Financial News & Views

The 4 Years of section 24

Section 24 was introduced in April 2017 affecting tax relief for landlords. What this means is that landlords will no longer be able to claim mortgage interest, or any other property finance costs against net rental profit. Instead, rental profit will be taxed on the full rental income, not just the profit by 2021, affecting the pockets of the Uk’s landlords.

Year 1

From April 2017 – For the first 75% of your mortgage interest cost, the higher rate tax relief can still be claimed. The remaining 25% will have a basic rate of tax relief.

Year 2

From April 2018 – The first 50% of your mortgage interest cost, the higher rate tax relief can be claimed. The remaining 50% will have a basic rate of tax relief.

Year 3

From April 2019 – A higher rate tax relief can be applied to 25% of your mortgage interest costs. The remaining 75% will be at the basic rate.

Year 4

By April 2021 – Landlords will only be able to claim tax relief at the basic rate level of 20%.

These tax changes could tip some landlords into a higher rate tax bracket, and there could also be some landlords made to pay tax on properties that do not make a profit. For example a landlord making £10,000 of rental income but paying £10,000 in mortgage interest payments could find themselves paying £2,000 – £2,500 in tax (2020/21), as the tax no longer applies to the profit but the entire rental income.

5 Ways to Make Your House Insurance Cheaper

1- Rebuild value

If something happens to your home, are you sufficiently covered? Always make sure you are fully covered should you need to rebuild your home from scratch.
At the opposite end of the spectrum, make sure that you haven’t set your rebuild value too high, or you could be paying too much for insurance.

2 – Pay in full

If you are able to pay the whole years insurance in one payment, do so, as paying monthly will usually cost you more.

3 – Cashback

Check coupon and cashback sites, as some insurers offer deals on their policies.

4 – Auto renew

Never ever auto renew your insurance if you want to save money. The price is usually always cheaper for new customers while existing customers get a price hike! Shop around or speak to your existing insurer and ask them to lower the price.

5 – Reducing premiums

Fitting a burglar alarm, approved locks, and installing security lighting are just some of the things that can help reduce your insurance costs.

Is your money protected?

British savers are now protected up to £85,000 should their bank collapse, but not many people know it is per licensed institution not by account.

The Financial Services Compensation Scheme which protects savers in the UK, says should the unfortunate happen, compensation should be in around 7 days, £85,000 for a single account and up to £170,000 for joint accounts.

Should you have more than £85,000 in savings then it is important to spread your money across different financial institutions. As different banking names are licensed under one parent company, it is important to know in which banks your savings are completely safe.

The Financial Services Compensation Scheme has an online tool to check how safe is your bank….and your money.

Help to buy ISA

With UK properties out of reach to the average first time buyer, the UK government has stepped in with a rudimentary measure.

The ‘help to buy ISA’ offers first time home buyers the chance to save into a cash ISA. The government will then add 25% of the amount you have saved, when you buy a property.

You can start saving with £1200 in your first month, then £200 a month thereafter and the government will add a maximum of £3000 onto £12,000 of your savings.

The Halifax is currently offering 4% on help to buy ISA’s.

From PCP to logbook loans, car finance made clear

From PCP to logbook loans, there are a myriad of loans on offer attached to cars, although it can be daunting, we thought we should take a look at each one.

Personal loan

A personal loan is a much favoured way of buying a car, you own the car outright with no mileage restrictions. Unfortunately borrowing from a bank, building society or other lender on a personal loan also makes it an unsecured loan, meaning if you default on the loan, unlike dealer finance where only your car can be repossessed, any of your assets can be seized.

PCP (personal contract purchase)

With PCP, there is a deposit to pay, plus monthly repayments usually from 12 to 36 months. At the end of the repayment term, there are 3 choices-
1-Return the car to the dealer
2-Keep the car and pay the final balloon payment, this is a payment which will have been agreed upon and written into contract, when taking out the PCP. The GFV (guaranteed future value)
3-Use the value (GFV) in the car as a deposit for a new car.

PCH (personal contract hire)

PCH is similar to PCP with one notable difference, at the end of the contact period, you simply hand the keys back to the dealer, there is no option to purchase the vehicle as in effect you are simply renting it for the contract period.

HP (hire purchase)

A popular choice is hire purchase, under this agreement there is a deposit to pay and fixed monthly payments. The car officially belongs to the hire purchase company until the last payment has been made, when this has been done the car then belongs to you.

Logbook loans

This is completely different to the other choices as logbook loans can only be considered when you already own a vehicle with no outstanding finance. This is usually taken out by people whose credit record wont allow them a traditional loan, or need cash fast. As the risk to the lender is high, so are the interest rate repayments. Online lender elogbook loan allows you to view repayments via an online calculator.

With each of these loan choices we ask you to get professional advice or at least do your homework. Apart from your home, a car is likely to be your next biggest purchase.

