let landlords may also find that it actually increases some of their expenses, particularly mortgage expenses since lenders will assess companies differently from private individuals. Some lenders may not even offer mortgages to companies. There is, however, an even more sophisticated version of this scheme in which landlords create a “beneficial interest company trust”. The trust holds the beneficial interest in the property on behalf of the company. All income from the property goes into the trust and hence is treated as corporate income (20% tax), but the landlord continues to own the title to the property. Hence there is no need to re-mortgage.

There is, however, a great need to remember that it is illegal for individuals to transfer personal assets into a company solely for the purpose of avoiding tax. In case of dispute the onus would be on the taxpayer to show that there was a commercial basis for their action (other than its tax benefits) rather than on HMRC to show that the taxpayer had deliberately acted to reduce their tax bill.


Help To Buy Scheme

Help to Buy Scheme As the bells ring out the old year and ring in the new, they will also be ringing out the Help to Buy guarantee scheme and ringing in the Help to Buy ISA and Lifetime ISA. More accurately the Help to Buy scheme is due to come to a close at the end of this year and at this point it can probably be assumed that if the government had intended to extend it, it would have announced its intentions by now. The Help to Buy ISA is already in place and accounts can be opened until 30th November 2019. Accounts will be able to accept contributions until 2029. The Lifetime ISA is due to roll out in April 2017 and to continue indefinitely.

What exactly is the Help to Buy scheme?

The original Help to Buy scheme is actually two schemes. There is the Help to Buy equity loan and the Help to Buy mortgage guarantee. The equity loan is only available on new builds and buyers required a (minimum) 5% deposit. The government then lends up to 20% of the remaining purchase price (40% in London) and the buyer takes out a mortgage for the rest. The mortgage guarantee scheme is exactly that. Supporters of the schemes argue that they provided essential support for first-time buyers and those on lower incomes. Opponents argue that they simply encourage house price inflation. Likewise now the scheme is coming to a close the Bank of England has stated that it believes the Guarantee scheme is no longer necessary, while the Intermediary Mortgage Lenders Association has stated the exact opposite. Only time will show who is right.

What exactly is the Help to Buy ISA?

The Help to Buy ISA essentially allows first-time buyers of any age to save up to £12K (including interest). The government will then add a 25% bonus up to a maximum of £3K. This money must be used to purchase a house and the funds are only paid upon completion. In other words, if mortgage lenders require an upfront deposit (as is often the case), the buyer needs to find it from other funds.

What exactly is the Lifetime ISA?

The Lifetime ISA was introduced to help those aged 18 to 39 to buy a house and/or to save toward their retirement. They can be opened at any point between those ages and holders can continue to pay into the accounts until they reach the age of 50. Savers can contribute a maximum of £4K per year and will receive a 25% bonus. Hence, in principle a saver could contribute £128K and receive a bonus of £32K for a total of £160K. At this point it is unclear whether the government will allow savers to continue to make contributions after this age without the bonus (or even with the bonus).

Accounts must be held for a minimum of 12 months before any money can be withdrawn for any purpose or the bonus is lost. Any money withdrawn before the age of 60 has to be paid directly to a conveyancer or the bonus is lost. In practical terms this means that the funds can only be used for an exchange deposit rather than an up-front mortgage deposit. There is an exception for people diagnosed with a terminal illness, who can withdraw all their funds after their diagnosis. After the age of 60 the whole fund can be withdrawn, tax free.

From the point of view of home buying are there any important differences between the ISAs?

The Help to Buy ISA can only be used to purchase property up to a value of £250K (or £450K in London), whereas the Lifetime ISA can be used to purchase property up to a value of £450K anywhere in the UK.

Your home may be repossessed if you do not keep up repayments on your mortgage

The tax efficiency of ISAs is based on current rules. The current tax situation may not be maintained. The benefit of the tax treatment depends on individual circumstances.

The value of your investments and any income from them may fall as well as rise and is not guaranteed. You may get back less than you invest.

State Pension Rules

State Pension Rules If you're a man born after 6th April 1951 or a woman born after 6th April 1953 then you are, or will be, receiving the state pension under the rules introduced in April 2016. Admittedly the younger you are, the likelier it is that these rules could be changed before you reach pension age, but for now here is a quick guide to what to expect from the new state pension.

Payments are still based on NI contributions, but, in principle, only contributions from the claimant

Under the old system, married women were able to pay a reduced rate of NI contributions. This right stopped in 1977, but those who had already opted in were allowed to continue to pay the lower rate. This means that women aged in their mid-fifties or older could still be paying the pre-1977 rate, possibly having forgotten that they chose to do this in the first place. Women in this situation may wish to seek professional advice or at least contact an organisation such as The Pensions Advisory Service since you may be able to increase your level of State Pension based on your husband's NI contributions, but there is a complex set of rules around this.

Payments are based on NI contributions alone, the Additional State Pension has ceased to exist

Those who have already paid extra contributions towards an increased state pension will find these contributions honoured but the level of extra payment they will receive will depend on various factors. Likewise those who opted out of the additional state pension may find that they receive less state pension than they expected. Again, the rules governing this transition are somewhat complex and so it may be worth speaking to a professional or other competent adviser.

The NI clock was reset on April 6th 2016

Basically for state pension purposes, your NI contributions prior to this date were converted into a “starting amount”, which should be at least equal to what you would have received under the old system. If your starting amount is higher than the full new state pension, you will receive the payment you have already accrued but will not be able to continue to increase your pension by making further contributions. If it is the exact same as the full amount of the new state pension then your pension will be frozen at its current level. If it is less, you may be able to make up the difference so that you receive the full state pension, for example by paying extra, voluntary, NI contributions.

You need 10 years' worth of payments to qualify for the new state pension and 35 years' of payments to receive the full amount.

Anything in between this will see your state pension increased on a pro-rata basis. Again, if you are worried about having less than you expected, you may be able to increase the amount of new state pension you receive by paying extra, voluntary, NI contributions.

If you have lived and worked overseas then it may be possible to use the NI contributions you made abroad as part of the qualifying period for the UK new state pension. This would typically apply in the EEA/Switzerland, the Channel Islands/Isle of Man and the U.S.A as well as a handful of other countries with reciprocal arrangements with the UK. The actual payment you receive would, however, still usually be based on your UK contributions. For example if you worked for 10 years in the U.S.A. and 5 in the UK, then your 10 years' of U.S. contributions would see you qualify for the new state pension, but the payment would be based on your 5 years of UK contributions.

Deferment is still possible, albeit less attractive

Under the old system, for each year you deferred your state pension, it was increased by 10.4%. The new state pension offers a much less generous 5.8%. Additionally the government has withdrawn the option to take your deferred pension as a lump sum.

Autumn Statement 2016

Autumn Statement 2016 The chancellor has spoken and we now know where we stand, at least for the next 6 months (until the full budget). Possibly the most surprising news from this Autumn statement is that it was the last of its kind and next year's Spring statement will likewise be the last ever. From now on the UK will have annual Autumn budgets and make Spring statements. The least surprising announcement was that the proposed rise to fuel duty has been scrapped. Given that this is the 7th consecutive year the government has frozen fuel duty, this was probably widely expected, but will still probably be welcome news to many people, particularly those who travel frequently. The rest of the budget was arguably a mixed bag. Here is a summary of the three most important areas.

The Economy

It's understandable that debate on the economy was overshadowed by Brexit, particularly since, at this point in time, there now seems to be a question mark over whether it will actually happen at all, let alone when and how and what effect it will have. Philip Hammond, however, is essentially obliged to work on the basis that it will and is therefore proceeding with caution. The government has ended its commitment to return to a budget surplus by the 2019-2020 financial year. Instead debt will rise and is forecast to peak in 2017-2018.

Personal Finances

Pensioners may have raised their eyebrows at the chancellor's commitment to maintain the triple lock system for this parliament. The triple lock system refers to the practice of increasing the state pension in line with average earnings, the consumer price index or 2.5%, whichever is highest. While it is undoubtedly reassuring to pensioners, it is also expensive and was recently criticised by the Work and Pensions Committee as being both unsustainable and unfair. The fact that Philip Hammond set a deadline on this commitment may be a hint that the government will look to drop it in the next parliament. Interestingly Philip Hammond also suggested a new bond for savers of all ages, paying 2.2% interest. No further details of this were given, but at first glance it sounds like a similar idea to the “pensioner bonds” of 2015 and may be intended to cushion the blow of removing the triple-lock guarantee.

For working adults, the chancellor raised the National Living Wage (formerly known as the minimum wage) to £7.50 (from April 2017). He raised the income tax threshold to £11,500 (also effective next April) and committed to raise the higher rate threshold to £50,000 by the end of this parliament. At the same time, he removed the tax benefits on salary sacrifice/benefits in kind schemes, but notably exempted schemes relating to childcare and pension saving along with schemes linked to ultra-low emission cars and the cycle-to-work scheme.


The headline-grabbing announcement that the taxpayer would fund repairs to Buckingham Palace was made before the budget and Philip Hammond was also notably silent on the matter of repairing the Palace of Westminster (otherwise known as the Houses of Parliament). He did, however, manage to find a relatively modest £7.6 million to fund repairs to Wentworth Woodhouse, known to Jane Austen fans as the probable inspiration for Mr Darcy's home of Pemberley. He also committed £2.3B to provide 100,000 new homes in areas of high demand as well as £1.4B for 40,000 affordable homes. The chancellor also promised almost £1.5B to fund various transport projects. The vast majority of this went to improving local transport networks in England with £220M to combat traffic pinch points and £110M for East West Rail. The digital economy was not forgotten with a commitment of £1B to improve broadband access. This is in addition to 100% business rate relief for spending on new fibre infrastructure.

Pre-Christmas Planning

Pre-Christmas Planning Going by TV commercials, the official countdown to Christmas starts right after Remembrance Sunday. In terms of financial planning, now is really the deadline for getting your Christmas in order so that you avoid going into the New Year with a financial hangover. There is one top tip, which we would like to emphasise ahead of everything else.

1. Plan your Christmas to suit your budget, rather than the other way round

Christmas is supposed to be about peace and goodwill, not about spending until your credit card screams. If something is too expensive for the amount of cash you have available, then it is too expensive, end of story. This goes for gifts, food, socialising and everything else connected with Christmas. If people really care about you, they'll accommodate your financial situation. They may even be relieved at your honesty taking a strain off them. If you're worried about receiving expensive gifts when you've only bought cheaper ones, then start setting expectations now, particularly for children.

2. Be firm with your budget and flexible with your shopping

The first point to remember about any form of Christmas shopping is that anything which has an obvious connection with Christmas is going to carry a premium price tag. Look for ways to avoid or work around this. For example, you could avoid the typical roast-meat-and-all-the-trimmings dinner and enjoy food which is non-typical but still special, whether it's poached salmon or curry. Likewise, you could pass on traditional Christmas cake and just go for a normal cake or other dessert.

3. Remember the power of packaging

Christmas is a time when manufacturers bring out their most attractively packaged products and many shops offer gift-wrapping services. There is, however, absolutely nothing to stop you taking items in ordinary packaging and making them look beautiful yourself. What's more, this can often be done very easily. For example it would probably work out much cheaper to buy a pretty, empty tin off eBay and fill it with sweets than to buy a special Christmas tin of the same sweets out of a shop. Likewise many gifts can be put into pretty baskets and will look just fine without being covered in cellophane. This is an excellent solution for toiletries. Basically it's a safe bet that any kind of pre-packaged gift set can be recreated more cheaply without any crafting skills being necessary.

4. Give creative IOUs instead of shop-bought (or crafted) gifts

In spite of what the internet might suggest, crafting can work out just as expensive as shop bought and that's even before you factor in the reality that your time also has a value. Even if you have a craft hobby which you enjoy, are you really going to want to commit to making all your presents when there is generally so much else to do this time of year? There is, however, one DIY gift, which, literally, anyone can make in minutes and which can also work perfectly for any one of any age. It is the gift of IOU vouchers. For example, instead of giving your child the current, must-have, toy, give them a voucher to stay up an extra hour on Fridays, Saturdays or school holidays. Make a voucher single use, or multi-use (just make sure multi-use vouchers have a way to track how often they've been used).

5. Practice saying no

Whatever your views on Christmas, it's hard to argue that it's become increasingly commercialised over the years, to the point where people can feel under pressure not only to spend more than they can afford on their nearest and dearest, but also to give gifts or at least cards to an ever-widening circle of people and then, of course, there is the growing practice of the Secret Santa. On top of all this, there may be pressure to attend events you would prefer to avoid. Practice saying no. It saves both money and stress.

It's The Economy

It's the economy “It's the economy, stupid” has been taken as a fundamental truth in modern politics. Brexit therefore left political commentators stunned as a slim majority of the electorate voted in favour of a decision which the commentators believed defied all economic sense. Economic data is often presented in the form of pie charts. In real life, some people get huge slices of the pie, while others survive on crumbs. Those who get the biggest slice of the pie tend to be the happiest with the status quo; those who get the crumbs are the likeliest to want change. Trump, ironically rather like Obama, was elected on a platform of change. One of the changes Trump's voter base wants to see is an economy where there is enough pie for them to get at least a small slice rather than just crumbs. The question now is - can Trump deliver? His plan for economic growth essentially rests on three pillars: cut taxes, remove red tape and withdraw from international agreements (particularly trade agreements). How do these stack up in reality?

Tax cuts

Ultimately taxes are what pay for government spending. Even though governments can borrow money, the basic idea behind this is that they will ultimately pay the loans back through tax revenues. Therefore, cutting taxes reduces the amount of money governments have to spend and increases the amount of money left in the hands of companies and private citizens to spend (or save) as they wish. Trump takes the free-market point of view that keeping taxes to a minimum encourages private investment and private spending and will therefore stimulate economic growth.

Remove red tape

The U.S. presidential election took place on the same day as news broke that a woman from California faced a year in jail selling home-made food through a Facebook group a couple of times a month. Her arrest came after a year-long investigation and a home-visit from an undercover officer. The prosecutor, Kelly McDaniel's comment on why this case was being pursued is essentially “the law is the law”. This case has made headlines in the U.S. and while some do agree that it was inappropriate for the woman to accept payment for food made in premises without any form of hygiene certification, many are questioning the severity of the sentence and the fact that additional misdemeanour charges were added after the woman asserted her right to a public trial. Red tape is the ban of small businesses and private individuals everywhere and cases such as this do little to inspire confidence in the idea that such regulations are intended to protect consumers from unscrupulous businesses rather than to protect established and larger businesses from incoming competition. This case may help Trump push through a process of deregulation, which could potentially allow smaller companies to flourish.

Withdraw from international (trade) agreements

It is probably this last part of Trump's economic policy, which is most likely to send shivers down the spines of business owners and governments around the world. Although Trump has indicated that he intends to withdraw from climate-related agreements, economists will probably be more concerned by the fact that he also intends to withdraw from/refuse to enter into trade agreements, including the North America Free Trade Agreement and the Trans Pacific Partnership. Presumably he will also be unwilling to enter into the Transatlantic Trade and Investment Partnership, although given the controversy behind this agreement; this may be welcome news to some on this side of the Atlantic. In simple terms, Trump believes that these agreements make it too easy for companies to employ workers outside of the U.S. to produce goods (and indeed offer services) which are then sold to people in the U.S. While his approach flies in the face of the trend towards globalisation, it's a very open question as to how much globalisation has benefitted the majority of people who voted for Trump.

Contactless & Mobile Payments – Do You Feel Safe?

Contactless & mobile payments – do you feel safe? Payment cards have been around for decades now and have transitioned from being read on manual imprinters and validated by signature to being read from a microchip and validated (generally) by PIN. They have now moved into the next stage of their development and can now support contactless payments in which customers literally just tap and go. At the same time, mobile operators and handset makers have caught on to the fact that smartphones are an essential part of everyday life and are attempting to use them to get into the payment market. Apple has launched ApplePay and its Android counterpart is known as Android Pay (although Android giant Samsung has its own version of it called Samsung Pay). The basic idea behind them is the same as for contactless payments, consumers just tap and go. While this is indisputably convenient, questions have been asked about whether or not it offers the same sort of level of security as chip-and-PIN (or signature) transactions.

Contactless and mobile payments cannot be as secure as chip-and-PIN payments

In the most basic of terms, the short answer is no. There is simply no way a form of payment, which removes the need to verify the identity of the cardholder can be as secure as one which does. A more relevant question, however, is whether or not contactless and mobile payments offer enough security for their intended purpose.

Contactless and mobile payments are intended for low-value transactions

Contactless and mobile payments are being promoted as a way to speed up high-volume/low-value transactions at places such as fast-food outlets, coffee shops and such like. Basically they are being presented as being a win for both merchants and cardholders neither of whom are likely to enjoy dealing with queues. At current time, the limit for contactless transactions is £30 per transaction and card-issuing banks are able to set their own limits regarding, for example, how many contactless transactions are permitted before the card has to make a chip-and-PIN transaction to confirm that it is being used by the legitimate cardholder. Mobile payments work along similar lines and can offer an additional level of security through the fact that access to the relevant service requires access to the mobile handset, which can be secured through various means, for example Apple now has a level of biometric authentication with fingerprint recognition.

Dealing with accidental payments and deliberate fraud

Whether or not you class accidental payments on contactless cards as a security issue is a matter of opinion but it is a matter of fact that they can happen. Contactless cards and mobile payments essentially broadcast the relevant card details over a very short distance. This means that, in principle, if you happen to have one or more cards in the vicinity of a card reader, their details could be picked up and you could be charged. In this case, it might be possible to have the merchant cancel the transactions or use a chargeback scheme. There are also some wallets available which claim to be able to block the signal between the card and the reader, meaning that users have to take their cards out physically in order for them to work. As yet, it remains to be conclusively proven how efficient these are. This then leaves the issue of deliberate fraud. The consumer association Which? carried out a study, which indicated that it was technically possible to skim data from contactless cards and use them to make online transactions. These kinds of transactions would, in theory at least, probably be a matter for a chargeback scheme.

Were Your Parents Right When They Told You To Budget Your Spending Better?

Were Your Parents Right When They Told You to Budget Your Spending Better? Budgeting is the skill of making sure that your pay lasts the whole month, ideally with a little left over. Nobody ever said it was necessarily going to be easy, let alone fun, but it's essential for peace of mind. Here are five signs that you may need to work on your budgeting and why they matter.

You frequently need to “borrow” money (or get other help) from family and friends
Life happens and sometimes getting help from your nearest and dearest is the only option, sometimes it's just a far more attractive option than getting a commercial loan. If, however, you find yourself regularly needing financial (or other) help from those close to you, then it's time to look closely at your budgeting to see how you can put a stop to this, even if you are managing to pay the money back (eventually). If you're becoming dependent on financial gifts, or not paying back loans, then you owe it to those you love and to yourself, to sort yourself out. Even if the people concerned can afford it, they need to take care of their own future and living to a ripe and happy old age can be expensive.

You're only making the minimum payment on your credit card(s)

The minimum payment is a limit rather than a target. The longer you carry a balance on a credit card, the more likely it becomes that you could wind up paying more in interest than you actually borrowed in the first place. Even if it doesn't get that far, the simple fact of the matter is that credit cards (and other forms of high-interest credit) are a really expensive way of borrowing money and should generally be paid off as quickly as possible. If you're only making the minimum payment each month, then you need to take a hard look at your budget to see how you can increase the repayment.

You continually find yourself relying on your overdraft

Overdrafts can have their uses, particularly for those whose income varies from one month to the next, but ideally they should be used as safety nets for occasional emergencies rather than being used month after month. Another danger of relying on overdrafts is that an unforeseen expense or a bill you've forgotten could tip you into unauthorised overdraft, which often carries penalty fees and interest charges. A few of these can add up to become uncomfortably expensive.

You have nothing left over at the end of the month

Even if you don't actually have any debt, even if, in fact, you do actually have some savings, running down to zero by the end of the month is generally best avoided if at all possible. There are many reasons for this. One of them is that if you have any sort of unexpected expense, then you'll have to dip into your savings to pay for it and then how will you replace those savings?

You'd be hard-pressed to say where your money is actually going

The main purpose of budgeting is to make sure that you're managing your money appropriately. Its usefulness is probably most obvious to those with little money who need to make sure that they cover all their essential expenses and see if they can possibly squeeze out a little extra to put aside for emergencies. It is, however, still useful for those on higher incomes for whom getting from one pay packet to the next is less of a concern. Basically you can only know whether or not you're making best use of your money if you actually know where your money is going in the first place.

Will Pension Freedom Leave You Unable To Manage Your Money?

Will pension freedom leave you unable to manage your money? Whatever criticisms can reasonably be made about annuities, they do have one great benefit. They are simple. You make a one-time purchase in return for which you get an income for life. Unfortunately that income may not be anything close to what you hoped it would be. In recognition of this, the government brought in pensions freedoms, which essentially give today's generation of retirees the ability to keep their pension funds invested and draw an income from them instead of having to buy an annuity. While this idea sounds attractive in principle, it's worth thinking about whether or not it could feasibly work for you in practice.

The background to pensions freedoms

While none of the main political parties has yet to make any serious move to abolish the state pension, the fact of the matter is that it is a significant drain on government funds, particularly in view of longer life expectancy. With that in mind, there has been general agreement across the main parties, that people should be encouraged to save for their later years. The problem was that recent decades have seen a perfect storm in the pension market. Defined benefits (final salary) schemes have been largely eradicated from the private sector. Their place has been taken by defined contributions schemes in which the eventual pay-out is based on investment returns rather than pegged to an employee's salary. The Equitable Life and Mirror pensions scandals shook confidence in private-sector and employer-based schemes respectively. To crown it all, the restrictive nature of annuities was a source of frustration for modern retirees, who wanted more flexibility than the product was designed to offer. In an attempt to push forward the principle and practice of individuals saving for retirement, the government offered new pensions freedoms designed to address the needs of today's generation of pensioners. One of these freedoms was the ability to use a pension fund in essentially the same way as any other form of investment capital, with all the potential for risk and reward this entails.

Having a right does not mean that it is a good idea to make use of that right

With freedom comes responsibility. In this case, the responsibility for ensuring that a pension pot lasts a lifetime is shifted from the annuity provider to the private individual. Unless the person in question has a guaranteed income from another source, they are in essentially much the same position as a professional gambler. Their income is entirely dependent on the performance of their investments. Now, there are people who make a lot of money as professional gamblers but it is unarguably a risky profession and one which requires commitment in terms of time, energy and mental strength. Some older people may enjoy this slightly edgier lifestyle, while others may have alternative incomes (such as buy-to-let or income from part-time businesses), which mitigates the risk, but for everyone else the potential rewards on offer thanks to pensions freedoms has to be weighed up carefully against the potential risks. Older people also need to be aware of and realistic about their chances of succumbing to age-related conditions such as dementia and Alzheimer's disease.

What options are available?

Arguably anyone with any sort of financial responsibility should have measures in place to ensure that their financial business can be managed easily in the event of their becoming incapacitated and wound up easily in the event of their death. Those entering the later stages of life should certainly take care of this while they are still able. They should also think clearly about the different stages of aging and be realistic about how they are going to cope with them. One approach might be to ease into retirement and to keep working to some extent in order to minimise the need for pension income, while keeping the pension pot invested and, hopefully, growing. They can then buy an annuity at a later date, when its simplicity becomes more appealing and the rate on offer is likely to have increased as the individual will be older at the time of its purchase.

The value of investments and any income from them can fall as well as rise. You may not get back the amount
originally invested.

Service Industry Puts Recession Fears To Bed

Service industry puts recession fears to bed The Markit/CIPS purchasing managers' index (PMI) is a monthly survey which is eagerly watched by those with an interest in the financial health of UK PLC. This month, the August data for the crucial service sector showed healthy growth.

A trampoline or a dead-cat bounce?

As Harold Wilson is said to have remarked, a week is a long time in politics. It is now two months and counting since the historic Brexit vote and while the jury is still out on what that vote actually means in reality, in the real world of the high street and online, the dust appears to be at least starting to settle. The July data for the PMI showed a decline, hence at least part of the increase this month is simply regaining the lost ground, but it is still growth rather than decline. It should also be noted that August is an unusual month in that it contains extended school holidays as well as a bank holiday (in much of the UK). It is therefore a time when the leisure, entertainment and hospitality industries would be expected to be pretty much in full swing. Economists are therefore likely to be watching eagerly to see if this strong performance continues over the run-up to Christmas and beyond.

Financial services in a fragile state?

While the service sector has many components, it's hard to dispute the importance of the financial services sector and there are still jitters in this area, some of which may be connected with Brexit. It was only shortly after the Brexit vote that Lloyds announced job losses in the UK. It is, however, unclear just how much, if any of these announced cuts, was actually due to Brexit itself. While the UK could, in principle, lose its right to act as a clearinghouse for Euro transactions, the jobs which are currently being lost have nothing to do with this area. They relate to branch closures and the harsh reality is that as customers have moved to online banking, the need for physical branches has been reduced, hence their vulnerability to cost-cutting measures. This has nothing to do with Brexit; it is a reflection of changing consumer habits. Lloyds has also admitted to being under investigation by the Financial Conduct Authority due to its behaviour towards customers who were having difficulty paying their mortgages and could feasibly have more potentially costly skeletons rattling in its cupboards. It also has to consider how an extended period of ultra-low interest rates could affect its profitability (and indeed business model). Other banks will have their own strengths and weaknesses and while none may be overjoyed by Brexit, it remains to be seen in what way and to what extent it will affect them.

Will manufacturing benefit from Brexit?

