Blog Archive

Please feel free to check out Heide’s Blog Archive

Think carefully before securing debt against your home, your home may be repossessed if you do not keep up repayments on your mortgage.

The Financial Conduct Authority does not regulate commercial and buy to let mortgages.

Commercial mortgages are available via referral to a master broker only.

Equity Release will reduce the value of your estate and can affect your eligibility for means tested benefits.

29th March, 2022: The Cost of Cash in an ISA

The cost of Cash

“Cash is like oxygen – you want to be sure it’s around, but you don’t need to have excessive amounts of it around” – Warren Buffet

So, how much cash should we hold?

• A couple holding cash ISAs may be missing out on £15,368 of real return over 10 years

• Inflation and opportunity cost are factors that impact real returns

• With inflation looking like being at its highest for years, the erosion of value is increased

We are approaching ‘ISA season’ when financial advisers typically draw their clients’ attention (rightly) to the benefits of sheltering their hard earned in an ISA.

In a nutshell, you won’t pay any tax on the interest or growth you get from the money you have in an ISA, which is so attractive that there are limits to how much you can put in annually.

However, it’s also worth considering what the money in your ISA is actually in – is it in cash, or is it invested in stocks and shares?

 

What do we mean by ‘cash’?

‘Cash’ means different things to different people. Some think of cash as physical money – the folding (and rattling) stuff. Many think of cash as including what is in their current account. Others include any money in immediate or short term access deposit accounts, or cash ISAs.

One useful way of defining cash is any money you have which is both:

(a) Immediately available to you, and

(b) Is not invested, so it doesn’t have any investment risk attached to it i.e. if stock markets go down it won’t affect the value.

 

What are the benefits of cash?

Cash is immediately available, so it’s great for handling unexpected events. Those might be negative – your boiler gives up, or your children need a sudden bailout. They could be positive opportunities – you suddenly find the car you’ve always wanted, or you get an unexpected chance to take your dream holiday.

Even people with substantial investments are usually advised to keep an amount of cash. Why? Simply because if you need cash short term – either for an unexpected event, or for general living expenses, you don’t want to be having to sell any investments at a time when the markets might be down, or borrow at potentially high rates of interest. That would ‘lock in’ the losses.

How much cash to hold?

The amount is often based upon how much people ‘feel’ safe having. A more considered way to establish the appropriate amount is to think firstly in terms of time rather than actual amount. Ask yourself – ‘if anything bad happened, such as I was made redundant, how long do I want to know that we could manage at our existing rate of expenditure before our savings are exhausted?’

What are the downsides of cash?

How is it that you can have too much cash? Because cash isn’t earning anything whilst it’s, well…cash. In fact, it’s losing money, and in two major ways.

Firstly, you are losing through inflation. Secondly you are losing through the opportunity cost. In other words, what you could have gained through a higher rate of investment return, compounded.

 

 

This diagram shows that, if you have £40,000 of savings in cash (for example, two cash ISAs of £20,000 each) earning no interest, then in 10 years you will have £40,000. Except you won’t, not really. Because its buying power in real terms will have been eroded. With inflation at 2.5% per annum(1), it’ll only be worth £31,053 in today’s terms. You will have lost £8,947 of buying power.

Note:
Investors do not pay any personal tax on income or gains, but ISAs do pay unrecoverable tax on income from stocks and shares received by the ISA managers.

Tax treatment varies according to individual circumstances and is subject to change.

Stocks and Shares ISAs invest in Corporate bonds; stocks and shares and other assets that fluctuate in value.

The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.

But the losses from the opportunity cost are even worse. For example, a couple who invests these ISAs in cash rather than in a stocks and shares ISA with a typical balanced multi asset fund could lose out on an extra £15,368 in real terms i.e. accounting for inflation.

 

Here’s how:

If you hold your cash in an instant access savings account you may get, say 0.6% p.a(2). This means that you have still lost money, because the interest is less than inflation. So, after 10 years your £40,000 is now worth just £33,018. You’ve still lost £6,982 of buying power.

If you don’t need this £40,000 for 10 years, you may decide to invest it in a typical balanced fund, let’s say one with an average per annum gain of 4.0% (after fund charges). Now of course you can still get your money at any time by selling the fund – but you might not want to, because at any time the markets could be down and you could lose money if you decide to sell at that particular moment. So, let’s assume you won’t be touching the money for 10 years. Assume also that you pay no tax on the gain – either because it’s within your Capital Gains Tax allowance or is protected in an ISA.

