“RETIREMENT” PLANNING

A majority of the work we are doing currently concerns “retirement”. It is not a word we care to use
as it implies a person will give up useful work and do little or nothing. We prefer to view it as a change of operating basis – of being able to move away from what one has had to do to make money, to other activities which one simply wants to do. Of course, there still does need to be adequate money available which is the reason why you should plan for this changeover.

Pensions are the source of income in later years for most people. They start with the new State Pension which currently pays £168.80 per week for those who have put in at least 35 years of work (and paid National Insurance in those years or were credited with years – for example, when raising children).

For the employed there are also occupational or workplace pensions. While the days of the best company pensions have faded into the past, they can still provide an excellent source of income in retirement with both the employer and employee having contributed. The self-employed need to establish their own pensions and make adequate payments if they are going to have their pension providing a reasonable amount of income. With people moving jobs more frequently there is often a number of smaller pensions from one’s work history. The main advantages of pensions is that you receive tax relief on what you invest into it (up to an annual maximum amount). For the Basic Rate taxpayer for example, the £1.00 they put into their pension will get 25p more added by the Government so it turns £1.00 to £1.25 overnight without risk. And a Higher Rate taxpayer gets even more tax relief.

THE TIME LORD AND WILLS

Do you know that you can go back up to 2 years before a person died and make amendments to their will? You can use what is called a Deed of Variation. As long as all the beneficiaries agree to the proposed changes, the will can be altered either to save on tax or just to make the result fairer to all beneficiaries. Of course, there does need to be a will in the first place, so do make sure you have one and it is up to date. (And do think seriously about arranging LPAs – Lasting Powers of Attorney).

BORROWING LIMITED BY AGE

In working out what they think a borrower can afford, lenders will consider the borrowers’ ages, since, at some future point, their income may be reduced or stopped altogether. 10 years ago most lenders set a limit of age 65 as the maximum age to which they would lend. This made it difficult for older people to get a long enough mortgage term to make the payments affordable. In recent years, however, this maximum age has moved to 70 for most lenders and even 75 and above for others – depending on the nature of the income the borrowers have.

There is an exception where age can be, in fact, an advantage in borrowing. What are called “Lifetime Mortgages” rely only on the ages of the borrowers and the value of the property. It is only
available for those aged 55 or older and who have considerable value in the property as the level of
borrowing even for the oldest borrowers is capped at about 50% of the property value. For those
stuck with an Interest-Only mortgage coming to an end, a Lifetime Mortgage can provide a useful
exit strategy. For example, a person aged 60 with a property worth £200,000 could get a Lifetime
Mortgage of up to about 34%, i.e. £68,000. One aged 65 could get up to about 38% of the property
value, i.e. £76,000 and a person aged 75 could get up to about 49% of the value, i.e. £98,000 on a
property valued at £200,000. Do contact us if you would like to discuss the options available to you.

BORROWING OPTIONS

A home is also an investment which historically as proven to be one of the best investments one can make. As the mortgage reduces as you pay it off, the share of the property you own (your “equity”) increases. It means that it can also be used as security to raise funds to achieve other objectives you might have in your life.
Your mortgage provider will, of course, want to be satisfied that you can afford to pay back what you are borrowing and will want proof of your income(s). While different lenders calculate affordability in different ways, a good rule of thumb is borrowing being limited to 4.5 times one’s salary or other guaranteed income. So, if your salary was £25,000, most lenders would consider giving you a mortgage of 4.5 x £25,000, i.e. £112,500 (subject to credit status).

THE HOME

Having and protecting a home is a financial priority for most of us. This ensures that we cannot be moved on by a landlord and gives us the freedom to decorate it or change it as we want. As the majority of us do not have the funds to buy a house outright, it means that getting (and paying!) a mortgage is an essential requirement. Currently the property market is pretty static – another result of the political uncertainty. On the plus side, however, this has meant that mortgage interest rates have remained at record low levels. This makes it a good time to take out, or change to, an interest rate fixed for a reasonable term. We consider the five year fixed rates to look pretty attractive. If you have a mortgage, it would be a good time to ring up your lender and find out what they can offer. You can then make other enquiries to other lenders (or using the services of an independent mortgage broker such as ourselves) and decide the best route for you to take.

