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Check under the mattress – You may find money

Plans to raid bank and ISA accounts could see a return to savers keeping money under their beds.

Proposals by the chancellor to grant HMRC new powers to take money directly from bank accounts to cover unpaid tax could soon become law.

Bank deposits and ISA accounts unsafe

The plans would enable HMRC to simply take cash from a UK tax payers bank account, joint account or even their Super ISA! Official documents reveal that HMRC expect to seize money from around 17,000 people a year, overcoming the need for HMRC to go to court.

The chancellor is attracted to the proposals as they estimate the scheme could recoup 375million between 2015 and 2019.


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Are normal tax payers safe?

The premise of the new law is to target those who deliberately avoid paying tax despite having funds available. HMRC argue that law abiding tax payers suffer at the hands of this minority as it takes huge amounts of money to take these few to court, removing funds from the chancellors pot.

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HMRC claims it will ensure targets still have at least 5,000 of funds left over after any raid.

However, while intentions may be to target only non-tax payers, HMRC have a reputation for making mistakes. So even if we pay our taxes our cash still isnt safe. David Gauke, the Exchequer Secretary to the Treasury said We must ensure that there are strong safeguards in place so that this is only targeted at the truly non-compliant.

Anyone who has dealt with HMRC over any query or mistake will know that it would take a lot of time and effort to recoup the funds nabbed from your account. In the meantime, you may suffer from direct debits and cheques bouncing while you await the correction.

How can we protect our money from being taken?

Disappointingly, the people targeted by the scheme can very easily side step the new powers once it becomes law simply by moving their cash overseas. In fact direct recovery of debts would encourage tax dodgers to move their money, eroding confidence in the scheme.

Inevitably, many law-abiding tax payers will fear for their cash and also remove their funds from UK banks and simply keep it at home. This would have several detrimental effects. The savers would miss out on receiving interest on their money, expose themselves to theft and in some cases even forget where theyve hidden it. It could also lead to growing pressure on the already wilting banking system. Deposits help keep banks and building societies liquid and operating within capital adequacy ratios. A mass withdrawal of funds could lead to a collapse in some of the banks, and ironically require bailout cash from the Government.

Can gold play a role?

Either way, the new law should be good for gold. Diversifying a proportion of savings into solid gold could provide the ideal solution. It ringfences your wealth from HMRCs powerful hands but over time also protects your savings from inflation, unlike cash under the mattress. The capital growth of gold provides the return for the saver. The gold can be stored securely in a specialist facility to keep your coins and bars safe from the gold thieves.

In fact, the HMRC plan should provide a couple of strong catalysts for the value of gold to rise.

The increasing lack of trust in the banking system, combined with the threat of having your account raided, should fuel demand for gold consequently pushing up prices.

If many savers do remove their cash from banks, the likely pressure on these institutions to survive and subsequent Government help, would further propel the gold price upwards appealing as a safe haven.

If the new law is passed, and youre concerned, its best to act quickly to diversify. Otherwise you may find youre paying double for the same gold once everyone else has bought.

Insider's Guide to gold and silver

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Gold’s Perfect Storm – Gold Price Prospects

After treading water for most of the first half of the year, gold price prospects may finally be improving

After last years dramatic fall in the gold price, precious metals enthusiasts were hoping for an immediate bounce upwards which never came.

However over the past few weeks the price has crept steadily higher and gold price prospects over the second half of 2014.

Golds perfect storm comprises of three elements:

1.Continued economic weakness

Recent disappointing US job numbers, a shrinking German economy and frozen wage growth in the UK have provided a catalyst for gold. With a rise in UK interest rates now postponed until next year, Sterling weakness is pushing the gold price up for UK investors as its base price is in US Dollars.

This provides a double whammy for British gold buyers: The underlying price rising with safe haven demand, combined with further gains in Sterling terms due to a weakening domestic currency.


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2.Middle East unrest

Political instability leads to a flight to safety, directly benefiting the gold price. With growing unrest in Iraq and Israel/Palestine, the cost of military involvement will fuel the safe haven appeal and increase the US deficit. Just as importantly, economic sanctions against Russia for the crisis in Ukraine could yet impact global growth, especially as Russia retaliate by pulling funds from the UK and US.

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3.Sub-continent push

Finally, autumn tends to bring the usual seasonal push for gold in response to the huge spike in demand from India in time for its wedding season. Theres no guarantee that this will push gold higher in Q3 but it does seem to 9 years out of 10.

Batton down the hatches

With all three elements working together, we should finally see sustained growth in the gold price, especially in Sterling terms. So strap yourself in and dont be tempted to sell if theres volatility along the way.

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Skip dessert and receive free gold

Free Gold

As a child, I could only dream of free gold. But I do remember being incentivised by my parents to do well in my exams with promises of modest cash rewards for good results. I can’t think I received more than £50 in total, but my exam results were pretty good!

Nowadays, I face a constant psychological battle with my own kids. Generally, I know that the promise of sweets should grant me leverage with my children’s behaviour and focus on school work.

But in Dubai, where everything is taken to the next level, children as young as 2 years old are being offered pure gold to lose weight!

The Emirate’s growing obesity problem is illustrated by their rise to the 6th heaviest country in the world. They recognise the issue is detrimental to health and that it costs money to treat the associated illnesses. Just as importantly they also understand that the best way to reduce the weight of families is to get the parents involved. If it was up to the kids themselves, I’m sure they may have tried dangling the carrot of free tickets to Atlantis waterpark instead! While UK families would worry about where to keep coins and bars safe from gold thieves, residents of Dubai have owned and stored gold for centuries.


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Your child is gold

Families can register for the free gold program, named “Your child is gold”, which offers 1 gram

Insider's Guide to gold and silverof free gold for every kilogram of weight lost. The Emirate is offering a special incentive of two grams per kilo if the participating family has children between the ages of 2 and 14. Dubai has the vision that catching eating habits young will set a positive precedent for the future.

Participants must register at one of several weigh-in sites so that health experts can measure their progress by the final weigh-in on 15 Sep. After the first day of the scheme’s launch, 9,200 had enrolled, 15% as families. This satisfies the intention of the program to address child obesity as authorities admit that many schools have cut exercise classes. This isn’t the first time Dubai has offered gold for weight loss. Last year they paid a total of £762,340 in gold, with three times the number of entrants this year.

Danger

Several experts in Dubai have criticised the scheme, citing the danger that sudden weight loss, especially in children, can bring. A kilo loss for an adult is modest but for a 5-year-old child, it can be proportionally significant and impact their health. To qualify for the gold, children must lose 2 kilos in one month, surely promoting short term weight loss rather than a move to a healthier lifestyle.

I can only imagine the political hot potato it would be in the UK. There would be an outcry from health authorities and exploitation from hard-up families. Considering the prospects for gold in 2014 British families would be queuing round the corner to sign up, perhaps even gorging on cakes beforehand to earn that bit extra! Still, it’s fascinating that Dubai’s ruling body can recognise their people’s affinity to gold to realise the leverage that can bring.