Arthur BeverlyPWP IFA WK aug13 blue
2 Stewart Street Milngavie Glasgow G62 6BW
[email protected] 0141 956 5525
IHT bill over £3bn in 2012/13 More than £3 billion in inheritance tax (IHT)
investments, life assurance policies or
transferable nil rate band, where
was paid in 2012/13, according to igures
business assets, your estate could be
any unused nil rate band from
from the Oice for National Statistics
liable for IHT.
the irst death within a marriage
(ONS). The £3.147 billion received by HMRC is eight per cent higher than the amount collected in 2011/12.
According to ONS data, 259,989 estates went through probate - the process of legally distributing a person’s estate after
It is believed a recovery in property prices
their death - in 2010/11, accounting for
and HMRC’s drive to administer and collect
nearly half of all deaths. Of these, 15,584
the tax more efectively - as well as the
were liable for IHT.
freezing of the IHT threshold at £325,000 - has resulted in an annual collection that comes close to the record £3.8 billion in 2007/08. IHT is charged at 40 per cent for the 2013/14 tax year and is payable where a person’s estate is in excess of £325,000. If you own your own house and have savings,
Commenting, the ONS said: “Up until 2007/08 receipts had been climbing steadily, relecting increases in asset
or civil partnership can be claimed against the estate on the second death.
Please contact us for more information about IHT, or about reducing your potential IHT liability.
prices over this period, speciically property prices and household savings.” IHT receipts then dropped after this period following the introduction of the
Arthur Beverly Financial Management is authorised and regulated by the Financial Conduct Authority. Financial Services Register number 485198. Registered in Scotland Number 342744. Registered Office: 22 Backbrae Street, Kilsyth, G65 0NH
www.abfm.co.uk
This month, we look at what more you could do to reduce your inheritance tax liability after data revealed that more than £3 billion in IHT charges was paid last year. We look at why many over-55s are increasingly using equity release to boost their retirement income. Recent research reveals that fraudulent insurance claims exceeded £1 billion in 2012. And, inally, we provide an update on the Help to Buy mortgage scheme after the Government conirmed further details last month.
AUGUST 2013
Welcome to your August newsletter.
Equity release funding more retirements With longer life expectancy, rising inlation and low interest and annuity rates, individuals are having to save more than ever to fund their retirement. It’s not surprising then that the need to supplement retirement income, and rising conidence in the housing market, is causing a growing number of over-55s to turn to equity release to free up the value in their homes. Research from Key Retirement Solutions found that more than £508
million was released from equity release plans in the irst half of 2013 - up 12 per cent from the same period last year. The average release amounted to £55,272. Equity release enables borrowers to quickly raise money from their home, either as a lump sum, additional income or both. Typically, homeowners borrow money against their home and, instead of making monthly repayments, incur ixed-rate interest payments over the life of the loan, which is then repaid when the property is sold or the homeowner dies.
Insurance fraud tops £1bn The value of fraudulent insurance claims made in 2012 reached £1.1 billion, according to igures from the Association of British Insurers (ABI). This equates to 2,390 fraudulent or exaggerated claims, worth £21 million pounds, made every week. It is the irst time that the annual igure has exceeded £1 billion. Figures revealed: • home insurance frauds were the most common: 51,000 worth
£95.5 million were detected • dishonest motor insurance claims were the most costly: savings of £614 million were made from 42,700 dishonest claims • the value of frauds uncovered nearly doubled between 2007 and 2012 • the number of frauds detected increased by more than a third in the same period. In December last year, Government research found that fraudulent personal injury claims from road traic accidents rose by 60 per cent between 2006 and 2012, despite a 20 per cent fall in the number of reported traic accidents over the same period. The inding led the Ministry of Justice to describe Britain as the “whiplash capital of the world.” According to research from Gocompare.com, six per cent of UK motorists would think about making a personal injury claim after an accident, even if they weren’t badly hurt. It also found that four per cent said that people should do whatever they can to get money out of insurers. Director of general insurance at the ABI, Nick Starling, said the insurance industry was maintaining its zero-tolerance approach to insurance fraud. “Never has it been harder to get away with insurance fraud, never have the penalties - such as getting a criminal record and being unable to get future insurance and other inancial products - been tougher,” he said. We can discuss the insurance products most suitable for your needs.
Of those surveyed, 21 per cent said they used equity release to clear mortgage debts, particularly interestonly mortgages - many of which are due to mature in the next few years. Home and garden improvements and family holidays were also popular uses of funds. Get in touch to ind out more about equity release and whether it may be suitable for you.