KEEP CALM AND CARRY ON

Political uncertainties tend to shake confidence in a country. As the value of money and successful trade rely on confidence, this is non-optimum. While hoping that the current matters are resolved quickly, most of us will be limited as regards what we can do personally to affect the outcome. Personal financial basics, however, do not change even in such an environment. The first essential is to ensure that you have more money coming in than you are spending (taking into account ALL of your outgoings). A second one would be to ensure money is set aside as reserves for future disasters or emergencies. It does take a bit of organising to achieve this state which the famous author, Charles Dickens, had one of his characters (Mr Micawber) describe as a state of “Happiness” as compared to the state of “Misery” if one is overspending.

PENSION OPTIONS

If you have pensions and need advice about your options, do give us a ring. There are a number of points to consider.

KEEPING YOUR RESIDENTIAL MORTGAGE RATE COMPETITIVE

Do review your mortgage rate regularly. If you are on the SVR (Standard Variable Rate), a simple telephone call to your lender might get you a considerably better deal and save you hundreds of pounds.

BUY NOW?

The property market is generally stable with properties holding their value, and interest rates remain attractive but changes in the economy caused by possible results of Brexit actions could affect these. If a Lifetime Mortgage is something you are considering, you might wish to do it sooner rather than later.

HOW MUCH MONEY CAN YOU RELEASE

Here are some examples of the maximum amounts that could be borrowed using a Lifetime Mortgage. The examples are based on a property worth £300,000 but the scale remains the same for a property worth more and for one worth less. Just give us a ring if you want to know how much you could borrow on your property.

Note: Interest rates have generally been good in the recent past. Any

changes that might come with Brexit could change that so, if a Lifetime Mortgage is something you want to do, it may be best to do it now.

Age     Loan to Value    Maximum Borrowing on Property Worth £300,000

___________________________________________________________________

55        25.6%                £77,000

60        34.0%                £102,000 (Note: These are examples only but do

65        39.0%                £117,000 represent a reasonable estimate of the

70        44.0%                £132,000 maximum borrowing at the ages shown.)

75        47.0%                £141,000

(The illustrated borrowing amounts above assume a property value of £300,000 and, if the property is jointly owned, that the age is based on that of the younger partner/spouse. For maximum borrowing interest rates vary from about 6.0% to 7.0%. Lower percentages of borrowing give rates as low as 3.30%. Also, if there is a serious medical condition, a higher level of borrowing may be possible).

SOME OPTIONS WORTH KNOWING ABOUT

The increasing flexibility of Lifetime Mortgages includes the following facilities

1. Monthly fixed interest-only payments;

2. Ad hoc payments of up to 10% of the amount borrowed each year;

3. Borrowing is available even where there has been adverse credit, even a discharged bankruptcy;

4. Borrowing is available even where there are up to 2 lodgers or a self contained rental part of the house;

5. Money raised can be used for virtually any purpose. In our experience the money is raised mainly for the following reasons: to clear existing debt, for works to the property, to help out a family member and enjoying life a bit better.

6. Borrowing can be done either without having to make any payments with the borrowing and interest to be paid by the eventual sale of the property; or by paying interest monthly or occasionally.

FLEXIBLE MORTGAGE OPTIONS FOR LATER LIFE

Later life mortgage options are increasing. The increasing flexibility of Lifetime Mortgages are making these more and more popular. Here are some examples of cases we have dealt with recently:

- An older couple with an interest-only mortgage reaching its end and with a historical bankruptcy and CCJs were able to clear all they owed and also finance an extension to their property.

- Another couple had moved into what they were sure would be their last move and wanted to enjoy their life with a great deal of travelling while they could. They had already markedly assisted their grown-up children with their own properties and good incomes. There were some medical issues so they wanted to spend money now rather than later. They also wanted to maximise what they could get at the present fixed rates so as to avoid any possible interest rate increase in the future.

