Bank of Mum and Dad feeling the squeeze

Figures from Legal & General released this week suggest young home buyers are growing increasingly reliant on their parents to help them get onto the property ladder. “Bank of Mum and Dad” will help fund one in four property purchases this year – but is starting to feel the pinch, according to new research.

Parents are parting with thousands of pounds to help their children get on the property ladder, but they can’t afford to lend as much as they used to. Parents will help 316,600 loved ones buy a home – an increase from 298,300 in 2017, according to projections.

• Parental contributions are highest in London and lowest in Scotland

• Buyers in London (41%) receive more help from the Bank of Mum and Dad than in any other area

• Under-35s are most likely to receive help from their parents

• Older home buyers also rely on the Bank of Mum and Dad, with 20% of those aged between 45 and 55 receiving help

The report said that whilst parents remain a major lender, they are handing over less cash.

The amounts being handed over are falling with the average amount they are expected to contribute towards a property purchase expected to fall from £21,600 in 2017 to £18,000 this year.

The average parental contribution this year comes in at £18,000, down £4,000 on the past 12 months, according to Legal & General.

Buyers in the Northeast have seen the average family contribution plummet by £12,200 in the past 12 months.

In London, more than 40% of buyers had financial help from family to invest in property. In London, the average family contribution now comes in at £30,600 – up from £29,400 in 2017.

Legal & General chief executive Nigel Wilson told the BBC, “People are feeling a bit of a pinch around the economy and therefore we’re seeing pretty much a national trend outside of London for less to be given.”


Modball Rally Insurance – are you correctly insured?

The Modball Rally is just around the corner starting 23 June.

Teams are encouraged to check with their insurer if participation in the Modball rally is covered, and if not call our private client division on 020 8681 4994 to arrange specialist insurance cover.

In our experience most insurers do not cover this rally so do check small print!

The rally and high net worth market is an important and specialist focus for PK Partnership. We understand that people taking part in such events are by nature usually passionate advanced drivers who are sensibly minded to protect their investments, which makes events such as this possible.




20th Anniversary London – Tokyo Gumball 3000 insurance arrangements

PK Partnership is delighted to have teamed up with Gumball 3000 for the second year running as the official insurance partner of the organisation.

PK Partnership Director, Amit Patel said, “We are delighted to be the official insurance partner of Gumball 3000 again – and are looking forward to providing bespoke cover during this landmark anniversary year. We have worked very hard over the past year to further understand the Gumball risks and build relationships with Gumball members. This has enabled us to reach out to the wider insurance market and seek cover for the Japan leg of this year’s rally, which is no mean feat, given the challenges of global territories.”

Max Cooper, CEO of Gumball 3000 commented, “We are pleased to partner with PK Partnership for the second year running. We have been very impressed by their work ethic, especially with their work behind the scenes to overcome the challenges ahead of this year’s rally to find appropriate insurance cover not just in Europe but Japan as well.”

Image courtesy of Flickr_Sheila Sund

Next stage of automatic enrolment

Since 2012 employer and employee automatic enrolment contributions have totaled 2% of ‘band earnings’, with the employer having to pay at least 1%.

From 6 April this year, the minimum contributions will rise to 5%, with 2% from the employer.

The extra outlay could be significant, especially for employees. Taking someone earning £26,000 a year as an example, the employer contributions will increase 98% from £16.77 a month to £33.28. The employee contributions will rise 198% from £13.42 a month to £39.94.

Further increases happen in April 2019, as the total rises to 8% with 3% from the employer. Each April there are generally also tax and NIC changes, so the impact on employees will be cushioned marginally.

The Financial Conduct Authority does not regulate tax advice. Levels and bases of taxation and tax reliefs are subject to change and their value depends on individual circumstances. Tax laws can change. Occupational pension schemes are regulated by The Pensions Regulator.


PK Partnership cost of financial advice

New focus on inheritance tax

The government has requested a review of inheritance tax (IHT), focusing on making the system less complicated.

The Chancellor, Philip Hammond, has asked the Office of Tax Simplification (OTS) for “proposals… for simplification, to ensure that the system is fit for purpose”.

The OTS has been asked to “focus on the technical and administrative issues within IHT” and also to consider “whether the current framework causes any distortions to taxpayers’ decisions surrounding transfers, investments and other relevant transactions”. This means the OTS will be looking at implifying the rules, instead of proposing radical reforms. The Chancellor is unlikely to reduce IHT revenue, as the tax is forecasted to raise £5.4bn in 2018/19.

Appropriately, the OTS did look at IHT when developing its ‘Complexity Index’ in 2015. The Index examined over 100 aspects of UK taxation, assessing their complexity and its impact.

Unsurprisingly, IHT ranked close to the top for complexity – coming third behind two sets of capital gains tax computation rules. IHT earned this position thanks to no fewer than 94 reliefs and nearly 200 pages of legislation.

If the OTS repeated the exercise today, IHT could well come first because of the extra complexity added by the residence nil rate band (RNRB) and its associated downsizing rules.

