Shababs Column: Earning over £50,000 and claiming child benefit?

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Shababs Column: Earning over £50,000 and claiming child benefit?

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The government introduced new rules last January where either parent earning over £50,000 in a household will lose one percent of their child benefit for every £100 of income over £50,000. For those people earning £60,000, this will equate to your household being entitled to no child benefit at all.

In households, where both parents are earning over £50,000, then the parent with the highest income is liable to paying back any child benefit they have received that they are now no longer entitled to. This means that they will now have to complete a self assessment form.

At the time the new rules were introduced it was your choice as a parent to either completely lose child benefit, or accept the payment, and then at the end of the tax year complete a self assessment tax form and repay the money that you are not entitled to.

There is a way of reducing your income so that effectively you do not end up paying the tax. You could do this by making a payment to a pension scheme. The benefit of doing this is that you pension will grow, whilst at the same time making sure you do not pay as much in tax.

An example is as follows:

If you have two children then you will get £33.70 weekly, which equates to £1752.40 per annum. This means that if you earn £60, 000 per annum, then you will lose £1752.40. If you could afford to make a pension payment of £10,000 gross, then this will cost you £10,000 less tax relief of £4000 and £1752.40 = £4247.60 This means that your £4247.60 is now equal to £10,000. If you do not make any pension provision, and keep your finances as they are, then your tax rate will effectively be 57.53% for all your income between £50,000 to £60,000.

Not only are you affected by an extra layer of tax, but worse by not filling in your self assessment form by January 31, 2014, you will be liable to a £100 fine. This will be followed by £10 a day up to a maximum of £900 over a period of three months, and then after six months a further 5% of the tax due.

Whether you feel the tax is fair or not the fact is you need to take action. I would suggest talking to a financial adviser/accountant and looking at your own personal situation. Let us know your thoughts on either twitter or email me directly.

Leeds Bradford Airport announce seven route launches in 2014

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Leeds Bradford Airport announce seven route launches in 2014
Tony Hallwood of Leeds Bradford International Airport. rossparry.co.uk
Leeds Bradford Airport’s Aviation Development & Marketing Director Tony Hallwood celebrates seven route launches for Leeds Bradford in 2014

Leeds Bradford Airport has announced seven route launches for 2014, offering an increased destination and airline choice for Yorkshire travellers.

Scandinavian Airlines (SAS) will launch their first destination between Leeds Bradford and Copenhagen. Jet2.com and Eastern Airways will both introduce new destinations to compliment their existing schedules.

Commencing January 20, Eastern Airways introduces services between Leeds Bradford and Southampton, expanding on their current operations to Aberdeen. The airline will operate to Southampton three times daily Monday to Friday, as well as a Sunday afternoon service; providing flexibility for both business and leisure travellers.

Leeds Bradford will welcome new airline SAS from March 31 with a twice weekly service to Copenhagen, offering a direct link to Denmark’s capital and onward connectivity across Scandinavia and Eastern Europe.

Jet2.com, Leeds Bradford’s largest based airline will introduce five new destinations this summer.

From April 3, Yorkshire travellers can fly directly into Hungarian capital, Budapest with a twice-weekly service. As of April 4, passengers can fly to Fuerteventura, Canary Islands with Jet2.com, their operations to Kos in Greece will commence May 6.

On May 14, Leeds Bradford will welcome a new destination, Verona in Italy, operated by Jet2.com. The airline will also introduce services to Reus on June 17.

Tony Hallwood, Leeds Bradford Airport’s Aviation Development & Marketing Director, said: “I am delighted to introduce new airline SAS this year alongside the growth of our existing airlines Jet2.com and Eastern Airways.

“We are anticipating another exciting year for Leeds Bradford Airport, building on our established route network to offer more choice for our business and leisure passengers than ever before. We are particularly excited to offer two brand new destinations; Copenhagen operated by SAS and Verona with Jet2.com, we hope Yorkshire travellers will take advantage of this increased destination choice this summer by flying locally from LBA.”

Shababs Column: Does Networking Work?

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Shababs Column: Does Networking Work?

