Child Benefit

How the latest Budget has  squeezed middle England

and affected Child Benefit.

It has been estimated that there are about 29 million tax payers in the UK and from this group nearly 2 million are earners who generate an income of £50,000 a year or more. This means that 93% of tax payers earn less than £50,000 (source Wikipedia “Income in theUK” article)

We can therefore deduce that only a small percentage will have the opportunity to find true financial freedom. Unfortunately this kind of freedom is nothing but a dream for the majority; indeed nearly 24% of people have an income of less than £10,000 per annum (source Wikipedia “Income in theUK” article)

The Coalition government’s ambition to take people on low incomes out of the tax system took a leap forward in the recent Budget. The Chancellor increased the income level at which people start to pay tax by £1100.  This means that another 800,000 will be taken out of the tax system and since coming to power nearly 2 million people are no longer paying tax as a result of the Coalition’s tax policies.

These measures will surely help the most disadvantaged in the country. Those at the other end of the spectrum that is the 7% on income exceeding £50,000 are relatively comfortable.

The media makes much of the so called “squeezed middle”, it is this group that seems to bear a disproportionate burden at times when a Chancellor has to make tough decisions on where to make unpopular cuts.

Removal of Child Benefit

Before the Budget there was much speculation as to how the removal of child benefit would operate. The original intention was to remove it from higher rate tax payers (income exceeding £42,000).

Clearly this would have been unfair to families with a single earner; where if the income exceeded £42,000 by just £1 they would lose the total child benefit; this did not compare well with families with two earners on £42,000 each who would have kept the benefit in full.

The Chancellors answer has been to raise the threshold so that child benefit is only effectively lost when an income reaches £60,000.

Despite this solution the “squeezed middle” is still being pinched.

Financial planning may not bring financial freedom but can “make do” and mend resources that have not received the attention they deserve.

The results are often surprising and invariably put people in an improved financial position.

In austere times everyone has a responsibility to make the most of their finances.  If you would like to know more about how to  make do and mend your financial recources,

Give your independent financial adviser a call now to find out your child benefit options.

Age Allowance

The Effectsof the 2012 Budget on the elderly and the Age Allowance

A group that is being pressed financially by the latest budget proposals are those who are entitled to what is known as the “age allowance”.

People aged 65-74 and those aged 75 or over enjoy a tax free allowance of £10,500 and £10,660 respectively as long as the level of income does not exceed £25,400.

Where income exceeds the £25,400 the amount of age allowance is clawed back by £1 for every £2 of extra income until it reaches the standard personal allowance of £8105.

The Budget announced that those who attain the age of 65 after 5th April 2013 will not benefit from the higher tax free allowance.

Those who are already entitled to the extra tax free income will retain it but find that the age allowance will be frozen and replaced by the standard personal allowance when it matches the level of the higher figure.

People who find themselves in these groups therefore have the greatest need to nurture everything that they have accrued.

Financial planning may not bring financial freedom but can “make do” and mend resources that have not received the attention they deserve.

The results are often surprising and invariably put people in an improved financial position.

In austere times everyone has a responsibility to make the most of their finances.  If you would like to know more about how to presenrve your tax free Age Allowance

Give your independent financial adviser a call now.

Extra Income

 “Shopping for Extra Income”

There are a great number of people who, when it comes to deciding how best to derive an income from their retirement savings, may not get the best deal if they do not shop around.

The wrong choice at a time when financial pressures should be reducing can result in less income being paid than could actually be achieved.

This can easily be avoided.

It is estimated that many retirees are entitled to a better retirement income than they are currently being offered – in other words even though they could qualify for a better income they don’t know how to get it. One of the reasons for missing out could be that this group is not given enough information about how to use their pension fund on which they can make an informed decision.

During the course of their working lives many people have saved money into one or more pension plans. As they approach retirement there are a range of options available to use these funds to generate an extra income.

The most simple of these is to understand that there is no obligation to have to take the retirement income from the pension company where the money has been saved. The service that is known as Open Market Option (OMO) is a facility to shop around for a better rate and this can help improve retirement income significantly.

It has been estimated that up to an extra 19%* extra income could be generated through researching for an annuity (income) rate that is better than the one offered by the original pension company. Nearly 750,000* people will reach retirement age this year and many will be wasting the opportunity to get the best out of their retirement savings. This puts them at risk of having a less financially secure retirement than they deserve.

