Inheritance Tax
The Land Registry has at last produced its own guide for couples who want to
change the way they own their home to reduce the Inheritance Tax which may be
due when they die. The new leaflet gives a step by step guide to filling in a
form called RX1 which is necessary when couples move from jointly owning all the
property (known confusingly as ‘beneficial joint tenants’) to each owning half
of it (called ‘tenants in common’). By taking this step a couple with a valuable
home can effectively double the amount they can leave free of Inheritance Tax
from £300,000 to £600,000. The Land Registry leaflet does not give advice about
the tax – you can get that from Saga’s online guide at saga.co.uk/magazine/money/inheritancetax/iht1.asp.
But it does explain how to fill in the almost unintelligible form which is a
necessary part of the process if you want to change the way you own your home.
The leaflet – Public Guide18 ‘Joint property ownership’ – is available from any
Land registry office or online at
www.landregistry.gov.uk/assets/library/documents/public_guide_018.pdf
Join the bear market
Daniel Agnew has the best job title I have come across for a long time. He
is Teddy Bear Expert at auctioneers Christie’s. And he is in charge of the sale
on 19 September of the contents of The Teddy Bear Museum which was founded by
politician and TV presenter Giles Brandreth in 1988. Daniel says the museum does
not contain any absolute rarities but "he set up the museum in the 1980s when
the bear craze was beginning and people know these bears personally as they
feature as illustrations in reference books such as the The Teddy Bear
Encyclopaedia by Pauline Cockerill."
Although some bears fetch serious money – the record is a staggering £110,000 – most fetch in the hundreds leaving the older ones in the low thousands. To be collectable bears must have been made before the 1940s and the best are those from the ‘boom years’ 1904-1910. Daniel says "99% of the bears I sell have fully jointed swivel head, movable arms and legs. That’s a sign of quality. If you have a photo of granny holding it aged 2 that is very good if you will sell the original photograph as well. Condition is important but it is the ‘Ahhh’ factor – is it appealing – that sells."
Brands to look out for are Steiff, Bing or Shuco from Germany or Farnell, Merrythought, Chiltern, or Chad Valley from Britain. But Daniel warns that the label is "often the first thing to go." He will give an opinion if you email a picture to dagnew@christies.com.
Be safe with free gas check
Anyone over pension age who has mains gas appliances can get a free annual
gas safety check. Only 50,000 out of millions of potential clients actually get
one. The free check is part of a package of measures which all energy suppliers
– gas and electricity – should make available to anyone over pension age or who
has a disability or long term ill health. Other help includes a password
protection scheme so that anyone from the supplier who calls will give you an
agreed password to authenticate their identity. If the gas supply is interrupted
alternative cooking facilities will be provided and you will be given notice of
any planned interruptions to electricity supply. If you are blind or deaf you
can get Braille or talking bills. You can also get controls or adapters to help
you use appliances safely and your meter may be moved if it is in a location
where you cannot get access to it. If your supplier reads your meter less than
four times a year you can get a guarantee that yours will be read at least once
a quarter, ensuring that your bills are as accurate as possible. To get the help
you must ask to be put on the Priority Services Register. Some suppliers are
better than others at telling people about it and, just to confuse things, they
have several different names for the scheme. If you get nowhere with your
supplier, call Energywatch on 0845 906 0708. It will then make sure your
supplier provides the extra services that you want. You can download a leaflet
about the Register at
www.energywatch.org.uk/uploads/Free_Services1.pdf
Council tax relief
Householders aged 65 or more living in the London Borough of Hillingdon will
have their council tax frozen for the next three years. About 13,000 households
whose income or savings are too high to get council tax benefit will gain from
the scheme.
The freeze follows Hillingdon’s decision to give older residents a 2% discount off their council tax this year. That knocked £27 off the average bill. Next year’s freeze could double that saving. And the council has promised that it will be followed by two more in 2009/10, and 20010/11 keeping the tax at the current average of £1350. However, bills will still drift upwards slightly as Hillingdon has no control over the tax levied by the Greater London Authority. That rose by 5.3% this year and will probably rise again in future. But householders aged 65 or more will at least know that the biggest element of their council tax bill will remain the same for the next three years.
This year’s 2% discount will cost Hillingdon £400,000 (out of a budget of £250 million). Freezing the tax next year will probably cost the same again. The council says that will come out of savings of £15 million a year from what it calls its ‘improvement programme’ – cutting costs on the amount spent to run the borough.