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My view is that business is all about meeting new people, and building good business relationships that will hopefully lead to further business as well as referrals to other businesses/individuals to do business with. I have been a keen networker for several years now and actually enjoy going to different events, and meeting different people.

Regardless of what business area you work in, networking will more than likely be the most effective, and the least expensive marketing strategy within your business. It takes very little time, and if the right events are chosen, I can guarantee you will make some good contacts.

I must be honest and say at first I did not enjoy networking. I found it tedious, and the same people attending the same events being very self motivated and just interested in whether they can get a sale or not. However, after the first few events I realised that I was more than likely going to the wrong events and expecting too much from the events.

Now, I go networking with no intention or ambitious objectives of how much business I may make from the event. I will go to relevant events, and give my business card to only those individuals whom I think I will contact in the next few days and hopefully arrange a meeting. At present, I try and attend two to three events on a monthly basis. This could be a curry networking event, a formal dinner or even a large local social gathering, whereby individuals from different sectors are attending.

So what will make your networking experiences more effective? First of all you need to find networking events which include delegates that share your interests, and or are potential people to do business with. You then need to make sure that you dress appropriately and professionally, and then remember you are not at the event to sell your services, but to promote yourself. The worst networker is someone who tries too hard to sell their services or someone who is very egoistic and feels they are the best at what they do and actively promotes this image.

So coming back to the question of this article, does networking work? The answer is yes networking does work, so long as you actually remain committed to being a good networker. You may hit it off with a client or possible introducer at your first event, or it may happen at the second or third time you attend a particular event. For me, whilst networking does take up some time, I do not mind because I have made some good acquaintances that have become friends such as the editor of this paper, some very good clients that required my expertise in managing their financial affairs, and some very good introducer’s whom I send work and they reciprocate by sending me work.

My advice is give networking a try, you never know how effective it may be till you try it.

Shababs Column: Interest Only Loans?

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Shababs Column: Interest Only Loans?

shababfinacecolumn

The press is always full of articles relating to interest only loans and how they are bad etc. However, they are only bad for those people that have not managed them properly.

First of all, I do not mind recommending interest only mortgages to people, who understand they have to wipe the debt and they have x amount of years to do it i.e. £100,000 mortgage with 25 years to repay means you pay around £4000 a year off to get to zero in 25 years; therefore if you have an interest only loan, you put away £4000 a year, then at the end of the 25 years you will hopefully have the capital to be mortgage free.

If you want an interest rate loan, please only do this if you have an investment strategy. The financial services industry carries the stigma of poor advice being given to clients who were pushed to take out interest only mortgages by unscrupulous mortgage advisers, when property was growing at circa 10% per annum. However on the flip side, these people now have a house, and its probably grown in value for some of them so they have benefited from a rise in equity. These people should now think about reverting to a repayment mortgage, unless they want to pay their mortgage off via an investment strategy such as:

  • ISA’s’;
  • Collective Investments such as unit trusts etc.
  • Other property to sell to repay loan;
  • Any other type of investment.

I would always tell clients on an interest only loan, make sure its an offset mortgage. This is when you can still pay your savings into the plan; therefore if you have a £100,000 mortgage, and £20,000 in savings, then you only pay interest on £80,000.

If you were one of those unlucky people to have been mis-sold by your adviser, then look at making a formal complaint with the Financial Conduct Authority, and if you have not managed the mortgage properly, then take action before its too late.

The reality is on the day your mortgage is due to be redeemed, if you do not have the capital to pay the mortgage off, you will be forced to sell your house, and will more than likely incur interest, and the wrath of the lender.

Whatever your situation always go and seek advice from a professional adviser to be able to see what are your options, such as:

  • Extending the term;
  • Selling other investments, if it is appropriate to do so;
  • Using the lump sum from your pension;
  • Altering the mortgage to a repayment mortgage, if you are not on track.

Please be aware this column is not providing you with financial advice; therefore in the event that you feel you require advice, either contact me through the paper or another adviser.

Westfield: More than 50% of floor space filled with construction to start in 2014

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Westfield: More than 50% of floor space filled with construction to start in 2014

Charles Steet up to Market Street
Westfield has announced it will start major construction work on the £260m Bradford Broadway development in January 2014.

