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  • 15/10/2019 | Investments News

    The tax rules for charitable giving

    Donating money to charity can be a fulfilling and rewarding way of giving back to the world. We outline the details of charitable giving from a tax and financial perspective in this helpful guide.

    Many people choose to support causes that mean a lot to them, whether on a regular basis or as a larger one-off donation. We’ve looked into the ways you can make your donations go further by making the most of charitable giving tax rules.

    How can you make charitable donations?
    If you’re thinking about making a financial charitable donation that is a little larger than change in a charity bucket, there are a number of ways to do so.

    You could decide to donate through Gift Aid; through your workplace or pension Payroll Giving Scheme; or through your will. A donation given in this way is tax free. How the tax relief is given – either to you or the charity – depends on the method you choose.

    It is best to keep a record of your charitable donations in order to claim tax relief.

    How can you donate through Gift Aid?
    Gift Aid allows charities and Community Amateur Sports Clubs (CASCs) to claim an extra 25p on every £1 that you donate at no extra cost to you. Charities are permitted to claim Gift Aid on most donations made to them.

    If you would like to add Gift Aid to your donation, you will need to make a separate declaration for each of the recipient charities, on a form that they can provide. You can include Gift Aid on any donations made in the past four years.

    You will need to inform the charity about any tax years you did not pay enough tax. Your donations will only qualify as long as they are not four times what you have paid in tax during that tax year, paid through income or capital gains tax.

    There are further rules for those on a higher rate of tax, or if you would like to receive your tax relief for the current year. It is best to consult the Government guide to Gift Aid for more information.

    How do Payroll Giving schemes work?
    If you choose to be part of an employer or pension provider’s Payroll Giving scheme, you make donations before Income Tax is taken on your earnings. You will still be required to pay National Insurance on the donation, but you will be exempt from paying Income Tax on that amount.

    The tax relief you will receive through the scheme depends on the rate of tax that you are paying, and on where you live in the United Kingdom. You can find further details in the Government website’s guide to donating to charity.

    How can you make a charitable donation through your will?
    When writing your will, you can donate a fixed amount, an item, or the remainder of your estate to a charity of your choice after other gifts have been distributed. The amount you donate will either be left out of the calculation of your estate value before Inheritance Tax, or reduce your Inheritance Tax rate if more than 10% is donated to charity.

    If you are planning to donate to a charitable organisation or a Community Amateur Sports Clubs (CASC) through your estate and you decide to leave the entirety of your assets, this will be exempt from inheritance tax. This means that your chosen charity will receive the full value of your estate.

    Find out more about inheritance tax on gifts 

    How to gift a charitable donation to another person
    If you’d like to make a gift of a charitable donation to another person, there are several ways to do so.

    You can “buy” a gift through a charity; for example, buying a mosquito net through Save the Children, or a Christmas dinner for a homeless young person through Centrepoint. These donations can be made in the name of another person.

    For charities such as those caring for animals, you can “adopt” an animal in someone else’s name; for example, you can gift the adoption of an endangered elephant for WWF. For something a bit closer to home, you could gift the sponsorship of an animal at a local sanctuary.

    How can you donate safely?
    To avoid any fraudulent scams, it is best to check whether the charity you plan to donate to is on the Government’s registered charity list for England and Wales, Scotland and Northern Ireland. These do not include charities with an income of below £5,000; those that have chosen to be excepted, such as a church, school, Scout or Guide group, or an armed force charity; or are exempt from reporting to the Charitable Commission.

    You can check which community amateur sports clubs, or CASCs, are eligible through the Government listings. It is important to be aware that you cannot donate to a CASC through a Payroll Giving Scheme.

    If you are approached to make a charitable donation, it is perfectly acceptable to ask for more information, or to make a donation at a later date after you have done some independent research to consider your support for that particular charity.

    How else can you support charities?
    Of course, charitable giving is not all about financial donations. There are plenty of ways to give your time, your expertise, your spare gifts and other items, and plenty more. Giving is completely personal, and every donation – monetary or otherwise – is gratefully received.

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  • 04/10/2019 | Investments News

    How living with a partner could affect your financial assets: entering a marriage or a civil partnership

    Entering a marriage or civil partnership can be a significant change to your personal life, but it can also have an effect on your financial assets. Getting acquainted with the laws around your finances can help you understand both parties’ responsibilities to the union from a financial perspective.

    Getting married or entering a civil partnership can change the way your finances, both present and future, are handled. It can be particularly important to think about your finances as an established earner and homeowner, or as someone who may be marrying or entering a civil partnership for the second time. No matter your circumstances, it’s worth familiarising yourself with the potential effects on your assets, and any potential liabilities you or your partner may have.

    What assets could be affected by getting married or entering a civil partnership?
    Assets that are typically affected by a change in your marital or civil partnership status include:

    • Money (including your bank account funds, savings, and debt owed)
    • Property
    • Pensions

    What is the legal definition of marriage or a civil partnership?
    Entering into a marriage is a legally recognised union when certified with an entry into the UK marriage registry, or with a marriage certificate from the country in which the marriage took place.

    A civil partnership is legally binding when a civil partnership document is registered with the appropriate registry office or authorities.

    Who has the legal rights to assets when getting married to, or entering a civil partnership with, a partner?
    Married and civil partners have a legal duty to support one another. When getting married or entering a civil partnership, assets may be considered joint, unless held separately under individual names. This may not be the case for property rights or other rights, however, it might be worthwhile speaking to a legal or financial adviser prior to your union to be sure.

    If both you and your partner have contributed to the purchase or maintenance of a property, or funds in a joint bank account, they are considered joint. Should you separate or a partner passes, property, money and other assets will likely be divided between inheritors and your spouse or civil partner.

    Money in joint bank accounts is owned by both parties, even if only one of you placed the money in the account. Debts on this account are also the responsibility of both partners. Should one partner pass away, the account defaults to being owned by the other; if a partner passes with a non-joint account, the bank may allow the remaining partner to withdraw the balance.

    If you owe council tax on a property, this will be considered a joint debt. However, if you had a debt prior to the union and it is in your name only, it is still considered your debt, and only you are liable to pay for it. An inheritance earned whilst you and your partner are married or in a civil partnership is considered joint.

    Existing property brought to the union by one or both parties is considered the “matrimonial” home, and though it is not jointly owned, both partners may have a legal right to stay in it. Should a marriage or civil partner pass away, a singularly-owned property will likely automatically go to the surviving partner, unless there is a will or other legally binding document in place.

    A state pension will be given jointly to the partnership, even if only one person qualifies for a full basic state pension. Should you or your partner pass, the surviving partner could receive the entire joint state pension, but this is scheme-dependent.

    How can you protect assets in case of a later separation, if you are married or in a civil partnership?
    If you or your partner wish to ensure that some of your assets remain separate in case you later agree to part ways, you can create a prenuptial agreement, a trust or a will to determine what happens to those assets after separation or death.

    In the United Kingdom, there is no stated proportion of assets that must be given to your spouse or partner in case of separation or death. Should you wish to pass on your assets to another person – such as your children – you can create a trust. This will likely not safeguard current assets from divorce claims. A prenuptial agreement could protect both parties’ assets if agreed before marriage and drawn up by a qualified third party such as a solicitor. The agreement must be seen as fair in the eyes of the law.

    A will is designed to protect financial and other assets, should you or your partner pass. Should you have a will prior to your marriage, this will be revoked and be invalid. Generally speaking, if a will has not been drawn up and signed, your estate will go in its entirety to your partner. If you wish this to be handled differently, you may wish to speak to a legal advisor to bequeath assets to other parties.

    Find out more about the legal impact of various relationship stages from the Citizens’ Advice Bureau

    How should you plan for a union of assets?
    If you are planning a marriage or a civil partnership, researching the effect it will have on your assets and speaking to a legal professional may be beneficial.

    The legal aspect of a marriage or a civil partnership should be handled by the appropriate authorities. Having a discussion with your partner and a legal professional may be in your interest if you wish your assets to be handled in a specific way in the case of separation or death.

    To learn more about your options, you could:

    • use an online advisory service
    • arrange for a few discussion sessions with a solicitor for legal clarification
    • use an independent third party between you and your partner to reach an agreement on assets
    • hire a solicitor to create a legally binding agreement and handle the entire process
    • speak to a pension or union representative about your partner’s potential rights to a pension

    Find out more about information on handling your financial assets here

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  • 04/09/2019 | Group News

    Castle Trust invited to apply for a banking licence

    Castle Trust has been working closely with the Prudential Regulation Authority and the Financial Conduct Authority on our banking licence application, which we submitted in early September 2019.

    September 2019

    In April 2018 we announced our intention to become a bank. Since then, we have been working closely with both UK regulators, the Prudential Regulation Authority and the Financial Conduct Authority, on our banking licence application. We were recently invited to submit our application, which we did this week.

    This is a natural next step in Castle Trust’s journey that started when we were founded in 2012 with a simple mission: to help both investors and borrowers achieve their financial goals. Becoming a bank is an exciting milestone but it won’t change our focus on doing what’s right for our customers. In fact, it means we’ll be able to offer a broader range of products in the future.

    This stage of the rigorous application process is expected to take until spring next year. There is nothing existing customers need to do now and we’ll keep customers updated on a regular basis.

    Speaking about the application, Martin Bischoff, Chief Executive Officer said:

    “Being invited to apply for a banking licence by the UK regulators is testament to the strength of the careful planning and preparations we have put in place. Castle Trust has always been proud of being different, and now we’re in the process of becoming a different kind of bank. We’re very excited about the opportunities that come with a banking licence to better help our customers achieve their financial goals.”

    You can find more information about our banking application on our Q&A page.

    Read more
  • 03/09/2019 | Investments News

    How living with a partner could affect your financial assets

    A change in your relationship status can have a significant effect on your financial assets. Whether you’re moving in with a partner, getting married, or entering a civil partnership, familiarising yourself with the laws around your financial assets can help you avoid anything unexpected.

    Though you might be aware of the potential effects a marriage, civil partnership, separation or divorce can have on your financial assets, it is also important to consider whether moving in with a partner could also have an impact.

    What assets could be affected by a change in relationship and living status?
    Assets that could be affected by a change in your relationship and living status include:

    • Money (including your bank account funds, savings, and debt owed)
    • Property
    • Pensions

    What is the legal definition of cohabitation?
    Though there is no legal definition for living with a partner, it usually refers to two individuals cohabiting without being married or being in a civil partnership. The term “common-law spouse”, referring to two people living together for a significant length of time, is common vernacular, but it does not have legal recognition.

    Who has the legal rights to assets when moving in with a partner? If you choose to take the next step and move in with your partner, assets are not considered joint unless both you and your partner have contributed to their purchase or maintenance; for example, a property, or funds in a joint bank account. There is no legal requirement between you to share pensions, property, or provide maintenance should separation or death occur. There is also no right to remain in the home you share, if a separation should occur.

    Money in joint bank accounts technically belongs to both of you; however, if your relationship ends and one person did not use the account for deposits or withdrawals during the relationship, it may be difficult to prove that they have legitimate stake on the contents. Debts are not considered joint unless it is in both of your names, or you are acting as a guarantor for your partner’s debt.

    Existing property is not considered joint, unless you both have contributed to the property’s purchase. Should a cohabiting partner pass away, the property does not automatically go to the surviving partner.

    Pension funds are not automatically awarded to the surviving partner if you or your partner should pass away. However, some pension schemes allow you to cover a partner, or to offer benefits to your partner.

    How can you protect assets in case of a later separation, if you are unmarried but live together?
    If you would like to protect you or your partner’s assets in case of a later agreed separation, you can create a cohabitation contract before you move in together. This is a formal document which outlines rights and responsibilities of each partner towards joint assets. It is not legally binding; however, should you wish to make a legally enforceable contract, you could consult a solicitor for further advice.