While the service sector plays a crucial role in the UK economy, it's worth remembering that the manufacturing sector also contributes. As with so much to do with Brexit, it's still very early days, but a weak pound could be great news for UK manufacturing. Even though it will mean that the import of raw materials becomes more expensive in real terms, it can help to make UK exports more affordable on the international market. It can also help to reduce the cost of employing workers in the UK as compared to those in lower-wage economies. The outlook for UK manufacturing may also depend on global oil prices since manufactured goods need to be physically transported from the factory to the retailers. Low oil prices benefit companies which want to transport goods over long distances, such as between Asia and Europe. If oil prices increase, then transport costs can become more of an issue, which makes it more attractive to manufacture goods closer to their intended destination.

Have You Got The Right Home Insurance Policy?

Have you got the right home insurance policy?
Even without the Euros, insurance arguably ranks well behind football in terms of fun topics of conversation; nevertheless, getting the right home insurance can make a big difference both to your peace of mind and your finances. Here are some helpful tips on making the right decision.

1. Consider buying buildings insurance and contents insurance from the same provider

Basically this will eliminate the possibility of two insurance companies bickering over who is responsible for paying out in the event of a claim, leaving you trapped in the middle.

2. Understand what is and isn't covered

In terms of buildings insurance make sure you are clear on whether the potential pay-out is the rebuilding value of your home (the value of the bricks and mortar) or the purchase price of your home. There's a good chance it's the former, which means that if you base your cover on the latter, you could end up paying a whole lot more than you need to for cover which is much less than you think it is. In terms of contents insurance, in addition to the overall level of cover, pay particular attention to any exemptions, limitations or specific requirements for particular items, typically ones which are very much targeted by thieves. Common examples of these include certain electronics (such as mobile phones), jewellery, money and bicycles. In some cases it may actually be worthwhile excluding these items from your home insurance and getting specialist insurance instead. For example, you could exclude bicycles from your main home insurance and get a specialist policy which covers you for theft from inside and outside the home, plus public liability in the event that you have an accident. You also need to be clear on where you stand with regards to items kept in outbuildings such as garages and sheds.

3. See if you can reduce the cost of your home insurance by improving security in your home

Insurers are likely to demand home-owners guarantee a certain level of security as a condition of their cover. For example this could include having a certain standard of locks on doors and windows. You may, however be able to reduce the cost of your cover by taking additional measures such as installing a proper home safe. Even if this does not reduce the cost of your cover, it may still be the best place for irreplaceable items such as jewellery with sentimental value.

4. Be clear on the type of cover offered

There are basically two types of contents cover. New-for-old cover is essentially what it says. If an item is damaged, it will be replaced with an equivalent item (or the cash value thereof). With indemnity cover, you are compensated for the estimated value of the item at the time it was damaged (or destroyed). This takes depreciation into account and therefore may not be nearly enough to purchase an equivalent item new.

5. If you do any work from home make sure you're covered for it

Insurance companies have long since caught onto the idea that these days many people have some sort of home office, even if it's just for managing the household finances and perhaps doing a bit of work from home now and again. If, however, you are doing anything more than that, then it is strongly recommended to check where this leaves you in terms of your policy. In particular, if you are actually running a business from home, then, as a minimum, your insurers will probably want to know about it. If your business essentially involves you working alone at a computer then it is unlikely to make much of a difference to your premiums, but if you are using expensive and/or specialist equipment and/or receiving clients or other visitors, then it is very likely to have an impact as insurers will probably perceive it as a higher risk.

Are You Caring For Your Workers Enough?

Are you caring for your workers enough? As the old saying goes, if a job's worth doing, it's worth doing well. This is why companies look to find the best candidates for any given position, be it entry-level or senior management and also why they look to hold on to good workers. Obviously there is a monetary element to worker retention, but there are other ways to increase the odds of your staff staying with you. One of these elements is the aspect of health and happiness in the workplace.

Ill health can force early retirement

Recent research by the TUC showed that ill health forces up to 12% of workers to retire up to 5 years before their planned retirement date. The research highlighted the potential challenges involved in raising the state retirement age in response to extended life-spans. In simple terms, we may be living longer but that does not necessarily mean that we are able to go on working for longer. Whether or not it is feasible for any given individual to go on working into their late 60s and 70s depends on a number of factors. Some of these involve circumstances beyond an employer's control, such as their family-health history, but others can be influenced by the workplace. Employers will already be aware of health-and-safety legislation and their legal obligation to keep their employees from being unreasonably exposed to harm at work, but there are many more steps employers of all sizes can take to promote healthy living on the part of their employees. This cannot only help them to make the most of older people in the workplace, but can also help to reduce disruptive absences due to sickness.

Appreciate ergonomics and use them wherever possible

Repetitive strain injury is a risk in any occupation where people repeatedly undertake a habitual action. In these days it is often associated with office workers using keyboards and mice, but it actually occurs across a variety of occupations “housemaid's knee”, and “tennis-player's elbow” are examples of this, even card dealers can get RSI from the recurring actions involved in dealing cards. Take a look at what your company does and how it does it to help to avoid these kinds of injuries.

The growing-bigger problem

It's unlikely to come as a surprise to anyone that people in the UK are growing bigger and it's not necessarily healthy. While the fundamental reason for this is that people are consuming more calories than they need for their lifestyle, the reasons why this is the case may vary. Employees may not know about healthy eating, in which case fun, work-place based events to educate them may make a difference. Alternatively, it may be an issue with time pressure, in which case there may be steps you as an employer can take to help them and thereby to help yourself. For example, you may find you need to wean people off a culture of working through lunch and into one of taking a break to eat properly and rest their minds. You may also need to encourage people to leave at the end of a standard work day, instead of working extensive overtime on a regular basis (even if it is paid). This may mean taking on more staff or outsourcing work to agencies or freelancers or automating it. The cost of this needs to be seen in the context of avoiding losing an employee and having to go through the recruitment process again, with all the disruption that can cause.

Exercise is about more than just weight

Possibly the most obvious reason for exercising is that it helps people to keep their weight down, but it can have other benefits too, for example team or club sports can have a social element. Even when budget is too tight for subsidised gym membership or other perks, there may be ways you can help. For example you could participate in the government's cycle-to-work scheme.

High Street Prices And What A Lower Pound Means For Your Purse

High street prices and what a lower pound means for your purse There are winners and losers in every change and this also holds true for changing currency values. In the most basic terms, a weak pound means that you need more pounds to buy other currencies and less of another currency to buy pounds. An effect of this is that in practical terms, it costs more to buy in goods from overseas and less for people overseas to buy goods from the UK. As with many aspects of life, however, in the real world the situation can be a bit more complicated. Let's take a look at how a lower pound can impact the high street in ways which may be less than obvious.

House prices and the high street

The UK housing market is core fodder for the press and can easily make headlines in the main body of popular newspapers rather than simply being relegated to the financial section. The weakness of the pound is almost guaranteed to have an impact on the housing market, although precisely what that overall impact will be is still unclear. The lower cost of doing business in the UK may attract international buyers and investors, but it may also make life more challenging for those looking to move abroad, who need to be able to finance a property purchase there. It may also influence how many international construction workers and tradespeople work in Britain. If house prices show signs of rising, then this may increase consumer optimism, but it may also mean that first-time buyers and those looking for bigger property may start to channel their disposable income into building up a deposit rather than using it for consumer spending. If house prices fall, it may drive some home owners into negative equity, for which they may try to compensate (or be obliged to compensate); thereby reducing the income they have available for consumer spending. On the plus side, however, lower house prices are great news for first-time buyers (and tend to be good news for those trading down), who could then use their disposable income on house-related consumer purchases (new appliances, furniture, décor etc.).

Holiday prices and the high street

Low fuel prices may be good news for the aviation industry, but a weak pound makes foreign holidays more expensive as it raises the effective price for everything from accommodation to food and entertainment. While the obvious candidates to feel the pain of this are travel-related companies such as travel agents and airlines, this could also have a trickle-down effect on other businesses. For example, holidays abroad can entail the purchase of new luggage, clothes and toiletries and may involve spending at airport stores. If foreign holidays become too expensive for the average consumer, they may choose to save their money instead, which could have a negative impact on the high street, alternatively they might choose to spend their money in other ways, in which case the high street might even benefit.

Employment and the high street

Employment is a major factor in whether or not people have disposable income to spend on the high street. A weak pound can make UK exports more attractive, although exporters will still have to account for the cost of buying in materials from overseas. A weak pound can also make the UK a more attractive prospect for investors when compared to lower-wage economies. At the same time, it can make imports more expensive and leave some retailers with a decision as to how much of the price increase they can absorb and how much they can, or want to pass on. If there is high employment, retailers may opt to absorb the price increases and compensate for the weak pound with higher demand. If, however, employment is weak, then retailers may have little choice but to pass the cost on to those who can still afford to pay it.

SME Finance Tips

SME Finance Tips SMEs' needs are different both to those of individual freelancers and to those of big corporations. Here are some tips to help SMEs deal with the issues of pensions, loans and money-saving in general.

1. Pensions

Arguably the most important money-saving tip of all is to make sure that you are fulfilling all of your obligations under the auto-enrolment scheme. By this point in time, all companies with 30 or more employees should already have a work-place pension scheme running (with some exceptions for newer employers). Smaller companies will be obligated to join up in the near future. Since auto-enrolment is mandatory whether companies like it or not, it may be worth getting some professional advice on what specific options may minimise its cost to your company. Steps could include anything from passing out more work to freelancers, to phasing in your contributions at the minimum level permitted by law to deferring the enrolment of specific employees, to using salary exchange to pay contributions. To stay on the right side of the law and to make the most of the options available to you, it may be best to consult an expert.

2. Loans

Business finance for SMEs has been a simmering topic for years and the credit crunch has made it even more of an issue. Where conventional lenders hesitate, alternative lenders step in. For SMEs therefore, there are two keys to getting finance. The first is to make themselves as attractive a customer as possible. This is about more than just showing that your income is more than your expenses. It's also about showing responsibility and consistency, for example always remembering to make payments on time. The second is about being ready to look beyond the established high-street lenders. Even if they're prepared to offer loans, there may be far better deals available elsewhere.

3. Money saving in general

It may seem trite, but saving money starts with ensuring that you are protected against risks which could damage or even destroy your business, so start by making sure that you have enough of the right insurance cover, such as Employers' Liability insurance and Public Liability insurance. Also make sure that you are clearly following all relevant laws such as Health and Safety laws and Equality and Diversity legislation. Breaking these laws, even unintentionally, can lead to fines, which can ruin a small business.

After this, many of the ways in which businesses can save money are similar to the ways in which private individuals can save money. Start by looking at basic bills such as energy and water. If you're renting or leasing premises, then you may be slightly constrained by what your landlord will do, but you'll only find out if you ask. Landlords tend to prefer to keep good tenants and if your request is reasonable, you may well find they're prepared to act on it. Even with the constraints of renting, however, you may find that when you look into the matter, there are energy-saving measures old and new, which can make a difference. Old-fashioned draft-excluders can make a significant difference to heating bills, while modern energy-efficient mini-PCs are more than capable of most office tasks and need very little electricity to power them. On the subject of PCs, using services like Skype numbers can allow businesses to combine the solid impression given by a landline telephone number, with the cost-efficiency of internet telephony. This can offer substantial savings over using a traditional telephone system.

Interest Rates & Inflation

Interest Rates & Inflation In principle, interest rates and inflation act a bit like a child's see-saw. When interest rates go up, people are encouraged to save rather than spend. This reduces demand, which encourages suppliers to lower their prices, which results in lower inflation. When interest rates go down, the reverse happens. That, at least, is the general theory. Of course, in the real world, many other factors can come into play. For example, if there is a bad harvest, then the price of the affected crop is very likely to go up regardless of what happens with interest rates.

Inflation and the economy

While the idea of continually-increasing prices may seem like bad news, it's actually fundamental to a healthy economy. In essence it acts as a “call-to-action” to consumers, preventing them from waiting for prices to drop further. An example of how this works in practice can be seen in the stock market. When a company is experiencing steady growth, consumers are happy to buy its shares in the expectation that they will see a return on their investment. When a company's stock price begins to drop, existing investors may try to sell their shares to mitigate their own losses, while potential investors sit on the sidelines to see how far the price will drop. At its most extreme, this sort of behaviour can lead to the classic “boom and bust” cycle.

Interest rates and asset prices

Interest rates can influence asset prices, including house prices. When interest rates go down, the cost of borrowing typically becomes cheaper. Up until relatively recently, this had the potential consequence of allowing consumers to take out larger mortgages, meaning that they were able to buy more expensive properties. Hence lower interest rates had the potential to feed into the demand for property and therefore to increase house prices. In recent times, however, the mortgage market review has tightened up the mortgage-lending market. Specifically it has forced lenders to look very closely at the likelihood of borrowers being able to manage a mortgage over the long term. This includes considering factors such as the potential for higher interest rates and the potential for borrowers to experience a reduction in income (or even a temporary loss of income). In principle, this could mean that, going forward, the level of interest rates at any given moment has, at most, limited influence on the housing market. At this point, however, it is still rather early to draw definite conclusions about this.

The Bank of England and the Monetary Policy Balancing Act

One of the Bank of England's responsibilities is to try to ensure that the UK experiences steady economic growth. Specifically, the Bank of England Monetary Policy Committee aims to ensure that the UK experiences continual inflation of exactly 2%, neither more nor less. Of course, even Olympic archers miss the absolute centre of the target some of the time and hence it is considered acceptable for inflation to be between 1% and 3%, if, however, it is any lower or higher than this, then the governor of the Bank of England has to write an open letter to the Chancellor of the Exchequer to explain why this has happened and what the Bank of England proposes to do about it. Over recent years, a sluggish economy has seen interest rates kept very low. Because of this, there is a case for arguing that, realistically, there is only one way for interest rates to go and that is up. While this may be true over the very long term, it is entirely possible that the Bank of England will hold fast to its current low-interest-rate policy until there are very clear and consistent signs of growth in the UK economy.

Have You Got The Right Home Insurance Policy?

Have you got the right home insurance policy? Even without the Euros, insurance arguably ranks well behind football in terms of fun topics of conversation; nevertheless, getting the right home insurance can make a big difference both to your peace of mind and your finances. Here are some helpful tips on making the right decision.

1. Consider buying buildings insurance and contents insurance from the same provider

Basically this will eliminate the possibility of two insurance companies bickering over who is responsible for paying out in the event of a claim, leaving you trapped in the middle.

2. Understand what is and isn't covered

In terms of buildings insurance make sure you are clear on whether the potential pay-out is the rebuilding value of your home (the value of the bricks and mortar) or the purchase price of your home. There's a good chance it's the former, which means that if you base your cover on the latter, you could end up paying a whole lot more than you need to for cover which is much less than you think it is. In terms of contents insurance, in addition to the overall level of cover, pay particular attention to any exemptions, limitations or specific requirements for particular items, typically ones which are very much targeted by thieves. Common examples of these include certain electronics (such as mobile phones), jewellery, money and bicycles. In some cases it may actually be worthwhile excluding these items from your home insurance and getting specialist insurance instead. For example, you could exclude bicycles from your main home insurance and get a specialist policy which covers you for theft from inside and outside the home, plus public liability in the event that you have an accident. You also need to be clear on where you stand with regards to items kept in outbuildings such as garages and sheds.

3. See if you can reduce the cost of your home insurance by improving security in your home

Insurers are likely to demand home-owners guarantee a certain level of security as a condition of their cover. For example this could include having a certain standard of locks on doors and windows. You may, however be able to reduce the cost of your cover by taking additional measures such as installing a proper home safe. Even if this does not reduce the cost of your cover, it may still be the best place for irreplaceable items such as jewellery with sentimental value.

4. Be clear on the type of cover offered

There are basically two types of contents cover. New-for-old cover is essentially what it says. If an item is damaged, it will be replaced with an equivalent item (or the cash value thereof). With indemnity cover, you are compensated for the estimated value of the item at the time it was damaged (or destroyed). This takes depreciation into account and therefore may not be nearly enough to purchase an equivalent item new.

5. If you do any work from home make sure you're covered for it

Insurance companies have long since caught onto the idea that these days many people have some sort of home office, even if it's just for managing the household finances and perhaps doing a bit of work from home now and again. If, however, you are doing anything more than that, then it is strongly recommended to check where this leaves you in terms of your policy. In particular, if you are actually running a business from home, then, as a minimum, your insurers will probably want to know about it. If your business essentially involves you working alone at a computer then it is unlikely to make much of a difference to your premiums, but if you are using expensive and/or specialist equipment and/or receiving clients or other visitors, then it is very likely to have an impact as insurers will probably perceive it as a higher risk.

6 Really Obvious Ways To Save Money

6 Really Obvious Ways to Save Money We hate to be the ones to say it, but now probably really is a good time to start watching your pennies in readiness for Christmas. We know it's in December but for those who are paid monthly it's 4 or 5 pay packets away (depending on exactly when you get paid). Looked at from that perspective, it makes sense to start saving now, even though (hopefully) it'll be some time before the carols start playing. To help you get started, here are 6 really obvious ways to save money.

Cull regular expenses you only use occasionally (or never).

Gym memberships are the obvious example of this. While pay-as-you-go rates can work out more expensive for those who go to the gym several times a week, for those who go less often, they can actually work out cheaper, plus there are lots of other ways to exercise both indoors and outdoors, without the need to pay regular fees - even for those who live in shared accommodation and studios. Subscriptions are another category to check, magazines, online entertainment sites, food parcels, if you're not getting full use out of them, then unsubscribe.

Eat more home-cooked food

Eating out can be fun, but meals out, take-aways and ready-meals all cost more than food prepared at home. Even buying ready-to-use ingredients such as jars of pasta sauce generally costs more than buying the ingredients and making them yourself. We appreciate that if you don't like cooking it can be a chore to come in tired after work and then have to make yourself something for dinner and then prepare a packed lunch for the next day (or do it in the morning when you'd rather be in bed) but you can break yourself in gently. Even if you start by only cooking at the weekends, freezing a couple of portions and making one packed lunch for Monday, you'll still be starting to save the pennies and as you get better at cooking and managing shopping, you may find you can do more than you thought.

Learn to ignore food packaging and to look at ingredients instead

Premium food brands with high-quality, attractive packaging may indeed be worth the extra money - or they may not. A look at the ingredients should give you a good idea as to whether or not the higher price is justified. For basic items you may well find that supermarket own brands and such like are every bit as good as their more expensive counterparts.

Use up what you have before you buy the same or a similar item

If you have a drawer full of T-shirts, you don't actually need any more no matter how good they look or what a good price they are. If you're a (paper) notebook lover and you already have a stack of them, you don't need any more, even if they're on special offer. Basically if you already have a stock of something, whatever it is, use it up first before you buy any more.

Be suspicious of special offers

Some special offers can be very good value, but some simply tempt us to spend money on items we would otherwise have ignored. It doesn't matter how cheap something is or what a good discount it is, if you don't really want it and won't actually use it or are only using it because you've bought it, then it's probably a waste of money.

Learn to love pre-loved

New may be nice but pre-loved can be much more prudent financially speaking. In particular, if you know you don't actually need to very latest model of phone/tablet/other consumer electronics item, then you can potentially make meaningful savings by going for a refurbished “last generation” item.

10 Minute Review Of Our Economy

10 Minute Review of Our Economy At this point in time, the economy seems to be dominated by one word “Brexit”. While the whole country is waiting to see what exactly will happen when, it's difficult to make any sort of predictions for the future, so instead we're focussing on the present with our 10-minute guide to the economy.

The housing market

A mortgage is a long-term commitment and as such both the lender and the borrower need to feel confident that the latter will be able to keep up with the repayments over the long term. Jitters over potential job losses, particularly in the banking sector and fears that falling demand (due to reduced immigration and/or the repatriation of current immigrants) are unhelpful for the mortgage market and therefore unhelpful for the housing market.

The financial sector

For better or for worse the FIRE (Finance, Insurance and Real Estate) sector plays a key role in the UK economy. At the moment, it is an open question whether or not the financial services sector will hold on to its coveted passports, which enable them to sell their products and services throughout the entirety of the common market. It is also an open question as to whether or not they will continue to be able to process transactions in Euro from the UK. Some banks, such as Lloyds, have already announced job losses in the UK, although it is unclear whether or not this is directly (or even indirectly) connected to the issues surrounding the Brexit. Online banking and the move to digital payment methods (such as Visa, MasterCard and PayPal) has reduced the need for customers to visit branches, while demographic movements can see formerly busy branches losing customers to other locations.

The Bank of England (interest rates).

The Bank of England has made it clear that it will do everything it can to keep the good ship UK PLC on a steady course, even if it is through uncharted waters. The BoE essentially has two key weapons at its disposal, the option of making low-priced (or even free) credit available to banks (which, in theory should be passed on to businesses and other consumers) and interest rates. Its challenge is to provide enough stimulus to keep the economy moving without providing so much that investors get nervous about the state of the UK economy, which could lead to the UK having its credit rating downgraded, thereby making it more expensive for the UK itself to service debt. At the moment, the BoE is essentially feeling its way through a new situation along with everyone else and only time will tell how well it will manage its task.

The retail sector

The big news in the retail sector has arguably been the demise of BHS, however given the history behind that company's woes it would be very difficult to pin this on Brexit. Likewise Marks and Spencer's clothing arm saw dismal sales in the first quarter of 2016, prior to the result of the referendum and it remains to be seen how well Marks and Spencer will address the issues which led to this. The issue facing the retail sector is, of course, that it relies on consumers spending money, which means that it relies on consumers having money to spend. If consumers are uncertain about their job prospects, then it is entirely possible that they will rein in their spending, which, of course, hits retailers who specialise (or generate significant income) from discretionary purchases. For this reason, any weakness in the pound is bad news for companies which rely on imported goods (or on imported materials to make goods at home) as this increases the effective price, which means that vendors have a choice between cutting into their own margins (if they have room to do so) or passing the cost onto consumers and accepting that this may make them less attractive.

4 Things To Know About Interest Rates

4 Things to know about Interest Rates Although it may not seem like it at first, interest rates really are interesting. High rates are great news for savers but bad news for borrowers and vice versa. Regardless of whether you're a saver or a borrower, it's important to understand 4 key points about interest rates.

For savers interest rates are in a race against inflation

Life is often a balancing act between conflicting goals and possibilities. In financial terms, this generally boils down to risk versus reward and/or cost versus benefit. Higher-risk investments can offer the possibility of great returns but, pretty much by definition, there is also the possibility of losing your initial investment. Cash savings can be viewed as safe in the sense that there is a relatively low risk of the saver losing their deposit, but if inflation (the cost of living) outpaces interest rates (the return on investment), savers can find their nest egg losing its value in real terms. This can be particularly challenging for older people on fixed incomes (pensioners) who do not necessarily have the long-term investment horizon of the younger generation but who do have a need for a reliable source of income to maintain themselves.

The interest rates available to consumers may be completely different to central-bank rates

About once a month, the press reports on the activities of the Monetary Policy Committee of the Bank of England, which sets the Bank of England's interest rates. These are the rates charged (or paid) to banks which borrow from or deposit with the Bank of England. These rates may then feed through into consumer products such as savings accounts, mortgages and credit cards, some of which track this base rate. Some products, however, are fixed-rate and hence are unaffected any changes to the interest rates set by the Bank of England for the life of the fixed-rate deal. The key point to understand is that the interest rates offered to consumers are influenced by a number of factors as well as the base rate. Some of these are generic, such as what the banks think of the economy in general. Some, however, are specific to each individual, such as their credit history. Then, of course, there is the simple fact that banks need to pay their own bills and make a profit for their shareholders.

The same product can have different interest rates, applied in different ways

Credit cards in particular can charge different interest rates for purchases and cash advances (this is in addition to any fees they charge on cash withdrawals). In addition to this, the interest levied on purchases may be applied after a grace period, whereas the interest levied on cash withdrawals may be applied straight away, even if it is only actually charged when the monthly statement is created. If you would like to check this then it should be make clear in your terms and conditions, although you may find it easier just to send a message to your lender's customer-service team to put the question to them directly.

Interest can be simple or compound

With simple interest, the interest payments are calculated purely on the basis of the initial sum deposited or lent. So, for example, if you deposit £100 then the interest you receive will always be based on that initial £100. With compound interest, however, interest is calculated on a rolling basis. Hence for example, if, after the first year you had received a total of £10 in interest payments, your next year's interest payment would be calculated on the whole £110 rather than just the £100 you initially deposited. This is great news for savers but, of course, terrible news for borrowers and is part of the reason why those who take out high-interest credit can wind up paying more in interest than they borrowed to begin with.

Saving For Big Occasions

Saving For Big Occasions Little things can mean a lot but big events can cost a lot. Hopefully you will either be planning them well in advance or have a lot of notice of them, so that you have time to get your finances in order with the help of our useful tips.

1. Start by making a budget

When you're working out how much money you're going to need, think about what is absolutely essential for your event, what is a nice to have (and how important it is to you) and what you can live without. The essentials are what you're absolutely going to need to finance. The optionals will depend on how your saving goes.

2. Look at the state of your finances at the moment

Hopefully you'll already have money left over at the end of each month, in which case you will need to decide how much of it to reallocate to saving towards this, specific event. If it's not enough, or, if you're not generating a cash surplus each month, then you will need to look at how you can make savings elsewhere. This means you need to know where your cash is going at the moment. Your bank statements will be a good place to start. Counter-intuitive as this may sound, start by looking at the small transactions; these are the likeliest candidates for (relatively) painless trimming. You may, however, find that your bank statements are too generic to be very helpful. For example, you may see that you spent money at a supermarket, but not actually remember what you bought. In that case, you need to start looking more closely at your receipts to see how much of your spending was actually essential and how much of it can be trimmed if need be. If this still isn't enough then you're going to have to look at ways of raising more money. Depending on how much is required and the nature of the event this could mean anything from selling your old stuff to asking for sponsorship to asking family and friends to contribute to the cost of your event.

