As you move through life, your needs and wants often change as does the type of insurance cover you require and the level of cover. While insurance may be an unglamorous topic, having the right cover in place can make all the difference in a difficult situation. Here we take a look at what types of personal cover you may need at different stages of your life. Young adult student, without children Although students are adults in the eyes of the law, they are in a very specific financial situation in that they often have little to no personal income and therefore any form of insurance which relates to income protection is probably a waste of money. Medical and dental insurance, however, could well be worthwhile and if the student has any plans to travel and/or work abroad then the appropriate insurance should be regarded as a must, even if they have an EHIC card. Young adult workers, without children Once a young person is earning an income and supporting themselves, at least for the most part, then it becomes appropriate to look at some form of income protection. At a basic level, a younger adult could look to self-insure, at least in part. Young adults with budgeting skills will know how much money they need to meet their commitments each month and the more cash savings they have the longer they will be able to meet those commitments if they are out of work (or ill). Having said that, some element of insurance may be helpful. If they have pets, pet insurance will help ease the pain of expensive vets bills, which can hurt even when you’re working. PPI could be a useful way to ensure you meet credit commitments if you are experiencing financial turbulence. Young adults who are self employed should definitely look at critical illness cover and income protection insurance, even those in standard, paid, employment may wish to see if they would benefit from some extra cover in this area. For people without financial dependents (and with savings to cover their funeral) life insurance is only likely to be relevant if they have a mortgage. Adults with children Pretty much everyone agrees that children change your life in all kinds of ways and that includes your financial life. Once you have children, you have people who are going to be financially dependent on you for at least 16 years and quite possibly for a lot longer. That means life insurance ceases to be something you need to keep your mortgage provider happy and becomes something which is vital to ensuring that your children will be in a good position to cope financially in the event of your death. When both parents are involved in raising children, then both usually need to be insured even if only one parent earns an income, because the death of the home maker would mean that someone else would have to step in to replace the contribution they currently make to the running of the house. The level of cover has to reflect the fact that children, by definition, are at the start of their lives and will therefore have financial needs long into the future. Empty nesters In some ways, empty nesters are in a similar position to young adults without children, but these days it is far from unusual for parents still to be offering some level of support to adult children, particularly if the children have their own children. It is also possible for people to be grandparents when their own parents are still alive. Because of this, it may be best for people in this stage of life to take a very detailed look at their situation, possibly with help from a professional, to see what sort of insurance they require at this point and what level of cover.

What kind of pension or pensions you have will determine what can happen to any remaining funds after your death. Here is a quick look at different types of pensions and what the options are for inheritance planning. The State Pension At current time, if you are married or in a civil partnership, widow(er)/surviving partner may be able to inherit some of your entitlement to a state pension. As the rules relating to state pensions are set by the government, this can, however, change at any time. Defined Benefits Pensions Often known as final-salary pensions, these schemes will have their own rules about what happens to your pension in the event of your death. This may well depend on whether or not you have already started to access it. If you are, or have been, a member of one of these schemes, then it is a good idea to check what these rules are so you can decide what steps, if any, need to be taken in order to ensure that your loved ones are protected in the event of your death. Defined Contributions Pensions – Annuities There are essentially two ways to pass on your annuity in the event of your death. One way is to buy an annuity which makes specific provision for a spouse’s pension. Obviously annuity providers are going to take account of this requirement when deciding how much income to offer for your pension pot, hence you are almost certainly going to be offered less than you would have received without equivalent provision. An alternative would be to opt for an annuity protection lump sum death benefit. In this scenario, if the income drawn from the annuity is less than the original purchase price thereof, the difference is transferred to your designated beneficiary. While this option will almost certainly increase the price of the annuity compared to an equivalent product without this protection, it is also almost certainly cheaper than opting for an annuity with a spousal pension since the provider’s liability is limited to the purchase price of the annuity. Defined Contributions Pensions – Income Drawdown Since April 2015, it has been possible for holders of pension funds which have been designated for income drawdown, to pass their remaining assets to whomsoever they please in a tax-efficient manner by using a vehicle called Nominee Flexi-Access Drawdown. The Nominee can, in turn, use a vehicle called Successor Flexi-Access Drawdown to pass on any remaining assets to their designated heirs and so on for as long as there are assets to transfer (assuming the regulations stay as they are now). The huge advantage of this approach is that, like a life insurance policy which is placed into a trust, the pension pot is kept out of the deceased’s estate and therefore avoids a (potentially hefty) IHT bill. This may be of particular importance to pensioners who also own property as the price of even a relatively modest home can soon gobble up an IHT allowance. As part of pensions freedoms, the government has also removed the hefty 55% “pensions tax”, which decimated the nest eggs left to surviving loved ones. As rules currently stand, if the holder of the pension fund dies before their 75th birthday, their pension fund can be passed on without any form of tax being payable. This continues down the line as the assets are passed from person to person. For example, if both the original saver and the first nominee die before their 75th birthday, the first successor will inherit the remaining assets without paying tax on them. Once the pension holder reaches their 75th birthday, any withdrawals are treated as standard income for the purposes of tax.

