Weekly News Bulletin - 11/03/2022

TAX FREE SAVINGS 

'It's YOUR responsibility' - Martin Lewis shares tax code tip after man gets £475 cheque

On The Martin Lewis Money Show on Tuesday, the finance expert discussed the end of the tax year, and what Britons can do to try and save some extra cash. Darren emailed into the show thanking the money saving expert for the “tax code tip” that helped him save £475. There are millions of people who are on the wrong tax code and overpay each year because they fail to check. He urged Britons to check their tax codes. The money saving expert said: "[Your tax code] is the little code that tells your employer or your pension firm how much tax to take off you. “Currently it will be a number like 1257L - that’s the standard one. “Millions of these are wrong every year and it’s not your employers responsibility, it’s not HMRC’s responsibilty, it’s your responsibility to check. “If it’s wrong and you’re overpaying then they will owe you money. There are millions of errors on tax code letters, so Britons should never assume their code is correct. Daily Express

ISA

Is an Isa protected from inheritance tax? Millions of over-55s unsure of the rules around the tax-free wrapper and passing on wealth

Little researched inheritance tax rules for Isas means millions are unprepared to pass on wealth and as a result, their beneficiaries could be hit with an unexpected bill later down the line. Isas are a tax-efficient way to invest your cash without paying tax on your returns. You can invest up to £20,000 per tax year. However, if you plan to pass these savings on to a family member the tax implications are not as favourable. If your spouse or civil partner dies you can inherit their Isa allowance under rules introduced in 2015. As well as your normal Isa allowance you can add a tax-free amount up to either the value they held in their Isa when they died or the value of their Isa when it's closed. But if you have plans to pass the Isa on to children, grandchildren, siblings or friends - which a third of over 55s do - it could leave them with a chunky tax bill. Current rules stipulate that if you plan to pass your savings on to the next generation, and all assets exceed the £325,000 IHT allowance, beneficiaries could be left with a 40 per cent tax charge. This is Money

Funding Circle surprises with £64m profit for 2021, permanently closes retail platform

Funding Circle, one of the UK’s first fintech companies, has reported its first full-year profit for 2021 following a two-year cost-cutting and growth strategy. The listed alternative SME lender says it banked £64m of profit for 2021. Like many alternative lenders, it faced an uncertain future at the start of the pandemic in the face of vast areas of the economy shutting down and spiralling economic uncertainty. It pivoted strongly towards offering government-backed lending schemes aimed at helping cash-strapped SMEs in the coming months and also began to increasingly automate its lending after a multi-year investment in its technology stack. The company also confirmed that it was permanently closing its retail platform to new investments. Retail investors have been locked out from investing in new Funding Circle loans since the start of the pandemic in March 2020 and today retail lending assets only represent c.5 per cent of Funding Circle’s £4.46bn of total loans under management, or about £222m. Repayments of interest and principal will continue every month and investors can withdraw the funds at any time. Altfi

SAVINGS

Energy bills: The 65p tin foil hack to save money as energy price caps soar

There are a few simple things that everyone can do to reduce costs. Lowering the thermostat by just one degree can reduce bills by around £80-£85. People should be more mindful of electricity when they leave the house, adjusting central heating timers to switch off at night and when the house is empty. For rooms such as bedrooms that are typically empty during the day, radiators can be adjusted to the lowest setting without turning it off completely. Another top tip is to fit reflective foil behind radiators on external walls to reduce the rate of heat loss in each room. Energy savers can pop to the supermarket for rolls of foil that cost as little as 65p. Lowering the temperature of the washing machine is another eco-friendly method of reducing electricity bills. Drying racks are much more money conscious than tumble dryers, so make a habit of using these more often for drying clothes. Those who opt to stick to the dryer should clean its filter first to improve energy efficiency. Daily Express

How to stop wasting food and save money

Use your fridge and freezer - About £2.1bn-worth of fresh fruit and vegetables is thrown away in UK homes each year because it has gone soft, mouldy or is out of date. How fresh produce is stored is key to its fate, and if you stow it in your fridge you will buy yourself more time. Apples, for example, can last for more than 100 days, much longer than in a fruit bowl. The freezer is a useful tool for single-person households, who waste proportionally more than bigger ones, often because it is harder to buy the right quantities. Buy loose fruit and veg - This should get easier because Wrap – which helps shape government policy on sustainability – is advising supermarkets to sell fruit and veg loose. A study it carried out found plastic wrappers didn’t make food last longer and forced people to buy more than they needed. Know your dates Getting a handle on the difference between the use-by and best before dates on food is vital. Get organised - Menu planning is a really effective way of preventing food waste. Get creative with leftovers - The Netflix series Best Leftovers Ever! helps viewers see yesterday’s meal remnants through new eyes. The Guardian

