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Venture capital trusts are a way for investors to put money into smaller companies and they are usually available from specialist investment firms designed for investors who are okay with taking a higher risk. Generally these firms will also offer advice on which companies to invest in and will be able to tell you about which firms are most promising in an area you are particularly interested in.
The reason these type of investments are so popular is because they are tax efficient. There are certain conditions that companies must meet if they are eligible for this sort of investments and generally they will have to have assets which are worth less than £7 million. The enterprise must also have less than 50 people working for it on a full-time basis and these are just two of the many criteria that must be met.
Tax relief on these types of investments for this year is set at 30 percent. This is taken off your income tax payments and it would be better to view the money as something that is repaid to you, rather than something that is taken off immediately.
When you are doing your self-assessment tax return it is important that you remember to claim everything that you are entitled to through these investments. Otherwise you are going to get no real benefit from this type of investment as the primary reason people invest in these things is for the tax benefits.
Tax relief can start happening from the first moment you invest. This means that if you invest £20,000 you’re immediately going to be entitled to £6000 in tax relief. There is an additional condition, which is designed to ensure that investors keep their money in the investment. This is that if you take you money out in the first two years, you have to pay the tax back to the government
 London 2012 turns thousands into temporary landlords It has been estimated that over the next three months or so, more that 100,000 homeowners in London will become temporary landlords by cashing in on the Olympics and privately letting flats, rooms and even their whole houses. With rents running at up to 35 times the norm, can anyone blame them?
This all sounds a very easy way of making money, but renting property isn’t as straightforward as it sounds. There are legal obligations to consider, as well as finances, tax, insurance and safety issues, This can seem very daunting for many, which is where Olympic Short Let step in to help you out.
Jeremy Lee, CEO of Olympic Short Let (OSL), points out that Olympic rental websites only go so far as to list properties, find tenants and hold deposits. They do not provide managed tenancy services. A recent customer stated their situation like this…’We were surprised to find a tenant – now we have to learn how to be a landlord’.
Jeremy says “We created OSL to simplify the process and offer common-sense advice, templates and essential services all in one package. To demonstrate, OSL provide a free rental agreement and advise on the cheapest way to secure
public liability and contents insurance through existing policies.”
OSL began by securing service agreements with London’s best property service partners. We realised that our reputation stands or falls on the quality of service that people receive. We elected Aspect to provide 24hr Emergency Call-out Services, and BLC property services for testing and inventory services.
OSL have distilled their range of services into three service plans (from £95.00) created to suit typical landlord types – from low budget DIY to a comprehensive plan for those who prefer to leave everything to the experts. Unique to OSL, all three Service Plans automatically calibrate to the customers property profile – made in just a few clicks. Jeremy says “This is one way we can help people quickly assess products according to their budget and needs”.
OSL claim to make every effort to remove jargon from copy – it is important you know; what each service does, what it costs, and a guide to whether it is essential or merely an optional extra. This distinguishes OSL from other property management services – where products can be complicated, inflexible and expensive – especially for shorter lets. “I believe the 2012 London Olympics will kick-start a trend for ongoing private home rentals and for this reason OSL plan to continue long after 2012″.
Jeremy is a property consultant with 15yrs experience and a personal interest in simplifying home rentals. He says “OSL is an idea started by friends and family who are all renting homes – our collective experiences helped shape this business.”
So will the London Olympics create part-time landlords as a new breed? Olympic Short Let certainly believes it will – and their views are shared by the leading olympic letting agent AirBNB.com whose bookings in the UK have increased by 748%. Only time will tell – but it is good to know that OSL are here to help Londoners through this stage.
For more information visit: www.olympicshortlet.co.uk or contact: press@olympicshortlet.co.uk
Olympic Short Let (OSL) is a trading name of Art & Industry (UK) Ltd. 5 Albemarle Way, London ECIV 4JB. Tel: 0800 298 7061
The Council of mortgage lenders has recently released new research which has highlighted the difference in cost between renting and buying property. It has been designed to help people make the decision about whether they should be renting a property, or buying one.
Many reports in recent years have shown that taking out a mortgage, and paying for a house, is actually a cheaper option than renting. However other reports said the contrary, saying that home ownership is still a more costly option.Even if you ignore the significant costs of raising enough money for a deposit, there are still several big charges associated with buying a property, instead of renting one.