    Find out more about the legal impact of various relationship stages from the Citizens’ Advice Bureau

    How should you plan for a union of assets?
    If you are planning to unify assets with someone, it might be worth your while to research your options and talk to legal professionals.

    Though it is possible to handle all the necessary paperwork yourself when your relationship status changes, you may wish to consult a professional for assistance in understanding the legal aspects of any agreements.

    You could:

    • use an online advisory service
    • arrange for a few discussion sessions with a solicitor for legal clarification
    • use an independent third party between you and your partner to reach an agreement on assets
    • hire a solicitor to create a legally binding agreement and handle the entire process
    • speak to a pension or union representative about your partner’s potential rights to a pension

    Find out more about information on handling your financial assets here

    Read more
  • 14/08/2019 | Investments News

    Debunking common pension and later life myths

    Sifting through the plethora of information on pensions can be a challenge. As legislation changes over time, it can be difficult to keep track of accurate information on later life planning. We separate myth from fact to give you a better understanding of pension and retirement regulation.

    With the ever-changing political landscape and new pension products being introduced over time, it can be difficult to divide fact from fiction when it comes to pensions.

    If you’re planning for your later life financing, it’s likely that you have read a significant amount of information on pensions – but how much of it is true? Here are some common myths that you may have encountered, with guidance on how to find the right information for you.

    Myth #1: You need a certain amount saved before you can think of retiring
    This myth stipulates that you need an arbitrary amount saved before you can think about retirement. In reality, the amount you should focus on saving for your pension should be able to cover the costs of your planned retirement lifestyle, and your expected expenses during your later life. This is likely to vary from person to person, and as such, the amount you should focus on saving is specific to you and your needs.

    Myth #2: All you need to do to fund your later life is to invest in property
    Though property can be a worthwhile investment for supporting you in your later life, it is not always the most cost-effective way of sponsoring your retirement. Whilst owning property and renting it out might potentially be a suitable way of funding your retirement, it could come with several associated costs. Property is often subject to a range of tax costs, including inheritance tax, capital gains tax, and income tax.

    Pensions have the benefit of tax relief, with a lump sum withdrawal of 25% of your pension pot being tax-free. This could be a preferable option for funding your later life, rather than risking high property tax costs.

    Myth #3: My pension pot is lost when I pass
    If you choose to appoint a beneficiary, as many pension schemes will allow you to do, your pension savings will not be lost upon your passing. Whilst there are specific schemes that do not allow you to appoint beneficiaries, most schemes will allow an appointed person to continue to benefit from your pension.

    In terms of taxes, generally speaking, if a person passes under the age of 75, their inheritors are not taxed on the remaining funding that they receive. If this occurs with the benefactor being over the age of 75, the recipients will likely pay income tax on the money they receive as their inheritance. There can be variations on this general rule, however, and consulting the Money Advice Service can help you understand more about the regulation involved.

    Find out more about the how pensions are passed on with the Money Advice Service

    Myth #4: If the employer providing my pension goes under, I lose out on my pension
    Despite the recent headlines about pensions being lost by companies going under, there are protections in place to make sure your hard-earned money is not lost.

    Your pension money, if it is paid into a pot by your employer, is likely to be held by a third party, such as a pension provider, in your name. Should the worst happen to your employer, your money will be kept safe, as it is separate from your employer’s capital. It could be worth checking to see if your pension is held in a pot protected by the Financial Services Compensation Scheme (FSCS) for further protection.

    You might have a pension that is part of a ‘defined benefit’ scheme, in which you are paid an amount based on your final salary or your career average when you retire. This pension type is covered by the Pension Protection Fund, which should cover any money you are owed if your employer goes into administration.

    Find out more about the Pension Protection Fund

    Myth #5: You shouldn’t retire until your mortgage is entirely paid off
    If you’re thinking about your later life planning, you might be worried about taking any debt into your retirement. Whilst carrying less debt could be advantageous, you don’t necessarily need to have paid off your mortgage in its entirety before you retire. If your mortgage repayments seem manageable for your retirement budget, and you have a low rate of interest, you may wish to retire before your mortgage is paid off in full. You could also pay off part or the entirety of your mortgage with a lump sum from your pension. A financial planner could help you to ensure that your mortgage repayment fits into your retirement plans.

    Find out more about pension myths 

    Read more
  • 01/08/2019 | Investments News

    Should the inheritance tax system be simplified?

    The Office of Tax Simplification (OTS) has advised that the inheritance tax system be changed to help ease the burden of later life planning. We look at how inheritance tax could be overhauled, and how the current legislation may affect you.

    The Office of Tax Simplification (OTS) has called for inheritance tax rules to be simplified, making end-of-life planning easier for those wanting to pass on money, possessions or property. Its suggestions were made as part of a review of inheritance tax regulation requested by former Chancellor Phillip Hammond.

    Current rules stipulate that if a person dies within seven years of gifting or passing on assets to a child or other direct descendent, a tax of up to 40% must be levied on the gift. The OTS has suggested that this limit should be lowered to five years, and that inheritance tax regulation in general should be simplified to help reduce confusion for those planning later life.

    Rather than having several complicated rules around gifting, the OTS has suggested that one “personal gifting allowance” be created. It also pointed out that the £3,000 annual exemption created in 1981 has not risen with inflation; that allowance would be worth £11,900 today.

    The organisation criticised the legislation that means inheritance tax is levied on lifetime gifts made to a trust. It also suggested that the tax on death benefit payments made from life insurance be scrapped.

    When does inheritance tax apply?
    Inheritance tax applies to anyone leaving an estate above a threshold of £325,000. The amount taxed is usually 40% of the value of the estate above the threshold. This current threshold is fixed until the 2020-2021 financial year and will be based on consumer price inflation thereafter.

    If you are leaving your main residential home to your children or other direct descendants, there is a nil rate band of £100,000. If you are leaving 10% or more of your estate to charity, inheritance tax rate is lowered to 36%.

    Assets left to a spouse or civil partner are normally exempt from inheritance tax. If you leave everything above the threshold to a charity or to a community amateur sports club, this will also be exempt. Inheritance tax also applies to gifts given in the seven-year period before your death. The tax on gifts is levied on a sliding scale, according to when the assets were given in relation to your death.

    Find out more about inheritance tax on gifts

    How can you prepare for inheritance tax and gifting in later life?

    1. Think about informing your next of kin and gift recipients
    The executor of your will, or the person handling your estate after your death, will use funds from your estate to pay inheritance tax to HM Revenue and Customs (HMRC).

    Though tax is not normally paid by your beneficiaries on the assets they inherit, they should be informed of any plans you have for your estate.

    In most cases, if you give gifts to anyone before your death, they will have to pay inheritance tax if you die within seven years of the gift being given, and if the sum is greater than £325,000.

    You might want to think about speaking with your next of kin and any gift recipients to alert them of any financial responsibilities they may have after your death.

    2. Consider establishing a trust
    If you’d like to leave part of your estate for a specific purpose, you could leave money, property or investments in a trust for your spouse or your adult children. This trust could be used to pay for education or for financial support for living costs.

    If you decide to establish a trust during your lifetime, this might incur capital gains tax. However, if you set up the trust as part of your will, this would not apply.

    Some trusts are subject to further trust taxes, or inheritance tax, depending on the type. Trustees could have to pay income tax at a rate of 45%, and capital gains tax at 28%. You may want to speak with an expert to work out whether this is best for your needs.

    3. Think about life insurance
    If you’d like to prepare for any inheritance tax costs after your death, you may wish to take out a life insurance policy. Any life insurance payout added to your estate will increase the amount of inheritance tax owed, so it might be worth organising this payout to go into a trust.

    Find out more about inheritance tax regulations

    4. Call the inheritance tax helpline for advice
    If you’re planning your later life and would like further advice on inheritance tax or gifting, HMRC’s Inheritance Tax and Probate Helpline can help you. The helpline can talk you through your responsibilities and the completion of any relevant forms.

    If you are leaving farmland or woodland in your estate, there are additional regulations around agricultural relief; the helpline can also advise you on this.

    Read more
  • 18/07/2019 | Group News

    Our latest financial statement

    Castle Trust has published its latest financial statement, as at 31 March 2019.

    Castle Trust has published its latest financial statement, as at 31 March 2019. The full detail of the statement can be found in the updated 'Supplementary Prospectus 19 07 04' document in the Prospectus Documents section of the Investments page, and a downloadable Financial Strength Summary can be found at the bottom of the About Us page.

    The summary is as follows:

    Castle Trust is a financial organisation that continues to go from strength to strength. We are a provider of investment, mortgage and consumer lending products, employing over 220 people across our executive headquarters in the City of London, and an administration centre in Basingstoke, Hampshire. Launched in October 2012, Castle Trust’s principal shareholder is the leading private equity firm J.C. Flowers & Co., which currently manages circa £6 billion in assets.

    Investments
    As at 31 March 2019, customers had £737 million invested into our Fortress Bonds, a product we launched in July 2014. In the last 12 months alone, interest payments of more than £16 million had been made to customers, with all payments (including capital repayments) being paid to those customers when due. Customer satisfaction was such that approximately 73% of customers reinvested with Castle Trust when their existing investment reached maturity.

    Lending
    As at 30 September 2018, Castle Trust’s total loan book stood at over £656 million. This included £497 million of mortgages secured on UK based, predominantly residential, property with the remainder of the book being unsecured consumer and wholesale lending. The business also had over £163 million of cash and cash equivalents that were held in reserve to meet short term funding requirements.

    Read more
  • 05/07/2019 | Investments News

    Over £19 billion 'lost' in forgotten UK pensions

    According to the Association of British Insurers (ABI), UK employees have lost track of as many as 1.6 million workplace pension pots, with £19.4 billion left unclaimed. We look at how you can track down your pension savings to ensure you can enjoy your retirement to the fullest.

    How have workers 'lost' their pension pots?
    With the average UK employee holding 11 jobs in their lifetime, pension funds can get lost in the process of moving from role to role.

    With the government now requiring businesses to offer workers a pension through an auto-enrolment scheme, it is wise to keep track of your pension plan if you change jobs. However, you may have already lost track of your pension, either through changing employment, lost records or moving address.

    What pension are you entitled to?
    If you think you may have a pension that’s become stranded, you may wish to check what pensions you have been eligible for throughout your working career. There are some rules that may have affected your employee pension eligibility, depending on the date when you left the company. If you left the employer:

    • Before April 1975, you will likely have been refunded your pension contributions, and are unlikely to be owed anything if you were part of the scheme for less than 15 years
    • Between April 1975 and April 1988, you will have a pension if you were over the age of 26 and had five years in the scheme. Otherwise, you would likely have been refunded your pension contributions.
    • After 1988, you will have a pension if you completed at least two years with the business. Otherwise, you would have likely been refunded your pension contributions.

    Find out more about the pension rules and regulations at the Pensions Advisory Service

    6 tips for finding any ‘lost’ pension savings:
    1. Check your paper records
    Take a look at your physical records first to see if you have any records of pension savings you may have. You should receive annual statements from all your pension providers, which will help you to keep track of any pension savings you may have accrued.

    2. Contact the pension provider
    If you have not received an annual statement or have lost contact with the pension provider, it is worth giving them a call. You can ask about any pensions you may have with the provider, and track down any savings you may have. You may require the details of your previous employer.

    3. Contact your former employer
    If you are unable to remember the pension provider for a particular company, it is best to contact your previous employers to see if they have records of your pension contributions.

    Find out what details you will need for tracking down your pension

    4. Use the free government tracing service
    The government has created a free service for tracing any ‘lost’ pensions you may have. The service has over 200,000 workplace and personal pension scheme details on file. You can contact the service by telephone or post if you can’t access the website.

    5. Check the Pension Protection Fund
    The Pension Protection Fund (PPF) gives compensation to workers who are part of an eligible pension scheme for businesses with insufficient pension assets. If the business you worked for has suffered insolvency, the pension they offered you may be listed with the Pension Protection Fund. You can check their website for further details.