- Another couple in a Grade II listed building were reaching the end of their interest-only residential mortgage and did not want to have to move to a repayment mortgage. They wanted to stay where they were and continue with a similar interest-only type of arrangement but without a fixed term which could cause worries in the future.

- A widowed mother of two was still working but needed to extend the house so as to provide accommodation for an imminent grandchild. She wanted to pay interest monthly so the amount owed would not increase.

- Another family living in a large house wanted to keep the house for themselves and their daughters but were not able to access normal mortgage facilities due to the pensions they would receive being insufficient to fund the needed borrowing.

SUMMERTIME TIPS

While there are a lot of changes on the horizon politically we believe that that best way to deal with personal finances is keep to the basics of providing a valuable service or product and ensuring that you have more money coming in than going out.

Lasting Power of Attorneys (LPAs) and Wills – reminder. It may be that the older one gets the more aware one is of older people and the challenges that come in later life. Certainly we do see more situations where Wills and LPAs (Lasting Power of Attorney) are important. We do recommend that you seriously consider setting these up or reviewing them if you already have them.

DOING OUR BEST TO BE EFFICIENT AND SPEEDY!

We work hard to provide the best possible service we can for our clients to help them achieve their objectives and enjoy financial security (although sometimes achieving both these goals can present a challenge!). Here are what a few clients have written recently:

“A big thank-you from both of us. We have used you before and are confident in your advice.” - Mr & Mrs MB of Uckfield

“Totally met our expectations – over and beyond. Very fast and efficient and reliable service.” - Mr & Mrs LC of East Grinstead

SOME SAVINGS AND INVESTMENT OPTIONS

With interest rates at low levels it is a struggle to get much of a return on your cash savings. It is very sensible to keep a reasonable amount of money in cash for emergencies and for anything you will need to pay for in the near future. However, in the longer term you may wish to take a risk with some of your savings by investing them in stocks and shares. One easy way to do this is to use a Stocks and Shares ISA into which you pay monthly. By saving on a monthly basis the risk is less as sometimes you are buying when the market is high and sometimes you are buying when the market is low.


For those with a lump sum they are willing to invest for 5 years or longer, it may be worth looking at an Investment Bond. The money you put in is invested in a range of stocks and shares. You can decide at the start what level of risk you are willing to take, and you can change that whenever you wish. The Investment Bond has a useful feature. Each year you can withdraw up to 5% of the amount originally invested without paying tax. This would give you an annual amount of 5% net each year. This compares well with the 1% to 2% you might get from cash savings options, although you do need to take into account that the value of your investment overall will be going up and down in line with the Stockmarket. We would be happy to discuss this option with you in more detail. Just give us a ring.

CREDIT CARDS – A BLESSING OR A CURSE!

Earlier generations could not spend money they had not already earned, because they had no choice! The invention of credit cards has changed this. They provide a useful tool but also one that can easily lead to disaster. As with any tool they work well when they are used properly. Using a credit card for on-line purchases, for an alternative to cash when you are travelling abroad, etc. are all very valid. But one has to hold the line and make sure that one pays off the amount owing in full each month when it is due. It can become very difficult to clear credit card debts once they are allowed to build up and the interest is increasing.

STAYING UP TO DATE

Recently when completing our Lasting Power of Attorney, my wife and I had occasion to review our Wills. Written 25 years ago, needless to say that they needed updating for various reasons including the fact that one of the executors we had appointed to look after our children had recently passed away. The moral of the story is to do a regular review of these important matters.

MAXIMUM PENSION ALLOWANCE

While the rules are more complex for high earners, for most people with a personal pension plan, the maximum they can contribute to their pension is £40,000 per year or the amount of their annual taxable earnings, if less. Contact us if you want to find out what your maximum contribution would be.

There is also a maximum Pension Lifetime Allowance. The Government has put a limit on how much you can build up in your pension over your lifetime. This currently amounts to £1,055,000 and is intended to increase each year in line with the rate of inflation. For those with pensions related to their salary and years of service, there is a formula which gives an equivalent value that can be built up.

