New rules to hit BTL
New rules due to be introduced by the Bank of England at the end of September could make it harder for Buy-To-Let owners to obtain mortgages, says the Telegraph. The rules will require lenders to assess the viability of the whole portfolio if someone owns more than four properties. The change comes on top of restrictions to BTL owners’ ability to claim tax relief on mortgage interest, and there is also uncertainty about how lenders will interpret and apply the rules, so brokers are urging owners to refinance before they take effect.
Millions at a loss on pension funds
Millions of savers have no idea whether the fund in which their pension savings are invested is any good, says the Times, citing recent research. This showed that many insurers are among those whose funds are in the doghouse, having earned consistently poor returns. The difference between the dogs and better funds is equivalent to tens of thousands of pounds at retirement.
Keep on borrowing
The number of mortgage borrowers aged over 70 has soared by 75% in the past five years, says the Mail. Many have obtained new loans because their existing mortgage lender won’t extend the repayment term of their current loan.
Three quarters of graduates will never repay their loans
Analysis by the Institute of Fiscal Studies shows that three-quarters of students will never repay their student loans, reports the Financial Times. One reason is the very high interest rates applied to student loans (RPI plus 3 per cent), which mean the average graduate accrues as much as £5,800 in interest even before they graduate. The result of high interest rates is that the debt rises too fast for repayments to keep pace. Taking into account the write-off of loans that aren’t repaid adds £5 billion to the bill paid by the government – about half the cost of abolishing tuition fees entirely as proposed by the Labour Party.
The cost of education
Parents in the UK who pay for private education for a child at primary, secondary and tertiary levels spend on average £128,600, says the Financial Times, citing research by HSBC. That is ten times the average cost of state-funded education and is second only to average spending in Hong Kong out of the 15 countries in which it conducted its research. A quarter of parents wish they had saved more, but only Chinese parents seem to be good at planning ahead, with most parents still paying the bulk of costs out of current income.
No big changes on pensions
A statement by the government minister in charge of pensions was interpreted by many, including the Financial Times, as signalling there would be no major changes to pension tax relief in the next few years. Reforms to the tax relief system had been considered by the previous Conservative government but such a major upheaval now looks very unlikely.
Fewer divorces, but more silver ones
The number of divorces fell by 9 per cent in 2015, in line with a long-term trend. But the average age of divorcees keeps rising, as it has done since 1985 – it is now 45 for men and 44 for women, reports the Financial Times. The result is more complex financial settlements, say lawyers. Older people have more assets and more pension rights, which are themselves increasingly valuable – for example, a £30,000 a year pension entitlement is worth over £1 million. The home, say lawyers, may not be the biggest asset that has to be divided.
As tax year end approaches, there is still time to make use of your available reliefs and allowances.
This tax year end planning checklist covers the main planning opportunities available to UK resident individuals and will hopefully help to inspire action to reduce tax for the 2023/24 tax year and to plan ahead for 2024/25.
As tax rate band thresholds are changing, understanding the impact on high rate taxpayers and the economy is crucial.
It was recently revealed in the media that the amount we need to enjoy a ‘moderate’ retirement has increased by £8,000 per annum, a 38% increase, in just one year.