Busy Bee and Industry News
I’ve been a bit of a busy bee for the last few days, so haven’t been able to update my beloved Blog. I think it’s like that for most of us - feast or famine - either thumb twiddling or fire fighting, but as one great sage said “The bad news is - time flies, the good news is - you’re the pilot”
Ah well - I’ve got a couple of things I’d like to briefly touch upon today that might effect the secured loans market.
Lets start with what some involved in the secured loans market might see as good news. It concerns Inheritance Tax. A number of lawyers and Independent Financial Advisers (IFAs) are predicting a surge in secured lending as a way of decreasing Inheritance Tax (IHT). This follows news, several weeks ago, when amendments to the Finance Act closed several tax loopholes.
Basically the surge is predicted because debts secured on property are devoid of IHT. So the Lawyers and IFAs are starting to advise people to take out a secured loan, give the money to their children and then for their children to set up a trust fund that pays the interest to their parents. To illustrate an example, if a family have assets of £2million but then take out a secured loan for £1million the estate is only valued at a million for tax purposes. This could result in a tax saving of £400,000 as long as the transaction took place seven years before death.
The other thing I’d like to discuss is not quite so good news for the industry. I’ve had time to read the recent report by the OFT into Payment Protection Insurance (PPI). It seems like the OFT want to move quickly on this one and whichever way you look at it the commission payments for the PPI element of secured loans will reduce within the next six months. I was originally going to take the OFT document and extract the points relevant to the secured loans industry and post them on here. However having now read the document it seemed more appropriate to create a page on here that includes more or less the full document. I’ll leave it on here until the dust settles and if you’re involved in the secured loans industry I suggest to take time out to read it.