PENSION TIPS

If you are employed, do take advantage of the Workplace Pension your employer is required to offer – even if you will be working only a few years. Currently you are required to contribute 5% of your pay and your employer must contribute a further 3%. The Government also adds an additional amount in the way of a tax rebate. For a person paying the 20% basic rate of tax, for every £4.00 they put into their pension, they end up with approximately £8.00 in their pension pot. In other words they have doubled their money – not a bad deal! For a person paying higher rate tax, the return is even better. The Workplace Pension is, effectively, a pay increase and should not be ignored.

Besides being a pot of money to use from age 55 onwards, a pension policy also provides a useful source of life assurance. Should you die before you take your pension benefit, the value will be paid to whomever you have nominated as the beneficiary. If your death is before age 75, the beneficiary will receive the value of your pension fund free of all taxes. If you die age 75 or older, the beneficiary will receive the pension fund value subject to the beneficiary’s level of tax. Note: do remember to fill out a Nomination of Beneficiary form for any pension you have so that the money goes to whoever you really want it to go to!

Do keep in mind your options from age 55 (currently): 25% of the pension fund is available as tax-free cash; the balance is available as an annuity (guaranteed income) or can be left invested with the option to take an income from it whenever you choose. The annuity can be a lifetime annuity which pays out as long as you live, or a fixed term annuity which pays an income for a fixed number of years and then provides a guaranteed lump sum at the end of that term. Note: the income from an annuity will be taxed in the same way as if you had earned the income. And if you leave it invested, any money you withdraw from it subsequently, whether as occasional lump sums or a regular income, will also be treated as earned income and taxed accordingly.

UNDERSTANDING YOUR STATE PENSION

The State Pension Age is the age at which you can start drawing your State Pension. While the State Pension is not a fortune, it is still a useful guaranteed income and worth playing for. To get the maximum under the current rules you will need to have worked, and paid National Insurance, for 35 years. To help with your planning in this regard use the State Pension Forecast facility the Government provides. This will tell you when you can expect to receive your State Pension, how much it is likely to be and what you can do to catch up any missed years.

Go to www.nidirect.gov.uk/article/check-your-state-pension.

And do remember that you can delay taking your State Pension. Those still working on a significant salary when they reach their State Pension age, could minimise tax by postponing taking their State Pension until their income decreases. For each year you delay taking your State Pension, the amount you receive when you do start taking it will have increased by 5.8% for each year you have postponed it. Generally, however, most people are probably best advised to take their State Pension as soon as they are entitled to do so.

LIFETIME MORTGAGES – INCREASING NUMBER OF OPTIONS

The number of options available for Lifetime Mortgages continues to increase. The money withdrawn can be taken as a single lump sum, as an initial lump sum with the option to take further drawings later, or as an income over an agreed number of years.

And you can choose to allow the interest to roll up without making a payment, or to pay the interest monthly as with a standard interest-only option, or to make lump payments annually for up to 10% of the amount owed. The interest rates have also moved downward over the last year or two. If you are over 55, these options will be open to you. Do feel free to ring us to discuss what may be possible.

MORTGAGE STRATEGIES

If you have a mortgage, or need one, you will find that the mortgage market

currently is more flexible than it probably has ever been. The interest rates are

also very competitive.

First: If you have a mortgage, make sure that you have the best interest rate you can achieve. Unfortunately it is a general failing that most people are inclined not to search out a change unless something really does motivate them. The least one can do is to speak to their existing lender and see if they have an option to switch to a better rate for little or no cost. And once you have done that it is not too much more trouble to speak with a mortgage broker to see how that compares with what is available on the mortgage market. A saving thus achieved could amount to hundreds of pounds a year.

Second: If you feel you are disadvantaged by your age, think again. Lenders generally are now much

more flexible in lending to those in their 60s and 70s and even 80s. And there are also now RIOs

(Retirement Interest Only mortgages) as well as Lifetime Mortgages with various options.

Third: While generally we strive to have our mortgage paid off as soon as we can, it is worth  thinking outside the box as well to see how you might be able to utilise the value you have built up in the property. This might be to act as “Bank of Mum and Dad” to help children get on the property ladder. It also might be a way of making later life more enjoyable.

