Some people are being hit with an unexpected tax bill after unlocking their money from a pension pot, according to Citizens Advice. Others are facing reductions in welfare payments owing to the income received by releasing the funds.
‘Pension freedoms’ began in April 2015. Since then, anyone aged 55 and over has been free to withdraw as much as they like from their pension pots, subject to income tax.
A report by Citizens Advice looked into the cases of 500 people who have accessed their pension pots. Of those, 9 per cent had unexpected tax issues and 6 per cent found that their benefits were affected. Nearly twice as many people used the money to pay for daily living costs rather than pay off debts.
A chronic shortage of bungalows has left more than half a million over-55s trapped in large houses, according to a report published in the Daily Mail.
While one in six homes built in the 1980s were bungalows, the figure is now less than one in 60. With older homeowners unable to move, this has contributed to a shortage of houses for younger families looking for more space, according to campaign group the HomeOwners Alliance.
There are 11.4 million people aged 55 and over in Britain, many of whom are keen to downsize and sell off the family home after their children have flown the nest.
Meanwhile, new analysis by Capital Economics, commissioned by housing charity Shelter, suggests that the Government will be 266,000 homes shy of its one million homes by the 2020 target.
The projections warn of an 8 per cent fall in house-building over the next year, as post-Referendum uncertainty puts the breaks on the big house builders.
In other housing news, gross mortgage lending held steady in July and was an estimated £21.4 billion, according to the Council of Mortgage Lenders. This closely matches June’s gross lending total of £21.5 billion and is 1 per cent lower than July last year (£21.6 billion).
Commenting on market conditions, CML chief economist Bob Pannell said: ‘Indicators are likely to provide truer readings of market conditions the further we move away from the distorting effects of April’s stamp duty change. The subdued nature of property transactions and mortgage lending in July are consistent with a less positive backdrop for house purchase activity post-referendum.’
The UK is a nation of shoppers unfazed by the EU referendum result when spending on plastic, says a trade body representing the major banks.
Credit card use for purchases in shops has been highlighted by the British Bankers’ Association as the key to rising borrowing on cards.
There were 168 million purchases on credit cards in July – the first full month since the Brexit vote. This was higher than in June and the average of the previous six months.
In other credit card news, Halifax has launched two new 0 per cent balance transfer credit cards with a 25 month fee-free and 41 month card with a fee of 3.5 per cent.
Matt Sanders, head of money at Gocompare.com, said: ‘Just last month Halifax released a 24 month fee-free balance transfer card, joining then market leader AA at the top of the best buy tables. This latest offering goes one step further, ousting Tesco to top the best buy tables in fee-free 0 per cent balance transfer cards.
‘In recent years credit card providers have competed for the longest interest free balance transfer period, with Halifax being one of the main contenders. But fee-free cards with shorter periods appear to be the latest tactic to entice new customers.’
The Treasury is proposing new rules to punish offshore tax evaders who fail to come clean about their finances before September 2018, with fines of up to 200 per cent of the amount owed.
The Guardian reports that the prime minister, Theresa May, promised to be tough on tax evasion and avoidance last month during her campaign to become leader of the Conservatives. The Treasury has acted swiftly to signal a tougher stance with greater powers for tax inspectors.
Thisismoney reports that British workers are seeing inflation catch up with their pay rises as the cost of living rises faster and salary growth stalls.
On average, pay increased by 2 per cent in the three months to July, only marginally ahead of the 1.9 per cent annual rise in the retail price index in July, a measure of inflation which also includes housing costs.
This rose from 1.6 per cent in June, while consumer price inflation, which excludes housing costs, went up to 0.6 per cent in July from 0.5 per cent the previous month.
Bank holiday weekend
Ahead of the August bank holiday weekend, breakdown cover provider Green Flag predicts that there will be an expected 39,548 breakdowns on Britain’s roads over the break. The biggest cause of breakdowns will be flat and faulty batteries (8,771), followed by 5,283 caused by punctures, 3,397 engine faults and 1,295 caused by clutch errors.