Weekly News Bulletin - 01/11/2021

Savings

Britons usurp Germans as Europe's biggest savers: Pandemic sees a huge boost in savings pots - and rates on offer here are FAR higher

Britain has overtaken Germany as the savings champion of Europe. Britons have been squirrelling away more money than any of their European counterparts since the pandemic began, according to analysis by savings platform Raisin. A total of £81billion was stashed away in savings accounts in the first half of 2021. This was an extra five per cent compared to the same period last year with British savers boosting their balances by £1,237 on average. In contrast, savers from the euro-area only grew theirs by an average of £691 per person during the same period. Despite UK savings rates being at rock bottom they appear to be more favourable than in other European countries. The average one year fixed rate deal in the UK is 0.76 per cent, according to Moneyfacts, whereas in Germany the average equivalent is 0.24. The UK is currently ahead of Sweden, Germany and Poland in offering the highest possible rates for both one year and three year savings deals, according to Raisin's analysis. Mail Online

ISA's

ISA limits remain untouched in Budget

The annual subscription limit for ISAs will be maintained at £20,000 for 2022-23 after there was no mention of the savings vehicle during Chancellor Rishi Sunak's Budget. Junior Isas (Jisa) and child trust fund annual subscriptions will remain at £9,000. The Treasury is also freezing the additional tax-free allowance of up to £5,000 in savings interest for those with an annual income of less than £17,570, the “starting rate for savings”. Anna Bowes, co-founder of the Savings Champion website, said: “The only bright spot is that there could be a Bank of England base rate rise around the corner. However, the fact that higher inflation has been the driver for this means it is a double-edged sword. And, of course, a base rate rise does not guarantee that all savings rates will rise in line — especially if you have money languishing with a high street bank.” Money Marketing The Times

Tax Free Savings

Tax loophole depriving low-paid workers of pension cash will be fixed

The Government has promised to fix a tax quirk that deprives low-paid workers of pension cash paid to better off colleagues - but not until 2025. The tax flaw means some poorly paid staff currently miss out on Government payments into their pension pots, depending on the type of scheme operated by their employer, a matter they have no control over. The Government's announcement was a victory for Ros Altmann, who has campaigned vigorously on the issue. Altmann said she was delighted the Treasury will finally resolve the problem of some workers being forced to pay an extra 25% for their pensions. “I had hoped this would have been done sooner, but at last there is a commitment to change the system, which I am very pleased about,” she said. Daily Mail

British pensions system now better than Germany and Switzerland

The UK's pension system has been ranked among the best in the world, jumping ahead of Germany, Switzerland and Ireland in the past year. The Mercer CFA Institute Global Pension Index ranked the UK ninth in a list of 43 developed nations, just behind Nordic countries, the Netherlands, Australia and Israel. The UK scored 71.6 according to Mercer, a consultancy, up from 64.9 in 2020. This was down to an improvement on its “adequacy”, which measures income provided by the system in benefits. However, Britain ranked among the four worst countries for a gender pensions gap. Men's pensions were 41% larger than women’s on average, worse only than Japan, Mexico and Austria. The Daily Telegraph

Capital Gains Tax

CGT deadline extended for UK properties

The Chancellor has avoided making any major changes to capital gains tax (CGT). One change, however, will affect how long people have to report and pay capital gains tax (CGT) after selling a residential property in the UK. CGT for these types of assets ranges between 18% and 28% depending on the rate band, and sellers have, until now, needed to inform HMRC about the sale and pay any tax on capital gains within 30 days of completion. But under the revised rules, UK residents and non-residents will have 60 days to comply with CGT rules, effective from yesterday. International Adviser Money Marketing

Property

House sales surge in September

House sales rose by more than two-thirds in September as buyers rushed to make stamp duty savings. Across the UK, an estimated 160,950 homes changed hands, which was 67.5% higher than in August, said HMRC. The September total was also 68.4% higher than in September 2020. A stamp duty holiday in England and Northern Ireland was tapered from the start of July and then ended completely at the start of this month. Sam Mitchell, CEO of online estate agent Strike, said: "The market enjoyed one final stamp duty holiday hurrah." Express.co.uk

Parents bankrolling half of all first-time buyer purchases

The ‘bank of mum and dad’ financed half of all first-time buyer housing transactions this year, according to a new property forecast. Total contributions from parents helping younger generations to buy a home are expected to reach £9.8bn in 2021, analysis from Savills found. This equates to an average of just over £58,000 in gifts or loans for each supported house purchase. Rising house prices have increased the pressure on those saving for a deposit, Savills said. This year is expected to represent a peak of family support, with total contributions projected to fall in 2022 to £7.9bn increasing to £8.6bn in 2023 as family support continues to be a vital source of funding. City A.M

Inheritance Tax 

The impact of IHT on estate planning for women

According to a recent study, female-owned estates are currently exposed to around £430m more in inheritance tax than male-owned estates due to greater wealth concentration in women overall. There are various estate planning steps that women (as well as men) with excess wealth should consider taking. Firstly, spouses or civil partners should put in place wills to take advantage of the complete IHT exemption. To mitigate IHT on death, individuals may also consider lifetime giving. Coupled with tax-efficient wills, this means a surviving spouse could pass wealth down to the next generation wholly free from IHT, provided the surviving spouse survives the gifts by seven years. Trusts can be an effective way of keeping assets outside an individual’s estate. However, to avoid tax charges, funds can be added every seven years under this allowance to allow the nil rate band to refresh. Alternatively, an individual could settle their surplus income each year under the “normal expenditure out of income” IHT exemption. FT Adviser