3. Find a place where your money can make more money

Storing your pennies in a piggy bank will keep them near to hand, but you'll make more money putting your savings to work in some way. Again, what you can do with your savings pot will depend on various factors, in particular how much time you have to grow your savings and whether or not you'll need access to your money at short notice in the run-up to it. For events up to a year away, realistically speaking, some sort of instant-access, interest-bearing savings account is likely to be the only feasible option. If you're working to a longer time frame then you may like to look at bonds or even investing in the stock market.

4. Try to save first and spend what's left over

Aim to pay yourself first. Put away the necessary amount (or even a bit more) into your chosen savings vehicle; then use the remaining money as your budget for the month. By removing the money from your current account, you can encourage yourself to see it as “gone” and to work with the money you have remaining. If you aim to save a bit more than you actually need, then you always have the option of dipping into your savings if you absolutely have to. If you find yourself needing to dip into the money you have saved for your event's essentials then it may be time to ask yourself if you need to rework your plans either to lower the cost of your event or to give yourself more time to save up for it.

Brexit And Social Housing

Brexit and Social Housing The impact of Brexit on the housing market combines two of the UK's favourite topics of conversation. Only time will tell what impact, if any, there will actually be, but we think it's still worth taking a look at how the UK's withdrawal from the EU could impact the property market. All housing statistics are from the House of Commons Briefing Paper 04737, published on 29th March 2016.

Social housing

Social housing is often a highly desirable option for those on lower incomes, offering both affordability and security. Between April 2014 and March 2015, only 9% of social lettings in England were made to those born overseas (including non-EU citizens). As of Q1 2015, 18% of those born outside the UK were social-housing tenants, compared with 17% of those born within the UK. While the levels of participation are similar, the fact that the number of people born overseas is much smaller means that any potential exodus of EU migrants is likely to have a much more limited impact on the availability of social-housing stock.

The private rental market

In the first quarter of 2015, 39% of all those born overseas were renting privately. Almost three quarters of the migrants who had arrived in the UK within the 5 years prior to the study, were in the private rental sector. While this obviously implies that any potential mass departure of EU citizens would have a much greater effect on the private rental market than it would on social housing, the fact that EU migrants form a relatively small segment of the population as a whole would limit the impact of their absence.

It's also worth noting that the term “the private rental market” covers everything from budget accommodation for low-income workers to luxury family homes and is spread across the UK. It's therefore a reasonable assumption that the areas with the highest proportion of EU migrants will feel the most impact of any significant outflow. Precisely what this impact would be is still very much an open question. In theory, falling demand should lead to lower rents for tenants and therefore lower yields for landlords. In practice, if landlords are relying on rents to cover a BTL mortgage, then they may decide (or be forced) to play safe and sell their property. This would reduce the availability of rental property, thereby making it more likely that remaining landlords could charge higher rents and thereby obtain higher yields, but it would increase the supply of housing stock for sale, hence potentially lowering prices.

Private home ownership

At Q1 2015, 43% of UK residents born overseas owned their own home (as compared to 68% of the UK-born population). Given that buying a home is a substantially more complicated process than everyday shopping, it indicates a level of commitment to staying in one place for more than a short time. It also indicates that an individual either has the funds to buy a home without a mortgage or the necessary income (and security of income) to get a mortgage. Hence it is a feasible assumption that EU citizens who own their own homes could be in a reasonably strong position if they wished to stay but needed to apply for a visa/work permit. In an extreme case, however, where there was a mass departure of EU nationals (voluntarily or otherwise) then their previous homes would presumably be absorbed either into the supply of property for sale or into the supply of property for rent. According to the law of supply and demand, increased supply should lead to reduced prices, which could be good news for first-time buyers and those looking to move into larger properties, except that lower prices may not necessarily translate into increased affordability. Cash buyers may be able to grab bargains, but those dependent on mortgages may find lenders insisting on even more substantial deposits and on compelling evidence that the potential buyer's situation is stable enough for them to make payments over the long term, even if interest rates go up.

Brexit And EU Tourism

Brexit and EU Tourism While the Brexit debate rages on, much of the attention has been focussed on banks and their highly-valued EU passports. It is, however, worth remembering that Brexit could impact on other industries, particularly tourism, which has varying degrees of importance across the EU. In a post-Brexit world, there are a number of factors which could influence its economic health.

Pound v Euro exchange rates

If the pound continues to fall then it will become cheaper for people from other EU countries to come to the UK for leisure travel. While the UK's weather may not be enticing, it has plenty of other attractions and a soft pound could be just what the UK's tourist industry needs to encourage more visitors. On the other hand, if the pound strengthens, then it may be more of a challenge to attract EU tourists to the UK, but it could be easier for UK tourists to head overseas. If, however, exchange rates settle to a consistent level, then different factors are likely to come in to play.

Ease of Travel

All visitors to the UK are currently required to go through border control but at this time visitors from the EU only require national identity cards, rather than passports. In theory this could change, but it is an open question as to whether or not this would actually happen. Travellers from the UK already expect to have their passports checked at least once when they arrive on the EU mainland. If the EU continues as an open-borders zone, participating in the Schengen agreement, then it is a reasonable assumption that UK tourists would be allowed to pass freely between member states. If the Schengen agreement is abolished, then it is likely that border controls would return, but this in itself would not necessarily mean that UK tourists would need a visa, just that they would need to be prepared for passport controls as is already the case when travelling outside the EU.

Cost of Travel

There are various factors involved in the cost of travel. One is oil prices, which are highly unlikely to be impacted by Brexit. Another is local taxation, which may or may not be impacted by Brexit. A third is, quite simply, supply and demand. At this point in time, there are numerous EU nationals living and working or studying in the UK as well as UK nationals doing likewise in the EU. This generates a certain amount of demand for travel as people visit friends and family who are now resident in a different country to them. If this situation changes and the demand for travel drops then, counter intuitively, this may well result in higher travel prices. The reason for this is that some airlines, particularly the budget ones, may begin to drop routes or even abandon their business completely, which would leave their remaining competitors in a stronger position to raise fares and improve their own margins.

Cost of Insurance

At the moment, those who hold an European Health Insurance Card
(EHIC) card can access local health services on a like-for-like basis with residents of the relevant country. Depending on how Brexit happens, this right may be withdrawn, which would mean that travellers would have to take out insurance to cover any medical issues. While this is also the case outside the EU, the actual price charged by insurers might be a factor in any travel decision.

The “feel-good factor”

While many of the issues surrounding Brexit have been couched in economic terms, it's probably fair to say that for many people, emotional issues are also an important consideration. In simple terms, holidaymakers want to know that they'll be welcome in any country they choose to visit. Safety is another key point. If the UK manages to project an international image of hospitality and security, then there is a very good chance that visitors will still choose to come here even if other destinations are cheaper and/or more convenient.

Brexit & EU Property

Brexit & EU Property In all the press excitement about Brexit and the property market, one group of (potential) property owners seems to have been largely overlooked. This is, of course, the people who either have bought, are in the process of buying or would like to buy property in the EU. On the one hand, this is understandable since they are very much in the minority of property owners in the UK. On the other hand, this is probably of scant comfort to those who are currently in this situation and wondering where they stand.

Sorting out your status

One of the reasons why it's so difficult to give any sort of firm comment on anything to do with Brexit is because at this time it's totally unclear what Brexit actually means in reality. Sadly this state of affairs is likely to continue until the Conservative party elects a new leader and, we assume, article 50 is invoked and the exit negotiations begin in earnest. Even then there could still be a long wait for any final outcome since the parties concerned have up to two years to conclude their negotiations and, in principle, could actually take longer if there was agreement from all concerned. The outcome could be anything from the UK moving essentially seamlessly into the European Economic Area (EEA), in which case it will be largely business as usual, or failing to reach any agreement at all, in which case the relationship between the UK and the EU would be governed by World Trade Organisation (WTO) rules. Alternatively it could be some sort of halfway-house agreement, as yet to be determined. Anything short of full EEA membership could impact on the plans of those looking to ease into a “soft” retirement, i.e. one bolstered by some work as well as those currently relying on some level of local income.

Getting there and back

Regardless of whether an EU property is a permanent home or a holiday property, it's a reasonable assumption that there will be at least a certain degree of travel between the property and the UK. Given that those with UK passports can travel to numerous countries without needing a tourist visa, it seems highly unlikely that Brexit would cause difficulties in this area.

The pound in your pocket

To be fair, the issue of Pound/Euro exchange rates has been an issue for UK pensioners living in the EU for a long time. The sudden drop in the pound did, however, bring it into sharp focus. In the long term, a more pressing issue could be how pensioners would be treated by the UK government in a post-Brexit world. At the moment, EU-based pensioners are treated the same way as their UK-based counterparts and any increases in pensions are automatically passed on to them. Even if the UK joins the EEA, it may be within the bounds of possibility that the UK will seek to treat EU-based pensioners in the same way as their counterparts living outside the EU, meaning that they could feasibly be excluded from future rises in the state pension. Even if this was, technically, a breach of the freedom-of-movement rules which also apply to EEA countries, the other member countries might allow it if they did not see this as having an impact on their citizens.

The availability of mortgages

Regardless of whether central governments lay down any rules restricting the ability of non-EU nationals to obtain mortgages, it is entirely possible that lenders may feel more nervous about advancing funds to borrowers who are non-EU nationals, particularly if their home country is experiencing economic and/or political turbulence, which could affect exchange rates and hence the borrower's income. If they choose to lend at all, they may demand larger deposits and higher interest rates.

Pension & Brexit

Pension & Brexit Much of the post-Brexit discussion has focused on what might be called “visible” topics, such as immigration. It is, however, also important to think about financial matters and to take whatever steps are necessary to mitigate any potential negative consequences. In this article, we'll take a look at Brexit and what it means (or could mean) for pensions and pensioners.

The UK state pension

The UK state pension is based on National Insurance contributions. These are paid by those in employment (which can include self-employment) and are paid on behalf of those in receipt of certain benefits. While it is arguably unlikely that any changes would be made to current entitlements for existing pensioners, there are plenty of open questions regarding future entitlements. George Osborne has already indicated that he thinks that taxes (and presumably NI) would need to go up and spending would need to go down to cope with the economic impact of a Brexit. This could have a number of implications for the state pension such as increased NI contributions being required to claim it, the state-pension age being increased (further) and/or the triple-lock guarantee being abandoned.

Defined-benefits workplace pensions

This type of pension scheme has already largely been abandoned in the private sector and employers who continue to offer such schemes tend to be ones in which there is a significant degree of union influence, this generally means the public-sector or formerly-national industries such as public transport, some of which at least continue to receive government (for which read taxpayer-funded) subsidies. Public-sector pensions have become an increasingly-contentious issue over recent years and could feasibly become a new battle-ground in a post-EU UK.

Defined-contributions workplace pensions

These are the de facto standard for workplace pensions and have been heavily promoted by the government over recent years (“We're all in”). In these schemes, employees and employers both make contributions to a pension pot in readiness for an employee's retirement. These contributions are currently determined as a percentage of the employee's salary. When the auto-enrolment scheme was announced, the plan was to mandate a steady rise in the level of contributions over the forthcoming years. The Brexit decision may cause that position to be rethought. It may also cause employees to rethink their commitment to workplace pensions and either to look for alternative ways to save for retirement (ones which offer more flexibility) or to suspend their preparations for retirement in order to focus on present needs.

Personal pensions

Personal pensions are essentially defined-contributions pensions without the involvement of an employer. They allow the self-employed and those out of employment (e.g. home-makers) to save towards a pension, but as with their workplace counterparts, they may lose favour to more flexible (if less tax-efficient alternatives) if people need to focus on the present.

Pensions in general

Ultimately all pensions, including taxpayer-funded ones are dependent on the returns from private enterprise (or state-owned assets). As the city of Detroit has so clearly demonstrated, life can get very interesting when commitments made by governments or government-backed organisations prove too much for the revenues which can reasonably be generated by the current generation of taxpayers. Likewise governments which have worked to incentivise people to save towards their retirement are likely to be very unhappy if they find that people have taken advantage of tax benefits only to lose the money they have saved over the years through poor investment choices. Hence it is possible that some people in government make seek to reverse the (relatively) new pensions freedoms and force pensioners back into annuities. The potential problem with this approach, however, is that it may simply encourage people to avoid pensions, in spite of their tax benefits.

Whilst all decisions are very much up in the air, if you have any concerns or questions regarding your current financial options we recommend that you talk to a financial adviser who should be able to allay your fears and answer your questions.

Summer Holiday Tips

Summer Holiday Tips
It's coming to the time when many people will be thinking about their summer holidays. Before heading off on your travels, take a look at our tips on how to save money.

1. Make sure you have the right insurance

This tip is so important we'd like to highlight it. Even if you're travelling within the EU and have an EHIC card, it's still very worthwhile considering taking out extra medical insurance as well, particularly if you don't speak the language of the country you're visiting. If you're going outside the EU then it's crucial to have medical insurance as a minimum and this needs to cover both the country or countries you intend to visit at the time you intend to visit them and also any and all activities you could possibly wish to undertake. Remember that lower-priced insurance policies may have restrictions which could invalidate your policy so be sure to check. If you do have an accident or fall ill on holiday, having the right insurance could make a world of difference to your situation and prospects.

NB: EHIC cards expire so check yours is valid before you travel.

2. Keep your browsing clean

You can be tracked on the internet. Websites might not know who you are (unless you register) but they can generally tell when a particular computer is making repeat visits to them and get an idea of why based on the user's activity, for example their searches. They may then use this information to adjust their offers and prices to encourage the user to spend the most money. To avoid this, keep your browsing history clean. If using Google Chrome avoid this by right-clicking on links and choosing “Open link in incognito window”. For other browsers, check the internet to see how to clean your browsing history.

3. Avoid getting caught out by add-ons

Low-cost airlines have become somewhat infamous for this, but there are plenty of other culprits including car-rental companies, insurance companies and hotels. Make sure you compare prices which include everything you need rather than just looking at headline prices.

4. Turn off your data

Even if you're travelling within the EU, data charges can add up for the simple reason that there's a temptation to use more data, for example to look up online maps. A bit of advance-planning can put a stop to this. For example, you can use an app like Navmii to download maps to your phone. Admittedly it's more basic than true satnav but it does the job without the cost of data. Similarly an old-fashioned paper-dictionary and/or phrase book doesn't need a data connection. If you don't want to carry one, download an ebook to your phone. If you're travelling outside the EU, data charges can be very expensive and turning it off completely is arguably the best way to avoid nasty surprises when you get home.

5. Check any local laws

This is particularly true if you're planning on driving. Again, if you're planning on driving within the EU, your UK driving licence should be accepted in all member countries. There may, however, be local rules to which you are still expected to adhere. For example, in many EU countries it is compulsory for motorists to carry a warning triangle in their car and some require other equipment as well such as a reflective vest and/or first aid kit. In France motorists are also required to carry an approved breathalyser. While this is only likely to be checked if you are stopped for any reason, a bit of prior research can help to avoid problems with local law enforcement. If you're travelling outside the EU, you will need to check if you need an International Driving Permit. If you do, make sure to use a reputable source such as the Post Office to get one. Please note most countries require an IDP 1949 but Brazil, Iraq and Somalia still require an IDP 1926. You will also need to check up on other local laws related to driving.

Brexit Initial Review

Brexit Initial Review It was the result which took the bookmakers by surprise. Maybe it would have been different if the weather had been dry and sunny in the South East of England. Since you can't run history twice, we'll never know. What we do know is that the UK as a whole voted to leave the EU, so let's look at what that means in practical terms for those seeking to take care of their finances.

Impact on the Pound

The pound dropped in the run up to the referendum, but began to climb again as polls indicated that the Remain camp had secured a significant lead. Notwithstanding this, the news carried stories of panicked travellers queuing to secure their holiday funds before a potential Brexit saw a drop in the value of the pound. Brexit is now confirmed and it is only to be expected that, in the short term at least, it will have an impact in the value of the pound. A drop in the value of the pound is, of course, bad news for holidaymakers (and the companies which serve them) and it's bad news for those who depend on imports. On the other hand, it makes the UK a cheaper holiday destination for people from overseas and it's great news for exporters.

Impact on Business as a Whole

Obviously any impact to the pound could have a knock on impact to UK-based companies. Those that benefit from a strong pound could be hurt by a fall, whereas those who aim to attract custom from overseas could benefit from it. Access to the EU's single market is a more interesting issue. The Remain campaign touted it as one of the major benefits of membership. The Leave campaign, however, pointed out that trade is (or should be) a two-way street and that countries which set up trade barriers against UK exports can expect to have their own exports treated the same way. How this works out in practice remains to be seen. It also remains to be seen what impact this will have on the highly-controversial TTIP(The Transatlantic Trade and Investment Partnership). In the short term, it is highly likely that there will be a drop (or at least volatility) in the stock market; this could open up a window of opportunity for investors to find bargains amongst companies with solid fundamentals, which have simply been caught up in economic turbulence.

Impact on the Financial-Services Sector

At the moment UK financial institutions can operate across the EU under one licence (or passport), whether or not they retain this ability depends on a number of factors. If the UK moves, more-or-less seamlessly into the EEA/EFTA then it could feasibly be business as usual. If not then the UK would have to negotiate specific agreements with its former EU partners. Given the strength of the UK's financial-services sector and the fact that European rivals would presumably love the opportunity to take over business from them, then this might prove trickier than negotiating trade agreements.

Impact on the Housing Market

If the UK's population drops then it seems a reasonable assumption that the demand for housing (to buy or to rent) will also drop and since prices in a free-market economy are a function of supply and demand, it therefore follows that prices for accommodation will also drop. As is so often the case in life, there are winners and losers in this situation. While sellers and landlords may regret the reduced demand, the plight of “generation rent” and “would-be first-time buyers” has been a constant source of news topics and any fall in house prices (or rental prices) would presumably be welcomed by them.

As with all changes, it makes sense to not make rash decisions based on yesterday's vote but to take a view on what's happening and keep an open mind. There will be initial fallout – for instance the drop in the pound but over the next few weeks the dust will clear and ways to move forward will become clear.

Lifetime ISA

Lifetime ISA The Lifetime ISA will be available from April 2017 and will work on a top up basis, meaning that for every £4 saved, the government will add £1.

At the same time the ISA allowance will be raised to £20,000. Anyone between the ages of 18 and 40 can open a Lifetime ISA, and any savings put in before their 50th birthday will receive an added 25% bonus from the government.

The ISA can be used for either retirement saving or towards a house deposit.
The money can be withdrawn tax-free after the savers 60th birthday, but if it is withdrawn at anytime before the age of 60 savers will lose their government bonus, including any interest or growth. They will also have to pay a 5% charge.

Pushed into pensions

The Lifetime ISA could become part of the pension regime, falling under the £40,000 annual allowance for pension contributions.
Your annual allowance for pensions will be £40,000, but you have to deduct from it any payment you make into your Lifetime ISA. It could be the beginning of the end of the current regime as we know it, albeit something that takes place over the next 30 to 40 years, he said.

Claire Trott, director at Sipp provider Talbot and Muir, pointed out people who wanted to withdraw savings before they turned 60 faced a large exit penalty.

You can use the funds at any time to buy your first home, however if you want to withdraw the funds at any time before youre 60, the government will reclaim their bonus, and theres a 5% charge as well, including any growth, she said.

Brexit & The Property Market

Brexit & The Property Market On 23rd June, the UK will go to the polls to decide whether or not to remain as part of the EU. At this time the end result would appear to be anybody's guess. If there is a Brexit, what impact could it have on commercial property investment?

Demand might be severely impacted

Immigration is undoubtedly one of the hot topics in the Brexit debate. On the one hand there are a number of EU immigrants currently living in the UK, who could potentially (but not definitely) find themselves being required to leave if the UK chooses to exit the EU. On the other hand there are a number of UK nationals living in the EU, who could potentially (but not definitely) be obliged to return home if the UK chooses to exit the EU. From a property-investment perspective, the worst-case scenario would be the EU immigrants being forced to leave without the UK nationals being obliged to return. While this would seem unlikely on the face of it, it could not be completely ruled out since many of the UK nationals living abroad are retirees, who are not competing in the local job market.

There could be a flood of property on the market

If EU immigrants are obliged to leave the UK then those who are housed in rental property will need to terminate their rental contracts. EU immigrants who are owner-occupiers may choose to sell their property or they may choose to hold onto it and become landlords themselves. This, in and of itself, may not necessarily be bad news. A short-term glut of supply could become a buying opportunity, although it's always worth remembering that there is a difference between low-priced and a bargain. Investors always need to be looking for quality property with the right features rather than just grabbing properties which are “priced to sell”.

There could be a shock to lending

Mortgage lending is at the core of the housing market and even those who have sufficient funds to operate purely out of their own funds can find themselves being affected by it. In simple terms, the more relaxed lenders feel, the more likely it is that there will be competition for the best properties since it will be easier for people to buy them with the help of mortgages. Conversely the more anxious lenders feel, the easier it is for cash buyers to build their own portfolios without competition from people who need mortgages. Also, when it is difficult to get a mortgage, people are more likely to rent, if only because they are unable to buy, which creates further demand for rental property.

A Brexit could trigger a second independence referendum in Scotland

During the independence referendum in 2014, much was made of the fact that an independent Scotland could not consider itself guaranteed membership of the EU. While it is unclear what impact (if any) this ultimately had on people's voting choices, however many pro-independence commentators in Scotland have argued that it was such an important plank of the “No” campaign that a vote for Brexit should trigger a second referendum in Scotland, particularly if the majority of the people in Scotland vote to remain in the EU, but are, effectively, over-ruled since England has a much more substantial population. This could raise a whole new set of questions relating to a potential new relationship between Scotland and England, which, as a minimum, could create uncertainty in the property market, at least in the short term. As always, however, it's important to remember that property investment is a long-term game and issues which create short-term volatility or other challenges are generally resolved over time.

Pension Scams – Don't Get Caught Out

Pension Scams – Don't Get Caught Out While the new pensions freedoms have been welcomed by many, some have raised concerns about the prospect of retirees being scammed out of their hard-earned pension pots. While this is a possibility, it's worth remembering that the days of buying annuities had their own challenges, with people realistically looking at a seriously-impaired quality of life if they went for an inappropriate provider. Those on the verge of retirement were, therefore, regularly advised to shop around for the best deal. Similar logic applies in the light of the new pensions freedoms, caveat emptor, let the buyer beware. Here are some useful pointers to avoid being parted from your money.

1. Get to know the provider thoroughly before you part with your cash.

In the old days, it was standard advice never to be pressurized into giving details to a cold-caller. This is still good advice, but in this age of e-mail and internet, you need to be cautious about digital communications too. In particular look out for any e-mails which purport to come from financial services companies, including ones with which you already do business. Check the actual e-mail address (it's often easy to spot scam e-mails just by looking at this) and avoid clicking any links in the actual e-mail. If it says it's from a particular company and you think it is, go to the company's website and find the information yourself or use an external, reputable, telephone directory to find the company's number and call them. Even when you're happy that you know the identity of the person you're dealing with, make sure you thoroughly understand any deal on offer before parting with your cash.

2. Never let yourself be rushed into anything

If a deal's good today then why would it stop being good tomorrow or next week or even next month? If someone's trying to pressurize you into acting quickly, you have to ask yourself why. There's a huge difference between buying tickets to the must-see event, which is guaranteed to sell out quickly and investing a pension pot to create an income which will last you for the rest of your life.

3. Be very suspicious of changes to established services

Companies in general (and financial services companies in particular) tend to give their customers as much notice as possible with regards to changes in their service. This is especially true when it comes to anything involving customers being able to send money to them. If you receive any communication purporting to be an urgent change to an established service then you should verify it directly with the provider by phone (or face to face). If you receive an e-mail advising you of a change in bank-account details then you absolutely must verify it before making any payment into it as there is a distinct possibility it is a scam.

4. Understand the rules around pension funds

Making sure you understand the ground rules of pension funds can help you to make better-informed decisions, which will also help you to avoid scams. For example, if anyone says (or even implies) that they can make it possible for you to access your pension pot before the age of 55, then alarm bells should start ringing immediately. As always, if a deal sounds too good to be true it probably is.

5. Be aware of the risks of unusual investments

There can be a very fine line between high-risk investment and scam, in fact it can arguably boil down to the provider's intentions. You may be prepared to use part of your pension pot for a bit of a gamble in the hope of achieving the highest returns, but be ready to investigate such investments very thoroughly so that you are totally aware of (and comfortable with) the time-scale and element of risk.

Are You Saving Tax Efficiently?

Are you saving tax efficiently? If you've always been a saver but never considered an Individual Savings Account (ISA) you could be losing out to the taxman.

Make your savings work harder

ISAs are tax-efficient savings plans that allow you to shelter up to £15,240 in the 2016/17 tax year from income and Capital Gains Tax. Around 13 million adult ISA accounts were contributed to in 2014/15. That's around £79bn being saved with an average of £6,064 in each account.

There are two types of ISA: cash ISAs, and stocks and shares ISAs. You can put your money in to one cash ISA, or one stocks and shares ISA or split your investment between the two.

Tax efficiency

With a cash ISA you don't pay tax on savings accounts interest.

For a stocks and shares ISA you don't pay tax on any income or capital gains tax you've made on your investment. You can include shares in companies, unit trusts and investment funds, corporate bonds and government bonds.

More freedom

Since 6 April 2016, you can withdraw and reinvest money into your ISA without losing your ISA tax benefits as long as the repayment is made in the same tax year as the withdrawal. Please seek advice or check with your provider before making withdrawals.

A higher allowance from 2017

The Chancellor's most recent Budget announcement confirmed an increase in the allowance to £20,000 from April 2017. This welcome move will allow people to save even more money in a tax efficient way.

