Financial planners are urging grandparents to give grandchildren enough capital for the deposit on a home, says the Times. The 4.5 million Britons aged over 65 collectively own over £1.07 trillions worth of property and most say they are worried about financial prospects for the younger generation (millennials).
Already, over 30 per cent of first time buyers get help from parents and grandparents with their deposit. Provided the donor survives for seven years after making a gift, it escapes liability for inheritance tax at 40 per cent.
The year of the switch
The number of people switching providers of their bank current account has risen by almost 50 per cent in the first few months of 2017, says the Independent. It says that after many years in which inertia ruled in the world of bank accounts, 2017 could see an upsurge in switching as new banks offer new features with their accounts. One newcomer, for example, is aiming at the self-employed with tools that help them build tax reserves and manage expenses. Another newcomer will offer real-time data on its banking app (delays in recording payments have caused problems with some existing apps). Many more such branch-less digital banks are expected to launch over the remainder of the year.
Company problems for BTL owners
Owners of BTL properties need to think carefully about changing to a company ownership structure, says the Financial Times. Most of those who do this are trying to avoid the restriction on mortgage interest deductions – from April 2017, tax deductibility of interest at 40 per cent is being phased out and by 2020, only a 20 per cent relief will be available. But the FT points out that interest rates on loans to companies are usually higher than for individuals, and that company owners may pay more tax when drawing money out of a company, depending on their own personal tax position. So they need to do all the sums carefully before making the change.
The risks of ‘fronting’ fraud
Thousands of parents are committing fraud by ‘fronting’ car insurance policies for their children, says the Financial Times. By putting themself down as the main driver, the parent can halve the cost of their child’s car insurance. But, says the FT, the risks of doing so are high. Insurers can refuse to pay out for any claims, or can attempt to recover the cost from the parent as policyholder. Even worse, if an insurer declines to pay out, the young driver could be treated as uninsured and could be fined, prosecuted and automatically banned from driving. Telematics – the ‘black box’ in the car – is a better and safer way to cut the cost for novice drivers.
Bomad lending soars 30 per cent
Bomad – otherwise known as the Bank of Mum and Dad – is now the UK’s ninth biggest mortgage lender, says the Financial Times. Its lending has soared by 30 per cent to £6 billion this year and it helps fund 26 per cent of UK house purchases, almost as many as Yorkshire Building Society. The proportion of people aged under 35 seeking financial help from family members with house purchase has reached 62 per cent.
Invest in the ideas factory
Now is a great time to invest in the UK ideas factory, says the Financial Times. Venture Capital Trusts and Enterprise Investment Schemes allow investors to buy into start-up businesses with good propositions, often spun out from universities and with highly motivated founders and employees. Restrictions on pension investing mean higher earners need to turn to long-term investments like VCTs and EIS with attractive tax breaks.
Financial Advice Bristol
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