The survey

The British Social Survey has been running since 1983 to track the satisfaction of the British public for the health service.

In 2023 only 24% reported satisfaction with the NHS due to waiting times and staff shortages being the biggest concerns.

This is a record low since the poll began and has recently dropped 29% points from 2020 .

Government funding for the NHS

Health care Funding reports that 86% of government funding goes towards the NHS for day-to-day costs including  medicines and paying staff.

In 2023/24 the spending amounted to £163bn in cash terms which is expected to increased to £192bn for the year 2024/25.

Many people have called for a shift in focus for spending claiming that the government needs to re-evaluate where the money goes in order to improve the NHS.

The Complaints

Waiting lists are at a high with people waiting months if not years before they receive treatment. GPs making referrals are often delayed as there is no capacity within the required outpatient department.

Waiting times in the hospitals are also creating anger with the public this is partly due to the poor patient flow where patients are not being transferred quickly as the social care lacks the capacity. Patients remaining in hospital means people cannot be seen until the space becomes available.

Staff shortages lead to a wide array of problems that are noticed by the public leading to longer wait times and unsatisfactory care for patients who require that extra supervision.

Can it be fixed?

The government has often relied on the role of the private sector to take on patients to reduce waiting lists and reduce the pressure on hospitals.

However a survey from BMA discovered that with this plan 60% of private practice doctors were then unable to provide care to their patients at the time.

The BMA also states the need for more encouragement in the medical fields for people to pursue careers within it. More options need to be presented including flexible working as often those who enter have to leave due to inflexible options.

Taxes for an improved NHS?

Is having a specific tax which covers only the costs of the NHS a beneficial way for the NHS to improve?

The survey showed that 48% of people would support an increase in taxes to allow for increased spending on the NHS.

42% of people would prefer to maintain the level of taxes and NHS spending.

Only 6% would want reduced taxes to spend less.

Would you be willing to pay a tax to improve the NHS?

In the last Quarter of 2023, it was confirmed that the UK had fallen into recession. The picture of the UK over the last decade has been one of stagnation or decline. Productivity has grown by just 0.9% per year since 2008, and as per the Centre for Macroeconomics May 2022 Survey, it is believed that the UK will continue to suffer from low growth in the upcoming decade. This was considered to be a result of UK-specific structural issues, one of which being the UK's tax system, which has been described as “complicated, inefficient and beset with perverse incentives that do little to raise revenue” (Tetlow and Marshall 2019).

For some time now, there has been discussion about tax reform in the UK, whether they truly maximise the revenue the Government could bring in, and whether they are still fit for purpose, with some taxes not seeing true reform in decades. With an election looming, both parties looking to win will require additional revenue in order to enact their policies. With growth in the UK stagnant, it's likely that either party would currently have to rely on either borrowing money or cutting spending. Herein lies the argument for reforming the taxes we currently have in order to increase the revenues the government can earn whilst simultaneously making them less complicated.

Taxing Capital vs Taxing Labour

One of the key battlefields is where the balance of taxation falls in the UK. It can be argued that in the UK, labour is taxed far more aggressively than wealth. This can be best seen by the current Prime Minister Rishi Sunak. Mr Sunak recently published his tax returns in which we learned that he paid £508,308 in the financial year 2022-23 on overall earnings and gains of £2.23m. This is an effective rate of tax of 23%, which is far lower than the top rate of income tax, which is 45%. This is largely due to his earnings in the US being taxed at source, and capital gains tax is much lower at 20%.

Capital Gains Tax

This raises a good question, why is a millionaire able to pay less in tax than for example, a Doctor? The answer is that capital gains tax is very favourable to those with wealth. The capital gains tax is targeted at realised capital gains. Realised capital gains are the amount of profit made after selling an asset, usually real estate or stock investments. The ‘gain’ is the amount earned by the sale minus the original amount. A capital gains tax will then tax the seller on the profit made from the sale. 

For some time now, capital gains tax has been lower than income tax. This has resulted in those who earn in excess of the highest tax bands to re-characterise their income. As capital gains are taxed lower than income tax, a lot of business owners now take small salaries or in some cases no salaries and instead take money out of their company in the form of capital gains.

So, how can we reform this tax to make it more suitable? In 2023 the Economy 2030 Inquiry by the Resolution Foundation released a report suggesting the following reforms:

"The report proposes aligning the tax treatment of these different income sources by increasing tax rates on self-employment and rental income, enabling the rate of employer NICs to be cut by one per cent. Moving towards equal treatment would also mean increases in the rates of Capital Gains Tax, such as from 28 per cent to a top rate of 53 per cent for second homes, and a top rate of 37 per cent for shares. Crucially though, the report argues that this would be combined with a major tax cut, with no tax paid on gains that are merely in line with inflation. The result would be a net Capital Gains Tax cut for many, with anyone seeing an annual capital gain for shares of 8 per cent or less facing a lower net tax rate than the 28 per cent rate that George Osborne oversaw between 2010 and 2016."