In this case, you will have more than offset inflation, and will have £46,421 in the value of today’s money – a gain of real buying power of £6,421 after inflation. In actual terms you will have £59,210, which is the £40,000 compounded at 4% per annum over 10 years.

So, you will have avoided losing the difference between the invested amount and the savings amount – £13,403.

You will have avoided losing even more if your alternative to investing had been to hold onto the cash in, say, a cash ISA or a current account that paid no interest – a loss of £15,368 avoided.

Of course, you’ll have your own numbers.

But the principles still hold, so it might be worth asking yourself some key questions – “How much have I got?” “How much do I need?” And crucially to help avoid such losses – “When do I need it?”

References

1.Bank of England Monetary Policy Report August 2021 p6 Chart 1.4

2. Moneyfacts.co.uk savings accounts article

 

If you’d like to learn more, please get in touch, and remember I will always stand the cost of our first meeting.

Tax treatment varies according to individual circumstances and is subject to change.

Heide  x

 

Telephone: 01525 309300

Mobile: 07903 302895

Email: heide@swift-mortgages.com

Website

#SwiftMortgages

#SwiftMortgagesandFinance

28th February 2022: Are you approaching your Company’s Year-End?

Company year-end approaching? Don’t lose out!

Welcome to new and existing readers to my blog.  As always, I try and provide you with help and guidance on financial matters which may be relevant and pertinent to your financial circumstances and plans.

To save you time, this article is aimed at business owners who are approaching their business’ year end.  If you don’t run you own business, then the article will have limited benefit to you. I suggest you might want to ‘move on’ to reading something more relevant and pertinent to you.  You might, however, find something of interest.  Whether you read on or move on, thank you for your time.

If you have decided to read on, I am guessing you might run your own business, on your own, or with a partner or shareholders.  As a business owner, I know the competing demands running a business has on my time (the most valuable, scarce, and irreplaceable resource) and my finances.

Approaching your company’s year-end is a challenging time. There are the ever-present challenges of profitability, cashflow, and (getting and keeping) customers.  Often, business owners can be too close to the tree to see the wood, let alone the forest!  What is essential, however, is to take the time to review, plan and take advantage of the significant tax breaks available to us as owners for the future of our business and us as individuals.

Our personal and business finances are inextricably linked, one being dependent on the other. There are many time limited allowances available to us as business owners and as individuals.  Being time limited, if we do not take advantage of them, and we have to consciously do so, the tax man will not offer them up again, we will lose them.

For example, some of the questions you may want to consider include before your business year end include:

  • Should you make a company pension contribution or take the income and pay a personal pension contribution?
  • Should you pay yourself a bonus (and do you pay the tax on the bonus and leave the money in your loan account for cashflow) or a dividend?
  • What capital investments do you need to make and what allowances do you need to use?

The answers to these questions will have an effect on your overall financial planning, your mortgage planning and your pension planning. All of these have an effect on your financial future.

My advice would be to take the time now to review and assess your business’ and your personal financial position.  This will help you determine which allowances are available to you and how best to use them, not only for today but also for tomorrow.

We work with our clients, and their other professional advisers, to help them through the maze of choices.  Often, significant gains and improvements can be achieved by changing existing arrangements and plans, without starting new plans.

If you’d like to learn more, please get in touch, and remember I will always stand the cost of our first meeting.

 

Thank you again for reading, I hope to speak to you soon but please do take the time to act.  You might lose out and your future self might regret not taking action now.

Tax treatment varies according to individual circumstances and is subject to change.

Heide  x

 

Telephone: 01525 309300

Mobile: 07903 302895

Email: heide@swift-mortgages.com

Website

#SwiftMortgages

#SwiftMortgagesandFinance

15th February: Are you using all your tax allowances and reliefs?

Have you reviewed your finances to ensure you’ve used up every allowance and relief you’re entitled to, before 5th April?
We’re nearly at the end of this financial year!
 
Each financial year (6th April – 5th April), there are various tax allowances and reliefs available to you. 
 
