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Redego clients unaffected by the death of the Self-Cert mortgage

Posted 21-10-2009 by Redego

Tags: Contractor, financial, mortgage

The FSA announced this week that they are likely to pull the plug on Self-Cert Mortgages

In a controversial announcement the financial services regulator revealed that they are looking to introduce compulsory verification of borrowers income which will effectively kill the self-cert mortgage market. This comes as no suprise following recent developments in the industry which has seen Nationwide, one of the last remaining lenders, pulling all of their self cert products from the market.

Contractors and the Self Employed seem to have been caught in the cross fire as the FSA has been keen to appear to be clamping down on the unruly banking sector. Just when the country needs Entrepenuers the most, the net result of the move could be to force them back in to permanent employment in order to obtain a mortgage.

As far as Redego clients are concerned, the death of the self-cert mortgage may come as alarming news but it is certainly not the end of your home ownership dreams. ContractorFinancials are specialist mortgage advisers who work on behalf of our clients and have negotiated contract based underwriting with lenders that can help ensure you can borrow the same, if not a higher amount, as when you were a permi. Their contract based income verification allows you to borrow without the high interest rates and fees that were often associated with Self Cert mortgages and could offer a life line to those Contractors who are coming to the end of a discounted or fixed term or are looking to purchase a house in the future.

Going directly to a lender and asking for a mortgage based on your contract rate would almost certainly end in failure as they will probably look at your short term contract and assume that you cannot afford the repayments. However, ContractorFinancials are able to secure your mortgage based on a multiple of your annualised contract rate alone which means you don’t have to worry.

With schemes available for Freelancers who are even within the first week of starting your first contract, there is a solution to fit almost all needs and the advisers charge Redego clients none of the usual brokers fees.

Contact Simon Foster on 0845 062 8888 , email simon@contractorfinancials.com or get in touch with Redego.

The FSA announced this week that they are likely to pull the plug on Self-Cert Mortgages

Tougher scrutiny for home loans

Posted 20-10-2009 by Redego

Tags: recession, Umbrella Company

Borrowers face a mortgage affordability test from lenders amid plans by the Financial Services Authority (FSA) to step up the regulation of home loans.

Self-certification mortgages will be banned under the proposals with lenders required to verify borrowers’ incomes.

FSA chief executive Hector Sants said that some people who were able to get home loans in the boom would no longer be able to under the proposed rules.

The industry will have until 30 January 2010 to comment on the plans.

The FSA, in its mortgage market review, has outlined a series of proposals for increasing regulation in the mortgage market.

Borrowers face a mortgage affordability test from lenders amid plans by the Financial Services Authority (FSA) to step up the regulation of home loans.

Recession in UK ’still not over’

Posted 13-10-2009 by Redego

Tags: recession

A leading business group has cast doubt on whether the UK economy emerged from recession in the third quarter of 2009.

The British Chambers of Commerce (BCC) said business confidence was improving but the economy was still “frail”.

Official GDP figures are due next week. If they show no growth, it will be the first time the UK has endured six successive quarters without growth.

Separately, UK retail sales rose 2.8% from September 2008, the British Retail Consortium (BRC) said.

But the BRC warned that “we mustn’t get carried away” – as the figures are compared with a “weak performance” last September when turmoil in the financial markets hit consumer confidence.

‘On the brink’

The BCC surveyed more than 5,500 companies and found that confidence strengthened across the board.

Confidence among manufacturers was at its highest level since the beginning of 2008.

But despite “good progress” being made in both the manufacturing and service sectors, domestic orders and sales were still down on the previous quarter, the BCC said.

“The Q3 results support our assessment that the UK economy is on the brink of leaving recession,” David Kern, chief economist at the BCC said.

“However, the improvement is not sufficiently strong to allow us to conclude without doubt that GDP has already returned to positive growth.”

Last week, the National Institute of Economic and Social Research also estimated that the economy did not grow in the June to September quarter.

A leading business group has cast doubt on whether the UK economy emerged from recession in the third quarter of 2009.

Tories plan rise in pension age

Posted 06-10-2009 by Redego

Tags: retirement

Conservative plans to raise the state retirement age, up to ten years earlier than planned, will be outlined by shadow chancellor George Osborne later.

If the Tories win power they will set up a review to look at raising the pension age for men to 66 from 2016 at the earliest, to help tackle UK debts.

They have not discounted a rise in pension age for women towards 66 but have ruled out doing so by 2016.

Ministers plan to raise the pension age to 66 between 2024 and 2026.

‘Complexities’

Bringing the move forward would mean many more people than previously expected, particularly those aged between 49 and 59, having to work a year longer before qualifying for a state pension.

Conservative Party sources say the change would save £13bn a year from the budget deficit, about 0.75% of GDP each year.

Conservative plans to raise the state retirement age, up to ten years earlier than planned, will be outlined by shadow chancellor George Osborne later.

Tax-free savings allowance rises

Posted 06-10-2009 by Redego

Tags: retirement

A change enabling millions of savers aged over 50 to increase the amount deposited in a tax-free Individual Savings Account (Isa) has come in.

