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Money digest: today’s need-to-know financial news

5 April 2016

8:44 AM

5 April 2016

8:44 AM

Two days after a huge leak of more than 11 million documents from Mossack Fonseca, a Panamanian law firm, the newspapers are still dominated by the so-called ‘Panama Papers’ and the revelations about international tax avoidance. Now the Prime Minister has become embroiled in the scandal after details emerged of his late father’s offshore investments. According to The Times, Ian Cameron’s multimillion-pound investment fund paid no British tax for 30 years.

The Telegraph reports that that the ‘good times are over’ for motorists after the cost of petrol rose for the first time in eight months. Campaigners are now accusing retailers of ‘unscrupulously fleecing’ motorists and adding ‘needless salt in their wounds’ for instigating a sudden price hike for unleaded as well as diesel, despite wholesale costs remaining stable.

A report by the RAC found that a 3.4p per litre rise led to average pump prices of 105p, while around £1.84 was added to the cost of filling up an average 55-litre car with unleaded.

Meanwhile, more than 11 million workers will be worse off under changes to the state pension. The Pensions Policy Institute has calculated that younger workers will be the biggest casualties of the reforms. It says they will be thousands of pounds worse off over the course of their retirement than under the current system. A single tier or flat-rate state scheme will be introduced tomorrow as part of a major shake-up designed to make the system fairer for women, carers and the self-employed.

The flagship policy was hailed by George Osborne as the biggest overhaul of the state pension since it was launched in 1909. But the think-tank claims that three-quarters of people currently in their twenties will lose out by around £19,000 in pension payments.

Inheritance tax (IHT) receipts taken by HM Revenue and Customs jumped to a record high of £4.6 billion in 2015-16, up by a fifth from £3.8 billion a year earlier says Wilsons, a private client law firm. That figure represents an increase of 70 per cent from 2010-11. A major driver of the increase in IHT revenue is more estates being caught in the ‘IHT net’ as property prices rise.

Wilsons says that, despite the record IHT take, the government has recently announced plans to introduce new dramatically increased probate fees that would mean estates worth over £2 million paying £20,000 for undergoing a probate instead of the current £215. Tim Fullerlove, partner and trusts and tax specialist at Wilsonsm said: ‘The planned new fees do not reflect any real difference in the costs to the probate service of handling probate on a large or small estate. In effect, they amount to an additional inheritance tax on larger estates.’

Property sellers in some of London’s most prestigious postcodes are having to cut thousands of pounds off the asking price in order to sell, according to Knight Frank, a global estate agent. Values in ‘prime’ central London nudged ahead by just 0.8 per cent in the year to March – the lowest figure since October 2009, when the world was gripped by the financial crisis. Hardest hit have been home values in Knightsbridge, Knight Frank says. In the last year, prices plummeted 6.8 per cent.


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