A week is a long time in politics. It was about the length of time it took Chancellor Philip Hammond (and/or his boss Prime Minister Theresa May) to decide that the proposed increase in National Insurance Contributions (NICs) for the self employed was best abandoned. Here is a quick guide to what happened and some possible explanations as to why and what it means. The manifesto pledge In the run-up to the 2015 general election, their predecessors George Osborne and David Cameron campaigned on a pledge to lock taxes and NI and to combat scepticism about politicians’ election promises, guaranteed that they would bring in legislation to make it illegal for them to do so, which they duly did. The “get-out-of-jail-free” card The legislation, however, only applied to NI contributions made by employers and the employed, hence Philip Hammond was in his legal right to raise NICs for the self-employed. The court of public opinion While the letter of the law was on the Chancellor’s side, politicians also have to answer to the court of public opinion and the judgement here was clear. The stated campaign pledge had been “no increase in NICs” and the fact that the related legislation had only specified Class 1 NICs was irrelevant. Not to put too fine a point on it, the move was seen as a betrayal of a manifesto promise and this fact was made clear in many newspaper headlines. A swift U turn It’s probably safe to say that neither Philip Hammond nor Theresa May expected the change to NICS to be popular with the self-employed, but that they completely underestimated the scale and strength of the reaction of the general public. Even though the change only impacted a relatively small number of people, it was perceived as the Conservatives using legal technicalities to get around a clear manifesto pledge and that went down very badly with the public as a whole. If newspaper columns are to be believed, the backlash made both backbench MPs and cabinet ministers very nervous. March 2017 is about halfway through a 5-year parliament. The proposed increase was due to take effect in April 2018 and hence would have factored in tax returns filed between April 2019 and January 2020. In other words, the subject was very likely to be fresh in people’s minds at election time in May 2020. Just as MPs need to think about their constituents’ opinions, so governments need to think about their backbenchers’ opinions, particularly ones which have an absolute majority of 12 and a working majority of 17. The Chancellor and Prime Minister quickly decided that this was one battle which was more hassle than it was worth and beat a hasty retreat. The end…? Philip Hammond and Theresa May may be taking their cue from the old saying “least said, soonest mended”. In other words, by backing down now, they’ve effectively put a stop to the topic for the time being and, of course, with Brexit looming, it’s a safe bet that journalists will have plenty of other material for columns and the public matter for debate. At the same time, financial books still need to be balanced and in a letter to Conservative MPs, Philip Hammond stated that it was his view that the benefits gap between the self-employed and the employed had narrowed sufficiently that the gap between their relative levels of NI contributions had ceased to be justifiable. Given that the manifesto pledge only applied to the current parliament, i.e. up to the 2020 election, it is entirely possible that Chancellor will seek to raise NI for the self-employed at some point in the future.

