State Pension Age Rise Brought Forward


Six million men and women will have to wait a year longer than they expected to get their state pension, the government has announced. The rise in the pension age to 68 will now be phased in between 2037 and 2039, rather than from 2044 as was originally proposed. Those affected are currently between the ages of 39 and 47.

The announcement was made in the Commons by the Secretary of State for Work and Pensions, David Gauke. He said the government had decided to accept the recommendations of the Cridland report, which proposed the change.

“As life expectancy continues to rise and the number of people in receipt of state pension increases, we need to ensure that we have a fair and sustainable system that is reflective of modern life and protected for future generations,” he told MPs.

Anyone younger than 39 will have to wait for future announcements to learn what their precise pension age will be.

‘Cocktail of ill health’

The change will affect those born between 6 April 1970 and 5 April 1978. The government said the new rules would save the taxpayer £74bn by 2045/46. While it had been due to spend 6.5% of GDP on the state pension by 2039/40, this change will reduce that figure to 6.1% of GDP.

Labour said the move was “astonishing”, given recent reports suggesting increases in life expectancy were beginning to stall, and long-standing health inequalities between different income groups and regions in retirement. 

Shadow work and pensions secretary Debbie Abrahams told MPs that many men and women were beginning to suffer ill health in the early 60s, well before they were entitled to their state pension.

“Most pensioners will now spend their retirement battling a toxic cocktail of ill-health,” she said. “The government talks about making Britain fairer but their pensions policy, whether it is the injustice that 1950s-born women are facing, or today’s proposals, is anything but fair.”

Age UK was also critical of the change. “In bringing forward a rise in the state pension age by seven years, the government is picking the pockets of everyone in their late forties and younger, despite there being no objective case in Age UK’s view to support it at this point in time,” said Caroline Abrahams, charity director at Age UK. “Indeed, it is astonishing that this is being announced the day after new authoritative research suggested that the long term improvement in life expectancy is stalling.”

Pensions Commission

The government has also committed to regular reviews of the state pension age in the years ahead. That raises the prospect of further rises. Indeed a report by the government’s actuary department in March suggested that workers now under the age of 30 may have to wait until 70 before they qualify for a state pension.

Tom McPhail, head of policy at Hargreaves Lansdown, said the government would need to do more to encourage saving, particularly amongst younger people. “For anyone yet to reach age 47, there is still time to adjust their retirement plans by looking to contribute more,” he said. “We feel it is important the government meets them halfway; we need a national savings strategy to help people save and invest for their future. A good starting point would be for the government to look at a savings commission.”

The SNP said it remained opposed to raising the pension age beyond 66 and reiterated its call for an independent pensions commission to be set up to look at “demographic differences across the UK”.  In response, Mr Gauke said the Scottish government would have the power to provide extra financial help for those approaching retirement if they so chose.

If you wish to discuss how the state pension age increase will affect you, please feel free to get in touch on 01482 638300 and someone will be more than happy to help you.


This article was written by Brian Milligan who is a personal finance reporter for BBC News.




Could your Will soon Become Electronic?


The law around wills should be updated and brought into the “modern world”, the Law Commission for England and Wales has said. The current rules were “unclear” and could be putting people off from making a will, it added.  It is considering whether texts, emails and other electronic communications should be recognised as a valid will in exceptional circumstances.  The commission has launched a consultation on the proposals.

Currently, for a will to be legally valid it must be voluntarily written by someone who is 18 or over and of sound mind and be signed in front of two witnesses who are also both over 18 and must also both sign the will in your presence.  But the commission wants to change the existing formality rules where the will-maker has made clear their intentions in another form. It gives the example where a car crash victim has not made a formal will but has expressed their intentions in electronic or other messages, such as a text or email. The family could then apply to a court to have those communications recognised as a formal will. These messages could only then be recognised as a will if a judge approved.

What happens if there is no will?
If someone dies without a will, rules dictate how their money, property or possessions should be allocated, and potentially not in the way the deceased would have wished. Unmarried partners and partners who have not registered a civil partnership cannot inherit from each other unless there is a will.