Some of these allowances are NOT carried over so if you don’t use them, you’ll simply lose them!  Forever…
 
You may want to check  of the things you can review to maximise your financial position:
 
1. Check you’re paying the correct Income Tax
 
• Make sure you’re on the right tax code* to ensure you’re not paying too much tax – check by looking at your last payslip
 
• If you’re a business owner, check the balance between your salary and dividends to make the most of your personal allowance and the lower tax rate on dividends
 
• If you are married or in a civil partnership you may be able to save money by structuring your finances as a couple. If one of you pays no tax (or earns less than the Personal Allowance), you could transfer £1,260 of your allowance to the other person
 
* Check tax code information here: Gov.UK Tax Code Info 
 
2. Maximise your contributions into an ISA
 
You can save up to £20,000 into your ISA(s) annually, without paying income tax or capital gains tax (CGT).
 
Bear in mind the allowance doesn’t carry over between tax years, so once the tax year ends, any unused allowance is lost forever.
 
The annual limits for ISAs during the 2021/22 tax year are:
 
Cash, Stocks and Shares ISA: £20,000
Junior or Children’s ISA: £9,000
Help to Buy ISA: £200 a month (existing accounts only – you can’t open a new account)
Lifetime ISA: £4,000
 
You can pay into both your individual ISA and a child’s junior ISA as long as you don’t exceed the annual allowances.
 
3. Top up your Pension
 
Saving into your pension pot is one of the best ways to save for retirement, particularly as you get income tax relief on the money you put in.
 
For most people, this is up to £40,000 this tax year, or 100% of your salary (whichever is lower).
 
If you’re a higher earner with an annual income of over £200,000, your annual pension contribution allowance might gradually reduce to as low as £4,000 in the current tax year.
 
This is known as the “tapered annual allowance”.
 
Topping up your pension contributions before the end of this tax year could add a significant amount to your total pension pot over the long term.
 
If you don’t use all your personal allowance this year, you can ‘carry it forward’, but only for up to 3 years.
 
As pension planning can be quite a complex area, it may help to speak to a professional who can help you make the most of retirement savings and the tax reliefs available.
 
4. Gift Wisely
 
It’s only natural to give your loved ones gifts, but did you know cash gifts could be counted as part of your estate for inheritance tax (IHT) purposes?
 
• You can gift up to £3,000 each tax year, IHT-free
 
• A couple can combine their allowance to gift up to £6,000 in the tax year
 
• If you have any unused allowance, you CAN carry it over for a year
 
Paying into a Junior ISA or a pension for your children or grandchildren are effective ways of passing on your wealth tax efficiently and reduce your future inheritance tax liability.
 
Any gifts over and above these annual allowances MAY be liable to IHT in the future, so it’s important to speak to an expert who can recommend ways to mitigate any potential liability.
 
5. Capital Gains Tax
 
Capital Gains Tax (CGT) is a tax you pay on any profit you make when selling (or ‘disposing of’) something (an ‘asset’) that has increased in value since you bought it.
 
You pay CGT on ‘chargeable assets’ such as:
 
• most personal possessions worth £6,000 or more, apart from your car
 
• property that isn’t your main home
 
• your main home if you’ve let it out, used it for business or if it’s very large
 
• shares that are not in an ISA or Personal Equity Plan (PEP)
 
• business assets
 
The annual tax-free allowance in the current (2021/22) tax year is £12,300.
 
The rate you pay on profit above £12,300 depends on the level of income tax you pay.
 
You’ll pay 10% if you’re a basic-rate taxpayer and 20% if you’re a higher-rate payer).
 
CGT can be a tricky area to understand. It is important you don’t fall into the trap of paying unnecessarily, or risk being fined for not paying when you should have.
 
A financial adviser can help you look at ways to reduce your Capital Gains Tax liability.
 
6. Regain your Child Benefit allowance
 
If your income or your partner’s income is over £50,000, you’ll have lost some or all your child benefit allowance.
 
By keeping your taxable income below the £50,000 threshold you could regain some of your allowance – for example, by making personal contributions into your pension.
 
By taking advantage of the tax-free childcare scheme, you could benefit from up to £500 every 3 months (up to £2,000 a year) for each of your children to help with childcare costs.
 
For every £8 you pay your childcare provider, the government will pay £2 towards these costs.
Your eligibility depends on:
 
• your working status (you need to be working)
 
• your income (and, if applicable, your partner’s income)
 
• your child’s age and circumstances
 
• your immigration status
 
To see whether are eligible please visit: Tax-free Childcare
 
7. Review your Finances
 
Now is the perfect time to take stock of your finances making sure you’ve accounted for the relevant tax year’s allowances and exemptions.
 