If nothing else, the slew of TV adverts which accompanied the introduction of auto enrolment will hopefully have raised awareness of the importance of making preparations for old age and of the fact that it’s never too early to start thinking about your future. Even though auto enrolment is now in full swing, its potential importance is high enough that it can be worth recapping what it means in practice. Auto enrolment potentially applies to all working adults Employers must automatically enrol all working adults into a workplace pension provided that they meet the relevant criteria. These are: Not already be contributing into another workplace pension scheme (having previously been a member of another scheme is fine, as is contributing to a personal pension at the same time). • Be aged between 22 and state pension age • Earn more than £10KPA • Be aged between 22 and state pension age • Earn more than £10KPA You can choose to opt out of auto enrolment, however if you do your employer must auto enrol you again after three years, unless you reconfirm that you wish to remain outside the scheme and so on for as long as you continue to meet the qualifying criteria. Advantages of auto enrolment From the government’s perspective, the main advantage of auto enrolment is that it works on the basis that people will have to take action if they take a conscious decision that saving for their later years through a workplace pension is not for them, at least not at the point, rather than obliging them to take action if they do decide that they want to make a commitment to saving for old age. From an employee’s perspective, the advantage of the scheme is that employers are mandated to make contributions on behalf of their employees, rather than being in a position to put pension contribution under the heading of optional benefits. Disadvantages of auto enrolment While the headline benefit of employer contributions may sound enticing, it needs to be viewed in context. The government has set a minimum level of contribution which needs to be made into a workplace pension (assuming the employee wishes to participate) and the percentage of this which needs to be met by the employer. There are three ways in which this minimum level of contribution can be calculated. These are known as tiers. At current time tier 1 requires a minimum overall contribution of 3% (of pensionable earnings), of which the employer must pay at least 2%. Tiers 2 and 3 require a minimum contribution of 2% of which the employer must pay at least 1%. As of April 2018, the minimum contribution will rise to 6% (Tier 1) and 5% (Tiers 2 and 3) of which the employer must pay at least 3% (Tier 1) or 2% (Tiers 2 and 3). From April 2019 the figures will be 9% and 4% for Tier 1 and 8% and 3% for Tiers 2 and 3. In other words, employees could find that enrolment in a workplace pension scheme does wind up making a noticeable difference to their take-home pay. Alternatives to auto enrolment With auto enrolment and workplace pensions making so many headlines, it’s easy to forget that even those in work can opt for private pensions and, in principle, employers could agree to make contributions towards them. Admittedly it is an open question as to whether or not they would, but in any case the individual would still be able to qualify for tax relief on contributions at the going rate. As private pensions are outside the scope of the government regulations, they can offer more flexibility with regards to contribution levels and therefore, even without employer contributions, some people may find them a more suitable channel for their pension saving.

Individual Savings Accounts, commonly known as ISAs, were originally introduced way back in April 1999, replacing Personal Equity Plans (PEPs) and Tax-Exempt Special Saving Accounts (TESSAs). While the rules and savings limits have been tweaked somewhat over the intervening years, the standard ISA is, at heart, much the same product as it was back in 1999. In November 2011, the government introduced the Junior ISA to replace the old Child Trust Fund and 2015, 2016 and 2017 have all seen (or are about to see) the introduction of new forms of ISA in the form of the Help to Buy ISA, the Innovative Finance ISA and the Lifetime ISA respectively. All ISAs share the common features of tax efficiency and the fact that the annual allowance is given on a “use it or lose it” basis. In other words, although it may be possible to replace withdrawals made in the same tax year, once a given tax year is over, any unused allowance disappears with it. Apart from this, they all have significant differences. Standard ISA The original product, can hold cash and or stocks and shares, provided that the latter meet the qualifying criteria. Cash deposits are subject to standard Financial Services Compensation Scheme (FSCS) protection, investments are subject to the relevant regulatory body. At current time, cash-only ISAs can be opened by individuals who have reached their 16th birthday, but any ISA with an investment component can only be opened by someone aged 18 or over. Junior ISA Junior ISAs are opened by adults for children under the age of 18. At age 16, children can open a Junior ISA for themselves and since they can also open an adult cash ISA, there is scope for two years of intensive (pre-University) saving. Regardless of who opened the Junior ISA, at age 18, it becomes the full property of the person for whom it was opened. The Help to Buy ISA Introduced in 2015, the Help to Buy ISA is currently available to those aged 16 or over, who qualified as first-time buyers. Savers received a 25% government bonus on their savings, to a maximum of £3K. In other words, if they manage to save £12K themselves, they will have a total of £15K to put towards their new house. The scheme is due to close to new customers in 2019 and to end completely in 2029. It should be noted that the Help to Buy ISA has come in for heavy criticism because the bonus only applies if funds are used after completion rather than upon exchange. This essentially makes it impossible to use ISA funds towards a