Inheritance sums decline as more adults opt for lifetime giving

31 Oct 2013

The value of traditional  inheritance lump sums is falling as older generations choose to give away more  of their wealth during their lifetime, new research suggests.

According to figures from the  Office for National Statistics (ONS), nearly one in 10 over-55s regularly give  money to family members in order to avoid a potential inheritance tax bill. A  further 20% of those studied said they would do the same if they could afford  to do so.

Experts claim older generations are  also giving away more money to help their children deal with costs such as  university fees, or to assist them to purchase their first property.

‘It is implied that the inheritance they were planning to  leave will be compromised as they are choosing to dip into their savings and  give money to younger family members while they are still alive,’ said a spokesman  for the ONS.

The data reveals that some 3.6% of UK adults – or 1.6  million – received an inheritance valued at more than £1,000 in a two-year  period. Of this figure, more than half of inheritors received less than £10,000.

However, one tenth is believed to have inherited a sum of £125,000  or more.

The ONS found that nearly half of  inheritances (46.8%) came from a parent or parent-in-law, whilst 22.5% came  from grandparents. Perhaps surprisingly, just over one in 10 inheritances  (11.1%) were bequeathed by an uncle or aunt.

We can advise on  strategies to help keep your inheritance tax liability to a minimum – please contact us for advice tailored to your circumstances.


Pension charges ‘could be capped at 0.75%’

30 Oct 2013

Pension scheme charges could be capped at 0.75% under new  plans unveiled by the Government.

The Pensions Minister Steve Webb has launched a new  consultation that proposes capping management scheme charges at between 0.75%  and 1%, in a bid to help people save for their retirement.

The Office of Fair Trading estimates that there are more  than 186,000 pension pots with £2.65 billion worth of assets subject to an  annual charge of more than 1%.

Any small variation in fees can make a significant  difference to the value of an individual’s final pension pot.

According to government calculations, someone who saves £100  a month over a typical working lifetime of 46 years could lose almost £170,000  from their pension pot with a 1% charge and over £230,000 with a 1.5% charge.

As pension auto-enrolment continues to be rolled out over  the coming years, industry experts are being urged to give their opinions on a  range of possible options for a proposed limit on scheme charges.

However, any cap would only apply to funds held in  auto-enrolment schemes.

Announcing the proposals, Pensions Minister Steve Webb said:  ‘The Government believes that enough is enough on charges. People need to know  they are getting value for money when they save into a pension and not being  ripped off by excessive charges.

‘We are consulting on a cap on pension charges. A range of  options will be on the table including an outright ban on all charges above  0.75% per year.’

Yet the National Association of Pension Funds described the  proposed cap as a ‘blunt tool that would inhibit innovation’.

Energy chiefs to be questioned over recent price hikes

29 Oct 2013

The big six energy companies will today meet with MPs at the  Energy and Climate Change Committee, to explain the escalating prices of  electricity and gas and to discuss how transparency can be achieved.

David Cameron said he was ‘frustrated about the big six’ and  wanted to see competition in the sector increase.

Labour MP John Robertson, who will be one of the MPs at  today’s meeting at the Energy and Climate Change Committee, agrees that energy  prices should be more competitive. He believes that pricing strategies similar  to those in our supermarkets should be adopted by the energy companies in order  to increase competition. He said, ‘You have never ever seen an energy company  take on the rest of its competitors to try to undercut them […] when one puts  the price up, they all put the price up.’

The big six control 99% of the retail energy market, and it  is expected that they will say that the price rises are mainly due to increased  wholesale costs. However, Andrew Wright, the acting chief executive of the  energy regulator Ofgem, is expected to tell MPs that wholesale prices have  risen by less than the rate of inflation.

If it is found that price rises are more than the increases  in their costs, Ofgem may be asked to investigate competition in the sector,  with the aim of easing the financial strain for the consumer.

The regulator claims that energy prices have risen by 24%  over the past four years, putting increased financial pressures on small  businesses and households alike.

Businesses welcome latest GDP figures but say ‘further action needed’

28 Oct 2013

Business leaders have declared that Britain’s economy is  ‘moving in the right direction’ after new figures revealed that UK GDP has  risen at its fastest rate in three years.

According to the latest quarterly figures from the Office  for National Statistics, UK economic output increased by 0.8% between July and  September, with growth recorded across every sector.

The data surpasses the 0.7% rate of growth recorded in the  previous quarter, and is the strongest performance since 2010.

However, the UK economy is still 2.5% below the level  recorded before the start of the recession.

The British Chambers of Commerce (BCC) welcomed the latest  figures, but it warned that the UK is still trailing behind other major economies.

BCC Director General, John Longworth, said: ‘This is the  highest quarterly increase we’ve seen in three years, so the economy is clearly  moving in the right direction. But we are still behind a number of advanced  economies, such as the US and Germany, that have managed to recover the output  lost during the economic downturn.’

Meanwhile, Graeme Leach, chief economist at the Institute of  Directors, commented: ‘The outlook looks better than at any time since the  onset of the financial crisis. Indeed, our members have more confidence in the  economy than at any time since 2008.

‘However, strong headwinds remain and the annual growth rate  year on year is nothing to get too excited about yet. Though inflationary  pressures are likely to remain benign, debt and inflation are rising faster  than earnings. Much more needs to be done to transform our economy from being  good to being really great’.

Bank of England ‘open for business’, says Carney

25 Oct 2013

The Bank of England is to increase lending to smaller banks  in a bid to help businesses and consumers.

The Governor of the Bank of England, Mark Carney, said the  Bank will offer money for longer periods of time, widen the definition of  acceptable collateral assets and offer liquidity at lower prices than before.

Speaking at the Financial Times newspaper’s 125th  anniversary, Mr Carney said he recognised that the reputation of the UK banking  system had been damaged over the last few years but believed that now ‘there  could be some sustainability, some traction in the recovery’.

He described the bank as being ‘open for business’ and  justified the move by saying that ‘the core of the financial system has gotten  a lot better’.

A document released yesterday by the Bank of England  provided a summary of changes to its Sterling Monetary Framework (SMF) and said  that the shift in circumstances has allowed ‘a re-positioning of the Bank’s  lending facilities’.

Mr Carney hopes that the banks will take advantage of these  new opportunities to borrow from the Bank of England and that they will be more  willing to lend to both consumers and businesses.

Self assessment tax return deadline approaches

23 Oct 2013

Taxpayers who wish to file a paper 2012/13 self  assessment tax return are being urged not to miss the forthcoming 31 October  deadline, or they could face a series of penalties.

Under HM Revenue & Customs’ penalty regime,  any paper tax returns received on or after 1 November will incur an automatic  £100 penalty.

The penalty applies even where there is no tax to  pay, or where any tax due is paid on time, and   additional penalties will apply where the return remains outstanding  after 3, 6 and 12 months.

Individuals who are sending a paper tax return  within the final days of the deadline are advised to obtain proof of posting,  in order to support them in the event of any appeal against a late-filing  penalty.

As an alternative, individuals can instead choose  to file their tax returns online, by a later deadline of 31 January 2014.

We can help to reduce the administrative burden,  by filing your tax returns on your behalf.