EDP:
The Mortgage Market Review (MMR) which the FCA has just pronounced upon is going to make the role of the EDP even more important. It comes into force on 26 April and one of the aspects which might affect some here is that mortgage holders can borrow on an interest-only basis as long as there is a credible repayment strategy.
The attitude of the banks towards the EDP is inconsistent. Lloyds only helped out with someone here because the current head of consume lending policy once happened to work in the temporary Lloyds Bank at Chater Road (RAF Wittering). I have asked Forpen if it could coral its administrative might and try to fuse a common lending approach to the EDP but I heard nothing back.
HMRC's attitude towards it is equally variable. I spend about 2 hours a week chatting with the dept in Liverpool which has the say. Part 2 Chapter 5 of the Finance Act 2005 differentiates between redundancy payments and contractual payments - HMRC accepts that it isn't a pension payment (which it isn't of course) but is happy to pass the decision to the various pension companies. Who can go around like headless chickens - the banks look on it as one, for instance.
This is important because if it counts as 'relevant earnings', it can count towards receiving tax relief for a pension contribution - important if a Higher Rate tax payer has limited need for capital and liquidity with his/her EDP and wants a last hurrah force multiplying bang per buck as a wage earner. It isn't for everyone, take advice etc, but for someone with a career profile cruising horizontally the annual pension contributions are notionally modest, so, making use of the previous 3 years unused annual contributions, an uplift can run into the £ tens of thousands.