The amount people can save in an Isa has now risen from £7,200 to £10,200, of which half can be saved in cash and half in stocks and shares.

The new limit, which was announced in this year’s Budget, is for anyone born on or before 5 April 1960.

For everyone else, the limit will rise from 6 April 2010.

“I am determined to help savers, because while low interest rates have helped millions of homeowners, I also know that they have hit those who rely on their savings to get by,” said Chancellor Alistair Darling.

Change

Isas were introduced 10 years ago by then-chancellor Gordon Brown in an attempt to encourage UK residents to get into the savings habit.

A change enabling millions of savers aged over 50 to increase the amount deposited in a tax-free Individual Savings Account (Isa) has come in.

Two-year high for services growth

Posted 05-10-2009 by Redego

Tags: recession

he UK service sector expanded at its fastest rate for two years in September, according to the latest survey of purchasing managers.

The figure for the sector rose to 55.3 in September from 54.1 in August, according to the Chartered Institute of Purchasing and Supply (CIPS).

It was the fifth month above the 50 level, which indicates expansion.

Restaurants, hotels and companies offering services to other businesses were particularly strong.

Activity fell in transport, storage, communication and personal services.

‘Losing impetus’

Last week, CIPS announced that its corresponding figure for the manufacturing sector had slipped to 49.5 in September from 49.7 in August.

Taken together, the whole economy figure rose to 54.3 in September from 54.2 in August.

“While that is still in positive territory, the stagnation on the month, and the further cuts in employment, could be the first signs that the UK economy may already be losing some of the initial impetus that is likely to have dragged it out of recession in the third quarter,” said Colin Ellis at Daiwa Securities.

“That is consistent with our view that the recovery is likely to prove slow and protracted, and we expect subdued growth during 2010.”

‘Upward momentum’

There was upbeat news for a key part of the service sector in the latest quarterly financial services survey from the employers’ organisation, the CBI.

It found that financial firms may be recovering, with business volumes growing for the first time in two years.

Analysts said that the positive news from the service sector would be taken as an indication that the Bank of England’s policy of quantitative easing was working.

“It’s a steady upward momentum, and consistent with the economy pulling out of recession in the second half of the year, probably in Q3,” said Alan Clarke, UK economist at BNP Paribas.

“I’ve estimated that the PMI surveys are roughly five points stronger than they would have been without QE. This survey reinforces that view.”

The Bank’s policymakers meet on Wednesday for their monthly two-day meeting, but no changes are expected to interest rates or the quanti

The UK service sector expanded at its fastest rate for two years in September, according to the latest survey of purchasing managers.

Why freelancers are still Government targets

Posted 02-10-2009 by Redego

Tags: Contractor, Freelancer, Freelancing, IR35

In last week’s Money Section of The Sunday Times the focus was very much on what all the main parties may take away in terms of ‘tax breaks’ if they form the next government. One of the eight key areas that the various tax luminaries interviewed thought would be on the political agenda was Setting up Companies because of the more favourable tax rates where profits are less than £300,000.

It is true that with previous recessions people have been forced out of careers and into freelancing, nevertheless it is difficult to agree with The Sunday Times view that to take advantage of lower tax rates we will “see a rush of high income earners to incorporate”, because as was pointed out in the article, one will need to be able to demonstrate that one is self employed.

However, it was interesting that one expert specifically referred to the Government potentially looking to tighten up the distinction between self employment and employment. The recent “False Self Employment in the Construction Industry” consultation paper which would spell the end of the labour-only subbie suggests that this is more than speculation. Can we therefore expect HMRC to try to reverse its poor yield from IR35 enquiries and start a new campaign against the freelancer? Or should we anticipate that Labour, or indeed whoever wins next year’s election, has something even more draconian in mind?

Also of concern was a reference to the Arctic Systems case being revived by Labour. Does this mean we will see Income Shifting make a return in the Chancellor’s autumn Pre-Budget Statement? The Government would love to stop small businesses distributing profits between husband & wife in favour of the spouse with the lower tax band, but can it come up with any legislation that is more workable than the 2008 draft which was dropped allegedly because of the recession?

What is evident from this line of thinking is that the second decade since the introduction of IR35 is likely to start off just as taxing for the freelancer. And as ever, it is important that contractors continue to take sound advice and be vigilant about how they protect their livelihood from an unhealthy interest by the taxman.

In last week’s Money Section of The Sunday Times the focus was very much on what all the main parties may take away in terms of ‘tax breaks’ if they form the next government. One of the eight key areas that the various tax luminaries interviewed thought would be on the political agenda was Setting up Companies because of the more favourable tax rates where profits are less than £300,000.

Britain to make ’stronger’ exit from recession

Posted 01-10-2009 by Redego

Tags: recession

Britain’s emergence from recession in 2010 will be stronger than previously thought, according to the International Monetary Fund (IMF).

The IMF now expects the economy will expand by 0.9 per cent, ahead of the 0.2 per cent growth in GDP it estimated three months ago.

The IMF lifted forecasts across the board due to the impact of action by several governments as well as signs of firmer house prices, recovering consumer confidence and a pick-up in world trade.