Fourth: You may feel trapped in your present mortgage arrangements, perhaps an interest-only

mortgage where the original plan to pay it off has not come off as expected.

Give us a ring.

We would be happy to work out your options.

A SAFE HAVEN FOR CASH!

While there is a great deal of competition by banks and building societies for your cash deposits, a safe and secure option is the National Savings and Investments Bank (NS&I).

While deposits with other savings institutions are insured by the Government up to a maximum

of £85,000 for each individuals, NS&I is a Government institution and ALL money held in S&I is guaranteed by the Treasury. (Note: The £85,000 limit applies to each banking group so you would need to check if you have savings with two or more companies which might in the same banking group, e.g. the Lloyds Banking Group includes Lloyds Bank, the Halifax and the Bank of Scotland so the £85,000 limit would apply to the total sum you have in all three of those institutions.)”.

Here is a look at some of the NS&I products:

1. Premium Bonds set to return 1.40% free of tax. Maximum £50,000 per person.

2. Guaranteed Income Bonds paying 1.45% guaranteed for one year or 1.90% guaranteed for 3 years (taxable). Maximum £10,000 per person in each.

3. Income Bond paying 1.15% with a maximum of £1 million (taxable)

4. Direct ISA paying 0.90% free of tax.

It is worth looking at NS&I as an option for your cash savings.

REMINDER – TAX BANDS IN THE NEW TAX YEAR (2019/20)!

Here are the new Income Tax bands that come into force from the 6th of April:

• Personal Tax Allowance - £12,500

This is the amount that an individual can earn before he pays any tax at all.

• Basic Rate Taxpayer (20%) - £37,500

This is the amount of earnings over the £12,500 that an individual would pay 20% tax on. So you would have to earn in excess of £50,000 before you started paying higher rate tax.

• Higher Rate Taxpayer (40%)

This is the amount over and above the Personal Tax Allowance and the Basic Rate. 40% tax would be charged on earnings from £50,000 to £150,000.

• Above that is the Additional Rate of Tax, i.e. 45%. So earnings over £150,000 would be charged at 45%.

Other tax matters to note are as follows:

Capital Gains Tax Exemption - £12,000

Inheritance Tax Nil-rate Band - £325,000

(unchanged from last year)

Rent-a-room relief - £7,500 per annum

(unchanged from last year)

Pension Lifetime Allowance - £1,055,000

Annual Pension Allowance - £40,000

(subject to earnings)

WHAT WE DON’T WANT TO THINK ABOUT

Death and incapacity are not popular subjects to think about or discuss but it is only right to consider how others close to you might be affected by your death or incapacity. Many have not written a will and the vast majority of people have not considered the effects of not setting up a Lasting Power of Attorney (LPA) in case one is still living but not able to make decisions on matters regarding their health or finances.

A recent case outlined by a firm of solicitors concerned a family with husband and wife in their mid-70s with two children and 3 grandchildren. They had written their wills but despite the recommendations of their financial adviser, they had not taken out an LPA. The husband suffered a sudden and unexpected stroke which left him effectively unable to make decisions. As many of his financial matters were in his sole name including his pension and investments, his wife could not take action to deal with his and the family’s needs. Even the financial adviser was not able to act on her behalf in respect of the husband’s financial matters as her husband had not given him authority to do so before he suffered the stroke.

They had to apply to what is called the Court of Protection which deals with such matters and is able to award powers to someone they deem appropriate in the form of a Deputy Order. The decision as to who was to be appointed was completely in the hands of the Court of Protection. It took several months to arrange and the costs of getting the Deputy Order was £3,243 and the estimated annual costs of the Deputy Order was about £1,500. Until that was set up the family had no say over the husband’s financial affairs or his medical treatment and rehabilitation.

There are two parts to an LPA. One is Health and Welfare and concerns medical treatment and related matters. The other is Property and Financial Affairs which deals with financial decisions and assets such as houses. One or both can be done. If done by a professional, which we would recommend, setting up an LPA is likely to cost in the region of £300 to £400.

