The downside of downsizing

The decision to sell up and move to a smaller property could come as a result of children flying the nest, the need to free up cash, or both. Whatever the reason, there are costs to downsizing that are important to know about before you make the move. 

The ‘hidden’ fees

Research from online estate agent suggests it costs an average of £17,843 to downsize, thanks to estate agency fees, stamp duty, conveyancing fees, surveys and removal costs. These add up to a sizeable chunk that can eat into

any equity released from the sale of the house.

The figure is based on downsizing from a detached family home in England worth £381,211 to an average two-bedroom apartment costing £268,174. In principle the move would free up £113,037, but when you take into account the additional costs this drops to £95,194.

Reducing the cost of downsizing

If you’re thinking of downsizing, there are ways to reduce the fees you’ll incur. For instance, if you’re looking to relocate, you might be moving to a cheaper area where properties don’t attract as much stamp duty. Estate agency fees can vary so it pays to shop

around for offers; like free valuations, or no up-front fees, or perhaps choose an agent who’ll sell your property for a fixed fee.

If you still require a mortgage after downsizing, we can help you find the right mortgage rate for your circumstances, particularly as we have access to some exclusive deals that you may not be able to get on the high street.

Researching all the costs up front, from stamp duty and estate agency fees to conveyancing and finding the right mortgage can help make downsizing work out for you financially.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Please talk to us if you’d like any help or advice on your next property move.

Keeping your heart healthy

Dementia and Alzheimers have replaced heart disease as the leading cause of death in England and Wales, but the latter still accounted for 11.5% of all deaths in 2015. In fact, every three minutes someone in the UK has a heart attack and 30% of those are fatal.

The good news is there’s a lot you can do to keep your heart healthy.

Watch your weight

Research shows keeping to a healthy weight cuts your risk of heart disease. The British Heart foundation offers support on eating well and being physically active which can help you manage your weight and keep your heart healthy. Find out more at
Stop smoking
Smokers are almost twice as likely to have a heart attack compared with those who’ve have never smoked. It’s a difficult habit to break, but stopping smoking is the single best thing you can do for your heart’s health. If you smoke:

• ask your doctor, practice nurse or pharmacist for advice on how to stop.
• make a date to give up and stick to it.
• tell your family and friends that you’re quitting and ask for their support.
• keep busy to help take your mind off cigarettes.

Don’t drink too much

Drinking more than the recommended amount of alcohol can also have a harmful effect on your heart and general health. If you drink alcohol it is important to keep within the guidelines and drink no more than 14 units each week.
Manage cholesterol, diabetes and high blood pressure
If you have too much cholesterol in your blood, have diabetes or high blood pressure, this can increase your risk of heart disease and other cardiovascular diseases. Eating healthily and exercising regularly can help lower cholesterol, reduce your risk of developing type two diabetes and reduce blood pressure.

Get financial protection

Life and Protection Insurance offers a financial safety net for you and your loved ones, should heart disease strike. In fact, Scottish Widows recently revealed that heart-related disorders were the second only to cancer as the most common reason for a policyholder to claim on their life cover and critical illness plan. They can provide a regular income or cash payout to ease the financial burden caused by serious illness or untimely death:

• Life Insurance can provide financial security to those who depend on your income when you die. It could pay off your mortgage, or provide an income to help cover things like regular household bills
• Critical Illness Insurance pays out a tax-free lump sum on the diagnosis of certain life-threatening or debilitating conditions, like cancer, heart attack or stroke.
• Income Protection Insurance pays out a regular, tax-free income if you become unable to work because of illness, injury, and in some cases, unemployment. It could help you keep up with your mortgage or rent payments, as well as other living costs, until you’re able to return to work.

You may already have one or more of the above in place, but it’s still worth reviewing your current cover levels. Personal circumstances can change regularly so it’s important to ensure your level of cover remains appropriate.

Contact us today for a Life and Protection Insurance review.

Saving for retirement: as easy as 1, 2, 3

Much is made of the tax benefits of saving into a pension scheme but there are other benefits to consider.

As many corporate pension schemes and even government pension schemes become unsustainable, the onus to create a comfortable retirement is increasingly on the individual. But, if we are honest with ourselves, by the time many of us start thinking about our pensions it can feel daunting.