Help to Buy scheme details conirmed Budget 2013 introduced the new Help to Buy mortgage scheme, under which the Government has pledged to invest £3.5 billion into shared equity homes to help irst-time buyers and increase the construction of new build homes. The Chancellor conirmed details of the ‘guarantee’ part of the scheme, which had been widely anticipated, in July. Help to Buy: equity loans In place since April 2013, the equity loan part of the Help to Buy scheme is aimed at supporting borrowers. It allows both irst time buyers and home movers to secure a mortgage on a new build property (up to a property value of £600,000) with only a ive per cent deposit. Help to Buy: mortgage guarantees Due to come into efect in January 2014, the mortgage guarantee part of Help to Buy is aimed at lenders. It will provide Government guarantees to lenders who ofer mortgages to irst-time buyers, providing they have a minimum ive per cent deposit on the purchase price of the property worth up to £600,000. In other words, the Government will take on some of the risk of lending to those with smaller deposits. Following growing concerns that buy-to-let landlords, foreign buyers and second-home owners would be able to take advantage of the mortgage guarantees, Chancellor George Osborne conirmed in July that it would not be made available to these buyers. Those looking to borrow must be able to aford the mortgage repayments and will be subject to income veriication and stress testing, as set out in the Financial Conduct Authority’s Mortgage Market Review. The responsibility for obtaining declarations from borrowers to ensure they are eligible will lie with the lender. In addition, Help to Buy will not be available alongside any other Government scheme, including NewBuy.
Important Information
The way in which tax charges (or tax relief, as appropriate) are applied depends upon individual circumstances and may be subject to change in the future. This document is solely for information purposes and nothing in this document is intended to constitute advice or a recommendation. You should not make any investment decisions based upon its content. The value of investments can fall as well as rise and you may not get back the amount you originally invested. Your home may be repossessed if you do not keep up repayments on your mortgage. Equity release may involve a lifetime mortgage or a home reversion plan. To understand the features and risks, ask for a personalised illustration. Equity release is not right for everyone. It may afect your entitlement to state beneits and will reduce the value of your estate. Whilst considerable care has been taken to ensure that the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information. E & OE.
[email protected] 0141 956 5525
IHT bill over £3bn in 2012/13 More than £3 billion in inheritance tax (IHT)
investments, life assurance policies or
transferable nil rate band, where
was paid in 2012/13, according to igures
business assets, your estate could be
any unused nil rate band from
from the Oice for National Statistics
liable for IHT.
the irst death within a marriage
(ONS). The £3.147 billion received by HMRC is eight per cent higher than the amount collected in 2011/12.
According to ONS data, 259,989 estates went through probate - the process of legally distributing a person’s estate after
It is believed a recovery in property prices
their death - in 2010/11, accounting for
and HMRC’s drive to administer and collect
nearly half of all deaths. Of these, 15,584
the tax more efectively - as well as the
were liable for IHT.
freezing of the IHT threshold at £325,000 - has resulted in an annual collection that comes close to the record £3.8 billion in 2007/08. IHT is charged at 40 per cent for the 2013/14 tax year and is payable where a person’s estate is in excess of £325,000. If you own your own house and have savings,
Commenting, the ONS said: “Up until 2007/08 receipts had been climbing steadily, relecting increases in asset
or civil partnership can be claimed against the estate on the second death.
Please contact us for more information about IHT, or about reducing your potential IHT liability.
prices over this period, speciically property prices and household savings.” IHT receipts then dropped after this period following the introduction of the
Arthur Beverly Financial Management is authorised and regulated by the Financial Conduct Authority. Financial Services Register number 485198. Registered in Scotland Number 342744. Registered Office: 22 Backbrae Street, Kilsyth, G65 0NH
www.abfm.co.uk
This month, we look at what more you could do to reduce your inheritance tax liability after data revealed that more than £3 billion in IHT charges was paid last year. We look at why many over-55s are increasingly using equity release to boost their retirement income. Recent research reveals that fraudulent insurance claims exceeded £1 billion in 2012. And, inally, we provide an update on the Help to Buy mortgage scheme after the Government conirmed further details last month.
AUGUST 2013
Welcome to your August newsletter.