The choices that people face when having to decide how best to benefit from the pension savings that they built up through their working lives is challenging.

This is a complex matter because beyond shopping around for the most competitive rate, there are 11 different income options and each of these can be tailored to a meet a retiree’s particular circumstance.

Make the wrong choice and not only could there be less income but more tax than is necessary could have to be paid. Some people can find themselves locked into an option where once committed there is no way back or not having made adequate provision for dependents.

Shopping for extra income is as simple as searching any annuity comparison website, getting advice on an appropriate at retirement income option however needs input from a specialist independent financial adviser.

For an initial consultation about acheiving extra income at our expense please contact Gordon Tate Associates on Tel: 023 92 571183


* Information supplied by Just Retirement.

Equity Release?

Equity Release? – Which type of scheme  is right for you?

The number and design of equity release mortgages has evolved to suit the needs of those who most need this type of product. There are now two types of Equity Release Mortgage available .

They have become safer, more efficient products with the loans tailored to help resolve the financial concerns of those who need to access this type of facility.

A recent meeting with a client, a single retired woman with no family brought to my mind the true value of equity release.

The financial circumstances were that she had a small occupational pension, the full state pension and a small investment fund.

She found herself stressing on how to get by on the income which never seemed to cover the increasing cost of surviving (not living); furthermore she worried as her investment eroded every time she had to en-cash part of it to keep herself going.

She lives in a house in Surrey worth £400,000.

The two types of mortgages are as follows:-

  1. A Lifetime Mortgage where the borrower doesn’t have to make any monthly interest payments. The interest is added to the loan on a monthly basis so the amount of the loan will rise over time.
  2. The Home Reversion Plan is another type of equity release arrangement that isn’t really a mortgage. The providers of this type of scheme effectively purchase a percentage of the value of the property, at a discount. The home owner retains the legal right to remain in the property until they die, sell it or go into care. On selling the property, the provider takes its agreed percentage, with any balance being paid to the client or their next of kin, so the intended beneficiaries always know exactly what percentage of the value of the home they will inherit.

Which of these two types is the right choice ?

It is only an experienced specialist Independent Financial Adviser who, having assessed your individual requirements, will be able to research the whole of the market for a suitable lender and mortgage product.

There are various options available:-

  • A lump sum, to spend as you wish, such as a deposit for grandchildren to purchase their first home, or fund their university fees.
  • A small remaining mortgage can be repaid before the funds can be utilised for other purposes
  • Use the loan to serve as a regular income plus “ad hoc” lump sums as required.
  • Use the loan as a reserve account (like an overdraft facility).
  • You can protect a percentage of the equity (value) in your home to safeguard any legacy.
  • Make monthly interest payments in order to limit the size of the loan (depending on the type of scheme used)
  • Borrow against a holiday home, let property or main residence.
  • Proof of income is not required.
  • Interest rates can be fixed for the life of the loan.

The lifetime mortgage option will not lend as great a percentage of the value of the house as a home reversion arrangement because this type of mortgage adds the monthly interest which increases the size of debt, unless you choose the make the monthly interest payments.

A home reversion plan works by buying a percentage of the value of the home and then passes a percentage of this amount to you as cash or income; the difference between the percentage that they buy and the percentage that they pass to you represents the provider’s gross profit before costs and expenses.

My client found that an equity release mortgage solution has transformed her financial position and lets her sleep well. Which is best for you?

For an initial consultation about Equity Release at our expense please contact Gordon Tate Associates on Tel: 023 92 571183



It often amazes me as to the number of telephone calls I receive from solicitors and accountants that relate to the following theme:-

“Gordon, you know I don’t like or believe in  the Equity Release Mortgage, BUT, I have racked my brains for an alternative, suitable answer to my client’s financial problems and Equity Release seems to be the only logical solution.”

I usually reply “that Equity Release mortgages are only bad when the wrong product is mis-sold to the wrong people, in the wrong circumstances at the wrong time”.

There are circumstances when these loans can help clients resolve financial pressures. I only investigate whether they are appropriate having exhausted looking at all other options.

Equity Release Mortgage case studies:-

The following case studies give examples of where equity release really helped to improve these clients financial position.