deposit. Innovative Finance ISAs These ISAs seem to have been largely overlooked by the financial press, possibly because they have such a restricted scope. They were created to allow peer-to-peer lending to be incorporated into the ISA platform, but at the point when they were introduced, the major platforms were all still waiting for accreditation. Lifetime ISA The Lifetime ISA is due to launch in 2017 and in spite of its rather generic name, it is intended to be used to purchase a house and/or to finance retirement. The advantage of this form of ISA is that, it too, attracts a government bonus. Currently this is set at 25% of the saver’s contributions to a maximum of £1KPA up to the saver’s 50th birthday. In other words, there is a lifetime maximum of £32K. Unlike a standard ISA, where withdrawals can be made for whatever purpose the saver sees fit, with a Lifetime ISA, withdrawals before the age of 60 can only be made to finance a house purchase (or in case of terminal illness), otherwise the saver loses the bonus. Unlike with the Help to Buy ISA, however, funds are made available upon exchange and hence can be used for a deposit. After age 60, savers can access their funds as they wish. If you haven’t used your allowance this year you have until 5th April, if you’d like more information contact us today

If TV adverts were to be believed, all you need to do to get a great deal on anything is to go compare the market at any one of a number of various online sites. It’s questionable whether only using a price-comparison site will actually give you the best deal on any financial product and when dealing with a product as significant as a mortgage it really can pay to get professional help from a mortgage broker. Here’s why. A mortgage broker is on your side Banks and lenders want your money. It really is that simple. The onus is on you to do your research and apply for the best product with the best lender, all the lender wants to know is whether or not you are a suitable customer. Because most people only buy a house a few times in their lives, they are unlikely to have the same level of familiarity with mortgages as the professionals do. Even if they understand the basic principles on which they operate, such as the difference between a repayment mortgage and an interest-only mortgage, it may be far too much of a challenge for them to look at all the different options available (even if they actually know of them) and work out what is most appropriate for their situation, so that they can then approach the right lender in the right way to secure the best deal. A mortgage broker is someone whose day-to-day job involves dealing with the ins and outs of the mortgage market and who is therefore in a good position to understand your situation and guide you through the maze. Mortgage brokers know the niche players as well as the major names If you were asked to sit down and put together a list of mortgage lenders, it’s a fair bet that most people would be able to name the major High Street banks and perhaps a few others as well. In reality, however, there are a number of niche players in the mortgage market, who are far more likely to be known to a professional mortgage broker than to the average person looking for a mortgage. Sometimes these will be companies who have a strong base in a particular geographical area but will take customers from elsewhere. At other times, they will be companies who are prepared to take on unusual properties, such as timber houses or who are more open to customers in unusual situations, such as those recently arrived from overseas or the self-employed. Using a mortgage broker can actually work out cheaper than getting the same product direct Here’s a little secret, which might already be known to people in certain industries such as travel. Headline prices can be open to negotiation. Advertised prices are often what the seller would like to get rather than the lowest price they’re prepared to accept. Negotiation is a skill and part of the skill involves knowing the market and what other people are doing, which is part of the reason why a mortgage broker is often in a better position to negotiate on behalf of clients than clients are for themselves. Another part of the reason is that mortgage brokers build up solid professional relationships with people who work for mortgage lenders and even in these days of computers, that can be very helpful. Finally, headline prices are set at a level which allows the seller to pay commission and/or offer discounts and still make a profit. A mortgage lender may well offer to forego some of their commission so the end client can get a better rate. The Basics of Buy to Let Anyone who’s been researching buy to let will probably have heard that buy-to-let landlords have been on the receiving end of two hefty tax stings recently. The first is the introduction of a 3% surcharge on the stamp duty paid on the purchases of second and subsequent homes. The second is a recalculation of how rental income is calculated combined with a change which fixes the tax relief granted on mortgages at 20% as opposed to the mortgage-holder’s rate of income tax. Notwithstanding this, the dynamics of the UK property market (otherwise known as a case study in the laws of supply and demand) ensure that buy-to-let still has a level of attraction. Here are three points which potential landlords need to consider. Are you sure the figures stack up? There are basically two kinds of investments, growth investments and yield investments. Buy-to-let is essentially a yield investment because you can only benefit from any increase in house prices if you actually sell the property, in which case you cease to be able to let it out. Therefore, to see if BTL makes sense as an investment, you need to understand, realistically, what sort of return you could expect after all expenses are taken into account and see how that compares to your other options for investing the same money. Given that BTL is a somewhat politically-contentious area at the moment, you may wish to leave yourself a reasonable margin or error and/or of safety