news round up

Early retirees, increasing gap for next home hunters, no limit on divorce claims, stealth taxes on the bereaved and buy-to-let mortgage falls…..all here – and more – in our July news round-up, Logic Bites.


One in three workers will be aged 50 or over by 2024
According to the Telegraph, while forty-somethings currently dominate the British workforce, an analysis by Aviva predicts that by 2024 the population of over fifties will represent more than 1 in 3 workers.  By contrast, the population of “early retirees” peaked at 1.6m in August 2011 but has since witnessed a continual decline, hitting less than 1.2m in today’s figures. The changing demographic is attributed to the fact that people are living longer and therefore need to save more or work longer to fund a longer life in retirement.

Stealth tax on the bereaved?
Proposed hikes of up to 9,202% in probate fees are a ‘stealth tax’ on the bereaved, reports the Mail. Probate fees are currently a flat £215 for all estates in excess of £5,000 but a proposed new banding system (under which an estimated 30,000 people inheriting between £5,000 and £50,000 will be better off) will see a rise of £300 for those inheriting between £50,000 and £300,000, with the wealthiest of estates (£2m+) paying a flat fee of a staggering £20,000. The size of the probate fee – which apparently bears no relation to the work involved in processing the case – will also create problems where estates consist predominantly of illiquid assets, say the Mail.

Buy-to-let mortgage market sees spectacular decline
Figures from the Council of Mortgage Lenders reveal that the number of buy-to-let mortgages taken out for purchase in April was just 4,200 after spiking to 28,700 in March 2016 ahead of the changes to stamp duty rates for additional properties. While this may not in itself be a huge shock, more telling was the fact that buy-to-let purchases dropped by 51% on the 8,600 recorded in April 2015, say the Mail. While the stamp duty changes will primarily affect new investors (as well as those who may have bought additional properties), a bigger impact for existing landlords will come from the removal of wear and tear allowance from 6 April 2016 and the changes to tax relief on mortgage interest payments, the rate of which will reduce annually over a four year period to a maximum of 20%.

Supreme Court rules no time limit on divorce claims
History was made last week when the ex-wife of a millionaire entrepreneur was awarded a £300,000 settlement, even though the pair divorced long before he made his money, reports the Mail.  Following an 11-year marriage, the couple divorced in 1992, at a time when they were both virtually penniless without addressing their finances. In subsequent years, the entrepreneur became a green energy pioneer and in 2011 his ex-wife started proceedings for a share in his £57bn fortune. The landmark ruling suggests that there is no time limit for ex-partners to claim for financial provision where the finances were not dealt with at the time of separation.

Pension freedoms users not shopping around!
A study conducted by Citizens Advice has found that 70% of the individuals surveyed who had paid to access their pensions since the freedoms were introduced in April 2015 did not shop around due to fears of exit charges –potentially leading to poor value deals that do not meet their needs. Citizens Advice estimates that around 160,000 people have paid to access their pensions since the freedoms were introduced in April 2015.

‘Second steppers’ need to save more as price gap between flats and houses widens
According to the price comparison service, prices of houses have risen by 21% in the past decade, while those of flats have gone up by just 15% over the same period. This leaves a potential shortfall for so-called ‘second steppers’  looking to upgrade to a larger more spacious property to accommodate a growing family, reports the Financial Times. Despite this, the research shows that a significant percentage of aspiring second-time buyers looking to trade up to a house were not intending to save for a deposit on their next property – having been lulled into a false sense of security by a generally rising property market. In similar research carried out last year, Lloyds Banking Group found that second steppers can need to find as much as £125,700 extra to bridge the gap in price between their existing and desired home.

For more on any of these news items, or if you are looking for a bit of help with your financial plans, get in touch with us (click on this link