Hansells Financial Planning Newsletter Edition 9
40,000 Tesco bank accounts hacked – Tesco admitted that 40,000 of its bank’s 136,000 current accounts had been hacked and money stolen from about half of them. Though many banks have previously had individual accounts hacked, this is believed to be the largest hack in the UK involving theft of money from a large group of accounts. Experts said this suggested the problem was to do with the bank’s own security systems. UK regulations require banks to reimburse customers for any such losses.
MPs suggest an end to pensions ‘triple lock’ – A select committee of MPs has recommended that the government ends the ‘triple lock’ for the state pension, legislation which requires it to rise each year in line with the highest of inflation, average earnings or 2.5%. The Office of Budget Responsibility says under the current rule the cost of the state pension will rise from 5% to 6% of GDP between 2020 and 2030, and the cost will fall on the ‘millennial’ generation, those born between 1981 and 2000. The MPs say the inflation link should be removed but the earnings link retained.
The Chinese are buying London – Sales to Chinese buyers of homes in exclusive parts of London have risen since the BREXIT vote, says the Financial Times. It quotes one agent as explaining this by saying the Chinese property market is at a 25-year high while the £ is at a 25-year low. Chinese investment in UK commercial property is also up strongly so far in 2016, with no sign of a slowdown.
Inflation to top 4% in 2017 – The National Institute of Economic and Social Research says inflation will rise to 4% in 2017, reports the Financial Times. NIESR expects a steady rise in oil prices to push up import costs, and consumer prices will rise by some 3.5% as a result of this and the fall in the sterling exchange rate. It does not expect consumer prices to start falling until after 2018.
One in three of wealthiest under HMRC investigation – One in three of the wealthiest people in the UK is under investigation by HMRC, reports the Financial Times. The amount of tax at stake is almost £2 billion, even though the wealthiest 6,500 people – each with assets over £20 million – paid over £3.5 billion in income tax and national insurance in 2015-16 and another £880 million in capital gains tax. The investigations of the specialist unit set up within HMRC to deal with the wealthiest 6,500 people brought in an extra £426 million of tax in 2015.
Improved lending options for small businesses – Hundreds of thousands of small UK businesses will soon be able to seek loans from other sources if they are turned down by their bank, says the Financial Times. Lending to small businesses has fallen in almost every year since the financial crisis, and over 100,000 firms are refused a loan by their bank each year. The scheme will require banks to refer companies to new panels of lenders including ‘peer to peer’ lenders.
15% more pay tax on capital gains – Rising property prices were the main factor behind a 25% rise in capital gains tax payments to £6.9 billion in 2014-15, the latest year for which data is available, says the Financial Times. In total 223,000 people paid CGT, a rise of 15% from the previous year. Experts said most of these were probably buy-to-let investors. Others said the figures showed why investors should make full use of the higher annual ISA allowance next year (£20,000) in order to escape tax on their investments.
Retired, Property owner
Parents and children retire together – By 2050, the number of 85-year-olds in the UK will double to 3.4 million, says the Telegraph. And it’s prompting a change in the property market, as more retiring 65-year-olds are choosing to live in the same retirement property complexes as their parents. Having a good range of facilities such as spas and gyms easily accessible, and often with care facilities on site, attracts people who want to be able to keep an eye on their parents without having to travel far, and also to benefit from an easy lifestyle.
Pension errors hit stay-at-home mums – Women who took time off work to have children are at risk of losing out on state pension entitlements, says the Telegraph, thanks to errors in the National Insurance record system. In many cases, including a case detailed in the paper, HMRC records show no contributions were made in certain years even though the individual was employed at the time. It is up to individuals to check their state pension forecast and the facts it is based on, and to provide HMRC with the evidence it needs to correct any errors.
Employee, Property owner
Buy with a friend – First time buyers with just one salary can rarely afford to buy on their own unless they’re lucky enough to have an inheritance, says the Times. It says , including having joint responsibility for the mortgage payments. Its case study of two young women emphasised the need to have a legal document setting out rights and responsibilities including how to deal with the situation when one wanted to sell.
Overpay your mortgage to beat low savings rates – One way to beat low savings rates is to overpay your mortgage, says the Mail. Every extra £1 you use to pay off the loan saves you the interest you’re paying on the mortgage, which is usually much higher than the savings rates on offer from banks and building societies. Watch out for penalties, says the Mail – usually lenders let you overpay a standard capital-and-interest mortgage by up to 10% (a few lenders go up to 20%) but levy penalty payments if you do more than this. Some older mortgage contracts have no upper limits on overpayments. However, the Mail also points out that it’s far better to pay off other debts such as credit cards first since these will have much higher interest rates and save you more in interest payments.