Government claims that family homes will be passed on free of inheritance tax from April, some children and grandchildren will find they are left with an 80% tax bill. Former Chancellor George Osborne unveiled the new “residence nil rate band” which is given in addition to the usual inheritance tax allowance of £325,000 per person. From April 2017 each person will have an extra £100,000 allowance to add to the £325,000. This is set to gradually rise until the residence allowance reaches £175,000 in 2020/21, giving a total IHT-free limit of £1m for a couple. However, the residence allowance is tapered, and reduces, for estates worth over £2m. This means an estate of £2.2m has no residence allowance at all. So, beneficiaries will pay the 40pc inheritance tax charge on £1.55m - which equates to £620,000. A £2m estate, however, will benefit from the full £200,000 allowance - if the property had two original owners - this leaves just £1.15m liable to inheritance tax, a bill of £460,000. Overall, this is an effective tax rate of 80%.
After a summer of uncertainty, annual UK house price growth suggests the post-Brexit vote property market is stabilising. The latest data from the ONS reveals a year of continuing growth despite uncertainty over the summer’s Brexit vote and April’s stamp duty changes. However, the number of sales has continued to fall, with levels lower than in 2014, 2015 and the start of this year. “We now have three months of post-Brexit official housing figures, which show price growth remaining robust, but fewer properties changing hands," said Richard Snook, senior economist at PwC. “At the start of the year, we expected slower house price growth, but in fact it has shown impressive resilience.”
Mortgage lenders are increasing the rates on their mortgages as the era of rock-bottom interest rates finally comes to an end around the world. This week one building society, Skipton, increased rates on some mortgages by 0.37 percentage points while another mutual, West Bromwich, scrapped its market-leading 10-year fix, which charged just 2.59%. Riskier first-time-buyer mortgages have also been affected. Virgin Money, previously one of the cheapest lenders in this area, has already increased the cost of several of its mortgages for borrowers with 5% deposits by up to 10%.
Homeowners are amassing record levels of mortgage debt despite Bank of England restrictions aimed at limiting financial risks. The BoE has limited the number of loans that banks can make to home buyers who want a mortgage 4.5 times bigger than their incomes. But in response, banks are lending lots of mortgages just below that. A Bank of England study of the most indebted 50pc of borrowers found the average mortgage is 4.1 times a homeowner’s income, the highest level on record and up from 3.6 times in 2009.
The average person requires 35 years of national insurance credit to qualify for a full state pension - however being short one year, could cost you nearly £5,000 New mothers may have lost out on more than half a billion pounds in state pension rights since changes to benefit rules were introduced in 2013, according to analysis. At present, a parent, usually a mother, receiving child benefit for a child under 12, gets a year of national insurance credits towards their state pension record. This means that even if a mother is not in paid work and does not pay national insurance contributions, her state pension record is protected.