Stamp duty cut for pensioners?

Older people could be given tax breaks to move to a smaller property. The idea - exempting older people from stamp duty when downsizing to a smaller property - is backed by the Royal Institute of Chartered Surveryors (RICS) in a new report.

And to encourage the downsizing, new higher rate tax bands could also be part of the deal. %VIRTUAL-SkimlinksPromo%

Stamp duty incentive

Exempting those over 65 year who are living in larger properties would help, it's claimed, ease financial pressure on growing families needing bigger accommodation themselves.

Some may argue it's a tax break for the better off, especially if the property is worth a significant sum. (How would the Government deal with those pensioners who own multiple properties?). For some families, potentially, it's also a way to cut their inheritance tax exposure.

The proposals also throw up ideas for relieving the chronic shortage of affordable properties to rent, including a "portable home ownership discount" which could be built up to offset the price of buying another property in the future (though how this would be paid for isn't clear).

Band H +

"I know it is an emotional wrench to move," Michael Newey, president elect of RICS is quoted in the Mirror, "but we are trying to provide incentives for people who are living in a house where they might have brought up their children but is too big for them now."

The introduction of higher rate council tax bands is another idea, lifting the number of council tax bands above the band H for properties worth more than £320,000 in 1991.

400,000 new homes

There's also another issue lurking, still unresolved: planning permission has already been given, it's thought, for 400,000 new UK homes but have yet to be built, despite the chronic housing shortage.

That's because developers are waiting for many plots to rise in value before they build - so called 'land banking'. Labour is threatening "use it or lose it", with new compulsory purchase orders on developers who hold onto the land, a move also given qualified support by Boris Johnson.

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Stamp duty cut for pensioners?

If, like many Britons, you have failed to save the cash you need to maintain a comfortable standard of living in retirement, one option is to sell your home and downsize to a smaller property, using the money leftover to cover your living costs.
If moving out of the family home is too much of a wrench, however, the good news is that equity release schemes allow you to stay in your house or flat while still using the equity built up in it to provide some extra cash. The downside of the schemes, which work a bit like mortgages, is that you may not have much left to pass on to any children or other relatives.
But that's a small price to pay for a reasonable standard of living. For more information, try Age UK on 0800 169 6565.

Choosing the right annuity can have a significant impact on your retirement income. And as with most pensions, you automatically have what's called an 'open-market option' (OMO), you can scour the market for the highest annuity rate.
It is worth checking what your pension provider is offering first, though, as some companies offer guaranteed rates for existing customers that are likely to beat those available elsewhere. The Pensions Advisory Service on 0300 123 1047 is a good place to get some free advice.

On retirement, most people convert their pension fund into a guaranteed income annuity that pays out the same amount every month for the rest of their lives.
However, you can also choose an increasing annuity that pays out smaller amounts in the first few years but offers larger payments further down the line. This may prove a wise move if the rate of inflation remains at over 2%.

It is now easier to work later in life because the "default retirement age" has been scrapped.
People approaching retirement age and worrying about money can therefore choose to work for a few years longer - potentially transforming their financial situation. Other than the extra income from working, these people can look forward to higher state pensions, and higher annuity rates due to their greater age.
They can also benefit from bigger tax allowances and the fact that they no longer have to pay National Insurance contributions. Check out this nidirect website for more details.

You could get a much better rate with an impaired-life annuity if you have a medical condition that is likely to reduce your life expectancy.
Incredibly, even snoring, which is a common symptom of Sleep Apnoea could have an impact.
According to figures from MGM Advantage, a man with this condition could receive an extra £12,000 retirement income over the course of their retirement - or £571.44 extra money each year. Click here to find out more.

To maximise your retirement income, it is vital to ensure that you are receiving all the benefits to which you are entitled. These include the basic State Pension, and in some cases, the additional State Pension.
If you are on a low income, you could also qualify for the guaranteed element of Pension Credit, while those with some savings may get the savings element of this benefit. For more information about these and other benefits such as the Winter Fuel Payment, click here.

Many older couples rely on the pension income of one person - often the man. Should that person die first, the other person can therefore be left in a difficult position financially.
One way to prevent financial hardship for the surviving person is to take out a joint life annuity that will continue to pay out up to 67% of the original payments to the surviving partner should one of them die.
The disadvantage of this approach, however, is that the rate you receive will be lower. Again, the Pensions Advisory Service on 0845 601 2923 is a useful first port of call if you are unsure what to do.

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