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personal finance

Annie Shaw: Your money problems solved


Question

I want to help my daughter to buy a flat. My original plan was to buy jointly and have both our names on the deeds and the mortgage. But because I am a homeowner, the purchase would count as a second property and we would have to pay a considerable extra sum in stamp duty. Is there any way round this? I’ve ruled out mortgaging my own home and simply giving her more cash.

Answer

Anyone considering giving a child money to help them get on the property ladder should take advice on the best way to do this. Your own financial security is paramount, and you have wisely decided against mortgaging your own home.

Securing a mortgage if you’re over 50

You should also be aware that involving an older person in the loan could, if the lender has a maximum age policy, reduce the period over which it is repayable. This makes monthly payments more expensive.

Giving property and money to family

One area you could explore is a ‘joint mortgage sole proprietor’ deal. These cost a little more than a regular loan and are not widely available but are offered by a number of lenders. They allow a parent or other interested party to be included in the mortgage arrangement, but with only one name listed with the Land Registry, thereby avoiding the extra stamp duty. See a broker for more advice.

Question 

My friend’s husband died without making a will, and I have been trying to help her to sort out his affairs. We obtained letters of administration and filled in form IHT205 for estates unlikely to pay inheritance tax. Months later, a dividend payment arrived for some shares we didn’t know about. We thought everything was done and dusted but are now not sure.

Answer

If the value of the shares takes the estate over the nil rate band of £325,000 you may have to complete form IHT400, but only if the estate does not qualify as an ‘excepted’ one. As the deceased’s wife is the estate’s main beneficiary and appears to meet other qualifications (go to gov.uk and search for ‘IHTM06013’ for details) it seems that it will count as ‘excepted’.

Discover more about wills, probate and inheritance tax

So even if you need to complete IHT400, it looks as if there will be no tax to pay. This can be a complex area; if you still have queries you may need to see an accountant or other tax specialist

Question 


I am nearing retirement and am considering deferring my state pension. Is it worth it?

Answer 

 It depends what you mean by ‘worth it’. If you are asking whether you can get more pension over the course of your retirement by deferring, the answer is ‘probably not’. The old deferment rules, which applied to people reaching state pension age before April 2016, were much more generous than the current ones. If you put off claiming your pension then, you got a generous uplift when you eventually came to take it.

How to boost your state pension

The new rules are ‘actuarially neutral’, so the average person should end up receiving the same amount over their lifetime, whether they take their pension as soon as they can, or wait and receive slightly more each week.

What benefits am I entitled to when I retire?

Since the age at which you are entitled to claim a pension is, in any case, rising, it would seem to make sense to claim your pension as soon as you can, particularly if you have health problems. Calculations indicate that you would need to live a further 17 years after deferring for one year to make monetary sense. That said, if you decide to work past state pension age and don’t need the extra income now, the state pension might simply attract higher tax. In that case it could make sense to defer, especially if you want a higher guaranteed income stream in later life or you come from a family that is especially long-lived. It is down to personal preference – but for Mr and Mrs Average there is now little or no advantage.

Question 

My local bank has closed, but I have been told I can pay cheques in at the Post Office. How does this work?

Answer

The Post Office has an arrangement with most leading banks, including Barclays, Lloyds, HSBC and Halifax, to accept both cheques and cash for forwarding to them. For cheques, you need a bank paying-in slip and a special envelope from the counter. Your deposit may take a little longer to be credited to your account than if you paid it in at a branch.

You can also withdraw cash using a debit card and, if you qualify, use a pre-authorised cheque encashment service. Ask your bank for more details.

For a full list of banks that use this service, visit Post Office Branch Banking Services.

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