These rules led the then head of the Treasury Select Committee, Andrew Tyrie, to say, “The main beneficiaries of this [legislation] would be tax advisers and lawyers”.

You should not defer your estate planning because of the impending OTS review – there is no timetable for the OTS to respond, and their previous recommendations on income tax and national insurance contributions have yet to be implemented. If you have not reviewed your will since the RNRB started in April 2017, now is the time to do so. The RNRB could save your estate up to £70,000 in tax (up to £140,000 for a couple) by 2020/21 but, as Mr Tyrie made clear, it is far from straightforward. The end of the tax year offers also opportunities to use your annual IHT exemptions, as covered in our feature article.

The Financial Conduct Authority does not regulate tax advice. Levels and bases of taxation and tax reliefs are subject to change and their value depends on individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate will writing, trusts and some forms of estate planning. For specific tax advice please refer to a tax specialist.


Image Courtesy of Flickr_Ishan Manjrekar

Markets tumble as Trump announces sweeping tariffs on China

Please find below latest market video update from our Partners at Russell Investments.

In this issue:

  • White House announcement on Chinese tariffs sparks slide in global indexes
  • Is the Fed sounding a more hawkish tone?
  • What the latest PMI data suggests about the state of the global economy




Image courtesy of Flickr_Pink Sherbert Photography

Cyber Security: What is malware?

There are over 100 million different viruses live on the Internet. Many of these are only slight variants of each, substantially enough different to try and avoid detection by anti-malware software.
Malware is short for ‘malicious software’ and is software designed with a malicious intent. In total it is estimated there are nearly 100 million different types of malware on the web today and growing rapidly.

Due to the potential for high returns, organised crime is investing heavily in malware production and a malware-based cyber attack is the most common threat smaller businesses will experience at least once in the next 12 months.

The UK Government’s Cyber Essentials scheme provides an excellent broader risk management framework for this threat.

Malicious content can be used:
• To record every keystroke on your keyboard, including bank details and passwords
• To make your computer undertake an action on behalf of the malware’s creator
• To encrypt the files on your computer and demand a ransom fee to get your files back

Malicious software, like all software, is ultimately written by a human being. The author of the software identifies a “vulnerability” in an operating system (e.g. Microsoft Windows) or other common software (e.g. Microsoft Word) and “exploits” the vulnerability.

Opportunities and organised crime are typically after either money or information that can be exchanged for money.

Nationstates are most typically after information, for example trade secrets or information on the activity of corporate firms or other Governments.

A simple metaphor is an open window on a house. Malware is written to detect if a certain window is open, and if so, it climbs through and begins to undertake its primary objective. This is why software updates are so important!

Some vulnerabilities aren’t found until it is too late. By this we mean that a malicious individual has found a vulnerability before the software developer, and begins to exploit the vulnerability before a ‘patch’ (software update) is released. These are often called “zero day” attacks, where are “zero days” to be able to respond – the problem is already underway.

Malicious software can’t spontaneously appear on a computer. Typically it requires action by the computer user, either by downloading a file from the Internet or via an infect USB drive.

Most malware is spread via the Internet, either as an attachment to an email, or as a download from a website. The first line of defence for all businesses is their staff not downloading or opening a suspect file.

Interestingly, a recent report identified that religious websites are a greater risk for malware than adult websites. The report stated that, firstly religious websites are often poorly secured, and secondly, that the users of such websites are more likely to trust the website due to its subject matter. Adult websites on the other hand are, mostly, legitimate businesses, meaning that security can be of more importance to the firm on behalf of their customer.

It is for the reasons above that a variety of steps need to be taken by a business to reduce the risk of a malware infection. These include:
• Anti-malware software installed, properly configured and up-to-date
• Annual staff awareness training with a focus on malware
• Configuring computers to require user prompts before software can run
• Ensuring computer users are not working on administrator accounts

With staff awareness training lacking, anti-malware software is often our single greatest hope to defend against this risk.

But… if the anti-malware software isn’t installed correctly it can’t do its job. This requires a business to firstly verify the software is installed correctly from day one, and secondly that they verify at regular intervals that the software remains up-to-date and properly configured.

The way that most anti-malware software works is through “signature” recognition. The creator of the anti-malware software finds a new virus in the wild and, metaphorically, ‘takes a photo’ of it. This photo is called a ‘signature’. The anti-malware software developers then push this signature to its software. If your computer sees the signature, it rejects the file, as it knows it is a bad file.

Unfortunately, malware creators known this, too. It means they have to keep creating variations of their software, with different signatures. The more new signatures, the harder it is for the anti-malware software developers to keep up, and the more chance it is that the malware will infect your computer.

It is for this reason that defending a business against malware must be taken seriously, and that a business should not simply rely on anti-malware software alone.

Unfortunately, the only true defence against malware is constant human diligence. If the malware doesn’t reach your computer, it’s unlikely to be able to infect you.

Source: Berea Group.

