The UK experienced rising levels of fraud throughout the coronavirus pandemic and it is estimated that more than £750m was stolen from consumers in the first six months of 2021. According to UK Finance, less than half of the money lost in these cases was refunded by banks.

Scams are becoming ever more sophisticated, and in previous years the largest losses have involved debit and credit cards. However, for the first time, authorised push payment (APP) fraud overtook this, which is where victims are duped into thinking they are paying a genuine organisation.

APP can involve large transactions, involving property purchases, but an increasingly common scam is where fraudsters pose as delivery companies, sending fake delivery text messages asking for payment to have a parcel redelivered.

What can you do to avoid a scam

• Treat all unexpected communications with caution.
• If a firm or your bank calls you unexpectedly and you are a customer of that company, use the contact details provided on official communications or their website to call them back.
• Look out for poor spelling and grammar.
• Don’t click links in suspicious texts or emails.
• Use unique passwords for all of your online log ins and never share your password.
• Be wary of urgent deadlines and never rush into making a payment – legitimate organisations will never pressure you to action anything immediately.
• Beware of adverts on social media.
• Keep your virus protection software up to date.
• If you’re unsure about a financial services company, check the FCA register to ensure they are genuine.

 
 Who to report a scam to?

• Contact your bank straight away if you think you are a victim of a scam and report it to the Police or Action Fraud on 0300 123 2040.
• You can also seek advice from Citizens Advice Consumer Helpline on 0808 223 1133.

Many savers will be aware of how low interest rates are at present and have been for several years now, with the most competitive rates on easy access savings accounts currently around 0.50% pa gross variable.

On the other hand, this has meant that rates on mortgages have been historically low. Many will remember rates typically being in double figures in the 1970s and 1980s, which for some would now seem hugely expensive.

We have now seen the launch of the cheapest mortgage in UK history by Platform, part of Co-op Bank, who are offering 0.79% fixed for 2 years. The average mortgage rate is also projected to fall to 1.6% in 2022. Between 2017 and 2019 the average was 2.1%, which reflects the downward trend.

With the combination of cheap mortgages and a housing shortage, it is thought that this could fuel an increase in house prices, despite the end of the stamp duty holiday at the end of this month.

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Following the announcement by Boris Johnson on 7^th September, we have outlined below points for consideration:

Social Care Plan

A new social care tax is set to be introduced across the UK to fund reforms to the care sector and NHS off the back of the Coronavirus. The intention is to implement a 1.25 percentage point increase in National Insurance from April 2022, for both employers and employees. From 2023, this is set to become a separate tax on earned income, in the same way as National Insurance, to be paid by all working adults, including those that are above State Pension age.

There is also set to be an increase of 1.25 percentage points in the rate of tax for dividends received from shares.

Overall, the aim is to raise funding in the range of £12bn pa, to be focussed primarily on health and social care in England, although Scotland, Wales and Northern Ireland are to receive £2.2bn of this amount in respect of their services.

Of the remaining funds, around £6bn has been earmarked for the NHS; just under £2bn is to go towards social care; and a portion will be spent on tax (paid by the NHS and the Department of Health and Social Care as employers). The remainder has not yet been allocated, pending a further announcement in the coming weeks.

Paying for Care

In respect of the funding for health and social care, this will see a number of reforms to the way in which people pay for adult social care in England. These include:

• The introduction of a cap on personal care costs, at £86,000 from October 2023.
• Increasing the upper capital limit from £23,350 to £100,000 from October 2023 – this is the threshold above which you are not eligible for local authority support towards care costs.
• Increasing the lower capital limit from £14,250 to £20,000 – this is the threshold below which you do not have to make a contribution towards your care costs from capital.
• Between these amounts, the local authority may fund some of your care, however you may have to contribute up to 20% of your ‘chargeable assets’ (assets that can be assessed for capital) per year, in addition to your income.
• Increasing the amount of income that you can retain after contributing towards your care costs.

State Pension Increases

In conjunction, the Government has announced that it will suspend the ‘Triple Lock’ on State Pensions for one year.

Ordinarily, under this Lock the State Pension increases by the higher of the Consumer Price Index (CPI), average wage increase, and 2.5%, which means that it should increase by a minimum of 2.5% pa. However, following concerns that a post-pandemic rise in average earnings would see Pensions increase by 8% pa, the Lock has been temporarily suspended.

At present, the intention is to reinstate this after one year, after which the artificial boost to wages following the pandemic should have fallen out of the equation.

As always, if you have questions in respect of the issues raised in this article, please don’t hesitate to get in touch.

We are very pleased to announce that both James and Adam have passed their latest exams and have now completed the Advanced Diploma in Financial Planning meaning they are now Chartered Financial Planners!

The Advanced Diploma exceeds the minimum qualification level required by authorised advisers, building on core knowledge to develop specialist capabilities in order to provide a more sophisticated and comprehensive approach to financial planning.

Chartered status represents a very high standard of technical competence and professionalism, and we are very proud of James and Adam’s achievements which will help Eldon to continue to deliver a first class service.

Huge congratulations to our very own Paraplanner James Hunt who has stepped up to be a Financial Planner.

James started his career in Financial Services in 2015 when he left University with a degree in International Finance and Banking.

After a stint as a paraplanner at another firm, James joined the Eldon Team in May 2017 as a paraplanner.

James has developed his knowledge and experience over the years, often behind the scenes but more frequently supporting Financial Planners in client meetings. James has shown dedication to Eldon and his progression by being involved in Eldon’s Investment Committee. This has enriched his knowledge of investments and will allow James to provide an excellent service for the benefit of our clients.