Whilst implementing a budget might feel like a daunting task initially, it can be very beneficial to reclaim control over your finances and feel prepared for the year ahead.
 
Read Quilter’s top tips to help you take control of your finances this year: Quilter Article
 
More information on annual allowances and exemptions https://www.gov.uk/can be found here: Gov.UK Allowances
 
Ideally, you should seek financial advice to ensure you are making the best possible decisions for your personal circumstances and benefiting from any reliefs available to you.
Tax treatment varies according to individual circumstances and is subject to change.
Tax planning & Inheritance Tax Planning are not regulated by the Financial Conduct Authority.
The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.
Investors do not pay any personal tax on income or gains, but ISAs do pay unrecoverable tax on income from stocks and shares received by the ISA managers.
 
Please get in touch if we can help you with anything before the new tax year starts on 6th April.
 
Heide x

Telephone: 01525 309300

Mobile: 07903 302895

Email: heide@swift-mortgages.com

Website

#SwiftMortgages

#SwiftMortgagesandFinance

1st February 2022: Maximising Your Tax Allowances

 

Are you missing out on pension tax breaks?

Most of us understand the benefits of investing tax-efficiently. Using the tax allowances, such as ISAs, provided by the government each year means we can avoid paying unnecessary tax. However, many of us are missing out on the valuable tax savings available through our pensions.

Despite the revolution of the last six years, pensions are still one of the most tax efficient ways to save for your retirement. If you’re a UK taxpayer, in the 2021/22 tax year you can get tax relief on pension contributions of up to 100% of your earnings or a £40,000 annual allowance, whichever is lower. In simple terms, the tax relief you receive on pensions means some of your money that would have gone to the government as tax goes into your pension instead.

You may be one of the thousands of people who have seen their savings grow over the last year due to lockdown. A reduction in commuting costs, expenditure on entertainment and holidays has meant many people have found themselves with more disposable income. If you find yourself in this position you could consider putting more into your pension. Even if you can’t commit to regularly saving more, you could consider investing additional lump sums. Redirecting any savings into your pension may mean you will be able to enjoy more of the good things in life when the time comes to retire.

Alternatively, some of us have seen our income reduce during the last year which has affected our existing financial commitments. For example, having to reduce contributions to our pensions. If you are self-employed, your income will almost certainly vary from year to year, sometimes reducing the amounts you are able to contribute to your pension and your allowable tax reliefs.

 

Carry forward

However, whether you find yourself with more, or less to save, you can take advantage of any unused allowance from the previous three tax years, subject to allowances and limits. This is commonly referred to as ‘carry forward relief’.

Carry forward allows unused annual pension allowances from previous tax years to be carried forward and added to the annual allowance for the current tax year.

The example below shows how you could benefit. Considering the annual allowance of £40,000, there is £50,000 unused annual allowance from the previous three years. Added to the £40,000 annual allowance, £90,000 could be contributed to the pension and receive tax relief in the 2021/22 tax year. However, your earnings must be at least equal to the amount that you are looking to contribute at that point.

 

Tax year Annual Allowance Total contribution Unused allowance
2018 – 19 £40,000 £10,000 £30,000
2019 – 20 £40,000 £30,000 £10,000
2020 – 21 £40,000 £30,000 £10,000

 

However, your earnings must be at least equal to the amount that you are looking to contribute at that point. So, in this example, to contribute £90,000, you would also have to earn at least that much in the current tax year.

Carry forward can be a valuable way of ensuring you don’t miss out and pay unnecessary tax. Whether that’s because you have additional savings to invest in your pension, or you need to temporarily reduce your financial commitments and would like to benefit in the future.

 

If you’d like to learn more, please get in touch now and stop paying tax unnecessarily.

 

Tax treatment varies according to individual circumstances and is subject to change.

 

Heide  x

 

Telephone: 01525 309300

Mobile: 07903 302895

Email: heide@swift-mortgages.com

Website

#SwiftMortgages

#SwiftMortgagesandFinance

 

Heide’s Blog – 20th December 2021

 

 

It’s been a crazy year.  Actually, a crazy couple of years! 🙁

We’re into December and I’ve realised it’s the first time I’ve done a blog since the summer.  