– Shop around and negotiate where you can.
– Don’t just look at the rate and monthly repayments, look at the total amount repayable.
– Look at any additional fees, such as admin fees or early repayment fees.

Making forced bankruptcy harder

A much needed law change happened on the Ist October 2015, that went pretty much unnoticed.

Did you know that before that date, if you owed a creditor as little as £750, they could apply to the courts to make you bankrupt?

Implications of bankruptcy

– Any assets such as your car or home could be sold to pay back the debt.
– It will remain on your credit file for 6 years, meaning you will find it extremely difficult to obtain credit, loans or a mortgage.
– You will not be able to act as a company director.

Bankruptcy was meant to be a last resort, for people or companies that were insolvent to the point of being unable to pay their debts, debts that were usually a large sum of money owed.

Unfortunately some took advantage of this situation, and the mere threat of applying for bankruptcy from a creditor to a debtor over as little as £750 was enough to cause serious implications and further financial hardship.

As of 1st October 2015, the law has now changed and the amount of debt you would need to owe before anyone can apply for bankruptcy against you, is now a more realistic £5000.

A welcome change.

For further information on bankruptcy in the UK

Know your credit score

Based on your financial history, a credit score is what companies will look at in order to help them in their decision on lending you money, wether you are ‘credit worthy’.

It is not just the big ticket items such as mortgages and loans, but also credit cards, new phone contracts and even insurance, all require companies to look into your credit score. It is therefore important for you to maintain a good credit rating through life.

Negative Points

1- County court judgements, bankruptcies.
2- Being late paying bills, credit cards.
3- Applying for too many loans, mortgages, credit at the same time.
4- Moving home a lot.

These above, are just some of the big red flags to credit scoring companies.

How to Improve Your Score

1- Pay your bills on time, set up direct debits.
2- Get on the electoral register, and keep your contact details consistent.
3- Until you have improved your financial situation and credit score, stop applying for further credit or loans.

There are 3 main credit agencies that supply your credit reference. By law you have the right to see your credit report. There may be a small fee to view your report.


Sometimes agencies make mistakes, if you see a mistake on your report, contact the agency, by law they have 28 days to either correct the mistake or mark it as disputed which means lenders are not to rely on it when credit referencing.

It is important that you view your credit report and make sure it is accurate and up to date.

Retired? Don’t waste your money!

Retired? As important as savings and pensions are, how you spend your money during this time is just as important.

Living in too large a property

If you are still living in a large family home, then consider trading down to a smaller property, do you really need those extra bedrooms and bathrooms? By trading down you will save on gas, heating and electricity bills as well as general maintenance costs. Hopefully, you will also release cash equity on selling your property that can go towards your pension pot.

Eating out everyday

The average cost of eating out in the UK has now surpassed £20 per head. Eating out just once a day everyday will therefore cost you over £7300 per year! Add a partner or eat out more often and the costs really add up. If you enjoy eating out, take advantage of coupons or lunchtime specials to reduce your costs.


To retire stress free, we recommend if you can, removing debt from your life. Credit cards are only adding interest on everything you buy, therefor making purchases more expensive. If you can’t pay your credit card balance on purchases before the interest kicks in, then consider removing credit cards and store cards away from your life.

Buying a new car

Money wise, one of the worst things you could do to your finances on retirement, is to purchase a new car. Depreciation makes them one of the worst assets to own. Consider buying nearly new, when most of the depreciation has set in, this will save you thousands of pounds.

Buying a holiday home

Taking on a large commitment, like a holiday home with its added bills and maintenance is going to take out a large portion of your money. Add to this, currency volatility and the added stress of another home can make this a financial and emotional burden. Consider renting, the cost savings over a holiday term are more beneficial, plus, let some one else worry about the property, after all this is supposed to be your retirement!

A cold shoulder for self employed mortgages?

At Charther CT we come across many self employed contractors and freelancers who feel cold shouldered by traditional mortgage lenders. Over 50% of people who are self employed feel that they may never be able to even get a mortgage!

Before the recent credit crunch, potential borrowers had the option of a self-cert mortgage, where there was little requirement for proof of earnings. This was a boon for the self employed whose income tended to fluctuate.

Unfortunately for the self employed, self-cert mortgages are no longer on offer, making it increasingly difficult for the self employed to get a mortgage. It is not a lost cause, and with due diligence, people who are self employed can greatly help themselves to obtaining a mortgage.

Steps to a self employed mortgage

  • Keep an eye on your credit rating and try to avoid any arrears, non-payments, ccj’s etc.
  • Minimise any superfluous personal costs, mortgage lenders will look at all your expenses.
  • Make sure you have a qualified accountant to sign off your accounts.
  • Try to have at least 3 years of receipts and accounts for you and your business.
  • Keep/get receipts from HMRC in regard to your accounts/earnings.

Good luck!

For further information on mortgages Council of Mortgage Lenders