If there are no surviving relatives who can inherit under the rules of intestacy, the estate passes to the Crown. Specific rules can vary across the United Kingdom

The Law Commission acknowledged the proposals on electronic communications could cause family arguments or worse. It said the plans could provide a “treasure trove for dissatisfied relatives” and lead to a “variety of avenues by which probate could become both expensive and contentious”. But it said on balance it believed they should be recognised by the courts, noting that 40% of people are intestate, meaning they die without a will.

Law Commissioner, Professor Nick Hopkins, said making a will should be “straightforward” but the law was “unclear and outdated”.  “Even when it’s obvious what someone wanted, if they haven’t followed the strict rules, courts can’t act on it.  “And conditions which affect decision-making – like dementia – aren’t properly accounted for in the law. “That’s not right and we want an overhaul to bring the law into the modern world.  “Our provisional proposals will not only clarify things legally, but will also help to give greater effect to people’s last wishes.” The consultation closes on 10 November.

If you have any questions or queries about how this may affect you, contact ICF Group Financial Services group by phone on 01482 638300 and we’ll be happy to help you.



Source: BBC News

Source: Citizens Advice


Gay man wins Supreme Court case on equal pension rights

pension pot

A gay man has won a landmark ruling which will give his husband the same pension rights as a wife would receive. The Supreme Court unanimously ruled that if John Walker, 66, dies, his husband is entitled to a spouse’s pension, provided they remain married. They will now enjoy the same pension rights and entitlements as those in a heterosexual marriage.


The ruling means Mr Walker’s husband – who is in his 50s – would be entitled to a spousal pension of about £45,000 a year in the event of his death, rather than around £1,000 a year. Mr Walker worked for chemicals group Innospec from 1980 to 2003. He made the same contributions to the pension scheme as heterosexual colleagues.


Mr Walker took legal action as he wanted to ensure that, should he die first, his husband would receive an adequate pension. Most occupational pension schemes give 50% of the value of a pension to a spouse for the rest of their lives after their husband or wife dies – without taking the marriage date into account. However, the Equality Act 2010 has an exemption for employers, allowing them to exclude civil partners from spousal benefits paid in before December 2005. Although the supreme court has ruled that it is not compatible with EU law and must be disapplied.


The government has promised to incorporate European law into UK law before the scheduled departure in 2019. In theory, the anti-discrimination law which was crucial to the Supreme Court’s decision will still be in effect and the decision to close the loop hole will remain valid. There however, remains concerns that in the future Brexit could affect the ruling and any other future cases. As the Government don’t have to implement the law into UK law which could result in the loop hole still being open for businesses to use. For more information on how this could affect you please ring 01482 638300 and speak to your ICF Financial Adviser.


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Inheritance Tax Rule Changes


Effective estate planning can safeguard your wealth for future generations. If you want to have control over what happens to your assets after your death, effective estate planning is essential. After a lifetime of hard work, you want to make sure you protect as much of your wealth as possible and pass it on to the right people. However, this does not happen automatically. If you do not plan for what happens to your assets when you die, more of your estate than necessary could be subject to Inheritance Tax.

The rules around Inheritance Tax changed from 6 April this year. The introduction of an additional nil-rate band is good news for married couples looking to pass the family home down to their children or grandchildren, but not every estate can claim it.

Bereaved families

This tax year, according to the Office for Budget Responsibility, more than 30,000 bereaved families will be required to pay tax on their inheritance[1]. So, it pays to think about Inheritance Tax while you can and work out as soon as possible how much potentially could be taken out of your estate – before it becomes your family’s problem to deal with.

 An Inheritance Tax survey conducted by Canada Life[2] shows that Britons over the age of 45 are either ignoring estate planning solutions or they have forgotten about the benefits these can provide. Only 27% of those surveyed have taken financial advice on Inheritance Tax planning, despite all of them having a potential Inheritance Tax liability.

 Leaving an estate

Every individual in the UK, regardless of marital status, is entitled to leave an estate worth up to £325,000 without having to pay any Inheritance Tax. This is known as the ‘nil-rate band’. Anything above that amount is taxed at an Inheritance Tax rate of 40%. If you are married or in a registered civil partnership, then you can leave your entire estate to your spouse or partner with no Inheritance Tax liability.