I have a New Year’s resolution and that’s to keep in touch more regularly in 2022 and beyond. 

 

So let’s talk about Budgeting.  It’s the time of year people think about money (or their lack of it) because they probably spend a lot due to Christmas and all the festivities and celebrations surrounding it. 

It may be worse this year as people on the whole didn’t really have much of a Christmas last year as we weren’t allowed to mingle and socialise outside our immediate households.   January is often the time of year people think about cutting back: whether it be spending or eating and drinking.  Quite often, one leads to the other! 

In any case, January is a great time of year to get on top of your finances.  To review your current expenditure and see where you can make changes. 

A time for “budgeting”. 

What is the dictionary definition of budget?  I’ve looked it up: “to allow or provide a particular amount of money in a budget”. 

Your income is the money you get IN.

Outgoings relate to the money you SPEND. 

Budgeting is aiming to ensure that your outgoings are equal to or less than, your income.

When it comes to your outgoings, you have “essential” and “non-essential” expenditure. 

Essential expenditure may include:

  • Rent/Mortgage
  • Utilities
  • Council Tax
  • Food
  • Travel to Work

Non-essential expenditure is usually money spent on extras such as clothing, coffee, meals out, takeaways. 

Knowing exactly what your expenditure is can help you to effectively budget. 

Something as simple as a spreadsheet will work. Include your “take home pay” (what you get paid after your tax and national insurance contributions have been paid).  Make a list of your essential bills. 

The difficulty comes when we have essential expenditure which is not fixed.  For example, we’ll pay more money in the winter for heating our property than we will in the summer.  So when it comes to managing your budget, go for “worst case scenario” and add the winter utility costs onto the spreadsheet. 

What’s left? If there are any areas of non-essential expenditure you can cut down (for example, food shopping costs? eating out costs?  How much is your daily or weekly coffee on the run?) then we can aim to do that.  Do you have an emergency fund?  Do you have enough money in savings to be able to cover your essential outgoings for a few months, in the event of an unexpected reduction in income? 

Spending more than you earn on a regular basis is “living beyond your means”.  Although, for most of us this may happen occasionally, if it is regularly the case, you will be making up the deficit either by going into debt (adding to credit card balances, for example) or reducing your savings.

 

We’ve recently heard in the news that inflation is at at a 10 year high.  And the Bank of England increased Base Rate by 0.15% on 16th December to 0.25%.  This means that the spending power of your savings is likely to be reduced as the prices of goods increase.  And credit (mortgages, loans and credit cards) are likely to become more expensive as interest rates rise. 

Think what we’ve learned from the Covid-19 pandemic: how many people were in a financial turmoil because of losing 20% of their monthly income?  If you’d like any help with creating a budget planner, particularly if you’re thinking about buying a property at any time in the future, please get in touch and we’d be very happy to help you.   

In the meantime, have a very merry Christmas and a wonderful new year, 

 

Heide & Poppy x

 

Telephone: 01525 309300

Mobile: 07903 302895

Email: heide@swift-mortgages.com

Website: www.swift-mortgages.com

#SwiftMortgages

#SwiftMortgagesandFinance

Heide’s Blog – 20th August 2021

 

We’re re-branding to become Swift Mortgages & Finance

 

Hello again! 🙂

How can it possibly be almost the end of the August already?

It’s been a long time since I was last in touch with you via a blog.  That’s because we’ve been so busy.  So this week is just a quick insight into what’s recently been going on in our world over the past few months.  

From now on we’ll aim to keep in touch with you at least fortnightly.  

Heide Swift DipFA, CeMAP, CeRER

 

Heide has qualified with her Diploma in Financial Advice (DipFA) and is now qualified to offer advice in investments and pensions as well as mortgages, equity release (lifetime mortgages) and financial protection.  

We are therefore now able to assist you through your complete financial lifecycle: from setting up an ISA to start you saving for your first home, helping you get your first time buyer mortgage, helping you financially protect yourselves to ensure you’re not left homeless if the worst happened, moving to your next time home, helping your save towards your retirement, helping you downsize when the time is right and help you access your pension funds to see you through your retirement.  

We will be re-branding over the next month or so and will become Swift Mortgages & Finance.  We’ll keep you posted and let you know when our website has been fully updated to reflect our new services. 