  1. An accountant contacted me as his clients in their 70’s had taken on so much debt that all of their income were taken to service the debts. They had not gone into arrears but were having difficulty in servicing the loans, in fact the pressure was so great they could not afford to live and would soon have credit arrears problems. 
    • With the agreement of their only child, I arranged an Equity Release mortgage. This repaid all of their debts and released income to fund their lifestyle.
    • The clients were so relieved with the outcome and the accountant was kept informed during the whole process.  The client’s, their son and the accountant were all made aware that the lifetime mortgage has not eradicated the debts, and that interest is still being added annually which will obviously reduce the eventual inheritance that their beneficiary will receive.  However, they now no longer have to worry about mounting debts and lack of income to live on.
  2. A solicitor contacted me with a client, a widow, with no living relatives.  She had a large bungalow, had developed arthritis and was therefore unable to maintain her beloved garden.  She couldn’t afford a gardener or pay for much needed repairs to the property. The property had been her marital home and she could not bear to sell leaving her memories behind.
    • The first thing we did was to ensure that she was receiving her full state benefit entitlements, then, we arranged an initial release of money so she had sufficient funds available to carry out the repairs, enjoy a holiday and provide a reserve from which she could draw to pay a gardener.
    • The result was wonderful for this lady who is now so relaxed knowing that she has sufficient money to fund her lifestyle. A satisfactory outcome. She was made fully aware that the interest would be added to the loan every year, thereby reducing the amount of inheritance that would be left to her beneficiaries, however, as she assured me that she had no living relatives she and her solicitor were happy with this outcome believing that whoever inherits her estate should be glad to receive whatever is left.

I do come across some horror stories. I met a lady who had gone direct to a lender some years before. She has found that Equity release can be a nightmare. The lender in question did not have a suitable product to meet her circumstances yet pressed her to take a product which was not really suitable. The lender is now no longer trading so she finds herself locked into a loan that doesn’t suit her circumstances and causes her considerable stress.

Going direct may have attractions to some clients, yet this experience emphasises the need for clients to seek independent advice when investigating whether an equity release mortgage is the right solution.

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The key to financial wellbeing in later life

What are you looking for out of retirement? Relaxation away from office worries, financial wellbeing in later life,  time and money for new interests and holidays, being able to help out your children and grandchildren …

In short, financial wellbeing.

Whether it’s Tuscany, a visit to the garden centre or supporting younger relatives in tough economic times, retirement should be the time when you can make the most of the savings you have built up over years of work.

If you’re like me you’d like cash for cinema trips, eating out and buying clothes, as well as bigger sums that might go towards a grandchild’s university fees or first-home deposit.

Sometimes a grown-up child might appreciate a stop-gap contribution towards this month’s mortgage or a family holiday.

But to draw the best income from your hard-earned savings you need specialist advice when you’re on the point of retirement.

It is essential to choose the right annuity and retirement income option from the array of complex offers available in the process known as ‘pension crystallisation.’

Those who get it wrong may find they are stuck with less income than they expected or a higher tax bill than necessary. A rotten result all round.

Financial Wellbeing In Later Life

Gordon Tate Associates are specialists in helping you to financial wellbeing in later life. We are qualified, independent and passionate about what we do.

We want to make sure you enjoy the retirement for which you have worked so hard, so we’ll talk through all your plans and needs to find the retirement income option that suits you best.

Then it’s up to you. College fees or a trip to Costa Rica … or both? You decide if you want financial wellbeing in later life!






When interest rates pay out 0.01%


We’ve all seen bank and building society advertisements promising savers attractive headline rates of interest, only to find these returns can later tumble, perhaps as low as 0.01% per annum in some cases.

Such figures are derisory by anyone’s standards and mean savings are constantly eaten away as inflation runs above 5%. This is understandably a big worry for many, particularly those facing retirement on a fixed income.

It was very sobering to see in a report from Saga how one in five over-50s fear they will have to sell their family home to meet the cost of rising energy, petrol and food bills. Another survey found a 30 per cent rise in the number of homeowners aged 66 – 70 selling their houses and becoming tenants.

What can be done about rock-bottom interest rates at a time of rising inflation?

Consulting an independent financial adviser is a sensible step. Qualified, experienced advisers specialising in helping clients to financial wellbeing in later life are able to search the whole market place and can tailor solutions to individual circumstances.

