May 2022 Newsletter | Cylchlythyr Misol Mai 2022
The Bank of England (BoE) has announced an increase of 0.25% to interest rates, increasing the base rate to 1%. This is bad news for borrowers. For those with a £100,000 mortgage, monthly repayments will rise by £20.
For savers there is corresponding good news and you should now receive over 1% on savings accounts. You may however need to look outside the main British banks as it does not appear that they have increased savings rates in line with interest rate increases.
Looking ahead, the BoE forecasts interest rates of 2.5% by mid-2023. This will increase monthly costs on a £100,000 mortgage by £150. If you have a large mortgage and are on a variable rate, fix now before there are even further increases in mortgage rates.
New legislation effective from 15 July 2022 will impact on landlords in Wales. Changes to the Renting Homes (Wales) Act include replacing tenancy agreements with 'Occupation Contracts' which must be provided in writing, and increased security to tenants with 6 months notice periods (if the occupation contract is not breached).
Further details can be found on the Rent Smart Wales website:
https://gov.wales/housing-law-changing-renting-homes
A recent report has found that 25% of 18-34 year-olds in the UK would trust scam messages (more than double the proportion of over-55s). Furthermore, 25% of 18-34 year-olds do not check scam messages for grammatical errors, which is one of the key indicators of a potential scam message. Take care when receiving emails/texts/calls from individuals or organisations you do not know and if you are unsure, do not respond!
Ask Huw & Aled: I have read online that many celebrities have reduced their inheritance tax (IHT) exposure by using various tax planning strategies. We have already discussed “Deeds of Variation”, tax efficient investments, the "Ronnie Corbett" loophole and Bruce Forsyth's will arrangements.
In the final article we discuss the one option we can all use: writing a tax efficient will.
Many celebrities have died intestate, including the singers Prince and Aretha Franklin and the actor Rik Mayall, causing great problems for their estates and potential beneficiaries. There are many advantages to a will:
- It will make matters easier for your family when they are processing your estate.
- With a valid will you can ensure that the estate goes where you want it to go, rather than relying on the laws of intestacy which are very inflexible.
- By planning ahead, you can make plans to reduce / spend / gift part of your estate if you know that your estate may be liable to pay Inheritance Tax.
- You can gift funds to charity from your estate. These gifts receive full inheritance tax relief of 40%. A gift of £10,000 reduces the Inheritance Tax liability by £4,000.