The tax efficiency of ISAs is based on current rules. The current tax situation may not be maintained. The benefit of the tax treatment depends on individual circumstances.

Although there is no fixed term, you should consider stocks and shares ISAs to be a medium to long term investment of ideally five years or more.

The value of your stocks and shares ISA and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

Pension Changes – What Do You Need To Know?

Pension Changes – What Do You Need To Know? Officially the UK now has pensions freedom. For some people however, this may equate to pensions confusion. Here is a quick and simple guide to the new pensions rules.

Rule 1 – The state pension becomes the new state pension

The talk about pensions freedoms relates to private, direct contributions pensions. The state pension operates according to its own set of rules. In short the old system of state pension + additional state pension is being replaced with a single-tier scheme and you will need at least 35 years of NI contributions to qualify for the full pension, as opposed to the previous 30.

Rule 2 – Pensions freedoms only apply to defined contributions pensions

Defined contributions pensions are pensions where you save to create a pensions pot and the benefit you receive is based on the value of that pot. Defined benefits pensions, often known as “final salary” pensions are ones in which you receive a previously-agreed benefit regardless of the value of your pension pot. You may be able to swap a defined benefit pension for a defined contribution one, but that is a significant move.

Rule 3 – The lifetime pensions allowance is reduced

The amount of money you can save, tax-free into a direct contributions pension has been reduced from £1.25 million to £1 million. You can choose to save more than this but you will have to accept a hefty tax liability on withdrawals (55%). While this may seem like a huge sum to accumulate, people are being increasingly encouraged to start saving for pensions at as early an age as possible, even people on average incomes may find themselves bumping up against this barrier.

Rule 4 – 55 and 75 are the two ages to remember

You can now access your pension pot from age 55 (planned to be 57 from 2028). If you die before your 75th birthday then your heirs will receive the whole pot tax free. If you die after that your heirs can either monetize the pot and pay 45% tax or receive an income from it, taxed as income.

Rule 5 – Annuities are now optional

For decades the price of the tax-efficiency of pensions as savings vehicles had to be set against the eventual requirement to buy an annuity. Now those with defined contributions pension pots can choose whether or not an annuity is right for them. This could be a very significant decision for many people. Annuities provide a guaranteed income for life. The advantage of this is obvious. The disadvantage is that annuities may offer far less generous returns than other options, such as keeping the money invested.

Rule 6 – You can withdraw up to a quarter of your pension pot without paying tax

You can either withdraw a quarter of the pot at once or you can make smaller withdrawals as and when you need them, in which case the first quarter 25% of the withdrawal will be tax-free and the rest taxed as income.

Rule 7 – Let the buyer beware

People may disagree on the niceties of retirement planning, but there is huge and broad consensus on its importance. Making arrangements to have an income at a time of life when working may no longer be desirable even if it is possible is a hugely important part of financial planning. Greater freedom of choice can mean greater challenges in making the right choice. Because of this the government has set up the Pension Wise service to help people to take informed decisions. This service, however, can only provide general guidance rather than personally-tailored advice, for the latter you would need to contact a professional financial advisor.

The Granny Lives

The Granny Lives In what appears to have been a classic example of the law of unintended consequences, the government's attempt to rein in the buy-to-let market (and thereby help first-time buyers competing against private landlords), has had the effect of hindering those trying to provide care for relatively who are elderly but still have at least some degree of independence. Now the offending rules have been diluted, although they may still cause headaches for some.

The background to the problem

As of 1st April, those buying properties which the government considers to be second or subsequent homes pay an additional 3% stamp duty if the property is valued at over £40K (except in Scotland where no extra tax is payable). There are various exceptions in place to try to ensure that people who end up as what might be called accidental owners of second properties, for example those who have inherited them or those who have moved into a new home as the result of a relationship break-up. As the rules were originally drafted, houses with annexes were automatically classified as second homes and triggered the extra charge. To make matters worse, the charge was (and is) applied to the value of the whole property rather than just the annex.

The importance of annexes

In terms of the recent legislation regarding stamp duty on second homes, the term “granny flat” should really be taken to mean “granny annex”. In short, a property only qualifies as a second home if it is capable of being sold independently of the main property and as such it requires its own entrance as well as its own supply of utilities. Hence giving grandparents a “granny flat” of their own inside an existing home would be outside the scope of the regulations. To assist those who simply want a bit of extra space for elderly relatives, the government has announced that it will exclude annexes with a market value of £40K or less and/or which are valued at a maximum of a third of the total cost of the home. The exact date of the rule change is yet to be confirmed, but this news will still undoubtedly be welcomed by many people as will the news that those who have already been forced to pay the charge may be eligible for a refund.

Finding the value

Of course, the decision as to whether or not the tax is payable depends on the value of the annex and determining that may be less than simple. A property may have separate access, but still be challenging to sell as a single unit. According to the treasury the valuation would be generated as part of the sales process. This suggests that it would be a part of the mortgage valuation or home-buyer's report. There are, however, three problems with this approach. Firstly, it's unclear what would happen if nobody actually bothered to check the independent sales value of the annex as part of the home-buying process. Secondly, valuing real-estate is arguably part science, part art and part experience. While it does lean heavily on comparables, comparables become more challenging when there is a change in the law which could feasibly affect house prices making previous sales less relevant. Comparables are also challenging on properties of a highly individual character, including those which have been changed by renovations such as the addition of extensions. Finally, while a significant number of house purchases do involve mortgages and therefore mortgage valuations, there is still a small but relevant number of house purchases which are essentially cash transactions and which would rely on the honesty of the purchaser to self-certify accurately in accordance with the law.

How Is EU Uncertainty Affecting Every Day Life

How is EU uncertainty affecting every day life People in the UK (and in particular in Scotland) could be forgiven for showing signs of voters fatigue. A general election in 2015 has been followed by elections for the Scottish Parliament and the EU referendum is drawing ever closer.

As voting day nears, both sides in the Brexit debate have been putting forward their respective arguments about how the UK exiting the EU could affect people living here. In the mean time, to a certain extent, the UK is in limbo, with people viewing some key decisions, particularly financial decisions, in the light of the potential for the UK to leave the EU.

Here are three areas which could be heavily impacted by the outcome of the EU referendum.

House Prices

Immigration from other EU countries has helped to boost demand for housing and therefore raise house prices. One of the key arguments made by the “Leave” camp is the fact that the UK would regain control over its own borders and, in short, could stop, or at least restrain, further immigration and even, in theory at least, revoke the permission to stay of immigrants who are already here. Fewer people translates to less need for housing and therefore could serve to lower house prices. Of course, this is good news for first-time buyers and it is not necessarily bad news for those who only own residential property. While sellers may well receive less for their home than they might have done previously, they would also be likely to pay less for another property into which to move. Buy-to-let landlords, however, are unlikely to be thrilled at the thought of having a property sitting empty and declining in value at the same time, particularly not when they have paid extra stamp duty to buy it.

Financial Services

There has been huge debate about how a Brexit would affect the financial services market in general and the City of London in particular. The reality here is that the impact, if any, will probably only become clear in the event of a vote to leave. Part of this impact will be direct in the sense that the UK financial services market will have to reassess its relationship with the EU and see where it stands in terms of having access to EU markets (and of having to provide access to the UK market to competitors from other EU countries). Another part of it is likely to be indirect, since the financial-services industry depends greatly on consumer confidence and as yet it is unclear how this would be affected by a Brexit.


This issue is closely bound up with the topic of immigration. On the one hand, EU immigration is good news for employers as it expands the labour pool making it easier for them to find skilled workers and to keep down wages for less-skilled jobs. On the other hand, less-skilled British workers are currently competing against EU immigrants for the available jobs. How much of an impact a Brexit would have would depend on the extent to which the government moved to curb immigration. At one end of the scale it could simply restrict new arrivals but allow those already here to stay indefinitely, while at the other it could, in theory at least, deport established immigrants. There is also a question of how many jobs in the UK have been created as a result of immigration and what would happen to these jobs if the UK were to exit the EU and reduce immigration. One example of this is the retail industry, where immigration provides extra custom. At current time, employers in these environments may well be postponing decisions about permanent headcount until after the EU referendum.

Should You Consider A Junior ISA?

Should You Consider a Junior ISA? Becoming a parent for the first time is a shock to the system in a great many ways. Lack of sleep is pretty much unavoidable. Lack of time for anything other than taking care of the baby is a hazard of being a parent. Lack of money, however, can be avoided with careful planning.

Financial Planning for Children – the Cost Curve

Parenthood can roughly be broken down into three stages, pre-school years, school years and post-school years. In the earliest years, children are hugely expensive and the first child most of all since all the relevant baby items such as cots, prams, pushchairs and such like have to be acquired. The school years can be a great relief to some parents since they mean a steady reduction in childcare requirements as children grow to be more independent, while still living at home. Then the post-school years arrive, when children are technically young adults but may very will still be financially dependent on their parents. This is where the expenses of parenting can quickly ramp up again, particularly if children wish to go to university and live away from home. Even if children do not wish to study at University, there is a good chance they will need some form of further training and possibly other forms of help to improve their employment situation such as driving lessons, a car and, of course, insurance. That's where Junior ISAs can come in. Essentially they allow parents (along with family and friends) to build up savings for a child, which they can only access when they reach 18.

The Basics of Junior ISAs

For the tax year 2016/2017 the Junior ISA allowance is £4,080. This allowance can be held in cash, in which case the interest is tax free or invested in which case the gains are generally tax free. Junior ISAs are available to UK-resident children aged under 18 and, under current rules, there is an extra boost for those aged 16 and 17 because they are old enough to open adult ISAs themselves but are still eligible to hold Junior ISAs. This could feasibly be a useful way to make a last-minute push to build funds before the child reaches legal adulthood at 18.

When considering opening a Junior ISA for your child, it's important to realize that any money which goes into it stays locked away until they reach 18 (unless they become terminally ill or die). Depending on your point of view this may be an advantage, which enforces saving discipline, a disadvantage as it stops anyone from accessing the cash in case of real need or an irrelevant point.

The Pros and Cons of Junior ISAs

The benefits of Junior ISAs are much the same as for their adult counterparts, i.e. they are a tax efficient way of saving, however parents might wish to consider how much of a benefit this actually is. In other words, how much interest is the child likely to earn and how much other income do they have? If they're not likely to pay tax on their savings in any case, then the key benefit of a Junior ISAs is somewhat irrelevant.

One feature of Junior ISAs which parents may wish to think about carefully is that on the child's 18th birthday, the money becomes theirs to do with as they please. In other words, if you're plan is for them to use the money to go to university and theirs is to use it to go travelling, then basically there's nothing you can do about it. Parents wishing to keep at least a degree of control over how the funds are used will need to look at alternative options such as trusts.

The value of investments and any income from them can fall as well as rise. You may not get back the amount originally invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen

What Do Stamp Duty Changes Mean For You?

What Do Stamp Duty Changes Mean For You? The housing market probably ranks close to the weather in terms of stereotypical conversation topics in the UK. As a change to stamp duty factor which has the potential to affect house prices, changes to stamp duty can also be widely debated. The latest comes on the back of the March 2016 budget and, in short, it means that almost anyone buying a second or subsequent property (of a value of £40K or over) for any reason will pay a 3% surcharge on stamp duty. Charities and registered social landlords are, however, exempt from this surcharge.

The Three Possible Scenarios in Property Purchase

1. The buyer is a first-time buyer or someone who has already sold their previous main home and owns no other property. At the end of the purchase they will only own one property. Only the basic rate of stamp duty is payable.

2. The buyer currently owns only one property (typically as their main home). They intend to sell their current residence after they have bought a replacement. At the time of the purchase, they will own two properties and therefore the surcharge will be payable. They will, however, be entitled to a refund of the surcharge provided that their original home is sold within three calendar years of the purchase of the second property.

3. The buyer already owns at least one property and intends to keep at least one other property in addition to the one they are purchasing. At the end of the transaction they will own two or more properties. The surcharge is payable.

NB: In this context the term property refers to property in England, Wales or NI. At current time, property in Scotland or elsewhere (including the EU) is ignored for the purposes of deciding whether or not the surcharge is payable. By the same token, people from outside the UK who wish to buy a single property in this country either for their own use or for investment purposes will be exempt from the surcharge. Read more here

Property also means standard residential property, e.g. homes such as caravans, mobile homes and houseboats are all excluded.

Some Key Points Regarding the New Surcharge

Married couples and civil partners are treated as being a single unit. In other words, the surcharge is still payable even if the couple buy the two properties in different names. Similarly parents who buy property with their children while owning a home of their own will trigger the surcharge.

Having said that, couples who have officially separated are treated as individuals, even if they are not actually divorced (or had the civil partnership dissolved).

Those who inherited a share in a property up to 36 months prior to the purchase of another property, will be exempt from the surcharge provided that their share is a maximum of 50%.

What Does The New Surcharge Mean in Practice?

It remains to be seen what impact this new surcharge will have on the housing market. In simple terms only time will tell if this new surcharge will cause a reduction in the number of properties being bought as buy-to-let investments or if buy-to-let landlords will simply absorb the charges and pass them on to their tenants. For some buy-to-let landlords, it may be cost-effective to run their portfolio by means of a limited company. Some financial services providers are already adjusting their offerings in the light of this, for example by allowing mortgages to be taken out by limited companies rather than individuals. This approach, however, will depend on each individual's situation and given the effort and costs involved in setting up a limited company, it is strongly recommended to take professional advice before embarking on this course of action.

Your property may be repossessed if you do not keep up repayments on your mortgage

Are You Prepared For Auto-enrolment?

Are You Prepared For Auto-enrolment? “We're all in” and if we're not we soon will be. If the auto-enrolment scheme (which has cross-party support) succeeds in its aims, this statement will only be a slight exaggeration. Saving for retirement has become a huge issue and a combination of measures, of which auto-enrolment is one, aims to encourage people to make saving for their later years a key part of their financial planning.

Starting in October 2012, larger companies have been obligated to enrol eligible employees into workplace pension schemes between then and now the auto-enrolment scheme has been extended to companies with fewer and fewer employees to the point where employers with fewer than 30 employees are now obligated to have auto-enrolment in place by April 2017. After this date there will essential be a mopping up exercise for special cases such as employers without PAYE schemes or employers who started in business on or after April 2012 Read more here. Ultimately, the aim will be to have all employers of any size participating in the scheme by 1st February 2018. Of any size means exactly that, even if you are a private individual just employing a nanny or carer, if the employee is eligible for auto-enrolment then you have a legal duty to enrol them unless they actively opt out.

If you are registered as an employer than you will have received (or will soon receive) a letter from the pensions regulator advising you of your obligations and the relevant compliance dates. If you have not done so already, then it would be very advisable to check whether or not you fall under the aegis of the scheme and if so who needs to be enrolled. Ideally this should be done at least a year before your probable staging date, which at this point means as soon as possible.

Around six months before your staging date, you will need to get to grips with the actual practicalities of auto-enrolment, in particular you will need to choose a scheme and look at how your processes will integrate with it. You may find that you need to update existing processes and/or software to ensure compliance with the scheme. Undertaking this exercise should also provide a clearer idea of what costs will be involved in the implementation.
On the staging date itself, you will need to assess and enrol eligible employees according to their status at that time. To begin with, you will need to ensure that anyone who should legally be classed as an employee is actually recognized as having this status. Employers may wish to note that the government has previously expressed concern about people being treated as self-employed when they are essentially acting as employees. After this, you will need to check each and every member of staff against the eligibility criteria, bearing in mind that some staff will need to be put into the auto-enrolment scheme unless they specifically choose to be excluded whereas others will only need to be put into the auto-enrolment scheme if they specifically ask to be included. The relevant staff will need to be informed, in writing, of the auto-enrolment scheme and their rights and responsibilities in relation to it. Once all this is complete, employers will need to complete the declaration of compliance.

After the initial round of enrolments, employers will need to ensure that changes such as new hires, promotions and significant changes to employment (e.g. part-time workers going full time and vice versa) are incorporated into the auto-enrolment scheme. In addition to this, every three years, employers will need to contact any members of staff who have opted out of auto-enrolment and either enrol them into the workplace pension scheme or (re)confirm their opt out.

What Could The Brexit Mean For Your Finances?

What could the Brexit mean for your finances? The reality of the potential Brexit is that nobody can know what it will mean in practice until it happens (if it happens). In some ways, the result of the referendum may have very little result on financial planning. Regardless of whether or not the result of the vote is to leave or to stay, mortgages will still need to be paid, retirement savings organised and healthcare managed. There are, however, some, perhaps unexpected, ways in which a Brexit could impact your finances, particularly if you travel in Europe. These issues may make little to no difference in terms of the overall economic debate since many of the issues raised will apply equally to people from the EU travelling to or otherwise working with the UK, but they may impact on the finances of particular individuals.

1 - Payment for visas

At the moment the EU is technically a superstate without borders. If there is a Brexit then countries may require UK citizens to have visas to pass through their borders. Of course, these visas may be issued for free or for a nominal charge, however UK citizens would still need to be aware of the requirements for them and the need to check for them might impact on transport arrangements, e.g. the requirement to arrive at international train stations in time for checks to be undertaken.

2 – Roaming charges for mobiles/tablets

In a similar vein to borderless travel, the EU has regulated charges for travellers who roamed between networks within its borders. This regulation applies to calls, texts and data and essentially aims to minimise the impact of moving across national borders. If the UK were to leave the EU then travellers could find themselves in the same situation as when travelling outside the EU at the moment.

3 – Increased cost for goods from the EU/delivering goods to the EU

The EU is a free-trade area, which means that individuals and businesses can send goods (and services) across intra-regional borders without any customs duties being paid. If the UK leaves this free-trade zone then the buying and selling of goods across national borders may become subject to customs charges. In addition to the fees themselves, this may cause the shipment of physical goods to take longer and become more burdensome to the sender and/or recipient, as they may need to manage customs declarations. There may also be the complication of dealing with different sets of legal systems, rather than having one set of pan-EU rules, which, again, may add to costs.

4 – Increased cost for travel insurance

At this point, travellers within the EU can access local healthcare services on the same basis as local residents. All that is required for this is an EHIC card (European Health Insurance Card). This reduces the potential liability for travel insurance companies. Again, if the UK withdraws from the EU, it may cease to be possible for travellers to make use of this system which could have an impact on the cost of travel insurance.

5 – Increased cost for using payment cards within the EU

Financial institutions which issue payment cards such as Visa and Mastercard, set their own fees and charges, which reflect the costs they pay themselves. At the moment, even though the UK is outside of the Eurozone, it is part of the EU itself and therefore banking and other financial services work on the same free-market basis as other goods and services. In the event of a Brexit, this may mean increased costs for UK financial institutions when they do business in the EU, including when their payment card holders use their cards in EU countries and this may result in higher charges for using cards overseas.

Budget 2016 Key Points

Budget 2016 Key Points Budget 2016 is now upon us and we can finally see the main budgetary issues for the year ahead. Here are the key points which could affect personal finances.

1 – A New Sugar Tax

“Sin” taxes are nothing new with taxes on alcohol and cigarettes having been in place for years. The latest food item to go on the tax “naughty list” is sugary drinks. To be introduced in about two years, there will be two bands depending on the level of sugar in the drink. In England and Wales, the money raised will be used to provide increased funding for sport at primary-school level. The devolved governments in Scotland and NI will decide themselves how the funds raised in their respective jurisdictions will be spent.

2 – Smokers Also Feel the Pinch

With a 2% increase on the price of cigarettes and 3% on the price of rolling tobacco, smoking has just become an even more expensive habit. Alcohol however escapes tax increases with freezes across the board on the duty payable on beer, wine and spirits. While the purported aim of this freeze is to help pubs, those who like a tipple of any sort.

3 - Fuel Duty Stays Frozen

It has been several years since fuel duty was last raised and so the continuation of the freeze was hardly a surprise. While the biggest beneficiaries are, of course, the heaviest users of fuel, such as transport companies, fuel costs feed into the everyday expenses of people in the street too. Leaving aside the cost of motoring, fuel costs affect how much it costs to transport staple items such as food from A to B and therefore how much is costs in shops.

4 – Sharing Just Got More Attractive

There are now two separate allowances (of £1K each) for micropreneurs engaged in trading and/or earning income from property, meaning that individuals could potentially make up to £2K tax-free income from occasional activities such as trading on eBay or letting out driveway space. Of course, these activities would still be subject to all relevant regulations and any local-authority restrictions. It should be noted that the definition of trading is essentially the provision of goods or services, which extends beyond simply running an online micro-business. It could, for example, feasibly cover more traditional business types such as hostess parties and other forms of direct sales. It could also make it possible for those with hobbies to earn some income from their handiwork, e.g. by opening up an etsy shop.

5 – Class 2 NICS Are Mixed

At current time, the self-employed are required to pay Class 2 NICS on profits of £5,965 or over and Class 4 NICS on profits of £8,060 or over. As of April 2018, Class 2 NICS will be abolished and Class 4 NICS will be reformed, although the shape of the reform has yet to be made public. This again could be of assistance to those who have an “extra” or “side” income such as those who have a self-employed job in addition to a main job or those who only earn a small amount e.g. by working a small business alongside childcare commitments.

6 – A Premium Tax on Insurers

Whether or not this is good news may depend largely on where you live. A premium tax on insurance companies will be used to pay for new flood defences and the improvement of existing ones in England. If insurance companies choose to pass on this cost to customers in the form of higher premiums, then those outside of flood-prone areas will essentially find themselves paying higher insurance costs to protect those in higher-risk areas.

What Is A Relevant Life Policy And Should You Have One?

What Is A Relevant Life Policy And Should You Have One? A relevant life plan is an in case of death in service insurance scheme for an employee paid for by the employer. It is designed to pay out a lump sum should the employee die or be diagnosed with a terminal illness.
Should a small business be looking for new high level staff it can be offered as part of a benefits package.
It is best suited to Directors wishing to provide their own individual 'death in service' benefits without having to take out a scheme for all employees and high-earning employees who's 'death in service' does not form part of their 'lifetime allowance' (£1.25 million 2014/15)
This scheme is not suited to sole traders or where this is no employee-employer relationship.
Tax Benefits
The policy has tax benefits for both sides:-

Employer benefits:
• corporation tax relief (so long as the premiums are wholly and exclusively for the purposes of the business); and
• no National Insurance contributions to pay on the policy payments paid to fund the Relevant Life policy.
Employee benefits:
• no National Insurance contributions to pay on the policy payments paid to fund the Relevant Life policy;
• the policy payments won't be taxed as a benefit in kind; and
• policy payments and benefits don't count towards annual or lifetime pension allowances.
(source https://www.aegon.co.uk/advisers/protection/relevant-life.html)
There are a number of rules to qualify as a single person relevant life policy.
• The policy must only provide a lump sum benefit on death payable before the age of 75.
• The plan must solely pay out on death and have no serious or critical illness cover included.
• The plan must not have a surrender value.
• Any benefit payable from the policy must only be payable to an individual or a charity.
• The main purpose of the relevant life policy should not be for the avoidance of tax.

How much cover can you have?
The sum assured with a relevant life policy is similar to that of a death in service package and it is also based on a multiple of reimbursement. For a company director the definition of remuneration is based on salary plus dividends plus bonuses etc. These multiples can vary from provider to provider and depend on the age of the director being insured.

The Relevant Life policy requires the employer to provide a trust for the benefit of the employee's family. This will help to complete all legal requirements for a Relevant Life policy and also in most cases, it should help to alleviate inheritance tax.
How to Get Insured
You can obtain a relevant life policy from most UK insurers, however there is no set premium or cover. All things will be taken into consideration such as your occupation, general health and the lifestyle that you lead and these may affect how much an insurer will charge and the terms of the policy.
It makes a lot of sense to seek independent specialist advice when considering relevant life insurance. An advisor will be able to recommend the best value cover for your specific circumstances and go through the savings you can make when compared to personal cover.

Is There A Shock In Store For Your Retirement?

Is there a shock in store for your retirement? According to the latest research under-40s could face a 148% rise in the cost of retirement living, over-45s also need to be prepared for financial shocks that could change their retirement plans.

• Avg. monthly retirement spending to rise from £1,183 to £2,930 by 2050 (For pensioners who do not rely on state pension)
• 42% of over-45s have not planned for financial set-backs in retirement

Research by Royal London has revealed that today's 35 year-olds need to have saved at least £666,000 by age 65 in order to secure the same standard of living as today's pensioners. This is indeed a wake up call created by estimates predicting a 148% increase in retirement living costs by 2050.

The research also found that today's 30-40 year-olds have an average pension pot of £14,000. This represents a significant shortfall on the monthly income that will just cover the basic £1,715 cost of 'essentials' (such as transport, housing, food and energy) in 2050.

But it's not all bad news...
Despite the above, there is good news, as the research also suggests the younger generation are no worse at planning for their future than those entering retirement today. It states that, 67% of 18-40 year-olds asked said they were saving for retirement (only slightly lower than the 68% of 65-75 year-olds who said they have a pension in place).

The younger age group also displayed an awareness of the likely shortfall they could face at retirement, unless they up their pension savings. 57% of those in their 30s, and 51% of those aged 18-29, said they expect to work part-time after they 'retire' to supplement their retirement income, while 40% of under-40s predicted that the state pension will be a thing of the past by 2050.

'Exposed generation' risks retirement shocks

Many current pension savers over 45 could be facing unexpected news in retirement as they too are underprepared.

The most commonly-cited potential retirement 'shocks' among the over-45s included:
• Unexpected healthcare costs
• High inflation rates
• A stock market crash
• Falling house prices
• 'Bailing out' children

When asked, it became clear that far from being oblivious to the risks 85% of those questioned were indeed worried about increased risks to their retirement dreams in the wake of this year's pensions reforms.