Eldon could not be more proud of James and his achievements since joining the company. We have no doubt he will make a great Financial Planner and believe our clients will feel the same way.

As retirees will be aware, their State Pension increases each year. The increase is determined by the ‘Triple Lock’ which means it will increase by the higher of:

• Consumer Price Index (CPI) – measured in September
• Average Wage Increase – measured in July
• 2.5%

This means as a minimum, the State Pension should increase by 2.5% each year.

The Triple Lock has made headlines recently, as the average wage increase figure is projected by the Office for Budget Responsibility (OBR) to be around 8%. This would be a significant increase for those in receipt of their State Pension. It would also benefit future recipients of the State Pension.

This rate of increase will be a significant cost and concerns have been raised over whether the government will honour their 2019 manifesto pledge or temporarily break the Triple Lock. The concerns are that such an increase will add a further £3 billion per annum to government spending, which comes on the back of the significant support package throughout the pandemic.

Rest assured, we will be monitoring this carefully over the coming months.

Last week the Financial Conduct Authority (FCA), our regulator, announced that it has fined LBGI, the insurance division of Lloyds Banking Group, £90.7 million for failure to ensure that their home insurance renewal communications were clear, fair and not misleading.

Between 2009 and 2017, LBGI (made up of Lloyds Bank General Insurance Limited, St Andrew’s Insurance Plc, Lloyds Bank Insurance Services Limited, and Halifax General Insurance Services Limited) issued nearly 9 million renewal letters to home insurance customers, including rhetoric to the effect of offering ‘competitive prices’. However, appropriate steps were not taken to ensure such claims were accurate. In reality, renewal prices offered to existing customers were likely to have been both higher than their previous premiums, and higher than prices offered to new customers. Those customers who renewed repeatedly, without ‘shopping around’, were most likely to have been misled, possibly multiple times, by such a practice.

Separately, LBGI informed roughly half a million of its customers that they would receive a discount based on loyalty and/or their status as a ‘valued customer’. Similarly, no such discount was applied.

LBGI has made voluntary payments of around £13.5 million to affected customers and has been contacting them proactively, meaning that customers do not have to take any steps themselves to receive payment. The FCA is continuing to work with LBGI in this respect.

From 1st January 2022, under new FCA rules, insurers will be required to offer renewing customers a premium that is no higher than what they would pay as a new customer. However, the action taken against LBGI highlights the importance of comparing the whole of the market when taking out, and renewing, insurance policies, not limited solely to home insurance.

Cryptocurrency is a digital or virtual currency. Some of you may recognise the product ‘BitCoin’ as this is one of the most popular cryptocurrencies on the market. There are several other cryptocurrencies available.

Investment in cryptocurrencies is extremely high risk. Our regulators, the Financial Conduct Authority (FCA), have recently ruled the product as unsuitable for retail investors and do not allow financial advisers such as ourselves to advise on cryptocurrencies.

The reasons for this are due to:

– Extreme volatility in prices
– The nature of the product having no inherent value i.e. it cannot be used for anything and therefore future cashflows or sales cannot be predicted
– The potential of using the currency as a cover for illicit activity including market abuse or financial crime.
– The lack of understanding of the products from retail clients and ability to assess the value and risks involved

By making the product ‘unregulated’, it means that should you invest in cryptocurrencies, there is no protection provided by the FCA and you are unlikely to have access to the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS).

The FCA has warned investors to be wary of adverts promising high returns on crypto asset investments and notes that you should be prepared to lose all of your money.
Before making any decisions on investing, you should always check that the product is regulated by the FCA.

HMRC has provided a welcome update in relation to life policies and the requirement to register on the Trust Registration Service (TRS).

Placing life policies into trust can be beneficial in estate and inheritance planning and can also ensure faster distribution of funds to beneficiaries following death.

Trusts of life policies are, subject to certain conditions, excluded from having to register with the TRS. These conditions are that the policy must only pay out:

• On the death, terminal or critical illness or permanent disablement of the person assured, or
• To meet the cost of healthcare services provided to the person assured

The exclusions can apply to trusts holding multiple policies so long as each policy within the trust meets the conditions above. It is also irrelevant whether a policy is a whole of life policy or a term policy for the purposes of the exclusion.

Similarly, where a trust is holding the benefits received following the death of the person assured and less than two years have passed since the date of death, that trust will also be excluded.

Some life policies can acquire a surrender value and initial HMRC guidance did not make clear how these policies would be treated, particularly as such policies are similar to an investment product, but HMRC has now confirmed that the above exclusions also apply in this instance. This means the trustees of such policies can breathe a sigh of relief.

We expect HMRC to provide more clarification to aspects of the guidance and we will continue to monitor any future updates.

The Office for Tax Simplification (OTS) has published a document setting out the scope for a review into amending the end of the tax year date, which is 5th April at present.

The 31st March is being considered for the proposed new date, which is both the end of a calendar quarter and the nearest month end date to the current tax year, as well as being the UK financial year end date to which the UK government makes up its own accounts.

The report is to focus on the benefits, costs and wider implications of such a change.

In addition to 31st March, they will also look at how it would work running the tax year to 31st December, thereby aligning this with the calendar year, similar to the US, France and Germany.

Whilst a date for completing the review has not been published, we will certainly be keeping a keen eye on any updates for this.

It should be noted however, any review would only provide suggestions and does not necessarily mean the changes will be implemented, as we saw with the recent reports and suggestions for inheritance tax and capital gains tax.