 

Poppy Price

 

Poppy is the apprentice who started with us in March 2020 – 2 weeks before the first lockdown last year! Poppy has stuck with business administration apprenticeship through a difficult year – she hasn’t had a single face to face college day.  She’s done everything from home but now is nearly ready to take her final end-point assessment.  She takes the assessment in September so we’re keeping our fingers and toes crossed that:

a – she passes the exam

b – she’ll stay on with us beyond the end of her apprenticeship scheme and work with us in the long-term

 

Agata Maznicka

 

We have a new mortgage and protection advisor working with us : Agata.  She lives in the Nottingham area but of course, can deal with people anywhere as we are not geographically limited.  Agata is Polish so has the advantage of being able to help Polish applicants in their own language.  

Charity Abseil for Ailsa’s Aim

 

Finally, for this week, Heide is taking part in a charity abseil for a charity called Ailsa’s Aim.  The charity provides funds and support to families and children suffering from cancer.  If you’d like to donate, your pennies would be very much appreciated!

If you have any questions, particularly in terms of financial advice or mortgages we’d love to hear from you.  Our contact details are below and we offer an complementary initial review with no obligation.  

  • Equity Release will reduce the value of your estate and can affect your eligibility for means tested benefits.
  • The Financial Conduct Authority does not regulate Buy to Let Mortgages. 
  • The value of investments can fall as well as rise. You might get back less than you invested.
  • Past performance should not be regarded as guide to future performance.
  • Tax treatment varies according to individual circumstances and is subject to change.

Telephone: 01525 309300

Mobile: 07903 302895

Email: heide@swift-mortgages.com

Website: www.swift-mortgages.com

#SwiftMortgages

#SwiftMortgagesandFinance

 

Heide’s Blog – 2nd April 2021

 

I hope you are keeping well and looking forward, at long last, to getting back to normality soon.   Not long now before we can go to the pub – albeit in the garden!   And I can’t wait to see the hairdresser…..

 

It’s almost the beginning of the new Financial Year.

 

Which means it’s our birthday!  Swift Mortgages is now 4 years old.

 

But to celebrate our birthday we’ve become Swift Mortgages & Finance!

 

You may already be aware, but I have spent a few months studying for, and taking, my Diploma in Financial Advice (DipFA) exam.  I took the exam in October of last year.  Received the pass result in November and then went through the process of registering my change of permissions with the FCA (Financial Conduct Authority) and also with Quilter Financial Services (my financial network).

 

It still didn’t seem real until the certificate arrived! 🙂

 

I’m pleased to be able to tell you that I am now qualified to be able to provide financial advice with immediate effect as well as still being able to help with any of your mortgage, equity release and financial protection requirements.

 

Whether you’re planning for your retirement by making contributions into a pension or increasing your wealth by investing, please feel free to get in touch.

 

According to Aegon (The Retirement Confidence Survey, 2019) 36% of people have never considered how much they will need to retire comfortably so it’s important to invest in your pension as early as possible.

 

If you have pensions from previous employers, we can review those and ensure your requirements are on track to provide the income you need on retirement.

 

If you have money to invest, we can help you make the most of your ISA allowance to earn tax-efficient returns.  ISAs are free from personal income tax and capital gains tax*.

 

Although having a wide range of options is a good situation to be in, it can be difficult to make the right choice.  With so many options, how do you know which is right for you and your financial goals?

 

We’ll discuss your goals and get to know your appetite for investment risk.  Then we’ll use our expertise to help you decide which option is best for you.

 

Please, do get in touch to arrange a meeting.

 

Likewise, if you know of anyone else who may like need any of the services I provide, I’d be very happy for you to pass on my details.

 

Thank you and speak soon! x

 

You can find me on the Equity Release Council’s Website: ERC 

 

You can find me on Vouched For: Vouched For

 

  • Equity Release will reduce the value of your estate and can affect your eligibility for means tested benefits.
  • The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.
  • Tax treatment varies according to individual circumstances and is subject to change.
  • Investors do not pay any personal tax on income or gains, but ISAs do pay unrecoverable tax on income from stocks and shares received by the ISA managers.

 

Swift Mortgages and Swift Mortgages & Finance are trading styles of Heide Swift and authorised and regulated by Quilter Financial Planning.  

