THE AUTUMN STATEMENT!

There was not much that was new announced in the Chancellor’s November statement

but it is worth taking note of the key tax changes from the 6th of April 2017:

Personal Tax And Benefits Changing From 6 April 2017

• The Personal Allowance will increase from the present £11,000 to £11,500. (This is the amount

of money you can earn before you start paying any tax at all.)

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

increase from £32,000 to £33,500. (If you include the Personal Allowance from next April of £11,500, it means that you will have to earn in excess of £45,000 before you start paying 40% tax.)

• You will pay 40% from that level up to £150,000, and over £150,000 you will pay the Additional

Rate of Tax – 45%. (Note: If you earn £100,000 or more, your entitlement to a 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 rise from £15,240 to £20,000.

• The Government announced its intention to launch a savings bond with a £3,000 limit and an

interest rate expected to be about 2.2% over a three year period.

• We understand that the Rent-A-Room relief will continue at the level of £7,500 per annum.

This is income you can earn from letting a room in your personal residence which will not be

taxable if it is less than £7,500 in the year. If you have any questions how this works, go to

www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme.

Sovereign Finance

Sovereign Finance enters its 36th year of trading in 2017. We look forward to a busy year helping our clients achieve their objectives and enjoy financial security.

It will be an interesting year. We still have to see how BREXIT will progress and affect the economy, and we have a new US president who, for better or for worse, is not an experienced politician. While these matters are not within our control, we can continue to work hard and flourish and prosper on our own and together with others in companies or groups in which we are involved.

The basics of a successful and happy life remain the same.

USING OUR EXPERIENCE AND EXPERTISE

Our purpose is to help our clients to achieve their objectives and enjoy financial security. We can call on many years of experience and expertise and seek to deal with all matters in a speedy and efficient

manner with the greatest degree of professionalism possible. Here are some recent client comments:

“Wanted someone with a track record of stability and we knew the owner. Absolutely met our expectations.”

– Mr & Mrs R R of West Sussex

“Many thanks for all your patience, guidance and expertise in arranging this for us.Your help is very much appreciated.”

– Mr & Mrs PL of Surrey

“I wanted to improve on the high interest rate I was paying. Sovereign Finance gave me sound advice on how to achieve this and I am thrilled with the outcome and results.

– Mrs AG of East Sussex

“I am impressed.Many thanks for the good work.”

– Mrs KC of West Sussex

SOME TIPS FOR THOSE OF US GROWING OLDER (OR WITH FRIENDS OR RELATIVES GROWING OLDER!)

• If income is tight, consider the possibility of renting out a room or two. You can earn up to £7,500 a year from this free of any tax.

• As we reach a point where some help is needed with our affairs, we should consider taking out a Lasting Power of Attorney to ensure there is someone who will be able to assist when needed.

• Make sure you are not paying more tax than you need to. The new taxation of savings income and of dividends may work out in your favour.

GETTING OLDER – WHAT ABOUT THE LIFETIME MORTGAGE?

The Lifetime Mortgage is not a completely new arrangement but over the last few years their flexibility and interest rates have improved. Borrowing is based on age and percentage of value of the property. There are no income requirements to be met. The youngest age allowed is 55 and in the case of a married couple or partners, the youngest of the two must be 55 or older. It must be your main residence. The level of borrowing starts at about 21% of property value at age 55 and goes up to about 46% at age 80. So on a property worth £200,000, that would be £42,000 borrowing at age 55 and £92,000 borrowing at age 80.

You can have the option of paying the interest so that the borrowing does not increase or allowing the interest to be added to the amount borrowed. In either case the mortgage and any interest owing is paid off on the eventual sale of the property. The Lifetime Mortgage can also be moved to a new property (subject to property value).

WHAT IS THE VALUE OF A PARENT?

Research has been done on the financial value of a parent based on what it would cost currently to replace the activities they do in raising a family.

 Taking into account cooking, cleaning, transport, childcare, etc., it works out as an average of £631 per week for the parent at home and £448 for the parent who is working. Over half of the parents contacted in the survey had no financial protection in place. The cost of taking out simple life assurance is not huge. A woman or man aged 30 can insure themselves for £200,000 for under £10 per month each, or under £15 per month for a joint policy (non-smokers and without major medical complications).

We can speedily provide you with quotes.

MORTGAGE PRISONER? THE CHAINS GROW LOOSER!

Mortgage lenders are becoming more flexible in dealing with borrowers who are locked into their present mortgage arrangement for one reason or another.

 

 There are those who were self-employed and found that the self-certification of income enabled them to raise the level of the mortgage they needed. Others will have taken out a mortgage in the past where they paid only interest, and now are approaching the end of the agreed mortgage term and their strategy to repay the mortgage may not now be workable. Still others have reached an age where they can get only a very short-term mortgage or even no mortgage at all.

Problem: Age

Solution: Try your present lender to see if they can provide some flexibility or contact us as there are a number of small lenders who will take a more enlightened view about maximum mortgage ages.

Problem: Providing adequate income

Solution: Again, first try your present lender to see how they may be able to help. Then try us to see what can be achieved on the income that you can prove. There is a wide variation in the way different lenders calculate the maximum lending they will permit. And if you and your spouse are both aged over 55, it is worth seeing if a Lifetime Mortgage would provide a solution. A Lifetime Mortgage is based on your age and property value and can run indefinitely. There are no maximum age restrictions and there are no income requirements. (But do remember that a Lifetime Mortgage is only going to work where the mortgage is relatively low in comparison to the property value.) Give us a ring and we can let you know what can be done.

Problem: An interest-only mortgage reaching the end of the mortgage term

Solution: The first thing to do is to work out what you want to do. It may be that you can deal with the problem by simply selling your property and downsizing. It is also possible to speak with your present lender and get them to extend the term of the mortgage if that is going to enable you to repay it in the reasonably near future – say, up to 5 years. There are also still lenders who will do interest-only mortgages and it may be worth talking with us about those options. And there is also the Lifetime Mortgage option mentioned above where the mortgage owed is relatively small when measured against the property value.