Beware - a Budget approaching !

The Budget the Chancellor will give on the 8th of July may have bad news for Higher Rate Taxpayers. There has been considerable discussion on whether he will limit tax relief on pensions to the Basic Rate (20%) tax relief. If you are a Higher Rate Taxpayer, you might want to consider making your pension contributions in this Tax Year sooner rather than later.

WHY USE US?

We have over 30 years of experience with financial matters which has given us a great deal of expertise and know-how.

We seek to provide an efficient, professional and friendly service to all our clients.

Here are a few recent client comments:

“You are trustworthy and professional with clear explanations given. Thanks for your patience.”

– Mr JG of East Grinstead

“Thank you for your help and attention, excellent as always.”

– Mrs CC of Leicestershire

“Ever grateful for your prompt and helpful advice.”

 – Professor BHW of Oxford

“I needed someone I could trust.”
– Mr GN of Turners Hill,West Sussex


“That’s brilliant. Can’t believe how quick you got this (mortgage offer) through.”
– TM and DW of Crawley, West Sussex

REMORTGAGE RATE WAR

Lenders are still fighting for market share which means that interest rates are at their lowest levels ever. If you are on your lender’s standard variable rate, it is worth finding out what your options are. It could save you hundreds of pounds and, in some cases, even thousands of pounds. We would be happy to provide quotations without cost or obligation.

INTEREST-ONLY MORTGAGES AND EQUITY RELEASE

Interest-only mortgages were popular in past years as the monthly payments for such were extremely low.

However, in many cases the means for eventual repayment of the amount borrowed was not dealt with properly – leaving many with money still owing on their mortgage and a relatively short number of years in which to repay it.

For those over 55 there is now an option to secure an indefinite interest-only mortgage arrangement at a fixed rate for the life of the borrowing. This is a new development in the Equity Release marketplace. Previously the only option one had with a Life-Time Mortgage was to allow the interest to accumulate. The repayment of the interest and original amount borrowed would take place on the eventual sale of the property. Now, however, many providers are offering an option which allows those taking out a Life-Time Mortgage arrangement to make voluntary payments of interest, and even capital. Since these payments are voluntary, you can miss payments without penalty or even stop payments altogether. There are also no affordability requirements as the borrowing is based on age and not on income.

Note: this type of equity release is only available from age 55. At age 55 you can only take about 25% of property value. This rises to about 48% of property value for those in their 80s.

Contact us with any questions you have or for quotations.

NOT YET 55?

If you have not reached the age of 55, you will have all of this ahead of you, but it does lay out a pension future with many more choices.

Those who are employed and now part of the compulsory Automatic Enrolment Company Pensions will have the satisfaction of knowing that they will be able to eventually access the money they and

their employer put in as cash. In this way pensions become much more of a transparent, tax-effective

long term savings plan. Hopefully it will also mean that more people will save more in their pensions,

 know that they eventually will be able to cash it in – either all at once, or bit by bit.

 

BETTER IN A BUY-TO-LET?

It is expected that many people may want to empty their pension funds and put the proceeds into one or more residential buy-to-let properties. This may suit many, but there are some factors to take into

account:
• How much tax will have to be paid on the money withdrawn (if in excess of the 25% tax-free sum);

• The amount of Stamp Duty to pay (on properties costing in excess of £125,000);

• The legal fees and other costs to be paid to purchase a property;

• The fact that rental income is potentially liable to tax;

• That there may be Capital Gains Tax to be paid on the eventual sale of the property.

This is not intended to be a statement that no-one should use their pension fund to invest in a Buy-to-Let, but it is meant to ensure that anyone who intends to do so balances the desire to acquire a property with the advantages of keeping the money in a pension (tax free increase in value; ability to pass to beneficiaries free of tax; ability to access income from the pension fund instantly rather than suffering the delays in releasing the value locked up in a property).

New Pension Vehicles

Providers are developing new and updated pension contracts to take advantage of the new rules. Contact us to discuss your options.