The company have also stated that the development already has retailer commitments for more than 50% of its floor space, with the new announcement of Topshop, Topman and Sainsbury’s taking up occupancy in the centre.

The retailers will join Debenhams, Marks & Spencer, Next, River Island, H Samuel, Ernest Jones, W H Smith, Vodaphone, Phones 4 U and more to still be announced.

The new centre is expected to open its doors in time for the Christmas period in 2015, with an estimated 1,500 construction jobs and 2,500 new retail jobs created in Bradford.

Prime Minister David Cameron said: “I am delighted to hear of the implementation of the £260 million Broadway Project. Projects like these stand as a great example to others to show that the regional growth fund has been used to attract the necessary private sector investment to deliver significant and positive change in our cities. Westfield has delivered on its commitment to help regenerate Bradford and to build the Broadway scheme, contributing to the Government’s growth agenda in the UK.

“We welcome the commitment Westfield has shown in the UK with its previous regeneration work having invested £3.5 billion and created 25,000 new UK jobs already, and we look forward to the realisation of its plans for a further £2.5 billion to be invested in the UK which we understand will create a further 14,000 new UK jobs.”

Westfield also announced that it has completed the sale of its interest to pan European retail real estate investment manager Meyer Bergman.

Meyer Bergman acquired the scheme as the initial investment for its second value-add fund, Meyer Bergman European Retail Partners II.

The fund completed the purchase of the Bradford site with co-investment from two major Canadian pension funds, Healthcare of Ontario Pension Plan and AIMCo,

Together they appointed Westfield to develop, design, construct and lease the project. Once the development is completed, Westfield will also act as the property manager for the centre.

Michael Gutman, Westfield Managing Director UK/Europe and New Markets said: “Westfield is delighted to announce the start of construction having remained steadfastly committed to delivering the Bradford development following cessation of work in 2008 as a result of the global financial crisis.

“Westfield has worked intensively with Bradford Council, the Government and Meyer Bergman to attract new retailers, create new jobs and ensure that this development is built for the city and the people of Bradford.”

Councillor David Green, Leader of Bradford Council said: “This is an important day and marks a very significant step forward for Bradford city centre. Since 2010 we have supported investment in the city centre, including establishing the growth zone, constructing City Park and working with Westfield to ensure this shopping centre becomes a reality.

“Major retailers have now confirmed their strong confidence in Bradford city centre and its potential to become the shopping destination for local people and the wider area. The Broadway shopping centre will create many new jobs for Bradford and support the whole city centre and existing businesses by increasing footfall in the city. We are working with Westfield to also maximise benefit to local businesses during the construction phase. We know there is still a lot to do to take forward the rest of the city centre, as we recognise in the City Plan. We will continue to work with local businesses and investors to strengthen Bradford’s economy.”

Shababs Column: What’s auto enrolment

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Shababs Column: What’s auto enrolment

shababfinacecolumnWhat’s auto enrolment
Roughly about a year ago the government started auto enrolment. This is an initiative to get the British public to save more for retirement. Initially auto enrolment started with the largest employers in the UK and by 2018 all employees who earn over £5, 668 will be opted into a pension scheme. If you choose to remain opted in you will have to pay 5% gross salary as well as your employer paying 3% of your salary into the scheme.
Your hard earned monies shall be invested into funds within the Nest scheme. In theory this money should grow and supplement state retirement income.
So is it worth being in the Nest scheme? Well at the moment only 10% of people whose employers have had their staging date have said no thank you I am not interest, and the remainder feel it’s a good idea.
So whose probably chosen to opt out? Well at a guess it’s probably individuals whose whole pay packet gets spent on accommodation, food and bills, as well as those near retirement who do not see the point in joining a scheme in their later years and probably graduates with a large debt who do not want more money going out of their wage packets.
Let’s face it we all need to prepare for retirement because our country is no longer financially strong, and with a growing population of elderly individuals, can the country really afford to give us a good state pension? I would say most people under 40 would agree with me that 25 plus years is a long time of uncertainty to retirement. How many of us can really put their hand on their heart and say yes I will get a good state pension and that we can rely on kids to support us or even that our kids will be able to afford or willing to support us. I know I am not relying on the state pension, and neither would I want to have to be a burden to my kids in the future; therefore i guess the only solution is save more now, or work much longer!
As someone who advises clients, I think Nest is a good idea, but in this day and age, when everything is getting more and more expensive, NEST will be the last thing people want to contribute into. The scheme is for everyone, but sadly those that should be saving the most i.e. people on incomes below £15, 000 will probably not remain in the scheme for long because, put simply, I am not sure how they can afford to do so.
For more information on auto enrolment please visit www.pensionadvisoryservice.org.uk
Please note the above is an expression of my opinion, and not advice.