The answer to providing a reasonable income while interest rates are derisory can often come through a blend of different products, funds and accounts.

If a client was able to expose their capital to some risk, they could consider stock market investments that might offer the potential for better returns:

  • Investment in funds that hold cash-rich companies offering decent yields may be one option.
  • Fixed-interest investments could be another option.
  • Holding a proportion in property funds could be a good strategy.

Getting the mix attuned to a client’s tolerances while balancing the need for the potential of a reasonable return requires specialist advice.

We can help you find this balance.

Got £180,000 lying around? You may need it for care fees

Could you come up with £180,000 to fund the care of an elderly parent or spouse?

No, not many of us could put our hands on that kind of sum easily. Selling property might be our only solution, and that’s an unsatisfactory move for all concerned.

Yet that is the amount it has been calculated that long-term care could cost for an elderly person in the South East if they live more than four years.

Ah, you may say, but what about the Dilnot Report? Commissioned by the Government and published in the summer, it recommended capping lifetime contributions to social care costs to £35,000.

It also suggested people should contribute no more than £10,000 a year to their food and accommodation costs whilst in residential care.

Well those proposals won’t come into force until 2013 if at all, and if the calculations of some analysts are to be believed, some of those needing long-term care could still face that £180,000 bill.

So what are families who want the best care for their loved ones to do? The sensible answer is to start planning, saving and looking for inventive ways to raise that money as soon as possible.

A qualified, independent financial adviser will be able to suggest strategies families may not have thought of, such as an equity release mortgage that gives them access to funds without selling the family home.

My advice would be not to panic, but to arrange to talk through all your options with an expert.








Lessons from Downton Abbey

Lessons from Downton Abbey


As fans of Downton Abbey know all too well, inheritance is an issue that can split families, cause emotional upheaval and require heart-rending decisions.

A glorious stately home may not be at stake for many of us, but the question of inheritance is still a very important, and sometimes difficult, matter.

So it was with interest that I read a recent report suggesting that coming generations will experience an ‘inheritance crash.’

Less money will be handed down from one generation to the next because of poor pensions, rising living costs and increased life expectancy, according to the study from HSBC.

As more people live to be 100 (Britain now has more than 12,600 centenarians and there will be 100,000 in 25 years’ time) they are likely to spend their way through their savings and investments in their final years, leaving little for their children to inherit.

Now that we are forewarned, what steps can young families take to prepare?

  • Think about investment options so that money saved now works as hard as possible for you. Consider expected rates of return and risk assessments.
  • Take retirement planning very seriously, even if the day you hang up your business suit for the last time seems far off.
  • Consult an adviser about the right options depending on your personal case: your age, your commitments (school fees, mortgage…)
  • Don’t just choose a pension fund and forget it. Make sure you get ongoing advice as markets and circumstances change.
  • Write a Will and act to minimise inheritance tax.

An independent financial adviser will be able to give qualified, unbiased advice.



Protecting your cash from care fees

It is a little-known fact that many couples in their 60s would benefit from splitting their assets and investments 50/50 and holding them in separate accounts in case either of them ever needs long-term care.

Why? Because a person must fund their own care until their assets are down to the last £14,250, when the local authority will foot the bill. All their income will also be used, except for £22 a week spending money.

But local authorities have no right of access to financial information on the partner or spouse and cannot touch their assets.

If savings are split evenly in separate accounts, only half the couple’s money will be swallowed up in funding long-term care fees. The partner or spouse’s assets are fully protected (and they still have the option of paying a top-up to the care provider for better care and accommodation than the local authority is prepared to pay for.)

I meet an awful lot of clients who put the bulk of their savings into the wife’s name simply because she is a non-taxpayer. In ordinary circumstances this is a sound idea, but if the wife falls ill and care funds are needed it could prove costly.

Couples should also beware of putting all or most of their savings into one institution. One couple I visited recently had everything with the Halifax, albeit in different accounts.

The problem is that they only get Government protection in case the institution goes bust up to a maximum of £85,000 per person per institution – and in the case of the Halifax, the one ‘institution’ also includes Lloyds/TSB, Bank of Scotland, Cheltenham & Gloucester and Birmingham Midshires!

An independent financial adviser should be able to suggest ways to help.