01494434544 info@pwwpl.com

What does the Bank of Mum and Dad need to consider?

24th September 2020

 What does the Bank of Mum and Dad need to consider?


 

In the recent Summer Statement from the Chancellor, the headline act was the ‘eat out to help out’ voucher scheme for August. However, a further and potentially more rewarding offer was the stamp duty changes for property purchase, which appears to be generating significant movement in the housing market. But with house prices still beyond the reach of many, the Bank of Mum and Dad (or BOMAD) is often being asked to step in to help their adult children with their financial commitments, including a deposit for a house.  

  


It is understandable that parents are keen to help their offspring to get a foot on the property ladder. In the current climate, especially with many high Loan to Value (LTV) mortgages being withdrawn, parental input can certainly help. However, before you hand over cash to your children (or even grandchildren), there are some important issues that need to be considered. We have noted just a few of them.


  1. Banks are clamping down on this – We are aware that a few lenders are starting to ask borrowers where their deposit has come from. The general feeling is that those who have saved the deposit themselves will be better borrowers going forward. Therefore, it is important not to simply assume that a parental deposit is the easy solution.

     

  2. Is it a Gift or a Loan - If you are able and willing to provide a house deposit to your offspring, will this be as a gift or a loan? Both have different taxation issues for you as the donor, and both also come with further issues. For example, if a gift is made to your child and this money is used as a deposit to purchase a house with a partner, what is the position, should the couple split up and the house be sold? You may want a say in how the rights to the property will be held should the relationship break down at some point.

     

  3. Can you afford it? Whilst the natural instinct is to help your children start out in life, it is important you talk to us about the implications of this, when it comes to your own financial plans. If you do decide to act as BOMAD, it’s important to make sure that this has been built into your own Planning process. If you’re using your pension and savings to help out, you do need to consider what impact that will have on your own retirement.

     

     

    There may be other concerns with providing capital to your children including Inheritance Tax issues. As with all major financial transactions, we would also suggest that your first port of call is to talk to us. We recognise that the ‘Bank of Mum and Dad’ is becoming a very familiar financial lending institution. However, as with all lending, it can have issues and advice is crucial to ensure everybody benefits from the support you wish to offer.

            


ABI Guide - Health and safety for small/medium sized businesses

Good health and safety standards help you to run your business successfully.

Aviva Motor Fleet Advice

Employers are legally responsible for employees who drive whilst at work.

Budget 2013

The 2013 Annual Budget Statement painted a somewhat bleak economic picture, alleviated by a few crowd-pleasing bright spots.

Budget Summary

Despite some speculation that Budget 2012 may have brought some unwelcome surprises in the

Charity Fundraising by PWW

This year for the first time, staff at P W White and Partners attended the Amersham carnival on 13thJuly in the glorious weather with temperatures of over 30 degrees C.

Dilnot Report on Long Term Care

Since 2004, the number of Britons aged over 85 has risen by two-thirds, and demand for care has outstripped supply. The UK's elderly population will continue to expand.

Disclosure of all the facts

Are you aware of yourresponsibility to disclose what is considered ‘material’ information inrelation to your Insurances?

Driving Licences and Driving Other Cars Third Party

If you are aged under 70 the chances are that your licence has not expired as driving licences generally expire at 70 unless extended.

Flood Advice from insurers

Insurers risk surveyors have been busy visiting the impacted areas across the UK and one of them yesterday in a flood

Floooding and Commercial Premises

Recent flooding events experienced across the UK, particularly over the last decade, have shown the devastating impact that flooding can have on property, businesses and individuals.

GAP Cover for new & used Cars

P W White & Partners Ltd now have the facility to provide GAP cover when you purchase a new or used (up to 7 year old) car from a dealer.

Have you provided your ELTO details?

ELTO is the Employers Liability Tracing Office which was set up so that all businesses (subject to a few exclusions)

Important information that could affect the validity of your cover

Any intended alteration or extension to your property – personal or commercial, i.e. creating an additional bedroom, bathroom or shower room

Intestacy changes from 1 October 2014

The Inheritance and Trustees' Powers Act 2014 announced some key changes to the intestacy rules.

Motor Insurance Database

If you run a motor fleet have your details been entered on the MID?

NISA New ISA

From July 1 2014 all ISAs will become New ISAs (NISAs).

Paper driving licence changes

From January 2015, the DVLA will no longer issue the paper counterpart to the photocard driving licence.

Pension Lifetime Allowance Limit (LTA)

In 2006 the Government introduced a cap on the value of Pension Pots.

Tax Disc Changes

The new rules, which came into effect on 1stOctober 2014, mean it will no longer be possible to transfer tax when a vehicle is sold.

What is the Retail Distribution Review (RDR)

The implementation of the Retail Distribution Review (RDR) is one of the biggest overhauls of financial regulation since the Financial Services Act of 1986.

Whiplash Reforms

The first stage of the government’s whiplash reform programme was introduced on 1st October 2014

Why to use an Independent Financial Adviser

You may have noticed the recent media coverage following the findings by Which?

Your choices at retirement

When you reach retirement age, with interest rates at historic lows, your most important choice will probably be between

 FSB member logo   Link to Cobra Network website        Click here for the BIBA website

P W White & Partners Limited is authorised and regulated by the Financial Conduct Authority. Financial Services Register No: 126673 http://www.fca.org.uk/register.

P W White & Partners Limited Registered Address: Suite 1, Sycamore House, 1 Woodside Road, Amersham, HP6 6AA. Registered in England & Wales, No. 933961.

Neither P W White & Partners Limited nor its representatives can be held responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

The Financial Conduct Authority does not regulate National Savings or some forms of mortgage, tax planning, taxation and trust advice, offshore investments or school fees planning.

The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at www.financial-ombudsman.org.uk.

The information contained within this site is subject to the UK regulatory regime and is therefore targeted primarily at consumers based in the UK.

Please read our Privacy Statement before completing any enquiry form or before sending an email to us.