Weekly News Bulletin - 28/02/2022
TAX FREE SAVINGS
ISAs versus pensions - key differences you need to know when it comes to inheritance tax
Both ISAs and SIPPs (self-invested personal pensions) are created to help savers invest for their future. Emilie Stevens, a senior analyst at Freetrade, broke down what savers need to take into account when choosing between an ISA or SIPP, when taking into account IHT. When someone dies, their ISA becomes part of your estate for inheritance tax purposes. Money within the ISA can be left in their will for anyone they wish to give it to. However, a spouse or civil partner can also inherit their ISA allowance as a one-off boost to their own allowance. In comparison, SIPPs are not part of the deceased’s estate as their cash is held within a discretionary trust. As a result, the money in the pension can be passed on to loved ones without being subject to IHT. Daily Express
SAVINGS
6 simple ways to save money during cost of living crisis - separate savings to buying used
Co-founder of social finance app EVERYTHING Michael Wilkinson shared his six tips for saving on bills. Buy used items - There are plenty of apps like Depop and Gumtree that allow people to get second-hand items on the cheap. Budgeting - Budgeting is a great way of saving a bit of extra cash. Tackling debts - People trying to clear debts should try and work off the ones with the highest interest first, before working on the ones lower down. Exploring the market - There are various price comparison websites that compare where the cheapest products can be found, such as Price Runner and people can also use different banks to try and save a little extra. Separate savings - Saving money into a separate account ensures that a person does not necessarily fall into the red in their main account, with no way of getting out of it. Daily Mirror
Will a water meter drain your wallet? With millions of households being forced into having one installed... here's what it might mean for you and your bills
Millions more homeowners may be forced to have a water meter installed — and face the threat of higher bills if they refuse. Will it cost more? With a water meter, how much you pay depends on what you use. Those without one pay a fixed fee made up of a standing charge and another rate based on the rental value of a property used by local authorities between 1967 and 1990. It means if you use less water than the size of your property suggests, you could save with a meter. As a general rule, if there are more bedrooms than people living in your home, it may cut your bills if you switch. The average household with Essex and Suffolk Water pays £219 with a meter, or £295 without. While Portsmouth Water says the average bill for a four-person household is £107 a year unmetered, and £113 with one. Daily Mail
PENSIONS
Pension warning as forgotten savings could be ‘raided’ - how to find them
It has been shared today that the Government will raid some £880million from forgotten pensions, investments and insurance payouts. This will go towards funding charities and local communities in an effort to push forward good causes. The decision has been made to expand the already existing Dormant Assets Scheme, and is to receive Royal Assent today according to Whitehall officials. The Government currently operates a system in the hopes of reuniting people with pension cash. People can find contact details for: - Their own workplace or personal pension scheme - Someone else’s scheme if the individual has their permission. It is worth noting the service will not tell a person if they have a pension, or what its value is. To use the online service, Britons will need the name of an employer or a pension provider. Daily Express
State pension: 500,000 Britons will not get increase in April due to frozen pensions
While the state pension rises every year, some people are not able to get the increase due to where they live. British pensioners living overseas often see their state pension frozen. The state pension is currently worth up to £179.60 for the full new state pension, and this will increase to £185.15 from April 2022. However, some Britons who have moved abroad in retirement will not receive this increase. The campaign group End Frozen Pensions estimates there are more than half a million pensioners impacted by a frozen state pension. Many of the pensioners affected have said they were not aware their state pension would not increase once they moved abroad. One of the countries where the state pension is frozen is Canada, despite the fact that expats south of the border in the USA do receive an annual increase to their state pension. Daily Express
INHERITANCE TAX
Inheritance tax changes urged as families pay £700m more - 'hefty bill'
Britons have, collectively, paid more inheritance tax in the last year, leading to suggestions there should be a shake up to make estate planning less complicated. The latest figures show the Treasury received £5billion in inheritance tax (IHT) receipts in the financial year up to January 2022, an increase of £700million for the same period a year earlier. Shaun Moore, tax and financial planning expert at Quilter, explained how more people have been sucked into paying tax on their estate over time. He said: “Sustained property price growth and asset price inflation has pushed up the value of estates, meaning higher IHT receipts for the Government. “IHT was once viewed as a tax on wealthier individuals, but the reality is that the average UK property is only £50,288 short of the standard nil-rate band. “With the nil-rate band and residence nil-rate band frozen until 2026 and house prices still on the up, many more people could face a hefty IHT bill.” Daily Express
CAPITAL GAINS TAX
£13bn in a year: Entrepreneurs selling businesses and assets cause capital gains tax bills to jump 20 per cent
The UK’s Capital Gains Tax bills jumped 20 per cent from £10.8bn to a record high of £12.9bn in the past year, according to accountancy group UHY Hacker Young, the increase was driven by three major factors. Firstly, the cut to Entrepreneurs Relief, the lifetime limit for Entrepreneurs Relief – now Business Asset Disposal Relief – has been lowered from £10m to £1m. Secondly, buy-to-let property investors are taking profits in the hot housing market as the average UK house price rose 16 per cent from January 2020 to December 2021. Thirdly, the stock market rally, the FTSE 100 rose 42 per cent from its pandemic trough to the end of 2021. City A.M.
PROPERTY
London’s smallest microflat sells for 80% above asking price
A 7-square-metre microflat, cramming in a bed, toilet, shower, sink and a microwave tucked under the pillow, has sold for 80% above its minimum listing price at £90,000. The microflat, located in a Victorian conversion in Lower Clapton, east London, is believed to be the capital’s smallest-ever property, marking a turn towards tiny homes driven by the UK’s housing crisis of soaring rent and property prices. The apartment had a minimum price at auction of £50,000, but sold at 80% higher at £90,000. After its listing it was described on social media as a “posh cell”. The Guardian
UK home sellers overprice their properties by as much as 21 per cent in wake of stamp duty holiday
Rightmove revealed yesterday that asking prices saw their biggest monthly increase in over 20 years. Despite a property market boom, the gap between the asking price expectations of the nation’s sellers and what buyers are willing to pay is as big as 21 per cent in some areas of the market. This means that while the average home is selling for £278,120, it’s initially entering the market at £301,080 – £23,000 higher than the price buyers are currently willing to pay. This market gap is at its widest in the North West, where the average asking price is currently £252,711, but homes are selling for £53,000 less – a drop of -21%. City A.M.
All the facts and figures presented are accurate at the time of posting.
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