    6. Check the Unclaimed Assets Register
    You can set up an online account or call to check Experian’s Unclaimed Assets Register for any ‘lost’ pension savings. The register lists financial assets, and can give you the contact details of your pension provider. It will cost £25 for each search you make.

    How to consolidate pensions and keep track of them in future
    If you would prefer to keep all your pensions under one provider, you can choose to consolidate your savings. Keeping your pension savings in one pot may help you to keep better track of your retirement funds.

    Aged schemes, such as those from 2000 and before, may require you to pay exit penalties, or preferable benefits. It is worth checking to see if there is a pension pot that will suit your needs better than your current schemes.

    The government is working to make viewing your pensions easier, with plans to launch a ‘pensions dashboard’ in 2023. This will allow you to keep track of all your pension pots in one place.

    Find out more information about tracing ‘lost’ pensions savings on the government website

    Read more
  • 23/06/2019 | Investments News

    How long will it take to double your money? Use this nifty trick to find out

    We explore Albert Einstein's thinking of the Rule of 72 and apply it to the effects of compounding interest.

    Have you ever asked yourself how long it would take to double your money if you left it invested, untouched, somewhere? There’s a clever, and easy way to find out.

    Of course, it depends on the rate of return you would be getting. If you were earning 10% a year, would it take approximately ten years?  No, actually it would only take seven because of the compound return – you’d be making gains on returns from previous years. If you wanted to see your money double in ten years, you’d only need a steady return of 7%.

    Once you know the rate of return you’ll receive (or can make a reasonable assumption), there is actually a simple way of working out how long it would take to double your money – it’s called the ‘Rule of 72’. You take the number 72, divide it by your annual estimated (or desired) rate of return, and voila! You have the approximate number of years it will take to double your money.

    So, let’s use a more realistic rate of growth as an example. Let’s say you want to put your £20,000 annual ISA allowance away, and think that you will always be able to find an interest rate of 3% in a fixed term account or bond. 72 divided by 3 equals 24; that’s 24 years to double your money. If you invested in a managed fund and reasonably expected a 5% rate of return, that’s 72 divided by 5 equals 14.4; just over 14 years to double your money.

    This helps demonstrate that the earlier you start to save, the more you’ll benefit from compounded growth on your returns. Using the above example with a rate of return of 5%, if you put £20,000 into a stocks and shares ISA at the age of 30 it would double before your 45th birthday, and would double again before you turn 60. That would be £80,000 from an original £20,000 investment.

    But always remember – for most investments the value can go down as well as up, and you may get back less than you invested. Financial advice is always recommended when investing.

    For more information on how compound interest works, we’ve covered Albert Einstein’s thinking of The Compounding Effect previously.

    Read more
  • 21/06/2019 | Investments News

    How to avoid falling victim to bank transfer fraud

    With banks being asked to do more to protect customers from bank transfer scams, we take a look at some common tactics fraudsters use and how to avoid them.

    A bank transfer scam, also known as an authorised push payment (APP) scam, is when money is transferred from your bank account to a fraudster. It could be due to a payment that you sent in good faith or money that was taken without your knowledge. There were over 84,000 cases of bank transfer fraud last year in the UK, with around £228m stolen from individuals.

    What are banks doing to protect their customers?
    Until now banks were not always able to reimburse customers if they had fallen victim to an APP scam, but from 28 May 2019 a new voluntary scheme came into force. More victims of fraud will be reimbursed, but both banks and customers have to take certain steps to stop fraud happening in the first place. For example, your bank must give you information to help you keep your money safe, and you have to do all you can to be sure the person or organisation you are paying is genuine.

    Most UK banks have signed up to the scheme, but not all of them.

    Find out if your bank has signed up

    How you can protect yourself against bank transfer fraud
    Most people assume they would never fall for an APP scam, but scammers are becoming more and more sophisticated. Techniques they use include:

    • Telling you you’ve been a victim of fraud to make you panic and gain your trust.
    • Knowing some personal information about you, such as your date of birth or mother’s maiden name.
    • Giving a time limit or a deadline within which you need to take action.

    Can you spot fraud? Try the Take Five test

    5 tips for avoiding falling victim to bank transfer fraud:
    1. Never call a number you don’t recognise
    Your bank will never ask you to call a number you don’t recognise. If you receive an email or text supposedly from your bank, call them from the number on their website or on the back of your debit or credit card.

    The same goes for answering calls from numbers you don’t recognise. However, criminals can now disguise their numbers to look like genuine phone numbers, so be aware of that tactic too.

    2. Don’t give out any personal details
    Your bank will never contact you to ask for any personal information such as your password or your PIN.

    3. Don’t click on any unknown links
    Avoid clicking on unknown links or opening unknown files. The same goes for pop-up windows in your internet browser.

    4. Check if a website is genuine
    To check if a website is real, look for a padlock sign next to the website address. If the site weblink starts with “https” this means the site is secure and protects customer details using encryption.

    5. Don’t be rushed into transferring money
    If someone tries to rush or panic you, alarm bells should ring immediately – a genuine organisation would never rush you to make a decision. Do not transfer any money at this stage. If need be, make an excuse such as your doorbell ringing and use this time to gather your thoughts.

    What to do if you think you may have been scammed
    If you think you may have been scammed, let your bank know immediately so they can try to stop the transfer. Criminals rely on you feeling too embarrassed to tell anyone you were duped, but that’s better than losing money to bank transfer fraud.

    More information from Which? on what to do if you’re a victim of a bank transfer (APP) scam

    Read more
  • 17/05/2019 | Investments News

    7 tips to cut the cost of holiday cash

    With the promise of sunnier climates on the horizon, we look at the best ways you can make the most of your holiday money this summer.

    According to The Telegraph, UK travellers spend a whopping £1.3bn a year on fees when taking out money abroad. With some careful planning, you could make your holiday cash stretch a little bit further. Here's how:

    1. Check the cost of using your cards abroad
    Be careful of using the same cards as you would do at home. They may be ideal for day-to-day in the UK, but they may have costly fees attached to them when used abroad. Check before you travel and if they do, you may wish to look into alternative cards that are more travel-friendly when it comes to fees.

    2. Be mindful of using your credit card to take out cash abroad
    You may want to be careful of doing this in the UK too, unless there’s an emergency. You’ll be charged interest straight away, on top of all the other fees. Keep an eye out for:

    • ‘Foreign exchange commission’ or 'foreign loading fee' of up to 2.99% of the sum spent, which is applied every time the card is used abroad
    • A cash withdrawal fee of approximately 3% (or minimum £3) when you take money out of a cash machine, as well as the foreign exchange and interest charges
    • Interest charges from the moment cash is withdrawn on the card, often at rates of up to 30% APR – even if the card balance is paid off in full before the end of the month.

    3. Be careful about taking out more than you need
    It may be worth budgeting for what you’ll need and trying to stick to that amount. According to YourMoney.com, the average UK holidaymaker comes home with £70-worth of foreign currency. Often this money is left in a drawer and inevitably forgotten about until it becomes unusable. 

    4. Think about getting currency before you leave – or use a card that doesn’t charge for using it abroad
    Most debit cards will charge you for using a cash machine overseas. They typically deduct up to 3% of what you take out or charge a minimum fee of £2 . Some cards also bolt on an extra flat fee, which can be up to £1.50 for every transaction. 

    All of these small costs seem minimal on their own but will swiftly add up. The best way to get around this is to find a card that doesn’t charge you for using it abroad.

    5. Don’t leave it until the last minute
    Unfortunately, convenience often comes at a price and this is usually the case with airport currency exchanges. Shopping around for the best deal before you go can broaden your options for getting the best rate for your currency. However, if you enjoy the ease of picking up your cash before you fly, you could look to order your cash in advance and then pick it up at the terminal. This may help you mitigate poor rates while still enjoying the convenience.

    All major sellers offer the option of pre-booking your currency for collection at the terminal, in return for a much more favourable exchange. But it’s always worth shopping around for the best rates, and that often isn’t at the airport.

    6. Tell your bank and credit card companies that you’re going away
    Once you’ve decided on which cards you’re using, make sure you’ll be able to use them while abroad. Let your debit or credit card provider know where you’ll be and for how long. That not only means they shouldn’t block your card while you’re away, but they’ll also know to quickly flag its use elsewhere if it’s cloned or otherwise.

    7. Consider paying in local currency – not pounds
    By paying in pounds, you’re converting from the local currency into pounds using the vendor’s exchange rate – which is often more favourable to them, rather than you. We’ve covered this in more detail in a previous article you can read here.

    Read more
  • 07/05/2019 | Investments News

    ISAs explained - Q&A Guide for the 2019/20 tax year

    Our Q&A guide aims to answer your questions about ISAs, to help you make the most of your tax efficient savings allowances.
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    What is an ISA?
    ISA stands for Individual Savings Account. An ISA is a way of holding savings or investments without paying personal tax on interest received, or on the growth of your investment.

    What kinds of ISA are there?

    • Cash ISA
    • A type of savings account, where any interest received is tax-free
    • Stocks & Shares ISA
    • A ‘wrapper’ for investments, where any investment growth is tax-free
    • Innovative Finance ISA
    • A ‘wrapper’ specifically for peer-to-peer investments, where any interest received is tax-free
    • Help to Buy ISA
    • A regular savings Cash ISA, where the government will add up to £3,000 if you have
      contributed £12,000 yourself
    • Lifetime ISA
    • A type of Cash or Stocks & Shares ISA available to the under 40s from 06 April 2017, designed to help people save for their first home, or for their retirement. Any interest received or investment growth is tax-free. Savings of up to £4,000 per year
      will be matched by a contribution of up to £1,000 from the government; any savings above that amount will not receive any additional bonus
    • Junior ISA
    • A type of cash ISA where parents can save up to £4,368 per year tax-free for the child. The child gains access to the money at the age of 16, and the account becomes a standard cash ISA at the age of 18
    • Inheritance ISA
    • A cash ISA specifically for widows, widowers or bereaved civil partners, where the deceased’s ISA can be transferred across into the surviving partner’s name, in addition to their own annual allowance.

    How much can I save into a Cash or Stocks & Shares ISA?
    There is a limit for how much new money you can place into these ISAs each year. For the 2019-2020 tax year, that amount is £20,000.

    What are the tax year dates?
    The tax year starts on 06 April each year, and runs to the following 05 April.

    Do I have to use the same ISA provider each year?
    No. Your options start afresh each tax year. If you contributed to an ISA with a company in any particular year, you’re not committed to using them again in the future – you could choose a new company for each year’s ISA contributions if you wanted to.

    Can I save into more than one ISA during the same tax year?
    You can contribute to one Cash ISA, one Stocks & Shares ISA, and/or one Innovative Finance ISA per tax year (so you could contribute to one, two or three types during the same tax year if you wanted to). Whilst you could choose a different company for each one of these ISAs, you can’t contribute to the same type of ISA with two different companies during the same tax year – for example, if you make a contribution to your existing Cash ISA provider during a tax year, you can’t then also make a contribution with a different Cash ISA provider in the same tax year. Your total contributions during the tax year can’t exceed the annual ISA contribution allowance.

    Can I transfer any existing ISA savings to a new ISA provider?
    Subject to each ISA provider’s terms, you can transfer existing ISA savings to a different ISA provider – and as the value being transferred relates to contributions made in a previous tax year, any transfer is in addition to your current annual contribution allowance. A transfer of contributions made in the current tax year must be made in full; ISAs built up in previous years can be transferred partially or in full, but this again may be subject to the terms of the provider that currently holds the ISA.

    If you are considering transferring an existing ISA, you should contact the provider to whom you wish to make the transfer first; they will then arrange for the transfer value to be requested from your existing provider. If you withdraw the existing ISA value and send it to the new provider, this would make the existing value lose its ISA status, which would then mean it would be classed as a new contribution again – which might mean that you exceed the current year’s annual contribution allowance.