Here are our top tips for a more comfortable retirement:

  1. Start early

Starting early cannot be stressed enough and is probably the most important piece of advice we can give. Investing even small amounts can make a significant difference to the potential outcomes as you

can see below:

Even if finding £20 a month is difficult at 21, it could be a lot easier to find than £117 a month at 60.

The figures above show saving without investing the money. Any money you invest at age 21 will have accumulated 46 years of returns by the time you come to retire; anything invested from 45 has only 22 years.

  1. Join your employer’s scheme

Following the introduction of auto-enrolment all employers must now offer their employees a workplace pension scheme, although not all employees are required to join. However, by joining the scheme, not only will you be contributing to your future comfort but your employer contributes too, boosting the total potential returns. This is particularly important if you think you might have a career break at some point in your working life, for example to have a family.

Most schemes employ a ‘salary sacrifice’ model where your contributions are deducted before tax is calculated, making it a simple way to save. If your employer doesn’t offer this kind of scheme, speak to us about setting up a personal pension plan. These non-employer sponsored schemes will assume you are a basic rate tax payer and calculate your contributions net of basic rate tax (so if you want to put aside £100 a month, your contributions will be £80 and the scheme will claim the additional £20 from HMRC). If you’re a higher rate tax payer you will need to claim the additional tax back through your self assessment tax form.

If you’re self-employed, a contractor or have irregular income, consider a Self Invested Personal Pension (SIPP).

  1. Top it up

Many schemes allow you to make additional contributions and some employers will match these to a maximum percentage of your salary. You can still invest more but the employer’s matching contribution will be capped. Alternatively, if your employer offers an Additional Voluntary Contributions (AVC) scheme, consider signing up for this. They won’t contribute to it but, again, saving even a small amount into the plan can help over the longer term.

Under current guidelines anyone not drawing a pension can invest up to £40,000 of their taxable income into their pension scheme(s) tax free per tax year unless their total pension savings exceed the lifetime allowance (currently £1,000,000). And remember, using an ISA can increase your tax-efficient savings.


So there we are. Starting as early as you can gives you the benefit of time; joining an employer’s scheme makes saving simple and boosts your savings rate; and investing as much as you can afford can maximise the tax benefits.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

If you are concerned in any way about preparing for your retirement, speak to us about the options available to you.

Buying For The First Time

For first-time buyers, getting onto the property ladder may seem a daunting process, but there’s more help available than you might think.

With supply and demand at an imbalance, the average UK house price has been pushed beyond the reach of many first-time buyers. August data from Land Registry shows an annual price increase of 8.4%, taking the value of the average UK property to £218,964. When you consider that first-time buyers would typically put down around 20% against their first home, it’s no wonder finding a sufficient deposit is becoming increasingly difficult – especially if you are currently renting.

Help is at hand

A report from Which? shows that just over half of first-time buyers (52%) had to rely on financial support from a parent or family member in order to purchase their home. This ‘bank of mum and dad’ has been a useful financial foot-up for many.
If you’re not able to put down a large deposit you may be able to find a mortgage rate of 90% or 95% – provided you can meet the lender’s affordability criteria.

Government help

Although the Help to Buy: mortgage guarantee scheme came to an end in December 2016, the Help to Buy: Equity Loan is still available. Here, the Government lends you up to 20% of the cost of your home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest. Equity loans are available to first-time buyers as well as homeowners looking to move, provided it’s for a new-build
worth less than £600,000.
The Help to Buy: ISA will help you boost your savings by 25%. For every £200 you save you receive a government bonus of £50. The maximum government bonus you can receive is £3,000.

Sound mortgage advice can take the complexities out of the home-buying process and maximise your chances of getting an affordable mortgage.

If you need help getting onto the property ladder please get in touch.

Your home may be repossessed if you do not keep up repayments on your mortgage

Protection Through The Years

When it comes to protection insurance, we hold two firm beliefs:
1. it should form the foundation of your financial plan.
2. cover should be reviewed regularly to make sure it continues to meet your needs.

The latter is particularly important when you are at a particular ‘life stage’. Whether that’s buying a house, getting married, starting a family, setting up in business, or all of the above, protection insurance will help to protect your loved ones and your financial responsibilities.

So what type of cover is right for you?

Term Insurance pays out a lump sum if you die within the agreed ‘term’ (the amount of time you have chosen to be covered for, eg. 20 years). Suitable for mortgage protection or while children are financially dependent on you.

