What has happened over the last few weeks in personal finance? (09/01/2020)

Category: News

High-risk mini-bonds still being promoted

Adverts for risky mini-bonds are still around despite the FCA banning them a year ago. Reports found mini-bonds at the top of searches such as “high-return investments” or “top ISA rates”.

Mini-bonds have come under scrutiny following several high-profile scandals. One was the collapse of London Capital & Finance, which left almost 12,000 investors out of pocket.

Funeral costs rise

The cost of dying has reached record highs of almost £10,000, fuelled by an increase in elaborate send-offs. It means funeral costs are now higher than they have ever been.

11,000 pensioners could be up to £3,500 a year worse off

From April, the Adult Dependency Increase (ADI) will stop. This could leave some older people £70 a week worse off. ADI was given to pensioners with a financially dependent spouse.

Since 2010 the Government has been phasing it out. It will end completely on 6 April 2020. People of pension age got this payment if they have a financially dependent partner. Anyone affected may be eligible for Universal Credit or Pension Credit.

Lifetime ISA warning

Lifetime ISAs are a way in which many people save money. This could be to buy their first property or for later in life. Savers withdrawing the money for other reasons have suffered penalties for doing so. HMRC have revealed these have totalled more than £9million.

Savers who have a Lifetime ISA can get a 25% government bonus added to their savings in this type of account. The most anyone under 50 can pay into the account is £4,000 each tax year. The 25% bonus is attractive but there are rules about withdrawing the money.

Anyone can take money out of a Lifetime ISA if they are buying their first home, are 60 or over, or have less than a year to live. They pay a 25% charge if they take their money out for any other reason.

Anyone treating their Lifetime ISA as a short-term savings product may get less back than they paid in.

Cost of living rises by £1,400

Researchers looked at the 13 most common household expenses. These include insurance, broadband, water, energy and food.

They found the annual cost of living per person has risen by £1,443 to £10,969 over the past decade. The average salary has increased by £884, from £25,220 to £26,104.

The biggest increase has been in the cost of home insurance. This has almost doubled from £159 to £307 for a typical buildings & contents policy.

Budget 2020 – what to expect

A tax-and-spend Budget on March 11 may look to boost struggling towns. However, official forecasts are unlikely to offer much room for manoeuvre.

The Conservatives’ have pledged to raise spending from about 2% of gross domestic product to 3%. This gives the chancellor some £100bn for investment over five years. Increasing tax revenues will be key to spending any more. The Government has pledged not to increase personal taxes. They do have many other ways they could increase revenues in the Budget. These could include changing reliefs such as Entrepreneurs relief.

House prices to rise in 2020 according to almost all analysts

The guesses from respected property industry analysts range from 1% to 4%.

High Court upholds a mother’s decision to disinherit daughter for unkindness

The mother who died in 2015 aged 96 made and executed a will in 2005 leaving her daughter £100. The daughter accused her brother, of forgery and undue influence over the will. She also alleged that her mother could not know what the will meant.

The will included an explanatory note, stating why she was disinheriting her daughter. The mother’s solicitor did not doubt her mental capacity to make the will. If there had been the slightest doubt he would have arranged for a medical examination.

In this case, the Judge dismissed the claims. This is not always the case, and legal advice is always the best option.

New Life Expectancy Figures Released

The Office for National Statistics (ONS) released updated life expectancy projections. While life expectancy is still expected to rise, the absolute numbers are now smaller.

Falls in projected life expectancy have been commonplace in the UK over recent years.

NHS England confirm their pensions fix

The NHS and the issues relating to annual allowance tapering have been prominent. The tax charges lead to many senior clinicians refusing to take extra work, reducing hours, or retiring.

NHS England took drastic action and announced they would cover these tax charges for the 2019/20 tax year. This should mean clinicians can take on extra work this tax year without worrying about annual allowance charges. This is a temporary solution and will only resolve the issue for 2019/20.

Although this is good news for affected clinicians in the current tax year, tapering has caused wider issues in the public sector and beyond. It appears the only real cure would be to remove tapering entirely. Whether the Government will be willing to make this more drastic move we will have to wait and see.

It is also important to note that the proposals above only apply to NHS England. We understand NHS Wales have made a similar commitment but have not yet seen official confirmation. We also understand the Scottish scheme has offered to pay the employer contributions as extra salary if the members choose to opt-out to avoid annual allowance charges.

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