for future changes. Can you actually manage being a landlord? Being a landlord is very different from taking board money from your children. Leaving aside the practicalities of managing a property and the need to deal with tenants, landlords have a number of legal obligations from ensuring that the property is safe to live in to ensuring that the tenants have the “Right to Rent” in the UK. This scheme only applies in England at the moment, but is (officially) due to be rolled out across the UK. It basically obligates landlords to check the immigration status of their (potential) tenants and failure to conduct adequate checks can be punished by up to 5 years in jail. Using a letting agent transfers the responsibility for the checks onto the agent, but, of course, this increases costs, which brings us back to the question of whether or not the numbers stack up. Are you able to recognise a good investment property and a good tenant? There are basically three components to buy to let – the landlord, the property and the tenant (letting agents work on behalf of the landlord). As a landlord, you not only need to choose a suitable investment property (which is different to buying a house for yourself) but also to pick suitable tenants. These last two points can make a significant difference to your success (for which read level of profitability) and they are closely related. The more attractive your property is to tenants, the greater your options for weeding out tenants who may cause problems and focusing on ones who will look after the property and pay their rent on time. Making your property attractive to potential tenants requires understanding your market, i.e. who your potential tenants are and hence what they want. For example, the “young adult” market includes students, young workers and young professionals. Affordability is likely to be a factor for all of them, but people who are earning an income may be prepared to spend a bit more for a place they like and the higher their income level the more they may be able and willing to spend. In other words, different market segments can be equally profitable but noticeably different in how they work. Lettings agents may be able to advise on what market(s) to target and how, but again, using a lettings agent comes at a cost, which leads back into the question of whether or not the numbers add up. Your home may be repossessed if you do not keep up repayments on your mortgage.

While the gist of Philip Hammond’s latest budget was widely anticipated (at least the major points), it still makes for interesting reading. National Insurance rises for the self-employed Those of a certain age may remember that in 1988 U.S. presidential candidate George H. W. Bush won headlines with a straightforward promise “Read my lips: no new taxes”. After election, in 1990, he proceeded to raise taxes. Rather more recently, David Cameron and George Osborne fought the 2015 election on a platform of no increases in personal taxation and explicitly included National Insurance in their campaign pledge. Now that the Conservative party is in government, however, this pledge has been shown to be open to negotiation as new Chancellor Philip Hammond used his April 2017 budget to announce an increase in National Insurance, albeit “only” for the self-employed. This increase will take effect in April 2018. He also reduced the tax-free dividend allowance available to directors and shareholders from £5KPA to £2KPA, again from April 2018. The chancellor did raise the personal tax-free allowance to £11.5KPA and reaffirmed his commitment to raising it to £12.5K by 2020. Business get some relief from rate rises Recently the business media has been full of stories of how the 7-yearly reassessment of business rates was great news for large internet retailers operating out-of-town warehouses but really hurting high-street retailers, particularly smaller ones. The chancellor has therefore announced £435M to assist businesses in dealing with this change, of which £300M will be used to create a hardship fund for those who are suffering the most. It should be noted, however, that this will be made available to local councils to use at their discretion, so it will be interesting to see how this works in reality. Additionally, pubs with a rateable value of under £100K will get a £1K discount on their rates and businesses which are losing rate relief will have the increase limited to £50 per month. The cost of key purchases As has become almost a budget tradition, fuel duty is frozen as is Vehicle Excise Duty rates for hauliers and the HGV Road User Levy. While some media sources had been anticipating a move to penalise owners of diesel cars or even to force diesel cars to be scrapped, nothing of this sort was mentioned in the budget, although there was a passing reference to the possibility of changes to the “tax treatment for diesel vehicles” at some point in the future. There were no extra increases to the duty on alcohol or tobacco, although there is a new minimum excise duty on cigarettes based on the assumption that cigarettes are priced at £7.35 per packet. Philip Hammond also announced that UK VAT would henceforth be payable by people roaming outside of the EU (which raises the question of whether this will be extended to within the EU after Brexit). To the surprise of some, the controversial “sugar tax” also remains as is for the time being and gambling is likewise left unchanged. Funding for the regions Scotland, Wales and Northern Ireland get £250M, £200 and £120M worth of funding respectively. Following on from his backing for a high-speed rail link between Leeds and Manchester in his last budget, Philip Hammond pledged £90M to the north of England and £23M to the Midlands, which is to be used specifically to address pinch points on roads. The chancellor also announced support for local projects over the coming year, for example work on the A483 corridor in Cheshire and the Outer Ring Road in Leicester. Also in keeping with his previous budget, the chancellor pledged £16M for 5G mobile technology and £200M for local broadband networks.