  • Whole of Life Insurance pays out a lump sum when you die, whenever that is, as long as you are still paying the premiums. Suitable for estate planning or to cover things like funeral expenses.
  • Critical Illness Insurance pays out a tax-free lump sum on the diagnosis of certain life-threatening or debilitating conditions, like cancer, heart attack or stroke. You may decide to buy Critical Illness Insurance when taking on a major commitment, like a mortgage or starting a family, but it can be bought at any time to provide peace of mind.
  • Income Protection Insurance pays out a regular, tax-free income if you become unable to work because of illness, injury and some policies cover unemployment. It could help you keep up with your mortgage or rent payments, as well as other living costs, until you’re able to return to work.

Things change – and so should your cover

You may already have one or more of these in place, but it’s still worthwhile reviewing your current cover levels – especially if your circumstances have changed. Ask yourself:

  • Whether your family could cope financially if either you or your spouse/partner died?
  • How much income would you have if you were taken seriously ill and couldn’t work?
  • Would your business survive without you or your key people?
  • How would your lifestyle change if you had an accident and couldn’t do the things you do today?

Contact us today for a Life and Protection Insurance review.

Pension Death Benefits

With the introduction of pension freedoms in 2015, we now have a range of options when deciding how to fund our retirement. But few of us stop to consider what might happen on our death: retirement itself seems far enough away!

Under the previous regulations, only one dependant of the pension plan holder could inherit a drawdown pension on the plan holder’s death. Commonly known as a “widow’s pension”, widowers, civil partners and a single named child could also inherit, putting the plan holder in a difficult position if they had more than one child.

Many still believe that this is the only way their pension savings can be passed on in the event of their death. However, alongside the more familiar changes to the retirement regime, the reforms heralded significant changes in how pension death benefits are taxed, bringing with them new inheritance planning opportunities.

Passing on your wealth

Since April 2015 it has been possible for the plan holder to pass their pension on to any nominee – or a number of nominees – through something called Nominee Flexi-Access Drawdown. Further, when the nominee dies, a successor – or successors – can also inherit a drawdown pension through a Successor Flexi-Access Drawdown. In turn, each nominee or successor can pass the assets on to other nominees or successors, retaining the tax efficiency of the plan through multiple generations.

The key benefit lies in retaining the assets within a pension wrapper: in this way they fall outside of the plan holder’s assets for Inheritance Tax (IHT) purposes. And as long as they remain within the wrapper they retain their full tax advantages until they are needed by the nominee or successor.

If the plan holder – or a nominee or a successor – dies before the age of 75, not only are the assets passed on free of IHT, but the drawdowns are paid out free of income tax. If they die after the age of 75, the assets are still excluded from the estate for IHT purposes, but any lump sums or income drawdowns are treated as income and subject to the beneficiaries’ personal tax position (ie. taking into account other sources of income).

How might your dependants benefit?

The example given below is a simplified illustration and only a guide to what might be achieved with careful financial planning.

However, it is important to note that most of the existing pension plans were set up before the new regulations came into force and may not have the flexibility to establish Nominee or Successor Flexi-Access Drawdown accounts. Instead, the pension provider will pay out the full value of the fund in cash on the death of the plan holder. In that situation, the assets count towards the total estate for IHT purposes and the tax benefits are lost.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

The pension family tree

A family comprises a husband and wife, their two children who in turn have two children each (four grandchildren in total). The husband dies aged 76 with £500,000 remaining in his pension fund.

The wife inherits a Nominee Flexi-Access Drawdown plan. As her husband died after reaching the age of 75, any withdrawals are taxable as income. The wife dies aged 74 with £450,000 remaining in the plan.

The two children each inherit half of this (£225,000) through Successor Flexi-Access Drawdown. Withdrawals are tax free as the mother died before age 75. However, both children die in their 60s without accessing their plans. As they also died before reaching 75, each residual pension fund passes tax free to the grandchildren.

Each grandchild inherits a Successor Flexi-Access Drawdown pot of £112,500 and enjoys tax-free withdrawals.

Please contact me if you would like to discuss the pension death benefit rules and explore whether and how you and your loved ones could benefit from them. We can review your current arrangements to see if they offer the flexibility required and explore alternative arrangements if necessary.

