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Help to get a foot on the ladder.

Enable’s experienced IFA’s in Bishop’s Stortford have had many discussions with parents and grandparents who want to help their children get a foot on the property ladder. The property market really can be an intimidating place for first-time buyers at the moment, with prices having soared and young adults struggling to scrabble together a deposit. According to Lloyds Bank Family Savings Report, last year UK parents handed over £8.2bn to adult children to buy property, with those receiving support benefiting from an average of £13,281.

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With the new pension rules in place since 6 April 2015, allowing those aged 55 or over complete freedom to access the money in defined-contribution pension pots it is now possible to take 25 per cent of your pot tax-free to help younger family members onto the ladder, but be careful – all subsequent lump sum withdrawals will be charged at your marginal rate of income tax. Sue Faiers, associate director of financial services at Smith & Williamson says, “If you had a £200,000 pension pot and wanted to stick it all into a property for your kids to live in, the danger is that £150,000 would be taxed as income.”

Parents often have very real concerns about how to raise the capital, and Ms Faiers, says “If they haven’t actually got funds available in cash but have investments, it’s worth asking whether it makes sense to raise money from those investments or whether it makes sense to raise money against their own properties.”  But if you are reliant on your investments for income it is not necessarily the best option, Enable’s IFAs are happy to talk it through.

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 – Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.

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