Shabab Column: Young Professionals Should I Rent or Buy

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Shabab Column: Young Professionals Should I Rent or Buy

shababfinacecolumnYoung Professionals should I rent or Buy 
A common issue for individuals when they leave home, University, or get married is should we buy or rent. I got my first house at 22, after taking the plunge and completing my degree, and the first issue I had was several months later I took a role in London. This meant I had to rent out the property as otherwise it would have remained empty and cost me several hundred pounds a month as well as headache knowing the property is empty and anyone could break in and worse become a squatter.
I get many people coming to me looking to buy properties, however the one issue young professionals do not consider is: are you going to be living in the same area, or are you looking to move in the not too distant future and more to the point will your future partner like the house or not. In my case, I was forced to renovate, then extend and then re-renovate the house!!!
In this day and age jobs are hard to come by, this is especially the case if you are made redundant, and you
may have to move further afield to be able to get your ideal role, so what happens to the house? Well in essence you are stuck, you either commute daily, or you rent and at the same time rent out your own property.
The one thing I have not mentioned is if you have a mortgage, then you need to get lenders consent to let out, otherwise if anything happens to your house, it may not be insured. This is because most buy to let insurances have a clause highlighting your lender is aware the property is
let. Most lenders will only give consent for one year, and if you still require the property to be rented they may force you onto their standard variable rate, or even make you pay more.
In my view, if you are a young professional, then you should wait to buy when you are settled and you are sure you are not looking to move out of the area for the next five years. The way the market is at the minute, there are more and more properties on sale, which means it is likely it will take time to sell yours.
So renting what’s the benefits to you? Well for starters there is no need to raise a hefty deposit. It will give you time to find the ideal home, and to settle down in your career.
You also do not have any headache for maintenance of the property, and if you do need to move out, well its only a few weeks notice that you need to give.

Shabab’s Finance Column: Interest Rates – Whats your thoughts?

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Shabab’s Finance Column: Interest Rates – Whats your thoughts?

shababfinacecolumnInterest Rates – Whats your thoughts?
The most common question I get asked by customers is what do I think will happen to interest rates. This is especially the case when I am looking at mortgage planning needs of clients. Perhaps this is because no one really knows what will happen in the next few years to the base rate!!!
Most of my clients over the age of 40 plus who have experienced more than one recession in their life time are surprised why rates are so low. They cannot understand why rates have not rocketed to double digits as was the case in the previous recession. Well it’s simple, if rates were say 13 per cent plus who can actually afford a mortgage, and more to the point who would want one.
The highest rates have been was around 2007 when rates at the peak got to 5.75 per cent. I very much doubt if rates will get so high again for a long time, and certainly not 13 per cent plus as most of us would not be able to afford a mortgage and that means bankruptcy!
So will the rate remain the same forever? The answer in my opinion is no. This is because rates are so low that the only way they can go in all likelihood is up. However by how much, well that is the million dollar question, and I think homeowners are getting more and more nervous than ever at the minute.
People do not want to take a gamble therefore most of my clients are taking five year fixed deals because they feel a two year deal does not protect them for a long period of time and they feel paying 3 per cent plus for certainty is better than 2 per cent plus for a 2 year fix and worrying about the future.
Whatever happens to rates one thing is for sure most of us hate the uncertainty. We would rather know where we stand, but the economy is so unpredictable in the UK that it really is very hard to make a judgement call.
I myself would not want a fixed rate at the minute of less than 5 years. This is because the banks have increased their standard variable rates to around 4.5 per cent to 5 per cent and higher in some cases; therefore if you take a two yr fix at 2.5 per cent, then your mortgage payments will increase unless your re-mortgage in two years and get a similar rate.
Whatever your views, please let us know as I would love to hear from you.

