A house can be more than a home. It can also be a serious tax problem.
Average house prices in England are nearly a quarter of a million pounds and the threshold for Inheritance Tax (IT) on death is £325,000 (after which tax applies at a flat 40 per cent rate). London average prices are way higher – so the rule of thumb is that anyone who has had a property in London for a few years (ie with minimal mortgage liability) will be liable for IT.
The data for England shows:
The regional data for England indicates that:
The Money&Co. Inheritance Tax Service takes advantage of Business Relief. At present, estates with a value of more than £325,000 pay 40% tax. This is reduced to 36% if 10% of the estate is given to charity.
If the family home is passed on before death, then the threshold increases to £450,000. If the threshold is not met following the death of a partner or spouse, then the balance is added to the threshold for the surviving partner or spouse. Thus, the maximum threshold is £900,000 (family home passed on and partner or spouse dies with no assets).
8% Yield Loans – Latest
A Process Guide To Innovative Finance ISA Investment
Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). That figure is the result of almost £15 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.