Dealing with an ageing population has been an increasing concern for a number of years now. “Pensions freedoms” have been one aspect of encouraging people to save for their later life. Not to put too fine a point on it, the changes made to paying for care in later life are another aspect of the same topic. In simple terms, it allows people to keep more of their money if they need care in their senior years. Presumably the government hopes that this will motivate people to save (more). The Care Act and what it says The Care Act actually contains a lot of changes to social care provision, but there are two which stand out. At current time, people with capital and savings of less than £14,250 have the cost of care paid for them in its entirety, people with a net worth of between £14,250 and £23,250 receive some level of assistance and people who have more than £23,250 must fund the entire cost of care themselves. From April 2020, people with capital and savings of less than £17,000 will have their care costs paid in full and those with a net worth of between £17,001 and £118,000 will be eligible for some form of assistance and only those with a net value of more than £118,000 will need to meet the cost of their care in full – up to a maximum of £72,000. The other stand out feature of the Care Act is that the amount an individual will have to pay towards eligible care will be capped at £72,000. Eligible care can include care at home as well as spending time in residential care. It is important to note that the actual cost of bed and board in a care home is excluded from the cap, but will itself be capped at £12,000 per year. For more information go to http://www.ageuk.org.uk/home-and-care/the-care-act/ Calculating the Cost of Eligible Care One of the most important points to note about the Care Act is that the amount of help you will receive will be based on two factors, which are assessed by your local authority: What care you need How much the relevant local authority estimates that it should cost In other words, your local authority will only pay for care which they agree you need and at a rate they assess (rather than based on what you actually pay). Given that the implementation of these changes is still three years away, it is arguably far too early to say what effect, if any, these facts will have in practice, although it is probably fair to say that it is always a good idea to aim to have funds available so that you can afford to pay for care which meets your expectations, rather than being obliged to accept your local authority’s point of view. It is also too early to know the details of exactly how this new approach will be administered in a practical sense. The basic principle behind them will be that local authorities will create “Care Accounts” for older people, which will be used to keep track of who has paid for what. Presumably this will involve some degree of paperwork for older adults. Planning ahead In modern times, the concept of old age has become something of a contradiction. On one hand, older people can be some of the most active people around and on the other, it’s still very much the case that some older people can be vulnerable and need extensive care. Realistically as we age, our bodies become more vulnerable to illness and injury and we need longer recovery time, so a spell in care is a distinct possibility for many people. With this in mind, even younger people should look at the question of financing their later years as being a core part of their financial planning.

Investment is, ultimately, all about looking at risk and reward and in the real world that means not only looking at the headline figures of how much return any investment could generate in and of itself, but also at how much it will cost to use the investment vehicle. It therefore makes sense to make a point of double-checking these costs on a regular basis to make sure that your investment numbers still stack up. In the case of buy-to-let property, Chancellor George Osborne has recently introduced a tax “triple whammy” of changes to the wear and tear allowance, stamp duty and mortgage tax relief. Let’s look at these individually. Wear and tear allowance As of April last year, landlords with furnished properties have only been able to claim the exact amount spent on furniture and fittings, whereas previously they were able to claim an allowance of 10% of the rental income (net of any services for which the tenant is responsible but which the landlord pays on their behalf, e.g. council tax) without producing receipts. If they needed to claim more than that, they had to support the claim with receipts. It’s an open question as to what effect, if any, this will have on landlords’ overall financial situation, give that landlords will still be able to claim for wear and tear, but what it does mean is that some landlords, particularly amateur ones, may have to up their bookkeeping standards and get a lot more diligent about keeping track of their purchases and taking into account the other changes as well, may want to start employing the services of a professional bookkeeper if not an accountant. Stamp duty Again as of April 2016, most people who have purchased a second property priced at over £40K have paid an extra 3% stamp duty (except in Scotland). There are a few exemptions to this charge and it can be refunded in certain circumstances (basically people who find themselves in the