    Can I transfer one type of ISA into another type of ISA?
    Yes. For example, you could transfer an existing Cash ISA into a Stocks & Shares ISA with a different provider.

    Can I withdraw money from an ISA?
    Subject to the ISA provider’s terms allowing withdrawals to be made, you can make withdrawals from your ISA. An example of when you might not be able to make a withdrawal is if you put money into a fixed-term savings account, but not yet have reached the end of the term.

    If a withdrawal is made, that money loses its ISA status; if it is then put into a new ISA, it will count towards the current year’s annual contribution allowance. The exception to this is if you make a withdrawal from a Cash ISA that you are contributing to in the current tax year; if that’s the case, you can replace the money you have withdrawn without it counting towards your annual ISA contribution allowance, providing that you do this during the current tax year.

    What happens to my ISA if I die?
    If you die, a surviving spouse or civil partner is eligible for a one-off additional ISA contribution allowance that is equivalent to the value of the deceased person’s ISA at their time of death; this is referred to as an ‘additional permitted subscription’, or APS allowance. This additional allowance is available even if the actual ISA value is bequeathed to someone else in your will (the benefits themselves will lose their ISA status). To allow time for the administration of more complex estates to be completed, ISAs can retain their tax-free status for up to 3 years the date of death.

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    You can download this information in our ISAs Explained Q&A Guide.

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    If you’re interested in finding out more about Castle Trust’s Fortress Bond ISAs, there’s more information on our Investments Information page

    This material is provided for informational purposes only and does not represent investment advice or recommendation to invest in any financial instrument or security.
    Please note: the information in this article was correct at the time of publication, but is subject to change in the future.

    Read more
  • 10/04/2019 | Group News

    The FSCS cover limit for investments has been increased to £85,000

    The maximum FSCS claim limit per person for investments is now the same as deposits, but other differences between the two products still remain…
    With effect from 1 April 2019, the Financial Services Compensation Scheme (FSCS) has increased the maximum level of protection available to individuals on investments to £85,000 (£170,000 on jointly-held investments), which is the same limit already provided on deposits.

    Whilst the maximum level of cover per individual is now the same, it should be noted that any other differences in the cover provided by the scheme for deposits and investments remain, and that claims will continue to be subject to eligibility. More information about the FSCS and eligibility criteria can be found on their website here www.fscs.org.uk.
    Read more
  • 10/04/2019 | Investments News

    Financial year 2019/20: 7 changes you should know about

    With Brexit looming and uncertainty rife, we take a look at the changes we can be sure of this new financial year.

    With Brexit looming and uncertainty rife, we take a look at the changes we can be sure of this new financial year.

    1. State Pension increases
    Thanks to the Government’s ‘triple-lock’ guarantee, the State Pension has risen by 2.6% on 6 April 2019, to £168.60. That’s an increase of £4.25 a week or £221 a year.

    The ‘triple lock’ means the state pension will rise each year by whatever is highest from: 

    • annual CPI inflation (announced in September every year)
    • average earnings growth
    • or 2.5%.

    This year, the state pension has increased by average earnings growth, which came in highest at 2.6%.

    2. Your tax-free Personal Allowance increases
    This is the amount you can earn before paying income tax. It increased from £11,850 to £12,500 in April. The higher-rate tax band has also increased, from £46,350 to £50,000.

    However, if you earn more than £46,350 your National Insurance contributions will have risen to 12% on what you earn between £46,350 and £50,000. This negates most of what you may save from the Personal Allowance increase.

    3. Pension contributions rise
    If you’re currently auto-enrolled in a company pension scheme, you’ll see your paycheque decrease slightly, as monthly pension contributions rise from 3% to 5%.

    Plus, your employer must pay at least 3% into your pension pot too – taking your combined total to 8%. This would mean more money in your pension pot in the long run, but in the short term will mean your take-home pay is slightly less.

    4. Buy to Let (BtL) tax relief reduced
    Landlords continue to feel the crackdown on their mortgage-interest tax relief, which is being gradually phased out.

    The 2019/20 tax year sees landlords only able to claim 25% of mortgage tax relief when filing their taxes – down from 50% in 2018/19.

    From April 2020, landlords will no longer be able to deduct mortgage costs from their rental income at all.

    All rental income earned will be taxable, and you’ll instead receive a 20% tax credit, which will can be applied to 75% of your mortgage interest.

    Read more about the BtL market tax changes.

    5. Pension Lifetime Allowance increases
    From April 2019, the pensions lifetime allowance increases from £1,030,000 to £1,055,000. This is the maximum amount that you can put into your retirement savings tax-free.

    Your lifetime allowance increases by the rate of Consumer Price Index (CPI) inflation which is currently 2.4%.

    6. NS&I interest rate to fall
    If you hold a National Savings and Investments (NS&I) Index-linked Savings Certificate, the interest rate will drop by about 1% next year.

    This is because the Government is changing the index NS&I uses from Retail Price Index (RPI) to CPI.

    Because of this change, you have the right to cancel your investment. So if your Certificate automatically renews, you’ll be able to cancel it within 30 days. NS&I will then refund the full value of your new Certificate with any interest due.

    However, if you choose to renew your Certificate for a different term, you won’t have the right to cancel. Instead, you can cash it in at any time, but the usual penalty will apply.

    Find out more about NS&I Index-linked Saving Certificates.

    7. Inheritance Tax (IHT) threshold rises
    From April 2019, the amount you and your spouse or civil partner can leave to your children and grandchildren without paying tax is rising to £950,000.

    As part of the threshold, the 'residence nil-rate band' – an extra allowance for those passing on their main homes to children or grandchildren after they die – is being raised from £125,000 to £150,000 for the new tax year, 2019/20.

    This brings the total amount that an individual can leave tax-free to £475,000, or £950,000 for married couples and civil partners.

    By 2020, the total tax-free allowance for those leaving their main residence to a child or grandchild is expected to rise to £500,000 for an individual, or £1 million for a couple.

    Read more
  • 19/03/2019 | Group News

    New Managing Director for Omni Capital Retail Finance

    On 18th March 2019, Castle Trust announced a new appointment within Omni Capital Retail Finance.

    Castle Trust Capital plc is pleased to announce the appointment of Ronnie Denholm as Managing Director of Omni Capital Retail Finance, its point of sale finance division.

    Following the acquisition of Omni Capital Retail Finance in 2016, Castle Trust has restructured the operations of the business and has ambitious plans for progress.

    Ronnie is an experienced financial services leader and joins the business from Barclays Bank Plc, where he held various Managing Director roles across the business, including most recently Barclays Partner Finance, one of the UK’s largest point of sale finance companies.  Prior to joining Barclays, Ronnie held several senior leadership roles across the American Express group, with a strong growth record across each of the business areas he led.

    Martin Bischoff, Chief Executive Officer of the Castle Trust Group said: “Opportunities to work with someone of Ronnie’s calibre are rare, so we are privileged to have him on board.  As he’s demonstrated in the past, he is a very capable pair of hands to lead the business as it looks to grow.   We have big ambitions for Omni Capital Retail Finance, which Ronnie is integral to helping us achieve.”

    Speaking of his appointment, Ronnie said: “I am delighted to join Omni Capital Retail Finance.  The company has undergone a lot of changes recently and the prospect of leading the next phase of the company’s growth is an exciting challenge.  I look forward to working together with the team to consolidate the business’ position within the market and expand its operations further. “

    Read more
  • 18/03/2019 | Investments News

    Buy-to-let purchases at 9-year low

    Landlords are buying fewer homes than any time in the past nine years. Are there still opportunities or has the buy-to-let bubble burst?

    New research from estate agents Hamptons International shows that landlords are buying fewer homes than at any time in the past nine years.

    In the first half of 2018, landlords across the UK bought 64,260 properties – 13% less than the same period in 2017, and a third less than in 2015.

    Why is Buy-to-Let no longer as popular?
    The tide began to turn against buy-to-let investors after a series of tax reforms and regulatory changes knocked investor confidence.

    What were the changes?
    Tax reforms to buy-to-let properties included tax relief on full mortgage interest being phased out. Instead it will be replaced with a 20% tax credit by 2020.

    The loss of full mortgage interest tax relief has eaten heavily into returns for many landlords. Higher-rate and additional rate-payers are likely to end up with a larger tax bill as a result.

    A new stamp duty surcharge was also introduced for landlord buyers in 2016, adding 3% to the duty paid by buy-to-let or second home purchasers.

    With the average purchase price of a buy-to-let property now £174,580, landlords are therefore paying an additional £5,238 in tax.

    Both of these changes have impacted landlords’ profits. Furthermore, The Bank of England has tasked lenders with “stress testing” loans and imposing stricter conditions on lending to those with four or more properties.

    What are the benefits of buy-to-let?
    Depending on your portfolio strategy, it may not be all doom and gloom. Some experts believe this is an opportunity for landlords, as a decreased appetite for buy-to-let mortgages has caused lenders to offer record low rates. It’s also creating less competition between landlords for properties as well as tenants.

    Many investors are hoping the downward trajectory will soon be over, while in the meantime they are taking the opportunity to snap up bargains.

    And despite these changes in government policy, the private-rented sector is predicted to grow as many struggle to get on the property ladder. Hamptons International estimates that by 2022, 20.5% of all UK households will be renting, up from 19.4% in Spring 2018. It predicts 6 million households will be renting by 2025.

    So, as an income investment, buy-to-let still looks attractive – especially compared to currently low savings rates and coupled with cheap mortgages.

    What other factors should be considered?
    Some areas of the UK are still trying to regain the ground lost during the housing slump caused by the financial crisis, and investors are increasingly looking for stronger returns in these areas – particularly in the North and away from London and the South East.

    Finally, experts are warning landlords taking out new mortgages to be mindful of low rates. Currently, mortgage rates are an investor’s dream, but at some point when they do rise you’ll need to be sure your investment is robust enough to still be profitable.

    Read more
  • 07/03/2019 | Investments News

    March is Free Wills Month

    If you’re over 55 you may be able to get a simple will written up or altered for free.

    What is Free Wills Month?
    Free Wills Month is a campaign that aims to help charities while encouraging more people to get their will written up – or altered if your circumstances have changed. It’s a good reminder to write a will if you haven’t already, or update your current one if you haven’t in the past 5 years.

    How do I take part in Free Wills Month?
    Contact a participating solicitor to request an appointment. Although it’s worth noting that appointments come on a first-come, first-served basis.

    Find a participating solicitor via the Free Wills Month website

    What’s the criteria to take part in Free Wills Month?
    The campaign is open to anyone aged 55 or over who would like to have a simple and straightforward will drawn up. In the case of couples writing ‘mirror’ wills, only one of the two should be 55 years old or older.

    Why is it free?
    It’s hoped that participants will donate to one of the many deserving charities involved with the campaign – but this donation is 100% voluntary. You can choose which charity you’d like to donate to. The charities include:

    • Lifeboats
    • Marie Curie Cancer Care
    • Age UK
    • Pet charity Blue Cross
    • NSPCC
    • National Trust
    • Dogs Trust
    • The armed forces charity SSAFA
    • Mental health charity Mind
    • Diabetes UK
    • Redwings Horse Sanctuary
    • Breast Cancer Now

    What should I do if I need a more complicated will written up?
    Free Wills Month is an excellent opportunity to get a simple will or pair of mirror wills drawn up. If you want something more complicated you can still take part, but your solicitor may ask you to pay for the extra work. However, most people will only require a simple will.

    Why is having a will important?
    According to IFA database Unbiased, 60% of UK adults don’t have a will. If someone dies without a will, this is called dying intestate and can cause huge difficulties for their loved ones.

    People often assume that if they’re married their loved one will automatically inherit their assets, but unfortunately it’s not always as simple as that.

    What happens if you die intestate?
    Dying intestate risks your estate being cut up and distributed against your wishes. Without a will, the law decides who gets what.