Image courtesy of Flickr_Sheila Sund

Health and Safety Executive Prosecutions

Recent Health and Safety Executive news and prosecutions:

£1m fine for Crossrail contractors following three incidents

Three separate incidents occurred during construction on the Crossrail tunnel, the last of which resulted in a worker’s death. As a result, Bam Ferrovial Kier (BFK), an unincorporated joint venture made up of three companies, was fined £1,065,000 and ordered to pay costs of £42,337.28. In its investigation, the HSE found that BFK had neither organised nor enforced a safe system of work. In addition, investigators discovered that equipment and vehicles were not being properly maintained, which also contributed to the incidents.

Companies fined more than £1m after workers exposed to asbestos

While refurbishing a school, workers were exposed to asbestos. The three companies working on the project were fined more than £1m. In its investigation, the HSE found that while an asbestos survey had been completed, there were multiple warnings and disclaimers that were not appropriately checked.

Image courtesy of Flickr_Sheila Sund

How millions have themselves at risk by failing to plan for their assets

More than anyone else, parents and grandparents should avoid the pitfalls of not preparing a will.

It’s a shocking statistic, but around 27 million adults in the UK have failed to prepare a will.

This can have serious consequences, especially if you’re a parent. Dying without a will means the law will simply run its course, often against your wishes. It’s a huge risk that can leave you powerless over your assets.

More than anyone else, parents and grandparents should avoid the pitfalls of not preparing a will.

It’s a shocking statistic, but around 27 million adults in the UK have failed to prepare a will.

This can have serious consequences, especially if you’re a parent. Dying without a will means the law will simply run its course, often against your wishes. It’s a huge risk that can leave you powerless over your assets.

Why A Professional Will Is Essential

The technical term for passing away with no valid will is ‘dying intestate’. If this happens your money, possessions and property will be divided up according to the law, and your loved ones could stand to inherit nothing.

For instance, if you are unmarried and die ‘intestate’, your partner would by law receive nothing. If you have children this can complicate things further, as the law often places them above your partner in the pecking order – and if you have children from a previous marriage they could be completely passed by too.

Put simply, dying without a will means you have no control over who stands to inherit your hard-earned assets. Even worse, if you pass away with no close relatives, this could pass automatically to the government, who claim millions of pounds from this every year.

By writing a Will and making sure you review it when your circumstances change, you are safeguarding your loved ones from unnecessary future emotional stress and financial worries in the event of your premature death. Click here to find out more about writing a Will.


PK Partnership Budget Savings and Pensions

Refresh your New Year Resolutions

It’s that time of year again, so what financial resolutions should you be making?

New Year resolutions have a tendency not to last very long. By the time the festive season finally ends and the decorations are put away, the eat less/drink less/exercise more resolutions have often also disappeared. For 2018, why not adopt a different type of resolution – a financial one? Here are four possibilities:

1. I will review my will

Whatever your December excesses, contemplating your own mortality is not an exercise you should rush into. However, ensuring your will is up to date is one way to make sure your assets are dealt with in the way that you want when you are not around. Although it is sometimes possible to restructure a will after someone has died, all parties to any amendment must agree, which can create its own problems. If – as many people do – you have no will and assume the laws of intestacy will resolve everything, you could be seriously mistaken. Intestacy does not  lways mean everything passes to a surviving spouse or civil partner – and it is especially hazardous if you are in an informal relationship.

2. I will complete a Lasting Power of Attorney

In many respects, no will is complete without a matching pair of Lasting Powers of Attorney (LPAs) or the equivalents in Scotland or Northern Ireland. An LPA allows you to appoint one or more people to make decisions for you if your health – mental and/or physical – prevents you from doing so. There are two LPA variants: one covering your property and financial affairs, and the other deals with your health and welfare. Without LPAs, your family could find themselves having to deal with the Public Guardian, which can be an expensive and impersonal legal process.

3. We will review our ownership of investments

The past few years have seen a steady flow of changes to the personal tax treatment of investment income, such as the introduction of the personal savings allowance and the reform of dividend taxation. It is now more important than ever for couples to review who owns which investment.

For example, next tax year’s cut in the dividend allowance to £2,000 could mean it makes tax sense, where unused allowance is available, to transfer some fund holdings from a basic rate taxpaying spouse to their higher rate tax-paying partner.

4. I will obtain an estimate of my current pension benefits

The recent multitude of changes to pension rules impacted on both the state and private pension provision. They could well have altered your retirement income, how you can draw benefits and even when you will receive some of your pension. If you have been automatically enrolled in your employer’s pension, a review is particularly relevant because of the significant contribution increases due over the next 18 months.

In personal financial planning, as in many other aspects of life, putting things off is seldom wise: delays can all too easily add to cost. The four resolutions listed here are one-offs – they do not require you to keep doing something regularly, which is how the typical 1 January pledge fails. Why not call us now and start 2018 the right way?

The value of tax reliefs depends on your individual circumstances.

Tax laws can change. The Financial Conduct Authority does not regulate tax, will writing, Lasting Powers of Attorney, trust advice and some forms of estate planning.



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