 The estate will be exempt from Inheritance Tax and will not use up the nil-rate band. Instead, the unused nil-rate band is transferred to your spouse or registered civil partner on their death. This means that should you and your spouse pass away, the value of your combined estate has to be valued at more than £650,000 before the estate would face an Inheritance Tax liability.

 Considered ‘wealthy’

You don’t have to own a very large estate or even be considered ‘wealthy’ to leave behind an Inheritance Tax bill. The nil-rate band has remained frozen at £325,000 since April 2009, but the average price of a UK property has risen 33% over the same period[3]. With much of the UK population’s wealth invested in their property, a growing number of families are potentially being left with a significant Inheritance Tax bill to pay.

 Residence nil-rate band

If you’re worried that rising house prices might have pushed the value of your estate into exceeding the nil-rate band, then the new ‘residence nil-rate band’ could be significant. From 6 April 2017, it can now be claimed on top of the existing nil-rate band. But claiming this new allowance is not as simple as it sounds. It can only be claimed by the estates of people on property that is, or was at some point in the past, used as their main residence and which forms part of their estate on death.

It’s only available to homeowners who plan on leaving their residence to ‘direct descendants’, such as children or grandchildren or step children. If you don’t have any direct descendants, or you wish to leave your home to someone else, the new allowance can’t be claimed.

 Tapering effect

Anyone without a property worth at least £175,000 per person, or £350,000 per couple (in 2020/21), will only partially benefit. And, because the new allowance was intended to help ‘middle England’ and those who weren’t especially wealthy, the residence nil-rate band reduces for estates worth more than £2 million by £1 for every £2 above the taper threshold. Because of this tapering effect, there is a point at which claiming the allowance is ruled out completely.

 Your estate may still be able to claim the residence nil-rate allowance even if you’ve already sold your home, for example, because you are in residential care or living with your children. If your home was sold after 8 July 2015 and you plan on leaving the proceeds to your direct descendants, then there are provisions in place that will allow your estate to claim the new allowance. However, this doesn’t apply to homes sold before 9 July 2015.

 Planning ahead

 If you plan ahead, certain gifts made during your lifetime could reduce the amount of Inheritance Tax payable on your death. In addition, the proceeds payable from any life insurance policies written in an appropriate trust will not form part of your estate and so will not further add to a potential Inheritance Tax bill.Estate planning will enable you to maximise your wealth and minimise Inheritance Tax. Is it time for you to have a comprehensive review of all your assets and objectives and consider the tax-efficient solutions?


Source data:
[1] Office of Budget Responsibility, November 2016.
[2] Survey of 1,001 UK consumers aged 45 or over with total assets exceeding the individual Inheritance Tax threshold of £325,000 carried out in September 2016.
[3] Nationwide report: UK house prices since 1952.

Budget 2017: What it Means for You

Image result for budget

Two Budgets in one year have the potential to make a major impression on your household finances. In the first of this double-header, Chancellor Philip Hammond said that he was supporting families while not spending recklessly. Although the Budget was relatively low-key, other changes were already planned. This adds up to a significant financial impact on millions of people – even before the next Budget in November. So here is how it could affect you.

Tax rise for the self-employed

The main National Insurance contribution rate paid by the self-employed will rise in the next few years. It will increase from its current level of 9% to 10% in April 2018, and then to 11% in April 2019 for those making a profit of more than £8,060.

The level for employees for these Class 4 contributions is 12%. The chancellor said that this would raise £145m a year by 2021-22. On its own, the change announced in the Budget will leave 2.84 million people facing an average annual increase of £240.

As previously announced, Class 2 payments – which have a lower threshold of £5,965 or more in profits a year – will be abolished. Taken together, only the self-employed with profits over £16,250 will have to pay more as a result of these changes – at an average cost of 60p a week to those affected.

The chancellor said this brought more fairness between the self-employed and employees. But the move was criticised by the body that represents the self-employed. “The chancellor should not forget that growth in self-employment has driven our labour market in recent years and punitive rises in tax will make many people have second thoughts about striking out on their own,” said Chris Bryce, chief executive of IPSE.

