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February snippets – you may have missed…

February snippets – you may have missed…

A selection of recent articles and updates which you may have missed….

Pension errors to affect over 2 million

Over 2 million people will be affected by errors in calculating their state pension, says the Mail. Their entitlements depend on the treatment of National Insurance contributions while they were enrolled in ‘contracted out’ occupational pension schemes. But there are many discrepancies between the NI records held by the pension schemes and those held by the Department of Work and Pensions, which has not helped matters by telling pension schemes in 2012 that they no longer needed to keep the data. A big data reconciliation programme is under way but it won’t complete until 2018 and in the meantime, says, the Mail, many people’s pensions could be out by £5 or more per week.

Wealthy to pay more for probate

Probate fees for the wealthy are set to rise sharply, says the Financial Times. The government has proposed major revisions to probate fees, which are currently £155 for people with assets over £5,000. Probate is required before inheritors can claim assets from an estate. The proposal is to raise the exempt limit to £50,000 and then charge fees starting at £300 up to estates of £300,000, but then rising sharply up to £20,000 at a level of £2 million.

Millions at risk of hefty pension penalties

Up to 2.2 million pension savers are at risk of having penalties applied to encashment of their personal pensions, says the Telegraph. Old policies issues in the 1960s and 1970s often applied penalties on encashment before age 65, and many people now want to access cash at 55 under the new pension freedom rules. The Telegraph cited the case of a 55-year-old business owner who wanted to cash in a £28,000 pension to finance her business, and was given varying figures by provider Aviva for the penalty that would apply, ranging from £6,000 to £10,000. Aviva eventually waived its penalty but many others in a similar position may not be so lucky.

The home of Mum and Dad

The proportion of young adults living at home with their parents has risen to its highest level for over 20 years, says the Mail. Back in 1996 55% of adults in the 20-34 year old age group owned their own property; today it is just 30%. That means one in four people in this age group today still live with their parents. Accumulating a deposit and qualifying for a large enough mortgage are the main factors keeping them at home.

Not many care about marriage allowance

Decried at the time as a typical Chancellor’s gimmick, the marriage allowance introduced by George Osborne has proved just that. Only 330,000 of the 4.2 million people eligible for the allowance have bothered to claim it, says the Sunday Times. In theory, if one of the couple have an income below the personal allowance  (£10,600 this year) they can transfer up to £1,060 of their allowance to their partner, who would then save just over £200 in tax. But the procedure and forms are complex, and the Sunday Times reported the case of a 77-year old who claimed HMRC did the transfer the wrong way round so he ended up paying more tax and it took him six months to sort it out.

Savers waste billions in unclaimed tax breaks

UK savers and investors waste £4.6 billion a year by not claiming obviously advantageous tax breaks, says the Financial Times. £1.9 billion relates to pension funds but another £1.8 billion comes from not making best use of ISAs. Transferring the maximum into ISA each year (£15,240 for 2015-16) reduces the amount of income tax payable on interest, dividends and capital gains.

Millionaires pay more tax

The top 6,000 taxpayers in the UK have been successfully targeted by a special unit within HMRC, says the Financial Times. Since it was set up in 2009 it has collected an extra £1.3 billion, and last year’s haul of £414 million was up 54% on the previous year. The top 6,000 UK taxpayers collectively pay between £3 billion and £4 billion a year in tax.

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