National Insurance & Income Taxes

Another area for reform is income taxes. Both National Insurance contributions (NIC) & Income taxes are overly complicated. Both have a series of rules and exemptions that make it difficult to calculate. For example, Resolution Foundation's 2023 report provides the following example:

"A common example of this complexity is the ‘hidden’ 60% effective marginal tax rate that people must pay if their annual income falls between £100,000 and £125,140 due to the loss of personal allowance, despite a statutory income tax of 40%. Similarly, employees face different effective marginal tax rates depending on how their income is structured. For instance, the effective marginal tax rates for employees in the top income bracket (earning more than £125,140) can vary significantly, peaking at 53.4% when employer NICs are included or 54.5% paid on income from dividends, falling to 47% paid on self-employment income, 45% on rental income, 28% on gains from property, and as little as 0% if an employee keeps their income in a company and then emigrates".

In order to uncomplicate this tax, one solution is provided by Broome et al. (2023), who suggest equalising tax rates on different kinds of income and removing very high marginal rates, through higher dividend and capital gains taxes and higher top National Insurance rates for the self-employed, offset by indexing capital gains to inflation, a cut in employer National Insurance, reinstating the personal allowance above £100,000, and abolishing the High Income Child Benefit Charge.

Property Taxes

When we examine property taxes, we see further examples of poorly designed taxes that need updating or reform. Council tax, stamp duty, and business rates which bring in near 9% (£90 Billion) of the UK's tax revenues are all flawed in their own ways.

Council tax is a levy on properties, but it is based on house prices in 1991. In an article in the New Statesman entitled "Britain's Great Tax Con" Harry Lambert wrote:

"If you live in Burnley, where homes are cheaper than many other parts of the UK, you will on average pay 1.1 per cent of the value of your home in council tax every year. If you live in a typical property in Kensington and Chelsea, where council tax has scarcely risen but homes have rocketed in value since QE – leaping from 24 times earnings in 2010 to 38 times earnings in 2022 – you will pay 0.1 per cent. The burden of council tax is ten times as great in Britain’s poorest areas."

A fairer way to tax property would be to replace the tax with an annual proportional property value tax based on up-to-date house valuations. Harry Lambert noted that by setting a flat 0.5% tax on house valuations you would raise the same revenue whilst cutting taxes for 3 out of 4 people and eradicating the need for Stamp Duty Tax. So, whilst it would not increase tax revenue, it would simplify the property tax as well as reduce the increasing economic equality in the UK as well.

In Summary

In Summary, we've outlined several reasons why the UK needs tax reform. Currently, the inequality in wealth is part of the reason that growth and GDP are struggling. By using these tax reforms, the government could free up finances to invest in public services as well as reduce the load on those who rely on those services the most. 

With Chancellor of the Exchequer Jeremy Hunt set to announce his Spring Budget on March 6th, we look into what we can expect from the UK's Spring Budget.

Tax Cuts

Mr Hunt has hinted at a series of tax cuts for the Spring Budget. Mr Hunt believes that the UK needs to reduce taxes as they are at the highest level since The Second World War. Speaking at the annual World Economic Forum in Davos, Switzerland, he said that countries with lower taxes have more "dynamic, faster-growing economies".

A key part of the Spring budget then will be tax cuts, but the question is how can these be paid for? The latest figures from the Office of National Statistics (ONS) had marked inflation remaining at 4%, which is still double the Bank Of England's target of 2%. With interest rates unlikely to be dropped until the summer in an ongoing attempt to reduce inflation, the cost of borrowing remains high. 

Therefore, Mr Hunt is unlikely to borrow money to pay for the tax cuts as we would be forced to pay these back with a higher interest rate, not to mention that Hunt himself said: "It is not Conservative to cut taxes by increasing borrowing because all you're doing is cutting the taxes paid by people today in exchange for increasing the taxes paid by our children tomorrow."

Cutting Inheritance Tax

One of the taxes regularly brought up as being cut or even scrapped is the inheritance tax. Currently, only 4% of the population is impacted by inheritance tax, but as house prices rise, and with inheritance tax thresholds frozen, it means more people are likely to pay this tax.

This policy is likely to be very popular with well-off Conservatives throughout the country, who will be able to pass on their wealth and assets more freely to future generations. However, it's likely to be very unpopular to those who fall outside of this, which is the vast majority of the country, who will likely see this as a tax cut for the rich, whilst the poorest in the country remain under a heavy tax burden.