NIC U Turn

A week is a long time in politics. It was about the length of time it took Chancellor Philip Hammond (and/or his boss Prime Minister Theresa May) to decide that the proposed increase in National Insurance Contributions (NICs) for the self employed was best abandoned. Here is a quick guide to what happened and some possible explanations as to why and what it means.

The manifesto pledge

In the run-up to the 2015 general election, their predecessors George Osborne and David Cameron campaigned on a pledge to lock taxes and NI and to combat scepticism about politicians’ election promises, guaranteed that they would bring in legislation to make it illegal for them to do so, which they duly did.

The “get-out-of-jail-free” card

The legislation, however, only applied to NI contributions made by employers and the employed, hence Philip Hammond was in his legal right to raise NICs for the self-employed.

The court of public opinion

While the letter of the law was on the Chancellor’s side, politicians also have to answer to the court of public opinion and the judgement here was clear. The stated campaign pledge had been “no increase in NICs” and the fact that the related legislation had only specified Class 1 NICs was irrelevant. Not to put too fine a point on it, the move was seen as a betrayal of a manifesto promise and this fact was made clear in many newspaper headlines.

A swift U turn

It’s probably safe to say that neither Philip Hammond nor Theresa May expected the change to NICS to be popular with the self-employed, but that they completely underestimated the scale and strength of the reaction of the general public. Even though the change only impacted a relatively small number of people, it was perceived as the Conservatives using legal technicalities to get around a clear manifesto pledge and that went down very badly with the public as a whole. If newspaper columns are to be believed, the backlash made both backbench MPs and cabinet ministers very nervous. March 2017 is about halfway through a 5-year parliament. The proposed increase was due to take effect in April 2018 and hence would have factored in tax returns filed between April 2019 and January 2020. In other words, the subject was very likely to be fresh in people’s minds at election time in May 2020. Just as MPs need to think about their constituents’ opinions, so governments need to think about their backbenchers’ opinions, particularly ones which have an absolute majority of 12 and a working majority of 17. The Chancellor and Prime Minister quickly decided that this was one battle which was more hassle than it was worth and beat a hasty retreat.

The end…?

Philip Hammond and Theresa May may be taking their cue from the old saying “least said, soonest mended”. In other words, by backing down now, they’ve effectively put a stop to the topic for the time being and, of course, with Brexit looming, it’s a safe bet that journalists will have plenty of other material for columns and the public matter for debate. At the same time, financial books still need to be balanced and in a letter to Conservative MPs, Philip Hammond stated that it was his view that the benefits gap between the self-employed and the employed had narrowed sufficiently that the gap between their relative levels of NI contributions had ceased to be justifiable. Given that the manifesto pledge only applied to the current parliament, i.e. up to the 2020 election, it is entirely possible that Chancellor will seek to raise NI for the self-employed at some point in the future.

Automatic enrolment and you

Auto-enrolment is a Government initiative where all workers will be automatically enrolled into a workplace pension.

New figures show that by 2020 over 10 million people are expected to be newly saving or saving more as a result of automatic enrolment. This means that an additional £17 billion a year is projected to be saved into workplace pensions by 2019/20.

By 2018, all employers will have been required to enrol their eligible workers into a workplace pension scheme if they are not already in one. So far, over 6.7 million people have been automatically enrolled into a workplace pension by more than 250,000 employers.

Employers’ duties

Three quarters of the total working population are now estimated to meet the age and earnings criteria for automatic enrolment ie. that:
• you’re not already in one
• you’re aged between 22 and State Pension age
• you earn more than £10,000 a year (£833 a month, £192 a week)
• you work in the UK
Employers must enrol and make a contribution for all staff who meet the criteria. You can choose to opt out of the scheme, but your employer is obliged to enrol you back in automatically every three years. You can opt out again if you still don’t think it’s for you, but you should think carefully before you do – especially if you don’t have any other pension savings.

Paying in

How much you’ll save will depend on your salary and the specific scheme you’ve been signed up to. By 2018 the minimum contributions will rise to the equivalent of 8% of a worker’s earnings – this will be made up of a 4% employee contribution, 3% from the employer and 1% from tax relief. You can however choose to increase your own contribution for a bigger final pot when you are ready to retire.
Contains public sector information licensed under the Open Government Licence v3.0.

