Budget Summary

Following the long-awaited Labour Party Autumn Budget, please read our summary which we hope you find helpful.

Unlock a better retirement

There has never been so much choice available to homeowners looking to use the equity in their home, so taking independent financial advice is crucial. A Lifetime Mortgage is the most popular way to release a tax-free lump sum; a way to make the most of the huge increase in property wealth in
the UK. Here are the 6 most common reasons why people release equity:

1. Increase income for a better retirement
2. Home/garden improvements
3. Paying off an existing mortgage/debts
4. Financial help/gifts for family members
5. Holidays/new cars
6. Buying a new home/ buying out an ex-partner
Equity Release via a Lifetime Mortgage has become more mainstream in recent years, as household
names, such as Standard Life and Legal & General are now offering flexible, good value options.

If you think it could be for you, don’t be put off by the myths that still exist to some extent.
Know the facts:

• You will continue to own your home – this is just a mortgage
• You could pay the interest if you chose; this is optional, and common for those replacing their existing mortgage
• Moving house: you have the option to move the mortgage with you or pay it off fully/partially
• No hidden costs and a Lifetime Mortgage is often cheaper to set up than a normal mortgage

We do not charge a fee, whether you proceed with a Lifetime Mortgage or not. Vanessa’s priority is to help you understand and assess whether equity release is the best solution for you, and to find the best Lifetime Mortgage from the whole of the market.

How to recognise a financial scam

UK fraud prevention groups are warning individuals to be extra vigilant as these scams increase in sophistication, we are all vulnerable.

The Financial Conduct Authority (FCA) reminds consumers that like anything valuable, your pension or investments can become the target for illegal activities, scams, or inappropriate investments. Scams can take many forms and often appear to be a legitimate investment opportunity. Use the FCA’s Scam Smart to check investments and pensions.

We have pulled together a list of tips on how best to recognise and avoid a financial scam.

• Stop and check the domain name of the sender’s email address. Fraudsters draw you in with an email that looks remarkably legitimate, so a close match but with something slightly off. Think @amaz0n.co.uk. If you are still unsure, it is good practice to go to the website directly rather than click on any links in the email.
• Do not click on links or open emails from senders you do not know.
• Be wary of special offers and deals that sound too good to be true. Avoid the pressure to act quickly.
• Avoid shopping on public Wi-Fi networks such as the railway station. They rarely have the safety protocols such as passwords in place, so easier for hackers to piggyback and steal unsecured banking details without you knowing.
• Be careful of fake websites designed to look identical to an official one. Every website should have a valid security certificate and you can tell by the little padlock icon next to the URL. If the website doesn’t have one, don’t give any personal details.
• Apple Pay and Google Pay are good payment options as they protect your bank details.
• Keep an eye on your bank account and if you see anything unusual get in touch with them.
• If you think any of your online accounts have been compromised, change the password, and try to have a unique password for each retailer.
• Another classic is a text message suggesting you have a parcel waiting with DHL, Royal Mail or some other delivery provider. A good indicator that something is amiss is if the text asks you for payment and includes a bit.ly link. Do not click on these.
• Investment opportunities found through search engines are not necessarily authorised or regulated by the FCA.
• Always check who you are dealing with before changing your pension arrangements or transferring money to another account.
• Take time to make checks and seek financial guidance.
• The FCA helpline is 0800 111 6768 and all investment and pension providers should be registered. Financial Management is registered as Philip Harper LLP and everyone should have a unique number – ours is 485423. Search for the FCA page via Google, do not click on a link within an email.
• If you get cold-called, the safest thing to do is to hang up. If you receive unexpected offers by email or text, it’s best to simply ignore them. You can register with the Telephone Preference Service and Mailing Preference Service to reduce the number of letters and cold calls you receive. Callers may pretend they aren’t cold calling you by referring to a brochure or an email they sent you that’s why it’s important you know how to spot the other warning signs.

 We are here to help If you are unsure about any financial approaches, please contact us first.

By Philip Harper  |  September 2024

Inheritance Tax
Protecting your assets for the next generation

The number of individuals caught by Inheritance Tax (IHT) is at an all-time high, so it is worth understanding the main exemptions

Marital Status: Transfers between spouses or civil partners made both during life and on death are exempt from IHT.

