Making money: what the experts think
Banking on mum and dad
A new study has underlined the increasing reliance of England’s property market on “the bank of mum and dad”, said Judith Evans in the FT. According to the Social Mobility Commission, some 34% of first-time buyers sought family help in 2013-2014, compared with just 20% seven years earlier – and “levels of reliance are predicted to reach almost 40% by 2019”. Housing is one of the main ways in which wealth is held and transferred across generations, noted the commission’s chairman Alan Milburn. The market, he says, is “exacerbating inequality”. Today, it is “almost impossible” for young people on lower incomes “to get a foot on the property ladder” if they lack the backing of family wealth. Richard Donnell of Hometrack says the pressure is now on older people to “start freeing up housing equity” – even taking out mortgages in their later years to pass on cash to younger generations. “The bank of mum and dad is here to stay.”
Relief is at hand
“Are you looking to pay less tax in a legitimate way,” asks Anne Ashworth in The Times. Which of us isn’t? The good news, as Gary Heynes of accounting firm RSM points out, is that you may be able to tap up to £38,000 of tax allowances in the 2017-18 tax year, which starts next week. These include an £11,500 personal income allowance if your income is less than £100,000, an £11,300 capital gains allowance from selling investments or rental properties, and the tax-free £5,000 you can take in dividend income. You could top it all off by renting out a room and claiming £7,500 relief – or earning £1,000 tax-free from selling items on ebay.
Divi trap
Make the most of that £5,000 in tax-free dividends while you can, said Sam Brodbeck in The Sunday Telegraph: it’s due to be slashed to just £2,000 from April 2018 – a move that might particularly affect pensioners who have “turned to investing” as a result of interest rates being so low. But you can limit the impact by placing as many investments as possible inside a tax-free Isa wrapper. From April next year, the annual Isa limit rises to a generous £20,000.