So what can you do about it?
You can't predict the future – but you can prepare for the unexpected. By building a personalised financial plan, and reviewing it regularly, you can take control of your future and give yourself a better chance of enjoying a happy and prosperous retirement that is able to withstand unexpected surprises.

Can You Agree Finances With Your Partner?

Can you agree finances with your partner? Money cannot buy you love, but disagreements about money can strain even the most loving of relationships. The reality is that if a relationship is to have a long-term future, couples must be prepared to reach agreements about managing their finances and both parties need to be happy with, and willing to stick to, these agreements. Here are 5 steps to making that happen.

1. Take stock of where you are now

Regardless of whether you are just officially becoming a couple or whether you have been together for some time but never (properly) addressed the issue of managing money, you need to have a starting point for your financial journey. So, where are you both now? Singly and jointly lay out your income, expenses, debts and assets. Check that your sums add up, in other words if you get to the end of the month without actually knowing where your salary has gone, it's time to start tracking it.

2. Decide where you both want to be going into the future

Think about where you want to be in one, five and ten years from now. What is important to you both and what is important to each of you individually? Map out a plan for your future together and work out how much your ideal life is going to cost.

3. Start to build a map which links your current situation to your future dreams

Realistically speaking, you may not be able to achieve your plans in your initial “ideal” time-frame. That is fine, it will give you a starting point and get you thinking about short-, medium- and long-term goals and realistic time-frames in which to achieve them. Financial planning is largely a balancing act between addressing current needs and wants and preparing for the future so take some time to think about what is really important to you in the here and now and what you are prepared to give up now so as to be better prepared for the future.

4. Decide on whether or not you are going to have a joint account

Joint accounts can be very convenient in terms of managing household expenses. Both parties can pay into them and shared bills can be paid out of them. This means that, in principle, either or both halves of the couple can manage household expenses. The challenge with joint accounts is that the account holders can have very different views on what constitutes reasonable expenses and withdrawals. One way to address this issue is to keep a joint account for household and other clearly-joint expenses and for each individual to have their own bank account into which they pay themselves and allowance to do with as they please. This can also provide a safety net in case of any issues with the joint account, e.g. banking outages.

5. Make the effort to understand each other's point of view

If one half of a partnership is a habitual saver and the other is an easy-come-easy-go spender, conflicts can arise out of frustration with these different habits. Instead of getting angry or upset, talk to each other and make the effort to understand why it is important to for the saver to save and for the spender to enjoy living in the moment. Then work to find a way to accommodate both your needs. For example, if the spender has a stressful job and likes to have some fun at the weekend, maybe they could start taking their own coffee to work instead of stopping off at a coffee shop and using the money they save to finance going out at the weekend.

Who Should Inherit Your Wealth?

Who should inherit your wealth? Wills are for anybody with assets who love someone or something more than they love the government. This includes young people, who, sadly, can die unexpectedly. The simple fact of the matter is that we come into this world with nothing and what we accumulate in this world stays in this world when we leave it. We therefore need to take a decision as to what will happen to our assets when it's time for us to move on.

Leaving it to our family (friends or other loved ones)

At current time, individuals can leave up to £325K worth of assets to anyone they please without any inheritance tax being paid. Couples who are married or in a civil partnership can leave unlimited assets to each other without IHT being paid on them (provided that the surviving partner is a permanent resident of the UK). In most circumstances, the remainder of the deceased's assets are then taxed at 40%, although there are some exceptional circumstances in which IHT is waived completely. There are also some assets which qualify for various forms of IHT relief and it is possible to reduce overall tax liability through leaving 10% or more of the estate to a recognized charity.

A surviving spouse/civil partner will automatically inherit any unused portion of the deceased's IHT allowance as a percentage. In other words, if the deceased leaves £162.5K worth of assets to people other than his/her spouse/civil partner, then the surviving spouse/civil partner will have their own IHT allowance plus an extra 50% to reflect the unused portion of the deceased's IHT allowance. The reason that this is given as a percentage is that this means it can be altered to reflect any changes in IHT allowance, i.e. if the IHT threshold is increased then the surviving party (or the beneficiaries of their estate) will benefit from it.


Leaving it to charity

Gifts to registered charities, museums, universities, community amateur sports clubs (CASCs) or qualifying political parties are exempt from IHT. If 10% (or more) of the net value of the estate is left to registered charities or CASCs, then the tax liability on the remaining estate is reduced to 36% (as opposed to 40%).


Leaving nothing

Leaving absolutely nothing could be trickier than it sounds. You're going to need to have somewhere to live and something to eat right up until you draw your last breath. On the other hand, you can certainly aim to gift away your estate to the point where it is below the IHT threshold. The first key point about gifting is that (with some specific exceptions) the gift has to be given at least 7 years prior to the donor's death in order for it to qualify for full IHT relief. If the donor lives for at least 3 years after making the gift, the gift will qualify for taper relief. In other words they will still have to pay some degree of IHT but there will be a reduction depending on how long the donor lived after making the gift. The second key point about gifting is that the donor must give the gift unconditionally, in other words they need to surrender all beneficial interest in a gift. For example if a parent gifts the family home to their child, they would need either to move out of it or to pay the child a fair market rent.

https://www.moneyadviceservice.org.uk/en/articles/gifts-and-transfers-exempt-from-inheritance-taxSaving Doesn't Have To Be Hard.doc (see section on PETs)

Dying with assets but without a will

The legal term for this is dying intestate. There are different rules regarding this situation in England and Wales, Scotland and Northern Ireland. In general terms however, spouses/civil partners and close, blood relatives can inherit an estate even where there is no will. If there is, however, no surviving family, the estate becomes the property of the crown.


Help To Buy ISA

Help To Buy ISA One of the basic rules of thumb of property buying is that you want to be able to put down as big a deposit as you possibly can. One reason for this is that bigger deposits are looked on very favourably by mortgage lenders and can help you to get a better mortgage deal. In fact in the light of the Mortgage Market Review, the size of your deposit might make a difference to whether or not you get a mortgage at all. Help to Buy ISAs were created specifically to help first-time buyers put together that all-important deposit.

What is a Help-to-Buy ISA?

The term ISA stands for Individual Savings Allowance. It was originally created to describe a general savings and investment product, which was (and is) available to all adults resident in the UK. The defining feature of a Help-to-Buy ISA is that the government will top up each £200 the saver deposits with £50 additional credit, up to a maximum of £6000. To get the £6000 you would need to save £1200, giving you a deposit of £18000. That is per person, so if two (or more) people were to buy together, they could pool their allowances. It is important to understand that you can make a total contribution of £3400 in the first year after opening an ISA and then up to £2400 each year after that until you reach the cap of £12000. This means that you would need a minimum of about four and a half years of saving to receive the full £6000 credit.

Who qualifies for a Help-to-Buy ISA?

Help-to-Buy ISAs are intended to help adults (in this case defined as people over the age of 16) to buy their first home in the UK. The key words to note here are first and home. Help-to-buy ISAs are only available to first-time buyers who intend to live in the property they purchase. The terms of the scheme explicitly forbid it from being used to purchase a buy-to-let property but there is nothing forbidding it from being used in conjunction with the rent-a-room scheme in which landlords who are resident in a property can receive up to £4,250 per year tax free by letting out furnished accommodation in their main home. It should be noted that this allowance is per property, rather than per person. In other words, if a couple buy a flat together and let out the spare room the £4,250 allowance would be between them rather than each.

Are there any catches to Help-to-Buy ISAs?

Help-to-Buy ISAs can only be used to purchase a property with a price of up to £250K or £450K in London. That is to say even if the buyer can raise a deposit of more than £18K and/or has sufficient income to make payments on a higher-priced property, they will still only be able to use the funds from their help-to-buy ISA to buy a property up to the permitted price. Whether or not this is an issue in practical terms will depend very much on personal circumstances. Younger first-time buyers looking to buy a starter flat well away from London may find this more than adequate. Older first-time buyers looking for a family home in the Thames Valley area may find it more of a challenge to find something suitable on this kind of budget. It should also be noted that those saving for a deposit have to make a direct choice between a help-to-buy ISA and a normal cash ISA. It is only permitted to open one or the other in any given tax year.



The PDF is basically everything you need to know on this scheme. If you CTRL+F on buy to let you will see it is forbidden but there is nothing on rent a room

Best Money Apps For 2016

 Best Money Apps for 2016 Whether your top financial goals for 2016 are to pay off debt, to learn to budget or to build up some savings, your smartphone or tablet can help you on your way. Here is a run-down of our top apps for improving the state of your finances in 2016. They are all available for both Android and iOS unless otherwise stated.

Money Saving Ideas

This is the new incarnation of the Money Saving Expert Fan App. It aims to teach users about money and money management and has links to websites and resources which can help with improving the family finance.

Monefy – Money Manager

There are plenty of expense-tracking apps out there so if, for whatever reason, you do not take to Monefy, you have a variety of other options. Monefy can help you keep tabs on your on-the-go spending, including those “little” purchases, which can slip under the radar and leave you wondering where your money is going each month.

Savings Track

If you are looking for a bit of willpower to resist those impulse purchases, Savings Track may be just what you need. It allows you to define your savings goal(s) including the amount you need to save and any deadline. Then you just track your progress until you meet your target. Keeping this on your phone or tablet could be a helpful reminder that you are saving money for a reason and make you think twice (or even three times) before making a non-essential purchase.

Christmas Gift List

We know this may set some readers groaning in despair but stay with us. Some people like to do their Christmas shopping well in advance, others leave it to the last minute. In either case, you need to know who you are buying for and how much you have to spend overall and for each person. It can also be helpful to keep notes on possible gifts if you are not ready to or sure about buying them at that point. Once you have bought a gift you can mark it as purchased. We know Christmas comes but once a year, but we think this apps still worth it.

Food Planner

What is in your kitchen cupboards, fridge and freezer and what can you make with it? Food Planner holds an inventory of what you have bought and allows you to create grocery lists to ensure that you buy what you actually need rather than what you cannot actually remember if you have or not. You can also create daily and weekly meal plans and import recipes from the internet.

Skype, Whatsapp and Viber

We suspect most people will be familiar with these but we will put them in just to be on the safe side. All three allow for free calls and instant messages. They can be used with data connections or over wi-fi. Even if you have unlimited calls/texts within the UK, these apps can still be useful when travelling or for keeping in touch with people overseas.


This app is a little tricky but if you are looking to top up your income, it can be worth the effort. Basically this is a site offering micro tasking jobs. To join the Roamler team you need to get an invite from an existing Roamler user. If you do not know anyone who is already on Roamler, you can head to their Facebook page or Twitter account to see if they are giving away invitation codes or if there is an existing Roamler user who will give you one if you ask.

Field Agent

This is similar to Roamler. Anyone can sign up without needing an invitation code but the app is only available on the iOS platform in the UK.

AVG Anti Virus

This may seem like a surprising choice but at the end of the data smartphones and tablets are essentially computers some of which also have the ability to make phone calls. Depending on what you have on your device it may be a very attractive target for hackers, so take a few minutes to give it some free protection.

All of these Apps are in the Google Play store except for Field Agent which is https://fieldagent.co.uk/

Pension Changes Should You Top Up?

Pension changes Should you top up? The value of a state pension is set by the government. Currently it is based on the amount of National Insurance contributions retirees have paid during their working life. The value of a private pension pot depends on three basic factors. Firstly, how much money has been saved into it. Secondly, how long the money has been invested. Thirdly, how well the investments have performed. In both the state-run and private schemes, you may be given the opportunity to top up your contributions. If you are in this position, it is important to think carefully about whether or not this is a good choice.

The State Pension

National Insurance contributions are paid by people in employment (above a certain earnings threshold) and are paid by the government on behalf of those in receipt of certain benefits, e.g. Job Seekers Allowance. Those who fall outside of these categories, e.g. people who take a gap year from employment but do not claim JSA, can sometimes choose to top up their state pension by paying contributions voluntarily. The first point to note is that you need 35 qualifying years of National Insurance contributions to claim the full new state pension. If you have fulfilled this requirement then regardless of whether or not there are “missing” years, you will still receive the maximum possible amount of state pension. There is a separate scheme which allows anyone who reaches state pension age on or before 5th April 2016 and qualify (this means they are entitled to the Basic State Pension or Additional State Pension and be either a man born before 6/4/1951 or woman born before 6/4/53) to buy up to £25 per week of extra state pension by making a lump sum payment on or before 5th April 2017. This is known as State Pension Top Up. If you have less than 35 years NI contributions and/or are considering making use of the State Pension Top Up scheme, then there are two key questions to ask before taking a final decision. The first is: how much faith do you have in the long-term future of the state pension? Government schemes and benefits can and do change. Governments might prefer to avoid making changes which lead to state pensioners being worse off, but in theory at least, it is a possibility. The second is: what else could you do with the money? In other words, could you get a better return on investment elsewhere?

Private Pensions

Private pensions come in two basic forms – workplace pensions and personal pensions. Under current laws, all qualifying employees must be enrolled into a workplace pension unless they actively choose to opt out. Both the employee and the employer make contributions into the employees pension fund (plus the contributions are eligible for tax relief), these contributions are then invested on the employees behalf and released to them when they are due to retire. In this case the opportunity for “free money” from an employer does generally make a compelling case for making the most of any workplace pension scheme. As always you would need to ask yourself if you could make better returns elsewhere. If you do find an opportunity where you could feasibly achieve higher returns, the next question to ask would be whether it realistically offers a comparable lack of risk.

Personal pensions do not benefit from employer contributions, but the fact that tax relief is available up to a certain level of contributions, means that saving for a pension can be an attractive way of planning financially for retirement. Up until recently, this had to be balanced against the fact that the majority of a pension pot had to be used to buy an annuity. This requirement has, however, been removed as part of a drive towards “pension freedom”. The result it that people currently saving towards a pension can make the most of the “free money” offered by tax relief, while enjoying a much greater degree of flexibility regarding what they can do with the resulting funds.

Info on state pension - https://www.moneyadviceservice.org.uk/en/articles/state-pensions
Info on workplace pensions - https://www.moneyadviceservice.org.uk/en/articles/automatic-enrolment-into-a-workplace-pension
Info on personal pensions - https://www.moneyadviceservice.org.uk/en/articles/personal-pensions

Saving For Your Holiday

Saving For Your Holiday The weather outside is frightful, but summer is so delightful and now that the shortest day is over, it is on its way. Summer brings holidays with it and so the dark days of winter could actually be a great opportunity to make plans for how to pay for them.

First decide what kind of holiday you want

Are you a beach lover or would you rather be enjoying the mountain air or cruising city streets? Are you someone who likes it hot or do you prefer to keep your cool? Do you thrive in crowds or need your own personal space? Write down everything you need to make a perfect holiday. Then make a list of “nice to haves” and give them a weighting. Finally make a list of anything you feel you need to avoid at all costs.

Second clarify when you can take your holiday

Those in work generally have to book holidays in advance and some employers can offer more flexibility than others. Those with school-age children will also have to work around their requirements. Holiday prices can vary significantly depending on the time of year, so those who can be flexible may be able to use this to your advantage.

Define your budget taking into account all costs

Set yourself a budget you have a realistic chance of being able to afford. Working on the basis that you will need to do some saving is absolutely fine, but if you set yourself too demanding a saving target you may find yourself facing some difficult decisions later.

Decide your destination

By thinking about what you need to make up a great holiday, rather than just looking at destinations, you put yourself in a position to discover options you might have overlooked if you would just thought about where to go. Do your research on the net to see where other people with similar interests and tastes have had enjoyable holidays and see which of these places are within your budget.

Double check your costs and add an allowance for unforeseen expenses

Think through your entire trip from start to finish and do your best to envisage any costs you could reasonably be expected to incur along the way. Then add on a bit extra for unforeseen expenses and insurance. (If you are travelling within the EEA make sure you have a valid European Health Insurance Card). Make sure your insurance covers you for any and all destinations you may visit and for any activities you may undertake. Remember that you and your insurance company may have different ideas about what constitutes a dangerous activity so be clear about what any given policy does and does not allow. Budget a reasonable amount for spending money.

Check your passport has enough time left on it.

Different countries may have different requirements regarding how much time your passport must have left on it before you are allowed entry. In any case it is probably a good idea to have at least some time left over after your planned return date in case of unforeseen circumstances. Checking this well ahead will avoid you having to use the passport office during their busiest period and possibly having to pay extra for express service.

Create a savings plan

Now that you know how much money you need, you will know how much money you need to save. It is therefore time to create a plan of how you are going to do it. You may be able to put away the money you need out of your monthly salary without needing to cut back on your regular expenses. Since it is the start of a new year, however, it could be an excellent opportunity so see where you could save money without really missing it, e.g. by cutting out subscriptions you hardly use or taking (healthy) snacks into work instead of using the vending machine.



Should You Consider Private Healthcare?

Should You Consider Private Healthcare? The NHS is part of the fabric of UK life and yet there is also a thriving private health insurance industry. Why is this and should you be looking at private healthcare insurance for you and your loved ones?

Healthcare insurance may give you more control over when you are treated

While TV dramas may focus on people being rushed to hospital in ambulances for emergency surgery, the reality is that accident and emergency services are only one part of healthcare. Other forms of treatment can be and are scheduled. Those with insurance may be able to take advantage of their cover to arrange for treatment at the time which is most convenient to them (or at least has the minimum inconvenience) rather than simply having to accept the slot allocated to them by the NHS. Likewise those with healthcare insurance may be able to see a relevant specialist more quickly to have their symptoms and/or concerns assessed. In other words, if there is a need for further medical treatments, this can be identified more promptly.

Healthcare insurance may make it possible to access treatment at a more convenient location

An obvious example of this is dental treatment. Private dentists may or may not accept NHS patients at all and if they do they may have limited spaces available for them. Having private health cover may make it possible for you to access a private dental clinic near to you rather than having to find the nearest NHS dentist with availability. Having private healthcare insurance may also make it possible for you to access purely private hospitals which do not accept NHS patients at all.

Healthcare insurance may give you a higher standard of care

By care we mean general care, rather than clinical treatment. As an NHS patient you may find yourself sharing a ward with other people and eating from a menu which is restricted for reasons of practicality rather than for clinical reasons. Having private healthcare insurance may enable you to have a private room and a better choice of food options. It may also mean you get access to amenities such as WiFi while you are in hospital, possibly making it easier to keep in touch with loved ones (or at least stave off the boredom of bed rest). It may even make it possible for you to receive visitors whenever you want, rather than being restricted to designated visiting hours.

Healthcare insurance may offer treatment options outside of what the NHS can offer

The NHS is designed to cater for essential treatment and to provide essential supporting equipment. The key word here is essential as opposed to simply beneficial. Private healthcare can help to bridge this gap. For example it may pay for extra physiotherapy sessions and/or help to upgrade you to a more comfortable wheelchair until you are ready to walk again.

Would you and your loved ones benefit from health insurance?

Ask yourself a simple question. If you did not have your health, how would you and your family cope? There are really two aspects to this question. One aspect is practical and in particular financial and the other is emotional. Taking steps to resolve practical issues and to ensure that you and your family are supported financially and can afford whatever you need to help you regain your health as quickly as possible, can go a long way towards mitigating the emotional challenges of dealing with health issues. In addition to private healthcare insurance, you may also want to look at other types of insurance to support you in periods of ill health such as payment protection insurance and critical illness cover. You may also wish to review your life insurance to make sure that those you love are adequately protected from the financial impact of anything happening to you.

Will There Be A Rate Rise In 2016?

Will There Be A Rate Rise In 2016? The U.S. Federal Reserve recently voted to raise their equivalent of the base rate by 0.25%. The Bank of England, by contrast, held interest rates steady so the UK will see out 2015 with the base rate at 0.5%. The question then becomes, what does 2016 hold for UK interest rates?

What exactly are interest rates and what do they do?

In very simple terms interest rates are fees paid by those who borrow money to those who lend money. Changing interest rates therefore changes how much it costs to borrow money. Lowering interest rates means that borrowers are charged less and hence lenders earn less by lending out money. Raising interest rates means that borrowers are charged more and hence lenders earn more by lending out their money.

Who sets interest rates and how do they set them?

In the UK, the Bank of England sets what is known as the base rate. This is the rate paid to the financial institutions which leave deposits with the BoE or charged to them if they borrow funds from the BoE. The BoE uses its control over the base rate as a means to achieve its target of maintaining price stability, in other words as a tool to control inflation. Specifically, the BoE has a target of ensuring a 2% increase in the CPI (Consumer Price Index). The Consumer Price Index is essentially a selection of products which are chosen to represent the sorts of items on which people spend their money. In other words, it is a measure of the cost of living. In very basic terms, if the CPI rises, the BoE can raise interest rates to make saving more attractive (and borrowing more expensive) and hence encourage people to reduce their spending in the hope that this will lead to a drop in prices. If the CPI falls, the BoE can do the opposite and lower interest rates to encourage borrowing (and spending) instead of saving in the hope that this will lead to price rises. In a sense, therefore, the BoEs decisions on interest rates are reactive rather than proactive. They are a response to inflationary pressures.

How likely is a rate rise in 2016?

We do not have crystal balls so all we can tell you is that mathematically speaking there is a lot more scope for interest rates to go up than there is for them to go down. It is also fair to say that the government has been paying a great deal of attention to the affordability of debt, in particular mortgage debt. The mortgage market review was intended to ensure that financial institutions only gave mortgages to people who could afford them over the long term, taking into a count changes which could happen over the course of many years, including a rise in interest rates.

What does this mean in practical terms?

The start of any new year is often a time when people make plans and resolutions. We would suggest that you make the start of 2016 a time to review your financial situation and see what steps you need to take (if any) to protect yourself against any possible increases in interest rates in the future. For example you may wish to make an extra effort to pay off any outstanding debt as quickly as possible. You may also wish to look to see how you could take advantage of any possible rate rises, by lending money to other people. There are a variety of ways of doing this from buying government bonds to peer-to-peer lending.

P1 – Current rates
P3 – The BoE and interest rates
The CPI http://www.investopedia.com/terms/c/consumerpriceindex.asp?header_alt=c

P4 – The MMR


Financial Resolutions You Should Make For 2016

Financial Resolutions You Should Make for 2016 With the new year nearly upon us, here are some resolutions to make for 2016 and to keep for the whole year and beyond.

1. Start by looking after your pennies

You know the old saying “Look after your pennies and you pounds will take care of themselves.”. It is not entirely true, you do need to manage your pounds too. It is, however, only too true that small expenses here and there can add up to a surprising amount when you actually stop and examine your spending. This in turn can have a long-term effect on your finances. Make some time to look at how you could reduce your spending without much, if any, impact on your lifestyle. For example could you make your own coffee to drink on the train instead of buying it every day? If so, the savings you make can be put to other work.

2. Learn to love budgeting

Budgeting essentially means keeping track of your income and expenses and taking steps to ensure that you always have the money you need available when you need it. As a minimum you should have a budget which will see you from one pay day to the next, ideally with some money left over. It can, however, also be helpful to create an annual budget, since some times of year can be noticeably more expensive than others. Christmas is an obvious example of this and, for parents, school holidays can be another. Some people may also have variable income, e.g. those who earn commission and will therefore need to ensure that they save money during their peak earning periods to balance out the times when they earn less.

3. Pay off debts

Sadly debts do not go away by themselves. Compound interest is wonderful when it works in your favour (i.e. on your savings), unfortunately it can be brutal when it works against you (i.e. on your debts). Before you get to work on paying off what you owe, you need to have an emergency savings pot set aside. This will essentially act as a buffer to help stop you needing more credit (which you may or may not get). How big this pot needs to be depends on your personal circumstances. As a minimum, think about which of your possessions would cause you the most pain to have to replace at short notice and have a plan (and finance) in place to deal with this worst-case scenario. Realistically you should ideally also have enough money set aside to tide you over in the event that you lost you job. In blunt terms this needs to take into account how long you are likely to need to find another one. With this emergency pot safely set aside, only to be touched if absolutely needed, you then need to start tackling your debts, beginning with the highest-interest ones, such as credit-card balances.

4. Start making financial goals

What do you really want to do with your life and how much money will you realistically need to finance your dreams? Saving and investing can seem so much more rewarding when you are undertaking them with a concrete goal in mind. If your goal seems huge, overwhelming even, see if you can break it down into smaller pieces. At the very least try to give yourself little rewards along the way. It can sometimes help to keep track of your progress in a very visible way, such as a physical chart on a wall, where you can tick off each milestone and literally see how you are getting closer and closer to achieving your goal.

Do Not Let Your Christmas Debts Hang Around

Do Not Let Your Christmas Debts Hang Around Christmas comes but once a year. Sadly its financial effects can be felt for a lot longer. Ideally Christmas should be paid for out of a budget you can afford. This could be through savings you make throughout the year. In reality however it is very easy to overspend at Christmas. If the children have set their heart on something... If there is a great company night out that is just a bit more than you wanted to pay... If you need to travel and miss the more affordable fares... The reality is that after Christmas you may well need to make it a priority to pay off debt. Here are some options for you.

Use Christmas to Pay Off Christmas

In other words, sell your unwanted gifts. While you are about it, see if you have other stuff you could clear out for cash as well. The obvious place to clear out stuff is eBay. It may, however, be worth thinking about whether this is the best option for you. You may be able to list your item for free, but you can expect to pay fees if the item sells. You are also going to have to be realistic about postage costs and the practicalities of posting items. There is also the possibility of dishonest buyers abusing eBays protection schemes. With that in mind it may be worth looking into alternatives such as Gumtree, Craigslist or local selling sites. You could even try a car-boot or just spread the word and see what happens.

Give up Small Temptations (at Least for a While)

Small expenses can add up. The cup of coffee bought on the way to work... The shop-bought sandwiches instead of a packed lunch... The takeaway when you are too tired to shop for food... Cutting down on these little expenses can go a long way to boosting your finances. Likewise resist the New Years sales. They might have some genuine bargains, but there are deals all year round for savvy shoppers.

