Warning on care home financial sales 

There are no rules preventing people selling financial products to vulnerable people in care homes, says the Sunday Times. It reported a Financial Ombudsman decision involving an elderly person in a care home who was showing signs of dementia. A relative was in the process of obtaining Power of Attorney to take charge of their finances when a salesman persuaded them to switch an investment. The Ombudsman said the advice was unsuitable and ordered compensation.

Huge rise in probate fees 

The fee for obtaining probate in England and Wales on an estate of over £2 million will rise by 9500 per cent from May 2017, says the Sunday Times. Instead of a flat fee of £215, the fee will be £20,000 in what experts describe as another tax on death. But there will be no charge on estates worth up to £50,000 and a flat fee of £1,000 will apply to estates between £300,000 and £500,000. Probate has to be obtained before the executors of a will can distribute any of the assets to beneficiaries. The Courts currently oversee probate on over 500,000 estates each year.

Call to women: ditch the cash ISA 

British savers hold £275 billion in Cash ISAs, and over 80 per cent of the new ISA accounts opened in 2016 were for cash. Yet with interest rates so low, savers are getting negligible returns on their money and in many cases are losing money after taking inflation into account.  Many experts say savers should put at least part of their annual ISA allowance (£20,000 from April 6 2017) into a stocks and shares ISA. This is especially relevant to women, says the Times, since whereas 17 per cent of men have a stocks and shares ISA, only 10 per cent of women have one. If you pay basic rate income tax, you can now have interest from deposits of up to £1,000 each year and pay no tax on it – so most people do not need to shelter their deposit savings from the taxman. 

Time for a 10-year fix? 

With the uncertainties of Brexit and Trump, and economic growth and inflation suggesting interest rate rises are ahead, it’s time to consider switching to a 10-year fixed-rate mortgage, says the Telegraph. It says that three years ago, there were only eight 10-year fixed-rate mortgage offers in the market but today there are 124, with lenders competing fiercely, especially for those seeking to borrow under 60 per cent of their property’s value. For them, 10-year fixes at 2.6 per cent to 2.7 per cent are readily available and offer security, albeit with large redemption penalties if you want to exit early. 

Thousands stumble towards pension tax traps 

A year after a reduction in the lifetime pension allowance to £1 million, hundreds of thousands of people are stumbling towards hefty tax bills because they will exceed this limit without knowing it, says the Telegraph. The rules are mind-numbingly complex, but if the value of your pension fund tops £1 million you can pay tax on any excess at up to 55 per cent. The workers most at risk are in their 40s and 50s and are members of defined contribution (final salary) pension schemes, where increases in pension entitlements are valued at 20 times the increase in annual pension. There are steps you can take to avoid or mitigate the problem, but you will certainly need advice.

Bigger loans to get easier

It should become easier to obtain a large mortgage loan, says the Mail. The Bank of England has tweaked its mortgage affordability rules to allow a higher proportion of lenders’ new mortgage loans to exceed the normal limit of 4.5 times income. Lenders have been unable to meet the demand for such loans and may now have about 10 per cent more capacity, say experts.

Learn to invest with Lisa 

The only companies offering the new Lifetime ISA (or Lisa) at launch in April will be investment fund-based, says the Financial Times. The scheme, offering a government top-up of up to £1,000 a year (25 per cent of the amount saved annually) to those aged 18-39 when they start the plan, is designed to be used for a first-time house purchase and will replace the Help-to-Buy Isa next year. Investment funds are fine for long-term saving, but if the plan is to use Lisa for house purchase within the next few years, you should wait for deposit-based schemes to launch in coming months.

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