Food For Thought – Financial Protection

Consider these facts…  Today, in the UK:

• 2.2 million people of working age are off work for 6+ months due to ill health and/or disability
• over 2 million people are claiming Income Support
• over 2.6 million are claiming Incapacity Benefit, and
• over 2.7 million are claiming Disability Living Allowance
• over 855,000 people are claiming Job Seeker’s Allowance, and
• 1,676 people will die.

Now consider this… a single person aged 25 or over receives only £59.15 per week in Income Support.  In addition, the short term lower rate of Incapacity Benefit for the under 45’s is just £8.55 per week.

One of the Department for Work and Pension’s aims is to “work to end poverty in all its forms”.  Ask yourself this question:  if you were unable to work, and had to survive on state benefits, how long could you last before falling into the poverty trap?  Could you maintain your current standard of living?  Even if you weren’t off sick indefinitely, once your employer’s statutory sick pay ceased, would you be able to support your standard of living, helped only by the benefits?

Furthermore, if the worst were to happen and you were to die, could your family survive financially without you?

These are sobering thoughts, but help is at hand.  Questa Financial Services offers expert advice on financial protection and a range of products from income protection to whole life insurance, family income benefit to private medical cover.  If you do not have financial protection in place for you and your family, call us today to safeguard your income.

Source: The Department of Works and Pensions 2007

The FSA do not regulate some forms of protection.

Buy To Let – Tax Facts

According to a recent Times report, HMRC has identified 80,000 landlords who may have claimed too much tax relief and failed to declare the full amount of rent recovered from a property, or not declared a Capital Gain on a property sale.  The article also suggested that HMRC will target so called ‘ghost-landlords’ (i.e. property owners who have failed to declare themselves to the taxman in a new campaign to recover more tax from UK taxpayers and investors.

Property investors are required to pay income tax of up to 40% on the rental income received. It is believed however that HMRC are also targeting a substantial group of property owners who may have incorrectly claimed deductions for mortgage repayment. Current law allows property owners to deduct the whole of the monthly mortgage repayment on an interest only mortgage. The rules stipulate that they cannot deduct payments that go towards reducing the capital borrowed. It is thought by the Revenue that many property owners may have unwittingly deducted such payments, unaware that their mortgage has an element of capital repayment.

IHT Update – 40% Inheritance Tax Nightmare

In our last newsletter we quoted an HBOS press release dated 19/03/07, which stated that a 1/3 of all detached homes in Britain came within the scope of Inheritance Tax last year.  However from new figures released by the Treasury it appears that this applied to nearly one in five of all homes - double the previous figure.*

The previous research suggested that 1.9 million of the 2 million sample houses to be caught in the net were
detached properties. The latest figures reveal a much more serious picture. The present (OE07/08) nil rate band is £300K, rising in small increments to reach £350K by 2010/11. Last year the Halifax estimated that the threshold would now be £430,000 if it had kept pace with house prices since 1997.  If you want to find out how your present liability to estate taxes can be mitigated or, at best, avoided altogether, contact us today.

* Source; Jason Groves, Political Correspondent, Daily Express 27th July