You Can Lose Weight Without Joining a Gym

Yes Christmas is a time when pounds can easily move from the wallet to the waistline. Yes you may need to lose some weight. No, you do not have to join a gym to do it. In fact now may be the time to ditch the gym membership you never use. It might also be a good time to review your other regular bills and see if you are still getting value for money from them. For example, if your mobile contract is up and you are happy with your handset, then now could be the time to switch to SIM-only or PAYG (Pay As You Go). If you are a smoker, then giving up is a win for your wallet and your health.

Get Savvy with Your Shopping

Before you reach for a well-known brand, take the time to look at the budget alternatives. Sometimes there will be a difference in quality. You may feel it is worth paying the extra for the premium brand. Other times, however, you may be surprised to discover how little difference there is. You may even find you prefer the budget brand.

Switch Nights Out to Nights In

Nights out can be great fun, but they can also be very expensive. There is the headline cost of whatever you want to do. Then there are the extras which can sneak in. January may be the perfect time to give yourself a little social down time. Of course, you can still keep up with your friends, just socialize in a budget-friendly way. You may well find that your friends are in the same situation as you. They may be more than happy to have a chance to keep their own costs down.

Are Employers Blocking Pension Freedom?

Are employers blocking pension freedom? The topic of retirement savings has had a lot of publicity recently. The introduction of the auto-enrolment scheme was accompanied by a series of adverts highlighting the importance of “saving for my pension”. The withdrawal of the requirement to buy an annuity has also made headlines and sparked plenty of debate. The ability to leave part of a pension fund invested while withdrawing some income from it (known as income drawdown) gives retirees new options for financing their retirement. At least, that is the theory. Those with workplace pensions may find that the reality is somewhat more complicated. Please note prior to taking any action it is extremely important to seek advice on pensions and transferring them before you do so.

Workplace pensions – an employers perspective

All employers have to comply with the requirements of the auto-enrolment scheme. At this point there is nothing which legally requires employers to run workplace pension schemes which support income drawdown. This means that businesses will look at the matter from a cost/benefit perspective in the same way as other business decisions. Companies which are introducing workplace pension schemes purely because they have to, arguably have little incentive to look beyond the cheapest and/or simplest option which keeps them on the right side of the law. Companies which view workplace pensions as a means to attract and retain staff do have to consider the issue of employee satisfaction, but this has to be balanced against any costs and resources involved.

What this means in practice for people currently saving towards a workplace pension

For those who currently have some time to go before retirement, it may be far too soon to make a definite decision as to whether or not income drawdown is the right way to go. It may, however, be the perfect time to see whether or not the existing workplace pension scheme supports income drawdown and if not if there are any plans to change it so that it does. If the answer to both questions is no, then it may be worth seeing whether other people would also like this option and if so speaking to management/HR about the matter.

What this means in practice for people close to retirement

If you are close enough to retirement to have made plans which involve either income drawdown or simply leaving your pension pot invested for some time after your retirement from paid employment, then it can be very helpful to check just how that pension pot is being invested. If the management company is working on the assumption that you are going to be buying an annuity in the near future, they may well be pursuing a different investment strategy for you than they would if they knew that your plan was to keep your pension fund (or part of it) invested over a longer period. It is probably also a good idea to check with whoever is managing your progress towards retirement, what the process is for transferring your pension pot to a provider who does support it and how long it will take.

One last and very important point

As we mentioned at the start of this article, the changes to income drawdown is new and exciting and has generated a lot of interest. Now everyone over 50 has the option to drawdown their income. For some people it is a superb way to finance retirement. For others, however, annuities or an annuity plus a lump sum may still be the more appropriate options. Either a lump sum or the income from an annuity can be invested however the retiree sees fit. For some people this approach may provide a better balance of flexibility and security.

Income Drawdown carries significant investment risk as your future income remains totally dependent on your pension fund performance.
The value of your investment and any income from it, could fall or rise and you may not get back the full amount invested.

How Long Should I Fix My Mortgage For?

How long should I fix my mortgage for? The mortgage market review led to the introduction of new mortgage rules. In very simple terms these rules obliged lenders to observe stricter mortgage lending practices. Buyers now need to prepared to demonstrate that they are capable of paying back mortgages over the very long term. This includes accounting for possible changes in personal circumstances. It also includes possible changes in interest rates. Realistically speaking any changes to interest rates could only be in one direction – upwards. With this in mind, buyers may like to look at the option of fixing the interest rate on their mortgage. This raises three questions and here are our thoughts on them.

1. Should I get a (new) mortgage at all?

If you are currently renting are you sure you are ready and able to buy? You may be able to afford a mortgage, but are you absolutely certain it is the right choice for you in your current situation? Home ownership offers stability, but renting offers flexibility. Which are you likely to find more useful over the next 5+ years?

If you are thinking about remortgaging your current home then it is important to understand that the answer to the question “How much can I borrow?” may have changed dramatically since last time. Assuming you can clear this hurdle, you will then need to ensure that you completely understand any and all costs associated with remortgaging your home. For example, do you need to have a new survey done? Then you need to do the sums to see whether or not remortgaging will save you money and if so how much. If switching is only a small gain, then only you can decide if it is worth the effort.

2. Should I look at a fixed-rate mortgage?

While fixed-rate mortgages have the obvious attraction of stability, you need to look at your overall situation to decide whether or not they are right for you. Remember that there are three main types of mortgages: repayment, interest-only and offset. With repayment mortgages, you pay off both the sum borrowed and the interest. With interest-only mortgages you only pay off the interest on the loan and it is up to you to find a way to repay the sum borrowed at the end of the loan period. Offset mortgages are essentially massive overdrafts, which allow you to put in and take out money very flexibly. The basic idea is that you give up earning interest on your savings in order to pay less interest on your mortgage, thus gaining overall. In theory any of these options could be offered as fixed-rate. In practice you will need to see what is available on the market at the time you are looking to (re)mortgage. While the idea of fixing your rate may seem attractive, you may find that there are simply better deals out there at the time.

3. How long should I fix my rate for?

If you are still in the market for a fixed-rate mortgage, you need to think about how long to fix the rate for. Again, the theoretical answer to this question may be very different to the practical one. While you might want to lock in a low rate for as long as possible, possibly the entire time of your mortgage, banks are businesses, which want to make a profit. With that in mind, you will need to look at each of the available deals and see what the overall cost is (including, for example, any set-up fees). You are also going to need to look at the situation after the fixed period comes to an end. In other words, will you still have a good deal or, realistically, could you find yourself either dealing with a poor mortgage or having to go through the remortgaging process and take the risk of being turned down?

Your home may be repossessed if you do not keep up repayments on your mortgage.

For Residential & Buy to Let Mortgages, our typically processing fee is £395 and we may receive commission from the lender.

Investing For Future Generations

Investing for Future Generations A quick internet search on the costs of raising a child brings up plenty of results. In real life, however, how much it costs to bring up a child depends largely on your personal situation. How much is housing in your area? How much free childcare can you get from grandparents? Are the local schools good or do you need to look at private school fees? One fact is, however, absolutely clear – children are a challenge to the family finance.

Parenting and Financial Planning

While nothing can prepare anyone for the reality of their first baby, there is a lot can be done in advance to sort out practical matters relating to the newborn-to-be. Ideally couples should start putting away some savings as soon as they agree they are seriously interested in having a baby. Putting away a little at a time in advance of the pregnancy can go a long way to dealing with baby-related expenses later. Once the pregnancy is confirmed, baby preparations should also include financial preparations.

Planning for Parental Leave

It is essential for parents-to-be to know what their employer offers in terms of parental leave. Some employers will only provide the statutory minimum. Others may offer more generous terms. Future parents will also need to think about the “post-leave” stage. Will one parent stay at home or will both work? If the latter, who will look after the baby? If one parent gives up work, there will obviously be a loss of income. If both parents work, there may be childcare costs. Depending on circumstances these may be paid out of income or financed in another way. For example parents may use their savings or may have been investing for this time.

Securing a Child is Long-Term Future

It may not seem like it at the time, but sooner or later the sleepless nights, dirty nappies and teething do come to an end. Parenting, however, is a long-term job and children are long-term commitments. Even if local state schools are good, there is still university and other expenses like driving lessons and first cars. Depending on where you live and what your child wants to do with their life, having a car (and a licence and insurance) may make a world of difference to their chances of employment.

Investing for a Child

There are a number of ways to help finance your child is path to adult life. One obvious route is Junior ISAs. At current time you can invest up to £4080 per year. Other relatives and friends can also put money into the pot. Junior ISAs can be held in cash or invested in the stock market (or both). In either case the returns are tax free. Once your child turns 18, the money becomes theirs outright. Junior ISAs can be attractive but there are a couple of points about them parents need to understand.

First of all, unlike their adult counterparts, the money in Junior ISAs is effectively locked away until the child is 18th birthday. There is absolutely zero flexibility in this. Therefore if you want to save in a way which allows withdrawals, you will need to look at other options. There are child savings accounts without the tax advantages but with much more flexibility.

Another potential issue is that the whole sum is available to your child on their 18th birthday. If you save the full amount each year, that is £73,440 plus any returns. Your child could use it responsibly. If you have taught them good financial management maybe they will. But if they go out and blow it all on wine (wo)men and song, there is absolutely nothing you can do about it. If this is a concern for you, you may wish to look at creating a trust for your child. This might sacrifice some of the tax advantages of Junior ISAs but could give you much more control over how the money is eventually released and spent.

The value of investments and any income from them can fall as well as rise. You may not get back the amount originally invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen


Beware Of These Optional Extras Costing You Money

Beware of These Optional Extras Costing You Money In an ideal world, buyers and sellers would work together to reach a deal with which both were happy. In the real world this does sometimes happen. Sadly it also happens that sellers try to take buyers for as much as they can get. What is more they can use very underhand tricks to achieve this. Here are a few (and what you can do to avoid them).

Dynamic Currency Conversion

Some shops, restaurants and cash machines abroad now offer a service called Dynamic Currency Conversion.

This one only applies in specific circumstances, but it can be such a nuisance, it is worth looking out for it. Dynamic currency conversion is when a price is advertised in a foreign currency but charged to your card in your own currency – at the merchants exchange rate. This is supposed to be an extra, add-on service. It is meant to give added convenience to international travellers and online shoppers. To be fair, it can be used entirely transparently and accurately. It can also be a useful way for buyers to avoid foreign-exchange fees. Unfortunately it can also be used to increase an item’s price in a subtle way. If you are looking to get the absolute best deal, you can check the merchant’s converted price against an independent exchange-rate calculator. Then you can decide whether to accept it or just take the hit with foreign-exchange fees. Alternatively you could look at getting a card in the currency of the purchase, i.e. a travel-money card.

Forgetting to Cancel after Trial Periods

Some companies offer a free trial of their add-on services. They may take your billing details up front so that they can start to bill you after the trial is over, unless you actively remember to cancel. Likewise some products, such as credit cards, offer introductory benefits for a certain period. They will then apply their standard rates at the end of this period unless you actively cancel. On a similar note some contracts are for a fixed length of time after which they renew automatically unless you actively opt out. There are two ways this can hit you in the wallet.

1. Companies increasing fees without you noticing (in time).
2. Companies failing to inform you that they have better deals available.

The way to avoid all of these extra costs is to stay on the ball. Make a note of when introductory offers and contracts come to an end. A paper calendar or diary is one way to do this. In this age of smartphones, however, you can put a note in an electronic calendar. Then you can set yourself a reminder to take action in good time. This is particularly useful for services such as insurance policies. In these cases you may well need the service but will want the best price. Give yourself time to shop around.

“Untick the Box” Charges

You buy an item for £10 but when it appears on your statement it is £12. You query this and discover that this was an optional extra. The box was helpfully ticked automatically and you never unticked it. There are lots of variations of this trick. One is to make customers go through the entire purchase process and then add in an effectively unavoidable fee at the end to complete the purchase. Yes, customers could click close and walk away, but by that point there is a good chance they will just grit their teeth and pay. Then of course there are add-on fees for items you might have expected to be included. Charges for hand-luggage on planes are one example of this. The strategy for avoiding these is a combination of alertness and determination. You need to stay alert to what is and is not included in any purchase. You also need to be realistic about when to walk away from a transaction. If you saw a headline price of £20 but “extras” bump it up to £40, is it still a good deal?

Do You Have A Financial Safety Net?

Do You Have a Financial Safety Net? Life happens. It has its ups and realistically it also has its downs. Hopefully, overall, there will be more ups than downs. It is, however, wise to be prepared for the more challenging periods. “Am I protecting my family enough?” is a question to keep in mind at all times. Here are four points to look at to keep your family financial secure.

Cash Savings

This may seem like stating the obvious, but having a cash cushion can help protect you and your family from financial blows. They are particularly useful for what could be called short-term shocks. These may not be covered in other ways, or you may not want to claim on other cover. For example if you are a freelancer and a regular contract is ended, cash savings can tide you over until you replace it. How much you need in the way of savings will depend on your personal situation.

Income Protection

No one wants to think about getting ill but it can and does happen. How would your family cope if the main breadwinner were suddenly unable to work?

In the short term, cash savings might tide you over. If you are close to retirement and have a pension due, they might be all you need. If, however, you have a longer horizon, then looking at some form of income protection may be advisable. The most obvious candidates for this product are the self employed. Even the employed, however, might want to think about it.

Income protection can be taken out to cover you for sickness and injury and provides you with an income until you are back on your feet.

Critical Illness Cover

Critical illness cover pays a lump sum if you are diagnosed with one of a specified range of medical conditions. It can be used in combination with medical insurance and income protection to help protect against illness devastating your finances. Income protection cover will take care of replacing your usual income. Medical insurance will take care of getting you the best possible treatment in the shortest possible time-frame. Critical illness cover can help smooth over the extra expenses which can be caused by illness. For example, it could help towards paying off your mortgage, covering additional medical expenses or reducing the financial impact if you were unable to return to work, or anything else you needed.

Life Insurance Cover

You are irreplaceable but in the event of your death being able to replace your income can give your family peace of mind. Even if you are a home-maker, you still make a financial contribution to the household. In simple terms, someone would have to do what you do in the event of your death. Family and friends will often do what they can to help, but this can be an extra burden on them. It is one they may struggle to manage over the long term. Even when you have a substantial estate, there is another advantage to life insurance. In simple terms it can be written in a way which leaves it ring-fenced from the rest of your assets. This means that it can be released promptly rather than having to go through the (potentially lengthy) process of probate.

Escaping Debt For Good

Escaping Debt For Good There is lots of good advice available on how to get out of debt. The reality though, is that getting out of debt can be a bit like dieting. Even though, ultimately, it can do you good, the process itself is not necessarily a whole lot of fun. Making it fun may be a bit too much of a stretch, but there are ways to keep yourself motivated. Who knows, you might even start to enjoy the challenge.

Tip 1 – Be Reasonable With Yourself

You may have made some stupid mistakes to end up where you are now, but those are in the past. The key point now is to manage the situation you are in and to put yourself into a strong position for the future.

If you only have a small amount of debt, you may be able to pay it back by going on a financial crash diet. In other words, you can pare your lifestyle down to the minimum so as to make the maximum possible debt repayments.

There is, however, a limit to the length of time anyone could reasonably be expected to follow a strategy like this. If you try to keep going with this sort of plan for too long, then you open yourself up to the danger of blowing your budget.

At best, you will have a (major) set-back. At worst, you will lose motivation to continue.

With this in mind, it can be better to pay back your debt a little more slowly so you have a bit of breathing space.

Tip 2 – Work Towards Goals And Rewards

You do not have to wait until you are debt-free to celebrate progress.

Set yourself goals to achieve along the way and allow yourself an appropriate reward for meeting them.

The rewards do not even need to be financial. At the beginning, you can even just award yourself a certificate. Pin it on your wall and look at it every time you need a bit of a boost.

As time goes by and you begin to get more control over your finances, you can start to divert a bit of money from your debt repayments for small rewards to recognize your achievements so far.

You can also start to think about what you will do with the cash you are currently spending on debt repayments once you are debt free.

Tip 3 – Get Creative And Be Flexible To Get Treats

Keep your eyes open for ways to get treats at lower prices. There are actually all sorts of options.

Check magazines for old-fashioned, money-off coupons and check online sites for discount codes. Look for off-peak deals and last-minute offers.

If you are in or near a place where students study practical courses, then look out for colleges offering cut-price services carried out by their students.

Squeeze extra benefit out of purchases you have to make anyway by signing up for loyalty deals.

Try home-made alternatives to purchases you cannot afford for now.

Have a film night at home with supermarket popcorn instead of going to the cinema (and you can pass on the trailers too).

Try your luck with free-to-enter competitions (or ones which require purchases you were going to make anyway). Somebody has to win.

Tip 4 – Keep Some Emergency Funds Available

If you are already in debt, then you want to avoid even applying for more credit, always assuming you can actually get it.

You particularly want to avoid being in a situation where you are applying to high-interest lenders aka payday loan companies and the like.

Leaving aside the impact on your credit score and the expense, this can be a very demoralizing experience after you have worked so hard.

Having an emergency fund will help you to cope with life ups and downs without having to resort to more credit.

How To Get The Mortgage You Want Approved

How To Get The Mortgage You Want Approved These days getting a mortgage is a bit like getting a job. You may know you have what it takes to manage it, but unless you communicate that clearly, the chances are you are going to go away empty-handed.

Understanding The Mortgage Landscape

The Mortgage Market Review reforms

The Mortgage Market Review took place between 2009 and 2012. As its name suggests, it was a major review of mortgage lending practices in the UK.

The result of it was new mortgage rules and much stricter mortgage lending practices. In the old days mortgage applicants might have asked themselves “how much can I borrow”, these days, the relevant question is “how much can I afford”.

In very simple terms, mortgage lenders today will be looking to see clear evidence that you can afford your mortgage over the long term, including life changing circumstances.

So, how do you get the mortgage you want? (see also http://www.fsa.gov.uk/about/what/mmr)

Step 1 – Tidy Up Your Present

Getting your financial house in order can have all sorts of benefits in addition to being approved for a mortgage.

In terms of improving your chances of being improved for a mortgage, you want to look at your overall debt situation. That includes what you could call potential debt.

In other words if you have credit and store cards you rarely, if ever, use, it is time to think about whether or not you really need them. As long as you keep them open, potential lenders will see that you could ring up debt to the credit limit on each card. You may know you are not going to but they do not. If you close them off, however, you will make yourself look more attractive to a potential mortgage lender.

Likewise, you may want to put in extra effort to clear off smaller debts, such as personal loans.

In addition to this, make sure that you are on the electoral register (see: Why should you register to vote?) at the address you plan to use when submitting your mortgage application.

As well as ensuring you will be able to vote if there is an election, this is also a major point with lenders.

Step 2 – Tidy Up Your Past

Your financial history is summarised in your credit report or, more accurately, your credit reports. In the UK there are three companies provide credit-reporting services. These are Experian, Equifax and CallCredit.

As they each use their own systems to create their own reports, you will need to get a copy of each report to see yourself as others see you.

On each report, check for any factual errors and, if necessary, have these removed.

Then look for anything, which comes under the heading of “true, but”. In other words, look for anything which is factually correct but paints a misleading or outdated picture of your finances and/or financial management.

You might not be able to get this removed (although if you have resolved the issue, this may be possible, there is unlikely to be any harm in asking). You may, however, be able to add a note about any special circumstances which led to the problem. As a minimum you can be prepared to explain the situation to potential lenders.

Now have a look at the overall picture. Is there anything you could do to make it look better (per the comments in the previous section)? If so aim to do it before putting in your mortgage application.

Step 3 – Make your application look good

Treat your mortgage application process as seriously as you would treat an application form for a job.

If you are applying on paper, make sure your writing is at least legible. If you are applying online, make sure you fill in all the relevant information in all the right boxes.

In either case, be realistic about what you can afford in terms of monthly repayments and be prepared to support your application with appropriate documentation.


Putting A Buy To Let Investment To Good Use

For many of us, financial uncertainty seems to be a key feature of life; saving and investing for the future in a time of low interest rates has become immensely challenging.

Many people who have accumulated savings, inherited money or wound up with a significant sum to invest, look instead to the buy to let property market in order provide for their futures.

In this blog post we will explore the best ways of ensuring that buy to let properties can provide for you and your family in retirement.

The golden years

In the decade between 1997 and 2007, property seemed to be all anyone was talking about. The TV stations were bursting at the seams with programmes about property ladders, property fortunes and property presenters.
It was clear, in hindsight, that the property bubble was about to burst.

The moment that a critical mass of people enter the market in one go, assuming that property is a licence to print money, the count down to a crash begins.

In 2008, an era of cheap borrowing, available credit and rising property prices came to an abrupt end and so did the dreams of many who hoped to become property millionaires overnight.

All is not lost, however

Get rich quick schemes aside, property can still be a great way of investing for the future; the rental sector is growing rapidly and predicted to continue expanding over the next decade.

Unless housing is built at a similar pace in order to meet demand, it is likely that rents and therefore rental income will continue to rise.
Most private landlords who own a buy to let property are small time property investors with one or two properties.

These days, the more risk averse banks are reluctant to lend to landlords with dozens of properties, recognising that they represent unacceptable default risk levels.

Banks have to lend money to someone, however, or they cease being banks, so you might find you can get a buy to let mortgage by presenting yourself as a low risk borrower with few liabilities.

Bank, building society or broker

Bank lending rules have become far more stringent since April 2014 and few are now happy to consider a buy to let mortgage without an existing property to put up as collateral.

Helping the next generation

Housing costs in London and other major cities have sky rocketed in recent years and even affluent young professionals find themselves priced out of the housing market.

If you have grown up children and dependents who are unable to buy, you might be able to provide for them and find an investment opportunity at the same time.
You will need landlords’ home insurance if you choose to become a buy to let landlord, as regular insurance policies will not be considered valid and the first concern of any new landlord is ‘insuring my property against possible damage or loss.’

The government’s pension reforms in the past year have left many retirees with a lump sum of cash that they can invest as they see fit, no longer having to purchase an annuity.

By investing in buy to let properties, retirees may be able to use rental incomes to supplement their pensions, and have a property to leave to the next generation in their will.

Save Like The Young Ones

Saving for a rainy day is what lets you buy an umbrella to keep you dry until the rain passes. Alternatively you may be saving with a specific goal in mind, for example to buy a house. Like many aspects of life, your saving needs and habits may change as time goes by.

If you are on the younger side, you may be looking at paying for your wedding, putting together a deposit on a house or planning for the costs of having children. If you are on the older side, then you may already have passed the bulk of life’s financial milestones. Instead you may be looking at saving for your personal goals. Alternatively you may be saving to help your children.

Whatever your age, the guiding principle should be to save money but enjoy life. You should also look at the most efficient and appropriate ways to save.

Treat savings as a key part of the family finances

In addition to day-to-day purchases, such as grocery shopping and utility bills, there are also recurring and foreseeable expenses which need to be managed. For example insurance policies may need to be renewed and household items, such as washing machines, may need to be replaced.

In very simple terms you will either need to have the money to pay for these or you will need to use credit.

It is also advisable to think about potential emergencies or challenges and how you would cope with them. For example having cash savings may form part of a plan for dealing with a period out of paid employment.

Do you really want to keep all your eggs in one basket?

As well as thinking about how much you need to save, it can be helpful to think about where to keep your savings. Here are some ideas.

Physical cash

Although keeping cash in the house (or elsewhere) means that you are missing out on the opportunity to earn interest, it can be convenient to keep some of your savings in physical form. If you need to use cash, but don’t want to, or can’t, go out, then having a stash of cash close to you can be very useful. Likewise if you live in a place where there is a limited number of ATMs, it may be useful to have a Plan B. Obviously storing physical cash has security implications. You will need to think about the pros and cons of this option for yourself.

Instant-Access Savings Accounts

These come in various forms such as standard savings accounts and individual savings accounts (ISAs). While the money is available to withdraw at any time, you will need to ensure that you understand how you go about accessing it. If you feel it is reasonably likely that you will need to withdraw more than the £250 available at ATMs, then you will need to check that there is somewhere accessible where you can pick up your cash, e.g. a local bank branch or Post Office.

Non-Instant-Access Savings Accounts

Some savings vehicles require a notice period before cash can be withdrawn. The reward for this may be better interest rates. Again, you will have to weigh up the reduced convenience against the potential gains.

Alternative Savings Vehicles

Premium bonds do not offer interest, but they do keep their cash value and can be redeemed at any time. Plus there’s always the possibility that you’ll win, somebody has to.

You might also wish to look at putting some of your savings into peer-to-peer lending. Unlike the previous options, there is always a risk of losing capital in this situation. On the other hand, there is the potential of attractive interest rates.


Raise Money Downsize To A Smaller Property

Your current home may well be the place where some of your happiest memories were created. Realistically, however, downsizing may be an excellent way of financing many more. Here is a quick guide to some key questions on the topic.

Why should I downsize my home?

Home may be where the heart is, but property has a financial value. There are various schemes which make it possible to release equity in property while you continue to live in it. These each have their advantages and disadvantages and you would need to do your research thoroughly to decide if one of them was right for you.

Downsizing simply means moving from a more expensive property to a more affordable one. This may be a smaller property and/or one in a different area. This turns home equity into cash, which can be used for other purposes. For example it can be used to help your children get on the property ladder themselves.

The practicalities of downsizing

Downsizing is essentially selling a home and buying another one. This means that you will have to go through the home-selling and home-buying processes again. It also means that you will have to pack up and move your worldly goods.

You will also have to be realistic about whether or not all your current possessions will actually fit into your new home. Instead of feeling sad or stressed about this, it may help to think about it as an opportunity to adjust to your new situation. It may also be appropriate to think about giving inheritances in advance. For example if you have some furniture you love and wanted to pass on, you could pass it on now.

