How to use the assumptions page

This page describes what each of the assumptions are used for, and how to set them to get maximum benefit out of the system. It is important that these assumptions, which apply to every portfolio in your account, are set, as the system's calculations cannot run without them.

Assumed residential / commercial growth p.a.

What will the long-term capital growth rate of UK residential or commercial properties be over the next 20-30 years? This affects how much each property will grow in value each year, and its primary impact on the calculations is the rate of growth of equity in the accelerators.

These assumptions can be overridden on the property details page for individual properties, which can be particularly useful for modelling overseas properties.

Assumed residential / commercial rental growth p.a.

What will be the long-term rental growth of UK residential or commercial properties over the next 20-30 years? This affects how much each property's rental income will increase each year, and its primary impact on calculations is the speed at which the excess rental income can pay down the mortgages on the generators.

These assumptions can be overridden on the property details page for individual properties, which can be particularly useful for modelling overseas properties.

Assumed inflation p.a.

What will the UK's long-term inflation rate be over the next 20-30 years? Figures which are grown by inflation each year include all the costs in the 'Costs Details' section of the property details page, excluding the management charge which instead grows in line with the rental growth assumption, the rates payable on untenanted furnished property, optionally the monthly contribution to fund-type investments and any running costs associated with the portfolio.

Likely pension income

This amount can be added to the predicted rental income from your portfolio to give your likely overall income in retirement.

Target retirement age

At what age do you wish to retire? When running our calculations we will tell you at what age you can retire and the difference between that and your target.

Date of birth

Used to calculate at what age you can retire, which is then compared with your target retirement age. Also used to calculate when you will reach the legal minimum retirement age, currently 55, when calculating pension portfolios.

Interest base rate in years 1 - 10

These settings provide the base rates to which the margin above base rate on base rate tracker and standard variable rate mortgages will be applied. Clicking the down arrow next to each field will copy that value into all subsequent fields.

Long-term interest base rate

This provides the base rate for years after the 10th year of calculation.

Restore defaults

This button will reset the values for every assumption, other than your date of birth to values recommended by Assetz. These default recommendations may change from time to time in reaction to differing economic forecasts.

System Assumptions

The system assumptions are typically values which are set by government statute and as such will be the same for all users. We will update these as the laws change.

Capital gains tax rate

Used in conjunction with the acquisition price for CGT calcaultion if set, otherwise with the value today, and the annual CGT exempt amount to calculate how much tax is payable when selling an accelerator. The remaining equity can then be used to pay off mortgages on the generators.

Annual CGT exempt amount

Determines how much capital gain an individual can claim exempt from tax. This amount will be multiplied by the number of people who own the portfolio, as each person can use their own exemption.

Minimum retirement age

The minimum legal age at which you can start drawing income from a pension. For pension portfolios no accelerators will be sold until you have reached this age, even if they could be sold earlier to pay off the generators.

Corporation tax rate

For company portfolios this tax rate is used instead of both your marginal personal tax rate when repaying mortgage capital, and also instead of the capital gains tax rate.

Employer National Insurance Contributions

In a company portfolio, any income above the Weekly salary available without paying National Insurance will be taxed at this rate.

Weekly salary available without paying National Insurance

The level upto which salary drawn in a company portfolio is not subject to National Insurance Contributions. Above this level, any income will be taxed at the Employer NI contributions rate.





 
 
 
     
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