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Fairyland

DM: Up to TEN MILLION savers to be hit by a £1.8bn stealth tax raid buried in Budget papers

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Daily Mail : Up to TEN MILLION savers to be hit by a £1.8bn stealth tax raid buried in Budget papers
 

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Millions of savers will be hit by a £1.8billion stealth tax raid buried in the small print of the Budget papers.

Up to ten million people will be squeezed under new rules that target those who put cash in long-term savings plans offered by insurers.

The rule change hits savers who hold endowment, with-profit and whole-of-life policies. 

These are popular plans used by families to save over ten or 20 years for their old age or for paying off home loans.

Obscure rules in the Budget reveal that these investments will all be hit with a new tax bill.

 

Are these the same endowments that are related to IO mortgages.

Edited by Fairyland

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1 hour ago, Fairyland said:

Daily Mail : Up to TEN MILLION savers to be hit by a £1.8bn stealth tax raid buried in Budget papers
 

Are these the same endowments that are related to IO mortgages.

They are.

And they were widely sold to house buyers in the 1980s and early 1990s. Moreover, they tended to be rolled over when people moved home.

Edited by stormymonday_2011

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Now we know who is paying for the £300k stamp duty? You have got the love the last bit where the Treasury think the tax won't be passed on!

 

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So, for example, if the cost of living rises by 3 per cent a year – the current rate of inflation – and returns come in at or below this figure, no tax is due. 

If returns are higher, savers have tax deducted on the portion of the gain that was above the level of inflation.

This is a tax levied on the company, and so incurs corporation tax. However, insurers have always paid for it by deducting it from savers' funds. 

But under changes to be introduced in January, the taxman will charge the corporation tax of 19 per cent on every penny that savers earn, regardless of the level of inflation. Again this will be passed on to savers.

....

The Treasury insisted last night the policy will have no impact on individuals or households and will only affect insurance companies.

 

 
 

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The whole life insurance based saving scams should have been shut down in the mid 80s.

These sharks fuxed up pensions, endowments. They were, rightly, pretty much destroyed by the removal of the ability to rip off new investors.

With profit makes timeshare look good.

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Yeah these things (with profits) were as transparent as 6” thick concrete block. I was reading some guidance on the calculation of net asset value for a particular fund. Couldn’t follow it to the answer. Probably needed a financial advisor. They seemed to calculate it from a mathematical model of other policies. 

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4 hours ago, Ash4781 said:

Yeah these things (with profits) were as transparent as 6” thick concrete block. I was reading some guidance on the calculation of net asset value for a particular fund. Couldn’t follow it to the answer. Probably needed a financial advisor. They seemed to calculate it from a mathematical model of other policies. 

I can confirm. I am an actuary and have done some work on with profits. They can be very complicated and not very transparent due to the high level of discretion involved.

I disagree however with people that say with profits products are a scam. Although they are not for everyone, the products are managed in the policyholders best interests and there is a huge focus by the main providers on treating customers fairly.

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  • 406 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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