Cutting Income Tax

There is also the potential for Income Tax to be cut. This cut, as well as a further potential cut to the National Insurance tax, could save your average pay-as-you-earn (PAYE) workers as much as £450. As reported by The Times "A 2p cut to income tax for someone earning £35,000 would leave them £448 better off a year while someone earning £60,000 would have an extra £948, according to analysis from AJ Bell."

"Meanwhile, a further percentage point cut to NI would leave a worker earning £35,000 a year £673 better off while someone earning £60,000 would be £1,131 better off."

"It sounds good, but such cuts are wiped out by the impact of frozen tax thresholds, known as fiscal drag. "

Cutting Spending

It seems likely that to pay for tax cuts, Mr Hunt would be either forced to cut public spending or find taxes that can be low impact, but still reduce the tax burden. On the BBC's Political Thinking Podcast, Mr Hunt said: "It doesn't look to me like we will have the same scope for cutting taxes in the spring Budget that we had in the Autumn Statement". 

"And so I need to set people's expectations about the scale of what I'm doing because people need to know that when a Conservative government cuts taxes we will do so responsibly and sensibly."

He added: "But we also want to be clear that the direction of travel we want to go in is to lighten the tax burden."

According to the Financial Times, sources close to Hunt have said that Treasury officials are considering “reducing projected spending rises to about 0.75 per cent a year, releasing £5bn-£6bn for Budget tax cuts.” 

Politics at play

With a General Election looming Mr Hunt and the Conservatives will be reticent of their current low standing in the opinion polls and will likely see tax cuts as one of the only potential routes to victory. In light of the UK's recession, Mr Hunt will be eager to grow the economy again and stop the current stagnation occurring in the UK's economy, which was one of Prime Minister Rishi Sunak's five pledges. 

With that being the case, the economy will be one of the Prime Minister's best weapons in winning back voters. They'll be hoping that by using the spring budget, they can use a series of tax cuts to grow the economy and boost their flagging opinion polls, which put them somewhere between 15-20 points behind the Opposition Labour Party.

The full interview with Jeremy Hunt from Political Thinking with Nick Robinson is available on BBC Sounds.

If you're in Indianapolis and are wondering, "Will a medical malpractice settlement affect my taxes?" you're not alone. This issue has perplexed many individuals. In this article, we'll unravel this mystery and delve into the various tax implications of medical malpractice settlements.

According to an Indianapolis medical malpractice law firm, it's critical to understand the specifics of your settlement and how they fit into the broader scope of taxation laws. It's a tough row to hoe, but we're here to help.

Understanding Medical Malpractice Settlements

Before we dig into the tax implications, let's take a step back. What does a medical malpractice settlement entail?

Definition of Medical Malpractice

Medical malpractice occurs when a healthcare provider fails to adhere to the standard of care in their profession, leading to patient harm or injury. Settlements can arise from these unfortunate situations as a way to compensate the victim.

Components of a Settlement

A medical malpractice settlement often includes compensation for various damages such as medical expenses, loss of income, and pain and suffering.

General Tax Principles in Indianapolis, Indiana

If we're going to tackle the question, Will a medical malpractice settlement affect my Indianapolis taxes? we must first understand the basics of Indianapolis taxes.

Income Tax in Indianapolis

Indianapolis, like the rest of Indiana, imposes state income tax on its residents. This income tax might apply to your settlement, depending on its nature.

Tax Deductions and Exemptions

Indianapolis residents can avail of tax deductions and exemptions on specific sources of income. Whether your settlement qualifies is the crux of our inquiry.

Taxation of Medical Malpractice Settlements

Now that we have the basics covered, let's plunge into the heart of the matter: the tax implications of a medical malpractice settlement.

Federal Tax Implications

On a federal level, the tax implications of a settlement hinge on what the settlement compensates for. For example, compensation for physical injuries or sickness is usually tax-exempt.

State Tax Implications in Indianapolis

Indianapolis follows the federal guidelines for the most part. Still, there might be exceptions based on specific circumstances, so don't jump the gun just yet.

Factors Determining Taxability of a Settlement

What factors should you consider when trying to figure out if your settlement is taxable? Let's outline the main ones.

Nature of the Damages

As we've hinted, the damages' nature plays a significant role in determining taxability. Let's break down how different types of damages might be taxed.

Medical Expenses

If your settlement compensates for medical expenses resulting from physical injuries or sickness, it's usually tax-free.

Emotional Distress

Damages for emotional distress, on the other hand, are typically taxable unless they arise from a physical injury or sickness.