    For example, say you’re married, or in a civil partnership, and have two children. If you die intestate then your estate (up to the value of £250,000) will be split in half, with one half going to your husband, wife or civil partner and the other half going to your children.

    However, any lifelong partners or cohabiting couples who are not married or in partnerships, will often be left unable to inherit anything. Ex-spouses do not receive anything under the intestacy rules of England and Wales.

    What are the benefits of writing a will?

    • Help reduce inheritance tax
    • Provide for dependents, such as children and grandchildren
    • Less hassle and stress for your loved ones at an already difficult and upsetting time.

    Find out more about the benefits of writing a will

    Why is it important to keep your will up to date?
    Even if you already have a will it’s important to keep it up to date. This is also free of charge during Free Wills Month – with participating solicitors.

    Gov.co.uk recommends you review your will every 5 years (or if your executor dies) and alter it to take into account any major life changes, such as:

    • having a child
    • moving house
    • getting married (this voids any previous wills)

    Find out more about Free Wills Month

    Read more
  • 13/02/2019 | Investments News

    5 ways to detect a phishing email

    Clickbait or ‘Phishing’ is a fraudulent attempt to access sensitive information such as passwords or access to systems.

    It can sometimes be hard to identify a phishing scam, or you realise a little too late. 

    Phishing scams usually look like a legitimate email, often from a brand that you may recognise. Cyber-scammers will often use the names, and branding of larger companies that you are more likely to recognise, such as HMRC, your bank, Apple or Amazon to help give an air of legitimacy to their email. One of the most common approaches is to ask you to click on a link to update your account, or to access a refund that has been awarded and is ready for collection. Even if you think you know the sender, they may not be who they say they are so it’s always worth undertaking a few checks before you click on that link. If there is any doubt that the sender may not be genuine, or if they are encouraging an undue sense of urgency, don’t click until you’re absolutely confident that it’s the right thing to do.  

    5 ways to detect a phishing email 

    1. The email is sent from a public email address 
    2. Look at the sender’s email address, this will give more clarity into who the actual sender is. It will be different from the company address that it is making out to be from. For example, an email from Amazon is unlikely to come from an address that includes ‘gmail’ or has a series of numbers in it. 
    3. Strange attachments 
    4. If the email is unexpected, or comes from an unknown recipient (or one that looks untrustworthy), beware if it asks you to open an attachment. These attachments can contain malware (malicious software programs that load automatically) that can harm your computer and capture personal data, often without you knowing this is happening.
    5. The unnecessary creation of a sense of urgency
    6. Phishing emails will often make themselves out to be urgent, in the hope that you will panic and not pay enough attention to the potential risks. This may be achieved by saying that your personal data has already been accessed, and that you should verify or make changes to it urgently, or reset a password to stop any further damage occurring.
    7. Links to unrecognised websites, or website addresses that subtly misspell a familiar domain name
    8. Phishing emails normally ask you to click on a link within the email. If you hover your mouse over the link it may come apparent that the website address (or URL) is mis-spelled, or completely different from who they are pretending to be. 
    9. Poor spelling and grammar 
    10. You can often detect a phishing email by the way it is written. The style of writing or tone of voice used will often be very different from the sender who they are pretending to be; poor spelling or grammar is a good giveaway to a phishing scam that has originated overseas. 
    If any of these warning signs appear at any time or if in any doubt at all, do not click on any links, or open any attachments. If you wish to check the validity of the email, you should contact the provider (using a publicly available contact email address or telephone number from their website, and not the contact details specified within the email itself).

    For more tips on how to stay safe online, we've covered how to avoid falling victim to bank transfer fraud and how to protect yourself against identity theft.

     

     
    Read more
  • 04/02/2019 | Investments News

    The FCA publishes findings on the High-Cost Short-Term Credit market

    Over 5.4 million unsecured loans with interest rates (APR) of 100% or more were made in the year to 30 June 2018.

    Recent research published by the Financial Conduct Authority (FCA) has highlighted the size of the high-cost short-term credit (HCSTC) market, which includes payday loans normally repayable within one month, and short-term instalment loans repayable within a maximum of 12 months. More than £1.3bn was borrowed between 1 July 2017 and 30 June 2018 at interest rates (APR) of more than 100%, with the amount repayable on that borrowing being £2.1bn.

    The FCA data, sourced from regulatory returns and the FCA’s own Financial Lives Survey 2017 also includes the following key statistics:

    • Over 5.4 million HCSTC loans were made in the year to 30 June 2018
    • Lending volumes increased when compared to 2016, but were well below the levels seen in 2013
    • The average loan amount was £250, with the average amount repayable being £413 i.e. 1.65 times the amount that was borrowed
    • The average APR charged was around 1,250% (mean value), with the median value slightly higher at 1,300%.
    • The North West has the highest number of loans per head of adult population (125 per 1,000), with Northern Ireland having the lowest (74 per 1,000)
    • The average loan values were the highest in Greater London
    • The highest proportion (37%) of payday loan borrowers are aged 25 to 34
    • 37% of HCSTC borrowers are tenants, and 26% are living with parents

    Perhaps the most concerning, but unsurprising statistic supports the cycle of debt – 67% of payday loan borrowers and 49% of short-term instalment borrowers are over-indebted, compared with 15% of UK adults. As part of efforts to protect the more financially vulnerable in society, the FCA introduced price capping in January 2015 which limited interest and fees to 0.8% per day of the amount borrowed, with an overlying restriction that fees and interest can not exceed 100% of the amount that was borrowed.

    The full findings of the FCA research can be found here.

    We've looked into other investigations by the Financial Conduct Authority (FCA) including how savers are missing out on £480m in interest and proposals to reform the dysfunctional overdraft market.

    Read more
  • 10/01/2019 | Investments News

    Pensions cold calling has now been banned by law

    The ban on pensions cold-calling will come into force early in 2019, after being approved by parliament on 18 December 2018.
    Cold calls have, unfortunately, become a way of life. Whilst some controls have been put in place over recent years to try to reduce the number received (for example, GDPR regulations were launched in 2018, and you can register with the Telephone Preference Service to opt out of unsolicited contact), they continue.

    Whilst some cold calls can just be seen as an inconvenience, many people have suffered by following inappropriate pensions advice from unsolicited telephone calls – resulting in the loss of significant sums of money, which could have a notable effect on their standard of living in retirement. Inappropriate actions could include losing valuable guarantees by transferring the pension to a new scheme, or incurring high costs and/or increased risks by investing in more speculative investments.

    In the Autumn of 2016 the government committed to consulting on a ban on pensions cold calling, with the consultation subsequently being launched in December 2016. There was little disagreement with the proposed interventions, and the response to the consultation (including the proposed approach to the ban) was published in August 2017. Legislative changes needed to be made to push the ban through, and these were included in Section 21 of the Financial Guidance and Claims Act 2018, which received Royal Assent on 10 May 2018 . Whilst the intention was to introduce the ban in June 2018, this was delayed whilst the Treasury consulted on further technicalities, but the ban was finally approved on 18 December 2018, and is expected to become effective early in 2019.

    The Telephone Preference Service (TPS) is the official, free central opt-out register for unsolicited sales or marketing calls. It is a legal requirement that all organisations (including charities, voluntary organisations and political parties) do not make such calls to numbers registered on the TPS unless they have your consent to do so. If you would like to register with their service, it can be done via their website at  www.tpsonline.org.uk. 
    Read more
  • 19/12/2018 | Investments News

    The FCA proposes ‘radical changes’ to reform the dysfunctional overdraft market

    Newly announced plans from the FCA form part of its high-cost credit review.

    Banks have been criticized for charging excessive fees for unauthorised overdrafts, making it extremely difficult for customers to climb their way out of the red. Research undertaken by the Financial Conduct Authority (FCA) has found that banks and building societies made over £2.4bn in 2017 from overdrafts alone, with around 30% of this coming from unarranged overdrafts. In some cases, these fees can be more than 10 times as high as charges for payday loans; the full report can be found here. The FCA is planning to crack down on banks charging higher prices for unarranged overdrafts and in doing so, protect some of the more vulnerable customers who are more likely to be impacted by these fees.

    What are the FCA proposing, and why?
    Overhauling the way fees are charged: The FCA are proposing to simplify interest rate charges on overdrafts by introducing a simple, single interest rate with no daily or monthly charges. This comes with a ban on fixed fees for borrowing through an overdraft. They are also proposing a ban on charging higher prices for when customers use an unarranged overdraft; currently the daily interest rate for unarranged drafts regularly exceeds 10%.

    Forcing clearer advertising: The FCA report states that only 20% of consumers fully understand the pricing differences and charging structures in the current overdraft market. The financial regulator is encouraging transparency in the market by mandating that arranged overdraft prices must be advertised in a standard way, which will make it easier for customers to compare accounts with alternatives offered by the competition.

    Issuing new guidance on reasonable fees: Banks have been criticised for charging hyperbolic amounts compared to the administrative costs they incur for attempting to collect payment through a direct debit. The FCA are reiterating that fees relating to refused payments should correspond to the administrative costs of refusing those payments, and explain that these costs may be incurred.

    Telling banks to ‘do more’ to identify vulnerable consumers: The FCA reported that in 2016, 14% of consumers who used their overdraft every month paid 69% of all arranged, unarranged and refused payment fees. StepChange (a UK debt charity) have stated that overdrafts were the second most commonly held consumer credit debts after credit cards, with the average amount £1,523. The FCA are urging banks to identify overdraft customers showing signs of experiencing financial strain or financial difficulty, and to help them to reduce their overdraft use. This supports the proposal’s objective of providing greater protection for overdraft customers, particularly the most vulnerable.

    What have the FCA done so far?
    Whilst these proposals have just been announced, the FCA is already taking action on the overdraft market following a consultation in May. The following reforms have already been introduced:

    Digital comparison tools: online eligibility tools have been introduced that allow customers to check if they can get a cheaper overdraft elsewhere or whether other forms of credit may better suit their circumstances.

    Clearing up the complexity of fees: banks and building societies are required to provide overdraft charge calculators that help customers translate interest rates into pounds and pence.

    Making customers better informed of their overdraft: The FCA has asked for mobile phone alerts when accounts look like they may go overdrawn, and changes to show overdrawn balances to the customer at cash machines. These changes have been brought in to address unexpected overdraft use.

    New rules to be in place by December 2019
    The Chief Executive of the FCA, Andrew Bailey, says this proposal is the ‘biggest intervention in the overdraft market for a generation’. Whilst the FCA recognises that overdrafts are an integral part of the UK banking market, the proposed changes will make using overdrafts more of a safety net and less of a slippery slope for millions of people in the UK who use them.

    Banks and building societies have been asked to respond to the report by 18 March 2019. The FCA will then consider responses and final rules will be published in early June 2019, giving firms a six-month window to comply with the new rules, before they come into force by early December 2019.

    Further articles
    We've looked into other investigations by the Financial Conduct Authority (FCA) including how savers are missing out on £480m in interest and findings on into the high-cost short-term credit market.

    Sophie Redgell
    Investment Marketing Team

    Read more
  • 11/12/2018 | Investments News

    Bank of England ‘quietly confident’ UK banks are prepared for a cliff-edge Brexit

    The Bank of England have effectively been preparing for a no-deal Brexit since the day after the referendum, says Mark Carney.

    It’s been just 10 years since the last UK financial crisis, and the heavy criticism that followed that the banks were not adequately prepared for such an event. Who could forget the run on Northern Rock bank, the subsequent bailouts, and the recession that followed? With Brexit now coming to a head, the Bank of England is ‘quietly confident’ that UK banks are ready for all Brexit eventualities, and the impact it may have on the economy . So why has the Bank of England come to that conclusion?

    Stress-testing for a cliff-edge Brexit
    The BoE has modelled some of the more extreme economic scenarios that could fall out of a no-deal Brexit, and has then stress-tested lenders’ balance sheets against some of these scenarios. The good news is that the BoE has predicted that UK lenders will be able to withstand scenarios such as a fall in UK GDP of 4.7 per cent, and house prices plummeting by 33 per cent.