You could look at storage as a temporary option. For example if you are downsizing to help your children with a deposit, you could store larger items until they have bought their own homes.

You could also find new and possibly better ways of storing and accessing familiar items. Younger people may be able to help with this. For example photo albums can be turned into collections of digital photos. All your precious memories will still be saved – and in a fraction of the space.

You might also like to consider selling some of your excess possessions. This can mean anything from listing them on eBay to selling items through a specialist channel, e.g. an auction. Before disposing of anything for free, you may wish to check to see if it is worth selling. Perhaps some of your memorabilia has historic value, and would be of interest to a local museum.

Downsizing and the family finance

Your main reason for downsizing may be to help your children, but hopefully there will be some money left over for you too. This means that you need to think about how to make best use of it.

Of course, this will depend on your individual situation. For example, you may want to think about how likely it is that you will need to access this money in the near future. If it is important that you can withdraw it quickly, then you will need to keep it somewhere which allows that, such as an instant-access savings account.

If you are confident that you can live without the money for some time, then you have a wider range of options. For example you could put some of it into bonds or invest some of it in stocks and shares. Whatever you do, it should be in line with your plans for retirement and your overall financial goals.

Flood Risk - Check Your Insurance

One of the grim inevitabilities of the winter months in Britain is the prevalence of flooding.

Britain has experienced several years of above average rainfall that many scientists attribute to climate change.

In 2007, for example, the country was 20 percent wetter during the winter than any other year since records began in 1879.

Some studies have suggested that flooding is in part due to the development of towns, cities and farmland, preventing natural drainage from taking place.

Are you ready for the rain? This article is a quick guide to the likely risks of flooding and the steps that you can take to make your home safe from the high waters, or insured against them.

Waterlogged postcodes

Towns like Boscastle in Cornwall that was virtually swept away by flooding in 2004, or Hebden Bridge in 2012, are reminders to Britain and to the insurance industry, that some areas pose higher risks of flooding than others.

Insurers pay a great deal of attention to scientific information on flooding and calculate insur-ance premiums accordingly. As risks change, so the insurance industry devises new products to insure against them.

There are two types of flood risk insurance: buildings flood insurance that covers structural damage to your home, and home contents flood insurance that covers your belongings and fur-nishings.

If you have standard buildings and home contents insurance but you live in a high risk flooding area, you will need to change your policies to specific flood risk cover.

If you don’t have flood insurance and your home is damaged by flooding, there is a chance that your insurer will not pay out on a standard insurance claim.

Flood Maps

The Environment Agency has some sound advice about how to prepare for the possibility of flooding. It is important to visit the agency’s flood risk map to see if your home is likely to be af-fected.

The agency suggests that homeowners and business owners should create a flood plan before bad weather begins.

In addition to this, it is advised that you prepare your property’s flood defences in advance.
This could involve investing in a consultation with a surveyor or an architect to assess your property’s flooding needs.

A flood protection advisor can also be contacted, who will give an assessment of the costs in-volved in protecting your property from flooding.

If you find that insurance costs for your property are high, or that the level of risk to insurers is so great that they will not insure you at all, there are still options.

You might want to consider consulting a mortgage broker who can help secure a policy from specialist insurers who offer policies on higher risk homes.

There is also help and advice available at the National Flood Forum, who have a list of insurers who have signed up to the forum’s Charter for Flood Friendly Insurance.

Insurance Against Flood

As with most potential disasters, nine tenths of the solution lies in pre-emptive action. It is im-portant that you identify your level of risk and work with the official and industry bodies that exist in order to limit it.

Insurers will tend to look more favourably on claimants who have done whatever they can to lim-it the risks and prepare for the potential deluge.

The alternative is a large clean up bill and an unsympathetic insurer.

During a crisis, when there are numerous claims being made against insurance policies, and shareholder profits to protect, insurers will create their own criteria about who they consider to be worthy of a pay out.

By prudent action now you can get yourself on that list.

Is Life Insurance Still An Asset For The Over 50s

Most people start families in their 20s or 30s and this is also the first time they think about family protection, life insurance and making sure that their loved ones are taken care of if they die.

Once this life cover is purchased, it is common to forget all about it and only review it every couple of years when a review of ones finances is due.

Decades later, when your circumstances have changed and your family has grown up, it might be tempting to question whether a life insurance policy is necessary at all.
However, cancelling a policy might involve hidden costs. This blog post is a quick guide to the possible pitfalls of cancelling your policy.

Changing Circumstances

If your children are over the age of 18 or a substantial part of the mortgage is paid off, there might be little reason to keep your policy.

It seems rather obvious to say, but if you cancel your policy the first thing you will lose is the cover it offers.

If you need to take out a future policy for any reason, you will find it far more expensive in terms of monthly payments than the original agreement.

Some policies are designed to pay for the cost of schooling and university education of children if a parent dies, but this might seem redundant if your children are now grown up and have left home.

You might also find that you still need a life insurance policy as grandchildren could become dependents and the financial future of your partner might be in jeopardy if you pass away.
It might be that if you died over the age of 50, your partner could still be several years away from retirement age, and may therefore be dependent on an additional source of income that a policy could provide.

What are the savings?

If you cancel your life insurance policy you will save the cost of the monthly contributions and in today’s economic climate this could well be ready cash you can’t do without.
However, whilst you might be making savings to your financial plan in the short term, the financial risks to your family dramatically increase if you were to unexpectedly pass away.
Life insurance in many ways is a far wiser investment for families with less disposable cash than others, as the financial pressures on wealthier families in the event of bereavement will be lesser.

Lower Insurance Premiums

Cancelling a policy outright is not the only option open to policyholders facing financial difficulties.

It might also be possible to agree with your policy provider to pay a reduced contribution (see ‘Other Options’ 3rd sub heading) in return for a lower level of cover for a period of time until your financial situation improves.

Most UK life insurance policies have no charge for cancellation, but if you do cancel and then re-apply for cover, the increased cost of a new policy will act as an unofficial penalty.

Protecting My Family

One possible way of spreading the costs of life insurance is to look at the cover both you and your partner have.

When you initially took out life insurance cover, you might have decided with your partner to take out a joint policy. Normally they cost less than two separate policies and are a lot easier to set up.

However, if you have two separate policies, it might be worth exploring whether taking out joint cover is more cost effective.

Much of this will depend on the age and relative health of both policyholders, but the good news is that nearly all over 50s are accepted on to new life insurance policies, (see ‘Guaranteed Acceptance’) without the inconvenience of a medical.

Should We Be Ditching Cash?

Apple Pay has now arrived in the UK. Paypal has now outgrown eBay. Visa Europe is said to be in talks to be bought back by its larger sibling Visa Inc. In short, digital payment systems are big business in every sense of the phrase.

Notwithstanding this, cash is still very much a part of life around the world. Is it, however, headed the way of the penny farthing bicycle?

Certainly there has been a push against cash in recent times. A UK MP has already suggested paying benefits on restricted-use payment cards.

The Danish government is considering allowing retailers to refuse to accept cash for payment. Meanwhile the French government has lowered the amount vendors are legally allowed to accept in cash for any single transaction.

Let’s look at three areas which concern us all and see where cash stands against digital payment methods.

Everyday Purchases

From morning coffee to supermarket shopping and paying utility bills, there are all sorts of everyday purchases people make time after time. Some of these purchases are now impossible to make with cash. If you get your supermarket shopping online, then you need to pay online.

Some of these purchases penalize those who want (or need) to pay with cash. For example, pay-as-you-go utilities are notoriously more expensive than other tariffs.

Of course, there are still plenty of purchases where it is possible to pay with cash. In fact in the face-to-face environment, there are some places which essentially penalize people for paying by other means. Some retailers (generally smaller ones) put surcharges or other fees on card payments. Others insist on a minimum transaction amount before they will accept card payments. Some retailers only accept cash. The march of the payment cards, however, continues and shows no sign of slowing.

Personal Security

Cash is essentially an anonymous payment method. This makes it an attractive target for thieves. The means by which people can be relieved of their cash vary from subtle pickpocketing to brutal mugging and armed robbery. As with all violent crimes, the victims can experience lasting psychological shock and/or physical injury or even death.

Digital payment methods (such as payment cards) can be traced back to their owner. This reduces their attractiveness to traditional thieves. They can, however, become a target for fraudsters. Fraudsters aim to gain access to online bank accounts and digital payment methods to use them for their own purposes. If they succeed, the consequences for their victim can range from mild inconvenience to full-scale ID theft.

So the question becomes: “Overall, is online banking safer than using cash?”

Arguably the answer is yes. Online banking does not have the same physical security risks as cash does. It does have some risks, but the banks and payment companies have been working hard to reduce these. For example banks have introduced card readers for some transactions. Payment companies have introduced chip cards and schemes such as Verified by Visa.

Individuals can also take steps to protect themselves by running security software on internet-linked devices. This includes phones and tablets as well as computers.

National Security

The anonymity of cash is an issue for national security as much as personal security.

To begin with, “cash-in-hand” transactions have become strongly associated with tax evasion. Given that it is tax revenue which funds the police and armed forces, its loss could quite reasonably be considered a security issue.

Similarly cash provides a straightforward method for under-the-counter transactions to take place. For example, shoplifted goods can be sold face to face for cash. Admittedly they can also be sold online, via portals such as Gumtree and eBay, but that does at least create some element of traceability.












How Will Chinas Crash Affect You?

They say that when China sneezes, the rest of the world catches a cold. So when China suffered the financial equivalent of a massive heart attack at the beginning of the week, the world’s financial markets duly went into full-scale panic mode. But what does this mean for your investments?

Black Monday, as it was quickly dubbed, was the day when the myth of China’s invincibility crumbled. By the time trading was done, stocks were down 8.5% the biggest single day loss in eight years.

The reverberations were felt all around the world. The Nikkei fell by over 4% and the Dow opened 1,000 points down. Oil hit a six-year low as commodities took a tumble. Approximately 73.74bn was wiped off the FTSE Index. China reacted by cutting interest rates in an attempt to boost the economy but to no avail. Stocks continued to fall as investors got rid of anything that had any connection with China.

The question is: how worried should we be and how will this affect your own investments? Investors panicked around the world because their confidence in the underlying health of the international economy was shaken. A slowdown in one of the largest consumer economies in the world could be a signal of bad times ahead for the rest of us.

But it’s not all doom and gloom. Around the world the general prognosis for the world economy is pretty good. In the UK, growth is predicted to be 2.8% in 2015. Against all predictions, the Greek economy did not collapse, but was recently reported to have shown some growth. China itself may no longer be delivering double digit growth, but for an economy of its size, growth is still healthy. In April to June it reported 7% growth and while its figures are often greeted with scepticism, its overall economic condition is a long way from collapse.

So, the short answer is that there is no need for anyone in the UK to panic. Daily values may fall, but in the long term you shouldn’t feel the effects as long as you follow the basic rules of diversification within the portfolio – namely don’t over expose yourself to any single market, and don’t invest in only equities (stocks and shares). As long as you have bonds and cash within the portfolio these should cushion the blow.

The crash may also have been alarming, but it is nothing truly out of the ordinary. Stock markets are cyclical with crashes such as these happening every seven to ten years. There have been big falls on the stock market before and there will be again. As long as you keep your head, the long term value of your investments should hold.

In summary, then, the message is this: don’t panic. Although it’s easy to be swept up in the hysteria, as long as you stay true to basic common sense principles such as diversification, you should be fine.

What Next For Inflation?

The UK has now experienced deflation for the first time since records began in 1996. The Office for National Statistics believes that the last time the UK experienced deflation was in the 1960s.

This was so long ago that you may well be asking yourself “What exactly is deflation and what does deflation mean for our economy?”.

Inflation v Deflation - What is The Difference?

In very simple terms, inflation is when the overall cost of living goes up and deflation is when the cost of living goes down. The word overall is important because prices of different items can go up and down at different times.

How Is The Overall Cost Of Living Measured?

There are two main measures used for determining changes in the cost of living. The older method is called the Retail Price Index (RPI). This was introduced in June 1947. The newer method is called the Consumer Price Index (CPI) and was introduced in 1996.

Both systems use an “average basket of goods” to keep track of how much “average consumers” are spending. In other words, they select a range of items which they think most people need (or want) to buy. They then track the prices of these items.

There are, however, important differences in what they track. For example, the RPI includes the cost of housing (including the impact of Council Tax) but the CPI does not. They also use different methods for calculating the average.

Summing all this up in a nutshell, the CPI is almost always lower than the RPI.

Can Inflation Be Managed?

It is the Bank of Englands job to try. The BoE runs the Monetary Policy Committee. This has the job of achieving exactly 2% inflation per annum.

Of course, that is a difficult job so the Bank gets a bit of breathing space. The government accepts inflation of between 1% and 3% per year.

If, however, inflation goes either higher or lower, the BoE is called upon to explain itself. The Governor of the Bank of England, must provide a public, written explanation of why it missed its target.

It must also advise the government what it intends to do to get back on target. The BoEs main tool for managing inflation is the use of interest rates. In very basic terms, raising interest rates encourages people to save. Lowering interest rates encourages people to spend.

Why Does The Bank Of England Try To Keep The Cost Of Living Going Up?

In very simple terms, deflation has much the same effect as waiting for the January sales to buy Christmas presents.

Customers assume (rightly or wrongly) that the item(s) they want will be cheaper after Christmas so they wait until then to buy them.

Extended periods of deflation can essentially become a time of Mexican standoff. Buyers get used to seeing prices dropping so they put off making purchases to get lower prices.

Unfortunately this can put producers (and retailers) out of business. Over the long term, this reduces supply and can stimulate inflation. In the short term, however, it can lead to painful redundancies.

Right now, for example, low oil prices are leading to layoffs in the oil industry.

So Is Deflation Automatically Always Bad?

That is an interesting question. It is possible that some deflation on essential items such as food and utilities might actually be helpful. It would give hard-pressed families a respite.

It might even be enough to free up money for other purposes. For example, it might allow families to pay down debts. It might allow them to treat themselves to some non-essential purchases.

The question would be whether or not the end producers would be able to support deflation for any meaningful length of time. If not, then the pendulum could swing the other way towards high inflation – and cause a lot of pain in the process.


Does It Make Sense For Britain To Quit The EU?

However it is eventually phrased on the ballot paper, the underlying question is essentially the same. “Should Britain stay in the EU?”

Sometime between now and the end of 2017, the great British public will be required to answer it. So, is the grass really greener on the other side of the EU fence? What would happen if the UK actually did leave the EU? Let’s look at some of the key points of EU membership and see how the UK might be affected in the event of a “Brexit”.

Free Movement Of Citizens

The free movement of citizens is a key part of the Maastricht Treaty and therefore of the EU. It is what enables Polish workers to come to the UK. It is also what enables British retirees to make their homes in sunnier climates. Polish workers compete against local job seekers. British retirees may need to make use of their host-country’s medical facilities. There are economic pros and cons to many aspects of EU membership.

There are also security issues to consider. The recent “I am an Immigrant” campaign stressed the positive contribution immigrants make to the UK. At the same time, British teenager Alice Gross is believed to have been murdered by Latvian builder Arnis Zalkalns. He already had a conviction for murder in his home country. The EU’s open-borders policy, however, allowed him to come to the UK regardless.

There have also been issues with Polish criminals organizing sham marriages with people who want UK residency.

Likewise, there are ongoing issues with the Eurotunnel being targeting by refugees living in France.

Free Movement of Goods, Capital And Services (AKA The Common Market)

Much has been made of the UK’s access to the single/common market. This allows the UK to export goods to the EU without import duties being paid by the recipient. Of course, it also allows other EU countries to export goods to the UK without paying import duties.

In fact it allows people from the UK to go on shopping sprees in the EU and bring their purchases back to the UK without paying customs duty. In the early days of the EU this led to the infamous “booze cruises”. These were trips made, usually to France, specifically to buy alcohol more affordably.

Small and light, cigarettes are also easily brought back from other EU countries where the purchase price is lower. Of course, this has implications for the NHS and its funding.

Like the free movement of citizens, there are pros and cons to the single market. It is also worth noting that the UK already trades on a global basis in any case. This demonstrates that it is quite possible to import and export without a free-trade agreement being in place.

The Single Currency

During the negotiations for the Maastricht Treaty, the basis for the modern EU, the UK opted out of the single currency.

It did, however, sign up to a clause in the treaty which requires EU members to aim for “ever closer union”. This is not just a statement of ideals. It is a legally-binding requirement. In very simple terms, the UK’s decision to keep the pound is directly contradictory to the principle of “ever closer union”.

This raises significant legal questions over the feasibility of the UK keeping the pound in the long term. David Cameron has stated that he aims to negotiate and opt-out to this requirement. The price of him achieving this may be giving up the UK’s veto in the EU. The price of him not achieving this may be the UK’s giving up the pound and adopting the Euro.

10 Things To Do To Get Your Finances Ship Shape

As spring moves into summer, people can start to think about their physical shape and how good they look in their holiday clothes. How about also taking a few minutes to look at your financial shape? Making sure you’ve ticked off all the boxes in this 10-step check-list will help keep them looking good too.

Make a Will
If you have any assets at all and there is anybody in life you love more than the Inland Revenue, make a will. Even if you are young and single with no dependants, make a will. If you do die unexpectedly, it can make life much easier for your loved ones.

Get Life Insurance
If you have anyone who depends on you financially, then life insurance should probably be high on your agenda. The bad news is that even young people can die unexpectedly. The good news is that it’s relatively unlikely so young people tend to get the best life insurance deals.

Shop around online to see what’s on offer.

Start Saving into a Pension
It’s never too soon to start saving into a pension. Later, however, is still better than never.
Saving into a pension has two big plus points. Firstly contributions attract tax relief. Secondly, those in workplace pensions can get additional contributions from their employer.
The fact that pensions have these benefits means it may be worth contributing to them even if you are still clearing debts.

Clear high-interest debts
Mortgages, car loans and student loans are designed to be paid off over the long term. These types of loans tend to have relatively low interest rates.
Personal loans and credit card or store card debt is an entirely different matter. This kind of debt tends to be very expensive. Therefore it is generally best to pay it off as quickly as possible. If your credit rating is good, you may be able to get a 0% interest balance-transfer deal. This can help to freeze the amount of the debt instead of having interest added every month. Ideally you should pay off the debt before the deal comes to an end.

Look at Moving Your Mortgage
A mortgage is a significant expenditure. Make sure you are getting the best deal you possibly can. If you’re not, see if you can move to a new mortgage.

Learn to Budget Properly
Look after your pennies and your pounds will take care of themselves. Little purchases can slip under your mental radar and have a significant impact on your finances.
You don’t need to stop making convenience or impulse purchases. You just need to know where your money is going. Then if you are looking for savings ideas, you know where to start trimming your expenses.

Organise Savings Pots
Some bank accounts will allow you to tag your money for designated purposes. This can be a great way of keeping on top of your savings goals. For example you could have dedicated pots for holidays or Christmas.
Get an ISA
ISAs are essentially tax-efficient accounts. They can be used for cash savings or for a wide range of investments. In short, they help you to make more from your money and give less to the tax man.
Take a look at investments
Investments can help to make your money grow over the long term. There are many different kinds of investments available to suit all kinds of tastes. Take a look and see what suits you.

Make Time To Review Your Finances
As you go through life your circumstances will change and your finances need to stay in sync with those changes. Therefore make time at least once a year to ask yourself “How to organise my finances?”. This will help to ensure that you make any changes you need to.


Ten Financial Tips For New Graduates

With university fees of up to £9,000 a year and predictions that students might be paying back their loans in their 50’s, financial planning after graduation has never been more important.

This blog article will explore the top ten most important financial considerations for new graduates and the spending, saving a borrowing pitfalls to avoid.

No New Debts

Leaving university with potentially a lifetime of debt in tuition fees means that new graduates need to be especially careful not to take on any new debt.

Taking out credit cards, hire purchase agreements on cars or buying any other big ticket items on instalments, can leave you overburdened by debt and any disposable income you might have will be sucked up in repayments.

Leave Mortgages For Later

In the long run it always makes more financial sense to own a property than to rent it, but for new graduates, the costs involved are huge.

Stricter lending rules and spiralling house prices mean that for many graduates, home ownership is prohibitively expensive, but it also presents an obstacle to job mobility.

Recent graduates often need to be mobile to find new career opportunities and a property can tie them down.

Pay Off Your Debts

The longer you are in debt, the longer you will be working hard to pay interest, so your first post-graduation priority should be to get out of debt as quickly as possible.

In order to pay your debts most effectively, start with the highest interest debt first (typically this will be a credit card, store card or personal loan), and then pay off lower interest debts like student loans later.

Start Saving

At university when funds are often short and there are constant demands on your income, there is little scope for saving.

However, after graduation, it is one of the most important habits to get into. Having regular savings, even if you are putting away a small amount each month is essential; as your income rises, so does the temptation to spend it.

You will need to protect your savings from taxation and the best way to do with is with an ISA or NISA, which can be easily set up through your bank.

You might have previously wondered ‘what is an ISA?’ or ‘how does an ISA work?’. It is a savings account which has an annual tax free allowance of £15,240.

Avoid Credit Cards

As previously mentioned, debt is a way of draining the lifeblood from your finances and a credit card can often be the quickest way of building up a debt burden for the future.

The best time to own a credit card is when you can be sure that you’ll rarely need it.

Pay into a Pension

As with savings, pensions are an important part of your financial future that cannot be neglected. If you have asked yourself ‘What is a pension pot?’, it is time to become more financially educated about preparing for the future.

When you start your first job, investigate the workplace pension scheme, or, if you are self employed, it might be an idea to set up a private pension instead.

It is always worth asking the question, can I be getting more from my pension? Especially when you are reviewing your annual pension statement.

Continue Learning

One of the keys to boost your future earning potential is to carry on educating and ‘skilling’ yourself.

If you increase your knowledge, experience and ability through further study or an internship, your worth within the job market will inevitably increase.

Budget Effectively

The suggestions in this blog involve a degree of discipline with your money and a requirement to budget effectively.

If you don’t have a clearly structured financial plan then the chances of you being able to save prudently are slim.

Have a picture of your income and your expenses, work out what is left (and where you can cut back), and divide that between your savings and pension.

Emergency Fund

Life is full of surprises, not all of them pleasant, which is why it is important to have a contingency fund.

Most financial advisors recommend that you build your emergency reserves enough for three months of living costs or the equivalent of three months salary.

For most people, this can’t be done overnight and requires a long term commitment to saving.

The advantage is that savers with cash reserves are less financially insecure if they become unemployed and don’t have to take the first job on offer.

Invest if you can…

Creating a strong financial basis for the future often means investing spare cash prudently and watching these investments accumulate value. After ensuring your financial stability, you might be thinking ‘Where do I Invest for growth?’

If you have managed to pay off debt and accumulate some savings, adding to a portfolio of investments is one of the best ways of making your money work effectively for you (though the value of investments can go down as well as up).


Have You Made Your Will Yet?

After a lifetime of saving and prudence, you may well have accumulated a great deal of personal financial wealth that will outlast you.
However, without a will to state who will benefit from your wealth, much of the hard work you have put in over the years might be lost.
Dying without a will (being intestate), can present your loved ones with all sorts of difficulties when it comes to dealing with your estate and it presents the tax man with an opportunity to extract wealth from your life savings.
This blog article is a quick guide to making a will and ensuring that your legacy goes to your loved ones as you intend.

A Will To Fit Your Circumstances

Leaving your wealth behind might not be quite as straight forward as you think.
Depending on your circumstances, your age, health and life expectancy and the number and age of your dependents, you might find you have to word your will specifically.

For example, if you have young children or grandchildren, you might want them to inherit your estate at a certain age, or you might stipulate that the money is used for something specific, such as university fees.

It might be that you want to appoint certain trustees or guardians in your will. This might be the solicitor who is drawing up the will or another legally recognised individual who can administer and distribute your estate.

Giving To Charity

If you are leaving an estate to others, you can give part (or all, if you want) of this away to charity.
The amount that you leave to charity will be deducted from your estate before the government calculates the amount of inheritance tax that is due.
If you leave at least ten percent of your estate to charity, the overall inheritance tax rate that is levied will decrease (though not if you take the option of deducting contributions from your estate first, as listed above).

Dying Without A Will

You should probably consider updating your will every five years or so. As your life circumstances, and that of your dependents, changes, your instructions on how to deal with your estate will change as well.
If you don’t have a will and pass away unexpectedly, a relative will have to apply for probate, the legal right to administer your estate.
There are legal processes that also decide who is legally entitled to what if you do die without a will.

Decisions made by the government might not match your own wishes, and they expose your estate to inheritance tax.
A will that is written by an inheritance expert can help avoid large portions of inheritance tax , simply by allocating money and property according to inheritance tax allowances. Anything left to your spouse or civil partner is inheritance tax exempt up to the value of £650,000 (if you both combine your allowances).

Having a will drawn up might cost in the region of £150-£250, but in the long run, it is worth an immense amount more in terms of peace of mind and the knowledge that your life’s savings will go to good use.

Leaving wealth behind is a way in which we leave something of ourselves to future generations and it can be more complex than it appears to be.

Want To Pay Less Tax? Ideas To Help Reduce The Amount You Pay

Paying tax is an onerous duty and one we all wish we didn’t have to do.

Judging by recent newspaper headlines, it seems that if you are rich and famous tax avoidance is almost compulsory.

Whilst actual tax evasion is illegal (ie stashing it under your mattress), tax avoidance is not, it is simply the practice of being savvy with your money to limit the amount it can be taxed within the law.

This quick guide will talk you through some of your options if you are looking to reduce the tax burden on your personal income. If you ever wonder: ‘how can I reduce my tax bill?’ this guide is for you.