Lost Income

Compensation for lost income is generally taxable, as it replaces taxable income.

Punitive Damages

Punitive damages, intended to punish the wrongdoer, are generally taxable. This remains true even if they're related to physical injuries or sickness.

How to Handle Your Settlement at Tax Time

So, you've received a settlement. What's next? How do you handle this on your tax return?

Reporting the Settlement

Even if your settlement isn't taxable, you might need to report it to the IRS. Make sure you understand the requirements.

Seeking Professional Help

Taxes can be a hornet's nest. Consider seeking help from a tax professional or an Indianapolis medical malpractice law firm to ensure you're on the right track.

Frequently Asked Questions

Finally, let's tackle some common questions related to medical malpractice settlements and taxes.

#1- Will a Medical Malpractice Settlement Affect My Indianapolis Taxes?

Possibly. It depends on the specifics of your settlement. Components compensating for physical injuries, for example, are usually tax-free.

#2 - Are Punitive Damages Taxable?

Yes, punitive damages are generally taxable.

#3 - How Do I Report a Settlement on My Tax Return?

It depends on the nature of the damages. Some portions might need to be reported as income, while others are reported elsewhere.

#4 - Should I Seek Help from a Tax Professional?

It's a good idea, especially if your settlement is complex. A tax professional or an Indianapolis medical malpractice lawyer can provide valuable guidance.

#5 - Can Medical Expenses Deducted in Previous Years Impact the Taxability of My Settlement?

Yes. If you received a tax benefit from deducting medical expenses, your settlement might be taxable.

#6 - Is Emotional Distress Damages Taxable?

Typically, yes, unless they result from a physical injury or sickness.

In conclusion, deciphering the impact of a medical malpractice settlement on your Indianapolis taxes is no easy feat. The nature of your damages, the concept of punitive damages, and the principles of local taxation all intertwine in this complex scenario.

A medical malpractice settlement could affect your taxes, but the specifics hinge on the details of your case. To navigate these muddy waters, consider seeking help from an Indianapolis medical malpractice law firm or tax professional. Remember, when it comes to taxes, the devil's in the details, so don't brush anything under the rug.

Carla Joseph

Carla Joseph is a renowned law writer who seamlessly blends her expertise in the legal field with her exceptional writing skills. With a legal degree and years of practice as a legal professional, Carla has dedicated herself to making the law accessible to a wider audience. Through her captivating articles and blog posts, she demystifies complex legal concepts and presents them in an engaging and relatable manner. Carla's unique ability to combine her legal knowledge with a compelling writing style has earned her widespread recognition and respect. Her work not only educates readers but also inspires them to engage with the law, empowering individuals with a deeper understanding of their rights and obligations.

It is a stressful and daunting task that can make you feel overwhelmed. In such a stressful situation, you are likely to make mistakes with your tax filing, which can lead to many problematic events in the future. 

If you want to avoid all this fuss, it is advised to do a little planning and organization. With proper planning, you can make your tax filing go smoothly and avoid major problems down the road. 

Here are a few tips to help you get started:

Start Early to Avoid Mistakes

When it comes to filing taxes, the best way to avoid mistakes is to start early. This way, you can make sure all your documents are in order and clearly understand the tax filing process. You can also use this time to research any tax breaks or deductions you may be eligible for. 

Starting early also allows you to file your taxes electronically, which can make the process even smoother. And if you do end up making a mistake on your tax return, you'll have plenty of time to fix it before the deadline. 

If you wait until the last minute, you may not have enough time to fix any errors before the deadline. In this case, you might have to avail tax resolution services to make your tax filing easy. 

Use Tax Filing Software to Prepare Your Return

With the right tax filing software, you can easily prepare your return and get the maximum refund you're entitled to. There are a lot of different tax filing software programs on the market, so it's important to choose one that's right for you. 

Some factors to consider include whether the software is easy to use and if it offers support in case you have questions. Also, make sure the software is compatible with your tax situation. Once you've selected the right tax filing software for you, simply follow the instructions to prepare and file your return. 

In no time, you'll have your refund in hand, and you'll be on your way to a stress-free tax season without hiring a professional. 

Gather all of Your Tax Documents

The best way to make your tax filing process smooth and stress-free is to gather all of your tax documents first. This way, you can have everything in one place and be able to reference it easily when you need to. 

These documents include W2 forms, 1099s, tax deduction forms, and tax forms that report your other sources of income. Make sure you have all these forms with you whenever you are going to file your tax returns. 

Pick the Right Filing Status

Tax filing will require you to pick a filing status according to your financial and marital status. Your filing status will determine how much you owe as taxes. That’s why it is important to pick the right filing status to avoid any problems and ambiguities. 