One of these is that when you purchase a property you are going to only be paying the percentage of the property which is covered by the mortgage, you will have to factor in the cost of the deposit into monthly payments in order to get an idea of total monthly costs. If you are renting, the total cost is the cost of rent, as you do not already own a portion of the property.
If you include the cost of the deposit, suddenly purchasing a house doesn’t look so favourable. It is estimated that when you consider this factor, around 70 percent of first-time buyers will be finding it more expensive to buy than rent. However when you do not factor in a deposit, buying is cheaper 80 percent of the time – but unfortunately this is not an accurate picture.
There are also several other costs associated with buying instead of renting. For one, maintenance costs can be expensive and these are something that would be covered by a landlord in a rental situation.
The director of the Council of Mortgage Lenders is Paul Smee and he has commented, “These figures can offer some guidance to people, but it is important to remember that finances are not the only thing people should be considering when buying a house. Emotions about purchasing a home also play a part and just because it might be cheaper, doesn’t mean it is always the best option for you.
A new sign that Britain’s middle classes are becoming increasingly strapped for cash has been that the popular pound store, Poundland has started accepting American Express cards. The credit card is usually associated with a certain amount of prestige and would not be typically associated with discount stores.
However, the company have reported that in recent years more people are asking to use the credit card is a method of payment, something that has not been available before.
In Poundland, everything retails for the same price, one pound, and it is something that has become increasingly popular with the middle-class, since the economic recession set in.
The company focused on attracting a new base of middle-class customers and they estimate that around 10 percent of their customers last year were in the AB socio-economic group. This grouping means that they are professionals or white-collar workers.
The chief executive of the company, Jim McCarthy, has stated, “The middle classes no longer feel embarrassed about shopping at our store. There has been a change in culture as now people are more willing to boast about money they have saved, rather than money they have spent.”
The collaboration between the store and American Express has shown that even upmarket companies are willing to work with discount retailers. In the last three years, the number of discount retailers on the high street has increased as people have been looking for better deals in order to suit their diminished finances.
Peer-to-peer borrowing is a type of lending system that has greatly grown in popularity over the last few years. This is largely because businesses have been unable to secure loans from banks, the typical route they would go to fund expansion. Peer-to-peer lending is something that is seen to be a win-win situation, lenders get a better return on their savings and borrowers are able to get a loan at a lower cost.
There are companies which facilitate peer-to-peer lending and those lending the money are allowed to decide the interest rate that they want to charge. Peer-to-peer lending is also capable of closing the gap that exists between what borrowers can lend and what savers can earn. This dramatically reduces the margin which the banks normally take and makes borrowing and lending more profitable for both parties.
One current player in the market is Zopa, a company that was founded in 2005 and matches lenders with borrowers. The service is based online and borrowers are given a creditworthiness check and then given access to a pool of lenders. All loans are taken in £10 packets from different lenders, this means that a loan valued at £1000 would come from 100 different investors. This reduces the risk on a lender of them losing a large amount of capital if a borrower defaults.
The loans offered by the company are growing in popularity as they offer a very competitive rate when compared to the banks. Loans on the website can be taken for just over six percent, which is very favourable to banks rates of around 12.7 percent.
The average return for a lender on Zopa stands at about 6.2 percent, but this is before any consideration is made for potential bad debts. This is a significantly larger sum than a lender will get if they have just left the money in the bank. The company highlight that six percent is just the average figure and many lenders are getting much higher returns if they are willing to wait a bit longer for them. Lenders are charged one percent per year on money lent as a service charge.
In an attempt to prevent the UK economy from collapsing any further, three years ago the Bank of England made the decision to lower interest rates to 0.5%, a record low in the history of the country.
This decision was something that was very good news for people with a mortgage as it has meant that their repayments have remained incredibly low. Those benefiting the most have been those who subscribed to a tracker deal.
Many people are asking whether the Bank of England have been right to keep interest rates so low for such a long time. The rate increases the inequality in the housing market which has been greatly exacerbated as there is no pressure on people to sell, which means the supply in the market remains low.
Those who own a house and would be potentially interested in selling, are willing to wait until they achieve the highest price possible for their property. This means that buyers are largely limited to a small, and wealthy, group of individuals.