position of temporarily owning two properties, such as during a house move, are likely to be eligible for a refund), but BTL landlords are likely to find themselves paying it. While this is only relevant to landlords who wish to enter the market or expand their portfolio, where margins are already tight, an extra 3% stamp duty may make the difference between a viable investment and one which is too risky to be worth the money. Mortgage tax relief From April 2017, landlords will only be able to claim mortgage tax relief at the basic rate of income tax (currently 20%) as opposed to their marginal rate of tax (40%+). How much impact this has will obviously depend on how much income they have from other sources. Those in the 20% tax band will be unaffected, those on higher incomes, however could find their revenue taking a hit. The financial press has already suggested that one way to get around this could be to operate through a “Special Purpose Vehicle”, which is basically a limited company for BTL landlords. There has been some debate about the pros and cons of this at the moment, what is known is that setting up an SPV entails some degree of cost and effort and there is always the risk that the government will simply apply new rules to SPVs, which will essentially put the owners therefore back to square one (or worse). While it is a separate issue, the Prudential Regulation Authority has introduced new affordability criteria for BTL landlords (in similar vein to the Mortgage Market Review in the residential mortgage market), which could lead to landlords struggling to get mortgages for new properties and/or to re-mortgage existing ones. YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. For mortgages, our typical processing fee is £395 and we may receive commission from the lender

In principle, interest rates and inflation can be viewed as being the two opposite ends of a see-saw. If interest rates go up, the cost of finance rises and savers get more for their money, if people have less inclination to spend, then there is an incentive for sellers to lower prices and hence lower inflation. The reverse is also true. That is, of course, a very simplistic explanation in that, in the real world, there can be many other factors at play, for example if demand for an item is high and supply limited, then raising interest rates may actually cause prices to increase as supply-side costs go up and demand stays high. The ideal level of inflation Inflation actually serves a useful purpose in that it acts as a call to action. Basically people know that if they put off making a purchase, there is a good chance that the price will increase. At the same time, however, if prices increase too quickly, then all kinds of problems can ensue. The Weimar Republic in 1920s Germany was characterised by high inflation, which meant that money became worthless almost as soon as it was printed. The opposite of inflation is deflation, which is when prices fall. Deflation has a similar effect to raising interest rates and was one factor in the Great Depression of the 1930s in the U.S.A. Basically although the headline cost of a purchase was reduced, the cost of paying for any finance needed to buy it effectively increased (by much more than the official rate of interest), making it significantly more expensive. At current time, the UK government aims for a continuous inflation rate of 2% and the Monetary Policy Committee of the Bank of England is tasked with managing this. How does the Bank of England manage inflation? The Monetary Policy Committee meets 8 times a year and decides what action to take, if any, to keep inflation at the government’s 2% target. They have two tools at their disposal, interest rates and quantitative easing. Interest rates can be used to influence inflation regardless of whether it is rising or falling. Quantitative easing only comes into play where low inflation/deflation is a concern. Essentially quantitative easing is when the BoE literally increases the supply of money and uses this “new money” to buy assets, typically government bonds. Increasing the supply of money reduces its value and therefore has a similar effect to lowering interest rates. Both the UK and US administrations have made use of QE in recent years, most notably after the financial collapse of 2008. What is likely to come in the near future? At this point, there is very little scope to lower interest rates any further (unless the BoE shows itself willing to go down the path of zero or negative interest rates). That being so, if inflation shows signs of dropping below the 2% target, the UK could see another round of QE. By contrast, if inflation increases, then the BoE, in theory, has plenty of scope to raise interest rates. The challenge to them is the fact that doing so would impact mortgage holders rather than simply reining in consumer spending. This could place the BoE between a rock and a hard place, but since its target is to keep inflation at 2%, it would have very little choice but to raise rates, unless the government agreed to waive the target. One factor which could suggest a rate rise might be on the cards sooner rather than later is that a weak pound increases the cost of importing goods and sellers may seek to pass this increase onto the customer (as the makers of Marmite tried to do). If they did, this would push inflation upwards and increase the likelihood of interest rates being raised.

