Weekly News Bulletin - 31/01/2022
ISA's
Cash ISA horror warning: British savers set to lose £8billion as inflation explodes
British savers could lose a collective £7.8bn because their money is locked into cash ISAs as inflation skyrockets. Inflation has surged to 5.4 percent, its highest level since the early-Nineties. The rocketing inflation rate is creating a cost of living crisis while also eroding any savings left in cash. These accounts typically pay an interest rate of less than one percent which means at least 4.4 percent of the real value will be lost. Data reveals that the average person will lose £547 this year to rising inflation. Nearly a million people have more than £50,000 in their cash Isas, which means they could lose a minimum of £2,200. The findings reveal that pensioners will take a £3.8bn hit this year alone. This is because the over-65s have twice as much in cash Isas as their younger peers. Inflation will knock £1,100 off the real value of the average cash Isa balance of pensioners, which stands at £25,383. Daily Express
SAVINGS
Green energy measures saving households £1,000 a year
Energy efficiency measures have already saved the average British household about £1,000 a year in energy bills, and further insulation and home improvements could halve future bills, analysis has shown. But the future savings are unlikely to be realised unless the government focuses swiftly on insulation, as the savings to date have come largely from efficiency improvements in electrical appliances and boilers, which will not be repeated. The Guardian
UK interest rate set to hit 1% by summer, City predicts
The UK interest rate is set for its first back-to-back increase since 2004 As of today, it seems highly likely UK interest will rise next week. Economists expect rates to then rise perhaps three more times this year, reaching as high as 1% by summer. The Bank of England put rates up in December from 0.1% to 0.25%. The City thinks they will go to 0.5% at the Monetary Policy Committee meeting on Thursday. Prior to the financial crash, “normal” rates were about 5%. We might now see the new normal at around 2%, which still leaves borrowing costs historically very cheap. If you are a saver – there are more of them than there are borrowers – you should start to see your interest payments go up. Most mortgage holders are on fixed rate deals so they are fine until those deals come to an end. New fixed rate deals will be a bit more expensive than the old ones. Evening Standard
PENSIONS
Can YOU afford a decent retirement? Just two in five people are on course for a moderate or comfortable pension, report warns
New barometer looks at how likely people are to live on a good income in old age Majority look set to miss the target, including a large cohort of affluent people What do minimum, moderate and comfortable lifestyles look like? Nearly 40 per cent of adults are on track to enjoy a decent lifestyle in retirement while the rest are set to struggle, new research reveals. A single person needs a minimum income of £20,800 per year, while a couple requires £30,600 to achieve financial security, according to an industry measure of retirement living standards. Those figures include the state pension, which is currently worth around £9,300 per person if you qualify for the full flat rate. Thisismoney.co.uk
£50,000 pension is not enough – here’s what you really need to enjoy retirement
At retirement, the average pension pot is £50,000 but men are in a better position, according to research from insurer Aegon. They have a nest egg worth £73,600 in total, while the average woman has a meagre £24,900. Worryingly, neither have anywhere near enough, warns Laith Khalaf, investment analysis at AJ Bell. As a rule of thumb, you should look to draw three of four percent of your retirement savings as income each year. That way your nest egg should never run out. If you had £50,000, that would generate income of between £1,500 to £2,000 a year, Khalaf said. “It's not enough.” To fund a little fun in retirement, such as meals out and the odd foreign holiday, you should aim for £300,000 in total retirement savings, Khalaf said. “That could generate an income of around £9,000 to £12,000 a year, on top of the State Pension, bringing you closer to £20,000.” Daily Express
INHERITANCE TAX
Inheritance tax: Five ways to pay less tax to HMRC in 2022 and save up to £250,000
People will need to pay 40 percent to HMRC on assets if they are above the threshold - which is usually £325,000 if the assets have not been left to a spouse, civil partner or charity.
Five ways to legally avoid paying inheritance tax:
- Give away £3,000 away each tax year inheritance tax-free. This allowance can be carried forward for one tax year.
- Gifts to charities and political parties are tax-free when it comes to IHT.
- £250 per person can be gifted each tax year are excluded from IHT and are not counted towards the £3,000 annual gift exemption.
- Consider giving away money from income rather than assets if affordable.
- Wedding gifts are tax-free up to a limit of £5,000 for a gift from a parent, £2,500 from a grandparent and £1,000 from anyone else. Daily Express
PROPERTY
Property price growth shows signs of SLOWING... but buyers are still forking out £25,000 more than they were at the start of 2020
The pace of property price growth across the UK has started to slow, fresh figures from Zoopla have revealed. Average prices increased by just 1 per cent in the three months to December 2021, the property portal said. This took the rate of price growth in 2021 as a whole down slightly from 7.7 per cent to 7.4 per cent. The average price tag of a home coming up for sale is now £242,000, which is still £25,500 more than at the start of 2020 when the average price was £216,500, according to the data. Thisismoney.co.uk
Sarah Beeny on the 3 areas of your property which could hinder a sale - ‘Really important'
Sarah Beeny has shared the three areas which could result in a slower sale of your home. Speaking exclusively to Express.co.uk, the property expert explained: “The most important thing - and I always say this - is to clean it. “Clean the windows, clean the outside, clean the inside. “Clean up the area - not the whole area, but the area outside your home and make sure it’s appealing to go in so people don’t feel they need to put on a chemical warfare outfit before they move in.” She added: “I guess another important thing is to make sure that it’s a solid house; so the roof is good, the wiring, the plumbing. “The next one is the kitchen because people love kitchens, they are the heart of the home - however small a flat is. “And having a nice kitchen means someone can move in and enjoy the space - they can always redecorate a bedroom, but redoing a kitchen is a really big upheaval, and it’s hard work, disruptive and expensive. Daily Express
Private rents in Britain rise at fastest rate on record
Private rents in Britain are rising at their fastest rate on record, piling more pressure on households feeling the strain of the cost of living crisis. The average advertised rent outside London is 9.9% higher than a year ago as tenants making plans for a post-pandemic life jostle for properties, according to the website Rightmove. Meanwhile, London rents have hit a new record and are higher now than before the start of the pandemic after a bounceback in demand fuelled by the gradual return to the workplace and more overseas students looking for a place to live. The average advertised asking rent outside London is £1,068 a calendar month, said Rightmove. In London it is £2,142. The Guardian