Weekly News Bulletin - 10/01/2022

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Cash ISAs struggle

This year, savers will struggle more than ever to get a real return from their cash Isas. A record 23 accounts paid 0.1% or less last year, and six paid a measly 0.01%. In 2020 only 12 cash Isas paid less than 0.1%. Barclays, First Direct and HSBC banks and Nationwide, Principality, Ipswich, Monmouthshire and West Bromwich building societies were among those paying 10p interest on every £100 saved, according to the website Savings Champion. Halifax, NatWest, Royal Bank of Scotland, Santander and Ulster Bank paid the rate of 0.01% amounts to 1p interest on every £100 saved while Scottish Widows Bank cut its E-Cash Isa 3 rate from 0.05% to 0.01% in May. The Times

Saving

HMRC update as married couples may be entitled to tax refund of up to £1,220

HMRC has issued an update on marriage tax allowance rules as millions of couples may be eligible for tax back from the Government. Couples in the UK could get up to £1,220. Marriage tax allowance claimants could be eligible for tax back, with 2.4 million couples in the UK potentially being entitled to the money. Anyone who is married, in a civil partnership and who aren’t benefiting from marriage tax allowance could be eligible for the tax return. Marriage tax allowance enables eligible Britons to transfer £1,260 of their personal allowance to their spouse or civil partner to cut their yearly tax bill, and claims can be backdated by up to four years. The personal allowance is the amount a person can earn before taxes are levied. Currently, this tax break is worth £252 and if claimants have it backdated, they may be able to claim back £1,220. To benefit from marriage tax allowance as a couple, the lower earner of the two must normally have an income below the Personal Allowance, which is usually £12,570. Sunday Express

Pensions

MPs demand pension auto-enrolment age is slashed to 18

MPs are pushing the Government to slash the age at which workers must be automatically enrolled onto pension schemes in a bid to end old-age poverty. Richard Holden, Conservative MP for North West Durham, argues that people who have not gone to university but entered the workforce or started an apprenticeship as well as workers in part-time jobs should not miss out on the chance to save for a pension. He has introduced in Parliament proposals to cut the age at which people are “auto-enrolled” from 22 to 18. He says small sums invested at the start of people’s working lives will benefit from half a century of compound interest. Mr Holden adds: “I don’t quite understand how we’ve ended up in a situation where somebody earning £40,000 a year gets auto-enrolled and gets the benefits but somebody earning £9,000 a year doesn’t.” The Times

Pensions: can you afford to retire early?

Younger people who are not in a final salary pension scheme may find it harder to retire early than those from an older generation, according to new research. When Aviva asked 2,000 people who had taken or planned early retirement, one in three said that having a defined benefit (final salary) pension was one of the main factors in their decision to stop work. This suggests that early retirement may become harder for younger workers because most in the private sector now save into a defined contribution (DC) scheme. Alistair McQueen, Aviva’s head of savings and retirement, stressed the importance of planning. “While happiness soars in retirement, many people find their finances take the strain when they retire early and money worries are one of the biggest factors resulting in people returning to work.” The Sunday Times

Pension age move from 55 to 57 could disrupt early retirement plans of fortysomethings - but the majority are in the dark about the change

People in their 40s are in danger of seeing retirement plans upended because they don't know the minimum age to tap private pensions will rise to 57 in six years' time. Four in five fortysomethings have no idea the Government plans to increase the minimum pension age for accessing workplace and personal retirement savings from 55 in 2028, new research reveals. 'Many of those seeking to draw benefits as soon as possible may be shocked to learn that they will have to wait,' warns the Pensions Management Institute. The PMI, a body for pensions industry professionals, found that 18 per cent in a survey of 2,000 workers aged 40-49 knew the minimum pension age for accessing private pensions is set to increase in a few years' time. Thisismoney.co.uk

Property

Average house price hits record high of £255k

Average house prices in the UK hit a record £254,822 in December, according to Nationwide. Prices rose by 10.4% in 2021, with this up on the 10% annual growth recorded in November and the fastest growth rate in 15 years. Wales was the UK region with the fastest house price growth, with values up 15.8% in the calendar year, while London was the slowest-growing region, with prices rising by 4.2%. Values in Northern Ireland rose 12.1% and annual house price growth in Scotland was 10.1%. Reflecting on the report, Robert Gardner, Nationwide’s chief economist, said high demand and low stock of homes on the market had contributed to the soaring prices. However, he suggested it “appears likely that the housing market will slow next year, since the stamp duty holiday encouraged many to bring forward their house purchase in order to avoid additional tax.” He added that the Omicron coronavirus variant “could reinforce the slowdown if it leads to a weaker labour market.” BBC News

Inheritance Tax

Inheritance tax UK: How to reduce the amount of IHT you may pay to HMRC in 2022

Inheritance tax receipts have risen consistently over the last year. Fortunately, there are some steps Britons can take to reduce their bills. According to Money Helper, the public advisory service, trying to reduce how much IHT is due on an estate is complicated. But, in short, Britons can reduce how much tax is paid by leaving a legacy to charity. Taxpayers can also put their assets into a trust for their heirs, leave their estate to a spouse or civil partner, pay into a pension instead of a savings account and/or regularly give away up to £3,000 a year in gifts. Sunday Express

Economy

Spending and borrowing start to normalise

Figures from the Bank of England (BoE) show that credit card spending increased in November, with spending and borrowing showing signs of normalising after being distorted by pandemic-driven support measures. The report shows that £1.2bn was borrowed in November, with £900m going on credit cards. This was the highest total since July 2020 and lines up with pre-pandemic averages. The Bank also revealed that households collectively saved £4.5bn in November, with this below the six month average of £7.9bn. The Times