Nil-Rate Band (NRB): The value of assets that, on death, can be passed to beneficiaries free of inheritance tax. Since 2009 the NRB has been frozen at £325,000. For married couples and civil partnerships, any allowance that remains unused on death can be transferred to the surviving partner, meaning qualifying survivors can pass up to £650,000 to beneficiaries free of IHT.

Main Residence Nil-Rate Band (RNRB): Property price inflation is one of the key reasons IHT is now applicable to more individuals than ever. To help counter this the Government introduced a RNRB in 2017, which provides married couples and civil partners an inheritance tax-free allowance of £1m when combined with their existing NRB. The allowance is tapered away on a 2:1 basis for estates with a value of over £2m.

Annual Exemption: Individuals may make transfer exempt from IHT up to £3,000 in any one tax year with the ability to carry forward the previous year’s allowance for one year if not already utilised.
Small Gifts: Individuals may gift up to £250 to any number of parties (other than an individual in receipt of the annual exemption) in any one tax year.

Normal Expenditure: An often-overlooked exemption, if a transfer is part of a donor’s normal expenditure, is made out of income and doesn’t affect their usual living standard, it will be exempt from IHT. This area of planning can be quite complex so financial guidance should be sought.

Wedding Gifts: Donors can gift £5,000 if parent to either party, £2,500 if grandparent and £1,000 if any other person.

Business Relief (BR): A tax relief provided by the UK Government as an incentive to increase investment in certain types of trading businesses.

Pensions: There is a common misconception that assets left in an individual’s pension will be free from tax when passed to their beneficiaries. Whilst true for IHT, it is important to consider the wider tax implications such as the type of pension and when the proceeds can be passed without the beneficiaries having to pay income tax.

We spend our days helping clients with estate planning and Inheritance Tax.

Contact us or book an initial consultation here at Penn Barn to find out how we can help you.

By Philip Harper  |  June 2023

Find your lost pensions

House moves, career moves, busy family lives – it’s easy to lose track of pension savings. Failure to keep tabs on old workplace pensions has led to over 2.8 million pension pots worth £26.6 billion being misplaced or forgotten about, according to The Association of British Insurers (ABI).  This is hard-earned savings that you could be missing!

Use the government free Pension Tracing Service to help you find lost pension savings.  The service is simple to use and provides trace results immediately. Enter your former employers’ details into the online database and you’ll be provided with contact details for pension schemes you may have paid into.  It will search a database of more than 320,000 pension scheme contact details.

Another best practice, we would recommend is to combine multiple pensions into a single pot, this makes it simpler and easier to manage and may also reduce costs.  Contact us and we’ll conduct a free pension review and advise the best approach for you.  If it does make sense to move your pensions, we’ll provide you with an initial report free of charge.

By Philip Harper  |  March 2024

Many people overestimate how much they spend on retirement

Many people overestimate how much they’ll need to live on in retirement, thinking that they’ll spend the equivalent of their wages.

 Another common perception is that you’ll need between half and two-thirds of the final salary you had when you were working, after tax, to maintain your lifestyle once you retire. This assumes however that the mortgage has been repaid, you are no longer bringing up children and of course you won’t face the cost of commuting once you’ve retired.

Which magazine conducted a survey in April 2022 to help figure out how much individuals need in retirement. Households with two people spent a shade under £2,340 a month, or around £28,000 a year, on average to be ‘comfortable’. This covers all the basic areas of expenditure (which had a combined cost of £19,000 per year on average) and some luxuries, such as European holidays, hobbies and eating out. Aiming for this level of income will provide a good platform for your retirement. You’d need £45,000 a year if you include luxuries such as long-haul trips and a new car every five years. Travelling and holidays are a very important part of retirement, with people spending on average £4,657 a year on this part of their life.

 “61% of under 65-year-olds have no idea what their retirement income will be. ”

 Priorities change slightly as you move through your retirement years. People tend to spend relatively less on food and drink, housing payments and recreation as they get older, particularly over the age of 80, but more on utility bills, health, and insurance premiums.

Since the research individuals would have undoubtedly spent more on energy, food and petrol.

By Philip Harper  |  June 2023