News

Good morning and welcome to 20 July Smart Financial Planning breakfast briefing review of the weekend's papers. Again this week two articles particularly caught my attention, firstly a very pleasing article regarding my two articles last week and the Inland Revenue's attempts to take more money out of your pocket. Not unsurprisingly, the clever people at some of the large accountancy practices have already started to come up with solutions to this problem. Two large city fund management groups have decided that rather than have the staff pay the 50% tax rate that will come into effect on 6 April 2010, they will actually pay them three years worth of salaries and bonuses prior to that date. It appears then that there will be some convoluted scheme put in place to loan the money back to the employer and that the money will be dripped over to them in a three-year period. It sounds that are very short capital and interest mortgage arrangement. What this does show is the level of unhappiness with the proposed new level of taxation and the extent to which people will go to avoid paying this level of tax.

The next article that caught my eye is our old friend of the Premium Bond. Much loved by grandparents as a gift for their grandchildren, I don't honestly think that anyone ever invested in expecting to win big but the chances of winning big have dropped significantly over the last few years. In 1992, for every £500 invested there was a one in twenty three chance of winning that equated to one win of the lowest amount roughly every two years. In 2009, this has dropped to one chance in seventy three or one in seven years chance of winning. This does not mean that  Premium Bonds are no use however I would suggest that people think more carefully about using. A specific target market for Premium Bonds is a higher rate taxpayer who wishes to place money from a relatively short time, take the chance that they might win, probably collect one or two prizes at the lower end remembering that there is no tax to be paid. So Premium Bonds are not finished but for basic rate and non-taxpayers, at the moment, it really doesn't look like a very good idea.

That's all from me, see you next week.

Goodbye

Steven Martin