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Weekly News Bulletin - 18/10/2021


Lockdown savers pile into 'fairly easy' access accounts

Easy-access accounts typically pay a record low of 0.17% on average, with some of the high street banks paying as little as 0.01%. But despite this, lockdown savers have piled into these accounts since the pandemic started. According to Paragon Bank, total savings on CACI's database - which captures data from more than 30 providers - has grown by 8% since March 2020, from £903bn to £975bn. The majority of this growth has been driven by easy-access accounts, which swelled by more than 16% over the course of the pandemic. And, while easy-access rates remain at record lows, notice accounts rates have risen - now typically paying three times' the interest. They enable savers to withdraw their funds following a notice period, typically ranging between 30 and 120 days, but can offer savers a better return than they might otherwise achieve with an easy-access account. Daily Mail

Tax Free Savings

£10,900 a year needed to retire

Calculations for The Pensions and Lifetime Savings Association suggest a single person will need post-tax annual income of £10,900 for a minimum standard of living in retirement, with this spending budget climbing to £16,700 for a couple. The calculations for retirement living standards are pitched at three different levels and housing costs are not included on the assumption that most pensioners have paid off mortgages. The minimum level would generally be made up of a full state pension of £9,339 per year, as well as some workplace pension savings. The moderate retirement living standard requires a budget of £20,800 for a single person and £30,600 for a couple. The annual budget needed for a comfortable retirement living standard is £33,600 for one person and £49,700 for a couple. About one in six single employees is projected to have an income between moderate and comfortable. BBC News

Capital Gains Tax

Capital gains tax faces potential hike

The Daily Express reports that capital gains tax already brings in more revenues than inheritance tax for HMRC, and taxpayers could hand over even more of their gains if Chancellor Rishi Sunak hikes the levy on October 27th, as many expect. Anybody who fears getting caught out should take action. Tom Selby of AJ Bell reckons CGT is the Chancellor’s most likely tax target this month. “The Office for Budget Responsibility (OBR) has already reviewed CGT at the request of the Chancellor and proposed aligning CGT rates with income tax rates.” If Selby is correct, basic rate tax payers would pay CGT at 20% on everything, while others could pay 40% or 45%. Express


Buy-to-let slowdown drives a rise in rent

Low levels of buy-to-let activity have led to rising rents in the UK, according to Hamptons. The proportion of total purchases made by buy-to-let landlords increased by just one percentage point during the stamp duty holiday, from 11 to 12%, as investors failed to outbid owner-occupiers during the 15-month break. Sales to buy-to-let landlords jumped most sharply in the North East of England, where the proportion of homes sold to investors rose from 21% to 29%. On average, landlords saved £3,000 during the stamp duty holiday, as the average property investor's tax bill fell from £8,500 in the month before the holiday to £5,500 during the break. Investors did not reinvest their savings in property, as prices paid by buy-to-let landlords increased by just 1%, to £181,000, during the stamp duty break. The Times

New scheme launches for first-time buyers

A new scheme has been launched designed to make it easier for first-time buyers to buy a new-build home. Deposit Unlock, a joint initiative from the Home Builders Federation and the insurer Gallacher Re, aims to encourage lenders to offer more flexibility. A pilot involving Newcastle Building Society and a handful of homebuilders has been running in the northeast, and the scheme is set to go live next month. According to the Home Builders Federation, 17 housebuilders, which together account for about 60% of all new homes, will be involved, and more lenders are expected to join. The Times

Soaring house prices wipe out stamp duty savings

House price increases in the wake of the COVID pandemic have outstripped stamp duty holiday savings almost 30 times over. In July 2020, Chancellor Rishi Sunak raised the nil-rate stamp duty band from £125,000 to £500,000 in England and Northern Ireland, meaning that buyers who completed sales by June 30 2021 saved a maximum of £15,000. After this date, the holiday tapered to £250,000 until Sept 30. However, the incentive to transact before the deadline helped to push house prices up far beyond the amount that buyers could save in tax. In two-thirds of English council areas, house price rises in the year to the end of July were at least triple the average stamp duty holiday savings in each area under the £500,000 nil-rate band. In 60 local authorities, price rises in the 12 months after the stamp duty holiday was introduced were more than 20 times the average stamp duty savings under the tapered £250,000 nil rate band. The Daily Telegraph

Inheritance Tax 

Poor planning means women pay more for IHT

Fidelity International has found that women are more likely to pay too much in inheritance tax due to a lack of financial planning. More than half (53%) of women plan on leaving an inheritance, but of this group, 55% have not made any financial plans compared with 41% of men. Dawn Mealing, head of advice policy and development at Fidelity International, said: “Out of those who are liable to pay inheritance tax, women’s net estates are worth £1.3bn more than men’s. Yet almost half have done no financial planning to make sure this wealth is gifted the way they want - something isn’t adding up.” She said when women outlive their male partners, they are making bigger decisions as they are responsible for both their own and their partner’s wishes FT Adviser


IMF expects economic growth to hit 6.8%

The International Monetary Fund (IMF) expects the UK economy to see growth of 6.8% this year. Although this is slightly lower than the 7% predicted in July, it would still represent the fastest growth in the G7. The IMF also believes the UK will see growth of 5% in 2022, a 0.2% increase on its previous forecast. The IMF said the global economy is set to grow 5.9% this year and 4.9% next year – with these 0.1 percentage points lower than previously suggested. The IMF expects most advanced economies to return their pre-pandemic growth trends next year as supply chain issues ease, and to exceed it by about 1% in 2024, while merging and developing economies (excluding China) could fall back and remain 5.5% below their pre-pandemic forecast by 2024. Despite outlining the levels of growth it expects, the IMF’s latest World Economic Outlook warns that there is “great uncertainty” about economic performance, pointing to the potential impact of inflation. Jatin Ondhia. BBC News

P2P Investing

The 2021 Peer2Peer Finance News P2P Power 50

The 2021 Peer2Peer Finance News Power 50 recognises the most influential individuals in the peer-to-peer lending sector who have propelled its growth over an undoubtedly challenging year. The list shines a spotlight on the individuals that head the fastest growing and largest platforms as well as those that are rife with innovation. Two faces from the Financial Conduct Authority (FCA) made it into the Top 10 for the first time: chief executive Nikhil Rathi and Andrew Kay, head of department, retail lending. This reflects the pivotal role that regulation plays in the sector, at a time when the FCA is increasing its scrutiny of ‘high-risk’ investments. Meanwhile, there were several new names in this year’s Power 50 list, reflecting the continued growth of the industry. These included platform bosses such as EasyMoney’s Andrew de Candole, Leap Lending’s Fawzi Kyriakos-Saad, Lendwise’s Rishi Zaveri and Shojin Property Partners’ Jatin Ondhia. P2P Finance News

Written by The easyMoney Team

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