    Rainy-day fund
    Yes, even banks need a rainy-day fund.

    The requirement to hold a buffer was introduced in 2010 by the Basel Committee on Banking Supervision. The Bank of England now requires banks to hold a rainy-day fund, known as the counter-cyclical buffer (CCyB), which can be freed up to help ensure the economy does not stall. The CCyB is currently set at 1 per cent of banks’ total assets, but notes published by BoE recently show that the BoE was ready to lower lenders’ capital buffers to 0% in an attempt to maintain £250bn of lending to the wider economy; this was most recently done in July 2016. This £250bn boost to lending to UK households and businesses is designed to stabilise the UK economy in the event of an economic downturn.

    Forcing banks to improve easy-to-sell assets
    The BoE has been forcing lenders to improve the amount and quality of easy-to-sell assets, to enable them to lend more to UK households and businesses. Lenders now collectively hold £1 trillion of high-quality assets, and some lenders have placed collateral with the Bank of England to enable them to borrow even more to lend out should the economy call for it.

    Mark Carney believes the BoE has put all the measures they can in place to prepare for a no-deal Brexit, although the nature of the exit has today become more complicated following the Prime Minister’s announcement to delay the vote on the draft Brexit agreement she negotiated with the EU.

    Sophie Redgell
    Investment Marketing Team

    Read more
  • 26/11/2018 | Investments News

    Over 800 nominees have been put forward for the face of the new £50 note so far

    The Bank of England has asked the public for nominations, with the window closing on 14th December.

    The Bank of England has released a list of the scientists that have been nominated by the public to replace James Watt and Matthew Boulton on the new £50 note, with over 600 men and almost 200 women being nominated so far.

    The list of nominations includes black holes expert Stephen Hawking, telephone inventor Alexander Graham Bell (if you ignore competing claims by Antonio Meucci and Philipp Reis), mathematician and computer scientist Alan Turing, penicillin discoverer Alexander Fleming, father of modern epidemiology John Snow, naturalist and zookeeper Gerald Durrell, fossil pioneer Mary Anning, British-Jamaican business woman and nursing pioneer Mary Seacole and Margaret Thatcher, who was a scientist before becoming British Prime Minister.

    There’s still time to submit your nomination if you wish to; this can be done on the Bank of England's website. Nominations must be real people, have contributed to the field of science in the UK (this can include anyone who worked in any field of science including astronomy, biology, bio-technology, chemistry, engineering, mathematics, medical research, physics, technology or zoology), and are deceased. Of the 174,112 nominations received so far, 114,000 have met the eligibility criteria.

    Once the nomination window has closed, the decision will be made by the Bank of England’s Banknote Character Advisory Committee, which will include space scientist Maggie Aderin-Pocock, author and genetics expert Emily Grossman, editor of the British Journal for the History of Science Simon Schaffer, and theoretical and particle physicist Simon Singh.

    According to the Bank of England, there are currently 330 million £50 notes in circulation, with a combined value of £16.5bn. A year ago there were doubts that the £50 note would continue to exist at all; fears that the largest denomination note was widely used by criminals, and rarely for ordinary purchases, prompted a government-led discussion on whether to abolish it.

    Nevertheless, in October, ministers announced plans for a new version of the note, to be printed in the UK, which they said would be plastic - so, more durable, secure and harder to forge.

    The deadline for nominations is 14th December 2018.

    Jeremy Stevens
    Investment Marketing

    Read more
  • 12/11/2018 | Investments News

    Castle Trust: Our investment story

    We answer some frequently asked questions to help you learn more about Castle Trust and our investment products [Updated 01/05/2019]

    [Updated 01/05/2019 to reflect the release of the latest financial statement]

    Castle Trust is authorised and regulated by the Financial Conduct Authority and is a participant in the Financial Services Compensation Scheme. You risk losing capital should Castle Trust become insolvent.

    It’s possible that until not too long ago, you hadn’t heard of Castle Trust and what we have to offer. It may even be that you’ve only just discovered us. We recognise that we are a small player in a big financial services market, but we believe that is part of our strength; small doesn’t necessarily mean bad, in the same way that big doesn’t necessarily mean good. To help you understand a little more about us, we’ve covered off some frequently asked questions that our Call Centre Associates often receive below.

    Where is Castle Trust based?
    Castle Trust employs over 230 people across our executive headquarters in the City of London, and our administration centre in Basingstoke, Hampshire. The call centres for investment and mortgage clients are staffed by helpful, friendly experts in the Basingstoke office. If you have any questions about Fortress Bonds, you can call (Freephone) 0808 164 5000, between 9am and 5pm Monday to Friday or write to us at Castle Trust, PO Box 6965, Basingstoke, RG24 4XE.

    What is Castle Trust’s financial position?
    Castle Trust was launched in 2012, with backing from private equity firm JC Flowers & Co. Our Fortress Bond range of investments was launched in July 2014. As at 30 September 2018 (the date of our last published accounts), customers had invested £735 million into our range of Fortress Bonds; in the last 12 months alone, interest payments of more than £13 million had been made to customers, with all payments (including capital repayments) being paid to those customers when due. For more information on Castle Trust’s financial position, you can download a summary version of Castle Trust's Financial Strength document. For a more detailed read, our full financial statements are available under the Prospectus Documents section of the Investments Information page.

    What does Castle Trust do with the money I invest?
    To generate your investment returns, Castle Trust uses the majority of the funds you invest to advance mortgage loans to residential property owners and property developers, as well as making loans to consumers. The balance is held by Castle Trust in cash instruments to manage the short-term cash requirement of the business.

    Why can’t I see Fortress Bonds in the Best Buy tables?
    Whilst Fortress Bonds achieve the same goals as fixed term deposit accounts – a rate of interest set at the outset, over an agreed term, with interest paid at regular intervals or at maturity – there are some key differences. Fortress Bonds are investments that offer an alternative to traditional savings accounts, and as the Best Buy tables only show like-for-like options (in this case deposit accounts) Fortress Bonds aren’t able to be included, despite their often market-leading rates.

    For more information on Castle Trust, please visit the About Us page  and the Investments Information page  to learn more about the company and the products we offer.

    Sophie Redgell
    Investment Marketing

    Read more
  • 02/11/2018 | Investments News

    How might the 2018 budget affect Castle Trust customers?

    We take a look through the budget announcement and highlight the key changes we think will be of most interest to our customers.

    The 2018 budget was announced this week in a speech by Chancellor Philip Hammond. With any budget, some areas benefit more than others, so we’ve taken a look through the detail and have highlighted some key changes which we believe might be of interest to our customers.

    The tax-free Personal Allowance will rise to £12,500
    The Personal Allowance will rise from £11,850 to £12,500 on 6 April 2019. This change was due to come into effect in 2020 but will be implemented in 2019 and will be held at this level in 2020. This affects all taxable income, which includes employment and pension income, as well as earnings from investments.

    Higher Rate Threshold set to increase from £46,350 to £50,000
    The Higher Rate Threshold will go up by £3,650 (a 7.8% increase) on 6 April 2019, meaning that people will now be able to have a taxable income of £50,000 before they pay tax at 40%.

    Fuel duty will remain frozen for a ninth year
    With petrol prices recently reaching the highest they have been in four years , this point in the budget may come as some respite for motorists.

    Short-haul rates of Air Passenger Duty
    Air Passenger Duty rates on short-haul flights will be held steady for the eighth year in a row, benefitting 80% of passengers. Whilst long-haul rates will rise, the increase will be in line with inflation.

    Lifting the borrowing cap to allow local authorities to build more housing
    Whilst developers will still need to go through the standard planning permission hurdles that are associated with building new homes, from 29 October 2018, the government is lifting the borrowing cap in England which will increase the amount local authorities are able to borrow to build housing.

    The Welsh Government is taking immediate measures to remove the cap in Wales.

    Up to £19 million in commemoration of the Centenary of the WWI Armistice
    A combined total of up to £19 million has been committed to mark 100 years since the end of the First World War. Up to £8 million will be available to help with the cost of repairs to village halls, Miners’ facilities and Armed Forces organisations’ facilities. £10 million will support veterans with mental health needs, and £1 million will fund First World War Battlefield visits for school students.

    Billions committed to improving roads
    £28.8 billion has been committed to the National Roads Fund, paid for by road tax, the largest ever investment of this kind. This figure includes £25.3 billion for the Strategic Road Network which addresses motorways, trunk and A roads; it will also help fund the new network of local roads and larger local network projects.

    In addition, local authorities will receive an extra £420 million to fix potholes and renew bridges and tunnels, and £150 million to improve local traffic hotspots such as roundabouts.

    Over £1.5billion to support the high street
    Whilst the government is limited on helping high street shops with their rent costs, they can help them in other areas. Small retail businesses will see their business rates bills cut by a third from April 2019, for two years, saving them £900 million.

    Transport links will be improved using a budget of £675 million which will benefit local high streets.
    This money will also be used to re-develop empty shops as home and offices and to restore and re-use old and historic properties.

    Increasing funding to help departments to prepare for Brexit to over £4 billion
    Unsurprisingly, Brexit received some attention from the 2018 budget with £500 million of additional funding being provided to departments to prepare for Brexit for 2019-20. This brings the total budget for Brexit for 2019-20 to £2 billion.

    A commemorative 50p Brexit coin will be available to buy from Spring 2019
    One for the coin collectors; the Royal Mint will create a new commemorative coin to mark the UK’s exit from the European Union. On the topic of Brexit, Hammond has cautioned that should a successful deal with the EU not be reached ahead of Brexit, he may have to deliver an unscheduled emergency Budget and revise the plans announced this week.

    Sophie Redgell
    Investment Marketing Team

    Read more
  • 19/10/2018 | Investments News

    Protect yourself against identity theft

    We cover how to spot suspicious activity and ways to stay safe online
    Icons_QuestionWhat is identity theft? 

    Identity theft happens when fraudsters access enough information about someone’s identity (such as their name, date of birth, current or previous addresses) to enable them to commit identity fraud. Identity theft can take place whether the fraud victim is alive, or deceased.

    If you’re a victim of identity theft, it can lead to fraud that can have a direct impact on your personal finances and could also make it difficult for you to obtain loans, credit cards or a mortgage until the matter is resolved.

    What is identity fraud?
    Identity fraud is the use of a stolen identity for criminal activity, such as to obtain goods or services by deception. Fraudsters could use your identity details to:

    • Open bank accounts
    • Obtain credit cards, loans and state benefits
    • Order goods in your name
    • Take over your existing accounts
    • Take out mobile phone contracts
    • Obtain genuine documents such as passports and driving licences in your name.

    You may not become aware that you have been a victim of identity fraud until you receive bills or invoices for things you haven’t ordered, or if you receive letters from debt collectors for debts that aren’t yours.

    What is phishing
    Fraudsters may try to trick you into revealing personal information by pretending to be from a legitimate source – this is known as ‘phishing’. A phishing scam usually begins with an email (perhaps with a link to a fake website, or with a form attached), a text, or an unexpected call which looks or sounds like it’s from a genuine business. The email or website might even have all the right logos or fonts on it. The scam might ask for personal details like usernames, passwords, PINs, or even ask directly for your bank account details. Alternatively, you may be encouraged to open a document attached to an email, which could in fact infect your computer with a virus.

    Often, the approach is made under the premise of conducting routine maintenance, or to update your security details. A more dramatic approach (designed to frighten you into taking action) can be to tell you that you have already been the victim of fraud, and that the details are required to confirm that you are who you say you are, and to stop any further fraud taking place.