Some important filing statuses include single, married couple filing jointly, a married couple filing separately, guardian of a household, and a widow or widower. 

This ensures that everything you own doesn't end up with unintended beneficiaries, secures your loved one's way of life, reduces taxes for the heirs, eliminates family disputes, and gives you peace of mind.

An ideal estate plan should have guardianship designations, a will, medical power of attorney, a durable power of attorney, beneficiary designations, and a personal intent letter detailing your wishes in case you become incapacitated or die. Here are five tips for successful estate planning.

1. Plan for state and federal estate taxes

When you pass on, your assets could be subjected to estate and inheritance taxes. However, you can minimise these taxes by ensuring simple estate planning and the total estate amount under the threshold. If your inheritances and estates are over the threshold, you can set up trusts to facilitate wealth transfer, easing the tax burden.

You can also minimise estate tax exposure by using an intentionally defective grantor trust to isolate specific trust assets to separate income and estate taxes treatment on the assets. Since tax laws are complex and could be difficult for you to keep up with, experienced tax lawyers can help create a solid ongoing tax strategy framework to help you maintain compliance or assist your loved ones after your demise.

2. Build a professional team

With the help of a professional team, including financial and tax advisors and estate planning lawyers, you can get a complete estate plan customised to your specific requirements. This is because each professional in the estate planning process plays a crucial role. The aim of assembling this team is to ensure the distribution of your assets to the relevant organisations and people has little to no confusion.

3. Expect family conflicts

Oftentimes, family conflicts are kept hidden when you're alive. They may erupt after your demise. Usually, the estate plan details result in or escalate family resentments or disputes. If you don't acknowledge family conflicts, you're setting up your estate planners for frustration. Additionally, having siblings with varying philosophies or personalities jointly inherit a business or property increases the risk of family conflicts and resentments. With the help of your estate planner, you can ensure cohesion among your estate beneficiaries.

4. Set guardianship for dependents

If you have dependents in your family, including a person with special needs or minors, you'll have to appoint a guardian to look after them in your absence. Talk to the potential guardian in advance to get their consent. They don't have to manage the finances you leave for your dependent's benefit. Additionally, appointing a couple as co-guardians can get tricky, especially when they divorce. Consult your estate planning attorney to prepare for this eventuality.

5. Document your will

Will documentation is a crucial estate planning step you shouldn't neglect. It shows how your assets should be distributed after your demise. The court won't accept a will that isn't documented. In such cases, the court will determine who will acquire your estate. So, draft your will with complete scrutiny and verify the document to prevent complications

Endnote

Preparing an estate plan is a crucial task, but it isn’t easy. Use these tips for successful estate planning.

“In fact, the administration tried hard to inject even more stimulus into an already over-heated, inflationary economy and only Manchin saved them from themselves,” Bezos Tweeted. “Inflation is a regressive tax that most hurts the least affluent. Misdirection doesn’t help the country.”

Bezos’ comments come in response to a thread in which President Biden claimed the US was on track for its largest yearly deficit decline ever, totalling $1.5 trillion. 

Bezos called the President out over a tweet that said taxing wealthy companies has the potential to bring down inflation and urged the Disinformation Board to review the President’s tweet. 

“Raising corp taxes is fine to discuss,” Bezos said on Friday. “Taming inflation is critical to discuss. Mushing them together is just misdirection.”

But how do equity release schemes work, and is this a good way to fund your retirement? This article will explore how equity release schemes work and the benefits and drawbacks of using them to fund your retirement.

The Large Sums And Equity Schemes

The first step in using an equity release scheme to fund your retirement is understanding how these schemes work. Equity release schemes allow you to access the large sums of money that are tied up in your home.

The value of your home is determined by its market value, minus any outstanding mortgage or loan payments. There is an option to use the equity release max interest rate release calculator to estimate how much money you could potentially access through an equity release scheme. With this estimate in hand, you can start to compare different equity release options to see which one is right for you.

A Lifetime Mortgage

The equity release scheme of a lifetime mortgage does not require you to make any monthly repayments. Instead, the money you borrow through an equity release scheme is repaid when your home is sold after your death or moved into long-term care. This means that you can use the money from your equity release scheme for anything you want - including funding your retirement.

With this sort of lifetime mortgage, you take out a loan against the value of your home. The amount of money you can borrow through a lifetime mortgage will depend on your age, the value of your home, and the type of equity release scheme you choose.

A Home Reversion Plan

Another option for funding your retirement with equity release is to sell all or part of your home. This option is known as a home reversion plan. With a home reversion plan, you sell all or part of your home to an equity release provider in exchange for a lump sum of cash or a regular income. Unlike a lifetime mortgage, you will not have to make any repayments on the money you receive from a home reversion plan.