Please note: I am not providing advice at all within this article. The information provided is based on my opinion, as well as the attitude of my current clients.

Shabab’s Column: Do you use an adviser?

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Shabab’s Column: Do you use an adviser?

shababfinacecolumnDo you use an adviser?
Let’s face it there are many of us out there, who do not trust others to look after their financial affairs. This could be because we have had bad experiences in the past. It could also be because you may not know who to go to.
I have recently come across people that have been dubious about using a Financial adviser to look after their affairs, and when the conversation came to how well they have done the answer was, either very well or not so well at all!
Those that have done very well cannot explain why they have done well. As a novice person at the age of 18 I remember losing several hundred pounds on shares a long time ago, why because I thought I knew what I was doing, clearly this was not the case and looking back it was more of a gamble than an informed decision. So why would you not want to use someone? The only reason I can think of is fees because let’s face it most of us would want the certainty of knowing our affairs are in order.
This is especially the case if we knew we did not have a big cost to pay for the advice. However there are certain ways of ensuring fees are minimised for certain services i.e. legal protection on your home insurance will give access to a wealth of legal professionals for free initial advice. This is without having to pay a fee and does not count as a claim on most policies either.
It is also a good idea to shop around. I know I am stating the obvious, but you would be surprised how many people immediately decide to use someone for their professional services without asking about fees, their expertise and if the person is the right person to provide them with advice.
So why would you want to use someone to look after your affairs? Well the answer is because you may have little knowledge of how the markets work and what is appropriate, or not appropriate for you. The second reason is we cannot be jack-of-all-trades. I am an ex lawyer, but after leaving the industry some eight years ago, and with so many legal changes since my time, I always take legal advice.
This is because I would rather someone who is a specialist telling me something is correct, and works in his or her field on a daily basis.
It would be interesting to get some feedback on the opinion of our readers. Have you had any bad experience you want to share, whilst at the same time have you had good experiences also that you may want to share.

Shabab Column: Insurance Continued…

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Shabab Column: Insurance Continued…

shababfinacecolumnInsurance Continued…
It seems we have stirred a large debate regarding insurance. You may recall edition 45 where I talked about if Insurance is haraam and different to death committees.
We touched upon the issue of what happens when a Muslim dies with debt, and has no insurance to repay their debts.
First of all, for those of you that thought I was advocating insurance as Halal, this was not the case. I said my view is insurance per say is haraam (forbidden), but I took the debate further. Insurance is regarded as haraam because of where the insurance company invests the funds.
First of all thanks for all the comments. Many of you agreed with me in that Islamic scholars have failed to look at what else is out there that can protect a Muslim from dying in debt.
Some of you highlighted grave concerns that you leave your affairs in the hands of God, but you feel that God has given us a brain, and we should use our brains to sort out affairs before death. One of you went as far as to say is it not our duty if our religion says you should not die owing people money to use takaful insurance (a form of cooperative insurance, run according to Islamic Law).
Unfortunately, there is no takaful insurance in the UK at the moment. I believe this maybe launched by a bank in a year or two but I am sceptical whether they will be able to launch such a complicated product so soon.
One of you felt this obsession with committees is damaging the community. Why? Well because having say £3000 worth of benefits when paying £20.00 a year may put off some people actually thinking how much money your family needs on death. I agree with this because £3000 in this day and age does not go a long way. The reader highlighted what’s the guarantee the money is still there as lets face it money does go missing in some voluntary organisations.
The crucial message that was received from the readership was scholars should stop putting their hands in the sand and not listening to real concerns of Muslims.
We need clarity on what a Muslim should do if he has debt to sort his affairs on death. We need to know if these committees are Halal, and we need to know if insurance is permissible under the rules of necessity when one has debt but does not wish to die with debt.
Next month. Islamic wills, but what about my Inheritance Tax Bill?


Disclaimer: Please note views expressed in this column do not represent views of any financial institution or financial advisor.

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