Weekly News Bulletin - 11/04/2022
TAX FREE SAVINGS
Early bird ISA investors can make an extra £37,632
Calculations by Interactive Investor, shows that investing the full ISA allowance into the average IA global fund at the start of each tax year (6 April) since ISAs were introduced in 1999 would have turned a total contribution of £263,440 into £667,187. This is £37,632 more than if the same amount was invested at the end of each tax year (5 April) over the same period and effectively only have nine years’ worth of growth: the portfolio would have grown to £629,555. Early bird investors who invested the full ISA allowance in the average UK fund over the same period would have been £23,412 better off than those who left it to the last minute — £510,132 versus £486,720. Over 20 years the impact is even more stark, with the difference between early-bird and last-minute investors resulting in a portfolio worth over £33,000 more by investing early — £694,385 compared to £661,319 if you generated a 5% return after charges, the figures from funds supermarket platform show. Yahoo News
The cost of living crisis is getting worse, here's what to do about it
Unfortunately, this month the cost of living squeeze is only set to get worse. Here’s what’s changing – and what you can do to lessen the impact. The personal allowance will be held at £12,570 until 2026, while the higher-rate income tax threshold will be frozen at £50,270. CGT allowance remains frozen at £12,300 until 2026, while the inheritance tax is also staying at £325,000. The threshold at which national insurance (NI) starts to be paid will rise to £9,880 from £9,568 in April, and then to £12,570 (matching the personal allowance) in July. But from 6 April most workers will also start to pay the health and social care levy, which is an increase of 1.25 percentage points on NI contributions, driving rates from 12% on earnings up to £50,270 and 2% on anything above that to 13.25% and 3.25% respectively. Taking the changes to the NI threshold from July into account, a worker on £30,000 will be better off overall, paying £2,309 a year in NI contributions, down £143 from the current £2,452. There are few government measures to help – houses in bands A to D in England will get a £150 rebate on their council tax bills in April. lso ensure you use your individual savings account and pension allowances this year – at least those shield you from CGT and dividend taxes. Money Week
How the war in Ukraine is making us question what our investments pay for, from oil to pensions
The morality of money has come out into the light of day says Becky O’Connor, the head of pensions and savings at Interactive Investor. As a global society, we’re on a steep learning curve with regards to our fundamental interconnectedness to other countries and societies, united, if not in our world views, then by a new awareness of collective responsibility for each other’s health, economic wellbeing or just concern for the plight of fellow humans. But one aspect of the war in Ukraine that will have caused pause for thought is how inextricably tied our financial wellbeing is to other places and people, through our pensions and other investments and through the price paid for commodities such as oil or wheat. The cost of living has been turbocharged by the war. What happens over there affects us here. Five weeks ago, few would have been concerned about whether their life savings were indirectly fuelling the Russian economy. Now, following several pension funds announcing the freezing or planned sale of Russian assets, it’s almost common knowledge. The morality of money – what we spend it on, who we bank with, what we invest in – has come out into the light of day. i News
SIX new state pension errors revealed – could you be owed thousands of pounds?
Hundreds of thousands of women were underpaid the state pension by more than £1billion in a blunder branded "shameful" by MPs. Now the government has revealed that there are further errors that could have left people underpaid their state pensions. The Department for Work and Pensions (DWP) has admitted that there are six new scenarios where the calculations were incorrect since 2007. The latest mistakes came to light after a freedom of information request submitted by Sir Steve Webb, the former pensions minister and now partner at LCP. But the DWP has refused to say how many people are affected or how much they are owed, citing the cost of getting this information as too expensive. Sir Steve said it was "surprising" that these errors and efforts to correct them have not previously been made public. If you are owed money, you'll likely have to sit tight and wait for the DWP to send you a letter confirming your payment. Those considered at "high risk" like those over 80 and widows are being prioritised. The Sun
UK homebuyers are getting younger, with millennials and Gen Z dominating the property market
In the past two years, the pandemic and the cost of living crisis have created a home ownership-obsessed generation, that has wholly different objectives when it comes to buying their first home. A new social study from the property concierge platform, Moveable, indicates that leveraging capital for property has become the top priority for buyers; however, when it comes to owning bricks and mortar, investing in developments is now trumping dwelling. Research from The English Housing Survey reveals that 35% of Brits who own a second home are using it as a long-term investment and source of income. In addition, the total assets for UK property owners from second homes – including buy-to-let investments and overseas property – have risen in value from £610 billion in 2001 to almost £1 trillion in 2019. With such favourable financial returns that come with being on the property ladder, it is not surprising that Brits (comprising millennials and Gen Z), now perceive the property market as a viable means for a secure secondary income, over and above a place to call home. Daily Mirror
All the facts and figures presented are accurate at the time of posting.
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