Remember radiograms? Those oversized, four-legged symbols of early 1970s domestic cool, invariably cased in teak or mahogany? My parents were the proud owners of a mahogany version, strategically positioned in the living room bay window. With the lid closed, our radiogram looked like an attractive item of furniture; open the lid and here was a record player turntable, a radio capable of tuning you into stations as far afield as New Guinea and Albuquerque, and a deep storage area for an eclectic collection of records, mostly LPs. On either side of the unit were a pair of impressively loud speakers.
At weekends, my parents would enjoy listening to music wholly unsuited to a 14-year-old’s ears. During the week, as he was getting ready for work, Dad would insist on having the radiogram’s radio function on LOUD in order that the whole road could hear the local and national news, with perhaps the odd update from Hong Kong, all courtesy of the Sharkey family.
My younger brother and I shared the bedroom immediately above the living room where we failed to appreciate being woken up at least half an hour before absolutely necessary in order that we could get to school on time. We agreed that something had to be done to address this daily disruption; the problem was, we had no money to buy records which, we hoped, would break our parents’ controlling monopoly of the radiogram.
Fortunately, an older cousin told me of a local newsagent in constant need of boys aged 14 and above who could be relied upon to deliver his daily newspapers. At 14, I was already over six foot and following a brief ‘interview’ was given an ‘easy’ local delivery round to start, though it didn’t feel that easy initially.
However, the job’s terms were reasonably attractive (though I had nothing with which to compare them). Delivering evening papers six days a week generated wages of 70p (yes, per week). Collecting money from the newsagent’s customers every Friday night earned a further £1 a week, plus tips, while delivering a single round of king-sized Sunday papers was worth an extra 50p plus, joy of joys, the use of an old-fashioned delivery bike, replete with a large carrier to the front.
Within a few months, I was earning well over £2 a week, not bad at a time when a hit single cost around 50p and an album could be bought for £2.50. First single I bought? Popcorn by Hot Butter. I played it on the radiogram so often, I think the needle wore out the record’s grooves. Most importantly, I could buy an album every week, providing a form of modern music competition to what I believed was my parent’s collection of staid, non-hit material. The only thing I hadn’t allowed for was persuading my parents to listen to one of my albums….
I’m sure that many readers did something very similar during their teenage years, getting a job and using their wages to buy records, clothes or anything else they could now afford and, perhaps most significantly, enjoying an element of financial independence.
Over the years, dozens of credible studies have highlighted the longer-term benefits of teenagers holding down a part-time job. Earning money provides teens with a tangible reward for their effort. Aside from learning ‘soft skills’ such as having responsibility and keep commitments while creating a valuable work history, as they move from earning to spending and eventually saving, teens also acquire important lessons in money management. Academics have concluded that adults who held down part-time jobs as teenagers are likely to save considerably more than their peers in later life. They also know ‘the value of a buck’.
This last point is currently extremely important. Very few people have anything given to them on a plate. Unless they’re prepared to borrow, it takes a mix of determination, effort and discipline to save from taxed income and gradually accumulate valuable assets. No wonder people tend to get more than a little irked when our politicians start fiddling around with an established tax regime, an exercise undertaken solely to raise money quickly rather than one designed to implement an important element of a longer-term budgetary strategy.
As we have seen over the past few months, the state has made no secret of the fact that it is casting its eyes on those assets it has taken people a lifetime to accumulate. At the same time it has dragged thousands more people into the income tax net – and will continue to do so – by freezing the personal allowance at £12,570 until April 2028.
Then there’s Capital Gains Tax (CGT). Last month (October), the rate of CGT levied upon basic rate taxpayers soared by 80% as tax allowances were slashed in half to £3,000. The amount raised by this tax has risen by 70% over four years and will comfortably exceed the £14 billion it cleared last year.
Over the past week, we have seen how irate farmers are following changes to inheritance tax (IHT), but this is not a tax solely designed to ruin farmers.
Ordinary homeowners could be hit too. Yet there are ways to avoid the full force of IHT: transferring assets into a trust can help reduce an IHT bill as the assets are no longer considered to be part of your estate.
Should you prefer to leave a gift to a qualifying charity in your will, whether it's money, property or another asset, it will be exempt from IHT.
The ‘seven-year rule’ ensures there is no IHT payable on certain gifts given to a second party, usually children.
Older homeowners are also using equity release to reduce a potential IHT liability. Many homeowners are attracted to this option because it enables them to withdraw tax-free funds from their property. At the same time, equity release effectively reduces the value of your estate and, by extension, a prospective IHT liability, ostensibly because your property will be sold after you die in order to repay the sum borrowed, plus any interest accrued. Opting for a joint equity release plan ensures that a surviving spouse or civil partner remain in the home either until they die or move into longer-term residential care.
Equity release can have a direct impact by reducing an IHT liability, but there is a flipside: dependent on how the mortgage is managed, by allowing interest to compound it could also reduce the amount that homeowners pass on to their loved ones.
There is no doubt that people feel aggrieved whenever the state dips further into the proceeds of their endeavour, especially after we’ve worked, saved and paid tax for decades. Providing the state with access to our assets, very, very few of which are acquired without effort is never welcome. Exploring legitimate ways to avoid the full force of the Treasury tax grab could pay enormous dividends and is likely to prove as satisfying as collecting those hard-earned wages we earned as a teenager.
Equity Release Supermarket provides equity release advice only. For advice on inheritance tax we always advise you seek independent financial advice from a suitably qualified person.