The amount of money you receive from a home reversion plan will depend on the percentage of your home that you sell and the current market value of your property. For example, if you sell 50% of your home for £100,000, you will receive £50,000 from the sale.

It's important to note that you will not be able to access the money tied up in your home until you sell it or move into long-term care. This means that if you need to access the money sooner, a home reversion plan might not be the right option for you.

Downsizing

With this option, you sell your current home and use the proceeds to purchase a smaller property. The equity from the sale of your previous home can be used to supplement your retirement income. Downsizing is a good option if you are looking to simplify your life and reduce your monthly expenses.

It's important to note that downsizing comes with its own set of costs and challenges. For example, you will need to pay for the cost of moving, as well as any stamp duty associated with buying a new property. You will also need to be sure that you are happy with the smaller property you are moving to.

Before deciding whether downsizing is the right option for you, it's important to speak with a financial advisor. They can help you weigh the pros and cons of downsizing and determine if it's the right decision for your unique situation.

Benefits Of Equity Release Schemes

Several benefits come with using an equity release scheme to fund your retirement. One of the biggest benefits is that you will not have to make any monthly repayments on the money you borrow. This can free up a significant amount of money each month, which can be used to fund your retirement.

Another benefit of equity release schemes is that they can provide you with a lump sum of cash that can be used for anything you want. This lump sum can be used to pay off debts, make home improvements, or simply provide you with extra spending money in retirement.

Finally, equity release schemes can provide you with peace of mind in knowing that you will have money available to cover your expenses in retirement. This can be a valuable asset if you are worried about outliving your retirement savings.

Which Scheme Is The Best For You?

The best way to choose an equity release scheme is to speak with a financial advisor. They can help you compare the different options and find the right one for your needs. However, some general things to keep in mind when choosing an equity release scheme include:

• The amount of money you need
• The size of your property
• Your age
• Your health
• The value of your property
• Your financial situation

Equity release schemes can be a great way to fund your retirement. However, it's important to make sure you understand how they work and what consequences they carry before deciding if one is right for you.

Equity Release Can Reduce the Value of Your Estate

It's important to note that equity release schemes can reduce the value of your estate. This is because the money you borrow through an equity release scheme will need to be repaid when your home is sold. This means that if you are considering an equity release scheme, it's important to speak with your family members about your decision. They need to be aware that the value of your estate may be reduced when you die.

The reduction happens because the amount that is repayable to the provider is deducted from the final sale price of your property. For example, if you have a loan of £100,000 with an interest rate of 5%, the amount repayable to the provider would be £105,000. This means that your estate would only receive £95,000 from the sale of your property.

This is an important consideration to make, as it can have a significant impact on your family's financial future. However, if you do not have any heirs, an equity release scheme can be a good way to ensure that your home is sold for its full value when you die.

It Can Be Expensive

Another downside of equity release schemes is that they can be expensive. The interest rates on equity release schemes are typically higher than the rates on traditional mortgages. This means that over time, the amount you owe can increase significantly, and the cost will be passed on to your heirs when you die.

If you fall behind on your repayments, the interest on your equity release scheme will start to accrue. This means that the amount of money you owe will increase over time, and you could end up owing more than the value of your property. If this happens, your home could be at risk of repossession.

To avoid this, it's important to compare the fees of different equity release providers before deciding on a plan. For example, some providers charge an arrangement fee, while others do not. That's why it's important to compare the interest rates of different providers to ensure you are getting the best deal possible.

Are You Eligible?

Not everyone is eligible for an equity release scheme. The eligibility requirements vary from provider to provider, but typically you must be over the age of 55 and own your home outright. If you have a mortgage, you will not be able to use an equity release scheme to pay it off. This is because the equity release provider will take charge of your property. This means that if you have a mortgage, the provider will be second in line to receive payment from the sale of your property, after your mortgage lender.

Therefore, you'll need to make sure that the mortgage is paid off before you can apply for an equity release scheme. Pay attention to the eligibility requirements of different providers to make sure you are eligible for the scheme you are considering.

The Conditions And Consequences

If you're thinking about using an equity release scheme to fund your retirement, it's important to be aware that you may need to move house. Most equity release schemes require you to have your home valued every few years and if the value of your property decreases, you may be required to move to a smaller property or downsize.

It's also important to be aware of the conditions that are attached to equity release schemes. For example, most providers will require you to take out an insurance policy to cover the cost of the loan if you die before it is repaid. This, on the other hand, means that your family will not have to worry about repaying the debt.

