The dates in question are of course the 5 April to signal the end of the old fiscal year and the 6th to mark the beginning of a new one.
It shouldn’t take ‘milestones’ to make us focus on our finances but often it’s events such as the Budget and the beginning of a new year, or indeed tax year, to make us think about how we could save a little here and there, borrow a bit more and be as tax-efficient as possible.
Milestones can also provide valuable ‘hooks’, especially within financial services and of course the intermediary market. At Barclays we have long championed the offset mortgage and much of this revolves around the tax-efficient nature of the product for borrowers.
This tax-efficiency is nothing new, and let’s reiterate offset is certainly not a product to be dusted off once a year on the back of Budget announcements or the impending start of the financial year. It’s a product that stands up in its own right throughout the year but let’s face it; it’s not always the easiest proposition to promote.
So, there is nothing wrong with investing a bit more time into being proactive in the offset field when financial efficiency is high on the agenda of a variety of new and existing clients.
It’s clear the number of ‘middle earners’, and higher earners for that matter, are growing and as such more people will have to explore ways in which to become as tax efficient as possible, both in terms of income as well as savings. And an often overlooked element in this search for the Holy Grail of tax efficiency involves ignoring the tax implication surrounding their mortgage requirements.
Higher rate taxpayers would normally see 40% of any interest on their savings accounts swallowed up in tax but because they receive no interest on savings linked to offset mortgages they will have no tax to pay.
An offset mortgage works to combat the tax and inflation implications whilst helping to mitigate negative returns on their savings. And in a sustained low savings environment this can have a significant effect on a variety of household budgets.
Current rates are possibly far more competitive than you might think and will, generally speaking, be applicable to a greater proportion of your client bank than you may realise. So, get on the bandwagon by making use of current milestones to boost your offset business.
Andy Gray managing director of mortgages at Barclays