Shareholders hit

Director shareholders will see a tax break reduced on the dividends they receive. The tax-free dividend allowance – which only came into force a year ago – will be reduced from £5,000 to £2,000 from April 2018. That will affect those who own a small business and pay themselves in dividends alongside a small salary. It will also hit people with a large portfolio of shares. Experts say that with an Isa allowance of £20,000 available to use from April, many investors will not need to worry. 

Help for savers

A new government-backed savings product was promised in November’s Autumn Statement – but we did not have date or a rate. Now the chancellor has said the Investment Guaranteed Growth Bonds will be offered by National Savings and Investments from April, paying interest of 2.2%.

The chancellor described this as a market-leading rate, which it is – but it is only the equal of the best-buy three-year bond on the market now. Critics have already labelled the product as a “sideshow” and “underwhelming”.

The bond will be open to those aged 16 and over, subject to a minimum investment limit of £100 and a maximum investment limit of £3,000. Savers must lock in their money for three years. Official forecasts estimate that the cost of living will rise at 2% or above for the next three years.

Sin taxes

There will be no change to previously planned inflation-linked increases in duties on alcohol and tobacco, but a new minimum excise duty is being introduced on the cigarettes targeting the cheapest tobacco. This, along with the previously announced measures, will mean a packet of 20 cigarettes will cost 35p more from 18:00 GMT on Wednesday. A 30 gramme pack of hand-rolled tobacco will cost 42p more.


Concerns have been raised that many people are falling into a subscription trap, by signing up for a paid-for service without meaning to – for example, when a paid subscription starts automatically after a free trial has ended.

Citizens Advice estimates that two million consumers each year have problems cancelling subscriptions on, for example, TV subscriptions. Those with mental health problems are often vulnerable to these issues. The chancellor confirmed that new measures will be considered in a Green Paper in the summer.

What we already knew

A long list of changes, announced in previous Budgets and Autumn Statements will come into force in April or the subsequent months. They include:

  • The amount you can earn before paying income tax – the personal allowance – is currently at £11,000 and will go up to £11,500. The government has promised this will rise to £12,500 by 2020-21. The threshold for higher rate will go up from £43,000 to £45,000, except in Scotland (owing to devolved powers) where it will be £43,000
  • Many working-age benefits remaining unchanged for a second year, as part of a four-year freeze. These include Jobseeker’s Allowance, Employment and Support Allowance, some types of Housing Benefit, and Child Benefit. However, state pensions, Maternity Pay and some disability benefits are excluded
  • The launch of a new Lifetime Individual Savings Account (LISA) for those aged between 18 and 40. They can save up to £4,000 a year, and the government will add a 25% bonus if the money is used to buy a home or as a pension from the age of 60
  • The start of a gradual process allowing people to pass on property to their descendants free from some inheritance tax
  • Any family which has a third or subsequent child born after April will not qualify for Child Tax Credit, which can be more than £2,000 per child. This will also apply to families claiming Universal Credit for the first time after April
  • The family element of child tax credits, worth £545 per year, will be abolished. So, families in which the eldest child is born on or after 6 April will not receive this payment.
  • Many buy-to-let landlords will see the amount of tax relief that they can claim on mortgage interest payments cut over the course of four years from April. They will only be able to claim at the lower rate of tax, not the higher
  • The National Living Wage will rise from £7.20 to £7.50 in April, for those aged 25 and over. Public sector pay has already been set at a 1% annual rise each year until 2019-20
  • The amount that can be saved in a tax-free Individual Savings Account (Isa) is rising from £15,240 a year to £20,000
  • Salary sacrifice restricted for items such as computers, gym membership and health screening
  • Fuel duty will be frozen for a seventh year, but the cost of vehicle insurance may rise owing to an increase in the Insurance Premium Tax from 10% to 12% in June
  • New Vehicle Excise Duty (VED) bands are to be introduced for cars registered from April – zero, standard and premium
  • In May probate fees will change, costing significantly more for large estates
  • Inflation-linked rises that mean a pint of beer will cost 2p more from Monday, wine will rise by 10p a bottle and a bottle of whisky will go up by 36p             

This article was written by Kevin Peachey, a personal finance reporter for BBC News.