Saving money probably ranks right up there with joining a gym in people’s lists of New Year’s Resolutions, hopefully though now we’re in February, that determination hasn’t faded. The good news is that there are lots of ways to go about saving money which are much less effort than sweating it out in a gym. Here are 7 of them. Write down your savings goals and put them somewhere very visible Admittedly this isn’t a money-saving technique per se, but it can help to keep you on track. It can be a whole lot easier to take action to save money when you can see how it helps to move you towards a goal. You could even create tickboxes and/or a graph to track your progress. Downsize your mobile Think hard about how you really use your mobile and what you actually need before buying a new phone at all and if you do decide you need an upgrade, look carefully at how to get the best value for your purchase. You may very well find that buying a mobile yourself and going for a SIM-only deal, or even PAYG, works out cheaper (and more flexible) than taking out a new (2 year) contract. Buy a water filter (and a SodaStream) This one depends on where you live but if you’re one of the many people in the UK who lives in a hard-water area and you are currently buying bottled water because you find it more pleasant to drink, then ditching shop-bought water for home-filtered water will be good for both your wallet and the environment. Regardless of where you live, if you like bubbles in your water then a SodaStream will add them at home, saving you money and cutting down on plastic. Rationalise your coffee If you really want to save money then ditching coffee-shop coffee for home-brew is the best way to go. If, however, that’s one step too far for you, then at least ditch the takeaway cups (which, generally speaking, are neither recycled nor recyclable, in spite of what may people think) and take your own to a shop which offers a discount to customers who bring their own mug. Take advantages of libraries (going digital) Again this will depend on your habits and where you live, but if you like reading then save space and money by only buying your favourite books to keep at home and picking up casual reading from your library. Some libraries are now also offering the opportunity to borrow ebooks and digital audiobooks (as opposed to the ones on CD). Many libraries also offer a selection of audiobooks on CD, music CDs and DVDs. Why buy them when you can borrow them for free? Ditch the gym membership (and buy a bicycle and/or some workout DVDs) If you really are going to the gym regularly and it’s the only practical way for you to practice your favourite form(s) of exercise and/or you really enjoy the social scene, then fair enough. If, however, you’re paying a monthly subscription for facilities you hardly ever use then it’s time to stop kidding yourself and ditch it. Instead of spending money on a gym subscription, you could buy yourself a bicycle, which could also provide some handy transport and/or some workout DVDs. Do more cooking Take a look at the price of a basic sandwich such as cheese or egg mayonnaise. Then think about how much the ingredients costs (even at retail prices, before volume discounts). Yes, there will have been a cost for labour, but making a standard sandwich is hardly a highly-skilled job and yes you’ll have to add on a bit for packaging and transport, but even so, it’s hard to avoid the impression that shop-bought sandwiches are usually extremely expensive for what they offer. Similar comments apply to ready-meals and other convenience foods.

There’s a lot of plus points about being in paid employment and there’s a lot of plus points about self employment. It would be nice to say that which one you choose should be a matter of preference, but these days job-market forces mean that it can be a wise move to be at least prepared for the prospect of having to earn a living on a self-employed basis, even if it’s not something you would want to do over the long term. So what does this mean in practice? Less debt equals more options This is arguably very true in any and all areas of life, but is a crucial point for the self employed and, in particular, for those who have only recently become self employed. Not to put too fine a point on the matter, lenders prefer people who have reliable incomes over people who may or may not have any income at all from one month to the next, which is a risk of self-employment. Therefore, if you are currently in a job, paying down debt as quickly as possible, particularly high-interest debt such as credit-card debt, should probably be a priority in any case and all the more so if there is any possibility of you going self-employed. The mortgage question If you bought a home recently then you will probably already have experienced the stringent checks carried out by lenders, which are intended to ensure that you can make your repayments over the long term, regardless of lifestyle changes. Those with mortgages should think particularly seriously about making the jump to self-employment and should ideally have a substantial cash cushion. Those who’ve had their current mortgage for some time may wish to look and see if they can get a better deal now, while they are still in employment and potentially go for a fixed-rate deal so that they can budget consistently or look at options such as “offset mortgages” which allow for greater payment flexibility. Renters might want to think long and hard about buying a property at the same time as going self-employed, but if you are absolutely sure this is the right route for you, then it is usually best to secure your mortgage while still in employment. Pensions As a self-employed individual, you will not get access to a workplace pension at all, let alone one into which your employer makes extra contributions. If you are transitioning into self-employment from work then you may want to make the most of your workplace pension scheme while you still can and also, potentially, start making some form of retirement provision outside of work. Once you are self-employed, there are various ways you could approach retirement planning, of which a private pension is just one. Because of this and because of the importance of making the right decision for you and your personal situation, it could be a very good idea to get some professional advice here. Insurance There are basically two aspects to insurance for self-employed individuals. One is insuring yourself, so that you and your loved ones can manage in the event that your ability to work is impaired for any reason. The other is double-checking that your possessions are adequately insured given your new circumstances and the fact that, particularly in the early years, you are likely to find it more of a challenge to take out credit. The first point includes looking at options such as medical and dental insurance, income-protection insurance and critical-illness cover. The second includes points like double-checking that your current home insurer is fine with you working from home (if this is your plan) and considering taking out pet insurance (if you haven’t already) to ensure that a vet’s bill can be paid even if you’re in a lean period. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE