Weekly News Bulletin - 28/03/2022
TAX FREE SAVINGS
Isa allowance 'irrelevant' for young people
The Isa allowance is "irrelevant" for young people who are not saving enough to begin with and as such "isn’t a particularly useful message", experts have said. Victor Trokoudes, co-founder and chief executive of investment app Plum, said young investors would be better served by being nudged to make regular contributions. The average total amount saved into Isas is around £6,450 for 18–24 year-olds while for 25–34 year-olds it is £7,750, according to data from HM Revenue and Customs. This compares with about £52,590 among those aged 65 and over. Trokoudes said: “Every year we see reminders that the end of the tax year is approaching and to fill up our Isa allowances. But this isn’t a particularly useful message for young people that struggle to get anywhere close to that amount. “In fact, the tax-free allowance is more or less irrelevant to millions of people on average incomes, who can’t afford to save £20,000 a year. “Instead, Plum wants to remind savers and investors that it is small, manageable, regular contributions that matter the most to building short-term security and long-term wealth." FT Adviser
Six ways to cut your tax bill in the next two weeks: From pensions to Isas and being strategic with capital gains, how to keep more of your investments growing
1. Use your annual pensions allowances - Pensions get tax relief on contributions, taking most people back to the position they were in before income tax was paid. An automatic 25 per cent uplift is applied to contributions to cover 20 per cent basic rate tax - taking £80 paid in back up to the £100 before tax was charged. 2. Use – or lose - your Isa allowances - Up to £20,000 per adult can be subscribed to an Isa before midnight on 5 April, with all returns generated within it sheltered from future taxation. 3. Start saving for children - The Junior Isa allowance is £9,000 a year and even those who are not paying tax are entitled to tax relief on pension contributions of £2,880 a year. 4. Be strategic with capital gains - Each year everyone has a tax-free capital gains allowance, currently £12,300 and above this they must may tax on chargeable gains. 5. Consider other tax-incentivised investments Investors in Venture Capital Trust (VCTs) can claim up to 30 per cent income tax relief on the amount they have invested in a VCT, provided they hold the investment for at least five years. 6. Gifts to reduce Inheritance Tax liability This is Money
SAVINGS
5 easy money-saving hacks to beat inflation as food prices rocket to highest in 10 years
Food writer and activist Jack Monroe shared her trick to try and save £20 per on food bills, by doing a full stocktake of what she has at home. The simple idea is that people should make meals out of what they already have at home, rather than going to the supermarket each time. Lowering the thermostat by one degree can save around £45 every year. Making sure appliances are switched off, using slow cookers instead of ovens and keeping warm through the use of blankets instead of heating can all keep costs of bills down. How to save on Petrol - Use supermarket petrol stations when you can. Shedding some weight in your car can help. One thing inflation can directly affect is a person's savings. Investing instead of saving your money should be very carefully considered, particularly as many struggling Brits may soon come to rely on savings. Daily Mirror
Energy bills: How to save over £800 a year on water bills with 'cheap and easy' fixes
Water experts have shared how homeowners can save more than £800 a year on water bills by making "easy and cheap" fixes. A dripping tap can waste over 450 litres of water in a day, which is 175,000 litres of water in a year. Each year, this costs the average homeowner an extra £300. Dripping hot water taps can also add hundreds of pounds to gas bills. A toilet that leaks from the cistern into the pan can waste around 400 litres of water a day. If the toilet is left to leak, this can add a massive £300 to water bills. An inefficient shower head could cost more water in under five minutes than a bath. A more efficient shower head would allow a family of four to save £95 each year on their water and gas bills. Ten minutes of rinsing and washing dishes can waste 100 litres of water. Britons can save £25 a year by just simply switching to a bowl. Most people will run the tap to check it’s cold before getting water from a tap. Doing that wastes a shocking one litre of water for every drink. Average homeowners can save £17 a year by instead keeping a jug of cold water in the fridge. Daily Express
PENSIONS
Triple lock: Therese Coffey commits to pension rise policy being honoured for the remainder of the Parliament
Therese Coffey has committed to the pensions triple lock being honoured for the remainder of the Parliament. The pensions triple lock is the policy used to set how much the state pension rises each year. The state pension is supposed to increase each year in line with whichever is highest out of CPI inflation, the average wage increase or 2.5%. Advertisement In the Conservative's 2019 manifesto, Boris Johnson's party committed to keeping the triple lock in place for the duration of this Parliament. However, last September the policy was suspended amid concerns that due to the pandemic, it would have produced an unaffordable rise in the following year. Sky News
INHERITANCE TAX
Couple cuts £3m inheritance tax liability to ZERO - easy trick to slash your IHT bill too
As an independent financial adviser himself, Tom Skinner knows the importance of IHT planning. Tom, 39, who is co-founder of London-based Barnaby Cecil Financial Planning, also knows the importance of protecting his family should the worst happen. He and wife Jane have taken out life insurance policies worth £1.5 million each, for their two young boys Charlie, 5, and Otto, 3. They're worth £3 million in total. If someone receives a life insurance payout, the payout will be added to the value of their other assets, including property, shares, Isas and so on, when calculating total value of their estate. One in four estates that are hit by an IHT bill each year include money from life insurance policies, HMRC figures show, so it’s a major problem. However, Tom said you can get around this by filling a simple form. “If you write a life policy into trust, it will not normally form part of your estate on death and would therefore not be liable for inheritance tax.” Tom said: “If you have life insurance and it isn’t in trust, phone your provider and ask for a trust form.” Gifts and money paid into trust are free of IHT, provided you live for another seven years after making them. Daily Express
PROPERTY
Should you buy or sell a house on the secret market? The private buying agents fixing sales that aren't even advertised
A record 135,730 homes were sold off-market last year, according to data from estate agency Hamptons. This was up 60 per cent on the year before. In December 2021, one home in ten was sold off-market. In London, this figure rose to one in five. And the trend is by no means confined to the capital, as rural areas such as the Cotswolds become increasingly in demand. Hamptons research analyst David Fell says: 'An agent will have a black book of their committed buyers and they will test the prices on them. These kind of buyers in the market will usually pay a slight premium.' If a seller was to list their home straight to sites such as RightMove and Zoopla, there would be a digital footprint of how much it had previously been advertised for and how much the price had dropped. What's more, a lot of sellers choose to turn to the secret market over privacy concerns. This is often because they are high-profile or extremely wealthy individuals. But will buyers get burnt? Buying homes is already an expensive affair, complete with hefty conveyancing and legal fees. So hiring a buying agent — who charge on average 1-3 per cent of the purchase price — only adds to the expense. On top of that, houses sold off-market usually attract their own premium, going for more money than they would on the open market. Daily Mail
Inside the £250m Abramovich property portfolio
The sanctioned club owner, Roman Abramovich, and his family have amassed a UK property collection worth more than £250m, numbering about 70 homes, buildings and pieces of land. The Guardian, working alongside the campaign group Transparency International, has also seen evidence connecting the billionaire’s companies and relatives to 53 luxury residential properties – plus commercial buildings and plots of land – in central London. Alongside the oligarch’s widely reported 15-bedroom mansion in Kensington Palace Gardens, bought for £120m, the Abramovich collection includes 42 flats and apartments in Chelsea Village, the hotel and residential complex situated around the football ground, including a $5.5m penthouse apartment overlooking the stadium and a $1m penthouse in the hotel. The Guardian
All the facts and figures presented are accurate at the time of posting.
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