Holly's Blog: Putting Lipstick on a Very Greedy Money Pig
25 Mar, 2022
It was the much-publicised Spring Statement this week. Rishi Sunak is battling inflation, a significant cost of living crisis and an unpopular commitment to increase National Insurance contributions. Gone are the jolly pandemic photo opportunities in Wagamama’s as he served up furlough schemes and Eat Out to Help Out soundbites.
Any of the better sounding bits – raising the threshold for National Insurance contributions, cutting fuel duty by 5p a litre and 1% reduction in the basic rate of income tax in 2024 – are shadowed by the glaring truth that most of us will be worse off. Rishi is doing battle with an increasingly Greedy Money Pig, and no amount of lipstick can make it look better.
Inflation is impacting wages as well as fuel and food, so more people will be pulled into higher tax brackets and of course these thresholds have been frozen. It’s been estimated that 7 in 8 working people will pay more tax over the coming years. And there ain’t a lot we can do about it.
Yup, the Jaws mood music is playing and we all know that the first hike in energy bills is heading our way in April. Don’t forget to take a meter reading /grab a photo on or before 31st March, or you are at the mercy of your energy company when it comes to what proportion of any future bill will be on the higher rates.
Tickety-tock
For very complicated reasons (we can blame this on Julius Caesar, Pope Gregory with Ye Olde New-Fanglede Calendare changes, and 16th century Britain not wanting to do what the rest of Europe did) the end of the tax year falls on 5th April.
Here’s a quick checklist of some things to do:
1. Can you pay into a pension? This can boost retirement savings (obvs) and lower a tax bill for higher rate earners. You can open one online, often with as little as £100. Here’s who we rate.
2. Can you pay into a spouse’s pension? A current non-earner can pay up to £2,880 into a pension and get a top-up of £720 from the tax man.
3. Can you use any of your ISA allowance? Shelter stuff from HMRC’s evil clutches and start a savings habit with a modest monthly direct debit? Our tables will let you compare options and charges for your specific £ amount.
4. If you’re a beginner, we’ve launched some new pages this week to help you get started on the journey.
5. Saving for a flat or helping the kids? Remember the generous top-ups into Lifetime ISAs. There are 4 stocks and shares LISAs we rate in our tables.
6. Pay into the kids’ Junior ISA – up to a whopping £9,000 a year – a parent or guardian needs to set it up but then anyone feeling generous can make contributions.
7. Can you manage inheritance tax? This is charged at 40% on estates over £325,000. Each tax year you can give away £3,000 and also use any unused allowance from last year. These pages are packed with info, tips and help from advisers.
Some final thoughts - if you’re a more seasoned investor working out what to put into your ISA, we added an article this week on commodities and the role they will lay in the move to net zero – a slightly different take on what’s driving this asset class. Or check out our Fund Tables, compiled with research house FE FundInfo, which share 108 funds well-rated by professional fund selectors and popular with investors.
Have a great weekend everyone. Happy Mother’s Day to all Mums. Thoughts with anyone struggling with a loss this year. And thanks to my lovely Mum who dutifully and kindly has read pretty much every blog I’ve written over the last 5 years, whilst doubtless wishing I’d gone into history, food or gardening instead of finance! Xx
Holly