The low interest rates have also meant that price adjustment is happening through an increase in rent, rather than a fall in the price of houses. These increasing costs of renting are falling largely upon a new generation of people who are unable to get onto the housing ladder.
Unfortunately, the windfall from decreased mortgage rains has largely fallen on investors who have bought properties to let them out. These people have significantly displaced young buyers in the market.
The majority of economists believe that the Bank of England won’t be changing the interest rates in the country for another 18 months. The Bank of England last changed them in early 2009 and since this time no changes have been made to interest rates in the United Kingdom.
In 2009 the Bank of England made the decision to lower interest rates to 0.5 percent, in a move that was designed to defend the economy against financial crisis. This was in order to protect people who had mortgages from higher interest payments and to a large extent the strategy has worked with homeowners expected to have saved a great deal of money.
Homeowners are very pleased with the interest rates that they are having to pay, but it is important to realise that they are not going to last. There is no other point in history when interest rates have been so low and so it is almost guaranteed that in the near future the base rate of interest is going to be increased.
The Monetary Policy Committee recently met for the three-year anniversary after lowering the rates and it is almost certain that they are not going to change the rate in the near future. The normal rate of interest in the country is around 3.5 percent and this is something that the rate will eventually be returned to.
For those people who took out a variable mortgage they have done very well from the government’s decision to keep interest rates low. Those who’ve been on a fixed-rate mortgage have not benefited from the change in interest.
In 2011 the inflation rate in the country was around 5.5 percent which is significantly higher than the interest rates. This has meant that people with savings were struggling to get a return on their investment, in fact, in many cases, those who had money in the bank were just watching it lose its value.
Around half of people surveyed by the website Moneysupermarket stated that they believe the interest rates set by the government have hurt their finances, rather than made them better.
While the fall in the rate of mortgage rates has been marked, the fall in the amount people are getting paid for their savings is even more dramatic. An average savings account five years ago paid around 3.5 percent, but today the figure has dropped to just over one percent. Unfortunately for the consumer the cost of taking out a personal loan, or credit card debt has increased, despite base rate interest being lowered.
Those who have a variable mortgage are the people who have benefited most from these times of low interest. The study by Moneysupermarket shows that around one quarter of borrowers have made use of lower interest rates and have paid more off their mortgage than they would have expected in the last three years.
Unfortunately, even people who’ve been saving money on their mortgage have lost out as the rate at which salaries are increasing is not matching inflation. Furthermore, the cost of living is increasing as gas and electricity bills have gone up substantially. People are also concerned about their job security and are increasing their savings, unfortunately this money they save gets relatively little return on it.
However, it is not all good news for those who have mortgages, despite the base rate remaining low several banks have decided to increase the amount they are charging for mortgages above base rate. They said this is largely because of increased borrowing costs and serious concerns over the debt crisis occurring in the Eurozone.
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Older Brits are set to be the major losers of the recently announced 2012 budget. How will the so-called ‘granny tax’ affect British elderly?
British pensioners will be one of the worst hit by the new budget. From April 5 2013, UK retirees will have to pay the same tax as any other worker, as George Osborne announced that the Government will remove the higher tax-free allowance that older Brits currently have.
Those changes will particularly affect British people aged over 65 with an income between £10,500 and £28,930. Out of the total of 11 million pensioners that live in the UK these days, that group currently represents up to 4.4 million people.
From April next year onwards, Brits fitting into these conditions will get a tax allowance of £9,205 – same as any other worker-, instead of the current higher allowance of £10,500.
Pessimistic financial prospects for 2013
The 2012 budget announcement drew a black picture in the financial future of many British pensioners.
Additionally, a recent research from retirement specialist LV= revealed that the cost of living increased by 33% for today’s pensioners. This means that retirees are the social group affected the most amid the current economic situation.
Further figures from that report showed that a retired couple spends an average of £17,922 per year, while a single pensioner spends £9,917 – £190 a week.
Once those figures are contrasted with the average state pension income of £102.15 a week that retirees receive nowadays, it comes clear that British pensioners are exceeding their pension average amount by 87% -£88.55 a week.
This reality, together with the future removal of the higher tax allowance, is forecasted to make the British elderly struggle more than any other social group in the UK. Many old people fail to plan effectively for elderly support and struggle with expenses such as getting a stairlift for the elderly.
