In my last article, I promised a more detailed comment on the Budget changes to the tax treatment of pensions, but it seems that these changes are not yet ‘cast in stone’. There have been some alterations since the Budget, as I last wrote, and we may not have seen the end of these. Briefly, the changes only affect those earning in excess of £150,000 and are applicable until 5th April 2011 when further restrictions on pension contribution tax relief will be put in place. If you are fortunate enough to be in this position, then the important parts are: all regular contributions (monthly or quarterly) in existence before the 6th of April 2009 will continue to receive full tax relief, as will those pension investors that have made irregular contributions – who will benefit from full tax relief on the lesser of the average of three years ‘infrequent’ contributions or £30,000. The changes do not apply to those members of occupational ‘defined benefit’ (final salary) pension schemes, only ‘money purchase’ arrangements. Confused? You should see the unabridged version! It is not inconceivable that there may be other alterations to pension tax relief – which still remains a valuable benefit for many – so watch this space.
Meanwhile, economic indicators continue to be conflicting: signs of increased mortgage lending, another small increase in a major house price index, Bank of England Base Rate held at 0.5% tempered with increasing unemployment and house repossessions. It appears that the recent rally in the UK stock market has reached somewhat of a plateau; a situation that I feel may well be the case for the remainder of the year. Volatility will probably be a feature of world markets for some while to come, a good thing for some people, and doubtless a great deal of money can be made by relatively few ‘day traders’ brokers and ‘market makers’. Most of us, however, will not benefit to any great degree from this situation for many months. Markets do seem to be reasonable value, not as was available a few months ago, but I feel that in a few year’s time, 2009 will be looked upon as a ‘bargain basement’ year for the share markets.
A quick few lines about the mortgage market: little by little, it seems that the Government actions of the last few months are starting to have some effect. There are signs of lenders increasing the number of schemes that are available and the percentage of purchase price that they will lend, and decreasing their profit margins. (Not that they are historically cheap though, some margins are more than five times what they were a few years ago, however, volumes are very low). But whilst there are no ‘green shoots’ wherever you look, there seem to be buds here and there, on the ‘brown sticks’. The mini heat-wave probably helped a bit, but roll-on the financial summer!