    How can I spot a possible phishing scam?
    Phishing isn’t always easy to identify, but there are a number of clues to look out for, for example:

    • Poor spelling or grammar – scams often originate overseas, where the scammers have weak English language skills
    • Non-personal address – the scammer probably doesn’t know you by name, so they might address you as ‘Dear Sir/Madam’ or similar, or something less formal such as ‘Dear Friend’
    • Unexpected email – try to think whether there is a good reason for this business to be contacting you
    • Suspicious email address – some of the email addresses used in such scams clearly raise suspicion, because they look like a personal email address. Others, however, can look like they are from a genuine organisation, but there may be clues to indicate that isn’t the case – perhaps a letter may be out of place, or a section of the email address (perhaps after the ‘@’ symbol) looks inappropriate
    • The website address that a link takes you to – check that it appears to be genuine, isn’t unusually long, or has letters substituted by numbers (for example, a 3 instead of an E, or a 4 instead of an A)
    • Requests to act quickly – you’ll often be urged to take action immediately, perhaps on the premise that your account will otherwise be suspended, or to prevent any further fraud taking place against you (a double-bluff).

    What should I do if I suspect a scam?
    If you have any reason to suspect whether the contact is genuine – even if it just doesn’t ‘feel’ right – proceed with caution.

    Phone calls
    • Don’t disclose any personal or financial details to the person on the phone
    • Don’t tell them any password or login details
    • Don’t reveal your PIN number, or any of the numbers on your credit or debit card
    • Tell the caller that you will contact their organisation directly instead, and hang up. Don’t be afraid to be authoritative
    • Wait a few minutes, and check that you have a dialling tone before you call any Helplines (sometimes the fraudulent caller may remain on the line).
    Emails
    • Don’t reply to the email
    • Don’t open any attachments
    • Don’t click any links in the message
    • Don’t phone any numbers or visit any website address included in the message
    • Delete the email from your Inbox, then delete it from your Deleted Items folder (sometimes called Trash).
    Texts
    • Don’t reply to the text
    • Don’t click on any links in the message
    • Don’t phone any numbers or visit any website address included in the message
    • Delete the text.

    What should I do next?
    If the contact claims to be from an organisation that you already have a financial relationship with, check previous correspondence you have received from them (a bank or credit card statement, for example), or look up their website address via a search engine such as Google or Yahoo, to find a genuine Helpline telephone number. Call their Helpline, explain the contact you have received and ask them if it is genuine or not; they may be able to help you immediately, or may need to put you through to their fraud department to confirm whether the contact was genuine or not.

    If you do not have a financial relationship with the organisation that has contacted you, there is more reason to be suspicious. Search for their website via a search engine such as Google or Yahoo, and contact their Helpline number.

    Icons_Docs

    You can download this information in our Protect Yourself Against Fraud guide.

    Read more
  • 10/10/2018 | Investments News

    Citizens Advice explores 'vast rip-off' of vulnerable and disengaged consumers

    Citizens Advice raises a super-complaint covering five 'essential markets'.

    On September 27, Citizens Advice (CA) raised a super-complaint with the Competition and Markets Authority (CMA) about long-term customers overpaying for key services in five ‘essential markets’, including mortgages, household insurance, mobile, broadband and savings accounts.

    Whilst all individuals have the right to complain, designated consumer organisations can make a super-complaint on behalf of thousands, or potentially millions of people. A super-complaint requires regulators to investigate the markets or market practices that the consumer organisation thinks are significantly harming the interests of consumers. 

    This complaint calls on the CMA to tackle the ‘loyalty penalty’ in essential markets to “protect people from being ripped off”.

    CA estimates that people who are loyal to their service providers are losing out on more than £4bn a year, when compared to the deals available to new customers, or customers who switch providers. Within its complaint the consumer group claimed “It is, in effect, a systematic scam”, adding that nobody would choose to pay these extortionate sums and that companies charge these prices solely in the hope that people won’t notice.

    Citizens Advice doesn’t use its power to make a super-complaint frequently. The last time it raised one was seven years ago, regarding the mis-selling of Payment Protection Insurance (PPI) – which has since led to £32.2bn being returned to customers in refunds and compensation.

    Savings accounts headlines
    The headline observations from the super-complaint relating to savings account are:

    • 80% of easy access accounts have not switched in the last 3 years (FCA Jan 2015)
    • 37% of people with a savings account likely to be paying a loyalty penalty, with an estimated average loss of £48.26 in interest for people holding cash ISAs
    • The total loyalty penalty attributed to savings accounts was £1.136bn a year
    • People aged 65 or over are more likely to have done no shopping around before entering into a contract than those aged 18-64, across broadband, mortgages, mobile contracts, home insurance and savings accounts. Over 8 in 10 (87%) of over 65s pay the loyalty penalty in at least one market in comparison to 72% of those aged 18-34.
    As part of its complaint, CA has drawn on the Financial Conduct Authority’s cash savings market study, which found that large current account providers have a considerable market advantage, because they could attract the most easy access balances despite offering lower interest rates. As a result, while there are over 100 providers, more than two-thirds of the market is controlled by just six savings providers. 

    The super-complaint will require the CMA to complete a thorough investigation into the ‘loyalty penalty’ in all five essential markets, including savings accounts, and take appropriate action following the result. 

    The next stage is for the CMA to publish a response within 90 days and the possible outcomes of its investigation competition or consumer enforcement action or launching a further market investigation or market study.

    Castle Trust has long been an advocate of encouraging customers to shop round for the best deal – savings rates, for example, can vary widely even in a low-interest environment such as the one we have been in for the last ten years.  Our blogs Big banks pay the best interest rates – right? Wrong! and FCA says savers missing out on £480m in interest have more information on this subject.

    More information about the super-complaint can be found here:
    Citizens Advice announcement
    CMA Press Release
    Citizens Advice complaint

    Jeremy Stevens
    Investment Marketing Team
    Read more
  • 10/10/2018 | Investments News

    More and more people rely on the bank of Mum and Dad to get on the property ladder

    A significant number of people are now finding themselves worse off financially as a result of making the gift.

    Recent research from Legal & General has found that whilst parents continue to lend or give money to children or grandchildren to get on the property ladder, they are feeling the pinch themselves with the average contribution going down by 17% this year to £18,000. A significant number of people are now finding themselves worse off financially as a result of making the gift. Nevertheless, more than one in four buyers still expect to receive help from family or friends.

    Despite the amount being lent or given dropping to £5.7bn this year compared to £6.5bn last year, the so-called Bank of Mum and Dad was still a ‘prime mover’ in the housing market.

    Key findings from the research were:

    • In total, 27% of homebuyers will get assistance – up from 25% in 2017. Almost 317,000 housing transactions this year will rely on at least some parental help
    • Parents and grandparents will lend £5.7 billion in 2018, helping more than a quarter of new home buyers (27%). The average amount has dropped from £21,600 in 2017 to £18,000 in 2018
    • 17% of parents and grandparents accept a lower standard of living to allow their children and grandchildren to get on the property ladder
    • Whilst nearly three in five people under the age of 35 get help from parents, one in five homeowners aged between 45 and 55 also now require support from their elderly parents to purchase property
    • The highest average contribution is £31,000 in London, with the lowest being £11,000 in Scotland.

    You may have already helped a family member with a property purchase, or be considering doing so in the future. If that’s the case, it’s important that you give any money you put aside the opportunity to grow at least at the rate of house-price inflation – but with house price inflation varying across the country, it is difficult to know just how much these savings have to grow by to hold their value.

    Sophie Redgell
    Investment Marketing Team

    Read more
  • 10/10/2018 | Investments News

    ISA Transfers – don’t neglect your old ISA contributions

    Could your previous tax years' ISA contributions be working harder for you?

    If you’ve already saved your ISA allowance for this year, you probably shopped around to find a competitive rate first. The ISA rules allow you to choose a different ISA manager for your contribution each year if you want to; you don’t have to save with the same ISA manager each year. 

    Whilst this flexibility gives you the freedom to find the best rate for the current year’s allowance, it can also leave your finances fragmented, with your ISAs spread across several providers – and that could mean that you’re losing out overall. The rate you managed to find a few years ago may have been competitive at the time, but that might not be the case now.

    This is where the ISA Transfer option can prove to be beneficial. ISAs accumulated in previous tax years can be moved about independently of the ISA manager that you’ve chosen for this year’s allowance – allowing you to shop around for the best interest rates for the contributions you’ve made in previous years, as well as this year.

    The transfer of a cash ISA is normally very simple – you instruct the new manager to request the transfer from the old one (via the application form, usually), and the cash value is then applied for, and moved across on your behalf.

    Stocks & Shares ISAs are a little different.  Whilst the process for requesting the transfer is the same, the actual ISA value can be transferred in one of two ways. The first is as per a cash ISA; any assets held within the stocks and shares ISA are encashed, and the cash value is then transferred to the new ISA manager.

    The second is known as an in-specie transfer and here the actual assets, rather than their cash value, are transferred to the new ISA manager. These types of transfer can only be arranged if the new ISA manager is able to accept and hold the assets, and there may be charges involved in facilitating the transfer. The main benefit of an in-specie transfer is that the assets will remain invested throughout the process and will therefore avoid the risk of the re-purchase price being higher than the price achieved when the assets were sold.

    It is essential to remember that, for an ISA value to retain its ISA status, any transfer must be made using the formal transfer process.  If you cash your ISA in and then try to forward the value to a new ISA manager, you have effectively withdrawn your money from the ISA and so any subsequent contribution paid to the new ISA manager would be counted as part of your current tax year’s ISA contribution allowance.

    You can find out more about ISAs by viewing our ISAs Explained Q&A Guide article. If you’re interested in finding out more about Castle Trust’s Fortress Bond ISAs, there’s more information on our Investments Information page.

    Jeremy Stevens
    Investment Marketing Team

    Read more
  • 10/10/2018 | Investments News

    ISAs explained - Q&A Guide

    Our Q&A guide aims to answer your questions about ISAs, to help you make the most of your tax efficient savings allowances.

    [This guide has been updated to reflect the 2019/20 tax year changes, you can read the updated guide here]

    Icons_Question

    What is an ISA?
    ISA stands for Individual Savings Account. An ISA is a way of holding savings or investments without paying personal tax on interest received, or on the growth of your investment.

    What kinds of ISA are there?

    • Cash ISA
    • A type of savings account, where any interest received is tax-free
    • Stocks & Shares ISA
    • A ‘wrapper’ for investments, where any investment growth is tax-free
    • Innovative Finance ISA
    • A ‘wrapper’ specifically for peer-to-peer investments, where any interest received is tax-free
    • Help to Buy ISA
    • A regular savings Cash ISA, where the government will add up to £3,000 if you have
      contributed £12,000 yourself
    • Lifetime ISA
    • A type of Cash or Stocks & Shares ISA available to the under 40s from 06 April 2017, designed to help people save for their first home, or for their retirement. Any interest received or investment growth is tax-free. Savings of up to £4,000 per year
      will be matched by a contribution of up to £1,000 from the government; any savings above that amount will not receive any additional bonus
    • Junior ISA
    • A type of cash ISA where parents can save up to £4,260 per year tax-free for the child. The child gains access to the money at the age of 16, and the account becomes a standard cash ISA at the age of 18
    • Inheritance ISA
    • A cash ISA specifically for widows, widowers or bereaved civil partners, where the deceased’s ISA can be transferred across into the surviving partner’s name, in addition to their own annual allowance.

    How much can I save into a Cash or Stocks & Shares ISA?
    There is a limit for how much new money you can place into these ISAs each year. For the 2018-2019 tax year, that amount is £20,000.

    What are the tax year dates?
    The tax year starts on 06 April each year, and runs to the following 05 April.

    Do I have to use the same ISA provider each year?
    No. Your options start afresh each tax year. If you contributed to an ISA with a company in any particular year, you’re not committed to using them again in the future – you could choose a new company for each year’s ISA contributions if you wanted to.