Equity release funding more retirements With longer life expectancy, rising inlation and low interest and annuity rates, individuals are having to save more than ever to fund their retirement. It’s not surprising then that the need to supplement retirement income, and rising conidence in the housing market, is causing a growing number of over-55s to turn to equity release to free up the value in their homes. Research from Key Retirement Solutions found that more than £508
million was released from equity release plans in the irst half of 2013 - up 12 per cent from the same period last year. The average release amounted to £55,272. Equity release enables borrowers to quickly raise money from their home, either as a lump sum, additional income or both. Typically, homeowners borrow money against their home and, instead of making monthly repayments, incur ixed-rate interest payments over the life of the loan, which is then repaid when the property is sold or the homeowner dies.
Insurance fraud tops £1bn The value of fraudulent insurance claims made in 2012 reached £1.1 billion, according to igures from the Association of British Insurers (ABI). This equates to 2,390 fraudulent or exaggerated claims, worth £21 million pounds, made every week. It is the irst time that the annual igure has exceeded £1 billion. Figures revealed: • home insurance frauds were the most common: 51,000 worth
£95.5 million were detected • dishonest motor insurance claims were the most costly: savings of £614 million were made from 42,700 dishonest claims • the value of frauds uncovered nearly doubled between 2007 and 2012 • the number of frauds detected increased by more than a third in the same period. In December last year, Government research found that fraudulent personal injury claims from road traic accidents rose by 60 per cent between 2006 and 2012, despite a 20 per cent fall in the number of reported traic accidents over the same period. The inding led the Ministry of Justice to describe Britain as the “whiplash capital of the world.” According to research from Gocompare.com, six per cent of UK motorists would think about making a personal injury claim after an accident, even if they weren’t badly hurt. It also found that four per cent said that people should do whatever they can to get money out of insurers. Director of general insurance at the ABI, Nick Starling, said the insurance industry was maintaining its zero-tolerance approach to insurance fraud. “Never has it been harder to get away with insurance fraud, never have the penalties - such as getting a criminal record and being unable to get future insurance and other inancial products - been tougher,” he said. We can discuss the insurance products most suitable for your needs.
Of those surveyed, 21 per cent said they used equity release to clear mortgage debts, particularly interestonly mortgages - many of which are due to mature in the next few years. Home and garden improvements and family holidays were also popular uses of funds. Get in touch to ind out more about equity release and whether it may be suitable for you.
Help to Buy scheme details conirmed Budget 2013 introduced the new Help to Buy mortgage scheme, under which the Government has pledged to invest £3.5 billion into shared equity homes to help irst-time buyers and increase the construction of new build homes. The Chancellor conirmed details of the ‘guarantee’ part of the scheme, which had been widely anticipated, in July. Help to Buy: equity loans In place since April 2013, the equity loan part of the Help to Buy scheme is aimed at supporting borrowers. It allows both irst time buyers and home movers to secure a mortgage on a new build property (up to a property value of £600,000) with only a ive per cent deposit. Help to Buy: mortgage guarantees Due to come into efect in January 2014, the mortgage guarantee part of Help to Buy is aimed at lenders. It will provide Government guarantees to lenders who ofer mortgages to irst-time buyers, providing they have a minimum ive per cent deposit on the purchase price of the property worth up to £600,000. In other words, the Government will take on some of the risk of lending to those with smaller deposits. Following growing concerns that buy-to-let landlords, foreign buyers and second-home owners would be able to take advantage of the mortgage guarantees, Chancellor George Osborne conirmed in July that it would not be made available to these buyers. Those looking to borrow must be able to aford the mortgage repayments and will be subject to income veriication and stress testing, as set out in the Financial Conduct Authority’s Mortgage Market Review. The responsibility for obtaining declarations from borrowers to ensure they are eligible will lie with the lender. In addition, Help to Buy will not be available alongside any other Government scheme, including NewBuy.
Important Information
The way in which tax charges (or tax relief, as appropriate) are applied depends upon individual circumstances and may be subject to change in the future. This document is solely for information purposes and nothing in this document is intended to constitute advice or a recommendation. You should not make any investment decisions based upon its content. The value of investments can fall as well as rise and you may not get back the amount you originally invested. Your home may be repossessed if you do not keep up repayments on your mortgage. Equity release may involve a lifetime mortgage or a home reversion plan. To understand the features and risks, ask for a personalised illustration. Equity release is not right for everyone. It may afect your entitlement to state beneits and will reduce the value of your estate. Whilst considerable care has been taken to ensure that the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information. E & OE.