Additionally, most equity release schemes have an early repayment charge. This means that if you decide to repay the loan early, you may be charged a fee. You should also be aware that equity release schemes can harm your credit score. This is because taking out an equity release scheme will appear on your credit report as a debt. If you miss a payment, it will harm your credit score.

You May Need To Pay Taxes On The Money You Release

If you're thinking about using an equity release scheme to fund your retirement, it's important to be aware that you may need to pay taxes on the money you release. The amount of tax you pay will depend on how much money you release and when you release it. For instance, if you release £40,000 from your property value when you retire at age 65, you will likely pay no tax on the money. However, if you release the same amount of money when you're 75, you may be liable for capital gains tax.

It's also important to be aware that the equity release provider may charge a higher interest rate if you're released from your property value when you're older. This is because the provider will want to recoup the money they lost by lending to you for a longer period.

The taxes also depend on how you use the money you release. For instance, if you use the money to buy an annuity, you will not have to pay any tax on the money. However, if you take the money as a lump sum and invest it in shares, you may be liable for capital gains tax.

Equity Release Schemes Are A Long-term Commitment

Once you enter into an equity release scheme, you will not be able to cancel it or change your mind. This means that you need to be sure that you are comfortable with the terms of the agreement and that you will be able to keep up with the repayments. Imagine if you suddenly needed to move house or needed to access the money for another purpose - you would not be able to do so.

Therefore, equity release is not a decision to be taken lightly. You need to be sure that you are comfortable with the terms of the agreement and that you will not need to access the money for any other reason.

Equity release schemes are becoming an increasingly popular way for people to fund their retirement. By allowing homeowners to unlock the value of their home to use the money however they please - they can use it as a retirement fund as well.

However, there are some important things to be aware of before you decide if this is the right option for you. For example, you may need to move house, and you will need to be comfortable with the terms of the agreement as it is a long-term commitment. With that being said, equity release can be a great way to fund your retirement if it is the right fit for you.

The COVID-19 pandemic, which is still ongoing, will no doubt have a profound impact on the world's economy for several months at minimum. Additionally, 2020 is an election year in the US, an event whose outcome could also have a powerful effect on a whole host of financial situations, like the unemployment rate, inflation, gross domestic growth, and more. How can you take all these factors into account to create a realistic, accurate personal budget? For starters, it makes sense to build as detailed a budget as possible, make saving a habit, file tax returns as soon as possible, and take defensive investment positions to protect against what will likely be a volatile year for the stock market. Here are four realistic ways to get your financial life in order before 2021 arrives.

Set a Savings Percentage, Not an Amount

Consider selecting a one-digit number as your regular savings percentage each payday. Too many people focus on amounts, which can be misleading and lock you into an outsize amount when your paycheck size varies. Instead, decide to put aside 5%, for example, out of each cheque you receive and you'll be better able to stick with the plan for the long run.

Get Your Budget in Order

Know what lies ahead, especially if you plan to make any changes to your monthly expenses like purchasing a home, renting an apartment, buying a car, or taking out a student loan. The point of budgeting is not always to minimise expenses; it's simply to identify where money comes from and where it goes. After doing that, and only after doing it, will you be able to manipulate various elements of the income and outflow.

[ymal]

Step one is to know what you have and what you spend each month. For example, an excellent way to plan for education borrowing is to use a student loan repayment calculator for estimating monthly payments. That way, there's no guesswork about what your obligation will be, and you'll be fully able to place the item student loan payment onto its proper line in the budget. Go through each of the ways you spend money and make sure there's an entry for each one. Many people fail at budgeting not because they spend too much but simply because they don't know how much they spend and lose track of their overall finances.

Get Your Tax Refund as Quickly as Possible

If you have money coming to you after you file your tax return, send the forms in via an e-file program as early as possible. That way, you could have the cash by February. If you plan to owe money to the government, wait until the official filing deadline, or a few days before, to file and pay.

Use Metals to Hedge for a Volatile Year

For numerous reasons, 2021 could be a roller-coaster year for the stock market. That's a good reason to purchase silver and gold as a hedge against market uncertainty and potential inflation. Be careful not to put your entire portfolio into metals, but only about 10%.

While emerging from 10 Downing Street on Wednesday, chancellor Rishi Sunak’s notes were caught by cameras ahead of a meeting with newly elected Conservative MPs.

Among the phrases glimpsed was a reassurance that there would not be “a horror show of new taxes with no end in sight” as the country seeks to overcome its short-term financial challenges.

Recent opinion polls have seen the Conservative Party’s lead over the Labour Party beginning to narrow, giving rise to concerns among Conservative MPs who won seats from traditionally Labour-voting areas – the so-called “red wall” – regarding the government’s policies. An unnamed “red wall” Conservative said that U-turns regarding the wearing of face masks, school meal funding and A-level exam results had made MPs in marginal areas “jittery”, according to the Press Association.