How To Pay Less Tax: The Obvious Methods

The government already provide a generous annual entitlement to every UK saver in the form of ISAs. If you open and Independent Savings Account, you will be able to deposit £15,240 tax free each year.

This means that any interest earned on the money invested is yours, tax free.

As well as paying into an ISA, the more of your income that you put into a private pension, the less of it can be taxed.

You can be eligible for tax relief on pension contributions of up to, the lower of; 100% of your earnings or £40,000 annual allowance, making it one of the most important means of limiting your exposure to taxation.

If you smoke, drink to excess and drive a gas-guzzling car, then you are making life easy for HMRC.

By giving up these vices, you not only make yourself far healthier and protect the environment, buy you also prevent yourself from losing money through indirect taxation like VAT.

If you are married, you might want to take advantage of the new rules that allow you to transfer your tax allowance to your partner or vice versa. If your partner pays a lower rate of tax than you do, transfer or ‘gift’ them an amount of savings that come up to their personal allowance threshold.

How To Pay Less Tax: The Less Obvious Methods

If you are a parent with young children you can avoid paying taxation on £55 a week by investing in the government’s child care vouchers, if your employer is enrolled in the scheme. This allowance is allocated to each parent and therefore a couple can buy £110 a week of vouchers.

By diverting your income into the vouchers, you can avoid income tax and NI contributions being levied on the sum and have the full amount to buy child care with.

This means that most tax payers on basic rate can save a maximum of £930 per year on income tax and NI.

Another way of protecting your income from taxation is through renting out part of your property. The government’s Rent a Room Scheme has a tax threshold of £4,250 per year.

You will need to charge at least that amount to a tenant per year before you have to pay any tax at all, making room rental an attractive means of tax free income generation.

Getting Some Guidance

This list of tax benefits is by no means exhaustive. It shows that you simply need to be sensible with your finances to reduce your tax liability.

Getting help and seeking advice can be one of the most effective investments, however, if you are looking to streamline your finances and reduce your overall tax burden.


How Divorce Could Affect Your Retirement Income

“Breaking up is never easy” but sometimes it’s the best you can do. The Abba hit “Knowing Me, Knowing You” was released in 1976. A lot has changed since then, but breaking up still remains a painful and potentially expensive matter.

The Basics of Divorce

There are three steps to getting a divorce.

Step one is to file a divorce petition. This currently carries a fee of £410.

If your spouse accepts the divorce petition, you can then apply for a decree nisi. This is essentially a statement which confirms that it is legally acceptable to end the marriage. If your spouse refuses to accept the petition and you wish to proceed with the divorce, you will need to attend a court hearing. You may require legal representation for this. The cost of this will vary depending on your needs.

If a decree nisi is granted, there is a 6-week cooling off period before you can apply for a decree absolute. The decree absolute formally and finally ends the marriage.

The Basics of Divorce Finance

It is perfectly possible and legal for two parties to divide their assets between themselves amicably upon divorce. Whether or not this is advisable depends on a number of factors.

Even if the divorce is amicable, it may still be worth both parties taking legal advice. Divorce can be a highly emotional situation. Having professional legal advice can help to keep both people focused on the practicalities.

There are basically four points to consider when looking at finances during a divorce.

The needs of children.
The immediate needs of the divorcing parties.
Longer-term maintenance.
The division of assets and debts
Where there are children in a marriage their needs will always be the highest priority. After this, both couples will need sufficient funds to meet their current needs. How much this will be will depend on individual circumstances.

It may also be considered appropriate for one party to pay another maintenance over a longer-term period. This is particularly likely if there are children. Even without children, however, the lower-income partner may be entitled to maintenance.

The division of assets and debts covers basically everything else – including pension savings.

How to Protect Your Finances in Divorce

Moving on financially after divorce is a bit like unscrambling eggs. Fortunately it can be done. You will need to disentangle yourself and your credit record from your spouse as quickly and effectively as possible.

One of your first priorities should therefore be to set up a current account in your own name. You should also aim to close all joint accounts as soon as you can. Separate lives mean separate bank accounts.

If you have joint debt, then this also needs to be dealt with. In an ideal world, the debt would be repaid as part of the divorce process. For example, joint assets could be sold and the proceeds used to pay the debt.

In the real world, this may not be possible. For example if children are to stay in the family home, then the mortgage payments on it will still need to be met.

Therefore the division of debts needs to be looked at just as carefully as the division of assets.

Divorce and Retirement Planning

Divorce can have a significant impact on your financial health in your later years.

First of all your existing retirement savings may well need to be split with your ex spouse.

Secondly you are each going to need to run your own home. This means that you may have the initial expenses of renting or buying a new property. It also means that bills which may have been split by two people now need to be paid individually.

Will You Be A Silver Entrepreneur?

Retirement isn’t what it used to be. A century ago, when old age pensions were first introduced, life expectancy was far lower than it is today.

After a life of hard manual work, most people of retirement age had approximately five years to savour the meagre entitlements available, before shuffling off this mortal coil aged, on average, 52.

The future for retirees today could not be more different, the years that follow the end of a working life are no longer counted in single digits but normally, decades.

For many, their retirements are a time of new opportunities when a lifetime of prudence and investment in pension pots pays off.

With the advent of new pension freedoms enabling savers to draw down large lump sums from their pensions with-out large tax penalties, it might be possible for a generation of ‘silver entrepreneurs’ to emerge.

According to the Daily Mail, a tenth of retirees are now considering taking the plunge and setting up small businesses with their nest eggs and on average, the size of the pot they can draw from is £550,000.

This suggests that the desire to ‘start a business using my pension’, is widespread amongst retirees.

A lifetime of expertise

Ending a career at 55 or 65 has often meant abandoning a lifetime of knowledge and expertise acquired in a valuable and important field.

With new opportunities to ‘use my pension to invest in a business’ opening to entrepreneurial pensioners, these skills no longer have to go to waste.

It might be that in retirement you can establish the type of small business or consultancy that you had always dreamt of, one which is not necessarily based on your work.

Some retirees, used to a life of frenetic activity in business, have found doing nothing in retirement frustrating and there is growing evidence that simply ‘giving up’ at 65 is very bad for mental and physical health.

Getting Advice

Even though many retirees might have had successful business careers, the prospect of cashing in up to a quarter of an entire pension pot in one go to set up a small business can be daunting.

Firstly, any investment is a risk, even if you think the business idea is sound and likely to work. Taking a risk when you are 35 is a different proposition to taking one when you are 65.

This means that, not only should you not gamble more than you can afford to lose (not that you can really ‘afford’ to lose any pension at all), but seeking professional business and investment advice is essential.

Many people who have worked in law, finance, engineering or other key professions or trades might have managed throughout their career to have successfully avoided ever creating a business plan or cash flow forecast.

Most local authorities run free business courses, which are always worthwhile investing your time in, but getting expert independent financial advice on your new business is also important.

Making the business as tax efficient as possible, ensuring that the right kinds of personal and professional insurance, or public liability insurance is purchased at as cheap a price as possible - these are the types of issues that a trained advisor can give you some guidance on.

Summer Budget Review

The first only-Conservative budget since 1996 was eagerly awaited by some and dreaded by others. Freed from the restraining hands of the Lib Dems he was free to produce the budget he wanted. In his sights were benefits, tax credits and student grants, while he also indicated a slightly less draconian approach to austerity.

Good News On The Economy

From the outset, he was keen to promote the government’s economic credentials. Britain was growing faster than any other major advanced economy at 2.6% in 2014. Over the next few years, GDP would be 2.5% in 2015, 2.3% in 2016 and 2.4% in 2019.

Employment is on the up and 1,000 extra jobs have been created every day.

The work to cut the deficit is to continue albeit at a slightly slower rate than before. The much longed-for surplus has been postponed by a year until 2019-20. Borrowing is expected to fall from £69.5bn this year to £43.1bn, £24.3bn and £6bn over the following few years culminating in a £10bn surplus in 2019/20.
Debt, as a share of GDP, is at 80.4% this year and will fall to 79.8%, 77.8%, 74.8%, before it reaches 71.6% in 2019/20.

In taking a slightly gentler approach to balancing the books, the government will be spending more than was previously planned. According to the Office of Budget Responsibility, it will be spending £83bn more than announced in the March budget. The squeeze on public sector spending will end a year earlier.


If the pace of austerity is a little slower, benefits were still firmly on the chopping block. Working age benefits have been frozen for four years including tax credits. Child tax credits will be restricted to two children after April 2017. The level of tax credit withdrawal will be reduced from £6,420 to £3,850.

Young people will be forced to either earn or learn, meaning they will no longer be automatically entitled to housing benefit.

In pensions, a new green paper published by the government opens the way to a significant change in the way we save for pensions. If the changes, which will be open to a public consultation period are adopted, pensions will become more like ISAs with people able to earn a tax-free sum that is topped up by the government. Meanwhile, the triple lock on the state pension will be maintained and tax relief on pension earnings restricted to £10,000 a year for those earning in excess of £150,000 per year.

Tax and Pay

As expected, the rate at which earners enter income tax has been increased again. That pops up to £11,000 as the government edges closer to its target of £12,000. The rate for the 40p rate rose from £42,385 to 43,000. As predicted, inheritance tax has received another cut. The threshold increases to £1million from 2017 with people being able to transfer an extra £175,000 “family home allowance” to their children tax-free on their death.

However, the headline grabber was the theft of an old Labour policy. The minimum wage would be replaced which something labelled as a National Living Wage. This will start at £7.20 an hour in April 2016 and will rise to £9 an hour by 2020, replacing the £6.50 per hour minimum wage. However, the levels more or less match predictions for the minimum wage over the same period. Critics were quick to argue that they had done little more than rebrand the existing system.

Osbourne spoke at length in support of non-dom tax arrangements, which he said were crucial to encouraging investment in the country, but he accepted the system needed to change and abolished permanent non-dom status. Anyone who has been living in the country for 15 of the last 20 years will be forced to pay the same amount of tax as everyone else.

Tax avoidance will also be targeted, with £750 million going to HMRC to target tax avoidance and evasion. With users of complex evasion schemes being named and shamed, he hopes to raise an estimated £7.2bn.


There were a number of measures designed to appeal to businesses. Corporation tax is to come down from 20% to 19% in 2017 and 18% in 2020. The bank levy, which has sparked wails of protest from the City, will be decreased to 0.21%, to 0.18%, reducing to 0.1% in 2021.

Small businesses had reason for cheer with an increase in the level of national insurance provisions. From 2016 this will rise by 50% to £3,000. At the same time, though, he made moves to clamp down on attempts by businesses to exploit loopholes such as setting up separate companies for each of their employees to reduce National Insurance contributions.

There are more moves to spread the wealth a little wider with attempts to spark faster growth away from the capital. Dusting down the Northern Powerhouse, he spoke of more powers being given to Greater Manchester and an Oyster card style travel system across the region. However, moves to electrify parts of the rail network in Northern England have been postponed, giving Harriet Harman a chance to lay into the plan in her response. “You can’t build a productive economy on a political slogan,” she said.

Any Other Business

This was a budget packed with policies. Among the other announcements was a restriction of Mortgage interest relief for buy-to-let mortgages to the rate of income tax. The rent a room relief is to be extended to £7,500 and the NHS will receive £8bn of extra funding. There was also a slight surprise in a commitment to meet NATO targets of spending 2% of GDP on defence. The UK had been widely expected to fall below this figure. Maintaining the 2% figure will require significant reinvestment into the armed forces.

Students suffered a hit with the removal of maintenance grants to be replaced by loans. However, to make up the shortfall the size of the loans is to be increased to £8,200. This will be repayable once the student’s earnings exceed £20,000.

This was a budget the budget most people expected. For the Conservatives it has intended to place them as the party of fiscal responsibility. Osbourne said he hoped to set a standard that would require all future Chancellors to only spend as much as they brought in.

Critics, meanwhile point to the cut in housing benefits to the young, the removal of maintenance grants, benefits caps, and tax credit cuts, as well as the absence of green issues.

Will The Next Budget Be Radical?

On 8th July 2015, George Osborne will deliver the first completely Conservative budget since Kenneth Clarke in 1996.

Given that George Osborne delivered his last budget on 18th March 2015, you could well we asking yourself “Why do we need another budget now?” The answer is essentially that the last budget was a combined Tory/Lib Dem budget.

This time around the Tories are working to their own agenda. The more cynical may also note that the Labour party lost its former shadow chancellor, Ed Balls, in the last election. This may make it more difficult for them to respond effectively to the Tory proposals.

The speed with which this budget is being announced has led to it being termed an “emergency budget”. Will it, however, be a radical budget?

Getting The UK Back Into The Black

The Conservatives have made a pledge to get the UK out of debt. To do this, they need to make spending cuts and encourage growth.

There have been various suggestions as to where spending cuts could be made. The Queen’s Speech included a reference to the removal of housing benefit for those aged 18 to 21.

David Cameron has also indicated support for a reduction in the benefits cap. This currently stands at £26,000 p.a., but could be reduced to £23,000 p.a.

Pensioners Are Likely To Be Protected

The Conservatives pledged to retain the triple-lock system.

This means that the state pension will rise in line with average earnings, inflation or 2.5%, whichever is the highest.

On the other hand, higher earners are likely to see a reduction in the pension tax relief available to them.

Housing Is A Key Area

The Conservatives believe that reducing pension tax relief for higher earners will counterbalance increasing the Inheritance Tax threshold.

They have pledged to raise this from £325,000 to £1 million. While this may seem like a large increase, it’s worth remembering that the current limit was introduced in 2009. Since then rising house prices have made Inheritance Tax a fact of life (or death) for a growing number of people.

This rise is an attempt to focus the effect of the tax on the highest earners. It will leave those on lower incomes with more money to spend, which may encourage growth.

To help people to get on the housing ladder in the first place, the Conservatives plan to introduce a “Help to Buy ISA”. This will only be available to first-time buyers.

In short, the government will add a 25% top-up to deposits made, up to a maximum of £3,000. In other words, if you save £12,000 yourself, you will get £3,000 from the government.

If you plan to buy as part of a couple, then both parties can have one each. This means that a couple could potentially have their deposits boosted by £6,000.

A Budget For Working People?

The personal allowance for Income Tax currently stands at £10,600. Under the coalition budget, it was due to rise to £11,000 in the financial year 2016/2017.

The Conservatives have pledged to raise it immediately to £12,500. Similarly they promised to raise the starting rate for the 40% tax bracket from £42,385 to £50,000. Obviously this means less money for the treasury, hence the need for spending cuts.

The Conservatives hope, however, that giving individuals more money in their pocket will help to boost the economy through growth.

So What Does This All Mean?

In simple terms, the effect of the budget will only be fully realized once it is implemented. In its general principles, it is arguably broadly similar to the coalition budget.

This is hardly surprising given that the Conservatives were by far the bigger party in the partnership. Whether the differences can be considered radical is largely a matter of opinion.

Use Your ISA Allowance Or Lose It

The phrase “use it or lose it” is very relevant to ISAs. As of April 6th 2015 you have 366 days to save up to £15,240 in your ISA. Even though 2016 is a leap year, giving you an extra day to achieve this, it’s recommended to get off the starting blocks quickly. Let’s cover the basics first.

What Is An ISA?

ISA stands for Individual Savings Account. In very simple terms, you pay into an ISA out of your post-tax income. You can either keep this money as cash or use it to buy investments. You should know that there is a government-defined list of ISA-approved investments and you have to choose from these. Having said that, the list is pretty extensive, so you have a good chance of finding something to suit you. If you keep it as cash then the interest you earn is tax-free. Generally speaking income earned from investments is also tax-free, but there are some exceptions to this.

How Does An ISA Work?

You pay into an ISA in the same way as you pay into any other bank account. As previously mentioned the amount you can deposit in any one year is capped. It’s important to understand that this cap relates to the amount deposited rather than the amount in the account at the end of the tax year. In other words, if you withdraw money, you can’t just put it back later. Otherwise ISAs work much the same way as a standard savings account or as an investment-funding account. You can even use the same ISA for both purposes, dividing your money as you see fit.

Do I Have to Pay into An ISA in One Go?

No, you can save over the course of the year if you want to. Alternatively you can pay in a lump sum if that suits you better.

What’s The Difference Between ISAs And NISAs?

Last year ISAs were given a revamp. In short the limits were increased and they were made more flexible. For a while these new-format ISAs were referred to as NISAs. Sometimes they still are, but the term ISA is also in common use. There’s a limit to how long something can really be considered new.

How Do I Save into A NISA/ISA?

The short answer is however it suits you best. If you have a regular income, you can set up a standing order to ensure that your ISA is topped up when you get paid. If your income fluctuates you can deposit money throughout the year as you have it spare. Alternatively you could save into a regular savings account throughout the year and transfer a lump sum at the end of the tax year. That way you can take out and replace money without any penalties.

How can I make the most of my NISA/ISA?

Quite simply the more you put in, the more you can potentially get out. In other words, if you possibly can, use your whole ISA allowance.

If you were unable to max out your ISA last year, now may be a good time to reflect on why that was. If you simply didn’t have the money, then that’s fair enough. Is there anything you could do to make your income go a little further this year? Maybe now would be a good time to review the family finances and run a keen eye over your household budget. If you did have the money but didn’t put it into an ISA, what specifically stopped you? Did you just forget? If so a standing order may be the answer. Alternatively you could set a reminder on your phone or calendar to double-check if you should be making a deposit.

Should I Fix My Mortgage Now?

Deflation is not all it is cracked up to be. Recently, as we cheered at the fall in fuel prices to historic lows, the fact that several industries were dependent on buoyant oil prices barely occurred to many of us.

However, the current plight of the oil city Aberdeen shows that there are significant problems attached to our current glut of cheap fuel.

Currently we have a glut of cheap borrowing too. Interest rates are at historic low, giving many of us low cost mortgages.

However, the actual amount of credit on offer is tightly regulated, following the housing boom and housing crash.

At the moment, there seems little evidence that an interest rate is in the offing in the short term and home owners are benefiting from the lowest mortgage rates, but even if this lasts, it might not be great for the economy in the long run.

How do I reduce my mortgage payments?

Classical economics suggests that supply and demand reach an equilibrium eventually and that equilibrium is always expressed through the medium of the price mechanism.

We have lived through a half decade of repressed demand in the economy for goods and services (in this case property) due to the long period of belt tightening that we have endured. Supply has remained relatively static, meaning that overall prices have declined or at least stagnated.

There are exceptions to this rule, London and the South East for example, where demand has outstripped supply.

In some sectors of the housing market (luxury six figure properties), spending power has remained largely consistent, meaning that there has been little overall decline.

Lowest interest rates

This decline of spending with the market place has led to a degree of deflation and for property owners this has brought about considerable advantages.

Those home owners on fixed rate mortgage products have been able to switch to variable rates, knowing that in all likelihood the rate won’t really vary all that much and if it does, the base rate set by the Bank of England is still 0.5 of a percent.

In the long term, this, of course, cannot last. The slashing of the cost of borrowing to almost non existent levels has brought about cheap mortgages for many of us, but for savers, it has been little short of disastrous.

Families used to accruing valuable interest off their savings have seen an important source of income and investment lost because of the decision to bring the base rate so low.

Savers will eventually demand to have their fortunes restored and when the Bank of England and the government comply, mortgages will become more expensive once again.

Mortgage Deals

Judging whether or not to take out a fixed rate mortgage now is beyond the scope (and the legal remit) of this blog, and ultimately it is a question that can only be answered by the borrower.

If you are risk averse and value security enough that you are willing to pay slightly more for a feeling that your financial future is more secure, then buying a fixed rate is eminently sensible.

However, if you have speculated that rates will stay low and there is no need to switch to a more expensive fixed rate, then you can stay on a variable deal. This might result in a scramble for a fixed rate policy when rate changes are announced, and at that time the cost of a fixed rate deal will inevitably be higher.

If you would like some independent advice on how best to manage the future of your mortgage, click here for details.


Find My Pension

Some things are so easily lost. Car keys, mobile phone, wallet, or your entire financial future.

At any given time a staggering five million people have lost track of their pension providers, like squirrels who bury acorns but forget where they put them.

The result of a lost pension may lead to a diminished income at retirement age and eventually the Treasury benefitting from the unclaimed wealth.

The government, keen for individuals to be as minimal burden on the state in their dotage as possible have launched the Pension Tracing Service which will help to find missing pension pots.

Finding them, however, is not the end of the story.

Reunited with your long lost pension

Pension pots need to be monitored in order to get the most out of them and to ensure your retirement is a time in your life you can enjoy.

Each pension pot that you have is subject to management charges and possible other annual costs.

In addition to this, some of the pension pots that you have might not have been performing as well as others.

Not all pension funds accumulate wealth as efficiently as others and therefore it is important to closely scrutinise how well your money has actually been performing over the years.

Once you have worked out which pension pots are performing and which are not, you need to explore your options.

Some pension plans might have benefits or guarantees attached to them, so make sure you know the long term consequences of any financial decision.

In addition to this, pensions that have a clause enabling you to retire earlier, or pensions that give you the option to draw down higher than normal lump sums cash free are also valuable and potentially worth keeping.

If you would like to review your pensions and assess the performance, it might be a good idea to seek some financial advice.


The Theory Of Every Asset

Physics is a more exact science than finance, and judging by recent Oscar nominations, it’s often more romantic and glamorous.

Stephen Hawking, one of the great minds of the 20th Century was one of the first proponents of unified field theory, or the theory that explained the entire universe.

So far a unified financial theory has yet to be created, but let’s consider the possible components.

Many of us are acquisitive, and we look to maximise profit and minimise loss in our day to day money management. We balance the need to acquire against the need to limit risk and this leads to a level of security we are comfortable with.

The one insight that is more useful than any other to the novice, or even the seasoned investor, is that their principal role, above all else, is to manage and to an extent, tolerate risk.

A strategy of investing for the long term as opposed to looking for short term higher risk investments generally provides more stability over time.

This is not a new idea particularly, but, as with all the most enduring scientific discoveries in the past, it doesn’t need to be, is simply has to make sense and to work.

Scientists like Stephen Hawking have often revolutionised how we see the universe in small steps, building on the achievements of their contemporaries and as Isaac Newton put it ‘standing on the shoulders of giants’.

A good investment firm with sound investment choices operates in a similar way, using the knowledge of experts in their given fields, to maximise return by investing in funds and minimise risk for the investor.

A well managed fund will seek to perform these two roles and make the investor’s money work hard so the investor doesn’t have to.

Therefore all investors have to accept a degree of risk when they purchase, but in return, the risk takers are entitled to a share of any rewards the accrue.

There now follows a statement that almost goes without saying, one which any investor with a modicum of common sense knows, but one which, by law, we have to reiterate:

"Past performance is not a guide to future performance. The value of stock market investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested.”

Yes, the value of investments can fluctuate, it can rise and it can fall. It is for this reason that the many investors ensure they access financial advice on how to invest their money.


You Can Invest In Property With Buy To Let

Back in the day

Ten years ago, nearly every TV show across a wide range of channels was property related. Not only was it cheap, easy TV to make, but the public couldn’t get enough of it.

A Place In The Sun, Property Ladder, that show with Kevin McLeod where people turn barns into mansions, the list was endless.

The vast public appetite for such programmes and for property investment in general was part of a vast bubble that, as we now know, burst in 2008.

It’s easy to be wise after the fact, and Britain’s property market, particularly the buy-to-let market has never quite been the same since.

A super cheap buy to let market between 1997 and 2008 saw large numbers of ‘get rich quick’ casual landlords buy properties in the hope that they would have to do very little in return for a continual income.

Many left the market in 2008, and a few limped on, realising that being a landlord is often quite demanding.

There is still a place for serious buy to letters out there who can work and think strategically to build up a business.

If you are thinking about it as an investment strategy for the future, this blog will give you some useful pointers.

Different finance

You cannot use a conventional mortgage or insurance to buy a buy to let property and switching a regular residential home over to rental use requires a special buy to let mortgage.

Scrimp on this detail and the bank might call in its mortgage altogether.

A mortgage for a rental property will typically have a much higher interest rate than a residential mortgage.

The loan to value percentage (how much of the total value of the property you can actually borrow), is higher for a buy to let mortgage than for a residential mortgage.

This shows that banks are interested in lending to serious investors who can a higher percent of the value of a property themselves.

One aspect of the buy to let mortgage that makes life slightly easier for the purchaser is the fact that they are often interest only.

This means that each monthly repayment covers just the interest payment and not the loan ‘capital’. At the end of the agreement the capital can be repaid by selling the property and the seller can retain any profits.

This presumes, of course, that there are profits. A poor purchasing decision could leave you with negative equity, or you might find, as millions have in the last decade, that markets can slump as well as boom.

Business Strategy

The bank sees the borrower as a business partner, one which it hopes will be fit, healthy and alive towards the end of the agreement.

The risk averse banking sector is no longer throwing money at house buyers (private or rental), and expect a buy to let landlord to take on the bulk of liability.

This means that if you are going into the letting business, you need to make sure that you have a viable business plan.

Are you targeting young professionals, students, married couples or commuters? If you don’t have a niche market in mind, you need to get one before you go any further.

This will determine where, and what you buy. There is no point buying a flat for wealthy young professionals in bedsit land, or a property aimed at families in a row of student houses.

Your Legal Responsibilities

You will also be responsible to the local authority as well as the bank; a rental property has to reach the basic levels of safety, hygiene and energy efficiency.

It might be worth consulting your council’s housing department for further advice on your legal requirements before you proceed.

Remember as well that your property will be liable for council tax payments, a cost that most landlords pass on to the tenants.

If you would like further advice on the kinds of finance available for fledgling buy to let businesses, speak to a financial adviser who deals in mortgage advice.


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