 

Heide Swift

Telephone: 01525 309300

Mobile: 07903 302895

Email: heide@swift-mortgages.com

Website: www.swift-mortgages.com

#SwiftMortgages

#FinancialAdvisor

 

 

 

Heide’s Blog, 22nd January, 2021

Have you submitted your tax return for year ending 2020
Your tax return is due!

This week’s blog investigates your annual personal tax return, due on 31st January, and why you should aim to submit it earlier if possible.

How can it possibly be the middle of January already? In the last lockdown, time seemed to pass exceedingly slowly (but the weather was much better so that was ok!) but this time it feels like warp speed!

With the rush for home buyers to complete their purchases by the March deadline to benefit from the stamp duty holiday, combined with Covid-related delays in all things mortgage-related, here we are already.

This blog, however, is not about the stamp duty holiday. Much more pressing is the HMRC self-assessment deadline of 31 January to submit and pay your taxes for the year ending 31 March 2020. If you live in fear of being chased by the taxman, your tax return may already be done and dusted. However, according to The Guardian, HMRC expects 12.1 million tax returns to be filed this time around and it is thought that more than 4 million people still have to submit their returns.

Due for submission by 31st January

 

HMRC has already confirmed that they won’t be fining people who file their taxes late and have a Covid-related excuse.  So, if like me, you are home schooling or you have been ill, you can apply to get your penalty cancelled.  Honestly though, if you don’t have a good reason, why not use this lockdown to get it out of the way?  If you are concerned that you can’t afford your tax bill, doing your tax return now means that you can set up a payment plan over 12 months, provided you owe less than £30,000.  If you leave it too late, you won’t have that option.  Just imagine that wonderful feeling of relief once it’s done 😊.

 

 

If you are self-employed and trying to reduce your tax bill, one way to do this is to pay more into your pension.  You can deduct your pension contributions from your taxable income.  For example, if your annual earnings were £50,000, and you contribute £5,000 into your pension, this reduces your total taxable income to £45,000.  So instead of giving money to the taxman, you are saving for your future.  It won’t help for 2019/2020 but it is worth thinking about now for the next tax year.

 

If you are self-employed and planning to apply for a mortgage, you may be better maximising rather than reducing your taxable income. Remember that mortgage companies will look at your income when they decide what you can afford to borrow and may also want to look at your bank statements to check your outgoings.  I wrote a specific blog on getting a mortgage when you are self-employed, so it might be worth having a read if this applies to you.  It is definitely worth getting to know your mortgage advisor in advance and getting some advice so that you can be prepared when the time comes.

Personally, I’m one of the people that lives in fear of the taxman, so I like to get my tax return done early.  Whatever your situation, I hope my blog has given you some food for thought and some encouragement to use this lockdown to submit your tax return on time.

 

Tax treatment varies according to individual circumstances and is subject to change.

 

Get in touch if we can help in any way.

Telephone: 01525 309300

Mobile: 07903 302895

Email: heide@swift-mortgages.com

Website: www.swift-mortgages.com

#SwiftMortgages

#TaxReturn

Heide’s Blog, 8th January 2021

Equity Release

With the festive season behind us and families at the forefront of our minds (whether we’ve managed to see them in person or not), it seems like the perfect time to talk about the Bank of Grandma and Grandad!

We are all familiar with the Bank of Mum and Dad.

According to Saga, one third of grandparents have also given financial help to their grandchildren, donating a total of over £37 billion for education, holidays, driving lessons and house deposits.

Read the article here

Helping Grandchildren
Helping children and grandchildren while you are still alive

If helping your grandchildren financially is something you have been thinking about doing but you don’t have enough ready cash in your savings, you may still be able to help. If you are over 55 and own a property, you may be able to access the equity in your property through an equity release plan.  This could provide a lump sum, several smaller amounts, an income or a combination. It is then up to you how you spend it.

 

I think the pandemic has forced us all to re-evaluate what’s important and many people are deciding to pass on their wealth when it is most needed. They would rather see their relative enjoy the money now than leave it as an inheritance.  In addition, they can see their families benefit from their wealth and enjoy that themselves.

 

 

What sort of scheme is right for you?

The most popular type of equity release scheme is a Lifetime Mortgage.  You have the right to remain in your property for the remainder of your life or until you need to move into long-term care. You are guaranteed not to have a negative equity situation.  This means the total amount owed will never be more than the value of the property.

