Pensions can help you avoid inheritance tax bills, says the Mail. If you have a defined contribution pension plan, its value on your death is free from inheritance tax and can be left to anyone you choose. If you die before the age of 75, the beneficiaries don’t pay any tax either.
And though they are in theory liable to income tax on a bequest of a pension if you die after the age of 75, many can avoid this – grandchildren, for example, will probably have no income and pay no tax, but still have their own personal tax allowance of £11,500 and could withdraw this amount each year without incurring any tax liability
Dangers of a price cap
Theresa May’s promise to introduce a price cap on energy bills may not improve the situation of those on Standard Variable Tariffs, says the Independent. Prices in this category have risen by an average of 8 per cent or three times the rate of inflation over the past 12 months. And finding a good deal is getting harder since price comparison sites are not bound to show all the available offers. A majority of utility customers are on SVTs and are paying about £300 a year more than they need to for their energy.
Student loan savings
The rise in the repayment threshold for student loans from £21,000 to £25,000 announced by the Prime Minister at the Conservative party conference will save individual graduates £30 per month and up to £15,700 over their working lives, says the Times, quoting research by the Institute of Fiscal Studies. The cost to the Treasury will be £2.3 billion per year. The IFS also says that 83 per cent of graduates will not repay their loans in full (after 30 years any remaining loan balance is written off) and that under the revised rules, 45% of all student debt will never be repaid.
No cheap cover for that
The collapse of Monarch airlines prompted newspapers to ask: was that covered by travel insurance? The answer given by the Times was that under half of travel insurance policies cover the failure of an airline (most also exclude acts of god such as hurricanes, and acts of terrorism). Experts said a plethora of cheap travel insurance policies had whittled away at coverage and policyholders needed to be aware of just what was and wasn’t covered.
Mortgage rates tick up
Some of the best-value mortgage lending offers have been withdrawn as the Bank of England has warned that a rise in interest rates is imminent, says the Mail. But one lender is still offering a 2-year fix at 0.99 per cent and several 5-year fixed rates are on offer at under 2 per cent. Economists expect the Bank of England’s base rate to rise to 1.75 per cent by the end of 2019.
HMRC’s auto-tax experiment
Between now and Christmas, some 400,000 people who normally complete a tax return will instead receive in the post from HMRC a ‘simple assessment form’, already pre-filled using data held by the taxman. The forms are going to two groups of people: new state pensioners whose income is above the personal allowance and PAYE taxpayers – most employed people – who have underpaid tax by a significant amount, perhaps because they enjoy a workplace benefit on which further tax is due. HMRC hopes people will just agree the figures and pay the tax. But experts warned that the error rate could be 10 per cent or more and urged people to check the figures carefully.
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