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.

Are cash ISAs a bad deal

It’s the time of year when we are bombarded with advertisements about cash ISAs, each promising the best deal for savers. Yet I’ve been asked by a number of my clients whether these ISAs are worth pursuing at all.

People who have the bulk of their savings in cash ISAs or on deposit are realising that cash is not keeping pace with inflation and, in a lot of cases, is not even making 1% in interest.

With inflation at 4%, the average household has to spend an extra £1,360 a year just to maintain their standard of living, compared with only 12 months ago.

In a recent survey for watchdog Consumer Focus, more than 80% of cash ISA holders were found to be earning less than 0.5% a year on their savings.

So clients are asking if they should look at other ways to invest, in order to beat inflation. What they are considering is a fairly low-risk strategy on the stock market in
collective investments to aim for modest returns of 6 to 8% per annum over the medium to long term.

Now, they know that the stock market is risky, and I understand that it can seem a daunting step when you’ve always kept your savings in the bank. There are options, however, which match this cautious approach.

Some of my clients prefer to take a modicum of risk rather than letting their funds stagnate and let the banks and insurance companies reap the bulk of the returns.

It is important to find an independent financial adviser who listens to your concerns and searches out the best solution for you; someone with a sympathetic approach.

At Gordon Tate Associates we are committed to helping our clients make the most of their money.