NO INCOME REQUIREMENTS!

Where the problem is insufficient income to meet the lenders’ requirements there are now a

number of Lifetime Mortgage options where the borrowing is dependent on age and property value only.

The minimum age is 55 but where one spouse or partner is over 55 but the other is not, there still can be options. Many Lifetime Mortgage providers also can ignore credit problems such as arrears or defaults and even sometimes CCJs or even a historical bankruptcy. A survey carried out at the end of 2018 saw people using Lifetime Mortgages to raise funds for many different purposes including the following: 66% - home improvements; 34% - to go on holiday; 30% - to pay off debts; 27% -gifting to family or friends; 21% to clear an outstanding mortgage; 12% to help with regular bills.


Lifetime Mortgages now also allow monthly interest payments for some or all of the interest being charged so the interest does not have to be left to build up. The other alternative is to be able to make lump sum payments during the year without penalty – usually up to about 10% of the amount borrowed. The interest rates vary from provider to provider but generally depend on how much is being borrowed and the loan to value ratio. The best rates start at about 3.2% going up to about 6.0% for maximum borrowing. Here are some examples of how much could be borrowed:

(Note: These are approximate figures and assume a property value of £300,000)


Age 75 - £141,000 (47% of property value)
Age 70 - £135,000 (45% of property value)
Age 65 - £120,000 (40% of property value)
Age 60 - £98,800 (33% of property value)
Age 55 - £73,500 (25% of property value)

Taking all of these points into account, the bottom line is that if you are over 55, you may be able to borrow for any legal reason on an interest-only basis without having to meet any affordability requirements and regardless of credit difficulties. If you would like to find out what your options might be, just give us a ring.

OPENING THE CAGE!

The last several years has seen the arrival of many new options for those who had not been able to obtain a mortgage due to their age. Standard residential mortgage lenders generally now allow borrowing up to age 70 for those who are relying on earned income – whether employed or self-employed. For those who have guaranteed income into retirement such as pensions and investment or rental income, it is possible to borrow up to age 85 or even 90.

EXPERIENCE AND EXPERTISE DO MAKE A DIFFERENCE!

We do seek to use our experience and expertise to help our clients achieve their objectives and enjoy financial security. Here are what a few clients have written to us recently regarding their experiences with us: “I must place on record my sincere appreciation of the kindness and the thoroughness of your preparation of the proposed mortgage.” — Mr RJ of Burgess Hill

COUNTING THE COST OF CHRISTMAS

Those who are very forward thinking will have worked out their Christmas budget and earned the money well in advance. They then have no surprise credit card bills greeting them in the New Year. There are many, however who are not so well organised and credit card bills will be an unwelcome visitor in their households in January and February. Credit cards are a useful way to shop and pay and are valuable – providing that the balance is paid in full when it comes due. If you have had to use credit cards and do not have money to pay them off in full, we would advise that you take out a loan to pay them off. In this way you know they will eventually be paid off in full and end up costing you much less overall.

GETTING OLD

It happens. A useful checklist for putting matters in order when dealing with someone who is getting old (even yourself!) could be as follows:

1. Get a Will made. Dying without a Will leaves a problem for those left behind.

2. Get a Lasting Power of Attorney made. Most people have had the experience with a family member or friend where they reached a point where the friend or family member could no longer deal confidently with key decisions regarding their health or finances and would benefit from help from someone they can trust. The Lasting Power of Attorney (LPA) puts an arrangement in place so that the named person or persons can act on behalf of their friend or family member.

3. Make a plan regarding any Inheritance Tax that might have to be paid when you die. For those who

add up the value of their estate including property value and find it is less than £325,000, a simple note showing what you added up – the items and their values, would probably be enough of a plan.

THE MIDDLE ROAD FOR PENSIONS!

For the last few years those with personal pensions have found that they have a wide freedom of choice as to how they can take their pension benefits from age 55.