Political opponents claim that other residents will pay for extra help to the over 65s. Mike Cox leader of the Liberal Democrats told the local paper that it was "welcome for the poorest pensioners" but called it "a political stunt which will hurt many residents faced with rising mortgage rates and those on lower incomes who can ill afford it."
Hillingdon is also trying out a scheme to provide special parking places restricted to those aged 65 or more. If the pilot is successful anyone over 65 will be able to apply for a ‘brown badge’ allowing them to park in specially marked bays. There will be no health or mobility test.
Joint accounts
When Lasting Powers of Attorney replace Enduring Powers from 1 October there
will be some changes in practice by banks where someone has a joint account.
Joint bank accounts are strange beasts. Both account holders each own all the
money. And similarly both have a duty to pay off the whole of any overdraft.
Normally they are made by husbands and wives on the basis that either can sign
to take out money. If one party dies, the other can then use the money in the
joint account as their own without any question. But if one party loses their
mental capacity then the bank freezes the account until it is sure the interests
of that party are being upheld. That can prevent the other joint account holder
accessing money which is, in fact, theirs.
An enduring power of attorney is registered when the person who has made it (the ‘donor’) loses their capacity. In England and Wales a joint account will normally be frozen at that time until the bank either receives an order from the Court of Protection or is satisfied that the other party is allowed by the terms of the Power to access the money. In Scotland the position is slightly different and the money (in an either-to-sign account) can be used as long as there is no order prohibiting it.
However, when Lasting Powers of Attorney begin in England and Wales October, they can be registered before mental capacity is lost. So a bank should not freeze the account just because it has been registered (although some Powers do state they should only be registered when capacity has been lost). Once the bank believes one of the joint account holders has lost their mental capacity it must freeze the account. That point may be very difficult to determine. The procedure to release the money should be speeded up if the joint account holder is also the only attorney. But it is probably sensible for individuals to have some money in a separate account of their own to tide them over the interim period.
Tax errors
A timely warning from the National Audit Office – check your tax. The NAO –
which acts as a spending watchdog on Government departments – did not put it
quite like that. But it did reveal in a recent report that more than a million
people paid the wrong tax in 2006/07 due to errors by the Revenue. Some paid too
little but most paid too much tax. The average overpayment was £290. The errors
were found both in the automatic deduction of tax through PAYE – reported in
Saga Magazine before – and in mistakes made on working out the tax through
self-assessment. Overall HM Revenue & Customs gets 95% of calculations right –
but that still leaves one in twenty of us paying too much tax – or too little
which may be claimed back by the Revenue in the future. So if your circumstances
are in any way complex, especially if you have more than one job or pension in
the tax year, make sure your tax is right at the end of the year.
Working on
Employers should prepare themselves for a big growth in the number of people
working beyond pension age. A survey by Aon Consulting found that more than
three quarters of adults currently in work expect to work beyond the age of 65.
Just over half (53%) said they would need to carry on working to boost their
pension, a quarter said they wanted to because they liked work. Only 22% said
they would not work beyond 65 in any circumstances.
At the moment only about one million people work beyond 65. But Jon Beaumont, a Human Resources consultant at Aon, says these figures imply "there will be three times that number working or at least wanting to work after that age." And he warned employers to prepare for the idea "As the current baby boom heads for pension age, the number of people aged 55-64 will fall while the number of over 65s grows. So there may be a gap to fill."
The bleak pension future facing many people was highlighted by figures which showed that the number of employees paying into a pension at work had fallen since 2000 by 700,000 to 9.6 million. Most of those were now employed in the public sector as more and more private companies close their schemes to new members or close them altogether. More than four out of five private sector schemes which offer a pension related to pay are closed to new members. And there is likely to be further pressure on schemes from the actuaries who advise them. Representatives of the Society of Actuaries have been meeting with the Pensions Regulator and the Financial Services Authority to discuss the growing evidence that life expectancy is going to carry on rising. A rise of one year in the average age at death adds up to £40 billion to the total cost of private sector pensions – and even more to those in the public sector which are largely funded by future taxpayers. At the moment life expectancy increases by about three months every year. At one time actuaries expected that rate of increase to tail off. But it is showing no sign of doing so.
September 2007