Funding for Lending Scheme will reduce the cost of borrowing

NatWest has set aside £2.5Bn of funds to be provided as loans to customers. That money will be lent with a 1% discount on interest charge and NO ARRANGEMENT FEE.

Any commercial loans to help trading will qualify. That will include asset purchase, buying factories and trading premises. Trade finance, possible buy-outs.

Nat West are also seeking to allow re-drawing of loans, say lending back the last three years repayments, plus terming out hard core OD’s.

I am sure that all the other High Street Banks will have similar schemes so its worth contacting you bank manager to see if the Funding for Lending Scheme can be applied to your loans.

Crowdfunding – How Social Media is helping businesses to get funding

I read with interest in the August edition of Accountancy Magazine (article by Guy Rigby) how Crowdfunding is gaining popularity, here are some examples:

  • In 1997 British rock group, Marillion, raised £38,000 from its fans to pay for its US tour. They then went on to use the same method to fund several albums
  • In 2010 Hotel Chocolat offered 3 year, FSA approved ‘chocolate bonds’ to its 100,000 tasting club members. Customers were invited to invest £2,000 for a gross annual return of 6.72%, or £4,000 for a return of 7.29% which were paid in regular deliveries of chocolate. The Bonds raised an incredible £3.7m for the company.
  • In 2011 Caxtonfx (foreign exchange) raised £4m from its bond issue
  • In 2012 Mr & Mrs Smith (travel website) are in the process of raising £4m from a 4 year bond with cash interest of 7.5%, or 9.5% if the ‘Smith loyalty money’ option is taken
  • In 2012 Pebble Technology, a Palo Alto based smart watch company used to raise $10m against forward sales of its Pebble watch

According to the article, quoting Simon Dixon, to be successful in crowdfunding there is a simple formula £££ = R + SC + E

Where the money raised depend on the strength of the rewards your offer (R), how much social capital you have (SC) and the emotion attached to your story (E)

Its early days, but could this be the future for some businesses, using their fans and contacts to access funding. Social Media and the internet are definitely playing a part in moving this forward.

How to avoid 55% Pension Death Tax

‘Worrying’ numbers of people are not using their pension savings efficiently leaving potential inheritors liable to a hefty tax, according to Skandia.

Adrian Walker, Skandia’s pension expert said: “The number of people currently in drawdown and not taking an income highlights just how many people could benefit from further financial planning.”

Skandia data shows 59% of customers in capped drawdown are not taking an income. In these cases customers have taken the maximum tax-free lump sum and have left the rest of their fund invested.

The remaining pension fund is technically in ‘drawdown’, even though the customer is not taking an income. This means the remaining pension fund is subject to a 55% tax charge if paid as a lump sum to a beneficiary on the member’s death.

For those who die below age 75, this tax charge was increased from 35% to 55% in April 2011. Skandia has said many people will be unaware of this.

So what action do you need to take to stop this happening once you have retired:
If you are under 75:
  • Phase the amount you move into drawdown, many SIPP’s are structured with this in mind and you can use the tax free cash to help with immediate income needs
  • Consider reinvesting income in drawdown back into the pension to get tax relief, this reinvestment will not be deemed to be in drawdown
  • If you receive £20000 or more guaranteed pension per year, you qualify for flexible drawdown which helps you move money out of the 55% tax charge faster than capped drawdowns

If you are over 75:

  • Work with your advisor to access as much of your pension as possible and move it out of the 55% tax charge

Rent a Room and earn up to £4,250 tax free

You can receive up to £4,250 a year tax-free (£2,125 if letting jointly) by letting furnished rooms in your home. This is known as the Rent a Room scheme.

It doesn’t matter how much you earn from other sources – you still get the full tax-free amount.

In the current economic climate renting a room is becoming an increasing popular method for boosting income and there has been an increase of 52% in the number of new homeowners taking in lodgers in the past two years.

On average UK room Rent is £406 per month rising to £717 in London.

Accroding to

So this could well be worth considering if you need extra cash.