Client category:  Estate planner

Family disputes on the rise

The number of family financial disputes that reach the courts is rising, says the Financial Times. An expert explains that one reason is the rising value of people’s assets. The typical cost of a court case over a will is £60,000, and rising property values means there is often a lot more than that at stake if someone feels they have been left less than they were due. Another factor is complicated families, with people wanting to provide for children by earlier marriages. One lawyer says home-made wills are a gift for him since they are rarely adequate.

Client category:   Employee

Millions won’t get new flat-rate pension

The flat-rate state pension starting in April 2016 was billed as simple but is anything but, says the Mail. It turns out that because of complex qualifying rules, as many as two million people will not get the full flat rate pension. For most, this will be because for some part of their working life they were ‘contracted out’ of the state scheme. What baffles most people is that even if they have the 35 years of NI contributions that are required for a full state pension, if they were contracted out at some point they will still suffer a deduction.

Client category:  Property owner

Listing slump hits London properties

There has been a slump in new residential property listings for sale, says the Mail. Nationwide, listings have fallen 20% since June but in many London boroughs new listings are down over 30%. Some agents say the average rise in prices of 5.2% in the year to July is partly due to this shortage of supply.

Client category:  Property owner

The place to buy is Birmingham

The Mail quoted estate agents tipping Birmingham as a likely top performer in property over the next year. The last major pieces of city centre redevelopment are happening, including the second largest John Lewis store in the country above New Street station, and 2-bed city centre flats are still available for under £250,000. By London standards that seems absurdly cheap. Birmingham’s population is 1.1 million and growing with a surprisingly low average age of 35.

Client categories:  Employee, Business owner

HMRC chases contractors

The taxman is chasing thousands of self-employed contractors who used mass-marketed schemes to avoid PAYE on their earnings, says the Mail. Last year HMRC gained new powers to force people to pay up the amount of tax HMRC says is due, and then argue their case through tribunals. The result is that many contractors have received demands for tax equal to their annual earnings. Experts say the HMRC assessments are often wrong, in which case people will eventually get refunds, but they still have to stump up the cash. The campaign against tax avoidance is becoming more aggressive.

Client category:   Employee

Beware 70% pension tax charge

Thousands of people aged over 55 who take money from their pension funds face possible 70% tax charges, says the Mail. This is because if you take a tax-free cash sum of over £7,500 from a pension fund, and then add to your regular pension contributions, HMRC can claim that you are abusing the tax relief system and impose a 40% tax charge on the tax-free cash withdrawal plus 30% in other charges and penalties. The issue arises because many people are taking cash from old pension pots, typically worth less than £50,000, while remaining in their employer pension scheme to which they make contributions. It’s open to HMRC to say that if the tax-free cash was used to, say, pay off debt, that was what enabled someone to pay more into their pension – and this is defined as abuse.

This is yet another example of why you really do need to take care – and advice – on pensions to avoid the tax traps.

Client categories:   Employee, Business owner

Pension tax relief under threat

The government launched a review of pension tax relief in July, and is expected to announce a policy change, perhaps as early as November, says the Times. Most experts believe the tax relief system will be changed to reduce tax relief to a flat rate of about 30%, and suggest that higher rate taxpayers make hay while the sun shines.

Client categories:  Saver/Investor, Employee, Retired

Avoid a drawdown disaster

The Telegraph showed how someone entering pension drawdown in 2000 could have lost half their fund within three years. The disaster was caused by taking too much out of the fund each year, and not setting aside a cash reserve at the start that could be used to draw on if the market – as it did – fell severely. Simple steps can be taken to reduce the risk and you would be unwise to enter drawdown without getting advice.

Client categories:  Employee, Retired

Pensioner wins cash-in battle

A pensioner won his battle against an insurance company to cash in his pension pot without having to pay for advice he didn’t need, reports the Mail. Originally, Phoenix Life insisted he get advice before cashing in a £13,000 fund, but since he had other substantial pension funds he had good reasons for getting rid of this one. Eventually Phoenix caved in and let him go ahead.

Insurance companies interpret the rules in their own way, sometimes wrongly, and as advisers we often have to persist to get the right answer for clients.

Client categories:   Employee, Parent

Don’t underestimate illness risk

Half of all workers think the risk of being unable to work though illness is less than one in ten, says the Independent. In fact the risk is a lot higher, and every year 300,000 people go from work to welfare as a result of illness. There are several types of insurance that can be used alone or in combination to provide cover for a family, but experts and insurers agree that this is something the general public knows almost nothing about.

Income protection is especially important for the self-employed and business owners.

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