In addition, for the duration of the lifetime mortgage, you can choose whether to pay some or all of the interest, or none at all.  If you pay none at all, the interest will compound over time and the final debt will be significantly bigger than the original loan you take out.

 

Helping family is a common reason for Equity Release

 

Is Equity Release safe?

There have been some equity release horror stories over the years, but the industry has improved immeasurably, with many product options and competitive interest rates. In fact, according to the Equity Release Council’s most recent market report, average interest rates fell to a record low of 4.11 per cent in July 2020, with over half of products offering a rate of 4 per cent or lower, and a fifth offering rates below 3 per cent.

Equity Release Council Article

 

 

 

What are the downsides?

If you are considering equity release, you should bear in mind that it can be more expensive than a traditional mortgage and as there is no fixed term by which you need to repay the interest, the size of the debt will escalate over time. It may leave you short of funds or unable to claim means-tested state benefits and if you want to downsize, you may need to repay some of your mortgage.

Of course, equity release is just one way of helping your grandchildren. As with all big financial decisions, you should speak to a professional adviser with access to the whole market about how an equity release plan could affect you and discuss the most suitable option for you.

It is also advisable to discuss equity release with your family as the property is likely to need to be sold to pay off the loan (unless your beneficiaries are able to secure a suitable means of re-financing at that time).  This means the value of your estate is likely to be lower than it would be if you had chosen not to use Equity Release.

 

Equity release will reduce the value of your estate and can affect your eligibility for means tested benefits.

Equity release can be more expensive than a traditional mortgage.

There is no fixed term by which a loan needs to be repaid so interest can escalate quickly

Releasing equity in your property now may leave you short of funds later.

 

Get in touch! 

Email: heide@swift-mortgages.com

Phone: 01525 309300

Mobile: 07903 302895

Visit our website www.swift-mortgages.com

Find us on the Equity Release Council’s website: Equity Release Council

 

Heide’s Blog, 18/12/2020

I can’t believe it’s nearly the end of December already! So many people have had their Christmas trees and decorations up early this year. I must admit: I’m one of those people!  But thinking I’ll probably take them down quite soon as well.

Christmas seemed very strange on all levels this year.  I’ve been so busy recently with the rush of mortgage applications due to the stamp duty holiday, that I felt Christmas almost passed me by without even noticing!

January is likely to be very busy with the stamp duty ending and also with the changes to the Help to Buy scheme.

It’s really important to plan ahead so that you don’t run out of time and end up on your current lender’s standard variable rate, which can be very costly. I am sure you have read in the news that lenders are taking much longer to produce mortgage offers at the moment. The housing market is “set for the busiest December in over a decade as buyers rush to beat the stamp duty deadline”, according to Zoopla (quoted in a Mortgage Strategy article dated 25th November 2020), so you definitely need to allow more time.

Read the article here

The other thing to consider is that “UK average house prices increased by 4.7% over the year to September 2020, to stand at a record high of £245,000”. This is according to data published on the gov.uk website and relates to the House Price Index in September of 2020. If you’re not planning to move house, you may think this is not relevant to you right now but, if the value of your property has risen, that means you have more equity in your property.  A lower loan-to-value ratio generally means a better mortgage offer. With house prices rumoured to drop in 2021 to coincide with expected rises in unemployment, it makes sense to secure the best possible rate while you can.

I think also that this renewal might be a bit different for a few people because of the pandemic. If your circumstances have changed and your income has reduced, your choice of lenders may be more limited.  You’ll need to complete a new affordability assessment with a new lender. You may even need to consider switching to a different product with your current lender, even though it’s not the best deal on the market, but it will be cheaper than paying your lender’s standard variable rate.

Whilst the end of your fixed-term may not be imminent, now might be a really good time to get your financial ducks in a row. Even if you don’t plan on applying for a new mortgage until January, why not do some preliminary work? Check your credit rating. Get your documents together. And make an appointment with your advisor for January. You can then relax enjoy Christmas knowing  you have a plan in place.

Maybe you don’t have a mortgage advisor?

 

Perhaps you’re confused by your renewal letter?

 

Just not sure of your options?

 

Feel free to get in touch. I will help you to make sense of your offer and, together, we can look at the whole market to find the most suitable mortgage for your circumstances. We can include your current lender in that search as well.

Well, I guess I’d better start thinking about New Year and see whether it feels any different to Christmas! 🙂

 

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