PENSIONS 

How Ukraine Russia war could impact your pension - and what you can do to protect savings

The Russian war in Ukraine is having far-reaching impacts, as a number of pension funds announce they will be pulling out of the country - but what does this mean for your own pot and what do you need to do to alleviate risk? Speaking to the Mirror, pensions expert Helen Morrissey of Hargreaves Lansdown said that despite the uncertainty, pension savers shouldn’t panic and should instead steer clear of “knee-jerk” reactions. She commented: “People with a pension in the UK aren’t massively exposed to Russia.” While they will be invested in the likes of BP and businesses affected by the crisis, the direct exposure should, in general, be limited. “A default fund that the average person is invested in is very, very well-diversified, so you’ll be diversified across different industries, different geographies and the whole reason for that is to protect people in circumstances just like this.” Ms Morrissey said the best thing you can do if you are worried about your pension is to speak to your provider to get more information about what you are invested in. With regards to pension-savers being proactive in trying to protect themselves, she urged people to be patient. “The thing to remember with pensions is that they are a long-term game, and I think that when we are seeing a lot of investment market volatility as we are seeing now, people can kind of panic.” She said people can react quickly and believe they need to make immediate changes or limited contributions, but this isn’t cause for reactionary decisions. Daily Mirror

INHERITANCE TAX

Sunak unleashes inheritance tax and capital gains tax blitz in April - do this NOW

Inheritance tax and capital gains tax bills are set to rocket, as Sunak scrambles for ways to top up the Treasury’s coffers. Tax experts are urging people to make full use of this year's IHT and CGT allowances, before the April 5 deadline. It's now less than a month away. Families can cut IHT exposure by making cash gifts to loved ones each tax year, says Becky O’Connor, head of pensions and savings at Interactive Investor. “Adults can gift a maximum £3,000 each year with no IHT to pay, so couples can combine their allowances and gift £6,000.” You can mop up unused allowance from last year, so couples could gift £12,000 in total. “Plus they can also make smaller gifts of £250 to as many people as they like, provided the recipient has not benefited from the £3,000 limit," O'Connor says. You can also reduce your IHT exposure to make by making gifts to loved ones who are getting married, or by giving to charity. Daily Express

CAPITAL GAINS TAX

Capital gains tax: 10 ways to reduce how much tax you need to pay to HMRC

Every year Britons are forced to fork out billions in Capital Gains Tax (CGT). However, there are 10 ways people can pay less tax which could offer some significant savings. 1. Use your £12,300 allowance - it can’t be carried over to the next tax year 2. Make use of losses - these can be offset against each other 3. Transfer assets to a spouse or civil partner - no CGT to pay 4. Invest in an ISA 5. Contribute to a pension 6. Give shares to charity 7. Invest in an Enterprise Investment Scheme which are free from CGT if held for three or more years 8. Claim gift hold over relief 9. Some antiques are CGT tax free 10. Speak to a professional Daily Express

PROPERTY

'Disorganised buyers will miss out': Three in five properties now sell within 30 days, as competition for homes shows no sign of letting up

More than three in every five properties listed for sale now sells within the first 30 days, according to new figures. Last month, 61 per cent of homes were sold subject to contract within the first 30 days, compared to fewer than half (43 per cent) during the same month last year, property portal OnTheMarket says. It highlights an imbalance between the relatively low supply of new homes coming to the market and the high number of people looking to buy. This increased competition for properties has led to bidding wars and helped to drive up property prices to record highs since the beginning of the pandemic. Property prices across Britain rose 10.8 per cent in February, the fastest annual pace since 2007, according to Halifax data published this week. This took the average house price across the country to a new record high of £278,123, while property values increased by 0.5 per cent monthly. This is Money

Property: How buyers can succeed in a sellers’ market

Low stock, bidding wars and over-the-asking-price offers — finding and buying the right property can feel impossible in the current climate, but there are things you can do to improve your position. Build up a rapport with local agents - If you want to get first dibs on the best properties, you need to put in the time building up a relationship with local estate agents. Use a buying agent Buyers keen to see properties without the competition could benefit from engaging a buying agent. Unlike traditional estate agents, they work on behalf of the buyer, getting them access to properties they wouldn’t normally be able to see — for a percentage commission which the buyer pays. Be ready to make an offer Before you start viewing properties, put yourself in the strongest position you can. If you are renting, know exactly when you need to give notice and, if you need to sell, make sure your home is, at the very least, on the market. Get personal - With all the paperwork and contracts involved, it’s easy to forget that buying a house is also about buying a home, and adding a personal element may give you the advantage over other interested buyers. Yahoo Finance

All the facts and figures presented are accurate at the time of posting.

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