    Can I save into more than one ISA during the same tax year?
    You can contribute to one Cash ISA, one Stocks & Shares ISA, and/or one Innovative Finance ISA per tax year (so you could contribute to one, two or three types during the same tax year if you wanted to). Whilst you could choose a different company for each one of these ISAs, you can’t contribute to the same type of ISA with two different companies during the same tax year – for example, if you make a contribution to your existing Cash ISA provider during a tax year, you can’t then also make a contribution with a different Cash ISA provider in the same tax year. Your total contributions during the tax year can’t exceed the annual ISA contribution allowance.

    Can I transfer any existing ISA savings to a new ISA provider?
    Subject to each ISA provider’s terms, you can transfer existing ISA savings to a different ISA provider – and as the value being transferred relates to contributions made in a previous tax year, any transfer is in addition to your current annual contribution allowance. A transfer of contributions made in the current tax year must be made in full; ISAs built up in previous years can be transferred partially or in full, but this again may be subject to the terms of the provider that currently holds the ISA.

    If you are considering transferring an existing ISA, you should contact the provider to whom you wish to make the transfer first; they will then arrange for the transfer value to be requested from your existing provider. If you withdraw the existing ISA value and send it to the new provider, this would make the existing value lose its ISA status, which would then mean it would be classed as a new contribution again – which might mean that you exceed the current year’s annual contribution allowance.

    Can I transfer one type of ISA into another type of ISA?
    Yes. For example, you could transfer an existing Cash ISA into a Stocks & Shares ISA with a different provider.

    Can I withdraw money from an ISA?
    Subject to the ISA provider’s terms allowing withdrawals to be made, you can make withdrawals from your ISA. An example of when you might not be able to make a withdrawal is if you put money into a fixed-term savings account, but not yet have reached the end of the term.

    If a withdrawal is made, that money loses its ISA status; if it is then put into a new ISA, it will count towards the current year’s annual contribution allowance. The exception to this is if you make a withdrawal from a Cash ISA that you are contributing to in the current tax year; if that’s the case, you can replace the money you have withdrawn without it counting towards your annual ISA contribution allowance, providing that you do this during the current tax year.

    What happens to my ISA if I die?
    If you die, a surviving spouse or civil partner is eligible for a one-off additional ISA contribution allowance that is equivalent to the value of the deceased person’s ISA at their time of death; this is referred to as an ‘additional permitted subscription’, or APS allowance. This additional allowance is available even if the actual ISA value is bequeathed to someone else in your will (the benefits themselves will lose their ISA status). To allow time for the administration of more complex estates to be completed, ISAs can retain their tax-free status for up to 3 years the date of death.

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    You can download the latest ISA information in our ISAs Explained Q&A Guide.

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    If you’re interested in finding out more about Castle Trust’s Fortress Bond ISAs, there’s more information on our Investments Information page

    Jeremy Stevens
    Investment Marketing Team

    This material is provided for informational purposes only and does not represent investment advice or recommendation to invest in any financial instrument or security.
    Please note: the information in this article was correct at the time of publication, but is subject to change in the future.

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  • 10/10/2018 | Investments News

    Should you pay in the local currency, or Sterling when using cards on holiday?

    This handy tip could make your holiday money go that little bit further.

    If you're making a payment abroad using a credit or debit card, you may be asked whether you want to pay in the local currency, or in Sterling. This might seem an innocent enough question, but beware because a nasty sting in the tail awaits those who ask to pay in Sterling.

    Typically you are better off opting to pay in the local currency, rather than converting to Sterling as you make the purchase. If you pay using the local currency, the transaction will then be converted into Sterling at the Mastercard, Visa or Amex own rate. This rate is set daily by Mastercard, Visa or Amex and is linked to the interbank rate, which is a wholesale price agreed between banks. Your card provider will then typically add their own profit margin – usually between 2.75% to 2.99% and the total cost will appear on your statement in Sterling.

    Should you elect, however, to pay Sterling at the point of purchase, a service known as Dynamic Currency Conversion (DCC) may be employed which allows the merchant – that is the shop, bar or restaurant – to set their own exchange rate rather than using the Mastercard or Visa official rate. Surveys have shown that this can typically add around a 7% fee; Cash machines seem to be the biggest culprits, with the conversion having been shown to add up to 18% of the cost of the cash withdrawal if you choose to be billed in Sterling, and not the local currency. If you consider how much you may spend on your card during a typical holiday this huge cost can add up to a big, nasty surprise when you open your statement the following month – so beware, and if not offered the opportunity to pay in the local currency, you should ask for it.

    Small differences in the interest rates you are being charged, or the interest rates your savings are earning, can add up. If you want to make the most of your money and you’re interested in fixed-term, fixed rate investments you’ll find more information about Castle Trust’s Fortress Bonds by viewing our Investments Information page.

    For more information on how to make the most of your holiday money, we've covered 7 tips to cut the cost of holiday cash.

    Jeremy Stevens
    Investment Marketing Team

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  • 10/10/2018 | Investments News

    FCA says savers missing out on £480m in interest

    Savers are losing out by waiting for the interest rate to go up on their existing savings account, instead of switching to a new provider.

    When the Bank of England increases the base rate of interest, you might understandably think that the interest rate on your savings account will also go up shortly afterwards. Of course, some banks will drag their feet, but surely it’s only be a matter of time before the increase is passed on to savers as well as borrowers?
     
    In fact, when the base rate was increased in March 2018, the interest paid on half of all savings accounts failed to rise at all. Of those that did, the average rise was below the 0.25% increase in the base rate. The Financial Conduct Authority (FCA) has estimated that savers could miss out on up to £480m in interest by waiting for the interest rate to go up on their existing savings account, instead of switching to a new provider.
     
    With the base rate as low as it is, it’s understandable that savers might think there will be little difference in the rates offered by different providers. Unfortunately, that's not the case; the spread of interest rates paid on both fixed term and instant access accounts (including ISAs) continues to be significant, hence the FCA’s startling estimate of how much interest is being missed out on.

    It pays to shop around for the best rates for your savings. If you’re interested in fixed-term, fixed rate investments you’ll find more information about Castle Trust’s Fortress Bonds by viewing our Investments Information page.

    Jeremy Stevens
    Investment Marketing Team

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  • 10/10/2018 | Investments News

    The Compounding Effect

    Act sooner rather than later to start feeling the snowball effects of compound interest.

    Often when reading about interest rates, many adverts will tell you to act quickly and or you’ll suffer the ‘cost of delay’. But if you choose where to put your money now or in 6 months’ time, your starting balance is the same, so what is the rush for consumers? Is it just a ploy for financial service providers trying to increase their customer numbers?

    The focus of this post is to understand why it is in your interest to act sooner rather than later. There is, of course, a benefit to the financial service provider; the sooner they get your money, the better it is for them. However, the cost of delay is certainly something worth considering from your own point of view as well, especially when thinking about making your money work as hard as possible for you. Essentially, the cost of delay comes about from the loss of compounded interest. None other than Albert Einstein called compound interest the “eighth wonder of the world”, stating “He who understands it earns it, he who doesn’t pays it.”

    Compounding is, essentially, interest earned (or charged) on interest, which creates a snowball effect. The power and impact of compounding is easiest seen over longer periods of time; whilst you won’t feel significant effects immediately, the longer you give your money to grow, the more you’ll see the beneficial impact of compounding. The cost of delay refers to the fact that the benefits of compounding can’t start to be felt until interest starts to be earned.

    The compounding effect is boosted by higher interest rates. Big banks make much of their money by relying on customer lethargy, from those who delay choosing better options for their savings; you can read more about this here. By leaving sums of money in low interest accounts to think about again 6 months down the line, you are missing out 6 months’ worth of higher interest that could have been compounding the whole time; whilst the benefit may not be significant over 6 months, the benefit will grow the longer those savings are held. In a low interest environment, compound interest can also help to combat the effects of inflation. By taking ownership of your finances now and making active choices, you’ll personally start to feel the positive effects of the snowball effect that others might be missing out on. And Albert Einstein would be proud of you.

    We've explored Albert Einstein's think of the Rule of 72 and apply it to the effects of compounding interest to figure out how long it would take to double your money using a nifty trick.

    Sophie Redgell
    Investment Marketing Team

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  • 08/10/2018 | Investments News

    Are you losing out by sticking with the big banks?

    With giants like Tesco and Amazon striking the balance between prices and profits, do big banks focus too much on shareholder returns?

    It’s not an unreasonable starting point to think that in business and finance, bigger is generally better. The sheer size of some companies enables them to drive economies of scale, which then enables them to price their product or service competitively, whilst continuing to provide acceptable levels of returns to shareholders. You might consider Tesco, Primark, Amazon or Superdrug in this category, for instance.

    These economies of scale are not always used to drive the best deal for all customers though. Some industries rely on the lethargy of their huge customer bases to enable them to charge higher prices, and then give better deals to customers who query this; Insurance companies often offer better rates to new customers than to existing ones, and magically find the ability to reduce a quoted rate when a customer threatens to move to a competitor. Gas and electric suppliers are also often criticised for allowing some of their longest-serving customers to remain on expensive (and more profitable) tariffs, without making sufficient effort to advise those customer that cheaper tariffs are available if only they were to ask.

    Surely the big banks do the best for their customers? And if not, do customers vote with their feet (and their business)? Whilst banks often offer up to £200 to switch banks, and this has never been easier to do thanks to the ‘current account switching service’ , take-up is still disappointingly low. Indeed, research in 2015 showed that people were more likely to get divorced than to change their bank account.

    The big banks often offer some of the lowest savings rates as well - meaning that they can harness the lethargy of their customer base to help maximise their profits. The big advantage banking customers have, however, is that they can move some of their business elsewhere; if moving a current account sounds like too much hassle, there’s no reason why savings or ISAs can’t be moved elsewhere to get a better rate. There are plenty of websites that will provide information on the best savings rates available such as MoneyFacts, MoneySuperMarket, and CompareTheMarket – and a few minutes spent on these websites will show just how much more interest your hard-earned savings could be earning for you.

    You can find out more about Castle Trust’s Fortress Bonds, and the rates available, by viewing our Investments Information page.

    Jeremy Stevens
    Investment Marketing Team

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  • 18/09/2018 | Group News

    Senior management changes

    On 2nd May 2018, Castle Trust announced two further management changes.
    2nd May 2018

    Castle Trust announces two further management changes. 

    Barry Searle, the company’s current Chief Operating Officer will become the company’s new Managing Director (Mortgages).  Barry has been with Castle Trust since 2014, he has been instrumental in the growth of the company, especially within the mortgage division. He held the largest underwriting mandate and had overall responsibility for operations.  During Barry’s financial services career he has held senior roles at various institutions including Legal and General’s mortgage division and GMAC RFC.

    Stuart Sykes will be joining the company as Operations Director from MyJar, where he has been Group Customer Operations Director for the last four years.  He has previously held roles at ICICI Bank, RBS and Lloyds Banking Group.

    Speaking of the appointments, Martin Bischoff, Chief Executive Officer said:

    “As the company’s COO, Barry is already very familiar with both the industry and the aims of the business and was a natural choice to fill the role.  He has contributed enormously to the success of the business so far and will be a pivotal part of our transition to become a bank.

    “Stuart has extensive experience in the lending environment, particularly in consumer finance.  We are delighted that he has chosen to join us as we move into Castle Trust’s next phase.”

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Mortgages
Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Your home may be repossessed if you do not keep up repayments on your mortgage. Loans are subject to status, terms and conditions. This website is for information purposes only. If you are in any doubt regarding suitability of our products please seek advice from an accredited independent mortgage adviser.

Investments
You risk losing capital should Castle Trust become insolvent.

Castle Trust is the trading name of both Castle Trust Capital plc (company number 07454474) and Castle Trust Capital Management Limited (company number 07504954). Castle Trust is authorised and regulated by the Financial Conduct Authority, under reference numbers 541910 and 541893. Registered office: 10 Norwich Street, London, EC4A 1BD. Registered in England and Wales.

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