Price hikes in every day products, higher tax rates and frozen income are set to leave many of them on the breadline.
All businesses have expenditure that simply cannot wait; employees wages, rent and paying supplier are the big three, but the money has to be there to pay them. These differ in value according to the type of company you have, for example, a wholesaler or retailer who buys or sells goods will pay out a huge amount to supplier, whereas service providers will have a bigger payroll to fund.
Whichever way you look at it, these are expenses that have to be paid, but there will invariably be times, especially for the likes of SMEs, that the current cash flow situation doesn’t have coming in what has to go out. For times like these are various types of business or trade finance options open to you, some are better than others, and whatever you decide on should have been thoroughly explored and be the best for your company.
The obvious first one is a business loan. Now while these are all well and good, and are great for purchasing assets, or when you are first starting up a new business, you have to consider if going into debt for a long period of time is the right way to deal with what may be only a temporary cash flow crisis. There could also be a problem securing a loan if your crisis has caused you to miss payments yourself, and adversely affected your credit rating.
Ask any SME what is the major cause of their cash flow problem and they will tell you it is having to wait for invoices to be paid. Many small businesses run on very small budgets, and have very little breathing space when it comes to ready cash. Corporations and large companies are a big coup for an SME to land as a client, but there unshakeable rule of having 30-45 days to pay their invoices can cripple a small business.
An option that is being taken up more and more, and once that doesn’t do a credit check, is invoice financing. This is where a company takes your invoices off your hands, gives you a value up front for them, typically 80-90% of their value, then recouping the full amount of the invoices from your clients. This is a safe and sensible way to get through a temporary cash flow crisis without accumulating any debt.
Touch Financial services are one of the top end companies who offer this service, and have saved many a small business from insolvency. Before accepting invoices, they check out the company that owes their money, and assess their ability to pay. This means that even if you have a poor credit through no fault of your own, you will not be rejected like you would be if you applied for a loan.
Featured article by Touch Financial services
The payday loans industry in the UK is estimated to be worth about £1 billion and it has recently become the subject of inquiry as to whether it is aggravating the personal debt crisis that is occurring in the country.
The OFT has recently started the inquiry after becoming concerned that some businesses are offering short-term loans, without adequately checking the ability of the customer to pay back the money. The OFT is going to specifically look at companies which encourage people to take out loans for their services.
It is going to be looking at high interest, short-term, loan providers such as QuickQuid and Wonga.com. There are also rumours in the industry that those who get into debt with these companies and are unable to make repayments are then bullied by the companies and subjected to treatment which is seen as being far too heavy-handed.
These companies make it very easy for people to borrow loans without having any sort of background check. In many cases it is even possible to borrow money through a simple text message. The interest rates on these types of loan are enormous, and in some cases the APR can be around 3000 percent.
The OFT is also going to be looking into the way that these loans are advertised to people, as they think that the company promoting loans to pay for plastic surgery or clothing is not acceptable.
The OFT have recently issued a statement which says, “We are warning these companies that if they are found to be guilty of lending irresponsibly, they could have their licences to give credit completely removed. This essentially means that they will be unable to continue trading.”
The cost of living is at its highest level for the past 60 years and these payday loan companies are taking advantage of this. The number of applications in recent years has gone up significantly as many people are turning to the high interest loans in order to pay for purchases they cannot afford, or meet bill payments they would otherwise miss.
As part of its investigation the OFT are going to be looking at over 50 of the major short-term lenders. David Fisher, the director of credit at the OFT has stated, “These loan companies might be taking advantage of people who are facing financial difficulties. It is possible they are in breach of legislation including the Consumer Credit Act and that they are also not meeting guidance for the industry about responsible lending.”
Loans are often given to applicants within moments which shows that these companies are not running adequate credit checks on their customers. Mr Fisher continued, “This is a completely unacceptable practice and we are going to demand that standards in the industry are improved, otherwise action will be taken against these irresponsible lenders.”
The Money Advice Trust is headed by Joanna Elson and she has backed the investigation saying, “These payday loans are seen as a quick fix but they have a serious tendency to make a person’s debt situation significantly worse.
“It is regularly reported that people phoning the government’s debt helpline are being harassed by these companies when they come to collect debts. They are taking enormous profits by demanding immediate settlement and refusing to listen to people’s suggestions of payment plans to pay off what they owe.”
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