Anxieties have been heightened by the COVID-19 pandemic and the costs it has incurred through government interventions, driving predictions that corporation tax will be raised in order to compensate. The government has thus far dismissed this as “speculation”.

Chancellor Sunak’s statement, which was to be read out in Parliament in an address to Conservative MPs elected in 2019, offered reassurances that the government “will be able to overcome the short-term challenges."

[ymal]

"Now this doesn't mean a horror show of tax rises with no end in sight,” the statement continued. “But it does mean treating the British people with respect, being honest with them about the challenges we face and showing them how we plan to correct our public finances and give our country the dynamic, low-tax economy we all want to see.”

The chancellor also noted during his address that unlimited borrowing cannot be the solution to government expenditure. "We cannot, will not and must not surrender our position as the party of economic competence and sound finance," he said.

Those who are against it say that it is a double tax and that it's a basic human right to provide for your children, which the government should have no say in. 

A survey of 3,000 Brits by William May, retailers of luxury vintage watches and fine jewellery, questioned what people think the threshold should be on inheritance tax (currently at 40% on estates above £325k). Considering how rapidly house prices have increased over the past few years, many may argue that an inheritance tax free threshold of £325,000 doesn’t seem at all high, and that it should increase. They were also asked whether they think inheritance tax should exist at all.

It was found that overall, Brits feel the tax-free threshold should be raised to £679,000 – more than double the current value. And on average, nearly 3/4 (70%) do not agree with the principle of taxing people on their inheritance...

Interestingly, the survey also found that over half (58%) of respondents did not know what the current inheritance tax rate is.*

The survey found that 74% of respondents feel that personal possessions that might be included in the inheritance tax, such as jewellery, should be excluded.

Moreover, nearly two-thirds (60%) agree that the inheritance tax threshold should be correlated to house prices.

Nearly two-fifths (39%) of Brits admit they wouldn’t declare gifted jewellery from a parent in order to avoid paying the inheritance tax on it.

Respondents were also asked what items they would like to be exempt from inheritance tax and it was found that over one-third (34%) said land. 20% felt jewellery should not be taxed; 18% said artwork; 16% believed cars should be exempt; 7% said vintage watches, and 5% said shares should also be inheritance tax-free.

“Luxury possessions like fine jewellery and vintage watches are priceless in terms of sentimental value, and often in terms of physical value too,” says Nick Withington of William May. “If you’re thinking about investing in a timeless piece, it’s worth planning ahead so it can be passed down (legally) free of inheritance tax.”

*According to UK regulations, inheritance tax is defined* as a tax on the estate – this not only included property and money, but also personal possessions such as family heirlooms and jewellery. Potentially this means that people might be forced to sell items passed down of sentimental value, just to pay the tax on it. While there are exceptions, the current standard inheritance tax is 40% and is charged on the portion of the estate that is above the tax-free threshold of £325,000.

Making Tax Digital (MTD) is the Government's ambitious plan to transform the way taxpayers interact with HMRC. With only a few exemptions, VAT-registered businesses trading over the VAT threshold of £85,000 are required to keep records in a digital format, ensure that the transfer or exchange of VAT information is digitally linked and submit their VAT return information to HMRC using MTD compatible software.

HMRC estimates that 1.2 million businesses are subject to the MTD rules, which became law for VAT periods starting on or after 1 April 2019 (or 1 October 2019 for organisations which are deemed to be more complex). Depending on their VAT return stagger, a significant number of these will be required to submit their first quarterly VAT return to HMRC using software by the 7 August this year.

Yet figures just released by HMRC show that the financial sector has been one of the slowest to sign up, with 75% of firms yet to register.

Commenting on the new figures, John Forth, the head of RSM's financial services indirect tax practice said: “While it's not clear why financial firms have been so slow to sign up, these figures are pretty shocking.

“It is possible that HMRC have overestimated the size of the problem due to the complexity of the VAT regime. Alternatively, they may have failed to recognise that many financial services organisations will be regarded as complex and will therefore be subject to the 1 October deadline. As a result, we may see this figure come down rapidly over the next few months.

“While HMRC have stated that they won't issue filing or record keeping penalties during the first year, financial firms should not see this as a reason not to register. MTD represents a major change to the way businesses report and pay their VAT, and businesses need to make sure they are ready.

“Currently, HMRC are dealing with 10,000 registrations every day. Clearly there are tens of thousands of VAT-registered financial businesses that need to get their skates on and register at the earliest opportunity.”

(Source: RSM)