The new Flexi-Drawdown Pension arrangement allows you to keep your pension fund invested indefinitely and still have the option of taking out money from the pension at any time – whether that means taking it all at once, or monthly, or annually, or just bit by bit as needed. By leaving it invested in this way there is a chance of making a good return on your pension investment so that it lasts longer (although the value of the fund can go down as well as up, so it could also shorten the time the pension fund lasts).

The traditional way of taking pension income – the Lifetime Annuity, is also still available. In this way you can secure an income for life by exchanging some or all of your pension fund for a guaranteed income for life with a fixed rate of return. This provides the certainty of income for those who need that sort of certainty, but does mean that the lump sum used to “buy” the annuity is gone forever. There is a middle road option which not everyone is aware of. This is the “Fixed Term Annuity”.

This arrangement guarantees an income for a period of time – usually 5 years – with a guaranteed lump sum at the end of the fixed term. This provides the certainty of income for the fixed period which, for example, might be needed to cover a shortfall of income until one’s State Pension comes into payment. Additionally it guarantees a fixed lump sum on maturity. At that point you have the chance of making your choice all over again – whether that choice is to put the lump sum in a Flexi-Drawdown pension or purchase a Lifetime Annuity, or even purchase another Fixed Term Annuity. So this middle way provides some of each – guaranteed (!) – some income and some lump sum.

All of these choices have their advantages and disadvantages and so it is important to choose the one that best matches your income and investment needs. We can assist you to choose the option that best suits your situation.

MORE OBSTACLES FOR LANDLORDS

The Government does seem to be making it as difficult as possible for those seeking to rent out residential properties. The latest hurdle are the new rules governing houses in multiple occupation (HMO) which came into force on 1 October 2019. These rules affect any property which is occupied by five or more people, forming two or more separate households. The landlord must obtain a licence from the local authority which will include meeting the rules regarding minimum bedroom sizes.

MORTGAGE SOLUTIONS FOR OLDER GENERATIONS

There are many more options now for those who are 60 or older. Where the incomes are guaranteed, such as income from pensions or investment income, more lenders will now offer normal residential interest rates and terms. Where the incomes are not guaranteed or not at a high-enough level, there are the Lifetime Mortgage options. These are not based on income. They are calculated on age and property value only. The money raised can be for any purpose. You have the option of making payments or simply letting the interest be added to the original borrowing – to be paid from the eventual sale of the property. The interest rate is fixed for the life of the mortgage. Do contact us if you would like to know what options might be available to you.

THE AUTUMN STATEMENT!

There was not much announced in the Chancellor’s October statement that was new, but it is

worth taking note of the key tax changes from the 6th of April 2019.

Personal Tax And Benefits Changing From 6 April 2019

• The Personal Allowance (the amount that you can earn before you have to start paying any tax)increases from £11,500 to £12,500.

• The amount you can earn over and above this Personal Allowance and pay only 20% tax increases

to £37,500. This means that in the new Tax Year you will only pay 40% tax on earnings you make in

excess of £50,000 per annum.

• Earnings you have in the new Tax Year above £150,000 will be subject to 45% tax, the “Additional Tax Rate”. (Note: if you earn £100,000 or more, your entitlement to the £12,500 Personal Allowance will be lost progressively until it is gone completely for those earning £122,000 or more.)

• The Individual Savings Account (ISA) contribution limit will remain the same at £20,000. This includes the total of all payments in the year to any ISA.

• The Capital Gains Tax allowance increases from £11,700 to £12,000.

• The Inheritance Tax Allowance nil-rate band remains the same at £325,000. For those married or in a civil-partnership each can claim this allowance, so effectively, their joint estate would have to be worth more than £650,000 before Inheritance Tax would have to be paid. However, for those with residential property that they are leaving to direct descendants there is also the additional “Residence Nil-Rate Band” which increases in the new Tax Year from £125,000 to £150,000. This is a rather complicated calculation and you should take tax advice regarding it. The Inheritance Tax rate remains at 40%.

• The Pension Lifetime Allowance will increase from £1,030,000 to £1,055,000.

• We understand that the Rent-A-Room relief will continue at the level of £7,500 per annum so those
renting up to two rooms in their own home can earn up to this amount without a tax liability.