If you’d like expert advice on your retirement choices, please get in touch.

Maximising Your ISA Allowance

If you haven’t used up your Individual Savings Account (ISA) allowance for 2016/17, you have until 5 April to do so.

Saving into an ISA is a great way of making your savings work harder. Whether you’re looking to supplement your retirement income, build up funds for a property purchase or you simply want a ‘rainy day’ nest egg, ISAs offer an array of tax-efficient savings options. But with the tax-year end fast approaching, the clock is ticking for you to use your full 2016/17 ISA allowance of £15,240.

Why is it so important to use up your allowance? Here are some great reasons:

Your ISA is tax-efficient

Unlike some other investments, your returns are not subject to tax. That means every extra pound you save (within your allowance) will be sheltered from the taxman. This tax year, you can invest up to £15,240 tax-free.

You can’t ‘carry over’ your ISA allowance

You cannot carry any unused ISA allowance over to the following tax year unlike some other personal allowances (such as your pension annual allowance). That makes it doubly important to invest your full allowance, if you can afford to. You also have the freedom to take money out and put it back in later in the same tax year, without losing any of your tax-free entitlement. That means you needn’t worry about missing out on lost interest if you need to make a short-term raid on your savings, but can afford to replace it later.

The miracle of compound interest

Maximising your ISA savings can deliver huge benefits over the longer term. For instance, assume you invested the current maximum allowance of £15,240 in a Cash ISA, every year, for 25 years. Even if your investment grows at a modest 2.5% each year, your investment would have grown to £555,841.15.

Inheriting an ISA

Before April 2015, any savings held in an ISA automatically lost their tax-free status on the death of the ISA holder. Since April 2015, however, the Additional Permitted Subscription allows the spouse / partner to retain the tax benefits in the form of a one-off ISA allowance equal to the value of the ISA at the date of the holder’s death. For example, if your partner had £40,000 in ISA savings including interest, your ISA allowance for that tax year would be £55,240 (the value of your partner’s savings and your own ISA allowance for the 2016/17 tax year).

The tax efficiency of ISAs is based on current rules. The current tax situation may not be maintained. The benefit of the tax treatment depends on the individual circumstances. The value of your stocks and shares ISA and any income from it may fall as well as rise. You may not get back the amount you originally invested.

Contains public sector information licensed under the Open Government Licence v3.0

Contact us for more information or advice about the different kinds of ISA investments. We will help you to make the best choice for you and your family.

The value of mortgage advice

With so many mortgage lenders offering their products on the high street and online, it can be tempting to cut out the middleman and ‘go direct’.

But when you’re making such a huge financial commitment, the guidance you can get from a qualified mortgage adviser can be invaluable.

Here are five ways we can make a difference to your mortgage search:

  1. We know what a good deal looks like

It’s easy to underestimate the costs involved when buying a property or remortgaging. An attractive rate may appear good value, but this could change once you factor in things like fees and loan conditions.

We will compare a wide range of lenders and thousands of mortgages on your behalf; looking beyond the headline rate so that you understand how the length and type of loan will affect how much you pay over the longer term. We’ll highlight any additional costs you should be aware of (like administration fees, booking fees and valuation costs).

  1. We know the market

If your mortgage needs or circumstances are ‘out of the ordinary’, you may find it more difficult to find a mortgage. We can save you time and hassle and help you find a suitable lender.

  1. We can do the hard work for you

Selecting the right mortgage is just the start. We will work with you to complete all of the necessary application forms, liaise on your behalf with solicitors, valuers and surveyors, and help make the process as smooth as possible.

  1. We are professionally qualified

Unlike many branch and telephone-based mortgage sellers in banks and building societies, we are able to advise you on a broad range of lenders and products. This means you benefit from genuine choice coupled with quality advice.

  1. We look beyond the mortgage

We consider the bigger picture when it comes to advising you on your mortgage. For example, we can help you safeguard your home by recommending products that can financially protect you and your family, should the unexpected happen. We can also recommend providers that can help with other elements of the home-buying process, including solicitors and surveyors.

And, if you want us to, we can stay in touch with you into the future, to ensure your mortgage and protection arrangements remain appropriate for your needs.

Conveyancing is not regulated by the Financial Conduct Authority. 

Whether you’re looking for a mortgage on your first home or dream home, we can help.