The UK will lag behind the 1.3 per cent growth expected for the US although it will perform more strongly than the Eurozone, where the IMF predicts a 0.3 per cent rise in output. Ben Bernanke, chairman of the US Federal Reserve, recently said it is highly likely the world’s biggest economy has already emerged from recession, though he cautioned that recovery will be slow. Yesterday, new figures revealed that US GDP fell by 0.7 per cent in the second quarter, lower than the 1 per cent previously reported and was also better than the 1.2 per cent contraction which Wall Street had expected.

Britain’s emergence from recession in 2010 will be stronger than previously thought, according to the International Monetary Fund (IMF).

Treasury focus on ‘false self-employed’ in construction

Posted 30-09-2009 by Redego

Tags: construction, Contractor, PAYE, Umbrella Company

Treasury focus on ‘false self-employed’ in construction

HM Revenue & Customs (HMRC) have been exasperated for many years by the way the construction industry behave as if the rules on paying workers gross don’t apply to them.

They published a new consultation (July 2009) that has the look and feel of the finished article, so its more than likely to become legislation before the end of 2010.

Reading between the lines, HMRC see this as the final attempt to align the construction industry with other sectors and get 300,000 ‘false’ self-employed subbies on to PAYE. Genuine self-employed workers will be able to continue trading by passing a simple 3 criteria test. To qualify, sub-contractors would have to either:

provide their own plant & equipment (normal tools of the trade do not count!)

provide all the materials for a contract OR

provide other workers

So, how will the construction industry respond? To be fair to the industry, they have always had to balance between being ‘compliant’ with competing with other contractors who pay workers on a ’self-employed’ basis. To make matters worse, the test for employment status has always been complex, based on case law and constantly changing, so they could genuinely say they didn’t know whether a worker was self-employed or not.

Now there is a workable status test, and the Treasury’s intention has been clearly stated, most contractors will probably decide that the risk of non-compliance is too great and make arrangements to pay their workers through PAYE. They can do this through their own payroll or outsource to a compliant PAYE umbrella company, which will give workers the opportunity to claim legitimate expenses

HM Revenue & Customs (HMRC) have been exasperated for many years by the way the construction industry behave as if the rules on paying workers gross don’t apply to them.

Minimum wage up to £5.80 an hour

Posted 29-09-2009 by Redego

Tags: minimum wage, PAYE

The UK minimum wage will rise by 7p to £5.80 an hour from October, the government has announced.

The rate for 18 to 21-year-olds will increase by 6p to £4.83 and for 16 and 17-year-olds will go up by 4p to £3.57.

The change will come a year after the statutory hourly rate was increased by 21p an hour.

Business leaders had recently called for the minimum wage to be left at the current levels in 2009 amid the economic downturn.

The government said that nearly one million people would benefit from October’s increase.

It also announced that, from October 2010, the adult statutory minimum rate would apply to 21-year-olds. At present their minimum wage is set – together with workers aged 18, 19 and 20 – at a lower rate.

Review

“The Low Pay Commission (LPC) has carefully examined the latest economic data before making their recommendations on the minimum wage rate, balancing the needs of workers and businesses in the current economic climate,” said Business Secretary Lord Mandelson.

“The government agrees with this assessment and has accepted the recommendations for these new rates to take effect in October.”

The chairman of the LPC, George Bain, said: “These are very challenging times for the UK and unprecedented economic circumstances for the minimum wage.

“We believe that the Low Pay Commission’s recommendations are appropriate for this economic climate. They reflect the need to protect low-paid workers’ jobs as well as their earnings.”

David Frost, director general of the BCC, said: “We pressed for a freeze to the minimum wage because of the severity of the downturn and the daily loss of jobs.

“We are pleased that the increase is only a modest one, and it shows that the Low Pay Commission and the government have largely understood the seriousness of the situation. However, a freeze would have been more help to business.”

‘Sensible’ approach

Dave Prentis, general secretary of the union Unison, said he was pleased the government had ruled out business leaders’ suggestions that the minimum wage be frozen.

“We think it should be increased by more than 7p an hour because it is hardly going to help low-paid workers pay the bills,” he added.

John Cridland, deputy director general of the CBI, said: “This moderate increase recognises that many businesses are struggling, and helps protect jobs at a time of rising unemployment.

“The inflation-busting rise some unions had called for would have hit firms hard and put many lower paid workers on the dole.

“Over the past decade, the minimum wage has risen faster than average earnings and inflation, and a sensible, cautious approach now will help ensure this landmark piece of legislation continues to improve the lives of low paid workers for many years to come.”

The news of the increase in the minimum wage comes shortly after the government said that, from October, employers would be banned from using tips and service charges to “top up” staff pay to meet the minimum wage.

However, tips not left in cash can still be used to pay restaurant’s other expenses and may not mean any more money for staff.

The government also said that it would draw up plans based on the LPC recommendation that employers who show “wilful disregard for minimum wage laws” should be named and shamed.

The UK minimum wage will rise by 7p to £5.80 an hour from 1st October, the government has announced.

The rate for 18 to 21-year-olds will increase by 6p to £4.83 and for 16 and 17-year-olds will go up by 4p to £3.57.